ck0001511699-20221130
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Prospectus
March 31,
2023 |
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Neither
the United States (“U.S.”) Securities and Exchange Commission (“SEC”) nor any
state securities commission has approved or disapproved of these securities or
passed upon the accuracy or adequacy of this Prospectus.
Any
representation to the contrary is a criminal offense.
Ecofin
Global Water ESG Fund
Tortoise
North American Pipeline Fund
Each
a series of Managed Portfolio Series (the “Trust”)
Fund
Summaries
Ecofin Global Water ESG
Fund
Investment Objective
The
Ecofin Global Water ESG Fund (the “Water Fund” or the “Fund”) seeks investment
results that correspond (before fees and expenses) generally to the price and
distribution rate (total return) performance of the Ecofin Global Water ESG Net
Total Return IndexSM (the “Underlying Index” or the “Water
Index”).
Fees and Expenses of the
Fund
This table describes the fees
and expenses that you may pay if you buy, hold and sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
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Management
Fees |
0.40% |
Distribution
and Service (Rule 12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.40% |
Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 in the
Funds for the time periods indicated and then sell all of your shares at the end
of those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund’s operating expenses remain the
same. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
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1
Year |
3
Years |
5
Years |
10
Years |
$41 |
$128 |
$224 |
$505 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account at the shareholder level. These costs,
which are not reflected in annual fund operating expenses or in the example
above, affect the Fund’s performance. During
the most recent fiscal year ended November 30, 2022, the Fund’s portfolio
turnover rate was 26% of its average portfolio
value.
Principal Investment
Strategies
The
Fund is an exchange-traded fund (“ETF”) and employs a “passive management” – or
indexing – investment approach designed to track the performance of the
Underlying Index. The Underlying Index is a proprietary rules-based, modified
market capitalization weighted, float adjusted index comprised of companies that
are materially engaged in the water infrastructure or water management
industries, and are listed and traded on global developed market exchanges. A
list of developed market exchanges is below. The Underlying Index is comprised
of companies operating in one of two primary water-related industries: water
infrastructure or water equipment and/or services (the “Water Industries”).
Water infrastructure companies are those whose principal business is providing
public water distribution or supporting/enhancing water distribution
infrastructure via engineering, construction and/or consulting. Water
infrastructure is comprised of two sub-industries: utilities and engineering
& construction. Water equipment and/or services companies are those whose
principal business is producing water equipment, such as pipes, valves, pumps
and water efficiency products, or providing water services, such as filtration,
treatment, and testing of water. Water equipment and/or services companies often
provide technologies or products that manage or facilitate the management of
water distribution and usage, including the fields of water efficiency, water
treatment, and irrigation. Water equipment and/or services is comprised of two
sub-industries: pipes, pumps & valves and filtration, treatment &
testing (together with utilities and engineering & construction, the “Water
Sub-Industries”).
The
Fund will normally invest at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in the types of securities suggested by its
name (i.e.,
Water Companies). A Water Company is a company that (i) derives at least 50% of
revenues from the Water Industries; or (ii) derives at least 40% of its revenues
from the Water Industries, is ranked in the top five companies by total revenue
derived from any one of the Water Sub-Industries, and whose principal source of
revenue comes from the Water Industries.
To
be included in the Underlying Index, a company must be a Water Company that is
listed on a developed country stock exchange. Tortoise Index Solutions, LLC,
doing business as TIS Advisors (the “Adviser”), the Fund’s investment adviser,
considers Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong
Kong, Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and
the United States to be developed countries. Under normal market conditions, the
Fund anticipates investing at least 40% of its assets in companies organized in
multiple countries outside of the United States, in companies whose principal
listing exchange is outside the United States, or in companies doing a
substantial amount of business outside the United States. The Underlying Index
may include small and medium capitalization companies. Eligible constituents
must also have a total equity market capitalization of at least
$400 million for two consecutive quarters prior to the reference date at
the time of inclusion in the Underlying Index. In order to remain in the
Underlying Index, a company must maintain an average equity market
capitalization of at least $300 million for a minimum of 20 trading days prior
to the rebalance of the Underlying Index. In addition, eligible constituents
must obtain a minimum liquidity turnover of 0.15 for two consecutive quarters
prior to the reference date to be eligible to enter the Underlying Index.
Current index components will be dropped from the Underlying Index if they fail
to meet a minimum of 0.10 liquidity turnover for two consecutive quarters. Any
constituent that does not meet at least a 0.05 liquidity turnover will be
dropped from the Underlying Index without the two-quarter requirement. Liquidity
turnover is calculated by dividing
a
company’s three-month average daily trading volume in U.S. dollars by the
company’s total U.S. dollar market cap at the end of the three-month period.
Lastly,
eligible constituents must have a minimum Environmental, Social and Governance
(“ESG”) Risk Rating as determined by the index committee that governs the
Underlying Index (the “Index Committee”). The Fund will invest at least 80% of
its net assets, plus the amount of any borrowing for investment purposes, in
companies that meet the required ESG Risk Rating criteria set forth by the
Underlying Index methodology. ESG Risk Ratings are provided by Sustainalytics, a
leading global provider of ESG and corporate governance research. The
Sustainalytics ESG Risk Ratings measure the degree to which a company’s economic
value is at risk driven by ESG factors or, more technically speaking, the
magnitude of the company’s unmanaged ESG risks. Each company’s ESG Risk Rating
is comprised of a quantitative score and a risk category (negligible, low,
medium, high, severe). The quantitative score is measured on an open-ended scale
starting at zero, with lower scores representing lower levels of unmanaged ESG
risk. The ESG Risk Ratings are made up of three building blocks that include the
foundational building block of Corporate Governance (a quality measure), a core
building block focused on Material ESG Issues (including Human Capital,
Occupational Health & Safety, and other industry specific issues); and a
third building block considering Idiosyncratic Issues (which can be
unpredictable or unexpected, industry-specific, event driven issues). The ESG
Risk Ratings seek to incorporate the extent to which companies are exposed to
material ESG risks and their ability to manage those risks.
The
Underlying Index methodology currently requires that new additions to the
Underlying Index be limited to companies with an ESG Risk Rating less than 30.
Existing
constituents must maintain a score less than 40 to remain in the Underlying
Index.
The
Underlying Index methodology provides that any existing constituent whose ESG
Risk Rating is between 30 and 39.99 and does not improve for three consecutive
quarters will be removed from the Underlying Index, and any constituent whose
ESG Risk Rating increases to 40 or above will be removed at the next rebalance.
Additionally, the Underlying Index methodology provides that current
constituents will be dropped from the Underlying Index if they fail to meet a
minimum of 0.10 liquidity turnover for two consecutive quarters. Any constituent
that does not meet at least a 0.05 liquidity turnover will be dropped from the
Underlying Index at the next rebalance. Companies that meet all other criteria
but have not been rated by Sustainalytics may be included, but will be limited
to 20% of the overall market capitalization of the Underlying
Index.
The
Underlying Index will include a minimum of 30 securities. Should the number of
securities that meet the Underlying Index inclusion criteria fall below 30, the
Underlying Index may include additional securities that have an ESG Risk Rating
above the threshold for existing constituents or below the liquidity turnover
threshold otherwise required for inclusion. This will ensure the Underlying
Index remains investable and diversified. For the Underlying Index as a whole,
no individual security may be more than 7.5% of the total float adjusted market
cap of the Underlying Index as of the reference date. Should the weighting of
any individual security be more than 7.5% of the total float adjusted Underlying
Index market cap as of the reference date for the next rebalance, excess market
cap will be distributed evenly to other constituents of the Underlying Index
that do not currently exceed the 7.5% threshold. Additionally, only six
securities may have a weight greater than 4% of the Underlying Index at the
reference date. All remaining constituents of the Underlying Index will be
capped at a maximum weight of 4%.
In
seeking to achieve its objective as an index fund, the Fund will invest at least
80% of its net assets (excluding any collateral held from securities lending) in
common stocks and American depository receipts (“ADRs”) of Water Companies that
comprise the Underlying Index. ADRs are negotiable receipts issued by a U.S.
bank or trust company that evidence ownership of securities in a foreign company
which have been deposited with such bank or trust company’s office or agent in a
foreign country. The Fund may also invest in Global Depositary Receipts
(“GDRs”), European Depositary Receipts (“EDRs”), and International Depositary
Receipts (“IDRs”) (collectively, with ADRs, “Depositary Receipts”). Under normal
conditions, the Fund generally will invest in substantially all of the
securities that comprise the Underlying Index in proportion to their weightings
in the Underlying Index; however, under various circumstances, it may not be
possible or practicable to purchase all of the securities in the Underlying
Index in those weightings. In those circumstances, the Fund may purchase a
sample of the securities in the Underlying Index or utilize various combinations
of other available investment techniques in seeking performance that corresponds
to the performance of the Underlying Index.
As
of the March 17, 2023 rebalance, the Underlying Index was comprised of 36
constituents. The Underlying Index will rebalance quarterly in March, June,
September and December. No constituents will be added to the Underlying Index
between rebalance dates. Constituents are reviewed annually, at the March
rebalance, to determine that they continue to meet the definition of a Water
Company under the Underlying Index methodology. Constituents in the Underlying
Index may be deleted from the Underlying Index due to corporate events such as
mergers, acquisitions, bankruptcies, takeovers, or delistings. Underlying Index
constituent changes and updates as well as any changes to the methodology will
be posted to https://tortoiseecofin.com/. The Underlying Index was established
in 2018 and is owned by the Adviser. The Adviser (also referred to herein as the
“Index Provider”) provides the Underlying Index for use by the Fund’s at no cost
to the Fund.
The
Fund will concentrate its investments (i.e.,
hold 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index
concentrates in an industry or group of industries. The Underlying Index and the
Fund will be concentrated in the water industry. The Fund is a non-diversified
fund.
Principal Risks
As with all funds, a shareholder of the Fund is subject
to the risk that his or her investment could lose money. The
principal risks affecting shareholders’ investments in the Fund are set forth
below. An investment in the Fund is not a
bank deposit and is not insured or guaranteed by the FDIC or any government
agency.
General
Market Risk.
The
Fund is subject to the risk that it will not achieve its investment objective
and that the value of an investment in its securities could decline
substantially and cause you to lose some or all of your investment. The Fund’s
net asset value (“NAV”) and investment return will fluctuate based upon changes
in the value of its portfolio securities. Certain securities in the Fund’s
portfolio may be worth less than the price originally paid for them, or less
than they were worth at an earlier time.
Water
Industry Risk.
Any
adverse developments in the water infrastructure and equipment/services industry
may significantly affect the value of the shares of the fund. Companies in the
water
industry are subject to environmental considerations, taxes, government
regulation, price and supply fluctuations, competition and water conservation
influences.
Depository
Receipt Risk.
Investing
in Depository Receipts may be subject to certain risks associated with direct
investments in the securities of foreign companies, such as currency, political,
economic and market risks. Depository Receipts may be less liquid than the
underlying shares in the primary trading market. Depository Receipts may not
track the price of their underlying foreign securities on which they are based,
may have limited voting rights, and may have a distribution subject to a fee
charged by the depository. As a result, equity shares of the underlying issuer
may trade at a discount or premium to the market price of the depository
receipts.
Concentration
Risk.
Because
the Fund’s assets will be concentrated in the water industry, the Fund is
subject to loss due to adverse occurrences that may affect that industry. The
Fund’s focus in this industry presents more risk than if it were broadly
diversified over numerous industries and sectors of the economy. An inherent
risk associated with any investment focus is that the Fund may be adversely
affected if a small number of its investments perform poorly.
Equity
Securities Risk. Equity
securities are susceptible to general stock market fluctuations and to volatile
increases and decreases in value. The equity securities held by the Fund may
experience sudden, unpredictable drops in value or long periods of decline in
value. This may occur because of factors affecting securities markets generally,
the equity securities of water companies in particular, or a particular company.
Non-U.S.
Securities Risk.
Investments
in securities of non-U.S. issuers involve risks not ordinarily associated with
investments in securities and instruments of U.S. issuers, including risks
relating to political, social and economic developments abroad, differences
between U.S. and foreign regulatory and accounting requirements, tax risks, and
market practices, as well as fluctuations in foreign currencies.
Mid-Cap
and Small-Cap Companies Risk.
Companies
defined as small and mid-cap securities may involve greater risk than is
normally associated with large cap companies, and as a result may be more
volatile and less liquid than the securities of large-cap companies, and may
have returns that vary substantially from the overall securities markets.
ESG
Risk.
The Index Committee's interpretation of positive ESG characteristics may differ
from that of other market participants. Applying ESG and sustainability criteria
to the investment process may exclude securities of certain issuers for
non-investment reasons and therefore the Fund may forgo some market
opportunities available to funds that do not use ESG or sustainability criteria.
Securities of companies with ESG practices may shift into and out of favor
depending on market and economic conditions, and the Fund's performance may at
times be better or worse than the performance of funds that do not use ESG or
sustainability criteria. Additionally, the Index provider may be unsuccessful in
creating an index consisting of companies that satisfy its desired ESG
thresholds. The failure to produce such an index could be the result of several
factors including, but not limited to, the Index Provider’s inability to receive
timely and accurate data from independent third-party ESG research
providers.
Increasing
Scrutiny of ESG Matters Risk.
The Adviser and its affiliates are subject to increasing scrutiny from
regulators, elected officials, investors and other stakeholders with respect to
ESG
matters,
which may adversely impact the ability of the Fund to raise capital from certain
investors, constrain capital deployment opportunities for the Fund and harm the
Adviser’s brand and reputation. In recent years, certain investors, including
public pension funds, have placed increasing importance on the impacts of
investments made by the funds to which they commit capital, including with
respect to climate change, among other aspects of ESG. Conversely, certain
investors have raised concerns as to whether the incorporation of ESG factors in
the investment and portfolio management process may be inconsistent with the
fiduciary duty to maximize return for investors. Investors may decide to not
invest in the Fund based on their assessment of how the Adviser approaches and
considers the ESG cost of investments and whether the return-driven objective of
the Fund aligns with such ESG considerations. In addition, anti-ESG sentiment
has gained momentum across the United States, with several states having enacted
or proposed “anti-ESG” policies, legislation or issued related legal opinions.
If investors decide not to invest in the Fund based on their own assessment of
the Fund’s approach to ESG, or are prohibited as a result of legislation, the
Adviser’s ability to maintain the size of the Fund could be
impaired.
Liquidity
Risk.
The
Fund may be exposed to liquidity risk when trading volume, lack of a market
maker, or legal restrictions impair the Fund’s ability to sell particular
securities at an advantageous price or in a timely manner. Illiquid or
restricted securities cannot be sold immediately because of statutory and
contractual restrictions on resale.
Passive
Investment Risk.
The
Fund is not actively managed and therefore the Fund generally will not sell a
security due to current or projected underperformance of a security, industry or
sector, unless that security is removed from the Underlying Index or the selling
of the security is otherwise required upon a rebalancing of the Underlying
Index.
Tracking
Error Risk. There
is no guarantee that the Fund will achieve a high degree of correlation to the
Underlying Index and therefore achieve its investment objective. The Fund’s
return may not match the return of its Underlying Index for a number of reasons,
including differences between the securities held in the Fund’s portfolio and
those included in the Underlying Index, pricing differences, transaction costs,
the Fund’s holding of cash, differences in timing of the accrual of
distributions, changes to the Underlying Index or the need to meet various new
or existing regulatory requirements. Consequently, the performance of the Fund
may diverge from that of its Underlying Index. This risk may be heightened
during times of increased market volatility or other unusual market conditions,
or due to delays of the Fund in purchasing and selling securities. Tracking
error also may result because the Fund incurs fees and expenses, while the
Underlying Index does not.
Non-Diversification
Risk.
The Fund is classified as “non-diversified,”
which means the Fund may invest a larger percentage of its assets in the
securities of a smaller number of issuers than a diversified fund. Investments
in securities of a limited number of issuers exposes the Fund to greater market
risk and potential losses than if its assets were diversified among the
securities of a greater number of issuers.
Absence
of Active Trading Market Risk.
Although
shares of the Fund are listed for trading on one or more stock exchanges, there
can be no assurance that an active trading market for such shares will develop
or be maintained. There can be no assurance that the requirements necessary to
maintain the listing or trading of Fund shares will continue to be met or will
remain unchanged.
Shares
May Trade at Prices Different than NAV Per Share.
Disruptions to creations and redemptions, the existence of extreme market
volatility or potential lack of an active trading market for shares of the Fund
may result in shares trading at a significant premium or discount to NAV. If a
shareholder purchases shares when the market price is at a premium to the NAV or
sells shares when the market price is at a discount to the NAV, the shareholder
may sustain losses.
Trading
Risks.
The Fund faces numerous trading risks, including disruption in the
creation/redemption process of the Fund and losses from trading in the secondary
markets. Secondary market trading in Fund shares may be halted by a stock
exchange because of market conditions or other reasons or due to extraordinary
market volatility pursuant to “circuit breaker” rules on the exchange or market.
Additionally, an exchange or market may also 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.
Legal
and Regulatory Change Risks.
The
regulatory environment for investment companies is evolving, and changes in
regulation may adversely affect the value of the Fund’s investments and its
ability to pursue its trading strategy. The effect of any future regulatory
change on the Fund could be substantial and adverse.
Methodology
Risks. The
Index Provider relies on various sources of information to assess the criteria
of issuers included in the Underlying Index, including information that may be
based on assumptions and estimates. Neither the Fund nor the Index Provider can
offer assurances that Underlying Index’s calculation methodology or sources of
information will provide an accurate assessment of included issuers or that the
included issuers will provide the Fund with the market exposure it
seeks.
Epidemic
Risk.
Widespread disease, including pandemics and epidemics have been and can be
highly disruptive to economies and markets, adversely impacting individual
companies, sectors, industries, markets, currencies, interest and inflation
rates, credit ratings, investor sentiment, and other factors affecting the value
of the Funds’ investments. Given the increasing interdependence among global
economies and markets, conditions in one country, market, or region are
increasingly likely to adversely affect markets, issuers, and/or foreign
exchange rates in other countries, including the United States. These
disruptions could prevent the Funds from executing advantageous investment
decisions in a timely manner and negatively impact the Funds’ ability to achieve
their investment objectives. Any such event(s) could have a significant adverse
impact on the value and risk profile of the
Funds.
Performance
Information
The accompanying
bar chart and table provide some indication of the risks of investing in the
Fund. The bar chart shows changes in the Fund’s annual total
returns from year to year. Following the bar chart is the Fund’s highest and
lowest quarterly returns during the periods shown in the bar chart. The table
illustrates how the Fund’s average annual returns for the 1-year, 5-year, and
since inception periods compare with those of a broad measure of market
performance and the Underlying Index. Prior to June 15, 2018, the Fund tracked a
different underlying index. Performance shown prior to June 15, 2018 represents
the performance of the
Fund
before the index change. Past performance (before and
after taxes) will not necessarily continue in the future.
Updated performance is available at https://etp.ecofininvest.com/funds/ecofin-global-water-esg-fund/
or by calling 844-TR-INDEX
(844-874-6339).
Calendar Year Total Returns as of December
31
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Best
Quarter |
Worst
Quarter |
Q4 2020
14.10% |
Q1 2020
-20.44% |
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Average
Annual Total Returns for the periods ended December 31, 2022(1) |
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One
Year |
Five
Years |
Since
Inception
(February 14,
2017) |
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Return Before
Taxes |
-24.94% |
6.20% |
8.63% |
Return After Taxes on
Distributions |
-25.24% |
5.84% |
8.24% |
Return After Taxes on Distributions and
Sale of Fund Shares |
-14.56% |
4.87% |
6.85% |
S&P 500 Total Return Index
(reflects no deduction for
fees, expenses or taxes) |
-18.11% |
9.42% |
10.79% |
Ecofin
Global Water ESG Net Total Return IndexSM
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-24.95% |
6.49% |
9.33% |
Ecofin
EBLU Blend (reflects no deduction for fees, expenses or taxes)(1) |
-24.95% |
6.49% |
8.97% |
(1)Reflects
the returns of the Tortoise Water Total Return Index, the Water Fund’s prior
underlying index, for periods prior to June 15, 2018, and the Ecofin Global
Water ESG Net Total Return IndexSM
for the period from June 15, 2018 to December 31,
2019.
After tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on your situation and may differ from those shown. Furthermore, the
after-tax returns shown are not relevant to those investors who hold their
shares through tax-advantaged arrangements such as 401(k) plans or individual
retirement accounts (“IRAs”). The Return After Taxes on
Distributions and Sale of Fund Shares is higher than other return figures when a
capital loss occurs upon redemption and provides an assumed tax deduction that
benefits the investor.
Investment
Adviser and Sub-Adviser
TIS
Advisors serves as the investment adviser to the Fund. Vident Investment
Advisory, LLC (“VIA” or the “Sub-Adviser”) serves as sub-adviser to the Fund.
The Adviser also serves as Index Provider to the Fund.
Portfolio
Managers
The
Fund is managed by the sub-adviser’s portfolio management team. The individual
members of the team jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio are described below.
Austin
Wen, Portfolio Manager, CFA, of VIA, has served as a portfolio manager for the
Fund since May 2020.
Rafael
Zayas, Portfolio Manager, CFA, of VIA, has served as a portfolio manager for the
Fund since June 2020.
VIA
began sub-advising the fund in May 2020.
Purchase
and Sale of Fund Shares
The
Fund will issue (or redeem) shares to certain institutional investors (typically
market makers or other broker-dealers) only in blocks of shares known as
“Creation Units.” Creation Unit transactions are typically conducted in exchange
for the deposit or delivery of in-kind securities and/or cash constituting a
substantial replication, or a representation, of the securities included in the
relevant benchmark index. Individual shares may only be purchased and sold on a
national securities exchange through a broker-dealer. You can purchase and sell
individual shares of the Fund throughout the trading day like any publicly
traded security. The Fund’s shares are listed on the NYSE Arca, Inc. Exchange
(The “Exchange”). The price of the Fund’s shares is based on market price, and
because exchange-traded fund shares trade at market prices rather than NAV, the
Fund’s shares may trade at a price greater than NAV (premium) or less than NAV
(discount). Except
when aggregated in Creation Units, the Fund’s shares are not redeemable
securities.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase shares of the Fund (bid) and the lowest price a
seller is willing to accept for shares of the Fund (ask) when buying or selling
shares of the Fund in the secondary market (the “bid-ask spread”). Recent
information about the Fund, including its NAV, market price, premiums and
discounts, and bid-ask spreads is available on the Fund’s website at
https://etp.ecofininvest.com/funds/ecofin-global-water-esg-fund/.
Tax
Information
Distributions
made by the Fund may be taxable as ordinary income, or capital gains, unless you
are a tax-exempt organization or are investing through a tax-advantaged
arrangement, such as a 401(k) plan or individual retirement account. Any
withdrawals made from such tax-advantaged arrangement generally will be taxable
to you as ordinary income.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Adviser and its related companies may pay the
intermediary for the sale of shares and related services. These payments may
create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s web site for more
information.
Tortoise North American Pipeline
Fund
Investment Objective
The
Tortoise North American Pipeline Fund (the “Pipeline Fund” or the “Fund”) seeks
investment results that correspond (before fees and expenses) generally to the
price and distribution rate (total return) performance of the Tortoise North
American Pipeline IndexSM
(the “Underlying Index” or the “Pipeline Index”).
Fees and Expenses of the
Fund
This table describes the fees
and expenses that you may pay if you buy, hold and sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
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Management
Fees |
0.40% |
Distribution
and Service (Rule 12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.40% |
Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 in the
Funds for the time periods indicated and then sell all of your shares at the end
of those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund’s operating expenses remain the
same. Although your actual costs may be higher
or lower, based on these assumptions your costs would
be:
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|
|
|
|
|
|
|
|
| |
1
Year |
3
Years |
5
Years |
10
Years |
$41 |
$128 |
$224 |
$505 |
Portfolio
Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account at the shareholder level. These costs, which are not reflected in annual
fund operating expenses or in the example above, affect the Fund’s performance.
During the most recent fiscal year ended November 30, 2022, the Fund’s
portfolio turnover rate was 12% of its average portfolio
value.
Principal Investment
Strategies
The
Fund is an exchange-traded fund (“ETF”) and employs a “passive management” – or
indexing – investment approach designed to track the performance of the
Underlying Index. The Underlying Index is a float adjusted, capitalization
weighted index of pipeline companies that are organized and have their principal
place of business in the United States or Canada. The Fund will normally invest
at least 80% of its net assets, plus the amount of any borrowings for investment
purposes, in the types of securities suggested by its name (i.e.,
North American Pipeline Companies). A pipeline company is defined as a company
that either 1) has been assigned a standard industrial classification (“SIC”)
system code that indicates the company operates in the energy pipeline industry
or 2) has at least 50% of its assets, cash flow or revenue associated with the
operation or ownership of energy pipelines. Pipeline companies engage in the
business of transporting natural gas, crude oil and refined products, storing,
gathering and processing such gas, oil and products and local gas distribution.
To
be included in the Underlying Index, a company must be a pipeline company that
is organized and has its principal place of business in the United States or
Canada (such pipeline companies are collectively referred to in this Prospectus
as “North American Pipeline Companies”) and is listed on the New York Stock
Exchange, NASDAQ, NYSE MKT or Toronto Stock Exchange. Eligible constituents must
also have a total market capitalization of at least $200 million USD at the time
of inclusion in the Underlying Index. In order to remain in the Underlying
Index, a company must maintain an average equity market capitalization of at
least $175 million USD for a minimum of 20 trading days prior to the rebalance
reference date of the Underlying Index.
Underlying
Index constituents may include the following equity securities of North American
pipeline companies: 1) common stock; 2) interests in master limited partnerships
(“MLPs”); 3) interests in North American Pipeline Companies structured as
limited liability companies (“LLCs”); and 4) equity securities of MLP
affiliates, including common shares of corporations that own, directly or
indirectly, MLP general partner interests (collectively referred to herein as
“MLP Affiliates”). MLP interests included in the Underlying Index must pay a
distribution greater than or equal to their minimum quarterly distribution
(“MQD”) at the time of inclusion in the Underlying Index. The Underlying Index
will include a minimum of 30 securities. Should the number of securities that
meet the Underlying Index inclusion criteria fall below 30, the Underlying Index
may include additional securities to maintain an investible and diversified
index. No more than 20% of the Underlying Index may consist of MLPs and no
constituent can exceed 7.5% of the Underlying Index as of the reference date.
Additionally, affiliated MLP families (e.g.,
related MLPs and/or MLP Affiliates) in aggregate may not comprise more than 15%
of the Underlying Index at the rebalance reference date.
In
seeking to achieve its objective as an index fund, the Fund will normally invest
at least 80% of its total assets in securities that comprise the Underlying
Index (or depository receipts based on such securities). Under normal
conditions, the Fund generally will invest in all of the securities that
comprise the Underlying Index in proportion to their weightings in the
Underlying Index; however, under various circumstances, it may not be possible
or practicable to purchase all of the securities in the Underlying Index in
those weightings. In those circumstances, the Fund may purchase a sample of the
securities in the Underlying Index or utilize various combinations of other
available investment techniques in seeking performance that corresponds to the
performance of the Underlying Index. The Fund may invest up to 20% of its assets
in certain index futures, options, options on index futures, swap contracts or
other derivatives related to
the
Underlying Index and its components, cash and cash equivalents, other investment
companies, as well as in securities and other instruments not included in the
Underlying Index but which Vident Investment Advisory, LLC (“VIA” or the
“Sub-Adviser”) believes will help the Fund track the Underlying
Index.
As
of the March 17, 2023 rebalance, the Underlying Index was comprised of 47
constituents. No constituents will be added to the Underlying Index between
rebalance dates, which take place on a quarterly basis in March, June, September
and December. Constituents in the Underlying Index may be deleted from the
Underlying Index due to corporate events such as mergers, acquisitions,
bankruptcies, takeovers, or delistings. Standard rebalances take place on a
quarterly basis. Special rebalances are triggered by corporate actions and will
be implemented as practically as possible on a case-by-case basis. Underlying
Index constituent changes and updates, as well as any changes to the
methodology, will be posted to http://tortoiseecofin.com/. The Underlying Index
was established by Tortoise Index Solutions, LLC, doing business as TIS
Advisors, the investment adviser to the Fund (the “Adviser”), and is owned by
the Adviser. The Adviser (also referred to herein as the “Index Provider”)
provides the Underlying Index for use by the Fund at no cost to the
Fund.
The
Fund will concentrate its investments (i.e.,
hold 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index
concentrates in an industry or group of industries. The Underlying Index and the
Fund will be concentrated in the energy pipeline industry. The Fund is a
non-diversified fund.
Principal Risks
As with all funds, a shareholder of the Fund is subject
to the risk that his or her investment could lose money. The
principal risks affecting shareholders’ investments in the Fund are set forth
below. An investment in the Fund is not a
bank deposit and is not insured or guaranteed by the FDIC or any government
agency.
General
Market Risk. The
Fund is subject to the risk that it will not achieve its investment objective
and that the value of an investment in its securities could decline
substantially and cause you to lose some or all of your investment. The Fund’s
net asset value (“NAV”) and investment return will fluctuate based upon changes
in the value of its portfolio securities. Certain securities in the Fund’s
portfolio may be worth less than the price originally paid for them, or less
than they were worth at an earlier time.
Concentration
Risk.
Because
the Fund’s assets will be concentrated in the energy pipeline industry, the Fund
is subject to loss due to adverse occurrences that may affect that industry. The
Fund’s focus in this industry presents more risk than if it were broadly
diversified over numerous industries and sectors of the economy. An inherent
risk associated with any investment focus is that the Fund may be adversely
affected if a small number of its investments perform poorly.
Energy
Pipeline Industry Risk. Companies
in the energy pipeline industry are subject to many risks that can negatively
impact the revenues and viability of companies in this industry, including but
not limited to risks associated with companies owning and/or operating
pipelines, as well as capital markets, terrorism, natural disasters, climate
change, operating, regulatory, environmental, supply and demand, and price
volatility risks.
Depository
Receipt Risk. Investing
in Depository Receipts may be subject to certain risks associated with direct
investments in the securities of foreign companies, such as currency, political,
economic and market risks.
Depository
Receipts may be less liquid than the underlying shares in the primary trading
market.
Depository
Receipts may not track the price of their underlying foreign securities on which
they are based, may have limited voting rights, and may have a distribution
subject to a fee charged by the depository.
As
a result, equity shares of the underlying issuer may trade at a discount or
premium to the market price of the depository receipts.
Equity
Securities Risk.
Equity
securities are susceptible to general stock market fluctuations and to volatile
increases and decreases in value. The equity securities held by the Fund may
experience sudden, unpredictable drops in value or long periods of decline in
value. This may occur because of factors affecting securities markets generally,
the equity securities of pipeline companies in particular, or a particular
company.
MLP
Risk. MLPs
are subject to many risks, including those that differ from the risks involved
in an investment in the common stock of a corporation. Holders of MLP units have
limited control and voting rights on matters affecting the partnership and are
exposed to a remote possibility of liability for all of the obligations of that
MLP. Holders of MLP units are also exposed to the risk that they will be
required to repay amounts to the MLP that are wrongfully distributed to them.
Furthermore, MLP interests may not be as liquid as other more commonly traded
equity securities.
The
Fund’s investment strategies depend in part on MLPs generally being treated as
partnerships for U.S. federal income tax purposes. If any of the MLPs owned by
the Fund were treated as corporations for U.S. federal income tax purposes, it
could result in a reduction in the value of your investment in the Fund and
lower distributions.
The
Fund expects to receive cash distributions each year from certain MLPs that
exceed the net taxable income allocated to the Fund from such MLPs for such
year, and, as a result, the Fund may recognize larger taxable gains (or smaller
losses) with respect to such MLPs when it disposes of its interests in such
MLPs. If you hold shares in the Fund when such gains or losses are recognized,
you may be required to pay tax on one or more Fund distributions, potentially at
ordinary income tax rates, even though you may not have economically benefited
from the associated MLP cash distributions.
MLP
Affiliate Risk. The
performance of securities issued by MLP Affiliates, including common shares of
corporations that own general partner interests, primarily depends on the
performance of an MLP. The risks and uncertainties that affect the MLP, its
operational results, financial condition, cash flows and distributions also
affect the value of securities held by that MLP’s affiliate.
Non-U.S.
Securities Risk.
Investments
in securities of non-U.S. issuers involve risks not ordinarily associated with
investments in securities and instruments of U.S. issuers, including risks
relating to political, social and economic developments abroad, differences
between U.S. and foreign regulatory and accounting requirements, tax risks, and
market practices, as well as fluctuations in foreign currencies.
Canadian
Securities Risk.
The
Canadian economy may be significantly affected by the U.S. economy because the
U.S. is Canada’s largest trading partner and foreign investor. Canada’s largest
exports are its natural resources, so the Canadian economy is dependent on the
demand for, and supply and price of, natural resources, and any market
developments that reduce the price of such goods could disproportionately affect
the Canadian economy.
Large-Cap,
Mid-Cap and Small-Cap Companies Risk.
The
Fund’s investment in companies with large market capitalizations is subject to
the risk that larger companies are sometimes unable to attain the high growth
rates of successful, smaller companies, especially during extended periods of
economic expansion. Securities of mid-cap and small-cap companies may be more
volatile and less liquid than the securities of large-cap companies.
RIC
Compliance Risk. The
Fund has elected to be, and intends to qualify each year for treatment as, a
“regulated investment company” (a “RIC”) under the Code. Given the Fund’s
contemplated investments in MLPs, qualifying as a RIC presents unusual
challenges and may limit its investment opportunities. If for any taxable year
the Fund fails to qualify as a RIC, its taxable income will be subject to
federal income tax at regular corporate rates and income available for
distribution to shareholders will be reduced.
Liquidity
Risk.
The
Fund may be exposed to liquidity risk when trading volume, lack of a market
maker, or legal restrictions impair the Fund’s ability to sell particular
securities at an advantageous price or in a timely manner. Illiquid or
restricted securities cannot be sold immediately because of statutory and
contractual restrictions on resale.
Passive
Investment Risk.
The
Fund is not actively managed and therefore the Fund generally will not sell a
security due to current or projected underperformance of a security, industry or
sector, unless that security is removed from the Underlying Index or the selling
of the security is otherwise required upon a rebalancing of the Underlying
Index.
Tracking
Error Risk.
There
is no guarantee that the Fund will achieve a high degree of correlation to the
Underlying Index and therefore achieve its investment objective. The Fund’s
return may not match the return of its Underlying Index for a number of reasons,
including differences between the securities held in the Fund’s portfolio and
those included in the Underlying Index, pricing differences, transaction costs,
the Fund’s holding of cash, differences in timing of the accrual of
distributions, changes to the Underlying Index or the need to meet various new
or existing regulatory requirements. Consequently, the performance of the Fund
may diverge from that of its Underlying Index. This risk may be heightened
during times of increased market volatility or other unusual market conditions,
or due to delays of the Fund in purchasing and selling securities. Tracking
error also may result because the Fund incurs fees and expenses, while the
Underlying Index does not.
Derivatives
Risk.
Derivatives are financial contracts whose value depend on, or are derived from,
the value of an underlying asset, reference rate, or index. The use of
derivative instruments involves risks different from, or possibly greater than,
the risks associated with investing directly in securities and other traditional
investments. Certain derivative instruments can lose more than the principal
amount invested. Derivatives may involve significant risks. Derivatives could
result in Fund losses if the underlying references do not perform as
anticipated. Derivatives may expose the Fund to additional risks including: the
risk of loss due to a derivative position that is imperfectly correlated with
the underlying reference it is intended to
hedge
or replicate (correlation risk); the risk that a counterparty will fail to
perform as agreed (counterparty risk); the risk that a hedging strategy may fail
to mitigate losses, and may offset gains (hedging risk); the risk that losses
may be greater than the amount invested (leverage risk); the risk that the Fund
may be unable to sell an investment at an advantageous time or price (liquidity
risk); the risk that the investment may be difficult to value (pricing risk);
and the risk that the price or value of the investment fluctuates significantly
over short periods of time (volatility risk).
In
October 2020, the SEC adopted Rule 18f-4 under the 1940 Act, which became
effective on August 19, 2022. Funds that are subject to the rule are required to
adopt and implement a written derivatives risk management program and
quantitatively limit their use of derivatives based on the estimated potential
risk of loss that the funds incur from their derivatives transactions. Funds
that limit derivatives exposure to 10% of net assets are exempt from many of the
requirements of Rule 18f-4, but must still adopt and implement policies and
procedures reasonably designed to manage the fund’s derivatives risks. Rule
18f-4 governs the way funds must comply with the asset segregation and coverage
requirements of Section 18 of the 1940 Act with respect to derivatives and
certain other financing transactions.
Non-Diversification
Risk.
The Fund is classified as “non-diversified,”
which means the Fund may invest a larger percentage of its assets in the
securities of a smaller number of issuers than a diversified fund. Investments
in securities of a limited number of issuers exposes the Fund to greater market
risk and potential losses than if its assets were diversified among the
securities of a greater number of issuers.
Absence
of Active Trading Market Risk.
Although shares of the Fund are listed for trading on one or more stock
exchanges, there can be no assurance that an active trading market for such
shares will develop or be maintained. There can be no assurance that the
requirements necessary to maintain the listing or trading of Fund shares will
continue to be met or will remain unchanged.
Shares
May Trade at Prices Different than Net Asset Value Per Share.
Disruptions to creations and redemptions, the existence of extreme market
volatility or potential lack of an active trading market for shares of the Fund
may result in shares trading at a significant premium or discount to NAV. If a
shareholder purchases shares when the market price is at a premium to the NAV or
sells shares when the market price is at a discount to the NAV, the shareholder
may sustain losses.
Trading
Risks.
The Fund faces numerous trading risks, including disruption in the
creation/redemption process of the Fund and losses from trading in the secondary
markets. Secondary market trading in Fund shares may be halted by a stock
exchange because of market conditions or other reasons or due to extraordinary
market volatility pursuant to “circuit breaker” rules on the exchange or market.
Additionally, an exchange or market may also 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.
Legal
and Regulatory Change Risks.
The
regulatory environment for investment companies is evolving, and changes in
regulation may adversely affect the value of the Fund’s investments
and
its ability to pursue its trading strategy. The effect of any future regulatory
change on the Fund could be substantial and adverse.
Methodology
Risks. The
Index Provider relies on various sources of information to assess the criteria
of issuers included in the Underlying Index, including information that may be
based on assumptions and estimates. Neither the Fund nor the Index Provider can
offer assurances that the Underlying Index’s calculation methodology or sources
of information will provide an accurate assessment of included issuers or that
the included issuers will provide the Fund with the market exposure it
seeks.
Epidemic
Risk.
Widespread disease, including pandemics and epidemics have been and can be
highly disruptive to economies and markets, adversely impacting individual
companies, sectors, industries, markets, currencies, interest and inflation
rates, credit ratings, investor sentiment, and other factors affecting the value
of the Funds’ investments. Given the increasing interdependence among global
economies and markets, conditions in one country, market, or region are
increasingly likely to adversely affect markets, issuers, and/or foreign
exchange rates in other countries, including the United States. These
disruptions could prevent the Funds from executing advantageous investment
decisions in a timely manner and negatively impact the Funds’ ability to achieve
their investment objectives. Any such event(s) could have a significant adverse
impact on the value and risk profile of the
Funds.
Performance
Information
The accompanying
bar chart and table provide some indication of the risks of investing in the
Fund. The bar chart shows changes in the Fund’s annual total
returns from year to year. Following the bar chart is the Fund’s highest and
lowest quarterly returns during the periods shown in the bar chart. The table
illustrates how the Fund’s average annual returns for the 1-year, 5-year and
since inception periods compare with those of a broad measure of market
performance and the Underlying Index. On March 20, 2017, the assets of the
Tortoise North American Pipeline Fund, a series of Montage Managers Trust (the
“Predecessor Fund”), which had the same portfolio manager as the Fund and had
identical investment strategies as the Fund, were transferred to the Fund in a
tax-free reorganization. Performance shown for periods prior to March 20, 2017
represent the performance of the Predecessor Fund. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information for the Fund is
available on the Fund’s website at https://etp.tortoiseecofin.com/funds/tortoise-north-american-pipeline-fund/
or by calling 844-TR-INDEX
(844-874-6339).
Calendar Year Total Returns as of December
31
|
|
|
|
| |
Best
Quarter |
Worst
Quarter |
Q2 2020
23.01% |
Q1 2020
-40.54% |
|
|
|
|
|
|
|
|
|
|
| |
Average Annual Total Returns for the
periods ended December 31, 2022 |
| One
Year |
Five
Years |
Since
Inception
(June 29,
2015) |
|
|
| |
Return Before
Taxes |
16.12% |
6.33% |
4.56% |
Return After Taxes on
Distributions |
15.50% |
5.69% |
3.84% |
Return After Taxes on Distributions and
Sale of Fund Shares |
9.94% |
4.79% |
3.36% |
S&P 500 Total Return Index
(reflects no deduction for
fees, expenses or taxes) |
-18.11% |
9.42% |
10.73% |
Tortoise
North American Pipeline IndexSM
(reflects no deduction for fees, expenses or
taxes |
16.91% |
6.87% |
5.13% |
After tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on your situation and may differ from those shown. Furthermore, the
after-tax returns shown are not relevant to those investors who hold their
shares through tax-advantaged arrangements such as 401(k) plans or individual
retirement accounts (“IRAs”).
Investment
Adviser and Sub-Adviser
TIS
Advisors (the “Adviser”) serves as the investment adviser to the Fund. Vident
Investment Advisory, LLC serves as sub-adviser to the Fund. The Adviser also
serves as Index Provider to the Fund.
Portfolio
Managers
The
Fund is managed by the sub-adviser’s portfolio management team. The individual
members of the team jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio are described below.
Austin
Wen, Portfolio Manager, CFA, of VIA, has served as a portfolio manager for the
Fund since March 2020.
Rafael
Zayas, Portfolio Manager, CFA, of VIA, has served as a portfolio manager for the
Fund since June 2020.
VIA
began sub-advising the fund in March 2020.
Purchase
and Sale of Fund Shares
The
Fund will issue (or redeem) shares to certain institutional investors (typically
market makers or other broker-dealers) only in blocks of shares known as
“Creation Units.” Creation Unit transactions are typically conducted in exchange
for the deposit or delivery of in-kind securities and/or cash constituting a
substantial replication, or a representation, of the securities included in the
relevant benchmark index. Individual shares may only be purchased and sold on a
national securities exchange through a broker-dealer. You can purchase and sell
individual shares of the Fund throughout the trading day like any publicly
traded security. The Fund’s shares are listed on the NYSE Arca, Inc. Exchange
(the “Exchange”). The price of the Fund’s shares is based on market price, and
because exchange-traded fund shares trade at market prices rather than NAV, the
Fund’s shares may trade at a price greater than NAV (premium) or less than NAV
(discount). Except
when aggregated in Creation Units, the Fund’s shares are not redeemable
securities.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase shares of the Fund (bid) and the lowest price a
seller is willing to accept for shares of the Fund (ask) when buying or selling
shares of the Fund in the secondary market (the “bid-ask spread”). Recent
information about the Fund, including its NAV, market price, premiums and
discounts, and bid-ask spreads is available on the Fund’s website at
https://etp.tortoiseecofin.com/funds/tortoise-north-american-pipeline-fund/.
Tax
Information
Distributions
made by the Fund may be taxable as ordinary income, or capital gains, unless you
are a tax-exempt organization or are investing through a tax-advantaged
arrangement, such as a 401(k) plan or individual retirement account. Any
withdrawals made from such tax-advantaged arrangement generally will be taxable
to you as ordinary income.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Adviser and its related companies may pay the
intermediary for the sale of shares and related services. These payments may
create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another
investment.
Ask your salesperson or visit your financial intermediary’s web site for more
information.
Index
Provider/Trademark License/Disclaimer
The
Adviser provides the Water Index and the Pipeline Index (together, the
“Underlying Indexes”) to the Funds. The Adviser created the rules-based
methodology of the Underlying Indexes.
The
Underlying Indexes are the exclusive property of the Adviser. The Adviser has
contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices
LLC) to calculate and maintain the Water Index and Pipeline Index.
The
Water Index and Pipeline Index are not sponsored by S&P Dow Jones Indices
LLC or its affiliates or its third-party licensors, including Standard &
Poor's Financial Services LLC and Dow Jones Trademark Holdings LLC
(collectively, “S&P
Dow Jones Indices”).
S&P Dow Jones Indices will not be liable for any errors or omissions in
calculating the Water Index or Pipeline Index. “Calculated by S&P Dow Jones
Indices” and the related stylized mark(s) are service marks of S&P Dow Jones
Indices and have been licensed for use by the Adviser and its affiliates.
S&P® is a registered trademark of Standard & Poor’s Financial Services
LLC, and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings
LLC.
The
Funds based on the Water Index or Pipeline Index are not sponsored, endorsed,
sold or promoted by S&P Dow Jones Indices. S&P Dow Jones Indices does
not make any representation or warranty, express or implied, to the owners of
the Fund or any member of the public regarding the advisability of investing in
securities generally or in the Water Fund and Pipeline Fund particularly or the
ability of the Water Index or Pipeline Index to track general market
performance. S&P Dow Jones Indices’ only relationship to the Adviser with
respect to the Water Index and Pipeline Index is the licensing of certain
trademarks, service marks and trade names of S&P Dow Jones Indices and the
provision of the calculation services related to the Water Index or Pipeline
Index. S&P Dow Jones Indices is not responsible for and has not participated
in the determination of the prices and amount of the Funds or the timing of the
issuance or sale of the Funds or in the determination or calculation of the
equation by which the Funds may be converted into cash or other redemption
mechanics. S&P Dow Jones Indices has no obligation or liability in
connection with the administration, marketing or trading of the Fund. S&P
Dow Jones Indices LLC is not an investment advisor. Inclusion of a security
within the Water Index or Pipeline Index is not a recommendation by S&P Dow
Jones Indices to buy, sell, or hold such security, nor is it investment
advice.
S&P
DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR
THE COMPLETENESS OF THE WATER INDEX OR PIPELINE INDEX OR ANY DATA RELATED
THERETO OR ANY COMMUNICATION WITH RESPECT THERETO, INCLUDING ORAL, WRITTEN OR
ELECTRONIC COMMUNICATIONS. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY
DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW
JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS
ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR
AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF THE FUND, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE WATER INDEX OR PIPELINE INDEX OR
WITH
RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN
NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT,
SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT
LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY
HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT,
STRICT LIABILITY, OR OTHERWISE.
Additional
Fund Information
Investment
Objective
The
Water Fund seeks investment results that correspond (before fees and expenses)
generally to the price and distribution rate (total return) performance of the
Water Index. The Pipeline Fund seeks investment results that correspond (before
fees and expenses) generally to the price and distribution rate (total return)
performance of the Pipeline Index. The Funds may change their investment
objectives and Underlying Indexes without shareholder approval. The Funds’ other
investment strategies and policies may be changed from time to time without
shareholder approval, unless specifically stated otherwise in this Prospectus or
the SAI.
Additional
Information About the Principal Investment Strategies
Each
Fund will normally invest at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in the types of securities suggested by its
name (i.e.,
Water
Companies or North American Pipeline Companies). If a Fund changes this 80%
policy, it will provide Fund shareholders with 60 days’ notice in advance of
such change. Each Fund anticipates meeting this 80% policy because, under normal
circumstances, at least 80% of the Fund’s total assets will be invested in
component securities of its Underlying Index.
Each
Fund, using an “indexing” investment approach, seeks to track the investment
results, before fees and expenses, of its Underlying Index. A number of factors
may affect a Fund’s ability to achieve a high correlation with its Underlying
Index, including Fund expenses, differences between the securities held in the
Fund’s portfolio and those included in the Underlying Index, the timing or
magnitude of changes to the composition of its Underlying Index, regulatory
policies, and high portfolio turnover rate. There can be no guarantee that the
Funds will achieve a high degree of correlation with the Underlying
Indexes.
The
Adviser or Sub-Adviser may sell securities that are represented in the
Underlying Indexes or purchase securities not yet represented in the Underlying
Indexes, in anticipation of their removal from or addition to the Underlying
Indexes. Each Fund seeks to achieve a correlation between its performance,
before fees and expenses, and its Underlying Index of 0.95 or better. A
correlation of 1.00 would represent perfect correlation. The Funds seeks to
replicate the component securities of their Underlying Indexes as closely as
possible. However, under certain circumstances, it may not be possible or
practicable to replicate the Underlying Indexes. In these instances, the Funds
may purchase a representative sample of the component securities of the
Underlying Indexes. There may also be instances in which the Adviser or
Sub-Adviser may choose to overweight or underweight securities represented in
the Underlying Indexes. Additionally, the Adviser or Sub-Adviser may purchase or
sell securities not in the Underlying Indexes if the Adviser or Sub-Adviser
believe such securities are appropriate to substitute for certain securities in
a Fund’s Underlying Index. The Adviser or Sub-Adviser may utilize various
combinations
of other available investment techniques in seeking to track the Underlying
Indexes.
As
a result of its investments, each Fund’s distributions for any taxable year may
exceed its earnings and profits, as determined for U.S. federal income tax
purposes. For a given taxable year, fund distributions, if any, that exceed
earnings and profits may be treated as a return of capital to
shareholders.
Additional
Principal Risk Information
The
following section provides additional information regarding certain of the
principal risks identified under “Principal Risks” in the Funds’ summary along
with additional risk information.
General
Market Risk (All Funds). The
Funds are subject to all of the business risks and uncertainties associated with
any business, including the risk that it will not achieve its investment
objective and that the value of an investment in its securities could decline
substantially and cause you to lose some or all of your investment. U.S. and
international markets have, and may continue to, experience volatility, which
may increase risks associated with an investment in the Funds. Certain social,
political, economic, environmental and other conditions and events (such as
natural disasters and weather-related phenomena generally, epidemics and
pandemics, terrorism, conflicts and social unrest) may adversely interrupt the
global economy and result in prolonged periods of significant market volatility.
Changes in the value of the Funds’ portfolio securities may be rapid or
unpredictable and cause the NAV of the Funds and its investment return to
fluctuate. These fluctuations may cause a security to be worth less than the
price originally paid for it, or less than it was worth at an earlier time.
Market risk may affect a single issuer, industry, sector of the economy or the
market as a whole. The market value of securities in which the Funds invest is
based upon the market’s perception of value and is not necessarily an objective
measure of the securities’ value. In some cases, for example, the stock prices
of individual companies have been negatively impacted even though there may be
little or no apparent degradation in the financial condition or prospects of the
issuers.
Water
Industry Risk (Water Fund). Any
adverse developments in the water infrastructure and equipment/services industry
may significantly affect the value of the shares of the Water Fund. Water
Companies are subject to environmental considerations, taxes, government
regulation, price and supply fluctuations, competition, and water conservation
influences.
Water
Companies may be significantly affected by events relating to international,
political and economic developments, water conservation, the success of
exploration projects, commodity prices, tax and other government regulations.
There are substantial differences between the water-related, environmental and
other regulatory practices and policies in various jurisdictions, and any given
regulatory agency may make major shifts in policy from time to time. Other
economic and market developments that may significantly affect companies in the
water-related resource sector include, without limitation, inflation, rising
interest rates, raw material costs and other operating costs, and competition
from new entrants into the sector.
Water
Companies are susceptible to changes in investment in water purification
technology globally, and a slackening in the pace of new infrastructure projects
in developing or developed countries may constrain such companies’ ability to
grow in global markets. Other reductions in
demand
for clean water, such as increased availability of potable water in arid
regions, may reduce demand for certain products and services provided by Water
Companies.
Depository
Receipt Risk (All Funds). Investing
in Depository Receipts may be subject to certain risks associated with direct
investments in the securities of foreign companies, such as currency, political,
economic and market risks. Depository Receipts may be less liquid than the
underlying shares in the primary trading market. Depository Receipts may not
track the price of their underlying foreign securities on which they are based,
may have limited voting rights, and may have a distribution subject to a fee
charged by the depository. As a result, equity shares of the underlying issuer
may trade at a discount or premium to the market price of the depository
receipts.
Concentration
Risk (All Funds). Because
the Water Fund’s assets will be concentrated in the water industry and the
Pipeline Fund’s assets will be concentrated in energy pipeline industry, the
Funds are subject to loss due to adverse occurrences that may affect those
industries. Each Fund’s strategy of focusing on a specific industry means that
the performance of the Fund will be closely tied to the performance of that
industry. The Funds’ focus in these investments may present more risk than if it
were broadly diversified over numerous industries and sectors of the economy. A
downturn in these investments would have a greater impact on the Funds than on a
fund that does not focus in such investments. At times, the performance of these
investments may lag the performance of other industries or the market as a
whole. An inherent risk associated with a concentrated investment focus is that
the Funds may be adversely affected if a small number of its investments perform
poorly.
Equity
Securities Risk (All Funds). Equity
securities can be affected by macroeconomic and other factors affecting the
stock market in general, expectations about changes in interest rates, investor
sentiment towards equities, changes in a particular issuer’s or industry’s
financial condition, or unfavorable or unanticipated poor performance of a
particular issuer or industry. Prices of equity securities of individual
entities also can be affected by fundamentals unique to the company or
partnership, including earnings power and coverage ratios. An adverse event,
such as an unfavorable earnings report, may depress the value of a particular
common stock held by the Funds. In addition, prices of common stocks are
sensitive to general movements in the stock market and a drop in the stock
market may depress the price of common stocks to which the Funds have exposure.
Common stock prices may fluctuate for several reasons including changes in
investors’ perceptions of the financial condition of an issuer or the general
condition of the relevant stock market, or the occurrence of political or
economic events that affect the issuers. In addition, common stock prices may be
particularly sensitive to rising interest rates, which increases borrowing costs
and the costs of capital. Any of the foregoing risks could substantially impact
the ability of such an entity to grow its dividends or distributions.
MLP
Risk (Pipeline Fund). MLPs
are subject to many risks, including those that differ from the risks involved
in an investment in the common stock of a corporation. Holders of MLP units have
limited control and voting rights on matters affecting the partnership. Holders
of units issued by an MLP are exposed to a remote possibility of liability for
all of the obligations of that MLP in the event that a court determines that the
rights of the holders of MLP units to vote to remove or replace the general
partner of that MLP, to approve amendments to that MLP’s partnership agreement,
or to take other action under the partnership agreement of that MLP would
constitute “control” of the business of that MLP, or a court or governmental
agency determines that the MLP is conducting business in a state without
complying with the
partnership
statute of that state. Holders of MLP units are also exposed to the risk that
they will be required to repay amounts to the MLP that are wrongfully
distributed to them. Furthermore, MLP interests may not be as liquid as other
more commonly traded equity securities.
The
Pipeline Fund’s investment strategies depend in part on MLPs generally being
treated as partnerships for U.S. federal income tax purposes. Partnerships do
not pay U.S. federal income tax at the partnership level. Rather, each partner
is allocated a share of the partnership’s income, gains, losses, deductions and
expenses, and takes that share into account in calculating its own U.S. federal
income tax liability. A change in current tax law, or a change in the business
of a given MLP, could result in an MLP being treated as a corporation for U.S.
federal income tax purposes. As a result, the amount of cash available for
distribution by the MLP could be reduced and the after-tax return to the
Pipeline Fund with respect to its investment in such MLPs could be materially
reduced. If any of the MLPs owned by the Pipeline Fund were treated as
corporations for U.S. federal income tax purposes, it could result in a
reduction in the value of your investment in the Fund and lower distributions.
An
MLP’s distributions to the Pipeline Fund generally will not be taxable unless
the cash amount distributed exceeds the Pipeline Fund’s basis in its interest in
the MLP. Distributions received by the Pipeline Fund from an MLP will reduce the
Pipeline Fund’s adjusted basis in its interest in the MLP, but not below zero.
Cash distributions in excess of the Pipeline Fund’s basis in the MLP will
generally be taxable to the Pipeline Fund as capital gains. A reduced basis will
generally result in an increase in the amount of gain (or decrease in the amount
of loss) that will be recognized by the Pipeline Fund for tax purposes on the
sale of its interest in the MLP. The Pipeline Fund expects to receive cash
distributions each year from certain MLPs that exceed the net taxable income
allocated to the Pipeline Fund from such MLPs for such year, and, as a result,
the Pipeline Fund may recognize larger taxable gains (or smaller losses) with
respect to such MLPs when it disposes of its interests in such MLPs. If you hold
shares in the Pipeline Fund when such gains or losses are recognized, you may be
required to pay tax on one or more Pipeline Fund distributions, potentially at
ordinary income tax rates, even though you may not have economically benefited
from the associated MLP cash distributions.
The
Pipeline Fund will report distributions made to shareholders annually on Form
1099. If an MLP in which the Pipeline Fund invests amends its partnership tax
return, the Pipeline Fund will, when necessary, send you a corrected Form 1099,
which could, in turn, require you to amend your federal, state or local tax
returns.
MLP
Affiliate Risk (Pipeline Fund). The
performance of securities issued by MLP Affiliates, including common shares of
corporations that own general partner interests primarily depend on the
performance of an MLP. As such, results of operations, financial condition, cash
flows and distributions for MLP Affiliates primarily depend on an MLP’s results
of operations, financial condition and cash flows. The risks and uncertainties
that affect the MLP, its results of operations, financial condition, cash flows
and distributions also affect the value of securities held by the MLP
Affiliates.
Non-U.S.
Securities Risk (All Funds). Investments
in securities of non-U.S. issuers involve risks not ordinarily associated with
investments in securities and instruments of U.S. issuers. For example, non-U.S.
companies are not generally subject to uniform accounting, auditing and
financial standards and requirements comparable to those applicable to U.S.
companies. Non-U.S. securities exchanges, brokers and companies may be subject
to less government
supervision
and regulation than exists in the U.S. Dividend and interest income may be
subject to withholding and other non-U.S. taxes, which may adversely affect the
net return on such investments. There may be difficulty in obtaining or
enforcing a court judgment abroad. In addition, it may be difficult to effect
repatriation of capital invested in certain countries. In addition, with respect
to certain countries, there are risks of expropriation, confiscatory taxation,
political or social instability or diplomatic developments that could affect the
Funds’ assets held in non-U.S. countries. There may be less publicly available
information about a non-U.S. company than there is regarding a U.S. company.
Non-U.S. securities markets may have substantially less volume than U.S.
securities markets and some non-U.S. company securities are less liquid than
securities of otherwise comparable U.S. companies. Non-U.S. markets also have
different clearance and settlement procedures that could cause the Funds to
encounter difficulties in purchasing and selling securities on such markets and
may result in the Funds missing attractive investment opportunities or
experiencing a loss. In addition, a portfolio that includes securities issued by
non-U.S. issuers can expect to have a higher expense ratio because of the
increased transaction costs in non-U.S. markets and the increased costs of
maintaining the custody of such non-U.S. securities. When investing in
securities issued by non-U.S. issuers, there is also the risk that the value of
such an investment, measured in U.S. dollars, will decrease because of
unfavorable changes in currency exchange rates. The Funds may, but do not
currently intend to, hedge their exposure to non-U.S. currencies.
Canadian
Securities Risk (Pipeline Fund).
The Canadian economy may be significantly affected by the U.S. economy because
the U.S. is Canada’s largest trading partner and foreign investor. Canada’s
largest exports are its natural resources, so the Canadian economy is dependent
on the demand for, and supply and price of, natural resources, and any market
developments that reduce the price of such goods could disproportionately affect
the Canadian economy.
Mid-Cap
and Small-Cap Companies Risk (All Funds). The
Funds may invest in mid-cap and small-cap companies that may not have the
management experience, financial resources, product diversification and
competitive strengths of large-cap companies. Therefore, their securities may be
more volatile and less liquid than the securities of larger, more established
companies. Mid-cap and small-cap company stocks may also be bought and sold less
often and in smaller amounts than larger company stocks. Because of this, if the
Adviser or Sub-Adviser need to sell a large quantity of a mid-cap or small-cap
company stock, in accordance with the Underlying Index methodology, it may have
to sell at a lower price than it might prefer, or it may have to sell in smaller
than desired quantities over a period of time. Analysts and other investors may
follow these companies less actively and therefore information about these
companies may not be as readily available as that for large-cap companies.
Large-Cap
Company Risk (Pipeline Fund). The
Fund’s investments in larger, more established companies are subject to the risk
that larger companies are sometimes unable to attain the high growth rates of
successful, smaller companies, especially during extended periods of economic
expansion. Larger, more established companies may be unable to respond quickly
to new competitive challenges such as changes in consumer tastes or innovative
smaller competitors potentially resulting in lower markets for their common
stock.
ESG
Risk (Water Fund).
The Index Committee's interpretation of positive ESG characteristics may differ
from that of other market participants. Applying ESG and sustainability criteria
to the investment process may exclude securities of certain issuers for
non-investment reasons and therefore the Water Fund may forgo some market
opportunities available to funds that do not
use
ESG or sustainability criteria. Securities of companies with ESG practices may
shift into and out of favor depending on market and economic conditions, and the
Fund's performance may at times be better or worse than the performance of funds
that do not use ESG or sustainability criteria. Additionally, the Index Provider
may be unsuccessful in creating an index consisting of companies that satisfy
its desired ESG thresholds. The failure to produce such an index could be the
result of several factors including, but not limited to, the Index Provider’s
inability to receive timely and accurate data from independent third-party ESG
research providers.
Increasing
Scrutiny of ESG Matters Risk (Water Fund).
The Adviser and its affiliates are subject to increasing scrutiny from
regulators, elected officials, investors and other stakeholders with respect to
ESG matters, which may adversely impact the ability of the Fund to raise capital
from certain investors, constrain capital deployment opportunities for the Fund
and harm the Adviser’s brand and reputation. In recent years, certain investors,
including public pension funds, have placed increasing importance on the impacts
of investments made by funds to which they commit capital, including with
respect to climate change, among other aspects of ESG. Conversely, certain
investors have raised concerns as to whether the incorporation of ESG factors in
the investment and portfolio management process may be inconsistent with the
fiduciary duty to maximize return for investors.
Certain
investors have demonstrated increased concern with respect to asset managers
taking certain actions that could adversely impact the value of, or, refraining
from taking certain actions that could improve the value of, an existing or
potential investment. At times, investors, including public pension funds, have
limited participation in certain investment opportunities, such as hydrocarbons,
and/or conditioned future capital commitments to certain funds on the basis of
such factors. Other investors have voiced concern with respect to asset
managers’ policies that may result in such managers subordinating the interests
of investors based solely or in part on ESG considerations. The Adviser and its
affiliates may be subject to competing demands from different investors and
other stakeholder groups with divergent views on ESG matters, including the role
of ESG in the investment process. Investors may decide to not invest in the Fund
based on their assessment of how the Adviser approaches and considers the ESG
cost of investments and whether the return-driven objective of the Fund aligns
with such ESG considerations. This divergence increases the risk that any action
or lack thereof with respect to ESG matters will be perceived negatively by at
least some potential stakeholders and adversely impact the reputation of the
Adviser and its affiliates. If the Adviser and its affiliates do not
successfully manage ESG-related expectations across the varied interests of its
stakeholders, including existing or potential investors, the Fund’s ability to
access and deploy capital may be adversely impacted. In addition, a failure to
successfully manage ESG-related expectations may negatively impact the Adviser’s
business, erode stakeholder trust and constrain the Fund’s investment
opportunities.
As
part of their increased focus on the allocation of their capital to
environmentally sustainable economic activities, certain investors also have
begun to request or require data from their asset managers and/or use
third-party benchmarks and ESG ratings to allow them to monitor the ESG impact
of their investments. In addition, regulatory initiatives to require investors
to make disclosures to their stakeholders regarding ESG matters are becoming
increasingly common, which may further increase the number and type of investors
who place importance on these issues.
Anti-ESG
sentiment has gained momentum across the United States, with several states
having enacted or proposed “anti-ESG” policies, legislation or issued related
legal opinions. For example, (i) boycott bills in certain states target
financial institutions that are perceived as “boycotting” or “discriminating
against” companies in certain industries (e.g., energy and mining) and prohibit
state entities from doing business with such institutions and/or investing the
state’s assets (including pension plan assets) through such institutions, and
(ii) ESG investment prohibitions in certain states require that relevant state
entities or managers/administrators of state investments make investments based
solely on pecuniary factors without consideration of ESG factors. If investors
subject to such legislation viewed the Fund’s or Adviser’s ESG considerations as
being in contradiction of such “anti-ESG” policies, legislation or legal
opinions, such investors may not invest in the Fund and the Adviser’s ability to
maintain the size of the Fund could be impaired.
Liquidity
Risk (All Funds). The
Funds may invest in securities of any market capitalization and may be exposed
to liquidity risk when trading volume, lack of a market maker, or legal
restrictions impair the Funds’ ability to sell particular securities at an
advantageous price or a timely manner. In the event certain securities
experience limited trading volumes, the prices of such securities may display
abrupt or erratic movements at times. In addition, it may be more difficult for
the Funds to buy and sell significant amounts of such securities without an
unfavorable impact on prevailing market prices.
Passive
Investment Risk (All Funds).
The Funds are not actively managed. Therefore, unless a specific security is
removed from the Funds’ Underlying Index, or the selling of shares of that
security is otherwise required upon a rebalancing of the Underlying Index as
addressed in the Underlying Index methodology, the Funds generally will not sell
a security because the security’s issuer was in financial trouble. If a specific
security is removed from the Funds’ Underlying Index, the Funds may be forced to
sell such security at an inopportune time or for a price discount to the
security’s current market value. The Funds anticipates that the value of its
shares will decline, more or less, in correspondence with any decline in value
of its Underlying Index. The Funds’ Underlying Index may not contain the
appropriate mix of securities for any particular point in the business cycle of
the overall economy, particular economic sectors, or narrow industries within
which the commercial activities of the companies comprising the portfolio
securities holdings of the Funds are conducted, and the timing of movements from
one type of security to another in seeking to replicate the Underlying Index
could have a negative effect on the Funds. Unlike the manager of an actively
managed fund, the Adviser and Sub-Adviser do not use techniques or defensive
strategies designed to lessen the effects of market volatility or to reduce the
impact of periods of market decline. This means that, based on market and
economic conditions, the Funds’ performance could be lower than other types of
funds that may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline.
Tracking
Error Risk (All Funds). There
is no guarantee that the Funds will achieve a high degree of correlation to the
Underlying Index and therefore achieve its investment objective. The Funds’
return may not match the return of its Underlying Index for a number of reasons.
For example, the Funds incurs a number of fees and operating expenses not
applicable to the Underlying Index and incurs costs associated with buying and
selling securities, especially when rebalancing the Funds’ securities holdings
to reflect changes in the composition of the Underlying Index and if it needs to
raise cash to meet redemptions or deploy cash in connection with newly created
Creation Units. Imperfect correlation between the Funds’ portfolio securities
and
those in the Underlying Index, changes to the Index and regulatory requirements
may cause tracking error, the divergence of the Funds’ performance from that of
its Underlying Index. This risk may be heightened during times of increased
market volatility or other unusual market conditions. In addition, the Funds may
not be able to invest in certain securities and other instruments included in
the Underlying Index, or invest in them in the exact proportions represented in
the Underlying Index. To the extent the Funds uses a representative sampling
approach, the Funds may not be as well-correlated with the return of the
Underlying Index as would be the case if the Funds purchased all the securities
in the Underlying Index in the proportions represented in the Underlying Index.
Moreover, the Funds may be delayed in purchasing or selling securities and other
instruments included in the Underlying Index. To the extent the Funds calculates
its NAV based on fair value prices, the Funds’ ability to track the Underlying
Index may be adversely affected.
Derivatives
Risk (Pipeline Fund).
Derivatives are financial contracts whose value depend on, or are derived from,
the value of an underlying asset, reference rate, or index. The use of
derivative instruments involves risks different from, or possibly greater than,
the risks associated with investing directly in securities and other traditional
investments. Certain derivative instruments can lose more than the principal
amount invested. Derivatives may involve significant risks.
Derivatives
could result in Fund losses if the underlying references do not perform as
anticipated. Use of derivatives is a highly specialized activity that can
involve investment techniques, risks, and tax planning different from those
associated with more traditional investment instruments. The Fund’s derivatives
strategy may not be successful and use of certain derivatives could result in
substantial, potentially unlimited, losses to the Fund regardless of the Fund’s
actual investment. A relatively small movement in the price, rate or other
economic indicator associated with the underlying reference may result in
substantial loss for the Fund. Derivatives may be more volatile than other types
of investments.
Derivatives
can increase the Fund’s risk exposure to underlying references and their
attendant risks, including the risk of an adverse credit event associated with
the underlying reference (credit risk), the risk of adverse movement in the
value, price or rate of the underlying reference (market risk), the risk of
adverse movement in the value of underlying currencies (foreign currency risk)
and the risk of adverse movement in underlying interest rates (interest rate
risk). Derivatives may expose the Fund to additional risks, including the risk
of loss due to a derivative position that is imperfectly correlated with the
underlying reference it is intended to hedge or replicate (correlation risk),
the risk that a counterparty will fail to perform as agreed (counterparty risk),
the risk that a hedging strategy may fail to mitigate losses, and may offset
gains (hedging risk), the risk that losses may be greater than the amount
invested (leverage risk), the risk that the Fund may be unable to sell an
investment at an advantageous time or price (liquidity risk), the risk that the
investment may be difficult to value (pricing risk), and the risk that the price
or value of the investment fluctuates significantly over short periods of time
(volatility risk).
The
market for many derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for derivatives.
The
value of derivatives may also be influenced by a variety of other factors,
including national and international political and economic developments.
Potential changes to the regulation of the derivatives markets may make
derivatives more costly, may limit the market for derivatives, or may otherwise
adversely affect the value or performance of derivatives.
Derivatives
may be purchased on established exchanges or through privately negotiated
transactions referred to as over-the-counter (“OTC”) derivatives.
Exchange-traded
derivatives generally are guaranteed by the clearing agency that is the issuer
or counterparty to such derivatives.
Each
party to an OTC derivative bears the risk that the counterparty will default.
OTC derivatives are less liquid than exchange-traded derivatives since the other
party to the transaction may be the only investor with sufficient understanding
of the derivative to be interested in bidding for it.
Certain
standardized swaps must be transacted through a futures commission merchant
(FCM) and cleared through a clearinghouse that serves as a central counterparty
(cleared swaps).
Other
swaps may be negotiated bilaterally and traded OTC between two parties
(uncleared swaps).
Central
clearing is intended to reduce counterparty credit risk and increase liquidity,
but central clearing does not eliminate these risks and may involve additional
costs and risks not involved with uncleared swaps.
In
addition, changes in government regulation of derivatives could affect the
character, timing and amount of the Fund’s taxable income or gains.
The
Fund’s use of derivatives may be limited by the requirements for taxation of the
Fund as a RIC.
In
October 2020, the SEC adopted Rule 18f-4 under the 1940 Act, which became
effective on August 19, 2022. Funds that are subject to the rule are required to
adopt and implement a written derivatives risk management program and
quantitatively limit their use of derivatives based on the estimated potential
risk of loss that the funds incur from their derivatives transactions. Funds
that limit derivatives exposure to 10% of net assets are exempt from many of the
requirements of Rule 18f-4, but must still adopt and implement policies and
procedures reasonably designed to manage the fund’s derivatives risks. Rule
18f-4 governs the way funds must comply with the asset segregation and coverage
requirements of Section 18 of the 1940 Act with respect to derivatives and
certain other financing transactions.
Non-Diversification
Risk (All Funds).
The Water Fund and Pipeline Fund are each classified as “non-diversified,” which
means the Fund may invest a larger percentage of its assets in the securities of
a smaller number of issuers than a diversified fund. Investments in securities
of a limited number of issuers exposes the Fund to greater market risk and
potential losses than if its assets were diversified among the securities of a
greater number of issuers.
Absence
of Active Trading Market Risk (All Funds).
Although shares of the Funds are listed for trading on one or more stock
exchanges, there can be no assurance that an active trading market for such
shares will develop or be maintained. There can be no assurance that the
requirements necessary to maintain the listing or trading of Fund shares will
continue to be met or will remain unchanged.
Shares
of the Funds May Trade at Prices Other Than NAV (All Funds).
Shares of the Funds may trade at, above or below their NAV. The NAV of the Funds
will fluctuate with changes in the market value of the Funds’ holdings. The
trading prices of shares will fluctuate in accordance with changes in the Funds’
NAV as well as market supply and demand. Price differences may be due, in large
part, to the fact that supply and demand forces at work in the secondary trading
market for shares will be closely related to, but not identical to, the same
forces influencing the prices of the securities of the Underlying Index trading
individually or in the aggregate at any
point
in time. The market prices of Fund shares may deviate significantly from the NAV
of the shares during periods of market volatility or when there is a lack of an
active trading market for shares of the Funds. While the creation/redemption
feature is designed to make it likely that shares of the Funds normally will
trade close to the Funds’ NAV, disruptions to creations and redemptions may
result in trading prices that differ significantly from NAV. Investors
purchasing and selling shares in the secondary market may not experience
investment results consistent with those experienced by those creating and
redeeming directly with the Funds. If a shareholder purchases shares when the
market price is at a premium to the NAV or sells shares when the market price is
at a discount to the NAV, the shareholder may sustain losses.
Trading
Risks (All Funds).
The Funds face numerous trading risks, including disruption in the
creation/redemption process of the Funds and losses from trading in the
secondary markets. Secondary market trading in Fund shares may be halted by a
stock exchange because of market conditions or other reasons. In addition,
trading in Fund shares on a stock exchange or in any market may be subject to
trading halts caused by extraordinary market volatility pursuant to “circuit
breaker” rules on the exchange or market. Additionally, 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 Funds being unable to buy or sell certain securities or financial
instruments. In such circumstances, the Funds may be unable to rebalance its
portfolio, may be unable to accurately price its investments and/or may incur
substantial trading losses. During a “flash crash,” the market prices of the
Funds’ shares may decline suddenly and significantly. Such a decline may not
reflect the performance of the portfolio securities held by the Funds. Flash
crashes may cause market makers in the Funds’ shares to limit or cease trading
in the Funds’ shares for temporary or longer periods. Shareholders could suffer
significant losses to the extent that they sell shares at these temporarily low
market prices.
Legal
and Regulatory Change Risks (All Funds). The
regulatory environment for investment companies is evolving, and changes in
regulation may adversely affect the value of a Fund’s investments and its
ability to pursue its trading strategy. In addition, the securities markets are
subject to comprehensive statutes and regulations. The SEC, Commodity Futures
Trading Commission, other regulators and self-regulatory organizations and
exchanges are authorized to take extraordinary actions in the event of market
emergencies. The effect of any future regulatory change on the Funds could be
substantial and adverse.
Epidemic
Risk (All Funds).
Widespread disease, including pandemics and epidemics have been and can be
highly disruptive to economies and markets, adversely impacting individual
companies, sectors, industries, markets, currencies, interest and inflation
rates, credit ratings, investor sentiment, and other factors affecting the value
of the Funds’ investments. Given the increasing interdependence among global
economies and markets, conditions in one country, market, or region are
increasingly likely to adversely affect markets, issuers, and/or foreign
exchange rates in other countries, including the United States. These
disruptions could prevent the Funds from executing advantageous investment
decisions in a timely manner and negatively impact the Funds’ ability to achieve
their investment objectives. Any such event(s) could have a significant adverse
impact on the value and risk profile of the Funds.
Risks
Related to Investing in the Energy Pipeline Industry (Pipeline
Fund)
Risks
associated with investing in securities issued by companies in the energy
pipeline industry, include:
Pipeline
Company Risk. Pipeline
Companies are subject to many risks, including varying demand for crude oil,
natural gas, natural gas liquids or refined products in the markets served by
the pipeline; changes in the availability of products for gathering,
transportation, storing, processing or sale due to natural declines in reserves
and production in the supply areas serviced by the companies’ facilities; sharp
decreases in crude oil or natural gas prices that cause producers to curtail
production or reduce capital spending for exploration activities; and
environmental regulation. Demand for gasoline, which accounts for a substantial
portion of refined product transportation, depends on price, prevailing economic
conditions in the markets served, and demographic and seasonal factors.
Gathering and processing pipeline companies are subject to many risks, including
declines in production of crude oil and natural gas fields which utilize their
gathering and processing facilities as a way to market the crude oil and gas,
prolonged depression in the price of natural gas or crude oil, which curtails
production due to lack of drilling activity, and declines in the prices of
natural gas liquids and refined petroleum products resulting in lower processing
or refining margins. In addition, the development of, demand for, and/or supply
of competing forms of energy may negatively impact the revenues of these
companies.
Capital
Markets Risk. Global
financial markets and economic conditions have been, and may continue to be,
volatile due to a variety of factors, including significant write-offs in the
financial services sector. In volatile times, the cost of raising capital in the
debt and equity capital markets, and the ability to raise capital, may be
impacted. In particular, concerns about the general stability of financial
markets and specifically the solvency of lending counterparties, may impact the
cost of raising capital from the credit markets through increased interest
rates, tighter lending standards, difficulties in refinancing debt on existing
terms or at all and reduced, or in some cases ceasing to provide, funding to
borrowers. In addition, lending counterparties under existing revolving credit
facilities and other debt instruments may be unwilling or unable to meet their
funding obligations. As a result of any of the foregoing, energy pipeline
companies may be unable to obtain new debt or equity financing on acceptable
terms. If funding is not available when needed, or is available only on
unfavorable terms, energy companies may not be able to meet obligations as they
come due.
Moreover,
without adequate funding, energy pipeline companies may be unable to execute
their growth strategies, complete future acquisitions, take advantage of other
business opportunities or respond to competitive pressures, any of which could
have a material adverse effect on their revenues and results of operations.
Rising
interest rates could limit the capital appreciation of equity units of energy
pipeline companies as a result of the increased availability of alternative
investments at competitive yields. Rising interest rates may increase the cost
of capital for energy companies. A higher cost of capital or an inflationary
period may lead to inadequate funding, which could limit growth from acquisition
or expansion projects, the ability of such entities to make or grow dividends or
distributions or meet debt obligations, the ability to respond to competitive
pressures, all of which could adversely affect the prices of their securities.
Several
European Union (“EU”) countries have experienced, and may continue to
experience, sever economic and financial difficulties, including Greece,
Ireland, Italy, Spain, and Portugal, each of which began to face budget issues
in 2010. There is continued concern about national- level support for the euro
and the accompanying coordination of fiscal and wage policy among European
Economic and Monetary Union member countries. The EU currently faces major
issues involving its membership, structure, procedures and policies, including
the successful political, economic and social integration of new member states,
the EU's resettlement and distribution of refugees, and resolution of the EU's
problematic fiscal and democratic accountability. In addition, one or more
countries may abandon the euro, the common currency of the EU, and/or withdraw
from the EU. In 2020, the United Kingdom (UK) withdrew from the European Union
(known as “Brexit”). As a result of Brexit, the financial markets, the financial
markets experienced high levels of volatility and there is considerable
uncertainty as to the arrangements that will apply to the UK’s relationship with
the EU and other countries going forward. This prolonged uncertainty may affect
other countries in the EU and elsewhere. The exit by the UK or other member
states will likely result in increased uncertainty, volatility, illiquidity and
potentially lower economic growth in the affected markets.
In
addition, negotiations regarding the U.S. federal government debt ceiling and
resulting agreements could adversely affect the Fund. In 2011, S&P lowered
its long-term sovereign credit rating on the U.S. federal government debt to
“AA+” from “AAA.” Since then, the debt ceiling has been adjusted and suspended
multiple times. The effects of these or similar events in the future on the U.S.
economy and securities markets or on energy companies cannot be predicted.
Terrorism
Risk. Energy
pipeline companies, and the market for their securities, are subject to
disruption as a result of terrorist activities, such as the terrorist attacks on
the World Trade Center on September 11, 2001; war, such as the wars in
Afghanistan and Iraq and their aftermaths; and other geopolitical events,
including upheaval in the Middle East or other energy producing regions. The
U.S. government has issued warnings that energy assets, specifically those
related to pipeline infrastructure, production facilities, and transmission and
distribution facilities, might be specific targets of terrorist activity. Such
events have led, and in the future may lead, to short-term market volatility and
may have long-term effects on the energy pipeline industry and markets. Such
events may also adversely affect the Fund’s business and financial condition.
Natural
Disaster Risk. Natural
risks, such as earthquakes, flood, lighting, hurricane and wind, are inherent
risks in energy pipeline company operations. For example, extreme weather
patterns, such as Hurricane Ivan in 2004 and Hurricanes Katrina and Rita in
2005, or the threat thereof, could result in substantial damage to the
facilities of certain companies located in the affected areas and significant
volatility in the supply of energy and could adversely impact the prices of the
securities in which the Fund invests. This volatility may create fluctuations in
commodity prices and earnings of companies in the pipeline industry.
Climate
Change Regulation Risk. Climate
change regulation could result in increased operations and capital costs for the
companies in which the Fund invests. Voluntary initiatives and mandatory
controls have been adopted or are being discussed both in the United States and
worldwide to reduce emissions of “greenhouse gases” such as carbon dioxide, a
by-product of burning fossil fuels, which some scientists and policymakers
believe contribute to global climate change. These measures and future measures
could result in increased costs to certain
companies
in which the Fund invests to operate and maintain facilities and administer and
manage greenhouse gas emissions programs and may reduce demand for fuels that
generate greenhouse gases and that are managed or produced by companies in which
the Fund invests.
Operating
Risk. Energy
pipeline companies are subject to many risks, including: equipment failure
causing outages; structural, maintenance, impairment and safety problems;
transmission or transportation constraints, inoperability or inefficiencies;
dependence on a specified fuel source, including the transportation of fuel;
changes in electricity and fuel usage; availability of competitively priced
alternative energy sources; changes in generation efficiency and market heat
rates (the rates at which power plants can efficiently convert a fuel source
into heat and electricity); lack of sufficient capital to maintain facilities;
significant capital expenditures to keep older infrastructure assets operating
efficiently; seasonality; changes in supply and demand for energy commodities;
catastrophic and/or weather-related events such as fires, explosions, floods,
earthquakes, hurricanes and similar occurrences; storage, handling, disposal and
decommissioning costs; and environmental compliance costs. Breakdown or failure
of an energy pipeline company’s assets may prevent the company from performing
under applicable sales agreements, which in certain situations could result in
termination of the agreements or incurring a liability for liquidated damages. A
company’s ability to successfully and timely complete capital improvements to
existing infrastructure or other capital projects is contingent upon many
variables. Should any such efforts be unsuccessful, an energy pipeline company
could be subject to additional costs and/or the write-off of its investment in
the project or improvement. As a result of the above risks and other potential
hazards associated with the pipeline industry, certain companies may become
exposed to significant liabilities for which they may not have adequate
insurance coverage. Any of the aforementioned risks could have a material
adverse effect on the business, financial condition, results of operations and
cash flows of such companies.
Regulatory
Risk. Issuers
in the energy pipeline industry are subject to regulation by various
governmental authorities in various jurisdictions and may be adversely affected
by the imposition of special tariffs and changes in tax laws, regulatory
policies and accounting standards. Regulation exists in multiple aspects of
their operations, including how facilities are constructed, maintained and
operated, environmental and safety controls, and the prices they may charge for
the products and services they provide. Various governmental authorities have
the power to enforce compliance with these regulations and the permits issued
under them, and violators are subject to administrative, civil and criminal
penalties, including fines and injunctions. Stricter laws, regulations or
enforcement policies could be enacted in the future which may increase
compliance costs and may adversely affect the financial performance of energy
pipeline companies.
Tariff
rates charged for pipeline transportation services by energy pipeline companies
engaged in interstate pipeline transportation of natural gas, refined petroleum
products and other products are subject to regulation by the Federal Energy
Regulatory Commission (“FERC”). An adverse determination by the FERC with
respect to the tariff rates of an energy pipeline company could have a material
adverse effect on its business, financial condition, results of operations and
cash flows and its ability to make cash distributions to its equity owners.
Prices for certain electric power companies are regulated in the U.S. with the
intention of protecting the public while ensuring that the rate of return earned
by such companies is sufficient to attract growth capital and to provide
appropriate services. The rates assessed for these rate-regulated electric power
companies by state and local regulators are generally subject to cost-of-service
regulation
and annual earnings oversight. This regulatory treatment does not provide any
assurance as to achievement of earnings levels. Changes in laws or regulations
or changes in the application or interpretation of regulatory provisions in
jurisdictions where electric power companies operate, particularly utilities
where electricity tariffs are subject to regulatory review or approval, could
adversely affect their business. The Fund could become subject to FERC’s
jurisdiction if it is deemed to be a holding company of a public utility company
or of a holding company of a public utility company, and the Fund may be
required to aggregate securities held by the Fund or other funds and accounts
managed by the Adviser and its affiliates. Accordingly, the Fund may be
prohibited from buying securities of a public utility company or of a holding
company of any public utility company or may be forced to divest itself of such
securities because of other holdings by the Fund or other funds or accounts
managed by the Adviser and its affiliates.
Environmental
Risk. Energy
pipeline company activities are subject to stringent environmental laws and
regulation by many federal, state, local authorities, international treaties and
foreign governmental authorities. These regulations generally involve emissions
into the air, effluents into the water, use of water, wetlands preservation,
waste disposal, endangered species and noise regulation, among others. Failure
to comply with such laws and regulations or to obtain any necessary
environmental permits pursuant to such laws and regulations could result in
fines or other sanctions. Environmental laws and regulations affecting power
generation and distribution are complex and have tended to become more stringent
over time. Congress and other domestic and foreign governmental authorities have
either considered or implemented various laws and regulations to restrict or tax
certain emissions, particularly those involving air and water emissions.
Existing environmental regulations could be revised or reinterpreted, new laws
and regulations could be adopted or become applicable, and future changes in
environmental laws and regulations could occur, including potential regulatory
and enforcement developments related to air emissions.
These
laws and regulations have imposed, and proposed laws and regulations could
impose in the future, additional costs on the operation of power plants. Energy
pipeline companies have made and will likely continue to make significant
capital and other expenditures to comply with these and other environmental laws
and regulations. Changes in, or new, environmental restrictions may force energy
pipeline companies to incur significant expenses or expenses that may exceed
their estimates. There can be no assurance that such companies would be able to
recover all or any increased environmental costs from their customers or that
their business, financial condition or results of operations would not be
materially and adversely affected by such expenditures or any changes in
domestic or foreign environmental laws and regulations, in which case the value
of these companies’ securities in the Fund’s portfolio could be adversely
affected. Energy pipeline companies may not be able to obtain or maintain all
required environmental regulatory approvals. If there is a delay in obtaining
any required environmental regulatory approvals or if an energy pipeline company
fails to obtain, maintain or comply with any such approval, the operation of its
facilities could be stopped or become subject to additional costs. In addition,
an energy pipeline company may be responsible for any on-site liabilities
associated with the environmental condition of facilities that it has acquired,
leased or developed, regardless of when the liabilities arose and whether they
are known or unknown.
Supply
and Demand Risk. A
decrease in the production of natural gas, natural gas liquids, crude oil, coal,
refined petroleum products or other energy commodities, or a decrease in the
volume of such commodities available for transportation, processing, storage or
distribution,
may
adversely impact the financial performance of companies in the energy pipeline
industry. Production declines and volume decreases could be caused by various
factors, including catastrophic events affecting production, depletion of
resources, labor difficulties, political events, OPEC actions, environmental
proceedings, increased regulations, equipment failures and unexpected
maintenance problems, failure to obtain necessary permits, unscheduled outages,
unanticipated expenses, inability to successfully carry out new construction or
acquisitions, import supply disruption, increased competition from alternative
energy sources or related commodity prices. A sustained decline in demand for
such commodities could also adversely affect the financial performance of
companies in the energy pipeline industry. Factors that could lead to a decline
in demand include economic recession or other adverse economic conditions,
higher fuel taxes or governmental regulations, increases in fuel economy,
consumer shifts to the use of alternative fuel sources, changes in commodity
prices or weather.
The
profitability of companies engaged in processing and pipeline activities may be
materially impacted by the volume of natural gas or other energy commodities
available for transporting, processing, storing or distributing. A significant
decrease in the production of natural gas, oil, coal or other energy
commodities, due to a decline in production from existing facilities, import
supply disruption, depressed commodity prices or otherwise, would reduce revenue
and operating income of such entities.
Price
Volatility Risk. Greater
volatility of energy commodity prices may lead to increased volatility in the
prices of equities in the energy pipeline industry. While energy pipeline
companies typically do not take title to commodities and consequently have
little direct exposure to changing prices, the price level of commodities may
affect the volume of commodities transported, processed, stored or distributed.
This changing volume may directly impact the revenues earned by energy pipeline
companies, leading to more price volatility.
Exclusion
of Adviser from Commodity Pool Operator Definition.
An
exclusion from the definition of “commodity pool operator” (“CPO”) under the
Commodity Exchange Act (“CEA”) and the rules of the Commodity Futures Trading
Commission (“CFTC”) has been claimed with respect to the Funds, and, therefore,
the Adviser is not subject to CFTC registration or regulation as a CPO with
respect to the Funds. In addition, the Adviser will rely upon an exemption from
the definition of “commodity trading advisor” (“CTA”) under the CEA and the
rules of the CFTC.
Disclosure
of Portfolio Holdings
The
Funds’ entire portfolio holdings are publicly disseminated each day the Funds
are open for business through the Funds’ website and may be made available
through financial reporting and news services or any other medium, including
publicly available internet web sites. Additional information regarding the
Funds’ policies and procedures with respect to the disclosure of the Funds’
portfolio securities is available in the Funds’ SAI.
Investment
Management
Investment
Adviser
TIS
Advisors serves as the investment adviser to the Funds. The Adviser provides
actively researched indices and passively managed exchange-traded products. Its
indices are intended to fill a void in the essential asset universe and provide
benchmarks for use by investment professionals, research analysts and industry
executives to analyze relative performance as well as to provide a basis for
passively managed exchange-traded products. The Adviser defines essential assets
as “those assets and services that are indispensable and necessary to the
functioning of our infrastructure, our economy and our society as a
whole.”
The
Adviser is a Delaware limited liability company and a registered investment
adviser. As of February 28, 2022, the Adviser had approximately $581
million in assets under management. The Adviser is indirectly controlled by
Lovell Minnick Partners LLC (“Lovell Minnick”), a private equity firm and SEC
registered investment adviser. The Adviser is an indirect wholly-owned
subsidiary of TortoiseEcofin Investments, LLC (“TortoiseEcofin Investments”), a
company that owns multiple wholly-owned essential asset and income-oriented
investment advisers. A vehicle formed by Lovell Minnick and owned by certain
private funds sponsored by Lovell Minnick and a group of institutional
co-investors owns a controlling interest in TortoiseEcofin Investments. Certain
employees in the TortoiseEcofin Investments complex also own interests in
TortoiseEcofin Investments. The Adviser is under common control with Tortoise
Capital Advisors, L.L.C. (“TCA”), Ecofin Advisors Limited (“Ecofin UK”), and
Ecofin Advisors, LLC (“Ecofin US”), registered investment advisers that manage
other series of the Trust. TCA serves as investment adviser to five other series
of the Trust, Ecofin UK serves as investment sub-adviser to two other series of
the Trust, and Ecofin US serves as investment sub-adviser to one other series of
the Trust. The principal business address of the Adviser is 6363 College
Boulevard, Suite 100A, Overland Park, Kansas 66211. The telephone number for the
Adviser is 1-844-TR-INDEX (1-844-874-6339) and the Adviser’s website is
https://tortoiseecofin.com/.
For
the services it provides to the Funds, the Funds pay the Adviser a unified fee,
which is calculated daily and paid monthly, at the annual rate of 0.40% of the
average daily net assets of each Fund. Under the investment advisory agreement,
the Adviser has agreed to pay all expenses incurred by the Funds except for the
advisory fee, interest, taxes, brokerage expenses and other fees, charges,
taxes, levies or expenses (such as stamp taxes) incurred in connection with the
execution of portfolio transactions or in connection with creation and
redemption transactions (including without limitation any fees, charges, taxes,
levies or expenses related to the purchase or sale of an amount of any currency,
or the patriation or repatriation of any security or other asset, related to the
execution of portfolio transactions or any creation or redemption transactions),
legal fees or expenses in connection with any arbitration, litigation or pending
or threatened arbitration or litigation, acquired fund fees and expenses, any
fees and expenses related to the provision of securities lending services,
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.
A
discussion regarding the basis for the Board’s approval of the Investment
Advisory Agreement with the Adviser is available in the Funds’ Semi-Annual
Report to Shareholders dated May 31, 2022.
Investment
Sub-Adviser
The
Adviser has retained Vident Investment Advisory, LLC to serve as sub-adviser for
the Funds. VIA is responsible for the day-to-day management of the Funds. VIA, a
registered investment adviser, is a wholly-owned subsidiary of Vident Financial,
LLC. Its principal office is located at 1125 Sanctuary Parkway, Suite 515,
Alpharetta, Georgia 30009. VIA was formed in 2014 and provides investment
advisory services to ETFs, including the Funds. VIA is responsible for trading
portfolio securities for the Funds, including selecting broker-dealers to
execute purchase and sale transactions or in connection with any rebalancing or
reconstitution of the Indexes, subject to the supervision of the Adviser and the
Board. For its services, the Sub-Adviser is paid a fee by the Adviser, which fee
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 fee as
follows:
|
|
|
|
|
|
|
| |
Fund |
Minimum
Fee |
Rate |
Ecofin
Global Water ESG Fund |
$20,000 |
0.04%
on first $250 million in assets 0.03% on next $250 million in assets 0.02%
on assets over $500 million in assets |
Tortoise
North American Pipeline Fund |
$20,000 |
0.04%
on first $250 million in assets 0.03% on next $250 million in assets 0.02%
on assets over $500 million in
assets |
A
discussion regarding the basis for the Board’s approval of the Investment
Sub-Advisory Agreement with the Adviser is available in the Funds’ Semi-Annual
Report to Shareholders dated May 31, 2022.
Portfolio
Managers
The
Fund is managed by the sub-adviser’s portfolio management team. The individual
members of the team jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio are described below.
Austin
Wen, CFA, is a portfolio manager for each fund. Mr. Wen has been 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 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 B.A. in Finance from
the University of Georgia and holds the Chartered Financial Analyst designation.
Rafael
Zayas, CFA, is a Portfolio Manager for each fund. Mr. Zayas became SVP, Head of
Portfolio Management and Trading at VIA in June 2020. From 2017 to 2020, he was
Senior Portfolio Manager – International Equity at VIA and has over 15 years of
experience that includes managing international equity portfolios, including in
emerging and frontier markets.
Prior
to joining VIA, 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. Prior to joining
Russell Investments, Mr. Zayas was a 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 graduated with a B.S. in Electrical Engineering from Cornell
University. He also attained the Chartered Financial Analyst designation in
2010.
VIA
began sub-advising the Pipeline Fund in March 2020. VIA began sub-advising the
Water Fund in May 2020.
Additional
information about the portfolio manager’s compensation, other accounts managed
by the portfolio manager, and the portfolio manager’s ownership of securities in
the Funds are available in the SAI.
Multi-Manager
Strategies
As
part of its services to the Funds, the Adviser researches, evaluates, and may
recommend professional investment managers to serve as sub-advisers. The Funds,
the Trust, and the Adviser have obtained an exemptive order that permits the
Adviser, subject to approval of the Board of Trustees of Managed Portfolio
Series, to enter into new or modified sub-advisory agreements with existing or
new sub-advisers for the Funds, without approval of the Funds’ shareholders
(“Exemptive Relief”). Under the Exemptive Relief, the Funds are required to
notify shareholders of the retention of a new sub-adviser within 90 days of the
hiring of the new sub-adviser. In the future, the Adviser may propose to appoint
or replace one or more sub-advisers, subject to Board approval and applicable
shareholder notice requirements.
Buying
and Selling Fund Shares
Shares
of the Funds are listed on the NYSE Arca, Inc. Exchange. When you buy or sell
shares on the secondary market, you will pay or receive the market price. The
Funds’ shares will trade on the Exchange at prices that may differ to varying
degrees from the daily NAV of the Funds’ shares. A “Business Day” with respect
to the Funds is any day on which the Exchange is open for business. The NYSE
Arca, Inc. Exchange is generally open Monday through Friday and is closed
weekends and the following holidays: New Year’s Day, Martin Luther King, Jr.
Day, Presidents’ Day, Good Friday, Memorial Day, Juneteenth Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.
NAV
per share for the Funds is computed by dividing the value of the net assets of
the Funds (i.e.,
the
value of its total assets less total liabilities) by the total number of shares
of the Funds outstanding. Expenses and fees, including management and
distribution fees, if any, are accrued daily and taken into account for purposes
of determining NAV. NAV is determined each business day, normally as of the
close of regular trading of the Exchange (ordinarily 4:00 p.m., Eastern time).
You
may incur customary brokerage commissions and charges and may pay some or all of
the spread between the bid and the offered price in the secondary market on each
leg of a round trip (purchase and sale) transaction. Investors buying or selling
shares in the secondary market will pay brokerage commissions or other charges
imposed by brokers as determined by that broker. Brokerage commissions are often
a fixed amount and may be a significant proportional
cost
for investors seeking to buy or sell relatively small amounts of shares. In
addition, secondary market investors will also incur the cost of the difference
between the price that an investor is willing to pay for shares (the “bid”
price) and the price at which an investor is willing to sell shares (the “ask”
price). This difference in bid and ask prices is often referred to as the
“spread” or “bid/ask spread.” The bid/ask spread varies over time for shares
based on trading volume and market liquidity, and is generally lower if the
Funds’ shares have more trading volume and market liquidity and higher if the
Funds’ shares have little trading volume and market liquidity. Further,
increased market volatility may cause increased bid/ask spreads. Due to the
costs of buying or selling shares, including bid/ask spreads, frequent trading
of shares may significantly reduce investment results and an investment in
shares may not be advisable for investors who anticipate regularly making small
investments.
The
Funds’ portfolio securities generally are valued at market price. Securities are
valued at fair value when market quotations are not readily available. The Board
has adopted procedures to be followed when the Funds must utilize fair value
pricing, including when reliable market quotations are not readily available,
when the Funds’ pricing service does not provide a valuation (or provides a
valuation that, in the judgment of the Adviser, does not represent the
security’s fair value), or when, in the judgment of the Adviser, events have
rendered the market value unreliable (see, for example, the discussion of fair
value pricing of foreign securities in the paragraph below). The Board reviews,
no less frequently than annually, the adequacy of the Funds' policies and
procedures and the effectiveness of their implementation. Valuing securities at
fair value may result in a different price being used in the calculation of the
Funds’ NAV from quoted or published prices for the same securities. Fair value
determinations are made in good faith in accordance with procedures adopted by
the Board. There can be no assurance that the Funds will obtain the fair value
assigned to a security if it sells the security.
In
certain circumstances, the Funds may employ fair value pricing to ensure greater
accuracy in determining daily NAV. Fair value pricing may be applied to foreign
securities held by the Funds upon the occurrence of an event after the close of
trading on non-U.S. markets but before the close of trading on the Exchange when
the Funds’ NAV is determined. If the event may result in a material adjustment
to the price of the Funds’ foreign securities once non-U.S. markets open on the
following business day (such as, for example, a significant surge or decline in
the U.S. market), the Funds may value such foreign securities at fair value,
taking into account the effect of such event, in order to calculate the Funds’
NAV.
Other
types of portfolio securities that the Funds may fair value include, but are not
limited to: (1) investments that are illiquid or traded infrequently,
including “restricted” securities and private placements for which there is no
public market; (2) investments for which, in the judgment of the Adviser, the
market price is stale; and (3) securities for which trading has been halted or
suspended.
Fair
value pricing involves subjective judgments and it is possible that a fair value
determination for a security will materially differ from the value that could be
realized upon the sale of the security. In addition, fair value pricing could
result in a difference between the prices used to calculate the Funds’ NAV and
the prices used by the Funds’ Underlying Index. This may result in a difference
between the Funds’ performance and the performance of the Funds’ Underlying
Index.
Frequent
Purchases and Redemptions of Fund Shares
The
Funds do not impose any restrictions on the frequency of purchases and
redemptions of Creation Units; however, the Funds reserve the right to reject or
limit purchases at any time as described in the SAI. When considering that no
restriction or policy was necessary, the Board evaluated the risks posed by
arbitrage and market timing activities, such as whether frequent purchases and
redemptions would interfere with the efficient implementation of the Funds’
investment strategy, or whether they would cause the Funds to experience
increased transaction costs. The Board considered that, unlike traditional
mutual funds, shares are issued and redeemed only in large quantities of shares
known as Creation Units available only from the Funds directly to a few
institutional investors (“Authorized Participants”), and that most trading in
the Funds occurs on the Exchange at prevailing market prices and does not
involve the Funds directly. Given this structure, the Board determined that it
is unlikely that trading due to arbitrage opportunities or market timing by
shareholders would result in negative impact to the Funds or its shareholders.
In addition, frequent trading of shares by Authorized Participants and
arbitrageurs is critical to helping the market price remain at or close to NAV.
Other
Considerations
Distribution
and Service Plan.
The Funds have adopted a Distribution and Service Plan in accordance with Rule
12b-1 under the 1940 Act pursuant to which payments of up to 0.25% per annum of
the Funds’ average daily net assets may be made for the sale and distribution of
its Fund shares or for providing or arranging for others to provide shareholder
services and for the maintenance of shareholder accounts. The Funds do not
presently intend to make any payments pursuant to the Distribution and Service
Plan for the fiscal period ending November 30, 2023. Thereafter, 12b-1 fees may
only be imposed after approval by the Board. Any forgone 12b-1 fees during the
initial twelve months will not be recoverable during any subsequent period.
Because these fees would be paid out of the Funds’ assets on an on-going basis,
if payments are made in the future, these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Payments
to Financial Intermediaries. The
Adviser, out of its own resources and without additional cost to the Funds or
its shareholders, may pay intermediaries, including affiliates of the Adviser,
for the sale of Fund shares and related services, including participation in
activities that are designed to make intermediaries more knowledgeable about
exchange traded products. Payments are generally made to intermediaries that
provide shareholder servicing, marketing and related sales support, educational
training or support, or access to sales meetings, sales representatives and
management representatives of the intermediary. Payments may also be made to
intermediaries for making shares of the Funds available to their customers
generally and in investment programs. The Adviser may also reimburse expenses or
make payments from its own resources to intermediaries in consideration of
services or other activities the Adviser believes may facilitate investment in
the Funds.
The
possibility of receiving, or the receipt of, the payments described above may
provide intermediaries or their salespersons with an incentive to favor sales of
shares of the Funds, and other funds whose affiliates make similar compensation
available, over other investments that do not make such payments. Investors may
wish to take such payment arrangements into account when considering and
evaluating any recommendations relating to the Funds and other ETFs.
Additional
Information.
The Funds may enter into contractual arrangements with various parties,
including among others, the Funds’ investment adviser, who provide services to
the Funds. Shareholders are not parties to, or intended (or “third party”)
beneficiaries of, those contractual arrangements.
The
Prospectus and the SAI provide information concerning the Funds that you should
consider in determining whether to purchase shares of the Funds. The Funds may
make changes to this information from time to time. Neither this Prospectus nor
the SAI is intended to give rise to any contract rights or other rights in any
shareholder, other than any rights conferred explicitly by federal or state
securities laws that may not be waived.
Dividends,
Distributions and Taxes
Fund
Distributions
The
Water Fund expects to pay out dividends from its net investment income
semi-annually and distribute its net capital gains, if any, to investors at
least annually. The Pipeline Fund expects to pay out dividends from its net
investment income quarterly and distribute its net capital gains, if any, to
investors at least annually.
Dividend
Reinvestment Service
Brokers
may make the Depository Trust Company book-entry dividend reinvestment service
available to their customers who own shares. If this service is available and
used, dividend distributions of both income and capital gains will automatically
be reinvested in additional whole shares of the Funds purchased on the secondary
market. Without this service, investors would receive their distributions in
cash. In order to achieve the maximum total return on their investments,
investors are encouraged to use the dividend reinvestment service. To determine
whether the dividend reinvestment service is available and whether there is a
commission or other charge for using this service, consult your broker. Brokers
may require the Funds’ shareholders to adhere to specific procedures and
timetables.
Tax
Information
The
following is a summary of some important tax issues that affect the Funds and
their shareholders. The summary is based on current tax laws, which may be
changed by legislative, judicial or administrative action. You should not
consider this summary to be a comprehensive explanation of the tax treatment of
the Funds, or the tax consequences of an investment in the Funds. More
information about taxes is located in the SAI. You are urged to consult your tax
adviser regarding specific questions as to federal, state and local income
taxes.
Each
Fund has elected and intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986, as amended. As a regulated
investment company, the Fund generally pays no federal income tax on the income
and gains it distributes to shareholders. Distributions may be reinvested
automatically in additional whole shares only if the broker through whom you
purchased shares makes such option available. Each Fund expects, based on its
investment objective and strategies, that its distributions, if any, will be
taxable as ordinary income, capital gains, or some combination of both. For
federal income tax purposes, Fund distributions of short-term capital gains are
taxable to you as ordinary income.
Fund
distributions of long-term capital gains are taxable to you as long-term capital
gains no matter how long you have owned your shares. To the extent that the
Funds’ distributions are designated as attributable to “qualified dividend”
income, such income may be subject to tax at the reduced rate of federal income
tax applicable to non-corporate shareholders for net long-term capital gains, if
certain holding period requirements have been met.
Each
year, you will receive an annual statement (Form 1099) of your account activity
to assist you in completing your federal, state and local tax returns.
Distributions declared in December to shareholders of record in such month, but
paid in January, are taxable as if they were paid in December. The Fund makes
every effort to search for reclassified income to reduce the number of corrected
forms mailed to you. However, when necessary, you will receive a corrected Form
1099 to reflect reclassified information.
At
the time you purchase your Fund shares, the price of shares may reflect
undistributed income, undistributed capital gains, or net unrealized
appreciation in value of portfolio securities held by the Fund. For taxable
investors, a subsequent distribution to you of such amounts, although
constituting a return of your investment, would be taxable. Buying shares in the
Fund just before it declares an income dividend or capital gains distribution is
sometimes known as “buying a dividend.”
A
sale of Fund shares is a taxable event and, accordingly, a capital gain or loss
may be recognized. Currently, any capital gain or loss realized upon a sale of
Fund shares generally is treated as long-term capital gain or loss if the shares
have been held for more than one year and as short-term capital gain or loss if
the shares have been held for one year or less. The ability to deduct capital
losses may be limited.
A
3.8% Medicare tax on net investment income (including capital gains and
dividends) will also be imposed on individuals, estates and trusts, subject to
certain income thresholds.
By
law, if you do not provide your proper taxpayer identification number and
certain required certifications, you may be subject to backup withholding on any
distributions of income, capital gains or proceeds from the sale of your shares.
Withholding is also imposed if the Internal Revenue Service requires it. When
withholding is required, the amount will be 24% of any distributions or proceeds
paid.
Fund
distributions and gains from the sale of your Fund shares generally are subject
to state and local taxes.
Non-U.S.
investors may be subject to U.S. withholding tax at a 30% or lower treaty rate
and U.S. estate tax and are subject to special U.S. tax certification
requirements to avoid backup withholding and claim any treaty benefits.
Exemptions from U.S. withholding tax are provided for certain capital gain
dividends paid by the Fund from net long-term capital gains, interest-related
dividends and short-term capital gain dividends, if such amounts are reported by
the Fund. However, notwithstanding such exemptions from U.S. withholding at the
source, any such dividends and distributions of income and capital gains will be
subject to backup withholding at a rate of 24% if you fail to properly certify
that you are not a U.S. person.
Under
the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax is
imposed on income dividends paid by the Fund to certain foreign entities,
referred to as foreign financial institutions or nonfinancial foreign entities,
that fail to comply (or be deemed compliant) with
extensive
reporting and withholding requirements designed to inform the U.S. Department of
the Treasury of U.S.-owned foreign investment accounts. After December 31, 2018,
FATCA withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund
shares; however, based on proposed regulations issued by the IRS, which can be
relied upon currently, such withholding is no longer required unless final
regulations provide otherwise (which is not expected). Information about a
shareholder in the Fund may be disclosed to the IRS, non-U.S. taxing authorities
or other parties as necessary to comply with FATCA. Withholding also may be
required if a foreign entity that is a shareholder of the Fund fails to provide
the appropriate certifications or other documentation concerning its status
under FATCA.
Creation
Units
An
Authorized Participant who exchanges equity securities for Creation Units
generally will recognize a gain or a loss. The gain or loss will be equal to the
difference between the market value of the Creation Units at the time of
purchase (plus any cash received by the Authorized Participant as part of the
issue) and the Authorized Participant’s aggregate basis in the securities
surrendered (plus any cash paid by the Authorized Participant as part of the
issue). An Authorized Participant who exchanges Creation Units for equity
securities generally will recognize a gain or loss equal to the difference
between the Authorized Participant’s basis in the Creation Units (plus any cash
paid by the Authorized Participant as part of the redemption) and the aggregate
market value of the securities received (plus any cash paid by the Authorized
Participant as part of the redemption). The IRS, however, may assert that a loss
realized upon an exchange of securities for Creation Units cannot be deducted
currently under the rules governing “wash sales,” or on the basis that there has
been no significant change in economic position. Persons exchanging securities
should consult their own tax advisor with respect to whether the wash sale rules
apply and when a loss might be deductible.
Under
current federal tax laws, any capital gain or loss realized upon redemption of
Creation Units is generally treated as long-term capital gain or loss if the
shares have been held for more than one year and as a short-term capital gain or
loss if the shares have been held for one year or less, assuming such Creation
Units are held as a capital asset.
If
the Fund redeems Creation Units in cash, it may recognize more capital gains
than it will if it redeems Creation Units in-kind.
Additional
Information
Other
Information
For
purposes of the 1940 Act, the Funds are treated as registered investment
companies. Section 12(d)(1) of the 1940 Act restricts investments by investment
companies in the securities of other investment companies, including shares of
the Funds. The SEC has issued an exemptive order on which the Funds rely
permitting registered investment companies to invest in exchange-traded funds
offered by the Adviser beyond the limits of Section 12(d)(1) subject to certain
terms and conditions, including that such registered investment companies enter
into an agreement with the Trust.
In
October 2020, the SEC adopted regulatory changes related to the ability of an
investment company to invest in other investment companies in excess of
specified statutory limits. These changes include, among other things,
amendments to Rule 12d1-1, the rescission of Rule 12d1-2, the adoption of new
Rule 12d1-4, and the rescission of certain exemptive relief issued by the SEC
permitting certain fund of funds arrangements. Rule 12d1-4, which became
effective on January 19, 2021, permits each Fund to invest in other investment
companies, including money market funds, beyond the statutory limits, subject to
certain conditions. The rescission of the applicable exemptive orders and the
withdrawal of the applicable no- action letters was effective on January 19,
2022. Following this effectiveness, an investment company is no longer able to
rely on these exemptive orders and no-action letters, and is subject instead to
Rule 12d1-4 and other applicable rules under Section 12(d)(1).
Continuous
Offering
The
method by which Creation Units are purchased and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the Funds on an ongoing basis, at any point a “distribution,” as such term is
used in the Securities Act of 1933, as amended (the “Securities Act”), may
occur. Broker-dealers and other persons are cautioned that some activities on
their part may, depending on the circumstances, result in their being deemed
participants in a distribution in a manner which could render them statutory
underwriters and subject them to the Prospectus delivery and liability
provisions of the Securities Act.
For
example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into individual shares, and sells such shares
directly to customers, or if it chooses to couple the creation of a supply of
new shares with an active selling effort involving solicitation of secondary
market demand for shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker-dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to categorization as
an underwriter.
Broker-dealer
firms should also note that dealers who are not “underwriters” but are effecting
transactions in shares, whether or not participating in the distribution of
shares, are generally required to deliver a prospectus. This is because the
prospectus delivery exemption in Section 4(a)(3) of the Securities Act is not
available with respect to such transactions as a result of Section 24(d) of the
1940 Act. As a result, broker dealer-firms should note that dealers who are not
underwriters but are participating in a distribution (as contrasted with
ordinary secondary market transactions) and thus dealing with shares that are
part of an over-allotment within the meaning of Section 4(a)(3)(a) of the
Securities Act would be unable to take advantage of the prospectus delivery
exemption provided by Section 4(a)(3) of the Securities Act. Firms that incur a
prospectus delivery obligation with respect to shares of the Funds are reminded
that under Rule 153 of the Securities Act, a prospectus delivery obligation
under Section 5(b)(2) of the Securities Act owed to an exchange member in
connection with a sale on the CBOE BZX Exchange is satisfied by the fact that
such Fund’s Prospectus is available on the SEC’s electronic filing system. The
prospectus delivery mechanism provided in Rule 153 is only available with
respect to transactions on an exchange.
Premium/Discount
Information
Information
regarding how often the shares of the Funds traded on the Exchange at a price
above (i.e.,
at
a premium) or below (i.e.,
at
a discount) the NAV of the Funds are available at https://tortoiseecofin.com/.
Index
Descriptions
Please
note that you cannot invest directly in an index, although you may invest in the
underlying securities represented in the index. Index returns are adjusted to
reflect the reinvestment of dividends on securities in the index, but do not
reflect the expenses of the Funds.
The
Ecofin Global Water ESG IndexSM
is a proprietary, rules-based, float-adjusted, modified market
capitalization-weighted index comprised of companies that are materially engaged
in the water infrastructure or water management industries.
The
Tortoise North American Pipeline IndexSM
is a float-adjusted, capitalization weighted index of pipeline companies
headquartered in the United States and Canada.
The
S&P 500®
Index is an unmanaged, capitalization-weighted index representing the aggregate
market value of the common equity of 500 stocks primarily traded on the New York
Stock Exchange.
Financial
Highlights
The
financial highlights in the following table are intended to help you understand
the Funds’ financial performance for the period of the Funds’ operations.
Certain information reflects financial results for a single Fund share. The
total return in the table represents the rate that an investor would have earned
or lost on an investment in a Fund (assuming reinvestment of all dividends and
distributions). This information in the table below has been derived from the
financial statements audited by Ernst & Young LLP, the Funds’ independent
registered public accounting firm, whose report, along with each Fund’s
financial statements, is included in the Funds’ annual report, which is
available upon request or on the Funds’ website at
https://tortoiseecofin.com/.
|
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| |
Ecofin
Global Water ESG Fund |
| Year
Ended November 30, 2022 |
Year
Ended November 30, 2021 |
Year
Ended November 30, 2020 |
Year
Ended November 30, 2019 |
Year
Ended November 30, 2018 |
PER
COMMON SHARE DATA(1) |
|
|
|
| |
Net
asset value, beginning of year |
$47.75 |
$38.05 |
$33.06 |
$27.27 |
$30.07 |
|
|
|
|
| |
INVESTMENT
OPERATIONS: |
|
|
|
| |
Net
investment income |
0.59 |
0.77 |
0.57 |
0.56 |
0.34 |
Net
realized and unrealized gain (loss) on investments and translations of
foreign currency |
(9.44) |
9.42 |
4.88 |
5.76 |
(2.65) |
Total
from investment operations |
(8.85) |
10.19 |
5.45 |
6.32 |
(2.31) |
|
|
|
|
| |
LESS
DISTRIBUTIONS FROM: |
|
|
|
| |
Net
investment income |
(0.75) |
(0.49) |
(0.46) |
(0.53) |
(0.30) |
Net
realized gains |
— |
— |
— |
— |
(0.19) |
Total
distributions |
(0.75) |
(0.49) |
(0.46) |
(0.53) |
(0.49) |
|
|
|
|
| |
Net
asset value, end of year |
$38.15 |
$47.75 |
$38.05 |
$33.06 |
$27.27 |
|
|
|
|
| |
TOTAL
RETURN |
(18.73)% |
26.98% |
16.80% |
23.42% |
(7.76)% |
|
|
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
|
|
|
| |
Net
assets, end of year (in 000’s) |
$61,037 |
$64,468 |
$20,927 |
$14,875 |
$4,091 |
|
|
|
|
| |
Ratios
to average net assets: |
|
|
|
| |
Expenses |
0.40% |
0.40% |
0.40% |
0.40% |
0.40% |
Net
investment income |
1.52% |
2.22% |
1.74% |
2.01% |
1.24% |
Portfolio
turnover rate |
26% |
21% |
19% |
16% |
36% |
(1)For
a Fund share outstanding for the entire period.
|
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|
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|
| |
Tortoise
North American Pipeline Fund |
| Year
Ended November 30, 2022 |
Year
Ended November 30, 2021 |
Year
Ended November 30, 2020 |
Year
Ended November 30, 2019 |
Year
Ended November 30, 2018 |
PER
COMMON SHARE DATA(1) |
|
|
|
| |
Net
asset value, beginning of year |
$21.63 |
$17.50 |
$22.18 |
$21.99 |
$22.87 |
|
|
|
|
| |
INVESTMENT
OPERATIONS: |
|
|
|
| |
Net
investment income(2) |
0.62 |
0.43 |
0.48 |
0.62 |
0.69 |
Net
realized and unrealized gain (loss) on investments and translations of
foreign currency(2) |
5.28 |
4.74 |
(4.12) |
0.55 |
(0.64) |
Total
from investment operations |
5.90 |
5.17 |
(3.64) |
1.17 |
0.05 |
|
|
|
|
| |
LESS
DISTRIBUTIONS FROM: |
|
|
|
| |
Net
investment income |
(0.51) |
(0.46) |
(0.42) |
(0.45) |
(0.53) |
Net
realized gains |
— |
— |
— |
— |
— |
Return
of capital |
(0.60) |
(0.58) |
(0.62) |
(0.53) |
(0.40) |
Total
distributions |
(1.11) |
(1.04) |
(1.04) |
(0.98) |
(0.93) |
|
|
|
|
| |
Net
asset value, end of year |
$26.42 |
$21.63 |
$17.50 |
$22.18 |
$21.99 |
|
|
|
|
| |
TOTAL
RETURN |
27.89% |
30.10% |
(15.74)% |
5.22% |
0.15% |
|
|
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
|
|
|
| |
Net
assets, end of year (in 000’s) |
$560,027 |
$421,715 |
$359,713 |
$413,585 |
$187,993 |
|
|
|
|
| |
Ratios
to average net assets: |
|
|
|
| |
Expenses |
0.40% |
0.40% |
0.40% |
0.40% |
0.40% |
Net
investment income |
2.27% |
2.20% |
2.34% |
2.01% |
2.11% |
Portfolio
turnover rate |
12% |
17% |
28% |
13% |
16% |
(1)For
a Fund share outstanding for the entire period.
(2)The
per common share data for the years ended November 30, 2021, 2020, 2019, and
2018 does not reflect the change in estimate of investment income and return of
capital. See Note 2 to the financial statements for further
disclosure.
INVESTMENT
ADVISER
Tortoise
Index Solutions, L.L.C.
d/b/a
TIS Advisors
6363
College Boulevard, Suite 100A
Overland
Park, Kansas 66211
INVESTMENT
SUB-ADVISER
Vident
Investment Advisory, LLC
1125
Sanctuary Parkway, Suite 515
Alpharetta,
Georgia 30009
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Ernst
& Young LLP
700
Nicollet Mall, Suite 500
Minneapolis,
Minnesota 55402
LEGAL
COUNSEL
Stradley
Ronon Stevens & Young, LLP
2005
Market Street, Suite 2600
Philadelphia,
Pennsylvania 19103
CUSTODIAN
U.S.
Bank N.A.
Custody
Operations
1555
North RiverCenter Drive, Suite 302
Milwaukee,
Wisconsin 53212
TRANSFER
AGENT, FUND ACCOUNTANT AND FUND ADMINISTRATOR
U.S.
Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202
DISTRIBUTOR
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202
Privacy
Notice
The
Funds collects only relevant information about you that the law allows or
requires them to have in order to conduct their business and properly service
you. The Funds collects financial and personal information about you (“Personal
Information”) directly (e.g.,
information on account applications and other forms, such as your name, address,
and social security number, and information provided to access account
information or conduct account transactions online, such as password, account
number, e-mail address, and alternate telephone number), and indirectly
(e.g.,
information about your transactions with us, such as transaction amounts,
account balance and account holdings).
The
Funds does not disclose any non-public personal information about their
shareholders or former shareholders other than for everyday business purposes
such as to process a transaction, service an account, respond to court orders
and legal investigations or as otherwise permitted by law. Third parties that
may receive this information include companies that provide transfer agency,
technology and administrative services to the Funds, as well as the Funds’
investment adviser who is an affiliate of the Funds. If you maintain a
retirement/educational custodial account directly with the Funds, we may also
disclose your Personal Information to the custodian for that account for
shareholder servicing purposes. The Funds limits access to your Personal
Information provided to unaffiliated third parties to information necessary to
carry out their assigned responsibilities to the Funds. All shareholder records
will be disposed of in accordance with applicable law. The Funds maintains
physical, electronic and procedural safeguards to protect your Personal
Information and requires their third-party service providers with access to such
information to treat your Personal Information with the same high degree of
confidentiality.
In
the event that you hold shares of the Funds through a financial intermediary,
including, but not limited to, a broker-dealer, bank, credit union or trust
company, the privacy policy of your financial intermediary governs how your
non-public personal information is shared with unaffiliated third
parties.
With
respect to the Funds, issues and redemptions of their shares at net asset value
(“NAV”) occur only in large aggregations of a specified number of shares (e.g.,
50,000) called “Creation Units.” Only Authorized Participants (“APs”) may
acquire shares directly from an ETF, and only APs may tender their ETF shares
for redemption directly to the ETF, at NAV. APs must be (i) a broker-dealer or
other participant in the clearing process through the Continuous Net Settlement
System of the NSCC, a clearing agency that is registered with the SEC; or (ii) a
DTC participant. In addition, each AP must execute a Participant Agreement that
has been agreed to by the Funds’ distributor, and that has been accepted by the
Funds’ transfer agent, with respect to purchases and redemptions of Creation
Units.
Because
of this structure, the Funds do not have any information regarding any
“consumers” as defined in Rule 3 of Regulation S-P with respect to any ETFs, and
consequently is not required by Regulation S-P to deliver a notice of the Funds’
privacy policy to any ETF shareholders.
Ecofin
Global Water ESG Fund
Tortoise
North American Pipeline Fund
Series
of Managed Portfolio Series
FOR
MORE INFORMATION
You
can find more information about the Funds in the following
documents:
Statement
of Additional Information
Please
refer to the SAI for additional information on the Funds. The SAI provides
additional details about the investments and techniques of the Funds and certain
other additional information. A current SAI is on file with the SEC and is
incorporated into this Prospectus by reference. This means that the SAI is
legally considered a part of this Prospectus even though it is not physically
within this Prospectus.
Annual
and Semi-Annual Reports
The
Funds’ annual
and semi-annual
reports provide additional information about the Funds’ investments. The annual
reports contain a discussion of the market conditions and investment strategies
that affected the Funds’ performance during the Funds’ prior fiscal
period.
You
can obtain a free copy of these documents and the SAI, request other
information, or make general inquiries about the Funds by calling the Funds
(toll-free) at 844-874-6339, by visiting the Adviser’s website at
https://tortoiseecofin.com/ or by writing to:
Ecofin
Global Water ESG Fund
Tortoise
North American Pipeline Fund
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
You
can review and copy information, including the Funds’ reports and
SAI:
•Free
of charge from the SEC’s EDGAR database on the SEC’s Internet website at
http://www.sec.gov; or
•For
a fee, by electronic request at the following e-mail address:
[email protected].
(The
Trust’s SEC Investment Company Act of 1940 file number is
811-22525.)