SUBJECT
TO COMPLETION, PRELIMINARY PROSPECTUS
THE
INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT
SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
MACQUARIE ETF TRUST
[Sustainable Global Listed
Infrastructure ETF]
Ticker: [ ]
[Energy Transition
ETF]
Ticker: [ ]
[Tax-Free USA Short Term
ETF]
Ticker: [ ]
Exchage: [ ]
[ ], 2023
The US Securities and
Exchange Commission has not approved or disapproved these securities or passed
upon the adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
Get shareholder reports and
prospectuses online instead of in the mail. Visit [website].
Table of contents [to be
updated]
Fund summaries |
[ ] |
[Sustainable Global Listed Infrastructure ETF] |
[ ] |
[Energy Transition ETF] |
[ ] |
[Tax-Free USA Short Term ETF] |
[ ] |
How we manage the Funds |
[ ] |
Our principal investment strategies |
[ ] |
Other investment strategies |
[ ] |
The risks of investing in the Funds |
[ ] |
Disclosure of portfolio holdings information |
[ ] |
Who manages the Funds |
[ ] |
Investment manager |
[ ] |
Portfolio managers |
[ ] |
[Manager of managers structure] |
[ ] |
Who’s who |
[ ] |
About your account |
[ ] |
Investing in the Funds |
[ ] |
How to buy shares |
[ ] |
Fair valuation |
[ ] |
Retirement plans |
[ ] |
Document delivery |
[ ] |
Investor services |
[ ] |
Frequent trading of Fund shares (market timing and disruptive
trading) |
[ ] |
Dividends, distributions, and taxes |
[ ] |
Certain management considerations |
[ ] |
Financial highlights |
[ ] |
Additional information |
[ ] |
Fund Summaries
[Sustainable Global Listed
Infrastructure ETF]
What is the
Fund’s investment objective?
[Sustainable Global Listed Infrastructure ETF]
seeks to deliver total return that consists of both capital growth and income by
investing in infrastructure companies making a contribution to sustainable
investment outcomes.
What are the
Fund’s fees and expenses?
The following table describes the fees and
expenses that you will incur if you buy, hold, and sell shares of the Fund.
You may also incur other fees, such as usual and
customary brokerage commissions and other fees to financial intermediaries,
which are not reflected in the table and the Example below.
Annual Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your investment)
|
|
|
Management fees |
|
[___]% |
Distribution and service (12b-1) fees |
|
None |
Other expenses1 |
|
None |
Total annual Fund operating
expenses |
|
[___]% |
1. Other
expenses are based on estimated amounts for the current fiscal year.
Example
This example is intended to help you compare the
cost of investing in the Fund with the cost of investing in other funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
|
|
|
|
|
1 Year |
|
3 Years |
|
$[___] |
|
$[___] |
Portfolio turnover
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in the annual fund operating expenses or in the
example, affect the Fund’s performance. As of the date of this Prospectus, the
Fund has not yet commenced operations and portfolio turnover data therefore is
not available.
What are the
Fund’s principal investment strategies?
Under normal circumstances, the [Sustainable
Global Listed Infrastructure ETF] will invest at least 80% of its net assets,
plus the amount of any borrowings for investment purposes, in global listed
infrastructure companies that meet the Fund’s sustainable investment criteria.
In seeking investments in sustainable companies, Delaware Management Company,
the Fund’s investment adviser (Manager) identifies companies that have the
capacity to contribute to the objectives of climate change mitigation, climate
change adaptation and/or positive social impact. Companies contributing to the
objective of climate change mitigation are those that are decarbonizing their
own activities or assisting with the decarbonization of their surrounding
economies. Companies contributing towards climate change adaptation are those
investing in critical infrastructure assets and associated natural resources to
improve their resilience and reliability. The Fund may also invest in
infrastructure companies that are generating positive social impact through the
promotion of social inclusion and equal access to infrastructure assets that are
essential for daily life and economies, such as energy, sanitation, transport
and digital connectivity. The investment process uses a proprietary process to
identify investments that exhibit carbon reductions targets, such as net zero,
with low or declining carbon emissions, material investments in assets that
contribute to systematic decarbonization and/or investments to increase
infrastructure resilience, as well as companies making commitments to improving
affordability of, and access to infrastructure.
The Manager uses a research-oriented, bottom-up
(researching individual issuers) investment approach to seek to identify
high-quality, global listed infrastructure companies. The Manager also uses the
research process to identify top-down factors that impact portfolio
construction. The Manager considers a number of factors in selecting individual
investments for the Fund’s portfolio, including the valuation and quality
analysis on each potential investment and the Manager’s sustainability analysis
described above. The Manager also undertakes due diligence comprising
qualitative and quantitative assessments in order to assess the quality of a
company’s assets and management teams, the nature of regulation and/or
contracts, strength of its balance sheet and sovereign risks.
The Fund will typically invest in “pure”
infrastructure companies, which the Manager defines as companies that derive
greater than 80% of their enterprise value from “pure” infrastructure assets,
which typically consist of: regulated utilities, such as electric and gas
transmission and distribution, water and sewage; energy infrastructure, which
consists of energy transport and storage companies; user demand and
transportation, such as airports, toll roads, seaports and railways; and
communications, which includes cell phone tower companies. The Fund may invest
in high quality companies of any size; however, the Manager may exclude
companies below a market capitalization of $2 billion that it deems not
sufficiently liquid, and large capitalization companies that the Manager
believes have limited free float (i.e., shares of the company available to the
public).
Generally, in determining whether to sell a
security, the Manager uses the same type of analysis that it uses when buying
securities to determine whether the security continues to be a desired
investment for the Fund, including consideration of the security’s current
valuation and sustainability criteria. Additionally, the Manager may sell a
security to reduce the Fund’s holding in that security, to take advantage of
what it believes are more attractive investment opportunities or to raise
cash.
The Manager may permit its affiliate, Macquarie
Investment Management Global Limited (MIMGL), to execute Fund security trades on
behalf of the Manager. The Manager may also seek quantitative support from
MIMGL.
The Fund’s 80% policy is nonfundamental and may
be changed without shareholder approval. However, Fund shareholders would be
given at least 60 days’ notice prior to any such change.
What are the
principal risks of investing in the Fund?
Investing in any exchange-traded fund involves
the risk that you may lose part or all of the money you invest. Over time, the
value of your investment in the Fund will increase and decrease according to
changes in the value of the securities in the Fund’s portfolio. An investment in
the Fund may not be appropriate for all investors. Unlike many ETFs, the Fund is
actively managed and does not seek to replicate the performance of a specified
index. The Fund’s principal risks include:
Market risk
- The risk that all or a majority of the securities in a certain market -
such as the stock or bond market - will decline in value because of factors such
as adverse political or economic conditions, future expectations, investor
confidence, or heavy institutional selling.
Large-capitalization company risk —
Large-capitalization companies tend to be less volatile than companies with
smaller market capitalizations. This potentially lower risk means that the
Fund’s share price may not rise as much as the share prices of funds that focus
on smaller-capitalization companies.
Sustainability risk — Investing
with a focus on companies that exhibit a commitment to sustainable practices may
result in the Fund investing in certain types of companies, industries or
sectors that the market may not favor. The securities of such companies may
underperform the stock market as a whole and, the criteria used to select
companies for investment may result in the Fund investing in securities that
underperform securities of companies that do not exhibit such a commitment to
sustainability.
Active
management and selection risk — The risk that the securities
selected by a fund’s management will underperform the markets, the relevant
indices, or the securities selected by other funds with similar investment
objectives and investment strategies. The securities and sectors selected may
vary from the securities and sectors included in the relevant index.
Company size
risk — The risk that investments in small- and/or medium-sized
companies may be more volatile than
those of larger companies because of limited financial resources or dependence
on narrow product lines.
Infrastructure industry risk — Companies in the infrastructure industry
may be subject to a variety of factors that could adversely affect their
business or operations, including high interest costs in connection with capital
construction programs, high degrees of leverage, costs associated with
governmental, environmental and other regulations, the level of government
spending on infrastructure projects, and other factors.
Foreign and
emerging markets risk — The risk that international investing
(particularly in emerging markets) may be adversely affected by political
instability; changes in currency exchange rates; inefficient markets and higher
transaction costs; foreign economic conditions; the imposition of economic or
trade sanctions; or inadequate or different regulatory and accounting standards.
The risk associated with international investing will be greater in emerging
markets than in more developed foreign markets because, among other things,
emerging markets may have less stable political and economic environments. In
addition, there often is substantially less publicly available information about
issuers and such information tends to be of a lesser quality. Economic markets
and structures tend to be less mature and diverse and the securities markets may
also be smaller, less liquid, and subject to greater price volatility.
Liquidity risk
- The possibility that investments cannot be readily sold within seven
calendar days at approximately the price at which a fund has valued them.
Industry and
sector risk — The risk that the value of securities in a particular
industry or sector (such as the infrastructure sector) will decline because of
changing expectations for the performance of that industry or sector.
Government and
regulatory risk — The risk that governments or regulatory
authorities may take actions that could adversely affect various sectors of the
securities markets and affect fund performance.
ETF risk
– The Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to
the following risks: “Authorized participants, market makers and liquidity
providers concentration risk,” “Secondary Market Trading Risk” and “Shares may
trade at prices other than NAV risk.”
|
• |
Authorized participants, market
makers and liquidity providers concentration risk – Only authorized
participants (“APs”) may engage in creation or redemption transactions
directly with the Fund. The Fund has a limited number of financial
institutions that are institutional investors and may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace, and they have no obligation to submit
creation or redemption orders. To the extent either of the following
events occur, the Fund’s shares may trade at a material discount to net
asset value (“NAV”) and possibly face delisting: (i) APs exit the business
or otherwise become unable to process creation and/or redemption orders
and no other APs step forward to perform these services, or (ii) market
makers and/or liquidity |
providers exit the business
or significantly reduce their business activities and no other entities step
forward to perform their functions. These events, among others, may lead to the
Fund’s shares trading at a premium or discount to NAV. A diminished market for
an ETF's shares substantially increases the risk that a shareholder may pay
considerably more or receive significantly less than the underlying value of the
ETF shares bought or sold.
|
• |
Secondary market trading risk -
Although the Fund’s shares are listed on a national securities
exchange [ ] (“Exchange”) and may be traded on U.S. exchanges
other than 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 the Fund’s shares on the Exchange may be halted. In addition,
an exchange or market may issue trading halts on specific securities or
financial instruments. As a result, the ability to trade certain
securities or financial instruments may be restricted, which may disrupt
the Fund’s creation/redemption process or affect the price at which shares
trade in the secondary market. |
|
• |
Shares may trade at prices other than
NAV risk – As with all ETFs, shares of the Fund may be bought and
sold in the secondary market at market prices. The Fund’s NAV is calculated at the
end of each business day and fluctuates with changes in the market value
of the Fund’s holdings, while the trading price of the shares fluctuates
continuously throughout trading hours on the Exchange, based on both the
relative market supply of, and demand for, the shares and the underlying
value of the Fund’s holdings. As a result, although it is expected that
the market price of the Fund’s shares will approximate the Fund’s NAV,
there may be times when the market price of the Fund’s shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount).
This risk is heightened in times of market volatility or periods of steep
market declines. |
New fund risk -
The Fund is a newly organized, diversified management investment company
with no operating history. In addition, there can be no assurance that the Fund
will grow to, or maintain, an economically viable size, in which case the Board
of Trustees of the Trust (the “Board) may determine to liquidate the Fund.
IBOR risk
- The risk that changes related to the use of the London Interbank
Offered Rate (LIBOR) or similar interbank offered rates (“IBORs,” such as the
Euro Overnight Index Average (EONIA)) could have adverse impacts on financial
instruments that reference LIBOR or a similar rate. While some instruments may
contemplate a scenario where LIBOR or a similar rate is no longer available by
providing for an alternative rate setting methodology, not all instruments have
such fallback provisions and the effectiveness of replacement rates is
uncertain. The abandonment of LIBOR and similar rates could affect the value and
liquidity of instruments that reference such rates, especially those that do not
have fallback provisions. The use of alternative reference rate products may
impact investment strategy performance.
None of the entities noted in this document is
an authorized deposit-taking institution for the purposes of the Banking Act
1959 (Commonwealth of Australia) and the obligations of these entities do not
represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583
542 (Macquarie Bank). Macquarie Bank does not guarantee or otherwise provide
assurance in respect of the obligations of these entities. In addition, if this
document relates to an investment (a) each investor is subject to investment
risk including possible delays in repayment and loss of income and principal
invested and (b) none of Macquarie Bank or any other Macquarie Group company
guarantees any particular rate of return on or the performance of the
investment, nor do they guarantee repayment of capital in respect of the
investment.
How has
[Sustainable Global Listed Infrastructure ETF] performed?
Because the Fund is new, it has no performance
history. Once the Fund has commenced operations, you can obtain updated
performance information at [website] or by calling [phone number]. The Fund’s
past performance (before and after taxes) is not necessarily an indication of
how the Fund will perform in the future.
Who manages
the Fund?
Investment
manager
Delaware Management Company, a series of
Macquarie Investment Management Business Trust (a Delaware statutory
trust)
Portfolio managers |
Title with Delaware Management
Company |
Start date on the Fund |
Anthony Felton |
Senior Portfolio Manager, Global Listed Infrastructure
Securities |
Since inception ([ ], 2023) |
Brad Frishberg |
Chief Investment Officer, Global Listed Infrastructure Securities,
Senior Portfolio Manager |
Since inception ([ ], 2023) |
Sub-Advisor
Macquarie Investment Management
Global Limited (MIMGL)
Purchase and
redemption of Fund shares
The Fund is an ETF. As an
ETF, only APs may engage in creation or redemption transactions directly with
the Fund. The Fund issues or redeems shares that have been aggregated into
blocks of [ ] shares or multiples thereof (Creation Units) to APs who have
entered into agreements with the Fund’s distributor, [ ]. The Fund will
generally issue or redeem Creation Units in exchange for a basket of securities
(and/or an amount of cash) that the Fund specifies each day. Individual shares
of the Fund may only be purchased and sold on a national securities exchange
through a broker-dealer. 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).
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase shares of the Fund (bid) and the lowest price a seller is
willing to accept for shares of the Fund (ask) when buying or selling shares in
the secondary market (the “bid-ask spread”). Recent information, including
information on the Fund’s NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at [website].
Tax
information
The Fund’s distributions generally are taxable
to you 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, in which case your distributions may be taxed
as ordinary income when withdrawn from the tax-advantaged account.
Payments to
broker/dealers and other financial intermediaries
If you purchase shares of the Fund through a
broker/dealer or other financial intermediary (such as a bank), the Fund and its
related companies may pay the intermediary for certain Fund-related
activities, including those that are designed to make the intermediary more
knowledgeable about exchange traded products, such as the Fund, as well as for
marketing, education or other initiatives related to the sale or promotion of
Fund shares. 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 website for more information.
[Energy Transition ETF]
What is the
Fund’s investment objective?
[Energy Transition ETF] seeks to provide
long-term growth of capital.
What are the Fund’s fees and
expenses?
The following table describes the fees and
expenses that you will incur if you buy, hold, and sell shares of the Fund.
You may also incur other fees, such as usual and
customary brokerage commissions and other fees to financial intermediaries,
which are not reflected in the table and the Example below.
Annual Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your investment)
|
|
|
|
|
|
Management fees |
|
[___]% |
Distribution and service (12b-1) fees |
|
None |
Other expenses1 |
|
None |
Total annual Fund operating expenses |
|
[___]% |
1. Other
expenses are based on estimated amounts for the current fiscal year.
Example
This example is intended to help you compare the
cost of investing in the Fund with the cost of investing in other funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
|
|
|
|
|
1 Year |
|
3 Years |
|
$[___] |
|
$[___] |
Portfolio turnover
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in the annual fund operating expenses or in the
example, affect the Fund’s performance. As of the date of this Prospectus, the
Fund has not yet commenced operations and portfolio turnover data therefore is
not available.
What are
the Fund’s principal investment strategies?
The [Energy Transition ETF] seeks to achieve its
investment objective by investing, under normal circumstances, at least 80% of
its net assets, plus the amount of any borrowings for investment purposes, in a
diversified portfolio of securities in the energy, materials, industrial,
renewable energy, and utilities sectors that meet the Fund’s investment criteria
noted below. The Fund’s strategy seeks to realize inefficiencies in the global
transition to cleaner, lower carbon energy in a world of increasing energy
demand and uncertain energy supply. The Fund may invest in
companies of any size and located across the
globe; however, the Fund generally will focus its investments on companies
domiciled in North America.
The Fund seeks to invest its assets primarily
in two types of companies. The first group of companies are ones that Delaware
Management Company, the Fund’s investment adviser (Manager) believes are
facilitating the transition to new, lower carbon energy sources, such as solar
or wind energy, as well as the increasing electrification of areas that have
traditionally relied on fossil fuels, such as transportation. The Manager
considers these companies to be “transition enablers” that have a significant
portion of their business committed to actively developing and/or providing
products and services designed to produce lower-emitting alternatives to fossil
fuels, or providers of services or materials required for the energy transition
or low greenhouse gas energy production.
The second category of companies, “responsible
producers,” includes traditional energy exploration and production companies
with the potential to transition to lower emission power production, as well as
providers of materials needed to augment low greenhouse gas (GHG) energy
production. To be classified in this category the companies must be producers
that are actively working toward reducing, displacing and/or sequestering their
GHG emissions, potentially including companies that currently have a high level
of absolute GHG emissions. Companies in this category also need to produce in a
responsible manner by limiting/controlling water usage/discharge and spills and
operate in a socially responsible manner (for example no use of child labor)
while ensuring proper governance especially when operating in higher risk
jurisdictions.
Companies must have a significant portion of
its business committed to responsible production which might include low carbon
production, limited methane, responsible water usage, careful reclamation, or
limited flaring in oil and gas production. Importantly, the proportion of energy
or mining such companies produce responsibly is expected to increase or at least
remain constant. Companies are required to remain focused on the cleanest
approaches to production, rather than a full transition to significantly lower
emission power production. Nuclear energy is included in this category on the
basis it provides a low emission source of base load power, complimenting the
low emission but intermittent power provided by renewables.
The Manager conducts an initial screening of
the universe of “transition enablers and “responsible producers” using its
proprietary environmental framework for companies leveraging the Manager’s own
views, in-house knowledge base and best practices, along with external resources
like Sustainalytics and Bloomberg. The Manager then analyzes each investable
opportunity that fits the criteria of a “transition enabler” or “responsible
producer.” While the Fund will invest in both companies that the Manager
considers to be “transition enablers” and companies it considers “responsible
producers”, the Manager expects that “transition enabler” companies will
gradually take an increasing share of the portfolio over the long-term.
The Manager then uses a proprietary fundamental
process to analyze each sustainable, investable opportunity. The Manager
evaluates these “responsible producers” as well as “transition enablers” on
various financial measures to determine which companies present an attractive
risk/reward. Financial measures include 1) sector and company growth
profile; 2) relative financial multiples; 3) net asset value; 4) balance sheet
and cash flow analysis; and 5) various other financial measures depending on the
industry and opportunity. Position sizing is determined based on
numerous risk factors such as 1) security domicile; 2) company asset domicile;
3) financial risk; 4) security liquidity; and 5) sub-sector exposures. The
portfolio is constantly monitored to maximize returns while reducing risk.
Positions presenting a more favorable risk/return profile will be larger
positions within the Fund’s portfolio.
Generally, in determining whether to sell a
security, the Manager uses the same type of analysis that it uses when buying
securities to determine whether the security continues to be a desired
investment for the Fund, including consideration of the security’s current
valuation. Additionally, the Manager may sell a security to reduce the Fund’s
holding in that security, to take advantage of what it believes are more
attractive investment opportunities or to raise cash. Positions will be
exited if they no longer are favorably valued or they no longer meet the
criteria as a “responsible producer” or “transition enabler.”
The Manager may permit its affiliates, Macquarie
Investment Management Global Limited (MIMGL) to execute Fund security trades on
behalf of the Manager. The Manager may also seek quantitative support from
MIMGL.
The Fund’s 80% policy is nonfundamental and may
be changed without shareholder approval. However, Fund shareholders would be
given at least 60 days’ notice prior to any such change.
What are the
principal risks of investing in the Fund?
Investing in any exchange-traded fund involves
the risk that you may lose part or all of the money you invest. Over time, the
value of your investment in the Fund will increase and decrease according to
changes in the value of the securities in the Fund’s portfolio. An investment in
the Fund may not be appropriate for all investors. Unlike many ETFs, the Fund is
actively managed and does not seek to replicate the performance of a specified
index. The Fund’s principal risks include:
Market risk
- The risk that all or a majority of the securities in a certain market -
such as the stock or bond market - will decline in value because of factors such
as adverse political or economic conditions, future expectations, investor
confidence, or heavy institutional selling.
Sustainability risk — Investing
with a focus on companies that exhibit a commitment to sustainable practices may
result in the Fund investing in certain types of companies, industries or
sectors that the market may not favor. The securities of such companies may
underperform the stock market as a whole and, the criteria used to select
companies for investment may result in the Fund investing in securities that
underperform securities of companies that do not exhibit such a commitment to
sustainability.
Liquidity risk
- The possibility that investments cannot be readily sold within seven
calendar days at approximately the price at which a fund has valued them.
Government and
regulatory risk - The risk that governments or regulatory authorities may
take actions that could adversely affect various sectors of the securities
markets and affect fund performance.
Industry and
sector risk - The risk that the value of securities in a particular
industry or sector (such as energy, materials or utilities) will decline because
of changing expectations for the performance of that industry or sector.
[Infrastructure industry
risk] - Companies in the infrastructure
industry may be subject to a variety of factors that could adversely affect
their business or operations, including high interest costs in connection with
capital construction programs, high degrees of leverage, costs associated with
governmental, environmental and other regulations, the level of government
spending on infrastructure projects, and other factors.
ETF risk
– The Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to
the following risks: “Authorized participants, market makers and liquidity
providers concentration risk,” “Secondary Market Trading Risk” and “Shares may
trade at prices other than NAV risk.”
|
• |
Authorized participants, market
makers and liquidity providers concentration risk - Only authorized
participants (“APs”) may engage in creation or redemption transactions
directly with the Fund. The Fund has a limited number of financial
institutions that are institutional investors and may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace, and they have no obligation to submit
creation or redemption orders. To the extent either of the following
events occur, the Fund’s shares may trade at a material discount to net
asset value (“NAV”) and possibly face delisting: (i) APs exit the business
or otherwise become unable to process creation and/or redemption orders
and no other APs step forward to perform these services, or (ii) market
makers and/or liquidity providers exit the business or significantly
reduce their business activities and no other entities step forward to
perform their functions. These events, among others, may lead to the
Fund’s shares trading at a premium or discount to NAV. A diminished market
for an ETF's shares substantially increases the risk that a shareholder
may pay considerably more or receive significantly less than the
underlying value of the ETF shares bought or
sold.
|
|
• |
Secondary market trading risk -
Although the Fund’s shares are listed on a national securities
exchange [ ] (“Exchange”) and may be traded on U.S. exchanges other
than 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 the Fund’s shares on the Exchange may be halted. In addition,
an exchange or market may issue trading halts on specific securities or
financial instruments. As a result, the ability to trade certain
securities or financial instruments may be restricted, which may disrupt
the Fund’s creation/redemption process or affect the
price |
at which shares trade in the
secondary market.
|
• |
Shares may trade at prices other than
NAV risk – As with all ETFs, shares of the Fund may be bought and
sold in the secondary market at market prices. The Fund’s NAV is calculated at the
end of each business day and fluctuates with changes in the market value
of the Fund’s holdings, while the trading price of the shares fluctuates
continuously throughout trading hours on the Exchange, based on both the
relative market supply of, and demand for, the shares and the underlying
value of the Fund’s holdings. As a result, although it is expected that
the market price of the Fund’s shares will approximate the Fund’s NAV,
there may be times when the market price of the Fund’s shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount).
This risk is heightened in times of market volatility or periods of steep
market declines. |
New fund risk -
The Fund is a newly organized, diversified management investment company
with no operating history. In addition, there can be no assurance that the Fund
will grow to, or maintain, an economically viable size, in which case the Board
of Trustees of the Trust (the “Board) may determine to liquidate the Fund.
IBOR risk
- The risk that changes related to the use of the London Interbank
Offered Rate (LIBOR) or similar interbank offered rates (“IBORs,” such as the
Euro Overnight Index Average (EONIA)) could have adverse impacts on financial
instruments that reference LIBOR or a similar rate. While some instruments may
contemplate a scenario where LIBOR or a similar rate is no longer available by
providing for an alternative rate setting methodology, not all instruments have
such fallback provisions and the effectiveness of replacement rates is
uncertain. The abandonment of LIBOR and similar rates could affect the value and
liquidity of instruments that reference such rates, especially those that do not
have fallback provisions. The use of alternative reference rate products may
impact investment strategy performance.
Large-capitalization company risk —
Large-capitalization companies tend to be less volatile than companies with
smaller market capitalizations. This potentially lower risk means that the
Fund’s share price may not rise as much as the share prices of funds that focus
on smaller-capitalization companies.
Company size
risk — The risk that investments in small- and/or medium-sized
companies may be more volatile than
those of larger companies because of limited financial resources or dependence
on narrow product lines.
Foreign and
emerging markets risk — The risk that foreign securities
(particularly in emerging markets) may be adversely affected by political instability,
changes in currency exchange rates, inefficient markets and higher transaction
costs, foreign economic conditions, the imposition of economic or trade
sanctions, or inadequate or different regulatory and accounting standards.
Active
management and selection risk - The risk that the securities selected by
a fund’s management will underperform the markets, the relevant indices, or the
securities selected by other funds with similar investment objectives and
investment strategies. The securities and sectors selected may vary from the
securities and sectors included in the relevant index.
None of the entities noted in this document is
an authorized deposit-taking institution for the purposes of the Banking Act
1959 (Commonwealth of Australia) and the obligations of these entities do not
represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583
542 (Macquarie Bank). Macquarie Bank does not guarantee or otherwise provide
assurance in respect of the obligations of these entities. In addition, if this
document relates to an investment (a) each investor is subject to investment
risk including possible delays in repayment and loss of income and principal
invested and (b) none of Macquarie Bank or any other Macquarie Group company
guarantees any particular rate of return on or the performance of the
investment, nor do they guarantee repayment of capital in respect of the
investment.
How has
[Energy Transition ETF] performed?
Because the Fund is new, it has no performance
history. Once the Fund has commenced operations, you can obtain updated
performance information at [website] or by calling [phone number]. The Fund’s
past performance (before and after taxes) is not necessarily an indication of
how the Fund will perform in the future.
Who manages
the Fund?
Investment
manager
Delaware Management Company, a series of
Macquarie Investment Management Business Trust (a Delaware statutory
trust)
Portfolio managers |
Title with Delaware Management
Company |
Start date on the Fund |
Samuel Halpert |
Division Director, Chief Investment Officer — Global Natural
Resources Equity, Senior Portfolio Manager |
Since inception ([ ], 2023) |
Geoffrey King |
Associate Director, Senior Vice President, Portfolio Manager — Global
Natural Resources Equity |
Since inception ([ ], 2023) |
Sub-Advisor
Macquarie Investment Management
Global Limited (MIMGL)
Purchase and
redemption of Fund shares
The Fund is an ETF. As an
ETF, only APs may engage in creation or redemption transactions directly with
the Fund. The Fund issues or redeems shares that have been aggregated into
blocks of [ ] shares or multiples thereof (Creation Units) to APs who have
entered into agreements with the Fund’s distributor, [ ]. The Fund will
generally issue or redeem Creation Units in exchange for a basket of securities
(and/or an amount of cash) that the Fund specifies each day. Individual shares
of the Fund may only be purchased and sold on a national securities exchange
through a broker-dealer. 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).
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase shares of the Fund (bid) and the lowest price a seller is
willing to accept for shares of the Fund (ask) when buying or selling shares in
the secondary market (the “bid-ask spread”). Recent information, including
information on the Fund’s NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at [website].
Tax
information
The Fund’s distributions generally are taxable
to you 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, in which case your distributions may be taxed
as ordinary income when withdrawn from the tax-advantaged account.
Payments to
broker/dealers and other financial intermediaries
If you purchase shares of the Fund through a
broker/dealer or other financial intermediary (such as a bank), the Fund and its
related companies may pay the intermediary for certain Fund-related
activities, including those that are designed to make the intermediary more
knowledgeable about exchange traded products, such as the Fund, as well as for
marketing, education or other initiatives related to the sale or promotion of
Fund shares. 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 website for more information.
[Tax-Free USA Short Term
ETF]
What is the
Fund’s investment objective?
[Tax-Free USA Short Term ETF] seeks to provide a
high level of current interest income that is exempt from federal income tax,
and attempts to preserve capital by investing in short term municipal
obligations.
What are the
Fund’s fees and expenses?
The following table describes the fees and
expenses that you will incur if you buy, hold, and sell shares of the Fund.
You may also incur other fees, such as usual and
customary brokerage commissions and other fees to financial intermediaries,
which are not reflected in the table and the Example below.
Annual Fund Operating
Expenses
(expenses that you pay each year as a percentage of the value
of your investment)
|
|
|
|
|
|
Management fees |
|
[___]% |
Distribution and service (12b-1) fees |
|
None |
Other expenses1 |
|
None |
Total annual Fund operating expenses |
|
[___]% |
1. Other
expenses are based on estimated amounts for the current fiscal year.
Example
This example is intended to help you compare the
cost of investing in the Fund with the cost of investing in other funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
|
|
|
|
|
1 Year |
|
3 Years |
|
$[___] |
|
$[___] |
Portfolio turnover
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in the annual fund operating expenses or in the
example, affect the Fund’s performance. As of the date of this Prospectus, the
Fund has not yet commenced operations and portfolio turnover data therefore is
not available.
What are the Fund’s principal
investment strategies?
Under normal circumstances, [Tax-Free USA Short
Term ETF] will invest at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in securities the income from which is
exempt from federal income tax, including the federal alternative minimum tax.
This is a fundamental investment policy that may not be changed without prior
shareholder approval.
The Fund will invest primarily in municipal debt
obligations that are issued by state and local governments to raise funds for
various public purposes such as hospitals, schools, and general capital
expenses. The Fund will invest its assets in securities with short durations
until maturity and will typically have a dollar-weighted average effective
maturity of between 1 and 5 years. Delaware Management Company, the Fund’s
investment adviser (Manager) will adjust the average maturity of the bonds in
the Fund’s portfolio to attempt to provide a high level of tax-exempt income
consistent with preservation of capital.
The Manager analyzes economic
and market conditions, seeking to identify the securities or market sectors that
it thinks are the best investments for the Fund. The following is a general
description of the investment strategies used to manage the Fund and a list of
securities in which the Fund may invest.
The Fund will generally
invest in debt obligations issued by state and local governments and their
political subdivisions, agencies, authorities, and instrumentalities that are
exempt from federal income tax. The Fund may also invest in debt obligations
issued by or for the District of Columbia, and the political subdivisions,
agencies, authorities, and instrumentalities or territories and possessions
(such as the Commonwealth of Puerto Rico, Guam, and the US Virgin Islands) of
the United States that are exempt from federal income tax. The types of
municipal debt obligations in which the Fund may invest include, but are not
limited to, advance refunded bonds, revenue bonds, general obligation bonds,
insured municipal bonds, private activity bonds, municipal leases, and
certificates of participation.
The Fund will generally
invest in securities for income rather than seeking capital appreciation through
active trading. However, the Manager may sell securities for a variety of
reasons such as: to reinvest the proceeds in higher yielding securities; to
eliminate investments not consistent with the preservation of capital; to honor
redemption requests; or to address a weakening credit situation. As a result,
the Fund may realize capital gains that could be taxable to shareholders or they
may realize losses.
During the security selection process, Delaware
Management Company, the Fund’s investment adviser (Manager) will assess a
security based on certain sustainability factors and for the potential for such
factors to have a positive impact on the community. A score is determined based
on environmental, social and governance factors. Environmental factors include,
but are not limited to, compliance with environmental regulations, flood and
earthquake risk, pollution and climate impact. A security’s social factors
include, but are not limited to, demographics, labor management, community
relations and affordability. Governance factors include, but are not limited to,
management oversight, transparency, and disclosure practices. The Manager will
assign a sustainability score of 3 to securities with neutral sustainability
related characteristics, a score of 1 or 2 to securities with positive
sustainability characteristics, and a score of 4 or 5 with negative
sustainability characteristics. A security with a score of 4 or 5 is
automatically disqualified from inclusion in the Fund’s portfolio. The Manager
will sell a security held by the Fund if the security’s sustainability score
drops below 3 and, in the Manager’s view, the change in score is not
temporary.
The Fund may invest up to 20% of its net assets
in high yield fixed income securities (junk bonds), which are rated less than
BBB- by S&P or comparably rated by other Nationally Recognized Statistical
Ratings Organizations or if unrated, determined to be of comparable quality by
the Manager. The Fund’s income level will vary depending on current
interest rates and the specific securities in the portfolio. The Fund may
concentrate its investments in certain types of bonds or in a certain segment of
the municipal bond market when the supply of bonds in other sectors does not
suit its investment needs.
The Fund's investment
objective is nonfundamental. This means that the Fund's Board of Trustees (the
“Board”) may change the objective without obtaining shareholder approval. If the
objective were changed, the Fund would notify shareholders at least 60 days
before the change became effective.
What are the
principal risks of investing in the Fund?
Investing in any exchange-traded fund involves
the risk that you may lose part or all of the money you invest. Over time, the
value of your investment in the Fund will increase and decrease according to
changes in the value of the
securities in the Fund’s portfolio. An
investment in the Fund may not be appropriate for all investors. Unlike many
ETFs, the Fund is actively managed and does not seek to replicate the
performance of a specified index. The Fund’s principal risks include:
Market risk
- The risk that all or a majority of the securities in a certain market -
such as the stock or bond market - will decline in value because of factors such
as adverse political or economic conditions, future expectations, investor
confidence, or heavy institutional selling.
Sustainability risk — Investing
with a focus on companies that exhibit a commitment to sustainable practices may
result in the Fund investing in certain types of companies, industries or
sectors that the market may not favor. The securities of such companies may
underperform the stock market as a whole and, the criteria used to select
companies for investment may result in the Fund investing in securities that
underperform securities of companies that do not exhibit such a commitment to
sustainability.
Interest rate
risk - The risk that the prices of bonds and other fixed income
securities will increase as interest rates fall and decrease as interest rates
rise. Interest rate changes are influenced by a number of factors, such as
government policy, monetary policy, inflation expectations, and the supply and
demand of bonds. Bonds and other fixed income securities with longer maturities
or duration generally are more sensitive to interest rate changes. A fund may be
subject to a greater risk of rising interest rates when interest rates are low
or inflation rates are high or rising.
High yield (junk
bond) risk - The risk that high yield securities, commonly known as “junk
bonds,” are subject to reduced creditworthiness of issuers, increased risk of
default, and a more limited and less liquid secondary market. High yield
securities may also be subject to greater price volatility and risk of loss of
income and principal than are higher-rated securities. High yield bonds are
sometimes issued by municipalities that have less financial strength and
therefore have less ability to make projected debt payments on the bonds.
Credit risk
- The risk that an issuer of a debt security, including a governmental
issuer or an entity that insures a bond, may be unable to make interest payments
and/or repay principal in a timely manner.
Call risk
- The risk that a bond issuer will prepay the bond during periods of low
interest rates, forcing a fund to reinvest that money at interest rates that
might be lower than rates on the called bond.
Liquidity risk
- The possibility that investments cannot be readily sold within seven
calendar days at approximately the price at which a fund has valued them.
Alternative
minimum tax risk - If a fund invests in bonds whose income is subject to
the alternative minimum tax, that portion of the fund’s distributions would be
taxable for shareholders who are subject to this tax.
Government and
regulatory risk - The risk that governments or regulatory authorities may
take actions that could adversely affect various sectors of the securities
markets and affect fund performance. For example, a tax-exempt security may be
reclassified by the Internal Revenue Service or a state tax authority as
taxable, and/or future legislative, administrative, or court actions could cause
interest from a tax-exempt security to become taxable, possibly
retroactively.
[Geographic
concentration risk - The risk that heightened sensitivity to regional,
state, US territories or possessions (such as the Commonwealth of Puerto Rico,
Guam, or the US Virgin Islands), and local political and economic conditions
could adversely affect the holdings in and performance of a fund. There is also
the risk that there could be an inadequate supply of municipal bonds in a
particular state or US territory or possession.]
Industry and
sector risk - The risk that the value of securities in a particular
industry or sector will decline because of changing expectations for the
performance of that industry or sector.
ETF risk
– The Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to
the following risks: “Authorized participants, market makers and liquidity
providers concentration risk,” “Secondary Market Trading Risk” and “Shares may
trade at prices other than NAV risk.”
|
• |
Authorized participants, market
makers and liquidity providers concentration risk - Only authorized
participants (“APs”) may engage in creation or redemption transactions
directly with the Fund. The Fund has a limited number of financial
institutions that are institutional investors and may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace, and they have no obligation to submit
creation or redemption orders. To the extent either of the
following |
events occur, the Fund’s
shares may trade at a material discount to net asset value (“NAV”) and possibly
face delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the business or
significantly reduce their business activities and no other entities step
forward to perform their functions. These events, among others, may lead to the
Fund’s shares trading at a premium or discount to NAV. A diminished market for
an ETF's shares substantially increases the risk that a shareholder may pay
considerably more or receive significantly less than the underlying value of the
ETF shares bought or sold.
|
• |
Secondary market trading risk -
Although the Fund’s shares are listed on a national securities
exchange [ ] (“Exchange”) and may be traded on U.S.
exchanges other than 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 the Fund’s shares on the Exchange may be halted. In
addition, an exchange or market may issue trading halts on specific
securities or financial instruments. As a result, the ability to trade
certain securities or financial instruments may be restricted, which may
disrupt the Fund’s creation/redemption process or affect the price at
which shares trade in the secondary
market.
|
|
• |
Shares may trade at prices other than
NAV risk – As with all ETFs, shares of the Fund may be bought and
sold in the secondary market at market prices. The Fund’s NAV is calculated at the
end of each business day and fluctuates with changes in the market value
of the Fund’s holdings, while the trading price of the shares fluctuates
continuously throughout trading hours on the Exchange, based on both the
relative market supply of, and demand for, the shares and the underlying
value of the Fund’s holdings. As a result, although it is expected that
the market price of the Fund’s shares will approximate the Fund’s NAV,
there may be times when the market price of the Fund’s shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount).
This risk is heightened in times of market volatility or periods of steep
market declines. |
New fund risk -
The Fund is a newly organized, diversified management investment company
with no operating history. In addition, there can be no assurance that the Fund
will grow to, or maintain, an economically viable size, in which case the Board
of Trustees of the Trust (the “Board) may determine to liquidate the Fund.
IBOR risk
- The risk that changes related to the use of the London Interbank
Offered Rate (LIBOR) or similar interbank offered rates (“IBORs,” such as the
Euro Overnight Index Average (EONIA)) could have adverse impacts on financial
instruments that reference LIBOR or a similar rate. While some instruments may
contemplate a scenario where LIBOR or a similar rate is no longer available by
providing for an alternative rate setting methodology, not all instruments have
such fallback provisions and the effectiveness of replacement rates is
uncertain. The abandonment of LIBOR and similar rates could affect the value and
liquidity of instruments that reference such rates, especially those that do not
have fallback provisions. The use of alternative reference rate products may
impact investment strategy performance.
Active
management and selection risk - The risk that the securities selected by
a fund’s management will underperform the markets, the relevant indices, or the
securities selected by other funds with similar investment objectives and
investment strategies. The securities and sectors selected may vary from the
securities and sectors included in the relevant index.
None of the entities noted in this document is
an authorized deposit-taking institution for the purposes of the Banking Act
1959 (Commonwealth of Australia) and the obligations of these entities do not
represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583
542 (Macquarie Bank). Macquarie Bank does not guarantee or otherwise provide
assurance in respect of the obligations of these entities. In addition, if this
document relates to an investment (a) each investor is subject to investment
risk including possible delays in repayment and loss of income and principal
invested and (b) none of Macquarie Bank or any other Macquarie Group company
guarantees any particular rate of return on or the performance of the
investment, nor do they guarantee repayment of capital in respect of the
investment.
How has
[Tax-Free USA Short Term ETF] performed?
Because the Fund is new, it has no performance
history. Once the Fund has commenced operations, you can obtain updated
performance information at [website] or by calling [phone number]. The Fund’s
past performance (before and after taxes) is not necessarily an indication of
how the Fund will perform in the future.
Who manages
the Fund?
Investment
manager
Delaware Management Company, a series of
Macquarie Investment Management Business Trust (a Delaware statutory
trust)
Portfolio managers |
Title with Delaware Management
Company |
Start date on the Fund |
Gregory A. Gizzi |
Managing Director,
Head of US Fixed Income and Head of Municipal Bonds, Senior Portfolio
Manager |
Since inception ([ ], 2023) |
Stephen J. Czepiel |
Managing Director,
Head of Municipal Bonds Portfolio Management, Senior Portfolio
Manager |
Since inception ([ ], 2023) |
William Roach, CFA,CMT |
Vice President, Senior Municipal Trader, Portfolio
Manager |
Since inception ([ ], 2023) |
Jake van Roden |
Managing Director,
Senior Portfolio Manager |
Since inception ([ ], 2023) |
Purchase and
redemption of Fund shares
The Fund is an ETF. As an
ETF, only APs may engage in creation or redemption transactions directly with
the Fund. The Fund issues or redeems shares that have been aggregated into
blocks of [ ] shares or multiples thereof (Creation Units) to APs who have
entered into agreements with the Fund’s distributor, [ ]. The Fund will
generally issue or redeem Creation Units in exchange for a basket of securities
(and/or an amount of cash) that the Fund specifies each day. Individual shares
of the Fund may only be purchased and sold on a national securities exchange
through a broker-dealer. 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).
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase shares of the Fund (bid) and the lowest price a seller is
willing to accept for shares of the Fund (ask) when buying or selling shares in
the secondary market (the “bid-ask spread”). Recent information, including
information on the Fund’s NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at [website].
Tax
information
The Fund’s distributions generally are taxable
to you 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, in which case your distributions may be taxed
as ordinary income when withdrawn from the tax-advantaged account.
Payments to
broker/dealers and other financial intermediaries
If you purchase shares of the Fund through a
broker/dealer or other financial intermediary (such as a bank), the Fund and its
related companies may pay the intermediary for certain Fund-related
activities, including those that are designed to make the intermediary more
knowledgeable about exchange traded products, such as the Fund, as well as for
marketing, education or other initiatives related to the sale or promotion of
Fund shares. 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 website for more information.
How we manage the Funds
Our principal investment strategies
[Sustainable Global Listed
Infrastructure ETF]
Under normal circumstances, the [Sustainable
Global Listed Infrastructure ETF] will invest at least 80% of its net assets,
plus the amount of any borrowings for investment purposes, in global listed
infrastructure companies that meet the Fund’s sustainable investment criteria.
In seeking investments in sustainable companies, Delaware Management Company,
the Fund’s investment adviser (Manager) identifies companies that have the
capacity to contribute to the objectives of climate change mitigation, climate
change adaptation and/or positive social impact. Companies contributing to the
objective of climate change mitigation are those that are decarbonizing their
own activities or assisting with the decarbonization of their surrounding
economies. Companies contributing towards climate change adaptation are those
investing in critical infrastructure assets and associated natural resources to
improve their resilience and reliability. The Fund may also invest in
infrastructure companies that are generating positive social impact through the
promotion of social inclusion and equal access to infrastructure assets that are
essential for daily life and economies, such as energy, sanitation, transport
and digital connectivity. The investment process uses a proprietary process to
identify investments that exhibit carbon reductions targets, such as net zero,
with low or declining carbon emissions ; material investments in assets that
contribute to systematic decarbonization and/or investments to increase
infrastructure resilience, as well as companies making commitments to improving
affordability of, and access to infrastructure.
The Manager uses a research-oriented, bottom-up
(researching individual issuers) investment approach to seek to identify
high-quality, global listed infrastructure companies. The Manager also uses the
research process to identify top-down factors that impact portfolio
construction. The Manager considers a number of factors in selecting individual
investments for the Fund’s portfolio, including the valuation and quality
analysis on each potential investment and the Manager’s sustainability analysis
described above. The Manager also undertakes due diligence comprising
qualitative and quantitative assessments in order to assess the quality of a
company’s assets and management teams, the nature of regulation and/or
contracts, strength of its balance sheet and sovereign risks.
The Fund will typically invest in “pure”
infrastructure companies, which the Manager defines as companies that derive
greater than 80% of their enterprise value from “pure” infrastructure assets,
which typically consist of: regulated utilities, such as electric and gas
transmission and distribution, water and sewage; energy infrastructure, which
consists of energy transport and storage companies; user demand and
transportation, such as airports, toll roads, seaports and railways; and
communications, which includes cell phone tower companies. The Fund may invest
in high quality companies of any size; however, the Manager may exclude
companies below a market capitalization of $2 billion that it deems not
sufficiently liquid, and large capitalization companies that the Manager
believes have limited free float (i.e., shares of the company available to the
public).
Generally, in determining whether to sell a
security, the Manager uses the same type of analysis that it uses when buying
securities to determine whether the security continues to be a desired
investment for the Fund, including consideration of the security’s current
valuation and sustainability criteria. Additionally, the Manager may sell a
security to reduce the Fund’s holding in that security, to take advantage of
what it believes are more attractive investment opportunities or to raise
cash.
The Manager may permit its affiliate, Macquarie
Investment Management Global Limited (MIMGL), to execute Fund security trades on
behalf of the Manager. The Manager may also seek quantitative support from
MIMGL.
The Fund’s 80% policy is nonfundamental and may
be changed without shareholder approval. However, Fund shareholders would be
given at least 60 days’ notice prior to any such change.
[Energy Transition
ETF]
The [Energy Transition ETF] seeks to achieve its
investment objective by investing, under normal circumstances, at least 80% of
its net assets, plus the amount of any borrowings for investment purposes, in a
diversified portfolio of securities in the energy, materials, industrial,
renewable energy, and utilities sectors that meet the Fund’s investment criteria
noted below. The Fund’s strategy seeks to realize inefficiencies in the global
transition to cleaner, lower carbon energy in a world of increasing energy
demand and uncertain energy supply. The Fund may invest in companies of any size
and located across the globe; however, the Fund generally will focus its
investments on companies domiciled in North America.
The Fund seeks to invest its assets primarily
in two types of companies. The first group of companies are ones that Delaware
Management Company, the Fund’s investment adviser (Manager) believes are
facilitating the transition to new, lower carbon energy sources, such as solar
or wind energy, as well as the increasing electrification of areas that have
traditionally relied on fossil fuels, such as transportation. The Manager
considers these companies to be “transition enablers” that have a significant
portion of their business committed to actively developing and/or providing
products and services designed to produce lower-emitting alternatives to fossil
fuels, or providers of services or materials required for the energy transition
or low greenhouse gas energy production.
The second category of companies, “responsible
producers,” includes traditional energy exploration and production companies
with the potential to transition to lower emission power production, as well as
providers of materials needed to augment low greenhouse gas (GHG) energy
production. To be classified in this category the companies must be producers
that are actively working toward reducing, displacing and/or sequestering their
GHG emissions, potentially including companies that currently have a high level
of absolute GHG emissions. Companies in this category also need to produce in a
responsible manner by limiting/controlling water usage/discharge and spills and
operate in a socially responsible manner (for example no use of child labor)
while ensuring proper governance especially when operating in higher risk
jurisdictions.
Companies must have a significant portion of
its business committed to responsible production which might include low carbon
production, limited methane, responsible water usage, careful reclamation, or
limited flaring in oil and gas production. Importantly, the proportion of energy
or mining such companies produce responsibly is expected to increase or at least
remain constant. Companies are required to remain focused on the cleanest
approaches to production, rather than a full transition to significantly lower
emission power production. Nuclear energy is included in this category on the
basis it provides a low emission source of base load power, complimenting the
low emission but intermittent power provided by renewables.
The Manager conducts an initial screening of
the universe of “transition enablers and “responsible producers” using its
proprietary environmental framework for companies leveraging the Manager’s own
views, in-house knowledge base and best practices, along with external resources
like Sustainalytics and Bloomberg. The Manager then analyzes each investable
opportunity that fits the criteria of a “transition enabler” or “responsible
producer.” While the Fund will invest in both companies that the Manager
considers to be “transition enablers” and companies it considers “responsible
producers”, the Manager expects that “transition enabler” companies will
gradually take an increasing share of the portfolio over the long-term.
The Manager then uses a proprietary fundamental
process to analyze each sustainable, investable opportunity. The Manager
evaluates these “responsible producers” as well as “transition enablers” on
various financial measures to determine which companies present an attractive
risk/reward. Financial measures include 1) sector and company growth
profile; 2) relative financial multiples; 3) net asset value; 4) balance sheet
and cash flow analysis; and 5) various other financial measures depending on the
industry and opportunity. Position sizing is determined based on
numerous risk factors such as 1) security domicile; 2) company asset domicile;
3) financial risk; 4) security liquidity; and 5) sub-sector exposures. The
portfolio is constantly monitored to maximize returns while reducing risk.
Positions presenting a more favorable risk/return profile will be larger
positions within the Fund’s portfolio.
Generally, in determining whether to sell a
security, the Manager uses the same type of analysis that it uses when buying
securities to determine whether the security continues to be a desired
investment for the Fund, including consideration of the security’s current
valuation. Additionally, the Manager may sell a security to reduce the Fund’s
holding in that security, to take advantage of what it believes are more
attractive investment opportunities or to raise cash. Positions will be
exited if they no longer are favorably valued or they no longer meet the
criteria as a “responsible producer” or “transition enabler.”
The Manager may permit its affiliates, Macquarie
Investment Management Global Limited (MIMGL) to execute Fund security trades on
behalf of the Manager. The Manager may also seek quantitative support from
MIMGL.
The Fund’s 80% policy is nonfundamental and may
be changed without shareholder approval. However, Fund shareholders would be
given at least 60 days’ notice prior to any such change.
[Tax-Free USA Short Term
ETF]
Under normal circumstances, [Tax-Free USA Short
Term ETF] will invest at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in securities the income from which is
exempt from federal income tax, including the federal alternative minimum tax.
This is a fundamental investment policy that may not be changed without prior
shareholder approval.
The Fund will invest primarily in municipal debt
obligations that are issued by state and local governments to raise funds for
various public purposes such as hospitals, schools, and general capital
expenses. The Fund will invest its assets in securities with short durations
until maturity and will typically have a dollar-weighted average effective
maturity of between 1 and 5 years. Delaware Management Company, the Fund’s
investment adviser (Manager) will adjust the average maturity of the bonds in
the Fund’s portfolio to attempt to provide a high level of tax-exempt income
consistent with preservation of capital.
The Manager analyzes economic
and market conditions, seeking to identify the securities or market sectors that
it thinks are the best investments for the Fund. The following is a general
description of the investment strategies used to manage the Fund and a list of
securities in which the Fund may invest.
The Fund will generally
invest in debt obligations issued by state and local governments and their
political subdivisions, agencies, authorities, and instrumentalities that are
exempt from federal income tax. The Fund may also invest in debt obligations
issued by or for the District of Columbia, and the political subdivisions,
agencies, authorities, and instrumentalities or territories and possessions
(such as the Commonwealth of Puerto Rico, Guam, and the US Virgin Islands) of
the United States that are exempt from federal income tax. The types of
municipal debt obligations in which the Fund may invest include, but are not
limited to, advance refunded bonds, revenue bonds, general obligation bonds,
insured municipal bonds, private activity bonds, municipal leases, and
certificates of participation.
The Fund will generally
invest in securities for income rather than seeking capital appreciation through
active trading. However, the Manager may sell securities for a variety of
reasons such as: to reinvest the proceeds in higher yielding securities; to
eliminate investments not consistent with the preservation of capital; to honor
redemption requests; or to address a weakening credit situation. As a result,
the Fund may realize capital gains that could be taxable to shareholders or they
may realize losses.
During the security selection process, Delaware
Management Company, the Fund’s investment adviser (Manager) will assess a
security based on certain sustainability factors and for the potential for such
factors to have a positive impact on the community. A score is determined based
on environmental, social and governance factors. Environmental factors include,
but are not limited to, compliance with environmental regulations, flood and
earthquake risk, pollution and climate impact. A security’s social factors
include, but are not limited to, demographics, labor management, community
relations and affordability. Governance factors include, but are not limited to,
management oversight, transparency, and disclosure practices. The Manager will
assign a sustainability score of 3 to securities with neutral sustainability
related characteristics, a score of 1 or 2 to securities with positive
sustainability characteristics, and a score of 4 or 5 with negative
sustainability characteristics. A security with a score of 4 or 5 is
automatically disqualified from inclusion in the Fund’s portfolio. The Manager
will sell a security held by the Fund if the security’s sustainability score
drops below 3 and, in the Manager’s view, the change in score is not
temporary.
The Fund may invest up to 20% of its net assets
in high yield fixed income securities (junk bonds), which are rated less than
BBB- by S&P or comparably rated by other Nationally Recognized Statistical
Ratings Organizations or if unrated, determined to be of comparable quality by
the Manager. The Fund’s income level will vary depending on current
interest rates and the specific securities in the portfolio. The Fund may
concentrate its investments in certain types of bonds or in a certain segment of
the municipal bond market when the supply of bonds in other sectors does not
suit its investment needs.
The Fund's investment
objective is nonfundamental. This means that the Fund's Board of Trustees (the
“Board”) may change the objective without obtaining shareholder approval. If the
objective were changed, the Fund would notify shareholders at least 60 days
before the change became effective.
Additional Investment
Considerations
The objective(s) and investment policies of each
Fund may be changed by the Board without a vote of the Fund's shareholders,
unless a policy or restriction is otherwise described as a fundamental policy in
this prospectus or in the Funds’ Statement of Additional Information (SAI).
Shareholders, however, will be given prior written notice, typically at least 60
days in advance, of any material change in a Fund's objective(s).
Because the Funds own different types of
investments, their performance will be affected by a variety of factors. The
value of a Fund's investments and the income it generates will vary from day to
day, generally reflecting changes in interest rates, market conditions, and
other company and economic news. From time to time, based on market or economic
conditions, a Fund may have significant positions in one or more sectors of the
market and may be overweight or underweight sectors as compared to its benchmark
index.
To the extent a Fund invests more heavily in
particular sectors, its performance will be sensitive to developments that
significantly affect those sectors. Alternatively, the lack of exposure to one
or more sectors may adversely affect performance. Performance also will depend
on the Manager's skill in selecting investments. As with any investment fund,
you could lose money on your investment. There is no guarantee that a Fund will
achieve its objective(s).
Each Fund also may invest in and use certain other
types of securities and instruments in seeking to achieve its objective(s). For
example, certain types of each Fund's authorized investments and strategies,
such as foreign securities and junk bonds, involve special risks. Depending on
how much a Fund invests or uses these strategies, these special risks may become
significant and thus affect the performance of a Fund.
Each Fund may actively trade securities in seeking
to achieve its objective(s). Factors that can lead to active trading include
market volatility, a significant positive or negative development concerning a
security, an attempt to maintain a Fund's market capitalization target of the
securities in each such Fund's holdings and the need to sell a security to meet
redemption activity. Actively trading securities may increase transaction costs
(which may reduce performance) and increase net realized gains that a Fund must
distribute for federal tax purposes, the distribution of which would increase
your taxable income.
Each Fund generally seeks to be fully invested,
except to the extent that it takes a temporary defensive position. In addition,
at times, the Manager may invest a portion of a Fund's assets in cash or cash
equivalents if the Manager is unable to identify and acquire a sufficient number
of securities that meet its selection criteria for implementing the Fund's
investment objective(s), strategies and policies, or for other reasons.
Please see the Funds' SAI for additional
information about certain of the securities described below as well as other
securities in which the Funds may invest.
Other
investment strategies
Each Fund may lend up to 25% of its assets to
qualified broker/dealers or institutional investors for their use in securities
transactions. Borrowers of a Fund's securities must provide collateral to the
Fund and adjust the amount of collateral each day to reflect changes in the
value of the loaned securities. These transactions, if any, may generate
additional income for a Fund.
Each Fund may borrow money from banks as a
temporary measure for extraordinary or emergency purposes or to facilitate
redemptions. A Fund will be required to pay interest to the lending banks on the
amount borrowed. As a
result, borrowing money could result in a Fund
being unable to meet its investment objective. Each Fund will not borrow money
in excess of one-third of the value of its total assets.
|
Purchasing securities on a when-issued or
delayed-delivery basis |
Each Fund may buy or sell
securities on a when-issued or delayed-delivery basis (i.e., paying for
securities before delivery or taking delivery at a later date).
|
Temporary defensive
positions |
In response to unfavorable market conditions, a
Fund may make temporary investments in cash or cash equivalents or other
high-quality, short-term instruments. These investments may not be consistent
with a Fund's investment objective(s). To the extent that a Fund holds such
instruments, it may be unable to achieve its investment objective(s).
The risks of investing in the
Funds
Investing in any exchange-traded fund involves
risk, including the risk that you may receive little or no return on your
investment, and the risk that you may lose part or all of the money you invest.
Before you invest in the Funds, you should carefully evaluate the risks. Because
of the nature of the Funds, you should consider your investment to be a
long-term investment that typically provides the best results when held for a
number of years. Unlike many ETFs, the Funds are actively managed, rather than
index-based ETFs, which means that they do not seek to replicate the performance
of a specified index. The information below describes the principal and
non-principal risks you assume when investing in the Funds. Please see the SAI
for a further discussion of these risks and other risks not discussed
here.
[Sustainable Global Listed
Infrastructure ETF]
Principal Risks. An investment in [Sustainable
Global Listed Infrastructure ETF] is subject to various risks, including the
following:
Market risk is the risk that all or a majority of
the securities in a certain market — such as the stock or bond market — will
decline in value because of factors such as adverse political or economic
conditions, future expectations, investor confidence, or heavy institutional
selling.
Large capitalization company
risk |
Large-capitalization companies may go in and out of
favor based on market and economic conditions. Large-capitalization companies
may be unable to respond quickly to new competitive challenges, such as changes
in technology, and also may not be able to attain the high growth rate of
successful smaller companies, especially during extended periods of economic
expansion. Although the securities of larger companies may be less volatile than
those of companies with smaller market capitalizations, returns on investments
in securities of large-capitalization companies could trail the returns on
investments in securities of smaller companies.
Investing with a focus on companies that exhibit a
commitment to sustainable practices may result in the Fund investing in certain
types of companies, industries or sectors that the market may not favor. In
evaluating an investment opportunity, the Manager may make investment decisions
based on information and data that is incomplete or inaccurate. Sustainability
metrics are not uniformly defined and applying such metrics involves
subjective assessments. Sustainability scorings and
assessments of issuers can vary across third-party data providers and may change
over time. In addition, a company's business practices, products or services may
change over time. If so, the Fund may continue to hold such company's securities
until the Manager deems it advantageous to sell them. Regulatory changes or
interpretations regarding the definitions and/or use of sustainability criteria
may limit the Fund's ability to invest in accordance with its investment
policies and/or achieve its investment objective.
Active management and selection
risk |
The Manager applies the Fund's investment
strategies and selects securities for the Fund in seeking to achieve the Fund's
investment objective(s). There can be no guarantee that its decisions will
produce the desired results, and securities selected by the Fund may not perform
as well as the securities held by other exchange-traded funds with investment
objectives that are similar to the investment objective(s) of the Fund. In
general, investment decisions made by the Manager may not produce the
anticipated returns, may cause the Fund's shares to lose value or may cause the
Fund to perform less favorably than other funds with similar investment
objectives.
Company size risk is the risk that investments in
small- and/or medium-sized companies typically exhibit higher volatility than
investments in larger, more established companies. Company size risk also comes
from lower liquidity typically associated with small company stocks, which means
the price may be affected by poorly executed trades, even if the underlying
business of the company is unchanged.
Infrastructure industry
risk |
Companies in the
infrastructure industry may be subject to a variety of factors that could
adversely affect their business or operations, including high interest costs in
connection with capital construction programs, high degrees of leverage, costs
associated with governmental, environmental and other regulations, the level of
government spending on infrastructure projects, and other factors.
Foreign risk is the risk that
foreign securities (particularly in emerging markets and frontier countries) may
be adversely affected by political instability, changes in currency exchange
rates, inefficient markets and higher transaction costs, foreign economic or
government conditions, the imposition of economic and/or trade sanctions,
inadequate or different regulatory and accounting standards, and the possibility
that significant events in foreign markets, including broad market moves, may
affect the value of fund shares.
As a result of the military action by Russia in
Ukraine, the US and many other countries have imposed sanctions on Russia and
certain Russian individuals, banks and corporations. The ongoing hostilities and
resulting sanctions are expected to have a severe adverse effect on the region's
economies and more globally, including significant negative impact on markets
for certain securities and commodities, such as oil and natural gas. Any
cessation of trading on the Russian securities markets will impact the value and
liquidity of certain portfolio holdings. The extent and duration of military
action, sanctions, and resulting market disruptions are impossible to predict,
but could be substantial and prolonged and impact your Fund's performance.
Emerging markets risk is the possibility that the
risks associated with international investing will be greater in emerging
markets than in more developed foreign markets because, among other things,
emerging markets may have less stable political and economic environments. In
addition, in many emerging markets there is substantially less publicly
available information about issuers and the information that is available tends
to be of a lesser quality. Economic markets and structures tend to be less
mature and diverse and the securities markets, which are subject to less
government regulation or supervision, may also be smaller, less liquid, and
subject to greater price volatility.
Liquidity risk is the possibility that investments
cannot be sold or disposed of in current market conditions in seven calendar
days or less without the sale or disposition significantly changing the market
value of the investment. Illiquid investments may trade at a discount from
comparable, more liquid investments, and may be subject to wide fluctuations in
market value. A fund also may not be able to dispose of illiquid investments at
a favorable time or price during periods of infrequent trading of an illiquid
investment.
At times, the Fund may have a significant portion
of its assets invested in securities of companies conducting business in a
broadly related group of industries within an economic sector. Individual
sectors may be more volatile, and may perform differently, than the broader
market. Companies in the same economic sector may be similarly affected by
economic or market events, making the Fund more vulnerable to unfavorable
developments in that economic sector than funds that invest more broadly.
Government and regulatory
risk |
Governments or regulatory authorities may take actions that could
adversely affect various sectors of the securities markets and affect fund
performance. Government involvement in the private sector may, in some cases,
include government investment in, or ownership of, companies in certain
commercial business sectors; wage and price controls; or imposition of trade
barriers and other protectionist measures. For example, an economic or political
crisis may lead to price controls, forced mergers of companies, expropriation,
the creation of government monopolies, foreign exchange controls, the
introduction of new currencies (and the redenomination of financial obligations
into those currencies), or other measures that could be detrimental to the
investments of a fund.
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o |
Authorized Participants, Market
Makers and Liquidity Providers Concentration Risk. Only authorized
participants (“APs”) may engage in creation or redemption transactions
directly with the Fund. The Fund has a limited number of financial
institutions that are institutional investors and may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace, and they have no obligation to submit
creation or redemption orders. To the extent either of the following
events occur, the Fund’s Shares may trade at a material discount to net
asset value (“NAV”) and possibly face delisting: (i) APs exit the business
or otherwise become unable to process creation and/or redemption orders
and no other APs step forward to perform these services, or (ii) market
makers and/or liquidity providers exit the business or significantly
reduce their business activities and no other entities step forward to
perform their functions. These events, among others, may lead to the
Fund’s Shares trading at a premium or discount to NAV. A diminished market
for an ETF's shares substantially increases the risk that a shareholder
may pay considerably more or receive significantly less than the
underlying value of the ETF shares bought or
sold. |
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Secondary Market Trading
Risk. Although the Fund’s Shares are listed for trading on the
Exchange and may be listed or traded on U.S. and non-U.S. stock exchanges
other than the Exchange, there can be no assurance that an active trading
market for Shares will develop or be maintained. Trading in the Fund’s
Shares may be halted due to market conditions or for reasons that, in the
view of the Exchange, make trading in Shares inadvisable. In addition,
trading in Shares on the Exchange is subject to trading halts caused by
extraordinary market volatility pursuant to Exchange “circuit breaker”
rules, which temporarily halt trading on the Exchange. Additional rules
applicable to the Exchange may halt trading in Shares when extraordinary
volatility causes sudden, significant swings in the market price of
Shares. There can be no assurance that Shares will trade with any volume,
or at all, on any stock exchange. Moreover, the Fund is required to comply
with listing requirements adopted by the Exchange. Non-compliance with
such requirements may result in the Fund’s shares being delisted by the
Exchange. Additionally, in stressed |
|
|
market conditions,
the liquidity of the Fund’s Shares may begin to mirror the liquidity of
the Fund’s underlying holdings, which can be significantly less liquid
than the Fund’s Shares. |
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o |
Shares May Trade at Prices Other Than
NAV. As with all ETFs, Shares of the Fund may be bought and
sold in the secondary market at market prices. Although it is expected
that the market price of Shares will approximate the Fund’s NAV, there may
be times when the market price of Shares is more than the NAV intra-day
(premium) or less than the NAV intra-day (discount) due to supply and
demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility or periods of steep market
declines. The market price of Shares during the trading day, like the
price of any exchange-traded security, includes a “bid/ask” spread charged
by the exchange specialist, market makers or other participants that trade
Shares. In times of severe market disruption, the bid/ask spread can
increase significantly. At those times, Shares are most likely to be
traded at a discount to NAV, and the discount is likely to be greatest
when the price of Shares is falling fastest, which may be the time that
you most want to sell your Shares. The Manager believes that, under normal
market conditions, large market price discounts or premiums to NAV will
not be sustained because of arbitrage
opportunities. |
The risk that changes related
to the use of the London Interbank Offered Rate (LIBOR) or similar interbank
offered rates (“IBORs,” such as the Euro Overnight Index Average (EONIA)) could
have adverse impacts on financial instruments that reference such rates. While
some instruments may contemplate a scenario where LIBOR or a similar rate is no
longer available by providing for an alternative rate setting methodology, not
all instruments have such fallback provisions and the effectiveness of
replacement rates is uncertain. The abandonment of LIBOR and similar rates could
affect the value and liquidity of instruments that reference such rates,
especially those that do not have fallback provisions. The use of alternative
reference rate products may impact investment strategy performance.
The Fund is a newly organized,
diversified management investment company with no operating history. In
addition, there can be no assurance that the Fund will grow to, or maintain, an
economically viable size, in which case the Board of Trustees of the Fund (the
“Board) may determine to liquidate the Fund.
Non-Principal Risks. In addition to the
Principal Risks identified above, an investment in [Sustainable Global Listed
Infrastructure ETF] may be subject to other, non-principal risks, including the
following:
Natural disaster and epidemic
risk |
Natural disaster and epidemic risk is the risk that
the value of a fund's investments may be negatively affected by natural
disasters, epidemics, or similar events. Natural or environmental disasters,
such as earthquakes, fires, floods, hurricanes, tsunamis, and other severe
weather-related phenomena generally, and widespread disease, including pandemics
and epidemics, have been and can be highly disruptive to economies and markets,
adversely impacting individual companies, sectors, industries, markets,
currencies, interest and inflation rates, credit ratings, investor sentiment,
and other factors affecting the value of a fund's investments. Given the
increasing interdependence among global economies and markets, conditions in one
country, market, or region are increasingly likely to adversely affect markets,
issuers, and/or foreign exchange rates in other countries. These disruptions
could prevent a fund from executing advantageous investment decisions in a
timely manner and could negatively impact the fund's ability to achieve its
investment objective.
The Fund may experience periods
of heavy redemptions that could cause the Fund to sell assets at inopportune
times or at a loss or depressed value. Redemption risk is heightened during
periods of declining or illiquid markets. Heavy redemptions could hurt the
Fund's performance.
Securities lending involves a risk of loss because the borrower may
fail to return the securities in a timely manner or at all. If the Fund that
lent its securities were unable to recover the securities loaned, it may sell
the collateral and purchase a replacement security in the market. Lending
securities entails a risk of loss to the Fund if and to the extent that the
market value of the loaned securities increases and the collateral is not
increased accordingly. Cash received as collateral for loaned securities may be
invested, and such investment is subject to market appreciation or depreciation,
with the Fund bearing any loss.
[Energy Transition ETF]
Principal Risks. An investment in [Energy
Transition ETF] is subject to various risks, including the following:
Markets can be volatile, and stock prices change
daily, sometimes rapidly or unpredictably. As a result, the Fund's holdings can
decline in response to adverse issuer, political, regulatory, market or economic
developments or conditions that may cause a broad market decline. Different
parts of the market, including different sectors and different types of
securities, can react differently to these developments. Stock markets tend to
move in cycles, with periods of rising prices and periods of falling prices.
During a general downturn in the financial markets, multiple asset classes may
decline in value. When markets perform well, there can be no assurance that
specific investments held by the Fund will rise in value. Market risk may affect
a single issuer or the market as a whole. At times, the Fund may hold a
relatively high percentage of its assets in stocks of a particular market
sector, which would subject the Fund to proportionately higher exposure to the
risks of that sector.
Securities are subject to price movements due to
changes in general economic conditions (which may not be specifically related to
the particular issuer), such as the level of prevailing interest or currency
rates, changes in the general outlook for revenues or corporate earnings,
investor sentiment and perceptions of the market generally. The value of
securities also may go up or down due to factors that affect an individual
issuer or a particular industry or sector, such as changes in production costs
and competitive conditions within the industry. Market prices of equity
securities generally are more volatile than debt securities. This may cause a
security to be worth less than the price originally paid for it, or less than it
was worth at an earlier time.
Global economies and financial markets have become
increasingly interconnected, meaning that conditions in one country or region
may adversely affect issuers in another country or region, which in turn may
adversely affect securities held by the Fund. In addition, certain events, such
as natural disasters, terrorist attacks, war, regional or global instability and
other geopolitical events, have led, and may in the future lead, to increased
short-term market volatility and may have adverse long-term effects on world
economies and markets generally.
In the years since the financial crisis that
started in 2008, the US and many global economies at times have experienced
volatility in the financial markets. 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 recent policy changes by
the US government and the Federal Reserve, which include increasing interest
rates, could cause increased volatility in financial markets.
The value of assets or income from the Fund's
investments may be adversely affected by inflation or changes in the market's
expectations regarding inflation. Furthermore, there is a risk that the prices
of goods and services in the US and many foreign economies may decline over
time, known as deflation (the opposite of inflation). Deflation may have an
adverse effect on stock prices and creditworthiness and may make defaults on
debt more likely. If a country's economy slips into a deflationary pattern, it
could last for a prolonged period and may be difficult to reverse.
The global outbreak of COVID-19 (commonly referred
to as “coronavirus”) has disrupted economic markets and resulted in travel
restrictions, closed international borders, enhanced health screenings at ports
of entry and elsewhere, disruption of and delays in healthcare service
preparation and delivery, prolonged quarantines, cancellations, supply chain
disruptions, and lower consumer demand, as well as general concern and
uncertainty. The impact of COVID-19, and other infectious illness outbreaks that
may arise in the future, could adversely affect the economies of many nations or
the entire global economy, individual issuers and capital markets in ways that
cannot necessarily be foreseen. In addition, the impact of infectious illnesses
in emerging market countries may be
greater due to generally less established healthcare systems.
Public health crises caused by the COVID-19 outbreak may exacerbate other
pre-existing political, social and economic risks in certain countries or
globally. The duration of the COVID-19 outbreak and its effects cannot be
determined with certainty.
Investing with a focus on
companies that exhibit a commitment to sustainable practices may result in the
Fund investing in certain types of companies, industries or sectors that the
market may not favor. In evaluating an investment opportunity, the Manager may
make investment decisions based on information and data that is incomplete or
inaccurate. Sustainability metrics are not uniformly defined and applying such
metrics involves subjective assessments. Sustainability scorings and assessments
of issuers can vary across third-party data providers and may change over time.
In addition, a company's business practices, products or services may change
over time. If so, the Fund may continue to hold such company's securities until
the Manager deems it advantageous to sell them. Regulatory changes or
interpretations regarding the definitions and/or use of sustainability criteria
may limit the Fund's ability to invest in accordance with its investment
policies and/or achieve its investment objective.
Liquidity risk is the possibility that investments
cannot be sold or disposed of in current market conditions in seven calendar
days or less without the sale or disposition significantly changing the market
value of the investment. Illiquid investments may trade at a discount from
comparable, more liquid investments, and may be subject to wide fluctuations in
market value. A fund also may not be able to dispose of illiquid investments at
a favorable time or price during periods of infrequent trading of an illiquid
investment.
Government and regulatory
risk |
Governments or regulatory authorities may take
actions that could adversely affect various sectors of the securities markets
and affect fund performance. Government involvement in the private sector may,
in some cases, include government investment in, or ownership of, companies in
certain commercial business sectors; wage and price controls; or imposition of
trade barriers and other protectionist measures. For example, an economic or
political crisis may lead to price controls, forced mergers of companies,
expropriation, the creation of government monopolies, foreign exchange controls,
the introduction of new currencies (and the redenomination of financial
obligations into those currencies), or other measures that could be detrimental
to the investments of a fund.
At times, a Fund may have a
significant portion of its assets invested in securities of companies conducting
business in a broadly related group of industries within an economic sector.
Individual sectors may be more volatile, and may perform differently, than the
broader market. Companies in the same economic sector may be similarly affected
by economic or market events, making a Fund more vulnerable to unfavorable
developments in that economic sector than funds that invest more broadly.
|
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Authorized Participants, Market
Makers and Liquidity Providers Concentration Risk. Only authorized
participants (“APs”) may engage in creation or redemption transactions
directly with the Fund. The Fund has a limited number of financial
institutions that are institutional investors and may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace, and they have no obligation to submit
creation or redemption orders. To the extent either of the following
events occur, the Fund’s Shares may trade at a material discount to net
asset value (“NAV”) and possibly face delisting: (i) APs exit the business
or otherwise become unable to process creation and/or redemption orders
and no other APs step forward to perform these services, or (ii) market
makers and/or liquidity providers exit the business or significantly
reduce their business activities and no other entities step forward to
perform their functions. These events, among others, may lead to the
Fund’s Shares trading at a premium or discount to NAV. A diminished market
for an ETF's shares substantially increases the risk that
a
|
|
|
shareholder may pay considerably more or receive significantly less
than the underlying value of the ETF shares bought or
sold. |
|
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Secondary Market Trading
Risk. Although the Fund’s Shares are listed for trading on the
Exchange and may be listed or traded on U.S. and non-U.S. stock exchanges
other than the Exchange, there can be no assurance that an active trading
market for Shares will develop or be maintained. Trading in the Fund’s
Shares may be halted due to market conditions or for reasons that, in the
view of the Exchange, make trading in Shares inadvisable. In addition,
trading in Shares on the Exchange is subject to trading halts caused by
extraordinary market volatility pursuant to Exchange “circuit breaker”
rules, which temporarily halt trading on the Exchange. Additional rules
applicable to the Exchange may halt trading in Shares when extraordinary
volatility causes sudden, significant swings in the market price of
Shares. There can be no assurance that Shares will trade with any volume,
or at all, on any stock exchange. Moreover, the Fund is required to comply
with listing requirements adopted by the Exchange. Non-compliance with
such requirements may result in the Fund’s shares being delisted by the
Exchange. Additionally, in stressed market conditions, the liquidity of
the Fund’s Shares may begin to mirror the liquidity of the Fund’s
underlying holdings, which can be significantly less liquid than the
Fund’s Shares. |
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Shares May Trade at Prices Other Than
NAV. As with all ETFs, Shares of the Fund may be bought and
sold in the secondary market at market prices. Although it is expected
that the market price of Shares will approximate the Fund’s NAV, there may
be times when the market price of Shares is more than the NAV intra-day
(premium) or less than the NAV intra-day (discount) due to supply and
demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility or periods of steep market
declines. The market price of Shares during the trading day, like the
price of any exchange-traded security, includes a “bid/ask” spread charged
by the exchange specialist, market makers or other participants that trade
Shares. In times of severe market disruption, the bid/ask spread can
increase significantly. At those times, Shares are most likely to be
traded at a discount to NAV, and the discount is likely to be greatest
when the price of Shares is falling fastest, which may be the time that
you most want to sell your Shares. The Manager believes that, under normal
market conditions, large market price discounts or premiums to NAV will
not be sustained because of arbitrage
opportunities. |
The risk that changes related
to the use of the London Interbank Offered Rate (LIBOR) or similar interbank
offered rates (“IBORs,” such as the Euro Overnight Index Average (EONIA)) could
have adverse impacts on financial instruments that reference such rates. While
some instruments may contemplate a scenario where LIBOR or a similar rate is no
longer available by providing for an alternative rate setting methodology, not
all instruments have such fallback provisions and the effectiveness of
replacement rates is uncertain. The abandonment of LIBOR and similar rates could
affect the value and liquidity of instruments that reference such rates,
especially those that do not have fallback provisions. The use of alternative
reference rate products may impact investment strategy performance.
Large capitalization company
risk |
Large-capitalization companies may go in and out of
favor based on market and economic conditions. Large-capitalization companies
may be unable to respond quickly to new competitive challenges, such as changes
in technology, and also may not be able to attain the high growth rate of
successful smaller companies, especially during extended periods of economic
expansion. Although the securities of larger companies may be less volatile than
those of companies with smaller market capitalizations, returns on investments
in securities of large-capitalization companies could trail the returns on
investments in securities of smaller companies.
Company size risk is the risk that investments in
small- and/or medium-sized companies typically exhibit higher volatility than
investments in larger, more established companies. Company size risk also comes
from lower liquidity typically associated with small company stocks, which means
the price may be affected by poorly executed trades, even if the underlying
business of the company is unchanged.
Foreign risk is the risk that
foreign securities (particularly in emerging markets and frontier countries) may
be adversely affected by political instability, changes in currency exchange
rates, inefficient markets and higher transaction costs, foreign economic or
government conditions, the imposition of economic and/or trade sanctions,
inadequate or different regulatory and accounting standards, and the possibility
that significant events in foreign markets, including broad market moves, may
affect the value of fund shares.
As a result of the military
action by Russia in Ukraine, the US and many other countries have imposed
sanctions on Russia and certain Russian individuals, banks and corporations. The
ongoing hostilities and resulting sanctions are expected to have a severe
adverse effect on the region's economies and more globally, including
significant negative impact on markets for certain securities and commodities,
such as oil and natural gas. Any cessation of trading on the Russian securities
markets will impact the value and liquidity of certain portfolio holdings. The
extent and duration of military action, sanctions, and resulting market
disruptions are impossible to predict, but could be substantial and prolonged
and impact your Fund's performance.
Investments in countries with emerging economies or
securities markets may carry greater risk than investments in more developed
countries. Political and economic structures in many such countries may be
undergoing significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristics of more
developed countries. Certain of those countries may have failed in the past to
recognize private property rights and have nationalized or expropriated the
assets of private companies. As a result, the risks described above, including
the risks of nationalization or expropriation of assets, may be heightened. In
addition, unanticipated political or social developments may affect the value of
a Fund's investments in those countries and the availability of additional
investments in those countries. The small size and inexperience of the
securities markets in such countries and the limited volume of trading in
securities in those countries may make a Fund's investments in such countries
more volatile and less liquid than investments in more developed countries, and
the Fund may be required to establish special custodial or other arrangements
before making certain investments in those countries. The economies of emerging
market countries may suffer from extreme and volatile debt burdens or inflation
rates. The repatriation of capital with regard to investments made in certain
securities or countries may be restricted during certain times or even
indefinitely. There may be little financial or accounting information available
with respect to issuers located in certain countries, and it may be difficult as
a result to assess the value or prospects of an investment in such issuers. In
times of market stress, regulatory authorities of different emerging market
countries may apply varying techniques and degrees of intervention, which can
have an effect on prices and may require that a Fund fair value its holdings in
those countries.
Active management and selection
risk |
The Manager applies a Fund's investment strategies
and selects securities for the Fund in seeking to achieve the Fund's investment
objective(s). There can be no guarantee that its decisions will produce the
desired results, and securities selected by a Fund may not perform as well as
the securities held by other exchange-traded funds with investment objectives
that are similar to the investment objective(s) of the Fund. In general,
investment decisions made by the Manager may not produce the anticipated
returns, may cause a Fund's shares to lose value or may cause a Fund to perform
less favorably than other exchange-traded funds with similar investment
objectives.
The Fund is a newly organized, diversified
management investment company with no operating history. In addition, there can
be no assurance that the Fund will grow to, or maintain, an economically viable
size, in which case the Board of Trustees of the Fund (the “Board) may determine
to liquidate the Fund.
Non-Principal Risks. In
addition to the Principal Risks identified above, an investment in [Energy
Transition ETF] may be subject to other, non-principal risks, including the
following:
Natural disaster and epidemic
risk |
Natural disaster and epidemic risk is the risk that
the value of a fund's investments may be negatively affected by natural
disasters, epidemics, or similar events. Natural or environmental disasters,
such as earthquakes, fires, floods, hurricanes, tsunamis, and other severe
weather-related phenomena generally, and widespread disease, including pandemics
and epidemics, have been and can be highly disruptive to economies and markets,
adversely impacting individual companies, sectors, industries, markets,
currencies, interest and inflation rates, credit ratings, investor sentiment,
and other factors affecting the value of a fund's investments. Given the
increasing interdependence among global economies and markets, conditions in one
country, market, or region are increasingly likely to adversely affect markets,
issuers, and/or foreign exchange rates in other countries. These disruptions
could prevent a fund from executing advantageous investment decisions in a
timely manner and could negatively impact the fund's ability to achieve its
investment objective.
The Fund may experience periods
of heavy redemptions that could cause the Fund to sell assets at inopportune
times or at a loss or depressed value. Redemption risk is heightened during
periods of declining or illiquid markets. Heavy redemptions could hurt the
Fund's performance.
Securities lending involves a
risk of loss because the borrower may fail to return the securities in a timely
manner or at all. If a Fund that lent its securities were unable to recover the
securities loaned, it may sell the collateral and purchase a replacement
security in the market. Lending securities entails a risk of loss to the Fund if
and to the extent that the market value of the loaned securities increases and
the collateral is not increased accordingly. Cash received as collateral for
loaned securities may be invested, and such investment is subject to market
appreciation or depreciation, with the Fund bearing any loss.
[Tax-Free USA Short Term
ETF]
Principal Risks. An investment in [Tax-Free USA
Short Term ETF] is subject to various risks, including the following:
Market risk is the risk that all or a majority of the securities in a
certain market — such as the stock or bond market — will decline in value
because of factors such as adverse political or economic conditions, future
expectations, investor confidence, or heavy institutional selling.
Investing with a focus on companies that exhibit a
commitment to sustainable practices may result in the Fund investing in certain
types of companies, industries or sectors that the market may not favor. In
evaluating an investment opportunity, the Manager may make investment decisions
based on information and data that is incomplete or inaccurate. Sustainability
metrics are not uniformly defined and applying such metrics involves subjective
assessments. Sustainability scorings and assessments of issuers can vary across
third-party data providers and may change over time. In addition, a company's
business practices, products or services may change over time. If so, the Fund
may continue to hold such company's securities until the Manager deems it
advantageous to sell them. Regulatory changes or interpretations regarding the
definitions and/or use of sustainability criteria may limit the Fund's ability
to invest in accordance with its investment policies and/or achieve its
investment objective.
The value of a debt security, mortgage-backed
security or other fixed-income obligation, as well as of shares of mortgage
REITs, may decline due to changes in market interest rates. Generally, when
interest rates rise, the value of such a security or obligation generally
decreases. Conversely, when interest rates decline, the value of such a security
generally increases. Long-term debt securities, mortgage-backed securities and
other fixed-income obligations generally are more sensitive to interest rate
changes than short-term debt securities. A Fund may experience a decline in its
income due to falling interest rates. Interest rates in the US recently have
been at, and remain near, historic lows, which may increase a Fund's exposure to
risks associated with rising rates. A Fund may use derivatives to hedge its
exposure to interest rate risk.
Changes to monetary policy by the Federal Reserve
or other regulatory actions may affect interest rates. It is difficult to
predict the impact of these rate changes and any future rate changes on various
markets.
Market developments and other factors, including a
general rise in interest rates, have the potential to cause investors to move
out of fixed-income securities on a large scale, which may increase redemptions
from exchange-traded funds that hold large amounts of fixed-income securities.
Such a move, coupled with a reduction in the ability or willingness of dealers
and other institutional investors to buy or hold fixed-income securities may
result in decreased liquidity and increased volatility in the fixed-income
markets, which could cause a Fund's NAV to fluctuate more and adversely affect
the Fund's return.
In general, a portfolio of
debt, mortgage-related and asset-backed securities and other fixed-income
obligations experiences a decrease in principal value with an increase in
interest rates. The extent of the decrease in principal value may be affected by
a Fund's duration of its portfolio of debt, mortgage-related and asset-backed
securities and other fixed-income obligations. Duration measures the relative
price sensitivity of a security to changes in interest rates. “Effective”
duration takes into consideration the likelihood that a security will be called,
or prepaid, prior to maturity given current market interest rates. Typically, a
security with a longer duration is more price sensitive than a security with a
shorter duration. In general, a portfolio of debt, mortgage-related and
asset-backed securities experiences a percentage decrease in principal value
equal to its effective duration for each 1% increase in interest rates. For
example, if a Fund holds a portfolio of securities with an effective duration of
five years and interest rates rise 1%, the principal value of such securities
could be expected to decrease by approximately 5%.
High yield (junk bond)
risk |
In general, low-rated debt securities (commonly
referred to as “high-yield” or “junk” bonds) offer higher yields due to the
increased risk that the issuer will be unable to meet its obligations on
interest or principal payments at the time called for by the debt instrument.
For this reason, these securities are considered speculative and could
significantly weaken a Fund's returns. In adverse economic or other
circumstances, issuers of these low-rated securities and obligations are more
likely to have difficulty making principal and interest payments than issuers of
higher-rated securities and obligations.
In addition, these low-rated securities and
obligations may fluctuate more widely in price and yield than higher-rated
securities and obligations and may fall in price during times when the economy
is weak or is expected to become weak. Low-rated securities and obligations also
may require a greater degree of judgment to establish a price, may be difficult
to sell at the time and price a Fund desires, and may carry higher transaction
costs. Issuers of securities that are in default or have defaulted may fail to
resume principal or interest payments, in which case a Fund may lose its entire
investment. In addition, a defaulted obligation or other restructuring of an
obligation could involve an exchange of such obligation for other debt or equity
securities of the issuer or its affiliates, which may in turn be illiquid,
speculative or unregistered. Low-rated securities and obligations are
susceptible to such a default or decline in market value due to real or
perceived adverse economic and business developments relating to the issuer, the
industry in general, market interest rates and market liquidity. The market
value of these securities can be volatile. Ratings of a security or obligation
may not accurately reflect the actual credit risk associated with such a
security. The creditworthiness of issuers of low-rated securities may be more
complex to analyze than that of issuers of investment-grade debt
securities.
Credit risk is the risk that an issuer of a debt security,
including a governmental issuer or an entity that insures the bond, may be
unable to make interest payments and/or repay principal in a timely manner.
Changes in an issuer's financial strength or in a security's credit rating may
affect a security's value, which would impact fund performance.
Investing in so-called “junk” or “high yield” bonds
entails the risk of principal loss because they are rated below investment
grade, which may be greater than the risk involved in investment grade bonds.
High yield bonds are sometimes issued by municipalities whose earnings at the
time the bond is issued are less than the projected debt payments on the bonds.
A protracted economic downturn may severely disrupt the market for high yield
bonds, adversely affect the value of outstanding bonds, and adversely affect the
ability of high yield issuers to repay principal and interest. Investment by a
fund in defaulted securities poses additional risk of loss should nonpayment of
principal and interest continue in respect of such securities. Even if such
securities are held to maturity, recovery by a fund of its initial investment
and any anticipated income or appreciation may be uncertain. A fund also may
incur additional expenses in seeking recovery on defaulted securities. Defaulted
securities may be considered illiquid.
In the case of municipal bonds, issuers may be
affected by poor economic conditions in their states.
Call risk is the risk that a
bond issuer will prepay the bond during periods of low interest rates, forcing
an investor to reinvest his or her money at interest rates that might be lower
than rates on the called bond.
Liquidity risk is the possibility that investments
cannot be sold or disposed of in current market conditions in seven calendar
days or less without the sale or disposition significantly changing the market
value of the investment. Illiquid investments may trade at a discount from
comparable, more liquid investments, and may be subject to wide fluctuations in
market value. A fund also may not be able to dispose of illiquid investments at
a favorable time or price during periods of infrequent trading of an illiquid
investment.
Alternative minimum tax
risk |
If a fund invests in bonds
whose income is subject to the alternative minimum tax, that portion of the
fund's distributions would be taxable for shareholders who are subject to this
tax
Government and regulatory
risk |
The municipal securities market generally, or
certain municipal securities in particular, may be significantly affected by
adverse political, legislative or regulatory changes or litigation at the
federal or state level. For example, political or legislative changes (as well
as economic conditions) in a particular state or political subdivision of the
state may affect the ability of the state or subdivision's governmental entities
to pay interest, to repay principal on their obligations or to issue new
municipal obligations.
In addition, the value of
municipal securities is affected by the value of tax-exempt income to investors.
For example, a significant change in rates or a restructuring of the federal
income tax (or serious consideration of such a change by the US government) may
cause a decline in municipal securities prices, since lower income tax rates or
tax restructuring could reduce the advantage of owning municipal securities.
Lower state or municipal income tax rates may have a similar effect on the value
of municipal securities issued by a governmental entity in that state or
municipality.
Geographic concentration
risk |
Geographic concentration risk is the risk that a
fund that concentrates on investments from a particular state, region, or US
territory or possession could be adversely affected by political and economic
conditions in that state, region, or US territory or possession. There is also
the risk that an inadequate supply of municipal bonds exists in a particular
state or US territory or possession
At times, a Fund may have a
significant portion of its assets invested in securities of companies conducting
business in a broadly related group of industries within an economic sector.
Individual sectors may be more volatile, and may perform differently, than the
broader market. Companies in the same economic sector may be similarly affected
by economic or market events, making a Fund more vulnerable to unfavorable
developments in that economic sector than funds that invest more broadly.
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Authorized Participants, Market
Makers and Liquidity Providers Concentration Risk. Only authorized
participants (“APs”) may engage in creation or redemption transactions
directly with the Fund. The Fund has a limited number of financial
institutions that are institutional investors and may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace, and they have no obligation to submit
creation or redemption orders. To the extent either of the following
events occur, the Fund’s Shares may trade at a material discount to net
asset value (“NAV”) and possibly face delisting: (i) APs exit the business
or otherwise become unable to process creation and/or redemption orders
and no other APs step forward to perform these services, or (ii) market
makers and/or liquidity providers exit the business or significantly
reduce their business activities and no other entities step forward to
perform their functions. These events, among others, may lead to the
Fund’s Shares trading at a premium or discount to NAV. A diminished market
for an ETF's shares substantially increases the risk that a shareholder
may pay considerably more or receive significantly less than the
underlying value of the ETF shares bought or
sold. |
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Secondary Market Trading
Risk. Although the Fund’s Shares are listed for trading on the
Exchange and may be listed or traded on U.S. and non-U.S. stock exchanges
other than the Exchange, there can be no assurance that an active trading
market for Shares will develop or be maintained. Trading in the Fund’s
Shares may be halted due to market conditions or for reasons that, in the
view of the Exchange, make trading in Shares inadvisable. In addition,
trading in Shares on the Exchange is subject to trading halts caused by
extraordinary market volatility pursuant to Exchange “circuit breaker”
rules, which temporarily halt trading on the Exchange. Additional rules
applicable to the Exchange may halt trading in Shares when extraordinary
volatility causes sudden, significant swings in the market price of
Shares. There can be no assurance that Shares will trade with any volume,
or at all, on any stock exchange. Moreover, the Fund is required to comply
with listing requirements adopted by the Exchange. Non-compliance with
such requirements may result in the Fund’s shares being delisted by the
Exchange. Additionally, in stressed market conditions, the liquidity of
the Fund’s Shares may begin to mirror the liquidity of the Fund’s
underlying holdings, which can be significantly less liquid than the
Fund’s Shares. |
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Shares May Trade at Prices Other Than
NAV. As with all ETFs, Shares of the Fund may be bought and
sold in the secondary market at market prices. The Fund’s NAV is
calculated at the end of each business day and fluctuates with changes in
the market value of the Fund’s holdings, while the trading price of the
shares fluctuates continuously throughout trading hours on the Exchange,
based on both the relative market supply of, and demand for, the shares
and the underlying value of the Fund’s holdings. As a result, although it
is expected that the market price of Shares will approximate the Fund’s
NAV, there may be times when the market price of Shares is more than the
NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This
risk is heightened in times of market volatility or periods of steep
market declines. The market price of Shares during the trading day, like
the price of any exchange-traded security, includes a “bid/ask” spread
charged by the exchange specialist, market makers or other participants
that trade Shares. In times of severe market disruption, the bid/ask
spread can increase significantly. At those times, Shares are most likely
to be traded at a discount to NAV, and the discount is likely to be
greatest when the price of Shares is falling fastest, which may be the
time that you most want to sell your Shares. The Manager believes that,
under normal market conditions, large market price discounts or premiums
to NAV will not be sustained because of arbitrage
opportunities. |
The risk that changes related to the use of the London Interbank
Offered Rate (LIBOR) or similar interbank offered rates (“IBORs,” such as the
Euro Overnight Index Average (EONIA)) could have adverse impacts on financial
instruments that reference such rates. While some instruments may contemplate a
scenario where LIBOR or a similar rate is no longer available by providing for
an alternative rate setting methodology, not all instruments have such fallback
provisions and the effectiveness of replacement rates is uncertain. The
abandonment of LIBOR and similar rates could affect the value and liquidity of
instruments that reference such rates, especially those that do not have
fallback provisions. The use of alternative reference rate products may impact
investment strategy performance.
Active management and selection
risk |
The Manager applies a Fund's investment strategies
and selects securities for the Fund in seeking to achieve the Fund's investment
objective(s). There can be no guarantee that its decisions will produce the
desired results, and securities selected by a Fund may not perform as well as
the securities held by other exchange-traded funds with investment objectives
that are similar to the investment objective(s) of the Fund. In general,
investment decisions made by the Manager may not produce the anticipated
returns, may cause a Fund's shares to lose value or may cause a Fund to perform
less favorably than other exchange-traded funds with similar investment
objectives.
Non-Principal Risks. In addition to the
Principal Risks identified above, an investment in [Tax-Free USA Short Term ETF]
may be subject to other, non-principal risks, including the following:
The prices of a Fund's
fixed-income securities respond to economic developments, particularly interest
rate changes, as well as to perceptions about the creditworthiness of individual
issuers. Generally, a Fund's fixed-income securities will decrease in value if
interest rates rise and vice versa. In a low interest rate environment, risks
associated with rising rates are heightened. Rising interest rates tend to
decrease liquidity, increase trading costs and increase volatility, all of which
may make portfolio management more difficult and costly to a Fund and its
shareholders. In the case of foreign securities, price fluctuations will reflect
international economic and political events, as well as changes in currency
valuations relative to the US dollar. Other factors may materially and adversely
affect the market price and yield of such fixed-income securities, including
investor demand, changes in the financial condition of the applicable issuer,
government fiscal policy and domestic or worldwide economic conditions. In
addition, certain events, such as natural disasters, terrorist attacks, war,
regional or global instability and other geopolitical events, have led, and may
in the future lead, to increased short-term market volatility and may have
adverse long-term effects on world economies and markets generally.
At times, a Fund may invest
primarily in municipal securities that finance similar types of projects, such
as those in health care, life care, public power, education and transportation,
among others, and in municipal securities of issuers located in the same
geographical area. A change that affects one project, such as proposed
legislation on the financing of the project, a shortage of the materials needed
for the project or a declining need for the project, likely would affect all
similar projects, thereby increasing market risk.
Municipal lease obligations
risk |
Municipal lease obligations
differ from other municipal securities because the relevant legislative body
must appropriate the money each year to make the lease payments. If the money is
not appropriated, the lease may be cancelled without penalty and investors who
own the lease obligations may not be paid.
Natural disaster and epidemic
risk |
Natural disaster and epidemic risk is the risk that
the value of a fund's investments may be negatively affected by natural
disasters, epidemics, or similar events. Natural or environmental disasters,
such as earthquakes, fires, floods, hurricanes, tsunamis, and other severe
weather-related phenomena generally, and widespread disease, including pandemics
and epidemics, have been and can be highly disruptive to economies and markets,
adversely impacting individual companies, sectors, industries, markets,
currencies, interest and inflation rates, credit ratings, investor sentiment,
and other factors affecting the value of a fund's investments. Given the
increasing interdependence among global economies and markets, conditions in one
country, market, or region are increasingly likely to
adversely affect markets, issuers, and/or foreign exchange rates
in other countries. These disruptions could prevent a fund from executing
advantageous investment decisions in a timely manner and could negatively impact
the fund's ability to achieve its investment objective.
A Fund may experience periods
of heavy redemptions that could cause the Fund to sell assets at inopportune
times or at a loss or depressed value. Redemption risk is heightened during
periods of declining or illiquid markets. Heavy redemptions could hurt a Fund's
performance.
Securities lending involves a
risk of loss because the borrower may fail to return the securities in a timely
manner or at all. If a Fund that lent its securities were unable to recover the
securities loaned, it may sell the collateral and purchase a replacement
security in the market. Lending securities entails a risk of loss to a Fund if
and to the extent that the market value of the loaned securities increases and
the collateral is not increased accordingly. Cash received as collateral for
loaned securities may be invested, and such investment is subject to market
appreciation or depreciation, with the Fund bearing any loss.
In purchasing municipal
securities, the Fund and the Manager rely on the opinion of an issuer's bond
counsel that the interest paid on the issuer's securities will not be subject to
federal income tax. A tax opinion generally is provided at the time a municipal
security is initially issued. However, after the Fund buys a security backed by
such an opinion, distributions by the Fund may become taxable to shareholders
due to noncompliant conduct by a bond issuer, unfavorable changes in federal or
state tax laws, or adverse interpretations of tax laws by the IRS or other
authorities or because of other factors. Such adverse interpretations or actions
could cause interest from a security to become taxable, possibly retroactively,
subjecting shareholders to increased tax liability. In addition, such adverse
interpretations or actions could cause the value of a security, and therefore,
the value of the Fund's shares, to decline.
Disclosure of portfolio
holdings information
A description of the Funds' policies and procedures
with respect to the disclosure of their portfolio securities is available in the
Funds’ SAI. The Funds disclose their portfolio holdings daily at
[website].
Investment manager
The Manager, located at 100
Independence, 610 Market Street, Philadelphia, PA 19106-2354, is the Funds'
investment manager. Together, the Manager and the other subsidiaries of
Macquarie Management Holdings, Inc. (MMHI) manage, as of February 28, 2023,
approximately $184.0 billion in assets, including mutual funds, separate
accounts, and other investment vehicles. The Manager and its predecessors have a
history of managing Delaware Funds, which are open-end registered mutual funds,
since 1938. The Manager is a series of Macquarie Investment Management Business
Trust (a Delaware statutory trust), which is a subsidiary of MMHI. MMHI is a
wholly owned subsidiary of Macquarie Group Limited. The Manager makes investment
decisions for the Funds, manages the Funds' business affairs, and provides daily
administrative services. For its services to the Funds, the Manager will be paid
an aggregate fee, net of fee waivers (if applicable) as follows:
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As a percentage of average
daily net assets |
[Sustainable Global
Listed Infrastructure ETF]
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[ ]% |
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[Energy Transition
ETF]
[ |
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[ ]% |
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[Tax-Free USA Short
Term ETF]
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[ ]% |
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A discussion of the basis for the Board's approval
of the Funds' investment advisory agreements will be available in the Funds'
first annual or semi-annual report to shareholders.
Portfolio
managers
[Sustainable Global Listed
Infrastructure ETF]
Brad Frishberg and Anthony Felton have day-to-day
responsibilities for making investment decisions for the [Sustainable Global
Listed Infrastructure ETF].
Anthony Felton,
CFA
Senior Portfolio Manager, Global
Listed Infrastructure Securities
Anthony Felton is a Senior Portfolio
Manager for Macquarie Asset Management’s (MAM) Global Listed Infrastructure
(GLI) investment team. In this role he has oversight of multiple listed
infrastructure strategies serving clients in Asia, Europe and North America. He
has been part of the GLI investment team since 2004, has acted in the role of
portfolio manager since 2010 for Core GLI strategies, and launched Macquarie’s
Sustainable GLI strategy in 2018. Prior to 2010, he was an analyst within the
team researching listed infrastructure securities in Europe and Asia Pacific.
He is a member of the MAM Public Investments Investment Governance
committee. He earned a bachelor’s degree from the University of New South Wales.
He holds the Chartered Financial Analyst designation and is a member of the CFA
Institute.
Brad Frishberg,
CFA
Chief Investment Officer – Global
Listed Infrastructure Securities, Senior Portfolio Manager
Brad
Frishberg is the head of Macquarie’s Infrastructure Securities business and its
Chief Investment Officer, based in New York, and lead portfolio manager. Brad
has over 25 years of asset management experience. Prior to joining Macquarie in
2009, he was managing director and U.S. equity portfolio manager at J.P. Morgan
Asset Management, where over a period of 13 years he was responsible for
managing portfolios and businesses in London, Tokyo, and New York. Brad started
his career at Aetna Asset Management as an international analyst and then as a
portfolio manager for Japanese equity and fixed income.
[Energy Transition ETF]
Samuel Halpert and Geoffrey King have primary
responsibility for making day-to-day investment decisions for the [Energy
Transition ETF].
Samuel
Halpert, CFA
Division Director,
Chief Investment Officer ‑ Global Natural Resources Equity
Samuel
Halpert leads the firm’s Global Natural Resources Equity team. Prior to joining
Macquarie Asset Management (MAM) in July 2018, he worked at Van Eck, where he
was a co-portfolio manager and senior analyst on its global hard assets
long-only and long-short team from April 2000 to June 2018. He specialized in
agriculture, coal, paper and forest products, refining, shipping, and steel
investments. He also managed a global real estate fund at Van Eck earlier in his
career. Prior to that, he worked at Goldman Sachs, which ultimately became Citi
Group, and he worked at Refco. He earned a bachelor’s degree in English and
American literature from Harvard College.
Geoffrey
King, CFA
Associate Director,
Senior Vice President, Portfolio Manager ‑ Global Natural Resources
Equity
Geoffrey King is a portfolio manager on the firm’s Global
Natural Resources Equity team. Prior to joining Macquarie Asset Management (MAM)
in July 2018, he worked at Abraxas Petroleum where he was vice president and
chief financial officer for approximately six years, responsible for strategy,
business development, financial planning, analysis, and hedging. For the five
years before that, King was a senior energy analyst at Van Eck, where he was
focused on natural resource commodities and equities. Prior to that, King worked
in the energy investment banking group at Merrill Lynch, which acquired Petrie
Parkman, as well as investment banking boutique Townsend Frew/Edgeview
Partners. He holds bachelor’s degrees in both economics and history from
Davidson College.
[Tax-Free USA Short Term
ETF]
Gregory A. Gizzi, Stephen J. Czepiel, Williams
Roach and Jake van Roden have day-to-day responsibilities for making investment
decisions for the [Tax-Free USA Short Term ETF].
Gregory A.
Gizzi
Managing Director, Head of US
Fixed Income and Head of Municipal Bonds, Senior Portfolio
Manager
Gregory A. Gizzi is Head of US Fixed Income and Head of
Municipal Bonds for Macquarie Asset Management Fixed Income (MFI) in the
Americas, a role he assumed in April 2022. Gizzi is responsible for overseeing
the US fixed income component of MAM’s global MFI business. Additionally, he
leads the MFI municipal business. In this
role, he is responsible for the overall
operation of the strategy and is team lead on several of the tax-exempt
strategies. Gizzi is also responsible for MFI’s taxable municipal business and
the marketing efforts for the team’s municipal products. Previously, Gizzi was
co-portfolio manager of the firm’s municipal bond funds and several client
accounts, a role he held since November 2011. Before joining Macquarie Asset
Management (MAM) in January 2008 as head of municipal bond trading, he
spent six years as a vice president at Lehman Brothers for the firm’s
tax-exempt institutional sales effort. Prior to that, he spent two
years trading corporate bonds for UBS. Gizzi has more than 20 years of trading
experience in the municipal securities industry, beginning at Kidder Peabody in
1984, where he started as a municipal bond trader and worked his way up to
institutional block trading desk manager. He later worked in the same
capacity at Dillon Read. Gizzi earned his bachelor’s degree in economics
from Harvard University.
Stephen J.
Czepiel
Managing Director, Head of
Municipal Bonds Portfolio Management, Senior Portfolio Manager
Stephen
J. Czepiel leads the portfolio management of the firm's municipal bonds
strategies for Macquarie Asset Management Fixed Income (MFI) in the Americas, a
role he assumed in February 2019. He is a co-portfolio manager of the firm's
municipal bond funds and client accounts, a role he has held since August 2007.
He joined Macquarie Asset Management (MAM) in July 2004 as a senior bond trader.
Previously, he was vice president at both Mesirow Financial and Loop Capital
Markets. He began his career in the securities industry in 1982 as a municipal
bond trader at Kidder Peabody and now has more than 20 years of experience in
the municipal securities industry. Czepiel earned his bachelor's degree in
finance and economics from Duquesne University.
William Roach, CFA, CMT
Vice President, Senior Municipal Trader,
Portfolio Manager
William Roach joined the municipal trading team within Macquarie Asset
Management Fixed Income (MFI) in June 2015. From November 2012 to May 2015, he
was an internal consultant for the firm’s third-party distribution group,
managing relationships with clients in New Jersey and Southern California.
Before joining Macquarie Asset Management (MAM), Roach worked as a financial
advisor, first with Creative Financial Group from October 2009 to November 2010,
and then with Merrill Lynch from November 2010 to November 2012. He earned a
bachelor’s degree with dual concentrations in business administration and
political science from Albright College and an MBA with a concentration in
finance from Villanova University.
Jake van
Roden
Managing Director, Senior Portfolio
Manager
Jake van Roden is a Senior Portfolio Manager on the municipal bond team
within Macquarie Asset Management Fixed Income (MFI) in the Americas, a role he
assumed in 2017. In addition to portfolio management, his responsibilities
include oversight of distressed and high yield investments across municipals,
public purpose, and corporate credit sectors. Van Roden joined MFI’s municipal
department in July 2004 as a generalist and became head of municipal trading in
December 2012. Prior to joining MFI, van Roden interned at Macquarie Asset
Management (MAM) in the client services department. He received a bachelor’s
degree in American studies with a minor in government from Franklin &
Marshall College.
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 Fund shares.
[Manager of managers
structure
The Funds and the Manager have received an
exemptive order from the US Securities and Exchange Commission (SEC) to operate
under a manager of managers structure that permits the Manager, with the
approval of the Funds' Board, to appoint and replace both affiliated and
unaffiliated sub-advisors, and to enter into and make material amendments to the
related sub-advisory contracts on behalf of the Funds without shareholder
approval (Manager of Managers Structure). Under the Manager of Managers
Structure, the Manager has ultimate responsibility, subject to
oversight by the Board, for overseeing the Funds' sub-advisors
and recommending to the Board their hiring, termination, or replacement.
The Manager of Managers Structure enables the Funds
to operate with greater efficiency and without incurring the expense and delays
associated with obtaining shareholder approvals for matters relating to
sub-advisors or sub-advisory agreements. The Manager of Managers Structure does
not permit an increase in the overall management and advisory fees payable by
the Funds without shareholder approval. Shareholders will be notified of the
hiring of any new sub-advisor within 90 days of the hiring.
The Funds and the Manager also have an exemptive
order from the SEC that allows the approval of a new sub-advisor to be taken at
a Board of Trustees meeting held via any means of communication that allows the
Trustees to hear each other simultaneously during the meeting. If a new
unaffiliated sub-adviser is hired for a Fund, shareholders will receive
information about the new sub-advisor within 90 days of the change.]
Who's
who
Board of trustees:
Exchange-traded funds are governed by a board of trustees, which has
oversight responsibility for the management of the fund's business affairs. Trustees establish procedures and oversee
and review the performance of the Funds’ service providers.
Investment manager:
An investment manager is a company responsible for selecting portfolio
investments consistent with the objective and policies stated in the exchange-traded fund's prospectus.
A written contract between an exchange-traded fund and its investment manager
specifies the services the investment manager performs and the fee the manager
is entitled to receive.
Portfolio managers:
Portfolio managers make investment decisions for individual
portfolios.
Distributor:
Exchange-traded fund distributors interact with authorized participants
during the creation and redemption process of the Funds’ creation units and
approve orders for creation units bought by Fund shareholders. Distributors are
regulated as broker/dealers and are subject to the Financial Industry Regulatory Authority
(FINRA) rules governing fund sales practices.
[Authorized
Participant: Exchange-traded
funds interact directly with certain broker-dealers, also called authorized
participants, to sell and redeem shares of the Funds. The Funds’ authorized
participants then sell the Funds’ shares to investors on the secondary
market.]
Service agent:
Registered fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and disburse dividends and capital gains, and
prepare and mail shareholder statements and tax information, among other
functions. Many service agents also provide administrative services to a fund
and oversight of other fund service providers. Accounting services agents
provide services such as calculating a fund's net asset value (NAV) and
providing financial reporting information for the Funds.
Custodian:
Registered funds are legally required to protect their portfolio
securities, and most funds place them with a qualified bank custodian that segregates fund securities
from other bank assets.
Financial
intermediary: Financial professionals provide advice to their clients.
They are associated with securities broker/dealers who have entered into selling
and/or service arrangements with the
distributor. Selling broker/dealers and financial professionals are compensated
for their services generally through sales commissions, and through 12b-1 fees
and/or service fees deducted from a fund's assets.
Shareholders:
ETF shareholders have specific voting rights on matters such as material
changes in the terms of a fund's management contract and changes to fundamental investment
policies.]
Investing in the
Funds
Buying and
Selling Shares
Shares of the Fund may be
acquired or redeemed directly from the Funds only in Creation Units or multiples
thereof, as discussed in the Creations and Redemptions section of this
prospectus. Only an Authorized Participant may engage in creation or redemption
transactions directly with the Funds. Once created, shares of the Funds
generally trade in the secondary market in amounts less than a Creation
Unit.
Shares of the Funds are
listed on [name of exchange], a national securities exchange for trading during
the trading day. Shares can be bought and sold throughout the trading day like
shares of other publicly traded companies. The Trust does not impose any minimum
investment for shares of the Funds purchased on an exchange. Shares of the Funds
trade under the following symbols: [ ].
Buying or selling Fund shares
on an exchange involves two types of costs that may apply to all securities
transactions. When buying or selling shares of the Funds through a broker, you
will likely incur a brokerage commission or other charges determined by your
broker. 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.
In addition, you may incur the cost of the “spread,” that is, any difference
between the bid price and the ask price. The spread varies over time for shares
of the Funds based on a Fund’s trading volume and market liquidity, and is
generally lower if a Fund has a lot of trading volume and market liquidity, and
higher if a Fund has little trading volume and market liquidity.
The board of trustees has not
adopted a policy of monitoring for frequent purchases and redemptions of Fund
shares (frequent trading) that appear to attempt to take advantage of a
potential arbitrage opportunity presented by a lag between a change in the value
of a Fund’s portfolio securities after the close of the primary markets for the
Funds’ portfolio securities and the reflection of that change in a Fund’s NAV
(market timing), because the Funds generally sell and redeem their shares
directly through transactions that are in-kind and/or for cash, subject to the
conditions described below under Creations and Redemptions. The board of
trustees has not adopted a policy of monitoring for frequent trading activity
because shares of the Funds are listed for trading on a national securities
exchange.
The Funds’ primary listing
exchange is [ ], which is open for trading Monday through Friday and is
closed on weekends and the following holidays: 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.
Section 12(d)(1) of the
Investment Company Act of 1940 (1940 Act) restricts investments by investment
companies in the securities of other investment companies. Registered investment
companies are permitted to invest in the Funds beyond the limits set forth in
Section 12(d)(1), subject to certain terms and conditions set forth in SEC rules
or in other exemptive relief as applicable. In order for a registered investment
company to invest in shares of the Funds beyond the limitations of Section
12(d)(1), the registered investment company must generally enter into an
agreement with each Fund.
Book
Entry
Shares
of the Funds are held in book-entry form, which means that no share certificates
are issued. The Depository Trust Company (DTC) or its nominee is the record
owner of all outstanding shares of the Fund and is recognized as the owner of
all shares for all purposes.
Investors
owning shares of the Funds are beneficial owners as shown on the records of DTC
or its participants. DTC serves as the securities depository for shares of the
Funds. DTC participants 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 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 securities that you
hold in book-entry or “street name” form.
Share
Prices
The trading prices of the
Funds’ shares in the secondary market generally differ from the Funds’ daily NAV
and are affected by market forces such as supply and demand, economic conditions
and other factors.
We generally price securities and other assets for
which market quotations are readily available at their market value. The value
of foreign securities may change on days when a shareholder will not be able to
purchase or redeem fund shares because foreign markets are open at times and on
days when US markets are not. We price fixed income securities on the basis of
valuations provided to us by an independent pricing service that uses methods
approved by the Board. For all other securities, we use methods approved by the
Board that are designed to price securities at their fair market values.
The NAV of each Fund is
determined by deducting a Fund’s liabilities from the total assets of the
portfolio. The NAV per share is determined by dividing the total NAV of a Fund
by the number of shares outstanding.
The Funds calculate the NAV
per share as of the scheduled close of regular trading on the New York Stock
Exchange (NYSE). The Fund does not calculate the NAV on days the NYSE is closed
for trading, which include New Year’s Day, Martin Luther King Jr. Day,
President’s Day, Good Friday, Memorial Day, Juneteenth National Independence
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. If the
NYSE has an unscheduled early close, a Fund's closing share price would still be
determined as of that day's regularly scheduled close of the NYSE. Each Fund’s
NAV per share is readily available online at [website].
In calculating its NAV, a
Fund generally values its assets on the basis of market quotations, last sale
prices, or estimates of value furnished by a pricing service or brokers who make
markets in such instruments. The value of foreign securities may change on days
when a shareholder will not be able to purchase or redeem fund shares because
foreign markets are open at times and on days when US markets are not. The Funds
price fixed income securities on the basis of valuations provided by an
independent pricing service that uses methods approved by the Board. If such
information is not available for a security held by a Fund or is determined to
be unreliable, the security will be valued at fair value estimates under
guidelines established by the Board.
Creations
and Redemptions
Prior to trading in the
secondary market, shares of the Fund are “created” at NAV by market makers,
large investors and institutions only in block-size Creation Units of [ ]
shares or multiples thereof. An “Authorized Participant” or “AP” is a member or
participant of a clearing agency registered with the SEC, which has a written
agreement with the Funds or one of their service providers (AP Agreement) that
allows such member or participant to place orders for the purchase and
redemption of Creation Units. All orders for the creation or redemption of
Creation Units for the Funds must be placed by or through an Authorized
Participant that has entered into an AP Agreement with the Distributor.
A creation transaction, which
is subject to acceptance by the Distributor, generally takes place when an
Authorized Participant deposits into a Fund a designated portfolio of
securities, assets or other positions and/or an amount of cash (which may
include cash in lieu of certain securities, assets or other positions) in
exchange for a specified number of Creation Units.
Similarly, shares can be
redeemed only in Creation Units by APs, generally for a designated portfolio of
securities, assets or other positions and/or cash (which may include cash in
lieu of certain securities, assets or other positions).
The prices at which creations
and redemptions occur are based on the next calculation of NAV after a creation
or redemption order is received in an acceptable form under the AP
Agreement.
Creation and redemption
baskets may differ and the Funds will accept “custom baskets.” More information
regarding custom baskets is contained in the Funds’ SAI. As a result of any
system failure or other interruption,
creation or redemption orders either may not be executed
according to a Fund’s instructions or may not be executed at all, or a Fund may
not be able to place or change such orders. Information about the procedures
regarding creations and redemptions of Creation Units (including the cut-off
times for receipt of creation and redemption orders) is included in the Funds’
SAI.
Premium/Discount
Information
Information regarding how
often the shares of the Funds traded on [ ] at a price above (at a
premium) or below (at a discount) the NAV of a Fund for the most recently
completed calendar year, and the most recently completed calendar quarters since
that year, can be found at [website].
Distribution
The Distributor, [ ],
is a broker-dealer registered with the SEC. The Distributor distributes Creation
Units for the Funds on an agency basis and does not maintain a secondary market
in Fund shares. The Distributor has no role in determining the policies of the
Funds or the securities that are purchased or sold by the Funds. The
Distributor’s principal address is [ ].
Distribution
and service (12b-1) fees
The board of trustees has
adopted a distribution plan, sometimes known as a Rule 12b-1 plan, that allows
the Funds to pay distribution fees of up to 0.25% per year, to those who sell
and distribute Fund shares and provide other services to shareholders. However,
the board of trustees has determined not to authorize payment of a Rule 12b-1
plan fee at this time.
Because these fees are paid
out of the Funds’ assets on an ongoing basis, to the extent that a fee is
authorized, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
Payments to
intermediaries
The Distributor and its affiliates may pay
additional compensation at their own expense and not as an expense of a Fund to
certain affiliated or unaffiliated brokers, dealers, or other financial
intermediaries (Financial Intermediaries) in connection with the sale or
retention of Fund shares and/or shareholder servicing, including providing the
Fund with “shelf space” or a higher profile with the Financial Intermediaries'
consultants, salespersons, and customers (distribution assistance). For example,
the Distributor or its affiliates may pay additional compensation to Financial
Intermediaries for various purposes, including, but not limited to, promoting
the sale of Fund shares, maintaining share balances and/or for subaccounting,
administrative, or shareholder processing services, marketing, educational
support, data, and ticket charges. Such payments are in addition to any
distribution fees, service fees, subaccounting fees, and/or transfer agency fees
that may be payable by a Fund. The additional payments may be based on factors,
including level of sales (based on gross or net sales or some specified minimum
sales or some other similar criteria related to sales of a Fund and/or some or
all other Funds advised by the Manager), amount of assets invested by the
Financial Intermediary's customers (which could include current or aged assets
of a Fund and/or some or all other Funds advised by the Manager), a Fund's
advisory fees, some other agreed-upon amount, or other measures as determined
from time to time by the Distributor. The level of payments made to a qualifying
Financial Intermediary in any given year may vary. To the extent permitted by
SEC and FINRA rules and other applicable laws and regulations, the Distributor
may pay, or allow its affiliates to pay, other promotional incentives or
payments to Financial Intermediaries.
[Sub-transfer agent/recordkeeping payments may be
made to third parties (including affiliates of the Manager) that provide
sub-transfer agent, recordkeeping, and/or shareholder services with respect to
certain shareholder accounts (including omnibus accounts), or to the shareholder
account directly to offset the costs of these services, in lieu of the transfer
agent providing such services.]
If a fund sponsor or distributor makes
greater payments for distribution assistance to your Financial Intermediary with
respect to distribution of shares of that particular fund than sponsors or
distributors of other funds make to your Financial Intermediary with respect to
the distribution of the shares of their funds, your Financial Intermediary and
its salespersons may have a financial incentive to favor sales of shares of the
fund making the higher payments over shares of other funds or over other
investment options. In addition, depending on the arrangements in place at any
particular time, a Financial Intermediary may also have a financial incentive
for recommending a particular share class over other share classes. You should
consult with your Financial Intermediary and review carefully any disclosure
provided by such Financial Intermediary as to compensation it receives in
connection with investment products it recommends or sells to you. A significant
purpose of these payments is to increase sales of a Fund's shares. [The Manager
or its affiliates may benefit from the Distributor's payment of compensation to
Financial Intermediaries through increased fees resulting from additional assets
acquired through the sale of Fund shares through Financial Intermediaries. In
certain instances, the payments could be significant and may cause a conflict of
interest for your Financial Intermediary. Any such payments will not change the
NAV or the price of a Fund's shares.]
Fair valuation
When the Funds use fair value pricing, they may
take into account any factors they deem appropriate. The Funds may determine
fair value based upon developments related to a specific security, current
valuations of foreign stock indices (as reflected in US futures markets), and/or
US sector or broad stock market indices. In determining whether market
quotations are readily available or fair valuation will be used, various factors
will be taken into consideration, such as market closures or suspension of
trading in a security. The prices of securities used by the Funds to calculate
their NAVs may differ from quoted or published prices for the same securities.
Fair value pricing may involve subjective judgments and it is possible that the
fair value determined for a security could be materially different than the
value that could be realized upon the sale of that security.
The Funds anticipate using fair value pricing for
securities primarily traded on US exchanges only under very limited
circumstances, such as the early closing of the exchange on which a security is
traded or suspension of trading in the security. The Funds may use fair value
pricing more frequently for securities traded primarily in non-US markets
because, among other things, most foreign markets close well before the Funds
value their securities, normally at 4:00pm ET or the close of the NYSE. The
earlier close of these foreign markets gives rise to the possibility that
significant events, including broad market moves, may have occurred in the
interim. To account for this, the Funds may frequently value many foreign equity
securities using fair value prices based on third-party vendor modeling tools to
the extent available.
The Board has designated the Manager as the
valuation designee, and delegated responsibility for valuing each Fund's assets
to the Manager and its Pricing Committee, which operates under the policies and
procedures approved by the Board and is subject to the Board's oversight. The
Manager, as the valuation designee, is responsible for periodically assessing
any material risks associated with the determination of the fair value of each
Fund's investments; establishing and applying fair value methodologies; testing
the appropriateness of fair value methodologies; and overseeing and evaluating
third-party pricing vendors and services. The Manager has a Pricing Committee to
assist with its designated responsibilities as valuation designee.
Retirement plans
In addition to being an appropriate investment for
your IRA, Roth IRA, and Coverdell Education Savings Account, the Funds may be
suitable for group retirement plans. You may establish your IRA account even if
you are already a participant in an employer-sponsored retirement plan. For more
information on how the Funds can play an important role in your retirement
planning or for details about group plans, please consult your financial
intermediary, or call [ ].
Document
delivery
You will receive the Fund's
financial reports every six months as well as an annual updated prospectus.
Householding for the Funds is available through certain broker-dealers.
Householding is a process in which related shareholders in a household will be
sent only one copy of the financial reports and prospectus. You may contact your
broker-dealer to enroll in householding. Once enrolled, this process will
continue indefinitely unless you instruct your broker-dealer otherwise. If you
prefer not to have these documents householded, please contact your
broker-dealer. At any time you may view current prospectuses and financial
reports on our website.
Investor services
To help make investing with us
as easy as possible, and to help you build your investments, we offer the
investor services described below. Information about the investor services we
offer is available free of charge on the Funds’ website at [ ], including
hyperlinks to relevant information in fund offering documents. Availability of
these services may be limited by the way your account is registered with the
Funds.
With Funds eDelivery, you can
receive your fund documents electronically instead of via US mail. When you sign
up for eDelivery, you can access your account statements, shareholder reports,
and other fund materials online, in a secure Internet environment at any
time.
Automatic investment
plan |
[The automatic investment plan
allows you to make regular monthly or quarterly investments directly from your
bank account.]
Dividend reinvestment
services |
The Funds will not make the DTC book-entry
dividend reinvestment service available for use by beneficial owners for
reinvestment of their cash proceeds, but certain individual broker-dealers may
make available the DTC book-entry Dividend Reinvestment Service for use by
beneficial owners of the Funds through DTC Participants for reinvestment of
their dividend distributions. Investors should contact their brokers to
ascertain the availability and description of these services. Beneficial owners
should be aware that each broker may require investors to adhere to specific
procedures and timetables in order to participate in the dividend reinvestment
service and investors should ascertain from their brokers such necessary
details. If this service is available and used, dividend distributions of both
income and realized gains will be automatically reinvested in additional whole
shares of a Fund purchased in the secondary market. Distributions reinvested in
additional shares of each Fund will nevertheless be taxable to beneficial owners
acquiring such additional shares to the same extent as if such distributions had
been received in cash.
Dividends, distributions, and
taxes
Each Fund intends to qualify
as a regulated investment company under the Internal Revenue Code. As a
regulated investment company, each Fund generally pays no federal income tax on
the income and gains it distributes to you. The Funds intend to pay income
dividends [monthly] with respect to the [Tax-Free USA Short Term ETF] and
[annually] with respect to the [Sustainable Global Listed Infrastructure ETF]
and the [Energy Transition ETF] from each Fund’s net investment income. Capital
gains, if any, may be paid at least annually. The Funds may distribute income
dividends and capital gains more frequently, if necessary, in order to reduce or
eliminate federal excise or income taxes on a Fund. The amount of any
distribution will vary, and there is no guarantee a Fund will pay either income
dividends or capital gain distributions. Distributions in cash may be reinvested
automatically in additional whole Fund shares only if the broker through whom
you purchased the shares makes such option available.
Annual statements. After the close of each
calendar year, you will receive tax information from the broker with respect to
the federal income tax treatment of each Fund’s distributions and any taxable
sales of Fund shares occurring during the prior calendar year. You may receive
revised tax information if a Fund must reclassify its distributions or the
broker must adjust the cost basis of any covered shares sold after you receive
your tax information. Your statement will show the exempt-interest
dividends you received and the separately-identified
portion that constitutes an item of tax preference for purposes
of the alternative minimum tax (tax-exempt AMT interest). Distributions
declared in October, November or December to shareholders of record in such
month and paid in January are taxable as if they were paid in December.
Additional tax information about the Funds’ distributions is available at
[website].
Avoid "buying a dividend." At the time you
purchase your Fund shares, the price of each Fund's shares may reflect
undistributed income, undistributed capital gains, or net unrealized
appreciation in the value of the portfolio securities held by a 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 gain distribution is
sometimes known as “buying a dividend.”
Tax
Considerations
If you are a taxable
investor, Fund distributions are generally taxable to you as ordinary income,
capital gains or some combination of both. This is the case whether you reinvest
your distributions in additional Fund shares or receive them in cash.
Dividend income. Income dividends are
generally subject to tax at ordinary rates. Income dividends reported by the
Funds as qualified dividend income may be subject to tax by individuals at
reduced long-term capital gains tax rates provided certain holding period
requirements are met. A return-of-capital distribution is generally not taxable
but will reduce the cost basis of your shares, and will result in a higher
capital gain or a lower capital loss when you later sell your shares.
Capital gains. Fund distributions of
short-term capital gains are also subject to tax at ordinary rates. Fund
distributions of long-term capital gains are taxable at the reduced long-term
capital gains rates no matter how long you have owned your Fund shares. For
single individuals with taxable income not in excess of $44,625 in 2023 ($89,250
for married individuals filing jointly), the long-term capital gains tax rate is
0%. For single individuals and joint filers with taxable income in excess of
these amounts but not more than $492,300 or $553,850, respectively, the
long-term capital gains tax rate is 15%. The rate is 20% for single individuals
with taxable income in excess of $492,300 and married individuals filing jointly
with taxable income in excess of $553,850. An additional 3.8% Medicare tax
may also be imposed as discussed below.
Sales of exchange-listed
shares. Currently, any capital gain or loss realized on the sale of
Fund shares generally is treated as long-term capital gain or loss if the shares
have been held for more than one year and as short-term capital gain or loss if
the shares have been held for one year or less.
Cost basis reporting. Contact the broker
through whom you purchased your Fund shares to obtain information with respect
to the available cost basis reporting methods and elections for your
account.
Taxes on creation and redemption of creation
units. An AP that exchanges securities for Creation Units generally
will recognize a gain or loss. The gain or loss will be equal to the difference
between the market value of the Creation Units at the time of purchase and the
exchanging AP’s aggregate basis in the securities surrendered plus any cash paid
for the Creation Units. An AP that exchanges Creation Units for securities will
generally recognize a gain or loss equal to the difference between the
exchanging AP’s basis in the Creation Units and the aggregate market value of
the securities and the amount of cash received. The Internal Revenue Service,
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. APs exchanging securities should consult their own tax advisor(s) with
respect to whether wash sale rules apply and when a loss might be deductible.
APs that create or redeem
Creation Units will be sent a confirmation statement showing how many shares
they purchased or sold and at what price.
Under current federal tax laws, any capital gain or loss realized
upon a 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.
If a Fund redeems Creation
Units in part or entirely in cash, it may recognize more capital gains than it
will if it redeems Creation Units in-kind.
Medicare tax. An additional 3.8% Medicare
tax is imposed on certain net investment income (including ordinary dividends
and capital gain distributions received from each Fund and net gains from the
sales 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. Any liability for this additional Medicare tax is reported on, and paid
with, your federal income tax return.
Backup withholding. A shareholder may be
subject to backup withholding on any distributions of income capital gains or
proceeds from the sale of Fund shares if the shareholder has provided either an
incorrect tax identification number or no number at all, is subject to backup
withholding by the IRS for failure to properly report payments of interest or
dividends, has failed to certify that the shareholder is not subject to backup
withholding, or has not certified that the shareholder is a U.S. person
(including a U.S. resident alien). The backup withholding rate is currently 24%.
State backup withholding may also apply.
State, local and foreign
taxes. Distributions of ordinary income and capital gains, and gains
from the sale of your Fund shares, are generally subject to state and local
taxes. If a Fund qualifies, it may elect to pass through to you as a foreign tax
credit or deduction any foreign taxes that it pays on its investments.
Non-U.S. investors. Non-U.S. investors may be
subject to U.S. withholding tax at 30% or a lower treaty rate on Fund dividends
of ordinary income. Non-U.S. investors may be subject to U.S. estate tax on the
value of their shares. They are subject to special U.S. tax certification
requirements to avoid backup withholding, claim any exemptions from withholding
and claim any treaty benefits. Exemptions from U.S. withholding tax are
generally provided for capital gains realized on the sale of Fund shares,
capital gain dividends paid by the Fund from net long-term capital gains,
short-term capital gain dividends paid by the Fund from net short-term capital
gains and interest-related dividends paid by the Fund from its qualified net
interest income from U.S. sources. However, notwithstanding such exemptions from
U.S. withholding tax at 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.
Other reporting and withholding
requirements. Payments to a shareholder that is either a foreign
financial institution or a non-financial foreign entity within the meaning of
the Foreign Account Tax Compliance Act (FATCA) may be subject to a 30%
withholding tax on income dividends paid by a Fund. The FATCA withholding tax
generally can be avoided by such foreign entity if it provides the broker, and
in some cases, the IRS, information concerning the ownership of certain foreign
financial accounts or other appropriate certifications or documentation
concerning its status under FATCA. The Funds may be required to report certain
shareholder account information to the IRS, non-U.S. taxing authorities or other
parties to comply with FATCA.
Additional
Information for [Tax-Free USA Short Term ETF]
Exempt-Interest
Dividends. Dividends from the Fund will
consist primarily of exempt-interest dividends from interest earned on municipal
securities. In general, exempt-interest dividends are exempt from regular
federal income tax. Exempt-interest dividends from interest earned on municipal
securities of a state, or its political subdivisions, generally are exempt from
that state’s personal income tax. Most states, however, do not grant tax-free
treatment to interest from municipal securities of other
states.
Because
of these tax exemptions, a tax-free fund may not be a suitable investment for
retirement plans and other tax-exempt investors. These dividends may be taxable
to corporate shareholders subject to a state’s corporate
franchise
tax, corporate income tax, or both and such shareholders should
consult with their tax advisors about the taxability of this income before
investing in a Fund.
Exempt-interest dividends are
taken into account when determining the taxable portion of your social security
or railroad retirement benefits. The Fund may invest a portion of its assets in
private activity bonds. The income from these bonds is a tax preference item
when determining your federal alternative minimum tax, unless such bonds were
issued in 2009 or 2010.
While the Fund endeavors to
purchase only bona fide tax-exempt securities, there are risks that: (a) a
security issued as tax-exempt may be reclassified by the Internal Revenue
Service or a state tax authority as taxable and/or (b) future legislative,
administrative or court actions could adversely impact the qualification of
income from a tax-exempt security as tax-free. Such reclassifications or actions
could cause interest from a security to become taxable, possibly retroactively,
subjecting you to increased tax liability. In addition, such reclassifications
or actions could cause the value of a security, and therefore, the value of the
Fund’s shares, to decline.
Taxable Income Dividends. The Fund may invest
a portion of its assets in securities that pay income that is not tax-exempt.
The Fund also may distribute to you any market discount and net short-term
capital gains from the sale of its portfolio securities. If you are a taxable
investor, Fund distributions from this income are taxable to you as ordinary
income, and generally will not be treated as qualified dividend income subject
to reduced rates of taxation for individuals. Distributions of ordinary income
are taxable whether you reinvest your distributions in additional Fund shares or
receive them in cash.
Capital Gain Distributions. The Fund also may
realize net long-term capital gains from the sale of its portfolio securities.
Fund distributions of long-term capital gains are taxable to you as long-term
capital gains no matter how long you have owned your shares.
Other tax information. This discussion of "Distributions and Taxes" is
for general information only and is not tax advice. You should consult your own
tax advisor regarding your particular circumstances, and about any federal,
state, local and foreign tax consequences before making an investment in the
Fund. Additional information about the tax consequences of investing in the
Funds may be found in the SAI.
This discussion of “Dividends,
distributions, and taxes” is not intended or written to be used as tax advice.
Because everyone's tax situation is unique, you should consult your tax
professional about federal, state, local, or foreign tax consequences before
making an investment in a Fund.
Continuous Offering.
The method by which Creation Units are
purchased and traded may raise certain issues under applicable securities
laws. Because new Creation Units are issued and sold by the Funds on an
ongoing basis, at any point a “distribution,” as such term is used in the
Securities Act of 1933, as amended (the “Securities Act”), may occur.
Broker-dealers and other persons are cautioned that some activities on their
part may, depending on the circumstances, result in their being deemed
participants in a distribution in a manner which could render them statutory
underwriters and subject them to the Prospectus delivery and liability
provisions of the Securities Act.
For example, a broker-dealer firm or its client
may be deemed a statutory underwriter if it takes Creation Units after placing
an order with the Distributor, breaks them down into individual Shares, and
sells such Shares directly to customers, or if it chooses to couple the creation
of a supply of new Shares with an active selling effort involving solicitation
of secondary market demand for Shares. A determination of whether one is
an underwriter for purposes of the Securities Act must take into account all the
facts and circumstances pertaining to the activities of the broker-dealer or its
client in the particular case, and the examples mentioned above should not be
considered a complete description of all the activities that could lead to
categorization as an underwriter.
Broker-dealer firms should also note that
dealers who are not “underwriters” but are effecting transactions in Shares,
whether or not participating in the distribution of Shares, are generally
required to deliver a prospectus. This is because the prospectus delivery
exemption in Section 4(a)(3) of the Securities Act is not available with respect
to such transactions as a result of Section 24(d) of the 1940 Act. As a
result, broker dealer-firms should note that dealers who are not underwriters
but are participating in a distribution (as contrasted with ordinary secondary
market transactions) and thus dealing with Shares that are part of an
over-allotment within the meaning of Section 4(a)(3)(a) of the Securities Act
would be unable to take advantage of the prospectus delivery exemption provided
by Section 4(a)(3) of the Securities Act. Firms that incur a prospectus
delivery obligation with respect to Shares of a Fund are reminded that under
Rule 153 of the Securities Act, a prospectus delivery obligation under Section
5(b)(2) of the Securities Act owed to an exchange member in connection with a
sale on the Exchange is satisfied by the fact that such Fund’s Prospectus is
available on the SEC’s electronic filing system. The prospectus delivery
mechanism provided in Rule 153 of the Securities Act is only available with
respect to transactions on an exchange.
Additional Information.
The Funds enter into contractual arrangements
with various parties, including among others the Funds’ investment adviser, who
provide services to the Funds. Shareholders are not parties to, or
intended (or “third party”) beneficiaries of, those contractual
arrangements.
The Prospectus and the SAI provide information
concerning the Funds that you should consider in determining whether to purchase
Shares of a Fund. The Funds may make changes to this information from time
to time. Neither this Prospectus nor the SAI is intended to give rise to
any contract rights or other rights in any shareholder, other than any rights
conferred explicitly by federal or state securities laws that may not be
waived.
Financial highlights
There is no financial highlights information for the Funds because they are
new funds and have no performance history as of the date of this
prospectus.
Additional information
Contact information
•
Website: [website]
•
[Service Center information] [(representatives are normally available
weekdays from 8:30am to 6:00pm ET)]
○
For fund information, literature, price, yield, and performance
figures.
•
Automated telephone service: [ ] (seven days a week, 24 hours a
day)
○
•
Written correspondence: [address] (by regular mail) or [address] (by
overnight courier service).
Additional information about the Funds' investments
will be available in their annual and semiannual shareholder reports. In the
Funds' annual shareholder report, you will find a discussion of the market
conditions and investment strategies that significantly affected the Funds'
performance during the period covered by the report. You can find more
information about the Funds in their current
SAI, which is filed electronically with
the SEC, and which is legally a part of this Prospectus (it is incorporated by
reference). To receive a free copy of the SAI, or the annual or semiannual
reports, or if you have any questions about investing in the Funds, write to us
at [address] by overnight courier service, or call toll-free [ ]. The SAI
and shareholder reports are available, free of charge, through the Funds'
website at [ ]. You may also obtain additional information about the Funds
from your financial advisor.
You can find reports and other
information about the Funds on the EDGAR database on the SEC website at sec.gov.
You may obtain copies of this information, after paying a duplication fee, by
emailing the SEC at
[email protected].
Investment Company Act number: 811-23890
48