ck0001774739-20211130
Global
Beta ETF Trust
PROSPECTUS
Global
Beta Smart Income ETF (GBDV)
Global
Beta Low Beta ETF (GBLO)
Global
Beta Rising Stars ETF (GBGR)
March 30,
2022
Shares
of the Funds are not individually redeemable and may be purchased or redeemed
from the Funds in Creation Units only. The purchase and sale prices of
individual shares trading on an Exchange may be below, at or above the most
recently calculated net asset value (“NAV”) for such shares. Individual shares
are listed for trading on NYSE Arca, Inc. (“Exchange” or “NYSE
Arca”).
The
SEC has not approved or disapproved these securities or passed upon the accuracy
or adequacy of this Prospectus. Any representation to the contrary is a criminal
offense.
TABLE
OF CONTENTS
Fund
Summaries
Global Beta Smart Income ETF
Investment Objective
The Global Beta Smart Income
ETF (the “Fund”) seeks to track the performance (before fees and expenses) of
the Global Beta Smart Income Index (the “Target
Index”).
Fees and Expenses
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 table and example
below.
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Annual
Fund Operating Expenses (expenses
you pay each year as a % of the value of your
investment) |
Management
Fees |
0.29% |
Distribution
and/or Service (12b-1) Fees(1) |
0.00% |
Other
Expenses(2) |
0.00% |
Total
Annual Fund Operating Expenses |
0.29% |
(1)
Pursuant to a Rule 12b-1
distribution and service plan (“Plan”), the Fund may bear a 12b-1 fee not to
exceed 0.25% per annum of the Fund’s average daily net assets. However, no such
fee is currently paid by the Fund, and the Board of Trustees (the “Board”) of
Global Beta ETF Trust (the “Trust”) has not currently approved the commencement
of any payments under the Plan.
(2)
Expenses have been
restated to reflect current fees.
Example
The following example
is intended to help you compare the cost of investing in the Fund with the costs
of investing in other funds. The example assumes that you invest $10,000 in the
Fund 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 each
year. Although your actual costs may be higher
or lower, based on these assumptions, whether you do or do not sell your shares,
your costs would be:
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1
YEAR |
3
YEARS |
5
YEARS |
10
YEARS |
$30 |
$93 |
$163 |
$368 |
Portfolio
Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher turnover rate may indicate higher transaction costs and
may result in higher taxes when the Fund’s shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or the
example, affect the Fund’s performance. For the fiscal year ended November 30,
2021, the Fund’s portfolio turnover rate was 117% of the average value of its
portfolio.
Principal Investment
Strategies
The
Fund seeks to track the performance (before fees and expenses) of the Target
Index. The Target Index is comprised of equity securities of U.S. companies in
the highest quintile of the average twelve month trailing dividend yield over
each of the prior four quarters in the S&P 900, and that rank in the top
half of their respective Global Industry Classification Standard
(GICS®)
sector classification. The constituent securities of the Target Index are
weighted based on their revenue, with each individual index constituent capped
at 4.5% at each quarterly rebalance. Any company that has cut or suspended its
dividend will be removed from the Target Index at the next quarterly rebalance
and will be ineligible for inclusion in the Target Index until it increases or
reinstitutes its dividend. In the event that the cut/suspension results in a
dividend that, when annualized, would result in a dividend yield below 3.5%, the
company will be removed promptly from the Target Index. In addition, index
constituents from the energy sector, as classified by GICS®,
are capped at 3% in the aggregate in the Target Index at each quarterly
rebalance when the price of crude oil, as defined by Crude Oil WTI futures
(ticker: CL00), is below its 30 day moving average. As of January 29, 2022, the
Target Index was comprised of 92 securities.
The
S&P 900 is an investable benchmark for the mid- to large-cap segment of the
U.S. equity market (including real estate investment trusts (“REITs”)). As of
January 29, 2022 the S&P 900 was comprised of 905 U.S. securities with
capitalizations ranging from $2.14 billion to $2.85 trillion. REITs are
companies that own or finance income-producing real estate. The Target Index
will not match the S&P 900 weighting of each GICS industry.
The
Fund may use either a replication strategy or representative sampling strategy
in seeking to track the performance of the Target Index. Under a replication
strategy, the Fund intends to replicate the constituent securities of the Target
Index as closely as possible. Under a representative sampling strategy, the Fund
would invest in what it believes to be a representative sample of the component
securities of the Target Index. The Fund may use a representative sampling
strategy when a replication strategy might be detrimental to shareholders, such
as when there are practical difficulties or substantial costs involved in
compiling a portfolio of securities to follow the Target Index (e.g., where the
Target Index contains component securities too numerous to efficiently purchase
or sell); or, in certain instances, when a component security of the Target
Index becomes temporarily illiquid, unavailable or less liquid. The Fund may
also use a representative sampling strategy to exclude less liquid component
securities contained in the Target Index from the Fund’s portfolio in order to
create a more tradable portfolio and improve arbitrage opportunities. To the
extent the Fund uses a representative sampling strategy, it may not track the
Target Index with the same degree of accuracy as would an investment vehicle
replicating the entire index.
To
the extent that the Target Index concentrates (i.e., holds 25% or more of its
net assets) in securities of a particular industry or group of industries, the
Fund is expected to concentrate to approximately the same extent.
The
Fund will primarily invest in U.S. companies that are included in the Target
Index. The Fund may invest its assets in investments not included in the Target
Index, but which Global Beta Advisors LLC (the “Adviser”) believes will help the
Fund track the Target Index. For example, there may be instances in which the
Adviser may choose to purchase or sell investments, including exchange-traded
funds (“ETFs”) and other investment company securities and cash and cash
equivalents, as substitutes for one or more Target Index components or in
anticipation of changes in the Target Index’s components.
S&P
Dow Jones Indices LLC (the “Index Provider”), in consultation with the Adviser,
developed the Target Index methodology. The Index Provider is responsible for
the ongoing maintenance, compilation, calculation and administration of the
Target Index.
Principal Investment
Risks
There
can be no guarantee that the Fund will achieve its investment objective.
The Fund is an ETF, not a bank
deposit, and is not guaranteed or insured by the Federal Deposit Insurance
Corporation or any other government agency. The value of your investment may fall, sometimes
sharply, and you could lose money by investing in the Fund. The
Fund is subject to the principal investment risks noted below, any of which may
adversely affect the Fund’s net asset value (“NAV”), trading price, yield, total
return and ability to meet its investment objective.
Index-Related
Risk.
The Fund is managed with an investment strategy that attempts to track the
performance of the Target Index. As a result, the Fund expects to hold
constituent securities of the Target Index regardless of their current or
projected performance. Maintaining investments in securities regardless of
market conditions or the performance of individual securities could cause the
Fund’s return to be lower than if the Fund employed an active
strategy.
Risks
related to the Index Provider. There
is no assurance that the Index Provider will compile the Target Index
accurately, or that the Target Index will be determined, composed or calculated
accurately. While the Index Provider provides descriptions of what the Target
Index is designed to achieve, the Index Provider does not guarantee the quality,
accuracy or completeness of data in respect of its indexes, and does not
guarantee that the Target Index will be in line with its described index
methodology. Any gains, losses or costs to the Fund that are caused by Index
Provider errors will therefore be borne by the Fund and its
shareholders.
Dividend-Paying
Securities Risk.
The Fund’s emphasis on dividend-paying stocks involves the risk that such stocks
may fall out of favor with investors and underperform the market. Also, a
company may reduce or eliminate its dividend after the Fund’s purchase of such a
company’s securities.
Equity
Investing Risk.
An investment in the Fund involves risks similar to those of investing in any
fund holding equity securities, such as market fluctuations, changes in interest
rates and perceived trends in stock prices. The values of equity securities
could decline generally or could underperform other investments. In addition,
securities may decline in value due to factors affecting a specific issuer,
market or securities markets generally.
Large
Capitalization Securities Risk.
The securities of large market capitalization companies may underperform other
segments of the market because such companies may be less responsive to
competitive challenges and opportunities and may be unable to attain high growth
rates during periods of economic expansion.
Mid-Capitalization
Securities Risk.
The securities of mid-capitalization companies are often more volatile and less
liquid than the stocks of larger companies and may be more affected than other
types of securities during market downturns. Compared to larger companies,
mid-capitalization companies may have a shorter history of operations, and may
have limited product lines, markets or financial resources.
Authorized
Participants Concentration Risk.
The Fund has a limited number of financial institutions that may purchase and
redeem Fund shares directly from the Fund (“Authorized Participants”). To the
extent they cannot or are otherwise unwilling to engage in creation and
redemption transactions with the Fund and no other Authorized Participant steps
in, shares of the Fund may trade like closed-end fund shares at a significant
discount to NAV and may face trading halts and/or delisting from the Exchange.
This risk may be more pronounced in volatile markets, potentially where there
are significant redemptions in ETFs generally.
Cash
and Cash Equivalents Risk.
Holding cash or cash equivalents, even strategically, may lead to missed
investment opportunities. This is particularly true when the market for other
investments in which the Fund may invest is rapidly rising.
Concentration
Risk.
To the extent that the Target Index is concentrated in a particular industry,
group of industries or sector, the Fund is also expected to be concentrated in
that industry, group of industries or sector, which may subject the Fund to a
greater loss as a result of adverse economic, business or other developments
affecting that industry, group of industries or sector.
ETFs
and Other Investment Companies Risk.
The risks of investing in securities of ETFs and other investment companies
typically reflect the risks of the types of instruments in which the underlying
ETF or other investment company invests. In addition, with such investments, the
Fund indirectly bears its proportionate share of the fees and expenses of the
underlying entity. As a result, the Fund’s operating expenses may be higher and
performance may be lower.
Factor
Risk.
The Target Index, and thus the Fund, seeks to achieve the specific factor
exposures identified in the Fund’s principal investment strategies above. There
can be no assurance that targeting exposure to such factors will enhance the
Fund’s performance over time, and targeting exposure to those factors may
detract from performance in some market environments. There is no guarantee the
Index Provider’s methodology will be successful in creating an index that
achieves the specific factor exposures identified above.
Market
Events Risk.
The market values of the Fund’s investments, and therefore the value of the
Fund’s shares, will go up and down, sometimes rapidly or unpredictably. Market
risk may affect a single issuer, industry or section of the economy, or it may
affect the market as a whole. Turbulence in the financial markets and reduced
liquidity may negatively affect issuers, which could have an adverse effect on
the Fund. In addition, there is a risk that policy changes by the U.S.
Government, Federal Reserve and/or other government actors, such as increasing
interest rates, could cause increased volatility in financial markets and
disruption in the creation/redemption process of the Fund, which could have a
negative impact on the Fund. In addition, local, regional or global events such
as war, acts of terrorism, spread of infectious diseases or other public health
issues, recessions, or other events could have a significant negative impact on
the Fund and its investments. The current global outbreak of the novel strain of
coronavirus, COVID-19, has resulted in market closures and dislocations, extreme
volatility, liquidity constraints and increased trading costs. Efforts to
contain the spread of COVID-19 have resulted in global travel restrictions and
disruptions of healthcare systems, business operations and supply chains
(including business closures), layoffs, volatility in consumer demand and
employee availability, defaults and credit ratings downgrades, and other
significant economic impacts. The effects of COVID-19 have impacted global
economic activity across many industries and may heighten other pre-existing
political, social and economic risks, locally or globally. The full economic
impact and ongoing effects of the COVID-19 pandemic (or other future epidemics
or pandemics) at the
macro
level and on individual businesses are unpredictable and may result in
significant and prolonged effects on the Fund's performance. In addition,
governments, their regulatory agencies, or self-regulatory organizations may
take actions in response to the COVID-19 pandemic that affect the instruments in
which the Fund invests, or the issuers of such instruments, in ways that could
have a significant negative impact on the Fund's investment
performance.
Premium-Discount
Risk.
Fund shares may trade above or below their NAV on the Exchange. The market
prices of Fund shares will generally fluctuate in accordance with changes in NAV
as well as the relative supply of, and demand for, Fund shares. Therefore, you
may pay more than NAV when you buy shares of the Fund on the Exchange, and you
may receive less than NAV when you sell those shares on the Exchange. This risk
is separate and distinct from the risk that the NAV of Fund shares may
decrease.
REIT
Risk.
A REIT is a company that owns or finances income-producing real estate. The
Fund, through its investments in REITs, is subject to the risks of investing in
the real estate market, including decreases in property revenues, increases in
interest rates, increases in property taxes and operating expenses, legal and
regulatory changes, a lack of credit or capital, defaults by borrowers or
tenants, environmental problems and natural disasters.
REITs
are subject to additional risks, including those related to adverse governmental
actions, declines in property value and the real estate market, and the
potential failure to qualify for tax-free “pass-through” of net investment
income and net realized capital gains and exemption from registration as an
investment company. REITs are dependent upon specialized management skills and
may invest in relatively few properties, a small geographic area or a small
number of property types. As a result, the Fund’s exposure to REITs may be
subject to volatility. To the extent the Fund invests in REITs concentrated in
specific geographic areas or property types, the Fund may be subject to a
greater loss as a result of adverse developments affecting such areas or
property types. REITs are pooled investment vehicles with their own fees and
expenses and the Fund will indirectly bear a proportionate share of those fees
and expenses.
Sampling
Risk.
To the extent the Fund uses a representative sampling approach, it will hold a
smaller number of securities than are in the Target Index. As a result, an
adverse development respecting a security held by the Fund could result in a
greater decline in NAV than would be the case if the Fund held all of the
securities in the Target Index. Conversely, a positive development relating to a
security in the Target Index that is not held by the Fund could cause the Fund
to underperform the Target Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Secondary
Market Trading Risk.
Investors buying or selling Fund shares in the secondary market may pay
brokerage commissions or other charges, which may be a significant proportional
cost for investors seeking to buy or sell relatively small amounts of Fund
shares. Although the Fund’s shares are listed on the Exchange, there can be no
assurance that an active or liquid trading market for them will develop or be
maintained. In addition, trading in Fund shares on the Exchange may be
halted.
Tracking
Error Risk.
Tracking error is the divergence of the Fund’s performance from that of the
Target Index. Tracking error may occur due to, among other things, fees and
expenses paid by the Fund, including the cost of buying and selling securities,
that are not reflected in the Target Index. If the Fund is small, it may
experience greater tracking error. If the Fund is not fully invested, holding
cash balances may prevent it from tracking the Target Index. In addition, the
Fund’s NAV may deviate from the Target Index if the Fund fair values a portfolio
security at a price other than the price used by the Target Index for that
security. To the extent the Fund uses a representative sampling strategy to
track the Target Index, such a strategy may produce greater tracking error than
if the Fund employed a full replication strategy.
Large
Shareholder Risk.
Certain shareholders, including (i) the Adviser and its owners and officers and
(ii) other funds or accounts advised by the Adviser, may from time to time own a
substantial amount of the Fund’s shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an authorized participant, a lead
market maker, or another entity may invest in the Fund and hold its investment
for a limited period of time solely to facilitate commencement of the Fund or to
facilitate the Fund’s achieving a specified size or scale. There can be no
assurance that any large shareholder would not redeem its investment, that the
size of the Fund would be maintained at such levels or that the Fund would
continue to meet applicable listing requirements. Redemptions by large
shareholders could have a significant negative impact on the Fund. In addition,
transactions by large shareholders
may account for a large
percentage of the trading volume on the listing exchange and may, therefore,
have a material upward or downward effect on the market price of the
shares.
Turnover
Risk. The Fund may engage in frequent and active
trading, which may significantly increase the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300% is equivalent to the Fund
buying and selling all of its securities three times during the course of a
year. A high portfolio turnover rate would result in high brokerage costs for
the Fund, may result in higher taxes when shares are held in a taxable account
and lower Fund performance.
Performance
Information
The following
performance information indicates some of the risks of investing in the Fund.
The bar chart shows the Fund’s performance for the calendar year ended December
31. The table illustrates how the Fund’s average annual returns for the 1-year
and since inception periods compare with those of the Target Index and a broad
measure of market performance. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is also available on the
Fund’s website at www.globalbetaetf.com.
Calendar Year Total
Returns
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 18.69% for the quarter ended March 31, 2021, and the
lowest quarterly return was
-35.49% for the quarter ended March 31,
2020.
Average
Annual Total Returns
For
the Period Ended December 31, 2021
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Global
Beta Smart Income ETF |
1
Year |
Since
Inception
December 27,
2019 |
Return Before
Taxes |
32.09% |
10.44% |
Return After Taxes on
Distributions |
30.92% |
9.23% |
Return After Taxes on Distributions and
Sale of Shares |
19.75% |
7.78% |
Global
Beta Smart Income Index(1)
(reflects no deduction for
fees, expenses, or taxes) |
32.49% |
10.51% |
S&P
900 Index(1)
(reflects
no deduction for fees, expenses or taxes) |
28.48% |
22.85% |
(1)
Index performance shown in
the table is total return, which assumes reinvestment of any dividends and
distributions during the time periods shown.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above and do not reflect the impact
of state and local taxes. Actual after-tax returns depend on an
investor’s tax situation and may differ from those shown. A higher after-tax return
results when a
capital loss occurs upon redemption and
provides an assumed tax deduction that benefits the investor.
After-tax returns shown are
not relevant to investors who hold their Shares through tax advantaged
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser:
Global Beta Advisors LLC
Portfolio
Managers:
The following table lists the persons responsible for day-to-day management of
the Fund’s portfolio:
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Employee |
Length
of Service |
Title |
Justin
Lowry |
Since
inception (December 2019) |
Chief
Investment Officer |
Vincent
T. Lowry |
Since
inception (December 2019) |
Chief
Executive Officer |
Purchase
and Sale of Fund Shares
The
Fund is an ETF. Individual Fund shares may only be purchased and sold on a
national securities exchange through a broker-dealer and investors may pay a
commission to such broker-dealers in connection with their purchase or sale. The
price of Fund shares is based on market price, and because ETF shares trade at
market prices rather than NAV, shares may trade at a price greater than NAV (a
premium) or less than NAV (a discount). The Fund will only issue or redeem
shares aggregated into blocks of 25,000 shares or multiples thereof (“Creation
Units”) to Authorized Participants who have entered into agreements with the
Fund’s distributor. The Fund will issue or redeem Creation Units in return for a
basket of assets that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Fund shares (bid) and the lowest price a seller is
willing to accept for Fund shares (ask) when buying or selling Fund shares 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 www.globalbetaetf.com.
Tax
Information
The
Fund’s distributions are expected to be taxable as ordinary income, capital
gains, or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a 401(k) plan or an individual retirement
account. Distributions may be taxed as ordinary income when withdrawn from such
tax-advantaged arrangement.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Adviser or its related companies may pay the intermediary
for the sale of Fund 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.
Global Beta Low Beta ETF
Investment Objective
The Global Beta Low Beta ETF
(the “Fund”) seeks to track the performance (before fees and expenses) of the
Global Beta Low Beta Factor Index (the “Target
Index”).
Fees and Expenses
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 table and example
below.
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Annual
Fund Operating Expenses
(expenses
you pay each year as a % of the value of your
investment) |
Management
Fees |
0.29% |
Distribution
and/or Service (12b-1) Fees(1) |
0.00% |
Other
Expenses(2) |
0.00% |
Total
Annual Fund Operating Expenses |
0.29% |
(1)
Pursuant to a Rule 12b-1
distribution and service plan (“Plan”), the Fund may bear a 12b-1 fee not to
exceed 0.25% per annum of the Fund’s average daily net assets. However, no such
fee is currently paid by the Fund, and the Board of Trustees (the “Board”) of
Global Beta ETF Trust (the “Trust”) has not currently approved the commencement
of any payments under the Plan.
(2)
Expenses have been
restated to reflect current fees.
Example
The following example
is intended to help you compare the cost of investing in the Fund with the costs
of investing in other funds. The example assumes that you invest $10,000 in the
Fund 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 each
year. Although your actual costs may be higher
or lower, based on these assumptions, whether you do or do not sell your shares,
your costs would be:
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1
YEAR |
3
YEARS |
5
YEARS |
10
YEARS |
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$30 |
$93 |
$163 |
$368 |
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Portfolio
Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher turnover rate may indicate higher transaction costs and
may result in higher taxes when the Fund’s shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or the
example, affect the Fund’s performance. For the fiscal year ended
November 30, 2021, the Fund’s portfolio turnover rate was 115% of the average value of its
portfolio.
Principal Investment
Strategies
The
Fund seeks to track the performance (before fees and expenses) of the Target
Index. The Target Index is comprised of equity securities of U.S. companies from
the S&P 500 in the lowest quintile (i.e., the lowest 20% of the S&P 500)
based on their twelve month trailing beta relative to the S&P 500. Beta is a
measure of the relative volatility of a security as compared to the market. The
constituent securities of the Target Index are weighted based on their revenue,
with each individual index constituent capped at 5% at each quarterly rebalance.
As of January 29, 2022, the Target Index was comprised of 101 securities. The
S&P 500 is an investable benchmark for the large-cap segment of the U.S.
equity market (including real estate investment trusts (“REITs”)). As of January
29, 2022, the S&P 500 was comprised of 505 U.S. securities with
capitalizations ranging from $5.13 billion to $2.85 trillion. REITs are
companies that own or finance income-producing real estate.
The
Fund may use either a replication strategy or representative sampling strategy
in seeking to track the performance of the Target Index. Under a replication
strategy, the Fund intends to replicate the constituent securities of the Target
Index as closely as possible. Under a representative sampling strategy, the Fund
would invest in what it
believes
to be a representative sample of the component securities of the Target Index.
The Fund may use a representative sampling strategy when a replication strategy
might be detrimental to shareholders, such as when there are practical
difficulties or substantial costs involved in compiling a portfolio of
securities to follow the Target Index (e.g., where the Target Index contains
component securities too numerous to efficiently purchase or sell); or, in
certain instances, when a component security of the Target Index becomes
temporarily illiquid, unavailable or less liquid. The Fund may also use a
representative sampling strategy to exclude less liquid component securities
contained in the Target Index from the Fund’s portfolio in order to create a
more tradable portfolio and improve arbitrage opportunities. To the extent the
Fund uses a representative sampling strategy, it may not track the Target Index
with the same degree of accuracy as would an investment vehicle replicating the
entire index.
To
the extent that the Target Index concentrates (i.e., holds 25% or more of its
net assets) in securities of a particular industry or group of industries, the
Fund is expected to concentrate to approximately the same extent. As of January
29, 2022, the Target Index was concentrated in the Health Care and Consumer
Staples sectors.
The
Fund will primarily invest in U.S. companies that are included in the Target
Index. The Fund may invest its assets in investments not included in the Target
Index, but which Global Beta Advisors LLC (the “Adviser”) believes will help the
Fund track the Target Index. For example, there may be instances in which the
Adviser may choose to purchase or sell investments, including exchange-traded
funds (“ETFs”) and other investment company securities and cash and cash
equivalents, as substitutes for one or more Target Index components or in
anticipation of changes in the Target Index’s components.
The
Fund is classified as “non-diversified” under the 1940 Act, which means that a
relatively high percentage of the Fund’s assets may be invested in a limited
number of issuers.
S&P
Dow Jones Indices LLC (the “Index Provider”), in consultation with the Adviser,
developed the Target Index methodology. The Index Provider is responsible for
the ongoing maintenance, compilation, calculation and administration of the
Target Index. Subject to the Index Provider’s ownership of the S&P 500, the
Target Index, the values thereof, and the specifications provided by the Adviser
to the Index Provider, are proprietary to the Adviser. The Adviser may from time
to time request that the Index Provider make changes to the specifications of
the Target Index.
Principal Investment
Risks
There
can be no guarantee that the Fund will achieve its investment objective.
The Fund is an ETF, not a bank
deposit, and is not guaranteed or insured by the Federal Deposit Insurance
Corporation or any other government agency. The value of your investment may fall, sometimes
sharply, and you could lose money by investing in the Fund. The
Fund is subject to the principal investment risks noted below, any of which may
adversely affect the Fund’s net asset value (“NAV”), trading price, yield, total
return and ability to meet its investment objective.
Market
Events Risk.
The market values of the Fund’s investments, and therefore the value of the
Fund’s shares, will go up and down, sometimes rapidly or unpredictably. Market
risk may affect a single issuer, industry or section of the economy, or it may
affect the market as a whole. Turbulence in the financial markets and reduced
liquidity may negatively affect issuers, which could have an adverse effect on
the Fund. In addition, there is a risk that policy changes by the U.S.
Government, Federal Reserve and/or other government actors, such as increasing
interest rates, could cause increased volatility in financial markets and
disruption in the creation/redemption process of the Fund, which could have a
negative impact on the Fund. In addition, local, regional or global events such
as war, acts of terrorism, spread of infectious diseases or other public health
issues, recessions, or other events could have a significant negative impact on
the Fund and its investments. The current global outbreak of the novel strain of
coronavirus, COVID-19, has resulted in market closures and dislocations, extreme
volatility, liquidity constraints and increased trading costs. Efforts to
contain the spread of COVID-19 have resulted in global travel restrictions and
disruptions of healthcare systems, business operations and supply chains
(including business closures), layoffs, volatility in consumer demand and
employee availability, defaults and credit ratings downgrades, and other
significant economic impacts. The effects of COVID-19 have impacted global
economic activity across many industries and may heighten other pre-existing
political, social and economic risks, locally or globally. The full economic
impact and ongoing effects of the COVID-19 pandemic (or other future epidemics
or pandemics) at the macro level and on individual businesses are unpredictable
and may result in significant and prolonged effects on the Fund's performance.
In addition, governments, their regulatory agencies, or self-regulatory
organizations may
take
actions in response to the COVID-19 pandemic that affect the instruments in
which the Fund invests, or the issuers of such instruments, in ways that could
have a significant negative impact on the Fund's investment
performance.
Factor
Risk.
The Target Index, and thus the Fund, seeks to achieve the specific factor
exposures identified in the Fund’s principal investment strategies above. There
can be no assurance that targeting exposure to such factors will enhance the
Fund’s performance over time, and targeting exposure to those factors may
detract from performance in some market environments. There is no guarantee the
Index Provider’s methodology will be successful in creating an index that
achieves the specific factor exposures identified above.
Low
Beta Risk. Although
subject to the risks of common stocks, low volatility stocks are seen as having
a lower risk profile than the overall markets. However, a portfolio comprised of
low volatility stocks may not produce investment exposure that has lower
variability to changes in such stocks’ price levels. Low volatility stocks are
likely to underperform the broader market during periods of rapidly rising stock
prices. There is a risk that the present and future volatility of a security
will not be the same as it has historically been and thus that the Target Index
will not be exposed to less volatile securities.
Index-Related
Risk.
The Fund is managed with an investment strategy that attempts to track the
performance of the Target Index. As a result, the Fund expects to hold
constituent securities of the Target Index regardless of their current or
projected performance. Maintaining investments in securities regardless of
market conditions or the performance of individual securities could cause the
Fund’s return to be lower than if the Fund employed an active
strategy.
Risks
related to the Index Provider. There
is no assurance that the Index Provider will compile the Target Index
accurately, or that the Target Index will be determined, composed or calculated
accurately. While the Index Provider provides descriptions of what the Target
Index is designed to achieve, the Index Provider does not guarantee the quality,
accuracy or completeness of data in respect of its indexes, and does not
guarantee that the Target Index will be in line with its described index
methodology. Any gains, losses or costs to the Fund that are caused by Index
Provider errors will therefore be borne by the Fund and its
shareholders.
Sampling
Risk.
To the extent the Fund uses a representative sampling approach, it will hold a
smaller number of securities than are in the Target Index. As a result, an
adverse development respecting a security held by the Fund could result in a
greater decline in NAV than would be the case if the Fund held all of the
securities in the Target Index. Conversely, a positive development relating to a
security in the Target Index that is not held by the Fund could cause the Fund
to underperform the Target Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Tracking
Error Risk.
Tracking error is the divergence of the Fund’s performance from that of the
Target Index. Tracking error may occur due to, among other things, fees and
expenses paid by the Fund, including the cost of buying and selling securities,
that are not reflected in the Target Index. If the Fund is small, it may
experience greater tracking error. If the Fund is not fully invested, holding
cash balances may prevent it from tracking the Target Index. In addition, the
Fund’s NAV may deviate from the Target Index if the Fund fair values a portfolio
security at a price other than the price used by the Target Index for that
security. To the extent the Fund uses a representative sampling strategy to
track the Target Index, such a strategy may produce greater tracking error than
if the Fund employed a full replication strategy.
Premium-Discount
Risk.
Fund shares may trade above or below their NAV on the Exchange. The market
prices of Fund shares will generally fluctuate in accordance with changes in NAV
as well as the relative supply of, and demand for, Fund shares. Therefore, you
may pay more than NAV when you buy shares of the Fund on the Exchange, and you
may receive less than NAV when you sell those shares on the Exchange. This risk
is separate and distinct from the risk that the NAV of Fund shares may
decrease.
Secondary
Market Trading Risk.
Investors buying or selling Fund shares in the secondary market may pay
brokerage commissions or other charges, which may be a significant proportional
cost for investors seeking to buy or sell relatively small amounts of Fund
shares. Although the Fund’s shares are listed on the Exchange, there can be no
assurance that an active or liquid trading market for them will develop or be
maintained. In addition, trading in Fund shares on the Exchange may be
halted.
Non-Diversification
Risk. The Fund is classified as “non-diversified”
under the 1940 Act, which means that the Fund may invest a relatively high
percentage of its assets in a limited number of issuers. As a result, the Fund
may be more susceptible to a single adverse economic or regulatory occurrence
affecting one or more of these issuers, experience increased volatility and be
highly invested in certain issuers.
Concentration
Risk.
To the extent that the Target Index is concentrated in a particular industry,
group of industries or sector, the Fund is also expected to be concentrated in
that industry, group of industries or sector, which may subject the Fund to a
greater loss as a result of adverse economic, business or other developments
affecting that industry, group of industries or sector.
Consumer
Staples Sector Risk. The
consumer staples sector may be affected by, among other things, marketing
campaigns, changes in consumer demands, government regulations and changes in
commodity prices.
Healthcare
Sector Risk. The
profitability of companies in the healthcare sector may be affected by
government regulations and government healthcare programs, increases or
decreases in the cost of medical products and services, an increased emphasis on
outpatient services, and product liability claims, among other factors. Many
healthcare companies are heavily dependent on patent protection, and the
expiration of a company’s patent may adversely affect that company’s
profitability. Healthcare companies are subject to competitive forces that may
result in price discounting, and may be thinly capitalized and susceptible to
product obsolescence.
Equity
Investing Risk.
An investment in the Fund involves risks similar to those of investing in any
fund holding equity securities, such as market fluctuations, changes in interest
rates and perceived trends in stock prices. The values of equity securities
could decline generally or could underperform other investments. In addition,
securities may decline in value due to factors affecting a specific issuer,
market or securities markets generally.
Large
Capitalization Securities Risk.
The securities of large market capitalization companies may underperform other
segments of the market because such companies may be less responsive to
competitive challenges and opportunities and may be unable to attain high growth
rates during periods of economic expansion.
ETFs
and Other Investment Companies Risk.
The risks of investing in securities of ETFs and other investment companies
typically reflect the risks of the types of instruments in which the underlying
ETF or other investment company invests. In addition, with such investments, the
Fund indirectly bears its proportionate share of the fees and expenses of the
underlying entity. As a result, the Fund’s operating expenses may be higher and
performance may be lower.
REIT
Risk.
A REIT is a company that owns or finances income-producing real estate. The
Fund, through its investments in REITs, is subject to the risks of investing in
the real estate market, including decreases in property revenues, increases in
interest rates, increases in property taxes and operating expenses, legal and
regulatory changes, a lack of credit or capital, defaults by borrowers or
tenants, environmental problems and natural disasters.
REITs
are subject to additional risks, including those related to adverse governmental
actions, declines in property value and the real estate market, and the
potential failure to qualify for tax-free “pass-through” of net investment
income and net realized capital gains and exemption from registration as an
investment company. REITs are dependent upon specialized management skills and
may invest in relatively few properties, a small geographic area or a small
number of property types. As a result, the Fund’s exposure to REITs may be
subject to volatility. To the extent the Fund invests in REITs concentrated in
specific geographic areas or property types, the Fund may be subject to a
greater loss as a result of adverse developments affecting such areas or
property types. REITs are pooled investment vehicles with their own fees and
expenses and the Fund will indirectly bear a proportionate share of those fees
and expenses.
Authorized
Participants Concentration Risk.
The Fund has a limited number of financial institutions that may purchase and
redeem Fund shares directly from the Fund (“Authorized Participants”). To the
extent they cannot or are otherwise unwilling to engage in creation and
redemption transactions with the Fund and no other Authorized Participant steps
in, shares of the Fund may trade like closed-end fund shares at a significant
discount to NAV and may face trading halts and/or delisting from the Exchange.
This risk may be more pronounced in volatile markets, potentially where there
are significant redemptions in ETFs generally.
Cash
and Cash Equivalents Risk.
Holding cash or cash equivalents, even strategically, may lead to missed
investment opportunities. This is particularly true when the market for other
investments in which the Fund may invest is rapidly rising.
Large
Shareholder Risk.
Certain shareholders, including (i) the Adviser and its owners and officers and
(ii) other funds or accounts advised by the Adviser, may from time to time own a
substantial amount of the Fund’s shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an authorized participant, a lead
market maker, or another entity may invest in the Fund and hold its investment
for a limited period of time solely to facilitate commencement of the Fund or to
facilitate the Fund’s achieving a specified size or scale. There can be no
assurance that any large shareholder would not redeem its investment, that the
size of the Fund would be maintained at such levels or that the Fund would
continue to meet applicable listing requirements. Redemptions by large
shareholders could have a significant negative impact on the Fund. In addition,
transactions by large shareholders may account for a large percentage of the
trading volume on the listing exchange and may, therefore, have a material
upward or downward effect on the market price of the
shares.
Turnover Risk.
The Fund may engage in frequent and active
trading, which may significantly increase the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300% is equivalent to the Fund
buying and selling all of its securities three times during the course of a
year. A high portfolio turnover rate would result in high brokerage costs for
the Fund, may result in higher taxes when shares are held in a taxable account
and lower Fund performance.
Performance
Information
The following
performance information indicates some of the risks of investing in the Fund.
The bar chart shows the Fund’s performance for the calendar year ended December
31. The table illustrates how the Fund’s average annual returns for the 1-year
and since inception periods compare with those of the Target Index and a broad
measure of market performance. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is also available on the
Fund’s website at www.globalbetaetf.com.
Calendar Year Total
Returns
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 10.53% for the quarter ended December 31, 2021, and
the lowest quarterly return was
0.07% for the quarter ended September 30,
2021.
Average
Annual Total Returns
For
the Period Ended December 31, 2021
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|
|
Global
Beta Low Beta ETF |
1
Year |
Since
Inception
July 24,
2020 |
Return Before
Taxes |
22.80% |
22.42% |
Return After Taxes on
Distributions |
21.79% |
21.57% |
Return After Taxes on Distributions and
Sale of Shares |
13.99% |
17.12% |
Global
Beta Low Beta Factor Index(1)
(reflects no deduction for
fees, expenses, or taxes) |
23.50% |
22.97% |
S&P
500 Index(1)
(reflects
no deduction for fees, expenses or taxes) |
28.71% |
32.81% |
(1)
Index performance shown in
the table is total return, which assumes reinvestment of any dividends and
distributions during the time periods shown.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above and do not reflect the impact
of state and local taxes. Actual after-tax returns depend on an
investor’s tax situation and may differ from those shown. A higher after-tax return
results when a capital loss occurs upon redemption and provides an assumed tax
deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax advantaged
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser:
Global Beta Advisors LLC
Portfolio
Managers:
The following table lists the persons responsible for day-to-day management of
the Fund’s portfolio:
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|
Employee |
|
Length
of Service |
|
Title
|
Justin
Lowry |
|
Since
inception (July 2020) |
|
Chief
Investment Officer |
Vincent
T. Lowry |
|
Since
inception (July 2020) |
|
Chief
Executive Officer |
Purchase
and Sale of Fund Shares
The
Fund is an ETF. Individual Fund shares may only be purchased and sold on a
national securities exchange through a broker-dealer and investors may pay a
commission to such broker-dealers in connection with their purchase or sale. The
price of Fund shares is based on market price, and because ETF shares trade at
market prices rather than NAV, shares may trade at a price greater than NAV (a
premium) or less than NAV (a discount). The Fund will only issue or redeem
shares aggregated into blocks of 25,000 shares or multiples thereof (“Creation
Units”) to Authorized Participants who have entered into agreements with the
Fund’s distributor. The Fund will issue or redeem Creation Units in return for a
basket of assets that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Fund shares (bid) and the lowest price a seller is
willing to accept for Fund shares (ask) when buying or selling Fund shares 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 www.globalbetaetf.com.
Tax
Information
The
Fund’s distributions are expected to be taxable as ordinary income, capital
gains, or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a 401(k) plan or an individual retirement
account. Distributions may be taxed as ordinary income when withdrawn from such
tax-advantaged arrangement.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Adviser or its related companies may pay the intermediary
for the sale of Fund 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.
Global
Beta Rising Stars
ETF
Investment Objective
The Global Beta Rising Stars
ETF (the “Fund”) seeks to track the performance (before fees and expenses) of
the FactSet Rising Stars Index (the “Target
Index”).
Fees and Expenses
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 table and example
below.
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|
|
|
|
|
Annual
Fund Operating Expenses
(expenses you pay each year as a % of the value of your
investment) |
Management
Fees |
0.29% |
Distribution
and/or Service (12b-1) Fees(1) |
0.00% |
Other
Expenses(2) |
0.00% |
Total
Annual Fund Operating Expenses |
0.29% |
(1)
Pursuant to a Rule 12b-1
distribution and service plan (“Plan”), the Fund may bear a 12b-1 fee not to
exceed 0.25% per annum of the Fund’s average daily net assets. However, no such
fee is currently paid by the Fund, and the Board of Trustees (the “Board”) of
Global Beta ETF Trust (the “Trust”) has not currently approved the commencement
of any payments under the Plan.
(2)
Expenses have been
restated to reflect current fees.
Example
The following example
is intended to help you compare the cost of investing in the Fund with the costs
of investing in other funds. The example assumes that you invest $10,000 in the
Fund 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 each
year. Although your actual costs may be higher
or lower, based on these assumptions, whether you do or do not sell your shares,
your costs would be:
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|
1
YEAR |
3
YEARS |
5
YEARS |
10
YEARS |
|
|
$30 |
$93 |
$163 |
$368 |
|
|
Portfolio
Turnover
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher turnover rate may indicate higher transaction costs and
may result in higher taxes when the Fund’s shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or the
example, affect the Fund’s performance. For the fiscal year ended
November 30, 2021, the Fund’s portfolio turnover rate was 312% of the average value of its
portfolio.
Principal Investment
Strategies
The
Fund seeks to track the performance (before fees and expenses) of the Target
Index, which is comprised of 100 U.S.-listed companies with operations in the
technology sector and that are selected based on a combination of valuation- and
growth-related factors. The Target Index may include small, medium, and large
capitalization companies.
The
Target Index is expected to be predominantly comprised of companies in the
technology sector and concentrated (i.e., hold 25% or more of its net assets) in
companies in the software sub-industry. To the extent that the Target Index
concentrates in securities of a particular industry or group of industries, the
Fund is expected to concentrate to approximately the same extent.
The
Target Index’s construction begins with the universe of the 3,000 largest
companies by market capitalization whose equity securities are listed on either
the New York Stock Exchange or the Nasdaq Stock Market, LLC. Such companies are
then screened to keep only companies with a minimum market capitalization of
$500 million and
whose
equity securities meet certain liquidity thresholds (the remaining companies
collectively, the “Index Universe”).
For
each company in the Index Universe, the Target Index evaluates each company’s
valuation relative to its sales growth rate over the prior year. Specifically,
the Target Index’s methodology calculates the difference between each company’s
recent year-over-year sales growth rate and the annual sales growth rate that
would be needed over the next 10 years to justify the company’s current market
valuation based primarily on the company’s price-to-sales ratio (such
difference, the “Excess Growth Rate”). Companies in the Index Universe whose
Excess Growth Rate ranks in the top 75% of companies in the Index Universe are
eligible to be included in the Target Index (the “Eligible Companies”).
The
Eligible Companies are then evaluated based on the following growth-related
factors: market share growth, industry growth, and, to a lesser extent,
operating margin growth. Each Eligible Company receives a score for each of the
factors. The results for all Eligible Companies for a given factor (e.g., market
share growth) are then ranked, and companies whose results rank in the top 20%
(i.e., the top quintile) of results receive the highest score while companies in
each of the lower quintiles receive scores that decrease with each quintile.
Because certain factors are focused on revenue from sub-industries within the
technology sector, the scores with respect to such factors will favor companies
earning all or a significant portion of their revenue from the technology
sector.
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|
Market
Share Growth Rate |
This
factor looks at a company’s year-over-year market share growth rate in
sub-industries within the technology sector. A company’s rank will be
higher if its combined weighted average market share growth rate across
all technology sub-industries is higher than other companies. The weighted
average is based on the company's percent of revenues earned in a
particular sub-industry. |
Industry
Growth |
This
factor looks at technology sub-industries’ year-over-year revenue growth
rate. A company’s rank will be higher if the growth rate of the
sub-industries it earns revenues from is higher than sub-industries that
other companies participate in. This is factored on a weighted average
basis. The weighted average is based on the company's percent of revenues
earned in that particular sub-industry. |
Operating
Margin Growth |
This
factor looks at the year-over-year growth rate of a company’s operating
margin. A company’s rank will be higher if its operating margin growth
rate is higher. |
The
Target Index is reconstituted and rebalanced quarterly. At the time of each
reconstitution of the Target Index, the 100 Eligible Companies with the highest
cumulative scores for the above factors are included in the Target Index and are
weighted based on their cumulative scores relative to each other.
The
Fund may use either a replication strategy or representative sampling strategy
in seeking to track the performance of the Target Index. Under a replication
strategy, the Fund intends to replicate the constituent securities of the Target
Index as closely as possible. Under a representative sampling strategy, the Fund
would invest in what it believes to be a representative sample of the component
securities of the Target Index. The Fund may use a representative sampling
strategy when a replication strategy might be detrimental to shareholders, such
as when there are practical difficulties or substantial costs involved in
compiling a portfolio of securities to follow the Target Index (e.g., where the
Target Index contains component securities too numerous to efficiently purchase
or sell); or, in certain instances, when a component security of the Target
Index becomes temporarily illiquid, unavailable or less liquid. The Fund may
also use a representative sampling strategy to exclude less liquid component
securities contained in the Target Index from the Fund’s portfolio in order to
create a more tradable portfolio and improve arbitrage opportunities. To the
extent the Fund uses a representative sampling strategy, it may not track the
Target Index with the same degree of accuracy as would an investment vehicle
replicating the entire index.
The
Fund will primarily invest in U.S. companies that are included in the Target
Index. The Fund may invest its assets in investments not included in the Target
Index, but which the Adviser believes will help the Fund track the Target Index.
For example, there may be instances in which the Adviser may choose to purchase
or sell investments, including exchange-traded funds (“ETFs”) and other
investment company securities and cash and cash equivalents, as substitutes for
one or more Target Index components or in anticipation of changes in the Target
Index’s components.
The
Fund is classified as “non-diversified” under the 1940 Act, which means that a
relatively high percentage of the Fund’s assets may be invested in a limited
number of issuers.
FactSet
Research Systems Inc. (the “Index Provider”), in consultation with the Adviser,
developed the Target Index methodology. The Index Provider is responsible for
the ongoing maintenance, compilation, and administration of the Target Index.
The Adviser may from time to time request that the Index Provider make changes
to the specifications of the Target Index.
Principal Investment
Risks
There
can be no guarantee that the Fund will achieve its investment objective.
The Fund is an ETF, not a bank
deposit, and is not guaranteed or insured by the Federal Deposit Insurance
Corporation or any other government agency. The value of your investment may fall, sometimes
sharply, and you could lose money by investing in the Fund. The
Fund is subject to the principal investment risks noted below, any of which may
adversely affect the Fund’s net asset value (“NAV”), trading price, yield, total
return and ability to meet its investment objective.
Market
Events Risk.
The market values of the Fund’s investments, and therefore the value of the
Fund’s shares, will go up and down, sometimes rapidly or unpredictably. Market
risk may affect a single issuer, industry or section of the economy, or it may
affect the market as a whole. Turbulence in the financial markets and reduced
liquidity may negatively affect issuers, which could have an adverse effect on
the Fund. In addition, there is a risk that policy changes by the U.S.
Government, Federal Reserve and/or other government actors, such as increasing
interest rates, could cause increased volatility in financial markets and
disruption in the creation/redemption process of the Fund, which could have a
negative impact on the Fund. In addition, local, regional or global events such
as war, acts of terrorism, spread of infectious diseases or other public health
issues, recessions, or other events could have a significant negative impact on
the Fund and its investments. The current global outbreak of the novel strain of
coronavirus, COVID-19, has resulted in market closures and dislocations, extreme
volatility, liquidity constraints and increased trading costs. Efforts to
contain the spread of COVID-19 have resulted in global travel restrictions and
disruptions of healthcare systems, business operations and supply chains
(including business closures), layoffs, volatility in consumer demand and
employee availability, defaults and credit ratings downgrades, and other
significant economic impacts. The effects of COVID-19 have impacted global
economic activity across many industries and may heighten other pre-existing
political, social and economic risks, locally or globally. The full economic
impact and ongoing effects of the COVID-19 pandemic (or other future epidemics
or pandemics) at the macro level and on individual businesses are unpredictable
and may result in significant and prolonged effects on the Fund's performance.
In addition, governments, their regulatory agencies, or self-regulatory
organizations may take actions in response to the COVID-19 pandemic that affect
the instruments in which the Fund invests, or the issuers of such instruments,
in ways that could have a significant negative impact on the Fund's investment
performance.
Factor
Risk.
The Target Index, and thus the Fund, seeks to achieve the specific factor
exposures identified in the Fund’s principal investment strategies above. There
can be no assurance that targeting exposure to such factors will enhance the
Fund’s performance over time, and targeting exposure to those factors may
detract from performance in some market environments. There is no guarantee the
Index Provider’s methodology will be successful in creating an index that
achieves the specific factor exposures identified above.
Growth
Securities Risk. The
Fund invests in growth securities, which may be more volatile than other types
of investments, may perform differently than the market as a whole and may
underperform when compared to securities with different investment parameters.
Under certain market conditions, growth securities have performed better during
the later stages of economic recovery (although there is no guarantee that they
will continue to do so). Therefore, growth securities may go in and out of favor
over time.
Volatility
Risk. There
is a risk that the present and future volatility of a security will not be the
same as it historically has been and thus that the Target Index will not be
exposed to less volatile securities. Volatile stocks are subject to sharp swings
in value.
Index-Related
Risk.
The Fund is managed with an investment strategy that attempts to track the
performance of the Target Index. As a result, the Fund expects to hold
constituent securities of the Target Index regardless of their current or
projected performance. Maintaining investments in securities regardless of
market conditions or the
performance
of individual securities could cause the Fund’s return to be lower than if the
Fund employed an active strategy.
Risks
related to the Index Provider. There
is no assurance that the Index Provider will compile the Target Index
accurately, or that the Target Index will be determined, composed or calculated
accurately. While the Index Provider provides descriptions of what the Target
Index is designed to achieve, the Index Provider does not guarantee the quality,
accuracy or completeness of data in respect of its indexes, and does not
guarantee that the Target Index will be in line with its described index
methodology. Any gains, losses or costs to the Fund that are caused by Index
Provider errors will therefore be borne by the Fund and its
shareholders.
Sampling
Risk.
To the extent the Fund uses a representative sampling approach, it will hold a
smaller number of securities than are in the Target Index. As a result, an
adverse development respecting a security held by the Fund could result in a
greater decline in NAV than would be the case if the Fund held all of the
securities in the Target Index. Conversely, a positive development relating to a
security in the Target Index that is not held by the Fund could cause the Fund
to underperform the Target Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Tracking
Error Risk.
Tracking error is the divergence of the Fund’s performance from that of the
Target Index. Tracking error may occur due to, among other things, fees and
expenses paid by the Fund, including the cost of buying and selling securities,
that are not reflected in the Target Index. If the Fund is small, it may
experience greater tracking error. If the Fund is not fully invested, holding
cash balances may prevent it from tracking the Target Index. In addition, the
Fund’s NAV may deviate from the Target Index if the Fund fair values a portfolio
security at a price other than the price used by the Target Index for that
security. To the extent the Fund uses a representative sampling strategy to
track the Target Index, such a strategy may produce greater tracking error than
if the Fund employed a full replication strategy.
Premium-Discount
Risk.
Fund shares may trade above or below their NAV on the Exchange. The market
prices of Fund shares will generally fluctuate in accordance with changes in NAV
as well as the relative supply of, and demand for, Fund shares. Therefore, you
may pay more than NAV when you buy shares of the Fund on the Exchange, and you
may receive less than NAV when you sell those shares on the Exchange. This risk
is separate and distinct from the risk that the NAV of Fund shares may
decrease.
Secondary
Market Trading Risk.
Investors buying or selling Fund shares in the secondary market may pay
brokerage commissions or other charges, which may be a significant proportional
cost for investors seeking to buy or sell relatively small amounts of Fund
shares. Although the Fund’s shares are listed on the Exchange, there can be no
assurance that an active or liquid trading market for them will develop or be
maintained. In addition, trading in Fund shares on the Exchange may be
halted.
Non-Diversification
Risk. The Fund is classified as “non-diversified”
under the 1940 Act, which means that the Fund may invest a relatively high
percentage of its assets in a limited number of issuers. As a result, the Fund
may be more susceptible to a single adverse economic or regulatory occurrence
affecting one or more of these issuers, experience increased volatility and be
highly invested in certain issuers.
Concentration
Risk.
To the extent that the Target Index is concentrated in a particular industry,
group of industries or sector, the Fund is also expected to be concentrated in
that industry, group of industries or sector, which may subject the Fund to a
greater loss as a result of adverse economic, business or other developments
affecting that industry, group of industries or sector.
Technology
Sector Risk. Technology
companies face intense competition and potentially rapid product obsolescence.
They are also heavily dependent on intellectual property rights and may be
adversely affected by the loss or impairment of those rights. Companies in the
software industry may be adversely affected by, among other things, the decline
or fluctuation of subscription renewal rates for their products and services and
actual or perceived vulnerabilities in their products or services.
Software
Industry Risk.
Software companies are subject to the risks of companies in the technology
sector (see above), as well as the following additional risks. Software
companies can be significantly affected by aggressive pricing, changing domestic
demand, the availability and price of components, cyclical market
patterns,
evolving industry standards, and frequent new product introductions. The success
of software companies depends in substantial part on the timely and successful
introduction of new products and the ability to service such products. Many
software companies rely on intellectual property laws to protect their
proprietary rights in their products and technologies, and there can be no
assurance that a company will be able to prevent misappropriation of technology
or that competitors will not independently develop comparable or superior
technologies.
Equity
Investing Risk.
An investment in the Fund involves risks similar to those of investing in any
fund holding equity securities, such as market fluctuations, changes in interest
rates and perceived trends in stock prices. The values of equity securities
could decline generally or could underperform other investments. In addition,
securities may decline in value due to factors affecting a specific issuer,
market or securities markets generally.
Large
Capitalization Securities Risk.
The securities of large market capitalization companies may underperform other
segments of the market because such companies may be less responsive to
competitive challenges and opportunities and may be unable to attain high growth
rates during periods of economic expansion.
Small-
and Mid-Capitalization Securities Risk.
The securities of small- and mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price changes
than larger capitalization stocks or the stock market as a whole. Small- and
mid-capitalization companies may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs, and
earnings.
ETFs
and Other Investment Companies Risk.
The risks of investing in securities of ETFs and other investment companies
typically reflect the risks of the types of instruments in which the underlying
ETF or other investment company invests. In addition, with such investments, the
Fund indirectly bears its proportionate share of the fees and expenses of the
underlying entity. As a result, the Fund’s operating expenses may be higher and
performance may be lower.
Authorized
Participants Concentration Risk.
The Fund has a limited number of financial institutions that may purchase and
redeem Fund shares directly from the Fund (“Authorized Participants”). To the
extent they cannot or are otherwise unwilling to engage in creation and
redemption transactions with the Fund and no other Authorized Participant steps
in, shares of the Fund may trade like closed-end fund shares at a significant
discount to NAV and may face trading halts and/or delisting from the Exchange.
This risk may be more pronounced in volatile markets, potentially where there
are significant redemptions in ETFs generally.
Cash
and Cash Equivalents Risk.
Holding cash or cash equivalents, even strategically, may lead to missed
investment opportunities. This is particularly true when the market for other
investments in which the Fund may invest is rapidly rising.
Large
Shareholder Risk.
Certain shareholders, including (i) the Adviser and its owners and officers and
(ii) other funds or accounts advised by the Adviser, may from time to time own a
substantial amount of the Fund’s shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an authorized participant, a lead
market maker, or another entity may invest in the Fund and hold its investment
for a limited period of time solely to facilitate commencement of the Fund or to
facilitate the Fund’s achieving a specified size or scale. There can be no
assurance that any large shareholder would not redeem its investment, that the
size of the Fund would be maintained at such levels or that the Fund would
continue to meet applicable listing requirements. Redemptions by large
shareholders could have a significant negative impact on the Fund. In addition,
transactions by large shareholders may account for a large percentage of the
trading volume on the listing exchange and may, therefore, have a material
upward or downward effect on the market price of the
shares.
Turnover
Risk.
The Fund may engage in frequent and active trading, which may significantly
increase the Fund’s portfolio turnover rate. At times, the Fund may have a
portfolio turnover rate substantially greater than 100%. For example, a
portfolio turnover rate of 300% is equivalent to the Fund buying and selling all
of its securities three times during the course of a year. A high portfolio
turnover rate would result in high brokerage costs for the Fund, may result in
higher taxes when shares are held in a taxable account and lower Fund
performance.
Performance
Information
The following
performance information indicates some of the risks of investing in the Fund.
The bar chart shows the Fund’s performance for the calendar year ended December
31. The table illustrates how the Fund’s average annual returns for the 1-year
and since inception periods compare with those of the Target Index and a broad
measure of market performance. Effective December 21, 2020, the
Fund's underlying index was changed from the Global Beta Momentum-Growth Factor
Index (“Former Target Index”) to the Target Index. The Former
Target Index was comprised of equity securities of U.S. companies from the
S&P 500 in the highest quintile (i.e., the highest 20% of the S&P 500)
based on their year-over-year revenue growth rate, as measured by their most
recently reported quarterly revenue as compared to the quarterly revenue
reported four quarters ago. Fund performance shown below prior to December 21,
2020 reflects the Fund seeking to track the performance of the Former Target
Index and Fund performance shown below beginning December 21, 2020 reflects the
Fund seeking to track the performance of the Target Index. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is also available on the
Fund’s website at www.globalbetaetf.com.
Calendar Year Total
Returns
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 6.69% for the quarter ended June 30, 2021, and the
lowest quarterly return was
-7.93% for the quarter ended September 30,
2021.
Average
Annual Total Returns
For
the Period Ended December 31, 2021
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|
Global
Beta Rising Stars ETF |
1
Year |
Since
Inception
July 24,
2020 |
Return Before
Taxes |
3.19% |
11.32 |
% |
|
Return After Taxes on
Distributions |
3.06% |
11.18 |
% |
|
Return After Taxes on Distributions and
Sale of Shares |
1.98% |
8.67 |
% |
|
Blended
FactSet Rising Stars Index(1)
(reflects no deduction for
fees, expenses, or taxes) |
3.24% |
11.24 |
% |
(2) |
Blended
S&P 1500 Index(1)(3)
(reflects
no deduction for fees, expenses or taxes) |
28.45% |
33.20 |
% |
|
(1)
Index performance shown in
the table is total return, which assumes reinvestment of any dividends and
distributions during the time periods shown.
(2)
The FactSet Rising Stars
Index performance information reflects the blended performance of the Global
Beta Momentum-Growth Factor Index through December 18, 2020 and the FactSet
Rising Stars Index thereafter.
(3)
In connection with the
change of the Fund’s underlying index, effective December 18, 2020, the Fund’s
benchmark index changed from the S&P 500 Index to the S&P 1500
Index.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above and do not reflect the impact
of state and local taxes. Actual after-tax returns depend on an
investor’s tax situation and may differ from those shown. A higher after-tax return
results when a capital loss occurs upon redemption and provides an assumed tax
deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax advantaged
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser:
Global Beta Advisors LLC
Portfolio
Managers:
The following table lists the persons responsible for day-to-day management of
the Fund’s portfolio:
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|
Employee |
|
Length
of Service |
|
Title
|
Justin
Lowry |
|
Since
inception (July 2020) |
|
Chief
Investment Officer |
Vincent
T. Lowry |
|
Since
inception (July 2020) |
|
Chief
Executive Officer |
Purchase
and Sale of Fund Shares
The
Fund is an ETF. Individual Fund shares may only be purchased and sold on a
national securities exchange through a broker-dealer and investors may pay a
commission to such broker-dealers in connection with their purchase or sale. The
price of Fund shares is based on market price, and because ETF shares trade at
market prices rather than NAV, shares may trade at a price greater than NAV (a
premium) or less than NAV (a discount). The Fund will only issue or redeem
shares aggregated into blocks of 25,000 shares or multiples thereof (“Creation
Units”) to Authorized Participants who have entered into agreements with the
Fund’s distributor. The Fund will issue or redeem Creation Units in return for a
basket of assets that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Fund shares (bid) and the lowest price a seller is
willing to accept for Fund shares (ask) when buying or selling Fund shares 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 www.globalbetaetf.com.
Tax
Information
The
Fund’s distributions are expected to be taxable as ordinary income, capital
gains, or some combination of both, unless you are investing through a
tax-advantaged arrangement, such as a 401(k) plan or an individual retirement
account. Distributions may be taxed as ordinary income when withdrawn from such
tax-advantaged arrangement.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Adviser or its related companies may pay the intermediary
for the sale of Fund 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.
More
Information About the Funds
More
Information About the Funds’ Investment Objectives
Each
Fund seeks to track the performance (before fees and expenses) of its Target
Index.
Each
Fund’s investment objective is non-fundamental and may be changed without
shareholder approval upon notice to shareholders.
More
Information About the Funds’ Principal Investment Strategies
Each
Fund seeks to track the performance (before fees and expenses) of its Target
Index. Each Fund will invest primarily in U.S. companies as a result of seeking
to track its Target Index. Each Fund may use either a replication strategy or
representative sampling strategy in seeking to track the performance of its
Target Index. Under a replication strategy, a Fund intends to replicate the
constituent securities of the Target Index as closely as possible. Under a
representative sampling strategy, a Fund would invest in what it believes to be
a representative sample of the component securities of the Target Index. A Fund
may use a representative sampling strategy when a replication strategy might be
detrimental to shareholders, such as when there are practical difficulties or
substantial costs involved in compiling a portfolio of securities to follow the
Target Index (e.g., where the Target Index contains component securities too
numerous to efficiently purchase or sell); or, in certain instances, when a
component security of the Target Index becomes temporarily illiquid, unavailable
or less liquid. A Fund may also use a representative sampling strategy to
exclude less liquid component securities contained in the Target Index from the
Fund’s portfolio in order to create a more tradable portfolio and improve
arbitrage opportunities.
To
the extent a Fund uses a representative sampling strategy, it may not track the
Target Index with the same degree of accuracy as would an investment vehicle
replicating the entire index. For example, the Adviser may use a representative
sampling if one or more of the component securities in the Target Index began to
raise liquidity concerns, and the Adviser may determine to exclude those
component securities from the Fund’s portfolio until the liquidity concerns were
lifted. In addition, the Fund may not be able to invest in certain securities
included in the Target Index due to restrictions or limitations on the trading
of such securities. When securities are deleted from the Target Index, the
Adviser will typically remove these securities from the Fund’s portfolio.
However, in the discretion of the Adviser, the Fund may remain invested in
securities that were deleted from the Target Index until the next rebalancing of
the Fund.
Each
Fund may invest its assets in investments not included in its Target Index, but
which the Adviser believes will help the Fund track the Target Index. For
example, there may be instances in which the Adviser may choose to purchase or
sell investments, including ETFs and other investment company securities and
cash and cash equivalents, as substitutes for one or more Target Index
components or in anticipation of changes in the Target Index’s components. There
may also be instances in which the Adviser may choose to overweight securities
in the Target Index. The Fund may not be fully invested at times as a result of,
for example, cash flows into the Fund or reserves of cash held by the Fund to
meet redemptions and pay expenses. Under these circumstances, the Fund may not
track the Target Index with the same degree of accuracy as it otherwise
would.
The
Index Provider for each Target Index, in consultation with the Adviser,
developed the respective Target Index methodology. Each Index Provider for the
Global Beta Smart Income ETF and the Global Beta Low Beta ETF is responsible for
the ongoing maintenance, compilation, calculation, and administration of the
respective Target Index. The Index Provider for the Global Beta Rising Stars ETF
is responsible for the ongoing maintenance, compilation, and administration of
its respective Target Index. Subject to the ownership by S&P Dow Jones
Indices LLC of the S&P 500 and S&P 900, the Global Beta Low Beta Factor
Index and Global Beta Smart Income Index, respectively, the values thereof, and
the specifications provided by the Adviser to the Index Provider, are
proprietary to the Adviser. The Adviser may from time to time request that an
Index Provider make changes to the specifications of a Target Index. Each Target
Index is unmanaged and cannot be invested in directly.
The
Global Beta Low Beta ETF and the Global Beta Rising Stars ETF are classified as
“non-diversified” under the 1940 Act, which means that a relatively high
percentage of a Fund’s assets may be invested in a limited number of issuers.
The
Global Beta Smart Income ETF is classified as “diversified” under the 1940 Act,
which means that at least 75% of the value of the Fund’s total assets is
represented by cash and cash items (including receivables), government
securities,
securities of other investment companies, and securities of other issuers, which
for purposes of this calculation, are limited in respect of any one issuer to an
amount not greater in value than 5% of the Fund’s total assets and to not more
than 10% of the outstanding voting securities of such issuer.
The
S&P 900 is an investable benchmark for the mid- to large-cap segment of the
U.S. equity market. As of January 29, 2022, the S&P 900 was comprised of
equity securities in the following sectors: information technology, health care,
financials, consumer discretionary, industrials, communication services,
consumer staples, energy, real estate (including REITs), utilities, and
materials. REITs are companies that own or finance income-producing real estate.
As of January 29, 2022 the S&P 900 was comprised of 905 U.S. securities with
capitalizations ranging from $2.14 billion to $2.85 trillion.
The
S&P 500 is an investable benchmark for the large-cap segment of the U.S.
equity market. As of January 29, 2022, the S&P 500 was comprised of equity
securities in the following sectors: information technology, health care,
financials, consumer discretionary, industrials, communication services,
consumer staples, energy, real estate (including REITs), utilities, and
materials. REITs are companies that own or finance income-producing real estate.
As of January 29, 2022, the S&P 500 was comprised of 505 U.S. securities
with capitalizations ranging from $5.13 billion to $2.85 trillion.
Global
Beta Smart Income ETF:
The Target Index is designed to reflect the performance of constituents from the
S&P 900 with the highest average twelve month trailing dividend yield over
each of the prior four quarters,diversified by GICS®
sector and re-weighted based on revenue. The Target Index calculates the average
twelve month trailing dividend yield of the constituents of the S&P 900 over
each of the prior four quarters and initially selects those securities in the
highest quintile. The Target Index then selects those securities with an average
twelve month trailing dividend yield over each of the prior four quarters that
rank in the top half within their respective GICS®
sector classification. The Target Index then re-weights those securities based
on their revenue, with each individual index constituent capped at 4.5% at each
quarterly rebalance. Any company that has cut or suspended its dividend will be
removed from the Target Index at the next quarterly rebalance and will be
ineligible for inclusion in the Target Index until it increases or reinstitutes
its dividend. In the event that the cut/suspension results in a dividend that,
when annualized, would result in a dividend yield below 3.5%, the company will
be removed promptly from the Target Index. In addition, index constituents from
the energy sector, as classified by GICS®,
are capped at 3% in the aggregate in the Target Index at each quarterly
rebalance when the price of crude oil, as defined by Crude Oil WTI futures
(ticker: CL00), is below its 30 day moving average. Target Index constituents
are only capped at quarterly rebalances. As of January 29, 2022, the Target
Index was comprised of 92 securities.
To
the extent that the Target Index concentrates (i.e., holds 25% or more of its
net assets) in securities of a particular industry or group of industries, the
Fund is expected to concentrate to approximately the same extent.
Global
Beta Low Beta ETF:
The Target Index is designed to reflect the performance of constituents from the
S&P 500 in the lowest quintile (i.e., the lowest 20% of the S&P 500)
based on their twelve month trailing beta relative to the S&P 500,
re-weighted based on revenue. Beta is a measure of the relative volatility of a
security as compared to the market. The Target Index calculates the twelve month
trailing beta of the constituents of the S&P 500 and initially selects those
securities in the lowest quintile. The Target Index then re-weights those
securities based on their revenue, with each individual index constituent capped
at 5% at each quarterly rebalance. Target Index constituents are only capped at
quarterly rebalances. As of January 29, 2022, the Target Index was comprised of
101 securities.
To
the extent that the Target Index concentrates (i.e., holds 25% or more of its
net assets) in securities of a particular industry or group of industries, the
Fund is expected to concentrate to approximately the same extent. As of January
29, 2022, the Target Index was concentrated in the Health Care and Consumer
Staples sectors.
Global
Beta Rising Stars ETF: The
FactSet Rising Stars Index evaluated Eligible Companies based on the
growth-related factors described in the table below. Because certain factors are
focused on revenue from sub-industries within the technology sector, the scores
with respect to such factors will favor companies earning all or a significant
portion of their revenue from the technology sector.
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Market
Share Growth Rate |
This
factor looks at a company’s year-over-year market share growth rate in
sub-industries within the technology sector. A company’s rank will be
higher if its combined weighted average market share growth rate across
all technology sub-industries is higher than other companies. The weighted
average is based on the company's percent of revenues earned in a
particular sub-industry. A company’ rank will be lower if its combined
weighted average market share growth rate across all technology
sub-industries is lower than other companies. |
Industry
Growth |
This
factor looks at technology sub-industries’ year-over-year revenue growth
rate. A company’s rank will be higher if the growth rate of the
sub-industries it earns revenues from is higher than sub-industries that
other companies participate in. This is factored on a weighted average
basis. The weighted average is based on the company's percent of revenues
earned in that particular sub-industry. A company’s rank will be lower if
the growth rate of the sub-industries it earns revenues from is lower than
sub-industries that other companies participate in. |
Operating
Margin Growth |
This
factor looks at the year-over-year growth rate of a company’s operating
margin. A company’s rank will be higher if its operating margin growth
rate is higher. In contrast, a company’s rank will be lower if its
operating margin growth rate is lower or
negative. |
The
Index Calculation Agent for the FactSet Rising Stars Index is Solactive AG,
which is not affiliated with the Fund, the Adviser, the Index Provider, or the
Fund’s distributor. The Index Calculation Agent provides information to the Fund
about the constituents of the Target Index and does not provide investment
advice with respect to the desirability of investing in, purchasing or selling
securities.
The
Target Index is expected to be predominantly comprised of companies in the
technology sector and concentrated (i.e., hold 25% or more of its net assets) in
companies in the software sub-industry. To the extent that the Target Index
concentrates in securities of a particular industry or group of industries, the
Fund is expected to concentrate to approximately the same extent.
More
Information about the Funds’ Principal Investment Risks
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Risks
|
Global
Beta Smart Income ETF |
Global
Beta Low Beta ETF |
Global
Beta Rising Stars ETF |
Principal
Risks |
|
|
|
Market
Events Risk |
X |
X |
X |
Factor
Risk |
X |
X |
X |
Low
Beta Risk |
|
X |
|
Growth
Securities Risk |
|
|
X |
Volatility
Risk |
|
|
X |
Index-Related
Risk |
X |
X |
X |
Dividend-Paying
Securities Risk |
X |
|
|
Sampling
Risk |
X |
X |
X |
Tracking
Error Risk |
X |
X |
X |
Premium-Discount
Risk |
X |
X |
X |
Secondary
Market Trading Risk |
X |
X |
X |
Non-Diversification
Risk |
|
X |
X |
Concentration
Risk |
X |
X |
X |
Consumer
Staples Sector Risk |
|
X |
|
Healthcare
Sector Risk |
|
X |
|
Technology
Sector Risk |
|
|
X |
Software
Industry Risk |
|
|
X |
Equity
Investing Risk |
X |
X |
X |
Large
Capitalization Securities Risk |
X |
X |
X |
Small-
and Mid-Capitalization Securities Risk |
|
|
X |
Mid-Capitalization
Securities Risk |
X |
|
|
ETFs
and Other Investment Companies Risk |
X |
X |
X |
REIT
Risk |
X |
X |
|
Authorized
Participants Concentration Risk |
X |
X |
X |
Cash
and Cash Equivalents Risk |
X |
X |
X |
Large
Shareholder Risk |
X |
X |
X |
Turnover
Risk |
X |
X |
X |
Market
Events Risk. The
market values of the Fund’s investments, and therefore the value of the Fund’s
shares, will go up and down, sometimes rapidly or unpredictably. Market risk may
affect a single issuer, industry or section of the economy, or it may affect the
market as a whole. The value of the Fund’s investments may go up or down due to
general market conditions that are not specifically related to the particular
issuer, such as real or perceived adverse economic conditions, changes in the
general outlook for revenues or corporate earnings, changes in interest or
currency rates, regional or global instability, or adverse investor sentiment
generally. The value of the Fund’s investments may also go up or down due to
factors that affect an individual issuer or a particular industry or sector,
such as changes in production costs, supply and demand, and competitive
conditions within an industry. In addition, unexpected events and their
aftermaths, such as pandemics, epidemics or other public health issues; natural,
environmental or man- made disasters; financial, political or social
disruptions; terrorism and war; and other tragedies or catastrophes, can cause
investor fear and panic, which can adversely affect the economies of many
companies, sectors, nations, regions and the market in general, in ways that
cannot necessarily be foreseen.
Turbulence
in the financial markets and reduced liquidity in equity, credit and
fixed-income markets may negatively affect issuers worldwide, which could have
an adverse effect on the Fund. For example, following the financial crisis that
began in 2007, the Federal Reserve attempted to stabilize the U.S. economy and
support the U.S. economic recovery by keeping the federal funds rate at or near
zero percent. When the Federal Reserve raises the federal funds rate, there is a
risk that interest rates across the U.S. financial system will rise. These
policy changes may expose markets to heightened volatility and may reduce
liquidity for certain Fund investments, causing the value of the Fund’s
investments and share price to decline. To the extent the Fund experiences
disruption in the creation/redemption process of the Fund because of these
policy changes or other for other reasons, the Fund may experience increased
portfolio turnover, which will increase the costs that the Fund incurs and may
lower the Fund’s performance.
The
current global outbreak of the novel strain of coronavirus, COVID-19, has
resulted in market closures and dislocations, extreme volatility, liquidity
constraints and increased trading costs. Efforts to contain the spread of
COVID-19 have resulted in global travel restrictions and disruptions of
healthcare systems, business operations and supply chains (including business
closures), layoffs, volatility in consumer demand and employee availability,
defaults and credit ratings downgrades, and other significant economic impacts.
The effects of COVID-19 have impacted global economic activity across many
industries and may heighten other pre-existing political, social and economic
risks, locally or globally. The full economic impact and ongoing effects of the
COVID-19 pandemic (or other future epidemics or pandemics) at the macro level
and on individual businesses are unpredictable and may result in significant and
prolonged effects on the Fund's performance. In addition, governments, their
regulatory agencies, or self-regulatory organizations may take actions in
response to the COVID-19 pandemic that affect the instruments in which the Fund
invests, or the issuers of such instruments, in ways that could have a
significant negative impact on the Fund's investment performance.
Factor
Risk.
The Target Index, and thus the Fund, seeks to achieve the specific factor
exposures identified in the Fund’s principal investment strategies above. There
can be no assurance that targeting exposure to such factors will enhance the
Fund’s performance over time, and targeting exposure to those factors may
detract from performance in some market environments. There is no guarantee the
Index Provider’s methodology will be successful in creating an index that
achieves the specific factor exposures identified above.
Low
Beta Risk. In
general, beta is a measure of price volatility resulting from general market
movements. Although subject to the risks of common stocks, low volatility stocks
are seen as having a lower risk profile than the overall markets. However, a
portfolio comprised of low volatility stocks may not produce investment exposure
that has lower variability to changes in such stocks’ price levels. Low
volatility stocks are likely to underperform the broader market during periods
of rapidly rising stock prices. There is a risk that the present and future
volatility of a security will not be the same as it has historically been and
thus that the Target Index will not be exposed to less volatile
securities.
Growth
Securities Risk. Growth
companies are companies whose earnings growth potential appears to be greater
than the market in general and whose revenue growth is expected to continue for
an extended period of time. Stocks of growth companies or “growth securities”
have market values that may be more volatile than those of other types of
investments. Under certain market conditions, growth securities have performed
better during the later stages of economic recovery (although there is no
guarantee that they will continue to do so). Therefore, growth securities may go
in and out of favor over time. Growth securities typically do not pay a
dividend, which can help cushion stock prices in market downturns and reduce
potential losses.
Volatility
Risk. There
is a risk that the present and future volatility of a security will not be the
same as it historically has been and thus that the Target Index will not be
exposed to less volatile securities. Volatile stocks are subject to sharp swings
in value.
Index-Related
Risk. The
Adviser does not actively manage the Fund and therefore does not attempt to
analyze, quantify or control the risks associated with investing in securities
in the Target Index. The Fund invests primarily in securities included in, or
representative of, its Target Index regardless of their investment merits. The
Adviser does not attempt to take defensive positions in declining markets. As a
result, the Fund may hold constituent securities regardless of the current or
projected performance of a specific security or a particular industry or market
sector. Maintaining investments in securities regardless of market conditions or
the performance of individual securities could cause the Fund’s return to be
lower than if the Fund employed an active strategy.
Risks
related to the Index Provider. The
Fund seeks to achieve a return which corresponds generally to the price and
yield performance, before fees and expenses, of the Target Index as published by
the Index Provider. There is no assurance that the Index Provider or any agents
that may act on the Index Provider’s behalf will compile the Target Index
accurately, or that the Target Index will be determined, composed or calculated
accurately. While the Index Provider provides descriptions of what the Target
Index is designed to achieve, none of the Index Provider or any agents of the
Index Provider provide any warranty or accept any liability in relation to the
quality, accuracy or completeness of the Target Index or its related data, and
they do not guarantee that the Target Index will be in line with the Index
Provider’s methodology. Errors in respect of the quality, accuracy and
completeness of the data may occur from time to time and may not be identified
and corrected by the Index Provider for a period of time or at all, particularly
where the indexes are less commonly used. Therefore, gains, losses or costs
associated with errors of the Index Provider or its agents will generally be
borne by the Fund and its shareholders. For example, during a period where the
Fund’s Target Index contains incorrect constituents, the Fund would have market
exposure to such constituents and would be underexposed to the Target Index’s
other constituents. Such errors may negatively or positively impact the Fund and
its shareholders. Any gains due to the Index Provider’s or others’ errors will
be kept by the Fund and its shareholders and any losses resulting from the Index
Provider’s or others’ errors will be borne by the Fund and its shareholders. The
Target Index is new and has a limited performance history. The foregoing risks
may be greater for a new index.
Apart
from scheduled rebalances, the Index Provider or its agents may carry out
additional ad hoc rebalances to the Target Index in order, for example, to
correct an error in the selection of index constituents, or to reflect corporate
actions or de-listings. When the Target Index of the Fund is rebalanced and the
Fund in turn rebalances its portfolio to attempt to increase the correlation
between the Fund’s portfolio and the Target Index, any transaction costs and
market exposure arising from such portfolio rebalancing will be borne directly
by the Fund and its shareholders. Therefore, errors and additional ad hoc
rebalances carried out by the Index Provider to the Target Index may increase
the costs and the tracking error risk of the Fund.
Sampling
Risk.
To the extent the Fund uses a representative sampling approach, it will hold a
smaller number of securities than are in the Target Index. As a result, an
adverse development respecting a security held by the Fund could result in a
greater decline in NAV than would be the case if the Fund held all of the
securities in the Target Index. Conversely, a positive development relating to a
security in the Target Index that is not held by the Fund could cause the Fund
to underperform the Target Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Tracking
Error Risk.
Tracking error is the divergence of the Fund’s performance from that of its
Target Index. The Fund’s return may not match the return of the Target Index for
a number of other reasons. For example, the Fund incurs a number of operating
expenses not applicable to the Target Index, and incurs costs in buying and
selling securities, especially when reconstituting the Fund’s securities
holdings to reflect changes in the composition of the Target Index. Because the
Target Index’s components are reconstituted on an annual basis, the Fund’s costs
associated with reconstitution may be greater than those incurred by other ETFs
that track indices whose composition changes less frequently. If the Fund is not
fully invested, holding cash balances may prevent it from tracking the Target
Index. In addition, the Fund’s NAV may deviate from the Target Index if the Fund
fair values a portfolio security at a price other than the price used by the
Target Index for that security. In addition, to the extent the Fund employs a
representative sampling strategy, the stocks held by the Fund may provide
performance that differs from the aggregate performance of all of the securities
comprising the Target Index.
Premium-Discount
Risk.
Although it is expected that the market price of Fund shares typically will
approximate its NAV, there may be times when the market price and the NAV
differ. Thus, the investor may pay more than NAV when buying Fund shares on the
secondary market, and may receive less than NAV when the investor sells Fund
shares on the secondary market. This risk is separate and distinct from the risk
that the NAV of Fund shares may decrease.
Secondary
Market Trading Risk.
Investors buying or selling shares in the secondary market will generally 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 Fund 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 Fund 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 Fund’s shares have more trading volume and market liquidity and
higher if the Fund’s shares have little trading volume and market liquidity.
Further, increased market volatility may cause increased bid/ask
spreads.
Although
the Fund’s shares are listed on the Exchange, there can be no assurance that an
active or liquid trading market for them will develop or be maintained. In
addition, trading in Fund shares on the Exchange may be halted due to market
conditions or for reasons that, in the view of the Exchange, make trading in
Fund shares inadvisable. Further, trading in Fund shares on the Exchange is
subject to trading halts caused by extraordinary market volatility pursuant to
the Exchange “circuit breaker” rules. There can be no assurance that the
requirements of the Exchange necessary to maintain the listing of the Fund will
continue to be met or will remain unchanged.
During
a “flash crash,” the market prices of the Fund’s shares may decline suddenly and
significantly. Such a decline may not reflect the performance of the portfolio
securities held by the Fund. Flash crashes may cause Authorized Participants and
other market makers to limit or cease trading in the Fund’s shares for temporary
or longer periods. Shareholders could suffer significant losses to the extent
that they sell shares at these temporarily low market prices.
Non-Diversification
Risk. The
Fund is classified as “non-diversified” under the 1940 Act, which means that the
Fund may invest a relatively high percentage of its assets in a limited number
of issuers. As a result, the Fund may be more susceptible to a single adverse
economic or regulatory occurrence affecting one or more of these issuers,
experience increased volatility and be highly invested in certain
issuers.
Concentration
Risk.
To the extent that the Fund’s Target Index is concentrated in a particular
sector, industry or group of industries, the Fund is also expected to be
concentrated in that sector or industry and may subject the Fund to a greater
loss as a result of adverse economic, business or other developments affecting
that industry. In addition, the value of the Fund’s shares may change at
different rates compared to the value of shares of a fund with investments in a
more diversified mix of sectors or industries. An individual sector, industry or
group of industries may have above-average performance during particular
periods, but may also move up and down more than the broader market. The Fund’s
performance could also be affected if the sectors or industries do not perform
as expected.
Consumer
Staples Sector Risk. Companies
in the consumer staples sector may be affected by the regulation of various
product components and production methods, marketing campaigns and changes in
the global economy, consumer spending and consumer demand. Tobacco companies, in
particular, may be adversely affected by new laws, regulations and litigation.
Companies in the consumer staples sector may also be adversely affected by
changes or trends in commodity prices, which may be influenced by unpredictable
factors. These companies may be subject to severe competition, which may have an
adverse impact on their profitability.
Healthcare
Sector Risk. The
profitability of companies in the healthcare sector may be adversely affected by
the following factors, among others: extensive government regulations,
restrictions on government reimbursement for medical expenses, rising costs of
medical products and services, pricing pressure, an increased emphasis on
outpatient services, a limited number of products, industry innovation, changes
in technologies and other market developments. A number of issuers in the
healthcare sector have recently merged or otherwise experienced consolidation.
The effects of this trend toward consolidation are unknown and may be
far-reaching. Many healthcare companies are heavily dependent on patent
protection. The expiration of a company’s patents may adversely affect that
company’s profitability. Many healthcare companies are subject to extensive
litigation based on product liability and similar claims. Healthcare companies
are subject to competitive forces that may make it difficult to raise prices
and, in fact, may result in price discounting. Many new products in the
healthcare sector may be subject to regulatory approvals. The process of
obtaining such approvals may be long and costly, and such efforts ultimately may
be unsuccessful. Companies in the healthcare sector may be thinly capitalized
and may be susceptible to product obsolescence. In addition, a number of
legislative proposals concerning healthcare have been
considered
by the U.S. Congress in recent years. It is unclear what proposals will
ultimately be enacted, if any, and what effect they may have on companies in the
healthcare sector.
Technology
Sector Risk. Technology
companies face intense competition, both domestically and internationally, which
may have an adverse effect on their profit margins. Like other technology
companies, technology companies may have limited product lines, markets,
financial resources or personnel. The products of technology companies may face
obsolescence due to rapid technological developments, frequent new product
introduction, unpredictable changes in growth rates and competition for the
services of qualified personnel. Companies in the technology sector are heavily
dependent on patent and intellectual property rights. The loss or impairment of
these rights may adversely affect the profitability of these companies.
Companies in the application software industry, in particular, may also be
negatively affected by the decline or fluctuation of subscription renewal rates
for their products and services, which may have an adverse effect on profit
margins. Companies in the systems software industry may be adversely affected
by, among other things, actual or perceived security vulnerabilities in their
products and services, which may result in individual or class action lawsuits,
state or federal enforcement actions and other remediation costs.
Software
Industry Risk.
Software companies are subject to the risks of companies in the technology
sector (see above), as well as the following additional risks. Software
companies can be significantly affected by aggressive pricing, changing domestic
demand, the availability and price of components, cyclical market patterns,
evolving industry standards, and frequent new product introductions. The success
of software companies depends in substantial part on the timely and successful
introduction of new products and the ability to service such products. An
unexpected change in one or more of the technologies affecting an issuer's
products or in the market for products based on a particular technology could
have a material adverse effect on a participant's operating results. Many
software companies rely on intellectual property laws to establish and protect
their proprietary rights in their products and technologies. There can be no
assurance that the steps taken to protect such rights will prevent
misappropriation of technology or that competitors will not independently
develop technologies that are substantially equivalent or superior to such
companies' technology.
Dividend-Paying
Securities Risk.
High dividend-paying stocks may underperform non-dividend paying stocks and the
market in general. The Fund’s ability to distribute income to shareholders will
depend on the yield available on the securities held by the Fund. Changes in the
dividend policies of companies held by the Fund could make it difficult for the
Fund to provide a predictable level of income or increase the rate of dividend
payout growth. Also, a company may reduce or eliminate its dividend after the
Fund has gained exposure to such a company’s securities.
Equity
Investing Risk.
An investment in the Fund involves risks similar to those of investing in any
fund holding or having exposure to equity securities, such as market
fluctuations, changes in interest rates and perceived trends in stock prices.
The values of equity securities could decline generally or could underperform
other investments. Different types of equity securities tend to go through
cycles of outperformance and underperformance in comparison to the general
securities markets. In addition, securities may decline in value due to factors
affecting a specific issuer, market or securities markets generally. Recent
unprecedented turbulence in financial markets, reduced liquidity in credit and
fixed income markets, or rising interest rates may negatively affect many
issuers worldwide, which may have an adverse effect on the Fund.
Large
Capitalization Securities Risk.
Investments in large capitalization companies may go in and out of favor based
on market and economic conditions and may underperform other market segments.
Some large capitalization companies may be unable to respond quickly to new
competitive challenges and attain the high growth rate of successful smaller
companies, especially during extended periods of economic expansion. As such,
returns on investments in stocks of large capitalization companies could trail
the returns on investments in stocks of small and mid-capitalization
companies.
Small-
and Mid-Capitalization Securities Risk.
The securities of small- and mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price changes
than larger capitalization stocks or the stock market as a whole. Small- and
mid-capitalization companies may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs, and
earnings.
Mid-Capitalization
Securities Risk.
Investing in securities of medium capitalization issuers involves greater risk
than customarily is associated with investing in larger, more established
companies. These issuers’ securities may be more volatile and less liquid than
those of more established issuers. These securities may have returns that vary,
sometimes significantly, from the overall securities market. Medium
capitalization issuers are sometimes more dependent on key personnel or limited
product lines than larger, more diversified issuers. Often, medium
capitalization issuers and the industries in which they focus are still evolving
and, as a result, they may be more sensitive to changing market
conditions.
ETFs
and Other Investment Companies Risk. The
risks of investing in securities of other investment companies, including ETFs,
typically reflect the risks of the types of instruments in which the investment
company invests.
When
the Fund invests in these securities, shareholders of the Fund bear their
proportionate share of the fees and expenses of the investment company, as well
as their share of the Fund’s fees and expenses. As a result, the Fund’s
investment in an investment company could cause the Fund’s operating expenses to
be higher and performance to be lower.
Through
its investments in investment companies, the Fund may be indirectly exposed to
additional risks. Derivatives used by an investment company in which the Fund
may invest may cause it to become leveraged, allowing it to obtain the right to
a return on stipulated capital that exceeds the amount paid or invested. Use of
leverage is speculative and could magnify losses. Although certain investment
companies may segregate liquid assets to cover the market value of their
obligations under the derivatives, this will not prevent losses of amounts in
excess of the segregated assets. Other investment companies may not employ any
risk management procedures at all, leading to even greater losses.
REIT
Risk.
A REIT is a company that owns or finances income-producing real estate. The
Fund, through its investments in or exposure to REITs, is subject to the risks
of investing in the real estate market, including decreases in property
revenues, increases in interest rates, increases in property taxes and operating
expenses, legal and regulatory changes, a lack of credit or capital, defaults by
borrowers or tenants, environmental problems and natural disasters.
REITs
are subject to additional risks, including those related to adverse governmental
actions, declines in property value and the real estate market, and the
potential failure to qualify for tax-free “pass-through” of net income and net
realized capital gains and exemption from registration as an investment company.
REITs are dependent upon specialized management skills and may invest in
relatively few properties, a small geographic area or a small number of property
types. As a result, investments in or exposure to REITs may be subject to
volatility. To the extent the Fund invests in REITs concentrated in specific
geographic areas or property types, the Fund may be subject to a greater loss as
a result of adverse developments affecting such area or property types. REITs
are pooled investment vehicles with their own fees and expenses and the Fund
will indirectly bear a proportionate share of those fees and
expenses.
Authorized
Participants Concentration Risk.
The Fund has a limited number of financial institutions that may purchase and
redeem Fund shares directly from the Fund (“Authorized Participants”). To the
extent they cannot or are otherwise unwilling to engage in creation and
redemption transactions with the Fund and no other Authorized Participant steps
in, shares of the Fund may trade like closed-end fund shares at a significant
discount to NAV and may face trading halts and/or delisting from the Exchange.
This risk may be more pronounced in volatile markets, potentially where there
are significant redemptions in ETFs generally.
Cash
and Cash Equivalents Risk.
The Fund may hold cash or cash equivalents. Generally, such positions offer less
potential for gain than other investments. Holding cash or cash equivalents,
even strategically, may lead to missed investment opportunities. This is
particularly true when the market for other investments in which the Fund may
invest is rapidly rising. If the Fund holds cash uninvested it will be subject
to the credit risk of the depositing institution holding the cash.
Large
Shareholder Risk.
Certain shareholders, including (i) the Adviser and its owners and officers and
(ii) other funds or accounts advised by the Adviser, may from time to time own a
substantial amount of the Fund’s shares. In addition, a third party investor,
the Adviser or an affiliate of the Adviser, an authorized participant, a lead
market maker, or another entity may invest in the Fund and hold its investment
for a limited period of time solely to facilitate commencement of the Fund or to
facilitate the Fund’s achieving a specified size or scale. There can be no
assurance
that any large shareholder would not redeem its investment. Dispositions of a
large number of shares by these shareholders may adversely affect the Fund’s
liquidity and net assets to the extent such transactions are executed directly
with the Fund in the form of redemptions through an authorized participant,
rather than executed in the secondary market. These redemptions may also force
the Fund to sell portfolio securities when it might not otherwise do so, which
may negatively impact the Fund’s NAV and increase the Fund’s brokerage costs. To
the extent these large shareholders transact in shares on the secondary market,
such transactions may account for a large percentage of the trading volume on
listing exchange and may, therefore, have a material upward or downward effect
on the market price of the shares.
Turnover
Risk.
The Fund may engage in frequent and active trading, which may significantly
increase the Fund's portfolio turnover rate. At times, the Fund may have a
portfolio turnover rate substantially greater than 100%. For example, a
portfolio turnover rate of 300% is equivalent to the Fund buying and selling all
of its securities three times during the course of a year. A high portfolio
turnover rate would result in high brokerage costs for the Fund, may result in
higher taxes when shares are held in a taxable account and lower Fund
performance.
Other
Information
Exclusion
of Adviser from Commodity Pool Operator (“CPO”) Definition.
With respect to each Fund, the Adviser has claimed an exclusion from the
definition of a CPO under the Commodity Exchange Act (“CEA”) and the rules of
the Commodity Futures Trading Commission (“CFTC”) and, therefore, is not subject
to CFTC registration or regulation as a CPO. In addition, the Adviser is relying
upon a related exclusion from the definition of a “commodity trading advisor”
under the CEA and the rules of the CFTC.
The
terms of the CPO exclusion require the Funds, among other things, to adhere to
certain limits on its investments in “commodity interests.” Commodity interests
include commodity futures, commodity options and swaps, which in turn include
non-deliverable forward currency agreements, as further described in the Funds’
statement of additional information (“SAI”). Because the Adviser and the Funds
intend to comply with the terms of the CPO exclusion at this time, the Funds
will limit their investments in these types of instruments. The Funds are not
intended as a vehicle for trading in the commodity futures, commodity options or
swaps markets. The CFTC has neither reviewed nor approved the Adviser’s reliance
on these exclusions, or the Funds, their investment strategies or this
Prospectus.
Investment
Advisory Services
Investment
Adviser
Global
Beta Advisors LLC (“Adviser”) acts as each Fund’s investment adviser pursuant to
an investment advisory agreement with the Trust on behalf of each Fund (the
“Advisory Agreement”). The Adviser is a Pennsylvania limited liability company
with its principal offices located at 1364 Welsh Road, Suite C120, North Wales,
PA 19454. The Adviser was founded in 2017.
Pursuant
to the Advisory Agreement, the Adviser has the overall responsibility for the
Funds’ investment program. The Adviser is responsible for trading portfolio
securities and other investment instruments on behalf of the Funds, including
selecting broker-dealers to execute purchase and sale transactions in connection
with any rebalancing or reconstitution of the Target Index, subject to the
overall supervision and oversight of the Board. The Board of Trustees supervises
and oversees the Adviser, establishes policies that the Adviser must follow in
its management activities.
Pursuant
to the Advisory Agreement, each Fund pays the Adviser the advisory fee for its
services payable on a monthly basis at the annual rate listed in the table
below, based on the average daily net assets of the Fund.
|
|
|
|
|
|
|
|
|
Fund
|
|
Advisory
Fee |
Global
Beta Smart Income ETF |
|
0.29% |
Global
Beta Low Beta ETF |
|
0.29% |
Global
Beta Rising Stars ETF |
|
0.29% |
Under
the Advisory Agreement, the Adviser bears all of the ordinary operating expenses
of the Funds, except for (i) the management fee, (ii) payments under the Funds’
Rule 12b-1 plan, (iii) brokerage expenses (including any costs
incidental
to transactions in portfolio securities or instruments), (iv) acquired fund fees
and expenses, (v) taxes, (vi) interest (including borrowing costs and dividend
expenses on securities sold short and overdraft charges), (vii) litigation
expenses (including litigation to which the Trust or the Funds may be a party
and indemnification of the Trustees and officers with respect thereto), and
(viii) other extraordinary or non-routine expenses (including expenses arising
from mergers, acquisitions or similar transactions involving the
Funds).
For
the fiscal year ended November 30, 2021, the Adviser received the below
aggregate fee (net of fee waiver) as a percentage of average net assets from
each Fund.
|
|
|
|
|
|
|
|
|
Fund
|
|
Advisory
Fee (Net Waiver) |
Global
Beta Smart Income ETF |
|
0.04% |
Global
Beta Low Beta ETF |
|
0.00% |
Global
Beta Rising Stars ETF |
|
0.00% |
Pursuant
to an Expense Reimbursement Agreement, the Adviser had reimbursed the Funds
certain expenses through April 30, 2021. This Expense Reimbursement Agreement
has since been terminated.
A
discussion regarding the basis for the Board’s approval of the Advisory
Agreement for the Global Beta Smart Income ETF, Global Beta Low Beta ETF, and
the Global Beta Rising Stars ETF is available in the Funds’ semi-annual report
to shareholders for the period ended May 31, 2021.
Portfolio
Managers
The
portfolio managers are responsible for various functions related to portfolio
management, including, but not limited to, investing cash inflows, implementing
investment strategy, researching and reviewing investment strategy, and
overseeing members of his or her portfolio management team with more limited
responsibilities.
Justin
Lowry
Justin
Lowry has over ten years of portfolio management experience. Mr. Lowry is a
Portfolio Manager and Chief Investment Officer at the Adviser, responsible for
oversight of investment activity, market research and product development.
Previously, Mr. Lowry was Director of Research at OppenheimerFunds, Inc., where
he oversaw research and product development for its Beta Solutions ETF business,
which held over $2 billion in assets in the RevenueShares ETF suite. He began
his portfolio management experience as Portfolio Manager and Head of Research at
VTL Associates, LLC. Justin earned his B.S. in business management from St.
Joseph’s University.
Vincent
T. Lowry
Vincent
T. Lowry has over 15 years of portfolio management experience. Mr. Lowry is a
Portfolio Manager and Chief Executive Officer at the Adviser. Previously, Mr.
Lowry was a Lead Portfolio Manager at OppenheimerFunds, Inc., where he oversaw
asset allocation for its Beta Solutions ETF business, which held over $2 billion
in assets in the RevenueShares ETF suite. Prior to his experience at
OppenheimerFunds, Inc., he founded VTL Associates, LLC, using his experience
developing global asset allocation models to create a family of revenue-weighted
ETFs in conjunction with Standard & Poor’s. Vincent earned his B.S. in
political science and his MBA from St. Joseph’s University.
The
SAI provides additional information about each portfolio manager’s compensation,
other accounts managed by each portfolio manager, and each portfolio manager’s
ownership of shares of the Funds.
Manager
of Managers Structure
The
Adviser and the Trust may seek an exemptive order from the SEC that would allow
the Funds to operate in a “manager of managers” structure whereby the Adviser,
as the Funds’ investment adviser, can appoint and replace both affiliated and
unaffiliated sub-advisers, and enter into, amend and terminate sub-advisory
agreements with such sub-advisers, each subject to Board approval but without
obtaining prior shareholder approval (the “Manager of Managers Structure”). The
Funds would, however, inform shareholders of the hiring of any new sub-adviser
within 90 days after the hiring. The SEC exemptive order would provide the Funds
with greater efficiency and without incurring the expenses and delays associated
with obtaining shareholder approval of sub-advisory agreements with such
sub-advisers.
The
use of the Manager of Managers Structure with respect to the Funds would be
subject to certain conditions that would be set forth in the SEC exemptive
order. Under the Manager of Managers Structure, the Adviser would have the
ultimate responsibility, subject to oversight by the Board, to oversee the
sub-advisers and recommend their hiring, termination and replacement. The
Adviser would also, subject to the review and oversight of the Board: set the
Fund’s overall investment strategy; evaluate, select and recommend sub- advisers
to manage all or a portion of the Fund’s assets; implement procedures reasonably
designed to ensure that each sub-adviser complies with the Fund’s investment
objective, policies and restrictions; allocate and, when appropriate, reallocate
the Fund’s assets among sub-advisers; and monitor and evaluate the sub-advisers’
performance.
There
are no assurances that the SEC will grant exemptive relief for the Manager of
Managers Structure should the Adviser and Trust seek to obtain it.
Information
Regarding Exchange-Traded Funds
Each
Fund is an ETF. An ETF is an investment company that offers shares that are
listed on a U.S. securities exchange. Because they are listed on an exchange,
shares of ETFs can be traded throughout the day on that exchange at
market-determined prices.
Conventional
mutual fund shares are bought from and redeemed with the issuing fund for cash
at the NAV of such shares. ETF shares, by contrast, cannot be purchased from or
redeemed with the issuing fund at NAV except by or through Authorized
Participants, and then only in large blocks of shares called “Creation Units,”
usually in exchange for an in-kind basket of securities. In order to be an
“Authorized Participant,” you must be either a broker-dealer or other
participant in the Continuous Net Settlement System (“Clearing Process”) of the
National Securities Clearing Corporation (“NSCC”) or a participant in The
Depository Trust Company (“DTC”) with access to the DTC system, and you must
execute an agreement with the Fund’s distributor.
NAV
is calculated once a day at the close of trading on the New York Stock Exchange
(“NYSE”) and reflects a Fund’s total assets, less its liabilities, divided by
the number of shares it has outstanding. Transactions in traditional mutual fund
shares are typically effected at the NAV next determined after receipt of the
transaction order, no matter what time during the day an investor in a
traditional mutual fund places an order to purchase or redeem shares, that
investor’s order will be priced at that Fund’s NAV determined as of the close of
trading of the NYSE. Traditional mutual fund shares may be purchased from a fund
directly by the shareholder or through a financial intermediary.
In
contrast, investors can purchase and sell ETF shares on a secondary market
through a broker. Secondary market transactions may not occur at NAV, but at
market prices that change throughout the day, based on the supply of, and demand
for, ETF shares and on changes in the prices of the ETF’s portfolio holdings.
Accordingly, an investor may pay more (or receive less) than NAV when the
investor purchase (or sells) Fund shares on the secondary market. Shareholders
will also incur typical brokerage and transaction costs when buying or selling
ETF shares on the secondary market. An organized secondary market is expected to
exist for the Funds’ shares because Fund shares are listed for trading on the
Exchange. It is possible, however, that an active trading market in Fund shares
may not be maintained.
Pricing
Fund Shares
The
NAV of each Fund’s shares is calculated each business day as of the close of
regular trading on the NYSE, generally 4:00 p.m., Eastern Time. NAV per share is
computed by dividing the net assets by the number of shares
outstanding.
The
trading prices of shares in the secondary market may differ in varying degrees
from their daily NAVs and can be affected by market forces such as supply and
demand, economic conditions and other factors.
If
you buy or sell Fund shares on the secondary market, you will pay or receive the
market price, which may be higher or lower than NAV. Your transaction will be
priced at NAV only if you purchase or redeem your Fund shares in Creation
Units.
When
calculating the NAV of the Funds’ shares, securities held by the Funds are
valued at market quotations when reliable market quotations are readily
available. Exchange traded securities and instruments (including equity
securities and ETFs) are generally valued at the last reported sale price on the
principal exchange on which such securities are traded (at the NASDAQ Official
Closing Price for NASDAQ listed securities), as of the close of
regular
trading on the NYSE on the day the securities are being valued or, if there are
no sales, at the mean of the most recent bid and asked prices. OTC securities
and instruments are generally valued using prices provided by a third party
pricing service.
When
reliable market quotations are not readily available, securities are priced at
their fair value, which is the price a security’s owner might reasonably expect
to receive upon its sale. The Funds also may use fair value pricing if the value
of a security it holds has been materially affected by events occurring before
the Funds’ pricing time but after the close of the primary markets or exchanges
on which the security is traded. Valuing the Funds’ investments using fair value
pricing may result in using prices for those investments that may differ from
current market valuations. The Board has delegated to a Valuation Committee the
authority to determine fair value prices, pursuant to policies and procedures
the Board has established. Certain market valuations could result in a
difference between the prices used to calculate each Fund’s NAV and the prices
used by each Fund’s Target Index, which, in turn, could result in a difference
between a Fund’s performance and the performance of its Target
Index.
In
December 2020, the SEC adopted Rule 2a-5 under the 1940 Act (“Rule 2a-5”), which
is intended to address valuation practices and the role of a registered
investment company’s board of trustees with respect to the fair value of the
investments of the registered investment company or business development
company. Among other things, Rule 2a-5 will permit a fund’s board to designate
the fund’s primary investment adviser to perform the fund’s fair value
determinations, which will be subject to board oversight and certain reporting
and other requirements intended to ensure that the registered investment
company’s board receives the information it needs to oversee the investment
adviser’s fair value determinations. The Funds and the Adviser must comply with
Rule 2a-5 by September 8, 2022. The Adviser continues to review Rule 2a-5 and
its impact on the Adviser’s and the Funds’ valuation policies and related
practices.
Shareholder
Information
Shares
of the Funds trade on exchanges and elsewhere during the trading day. Shares can
be bought and sold throughout the trading day like other shares of publicly
traded securities. There is no minimum investment for purchases made on an
exchange. When buying or selling shares through a broker, you will incur
customary brokerage commissions and charges. In addition, you will also incur
the cost of the “spread,” which is the difference between what professional
investors are willing to pay for Fund shares (the “bid” price) and the price at
which they are willing to sell Fund shares (the “ask” price). The commission is
frequently a fixed amount and may be a significant proportional cost for
investors seeking to buy or sell small amounts of shares. The spread with
respect to shares of the Funds varies over time based on the Funds’ trading
volumes and market liquidity, and is generally lower if the Funds have a lot of
trading volume and market liquidity and higher if the Funds have little trading
volume and market liquidity. Because of the costs of buying and selling Fund
shares, frequent trading may reduce investment return.
Shares
of the Funds may be acquired or redeemed directly from the Funds only in
Creation Units or multiples thereof. The Funds are listed on the Exchange, which
is open for trading Monday through Friday and is closed on weekends and the
following holidays, as observed: New Year’s Day, Martin Luther King, Jr. Day,
Presidents’ Day, Good Friday, Memorial Day, Juneteenth National Independence
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
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
during the most recently completed calendar year and the most recently completed
calendar quarters is available at www.globalbetaetf.com. Any such information
represents past performance and cannot be used to predict future
results.
Certain
Legal Risks
Because
Fund shares may be issued on an ongoing basis, a “distribution” of Fund shares
could occur at any time. Certain activities performed by a dealer could,
depending on the circumstances, result in the dealer being deemed a participant
in the distribution, in a manner that could render it a statutory underwriter
and subject it to the prospectus delivery and liability provisions of the
Securities Act of 1933, as amended (the “Securities Act”). For example, a dealer
could be deemed a statutory underwriter if it purchases Creation Units from the
issuing Fund, breaks them
down
into the constituent Fund shares, and sells those shares directly to customers,
or if it chooses to couple the creation of a supply of new Fund shares with an
active selling effort involving solicitation of secondary-market demand for Fund
shares. Whether a person is an underwriter depends upon all of the facts and
circumstances pertaining to that person’s activities, and the examples mentioned
here should not be considered a complete description of all the activities that
could cause a dealer to be deemed an underwriter.
Broker-dealer
firms should also note that dealers who are not “underwriters” but are effecting
transactions in Fund shares, whether or not participating in the distribution of
Fund shares, are generally required to deliver a prospectus. This is because the
prospectus delivery exemption in Section 4(3) of the Securities Act is not
available in respect of such transactions as a result of Section 24(d) of the
1940 Act. Dealers who are not “underwriters” but are participating in a
distribution (as opposed to engaging in ordinary secondary-market transactions),
and thus dealing with Fund shares as part of an “unsold allotment” within the
meaning of Section 4(3)(C) of the Securities Act, will be unable to take
advantage of the prospectus delivery exemption provided by Section 4(3) of the
Securities Act. For delivery of prospectuses to exchange members, the prospectus
delivery mechanism of Rule 153 under the Securities Act is only available with
respect to transactions on a national exchange.
Section
12(d)(1) of the 1940 Act restricts investments by investment companies in the
securities of other investment companies, including Shares. Registered
investment companies are permitted to invest in the Fund beyond the limits set
forth in Section 12(d)(1) subject to certain terms and conditions set forth in
certain SEC exemptive rules, including that such investment companies enter into
an agreement with the Trust on behalf of the Fund prior to exceeding the limits
imposed by Section 12(d)(1).
The
Adviser reserves the right to reject any purchase request at any time, for any
reason, and without notice. The Funds can stop offering Creation Units and may
postpone payment of redemption proceeds at times when the Exchange is closed,
when trading on the Exchange is suspended or restricted, for any period during
which an emergency exists as a result of which disposal of the shares of the
Fund’s portfolio securities or determination of NAV is not reasonably
practicable, or under any circumstances as is permitted by the SEC.
Legal
Restrictions on Transactions in Certain Securities
An
investor subject to a legal restriction with respect to a particular security
required to be deposited in connection with the purchase of a Creation Unit may,
at the Funds’ discretion, be permitted to deposit an equivalent amount of cash
in substitution for any security which would otherwise be included in the
in-kind basket of securities applicable to the purchase of a Creation
Unit.
Creations
and redemptions of Fund shares are subject to compliance with applicable federal
and state securities laws, including that securities accepted for deposit and
securities used to satisfy redemption requests are sold in transactions that
would be exempt from registration under the Securities Act. The Funds (whether
or not they otherwise permit cash redemptions) reserve the right to redeem
Creation Units for cash to the extent that an investor could not lawfully
purchase or a Fund could not lawfully deliver specific securities under such
laws or the local laws of a jurisdiction in which the Fund invests. An
Authorized Participant or an investor for which it is acting subject to a legal
restriction with respect to a particular stock included in an in-kind basket of
securities may be paid an equivalent amount of cash. An Authorized Participant
that is not a qualified institutional buyer (“QIB”) as defined in Rule 144A
under the Securities Act will not be able to receive, as part of a redemption,
restricted securities eligible for resale under Rule 144A.
Frequent
Trading
The
Board has evaluated the risks of market timing activities by the Funds’
shareholders. The Board noted that a Fund’s shares can only be purchased and
redeemed directly from the Fund in Creation Units by Authorized Participants and
that the vast majority of trading in the Funds’ shares occurs on the secondary
market. Because the secondary market trades do not involve a Fund directly, it
is unlikely those trades would cause the harmful effects of market timing,
including dilution, disruption of portfolio management, increases in the Funds’
trading costs and the realization of capital gains. With regard to the purchase
or redemption of Creation Units directly with the Funds, to the extent effected
in-kind (i.e., for securities), the Board noted that those trades do not cause
the harmful effects (as previously noted) that may result from frequent cash
trades. To the extent trades are effected in whole or in part in cash, the Board
noted that those trades could result in dilution to a Fund and increased
transaction costs, which could negatively impact a Fund’s ability to achieve its
investment objective. However, the Board noted also that direct
trading
by Authorized Participants is critical to ensuring that the Funds’ shares trade
at or close to NAV. The Funds also may employ fair valuation pricing to minimize
potential dilution from market timing. In addition, each Fund may impose
transaction fees on purchases and redemptions of Fund shares to cover the
custodial and other costs incurred by a Fund in effecting trades. These fees may
increase if an investor substitutes cash in part or in whole for securities,
reflecting the fact that the Fund’s trading costs increase in those
circumstances. Given this structure, the Board determined that it is not
necessary to adopt policies and procedures to detect and deter market timing of
the Funds’ shares.
Book
Entry
Shares
are held in book-entry form, which means that no stock certificates are issued.
The DTC or its nominee is the record owner of all outstanding shares of the
Funds and is recognized as the owner of all shares for all purposes. Investors
owning shares are beneficial owners as shown on the records of DTC or its
participants. DTC serves as the securities depository for all shares.
Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
shares, you are not entitled to receive physical delivery of stock certificates
or to have shares registered in your name, and you are not considered a
registered owner of Fund shares. Therefore, to exercise any right as an owner of
shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any other stocks that you may
hold in book entry or “street name” form.
The
Adviser will not have any record of your ownership. Your account information
will be maintained by your broker, which will provide you with account
statements, confirmations of your purchases and sales of Fund shares, and tax
information. Your broker also will be responsible for distributing income and
capital gains distributions and for ensuring that you receive shareholder
reports and other communications from the fund whose shares you own. You will
receive other services (e.g., dividend reinvestment and average cost
information) only if your broker offers these services.
Portfolio
Holdings Information
Each
Fund’s complete portfolio holdings as of the time the Fund calculates its NAV
are disclosed daily at www.globalbetaetf.com at or before the opening of trading
on the Exchange the following day. In addition, the deposit securities and fund
securities that should be delivered in exchange for purchases and redemptions of
Creation Units are publicly disseminated daily via the NSCC. A description of
the Funds’ other policies and procedures with respect to the disclosure of the
Funds’ portfolio securities is available in the SAI.
Distribution
and Service Plan
Each
Fund has adopted a distribution and service plan (“Plan”) pursuant to Rule 12b-1
under the 1940 Act. In accordance with the Plan, each Fund is authorized to pay
an amount up to 0.25% of its average daily net assets each year to finance any
activity primarily intended to result in the sale of Creation Units of each Fund
or the provision of investor services, including but not limited to: (i)
delivering copies of the Trust’s then-current prospectus to prospective
purchasers of such Creation Units; (ii) preparing, setting in type, printing and
mailing any prospectus, report or other communication to prospective
shareholders or authorized participants of the Trust; (iii) marketing and
promotional services including advertising; (iv) facilitating communications
with beneficial owners of shares of the Funds; and (v) such other services and
obligations as are set forth in the Distribution Agreement with Compass
Distributors, LLC (the “Distributor”).
No
Rule 12b-1 fees are currently paid by any Fund. In the event Rule 12b-1 fees
were charged, over time they would increase the cost of an investment in the
Fund and may cost you more than paying other types of sales
charges.
Dividends
and Distributions
Each
Fund has elected and intends to qualify each year as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the “Code”). As a
regulated investment company, a Fund generally pays no federal income tax on the
income and gains it distributes. Fund shareholders are entitled to their share
of a Fund’s income and net realized gains on its investments. Each Fund pays out
substantially all of its net earnings to its shareholders as “distributions.”
These amounts, net of expenses, are passed along to Fund shareholders as “income
dividend distributions.” The Fund realizes capital gains or losses whenever it
sells securities or buys back shorted securities. Net long-term capital gains
are distributed to shareholders as “capital gain distributions.”
Each
Fund intends to pay income dividends quarterly from its net investment income.
Capital gains, if any, may be paid at least annually. The amount of any
distribution will vary, and there is no guarantee a Fund will pay either income
dividends or capital gain distributions. Dividends may be declared and paid more
frequently to improve a Fund’s tracking of its Target Index or to comply with
the distribution requirements of the Code.
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 a
Fund just before it declares an income dividend or capital gains distribution is
sometimes known as “buying a dividend.”
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 Funds make
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.
Distributions
in cash may be reinvested automatically in additional shares only if the broker
through which the shares were purchased makes such an option
available.
The
Trust will not make the DTC book-entry Dividend Reinvestment Service available
for use by shareholders for reinvestment of their cash proceeds, but certain
individual brokers may make a dividend reinvestment service available to their
clients. If this service is available and used, distributions of both income and
realized gains will be automatically reinvested in additional whole shares of
the same Fund purchased in the secondary market. Fund distributions of income
and realized gains are taxable to you whether paid in cash or reinvested in Fund
shares.
Taxes
The
following is a summary of the material U.S. federal income tax considerations
applicable to an investment in shares of a Fund. The summary is based on the
laws in effect on the date of this Prospectus and existing judicial and
administrative interpretations thereof, all of which are subject to change,
possibly with retroactive effect. In addition, this summary assumes that a
shareholder holds shares as capital assets within the meaning of the Code and
does not hold shares in connection with a trade or business. This summary does
not address all potential U.S. federal income tax considerations possibly
applicable to an investment in shares of a Fund to shareholders holding shares
through a partnership (or other pass-through entity) or to shareholders subject
to special tax rules. Prospective shareholders are urged to consult their own
tax advisors with respect to the specific federal, state, local, and foreign tax
consequences of investing in shares based on their particular
circumstances.
As
with any investment, you should consider how your investment in shares of the
Funds will be taxed. Unless your investment in shares is made through a
tax-exempt entity or tax-advantaged arrangement, such as an individual
retirement plan, you need to be aware of the possible tax consequences when a
Fund makes distributions and when you sell your shares of a Fund.
Fund
Distributions
Distributions
from a Fund’s net investment income (other than qualified dividend income),
including distributions out of the Fund’s net short-term capital gains, if any,
are taxable to you as ordinary income. Distributions by a Fund of net long-term
capital gains in excess of net short-term capital losses are taxable to you as
long-term capital gains, regardless of how long you have held a Fund’s
shares.
Distributions
by a Fund that qualify as qualified dividend income are taxable to you at
long-term capital gain rates. In order for a distribution by a Fund to be
treated as qualified dividend income: (i) the Fund itself must receive qualified
dividend income from U.S. corporations and certain qualified foreign
corporations, (ii) the Fund must meet holding period and other requirements with
respect to its dividend paying stocks, and (iii) you must meet holding period
requirements and other requirements with respect to the Fund’s shares. In
general, your distributions are subject to federal income tax for the year when
they are paid. Certain distributions paid in January, however, may be treated as
paid on December 31 of the prior year.
Taxes
on Exchange-Listed Shares Sales
Currently,
any capital gain or loss realized upon a sale of Fund shares is generally
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.
Tax
Treatment of Fund Shareholders
An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from a
Fund and net gains from taxable dispositions of Fund shares) of U.S.
individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income”
(in the case of an estate or trust) exceeds a threshold amount. This Medicare
tax, if applicable, is reported by you on, and paid with, your federal income
tax return.
Fund
distributions and gains from the sale of Fund shares generally are subject to
state and local taxes.
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 (“IRS”) requires it.
When withholding is required, the amount will be 24% of any distributions or
proceeds paid.
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 a 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 a 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). A Fund may disclose the
information that it receives from its shareholders to the IRS. Information about
a shareholder in a 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 a Fund fails to provide
the appropriate certifications or other documentation concerning its status
under FATCA.
Taxes
on Purchase and Redemption of 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
received 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 that such
Creation Units are held as a capital asset. If a Fund redeems Creation Units in
cash, in whole or in part, it may recognize more capital gains than it will if
it redeems Creation Units in-kind.
If
you purchase or redeem Creation Units, you will be sent a confirmation statement
showing how many and at what price you purchased or sold shares.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in a Fund. It is not a substitute for personal
tax advice. You may also be subject to state and local taxation on Fund
distributions and sales of Fund shares. You are advised to consult your personal
tax advisor about the potential tax consequences of an investment in Fund shares
under all applicable tax laws.
Trademark
Notice/Disclaimers
S&P
Dow Jones Indices LLC Disclaimer (Global Beta Smart Income ETF and Global Beta
Low Beta ETF only)
Subject
to the Index Provider’s ownership of the S&P 900 and S&P 500, each
Target Index, the values thereof, and the specifications provided by the Adviser
to the Index Provider is the property of the Adviser, which has contracted with
S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate
and maintain each Target Index. The Target Indexes 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 a Target 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. 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
Global Beta Smart Income ETF and the Global Beta Low Beta ETF (for this section
only, the “Funds”) 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 Funds or any member of the
public regarding the advisability of investing in securities generally or in the
Funds particularly or the ability of a Target Index to track general market
performance. S&P Dow Jones Indices’ only relationship to Global Beta
Advisors LLC with respect to each Target Index is the licensing of the S&P
900 and S&P 500, certain trademarks, service marks and trade names of
S&P Dow Jones Indices, and the provision of the calculation services related
to each Target 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
Funds. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of
a security within a Target 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 A TARGET INDEX, INTELLECTUAL PROPERTY, SOFTWARE, 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 GLOBAL BETA
ADVISORS LLC, OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF
A TARGET INDEX, INTELLECTUAL
PROPERTY,
SOFTWARE, 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.
NYSE
Arca Disclaimer
Shares
of the Funds are not sponsored, endorsed or promoted by NYSE Arca. NYSE Arca
makes no representation or warranty, express or implied, to the owners of the
shares of the Funds or any member of the public regarding the ability of a Fund
to track the performance of its Target Index or the ability of a Target Index to
track stock market performance. NYSE Arca is not responsible for, nor has it
participated in, the determination of the compilation or the calculation of the
Target Indexes, nor in the determination of the timing of, prices of, or
quantities of shares of a Fund to be issued, nor in the determination or
calculation of the equation by which the shares are redeemable. NYSE Arca has no
obligation or liability to owners of the shares of a Fund in connection with the
administration, marketing or trading of the shares of the Funds.
NYSE
Arca does not guarantee the accuracy and/or the completeness of the Target
Indexes or any data included therein. NYSE Arca makes no warranty, express or
implied, as to results to be obtained by the Trust on behalf of the Funds as
licensee, licensee’s customers and counterparties, owners of the shares of the
Funds, or any other person or entity from the use of the subject index or any
data included therein in connection with the rights licensed as described herein
or for any other use. NYSE Arca makes no express or implied warranties and
hereby expressly disclaims all warranties of merchantability or fitness for a
particular purpose with respect to the Target Indexes or any data included
therein. Without limiting any of the foregoing, in no event shall NYSE Arca have
any liability for any direct, indirect, special, punitive, consequential or any
other damages (including lost profits) even if notified of the possibility of
such damages.
Adviser
Disclaimer
The
Adviser does not guarantee the accuracy or the completeness of the Target
Indexes or any data included therein and the Adviser shall have no liability for
any errors, omissions or interruptions therein.
The
Adviser makes no warranty, express or implied, to the owners of shares of a Fund
or to any other person or entity, as to results to be obtained by the Fund from
the use of its Target Index or any data included therein. The Adviser makes no
express or implied warranties and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to a
Target Index or any data included therein. Without limiting any of the
foregoing, in no event shall the Adviser have any liability for any special,
punitive, direct, indirect or consequential damages (including lost profits),
even if notified of the possibility of such damages.
FactSet
Research Systems Inc. Disclaimer (Global Beta Rising Stars ETF
only)
The
Global Beta Rising Stars ETF (for this section only, the “Fund”) is not
sponsored, endorsed, sold, or promoted by FactSet Research Systems Inc.
(“FactSet”). FactSet makes no 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 Fund particularly or the ability of
the FactSet Rising Stars Index (for this section only, the “Index”) to track
general stock market performance. FactSet’s only relationship to the Adviser
(the “Licensee”) is the licensing of certain trademarks and trade names of
FactSet and of the Index, which is determined, composed, and calculated by
FactSet without regard to the Licensee or the Fund. FactSet has no obligation to
take the needs of the Licensee or the owners of the Fund into consideration in
determining, composing, or calculating the Index. FactSet is not responsible for
and has not participated in (i) the determination of the prices and amount of
shares of the Fund, (ii) the timing of the issuance or sale of shares of the
Fund, or (iii) the determination or calculation of the Fund’s net asset value.
FactSet has no obligation or liability in connection with the administration,
marketing, or trading of the Fund.
FACTSET
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA
INCLUDED THEREIN AND FACTSET SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS,
OR INTERRUPTIONS THEREIN. FACTSET MAKES NO WARRANTY, EXPRESS OR
IMPLIED,
AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE FUND, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED THEREIN. FACTSET
MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO
THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING,
IN NO EVENT SHALL FACTSET HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.
Service
Providers
Distributor
Compass
Distributors, LLC is the principal underwriter and distributor of the Funds’
shares. The Distributor will not distribute shares in less than a Creation Unit,
and it does not maintain a secondary market in the shares. The Distributor is a
broker-dealer registered under the Securities Exchange Act of 1934, as amended,
and a member of the Financial Industry Regulatory Authority, Inc. The
Distributor is not affiliated with the Adviser, the Index Provider or their
affiliates.
Administrator,
Fund Accounting Agent, Transfer Agent
U.S.
Bank Global Fund Services serves as the Administrator, Fund Accounting Agent,
Transfer Agent, and Dividend-Paying Agent of the Funds.
Custodian
U.S.
Bank N.A. serves as Custodian of the Funds’ investments.
Index
Provider
Each
Index Provider, in consultation with the Adviser, developed the methodology for
each respective Target Index. Each Index Provider is responsible for the ongoing
maintenance, compilation, calculation and administration of each respective
Target Index (except FactSet Research Systems Inc., which is only responsible
for the ongoing maintenance, compilation, and administration of the FactSet
Rising Stars Index). No Index Provider is affiliated with the Funds or the
Adviser. The Adviser has entered into a license agreement with each Index
Provider to use each respective Target Index. Pursuant to a sub-licensing
agreement between the Adviser and the Trust, the Adviser sub-licenses the use of
each Target Index and related intellectual property to the Trust and the
Funds.
Householding
Policy
Householding
is an option available to certain investors of the Funds. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for the Funds is available through certain broker- dealers.
If you are interested in enrolling in householding and receiving a single copy
of prospectuses and other shareholder documents, please contact your
broker-dealer. If you currently are enrolled in householding and wish to change
your householding status, please contact your broker-dealer.
Financial
Highlights
The
financial highlights table is intended to help you understand the Funds’
financial performance for the Funds’ five most recent fiscal years (or the life
of the Fund, if shorter). Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the Funds’ (assuming
reinvestment of all dividends and distributions). This information has been
audited by WithumSmith + Brown, PC, the Funds’ independent registered public
accounting firm, whose report, along with the Funds’ financial statements, is
included in the Funds’ annual report, which is available upon
request.
|
|
|
|
|
|
Financial
Highlights |
Global
Beta Smart Income ETF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
a share outstanding throughout the periods presented |
|
|
|
|
|
|
|
|
|
|
For
the Year Ended November 30, 2021 |
|
For
the Period Ended November 30, 2020(a) |
|
Net
asset value, beginning of year |
$ |
17.15 |
|
|
$ |
20.00 |
|
|
|
|
|
|
|
INCOME
FROM INVESTMENT OPERATIONS: |
|
|
|
|
Net
investment income(b) |
0.83 |
|
|
0.74 |
|
|
Net
realized and unrealized income (loss) on investments(c) |
3.55 |
|
|
(2.99) |
|
|
Total
from investment operations |
4.38 |
|
|
(2.25) |
|
|
|
|
|
|
|
LESS
DISTRIBUTIONS: |
|
|
|
|
From
net investment income |
(0.76) |
|
|
(0.60) |
|
|
Total
distributions |
(0.76) |
|
|
(0.60) |
|
|
|
|
|
|
|
Net
asset value, end of year |
$ |
20.77 |
|
|
$ |
17.15 |
|
|
|
|
|
|
|
TOTAL
RETURNS: |
|
|
|
|
Net
Asset Value(d) |
25.71 |
% |
|
(10.35) |
% |
^ |
Market
Value(e) |
26.31 |
% |
|
(10.54) |
% |
^ |
|
|
|
|
|
RATIOS/SUPPLEMENTAL
DATA: |
|
|
|
|
Net
assets, end of year (millions) |
$ |
2.6 |
|
|
$ |
1.7 |
|
|
RATIO
OF EXPENSES TO AVERAGE NET ASSETS: |
|
|
|
|
Before
fees waived and expenses reimbursed |
0.54 |
% |
|
5.41 |
% |
+ |
After
fees waived and expenses reimbursed |
0.29 |
% |
(f) |
0.12 |
% |
(g)+ |
RATIO
OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS: |
|
|
|
|
Before
fees waived and expenses reimbursed |
3.78 |
% |
|
(0.30) |
% |
+ |
After
fees waived and expenses reimbursed |
4.04 |
% |
(f) |
4.99 |
% |
(g)+ |
Portfolio
turnover rate(h) |
117 |
% |
|
169 |
% |
^ |
(a)Commencement
of investment operations on December 27, 2019.
(b)Calculated
using average shares outstanding, during the year.
(c)The
amounts reported for a share outstanding may not accord with the change in the
aggregate gains and losses in securities for the fiscal period due to the timing
of capital share transactions in relation to the fluctuating market values of
the Fund’s underlying securities.
(d)Net
asset value total return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period and redemption
on the last day of the period at net asset value.
(e)Market
value total return is calculated assuming an initial investment made at market
value at the beginning of the period, reinvestment of all dividends and
distributions at net asset value during the period and redemption on the last
day of the period at market value. The market value is determined by the
midpoint of the bid/ask spread at 4:00 p.m. from the NYSE Arca, Inc. Exchange.
Market value returns may vary from net asset value returns.
(f)Effective
May 1, 2021, the Advisory Agreement was amended to charge a single unitary
management fee.
(g)Includes
voluntary fees waived by the Adviser of $2,698 or 0.17% of average net assets
for the period.
(h)Portfolio
turnover rate excludes in-kind transactions.
^ Not
Annualized.
+ Annualized.
|
|
|
|
|
|
Financial
Highlights |
Global
Beta Low Beta ETF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
a share outstanding throughout the periods presented |
|
|
|
|
|
|
|
|
|
|
For
the Year Ended November 30, 2021 |
|
For
the Period Ended November 30, 2020(a) |
|
Net
asset value, beginning of year |
$ |
21.56 |
|
|
$ |
20.00 |
|
|
|
|
|
|
|
INCOME
FROM INVESTMENT OPERATIONS: |
|
|
|
|
Net
investment income(b) |
0.58 |
|
|
0.15 |
|
|
Net
realized and unrealized gain on investments(c) |
2.31 |
|
|
1.46 |
|
|
Total
from investment operations |
2.89 |
|
|
1.61 |
|
|
|
|
|
|
|
LESS
DISTRIBUTIONS: |
|
|
|
|
From
net investment income |
(0.52) |
|
|
(0.05) |
|
|
Total
distributions |
(0.52) |
|
|
(0.05) |
|
|
|
|
|
|
|
Net
asset value, end of year |
$ |
23.93 |
|
|
$ |
21.56 |
|
|
|
|
|
|
|
TOTAL
RETURNS: |
|
|
|
|
Net
Asset Value(d) |
13.56 |
% |
|
8.06 |
% |
^ |
Market
Value(e) |
13.68 |
% |
|
7.97 |
% |
^ |
|
|
|
|
|
RATIOS/SUPPLEMENTAL
DATA: |
|
|
|
|
Net
assets, end of year (millions) |
$ |
1.2 |
|
|
$ |
2.7 |
|
|
RATIO
OF EXPENSES TO AVERAGE NET ASSETS: |
|
|
|
|
Before
fees waived and expenses reimbursed |
1.46 |
% |
|
2.09 |
% |
+ |
After
fees waived and expenses reimbursed |
0.29 |
% |
(f) |
0.29 |
% |
+ |
RATIO
OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS: |
|
|
|
|
Before
fees waived and expenses reimbursed |
1.34 |
% |
|
0.23 |
% |
+ |
After
fees waived and expenses reimbursed |
2.51 |
% |
(f) |
2.03 |
% |
+ |
Portfolio
turnover rate(g) |
115 |
% |
|
0 |
% |
^# |
(a)Commencement
of investment operations on July 24, 2020.
(b)Calculated
using average shares outstanding, during the year.
(c)The
amounts reported for a share outstanding may not accord with the change in the
aggregate gains and losses in securities for the fiscal period due to the timing
of capital share transactions in relation to the fluctuating market values of
the Fund’s underlying securities.
(d)Net
asset value total return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period and redemption
on the last day of the period at net asset value.
(e)Market
value total return is calculated assuming an initial investment made at market
value at the beginning of the period, reinvestment of all dividends and
distributions at net asset value during the period and redemption on the last
day of the period at market value. The market value is determined by the
midpoint of the bid/ask spread at 4:00 p.m. from the NYSE Arca, Inc. Exchange.
Market value returns may vary from net asset value returns.
(f)Effective
May 1, 2021, the Advisory Agreement was amended to charge a single unitary
management fee.
(g)Portfolio
turnover rate excludes in-kind transactions.
^ Not
Annualized.
+ Annualized.
# Less
than 1%.
|
|
|
|
|
|
Financial
Highlights |
Global
Beta Rising Stars ETF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
a share outstanding throughout the periods presented |
|
|
|
|
|
|
|
|
|
|
For
the Year Ended November 30, 2021 |
|
For
the Period Ended November 30, 2020(a) |
|
Net
asset value, beginning of year |
$ |
22.26 |
|
|
$ |
20.00 |
|
|
|
|
|
|
|
INCOME
FROM INVESTMENT OPERATIONS: |
|
|
|
|
Net
investment income(b) |
0.07 |
|
|
0.06 |
|
|
Net
realized and unrealized gain on investments(c) |
0.81 |
|
|
2.22 |
|
|
Total
from investment operations |
0.88 |
|
|
2.28 |
|
|
|
|
|
|
|
LESS
DISTRIBUTIONS: |
|
|
|
|
From
net investment income |
(0.10) |
|
|
(0.02) |
|
|
Total
distributions |
(0.10) |
|
|
(0.02) |
|
|
|
|
|
|
|
Net
asset value, end of year |
$ |
23.04 |
|
|
$ |
22.26 |
|
|
|
|
|
|
|
TOTAL
RETURNS: |
|
|
|
|
Net
Asset Value(d) |
3.84 |
% |
|
11.39 |
% |
^ |
Market
Value(e) |
4.00 |
% |
|
11.27 |
% |
^ |
|
|
|
|
|
RATIOS/SUPPLEMENTAL
DATA: |
|
|
|
|
Net
assets, end of year (millions) |
$ |
1.2 |
|
|
$ |
2.8 |
|
|
RATIO
OF EXPENSES TO AVERAGE NET ASSETS: |
|
|
|
|
Before
fees waived and expenses reimbursed |
1.33 |
% |
|
2.05 |
% |
+ |
After
fees waived and expenses reimbursed |
0.29 |
% |
(f) |
0.29 |
% |
+ |
RATIO
OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS: |
|
|
|
|
Before
fees waived and expenses reimbursed |
(0.75) |
% |
|
(0.91) |
% |
+ |
After
fees waived and expenses reimbursed |
0.29 |
% |
(f) |
0.85 |
% |
+ |
Portfolio
turnover rate(g) |
312 |
% |
(h) |
30 |
% |
^ |
(a)Commencement
of investment operations on July 24, 2020.
(b)Calculated
using average shares outstanding, during the year.
(c)The
amounts reported for a share outstanding may not accord with the change in the
aggregate gains and losses in securities for the fiscal period due to the timing
of capital share transactions in relation to the fluctuating market values of
the Fund’s underlying securities.
(d)Net
asset value total return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period and redemption
on the last day of the period at net asset value.
(e)Market
value total return is calculated assuming an initial investment made at market
value at the beginning of the period, reinvestment of all dividends and
distributions at net asset value during the period and redemption on the last
day of the period at market value. The market value is determined by the
midpoint of the bid/ask spread at 4:00 p.m. from the NYSE Arca, Inc. Exchange.
Market value returns may vary from net asset value returns.
(f)Effective
May 1, 2021, the Advisory Agreement was amended to charge a single unitary
management fee.
(g)Portfolio
turnover rate excludes in-kind transactions.
(h)Increase
in the Portfolio turnover was a result of the Index change that was effective on
December 18, 2020.
^ Not
Annualized.
+ Annualized.
Global
Beta ETF Trust
You
can find more information about the Funds in the following
documents:
Statement
of Additional Information:
The SAI of the Funds provides more detailed information about the investments
and techniques of the Funds and certain other additional information. A current
SAI is on file with the SEC and is herein incorporated by reference into this
Prospectus. It is legally a part of the Prospectus.
Annual
and Semi-Annual Reports:
Additional information about the Funds’ investments is available in the Funds’
annual and semi- annual reports to shareholders. In the Funds’ annual report,
you will find a discussion of market conditions and investment strategies that
significantly affected the Funds’ performance during its last fiscal
year.
You
can obtain free copies of these documents, request other information, or make
generally inquiries about the Funds by contacting the Funds at:
Global
Beta ETF Trust
c/o
Compass Distributors, LLC
Three
Canal Plaza, 3rd Floor, Portland, ME 04101 (833) 933-2083
Copies
of information about the Funds may be obtained from the SEC, after paying a
duplicating fee, by electronic request at the following e-mail address:
[email protected].
Shareholder
Reports and other information about the Funds are also available free of
charge:
–at
www.globalbetaetf.com; and
–from
the SEC’s EDGAR database at http://www.sec.gov.
(1940
Act File Number 811-23450)