SUBJECT
TO COMPLETION
DATED
DECEMBER 10, 2021
THE
INFORMATION HEREIN 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
JURISDICTION IN WHICH THE OFFER OR SALE IS NOT PERMITTED.
PSYK
ETF
(PSYK)
Listed
on NYSE
Arca, Inc.
PROSPECTUS
[
]
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
of these securities or passed upon the accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.
PSYK
ETF
TABLE
OF CONTENTS
FUND
SUMMARY
Investment
Objective
The
PSYK ETF (the “Fund”) seeks to track the performance, before fees and expenses,
of the Enhanced Consciousness Index (the “Index”).
Fees
and Expenses of the Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
|
|
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fees |
0.90% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses1 |
0.00% |
Total
Annual Fund Operating Expenses |
0.90% |
Less
Fee Waiver2 |
0.15% |
Total
Annual Fund Operating Expenses After Fee Wavier |
0.75% |
|
|
1
Estimated for the current fiscal year.
2
The
Fund’s investment adviser has agreed to waive 15 basis points (0.15%) of its
management fees for the Fund until at least [
] .
This agreement may only be terminated by, or with the consent of, the Fund’s
Board of Trustees.
Expense
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 redeem 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:
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 Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. Because the
Fund is newly organized, portfolio turnover information is not yet
available.
Principal
Investment Strategies
The
Fund uses a “passive management” (or indexing) approach to track the
performance, before fees and expenses, of the Index.
Enhanced
Consciousness Index
The
Index is a rules-based index that tracks the performance of a portfolio of
companies that have business activity in the fields of psychedelic treatment
used to address medical conditions in legal pharmacological applications under
the applicable country’s laws. Psychedelic drugs are a group of substances that
are used to change and enhance sensory perceptions, thought processes, and
energy levels. If fewer than 25 psychedelic treatment companies qualify for
inclusion in the Index, the Index will also include neurology biopharmaceuticals
companies. Neurology biopharmaceuticals refer to any pharmaceutical drug product
manufactured in, extracted from, or semi-synthesized from biological sources for
the treatment of disorders and diseases involving the central and peripheral
nervous systems. Neurology biopharmaceuticals companies may include companies
involved in the development of gene-based medicines for neurological diseases.
The Index uses a natural language processing algorithm to review publicly
available data to identify companies that have business activity in the fields
of psychedelic treatment (or neurology biopharmaceuticals, if applicable).
Construction
of the Index begins with the universe of equity securities and depositary
receipts (including depositary receipts of companies in developed or emerging
markets) that have a market capitalization of at least $50 million ($40 million
for companies already included in the Index) and meet certain liquidity
thresholds (collectively, the “Index Universe”). Companies that have their
primary listing in Australia, China, or Saudi Arabia are not eligible for
inclusion.
Companies
are selected for inclusion in the Index by Solactive AG (“Solactive”), using
ARTIS ®
,
Solactive’s proprietary natural language processing algorithm. ARTIS uses key
words to review large volumes of publicly available data, such as company annual
reports, published business descriptions, company publications, and financial
news reports, which Solactive believes will identify and classify companies as
having business activity in the fields of psychedelic treatment or neurology
biopharmaceuticals and then ranks the companies based on the number and quality
of key word “hits” in the company’s data. The ARTIS classification system
considers the frequency, relevance, and context of key words found in the
company’s data. The ARTIS classification system is different than traditional
classification systems because it utilizes natural language processing, such as
key word searching, whereas traditional classifications systems may utilize
backward looking metrics, such as a company’s past profits or revenue, to
determine the classification of a company. Solactive then reviews the rankings
provided by ARTIS for relevance and removes companies that were incorrectly
identified as psychedelic treatment companies (or neurology biopharmaceuticals,
if applicable).
At
the time of each reconstitution of the Index, the top ranked 25 psychedelic
treatment companies are added successively by their ranking and weighted based
on their market capitalization. If there are fewer than 25 psychedelic treatment
companies included in the Index after this process, neurology biopharmaceuticals
companies are added successively and weighted based on their market
capitalization until there is a minimum of 25 Index components. Index
constituents are weighted based on their market capitalization, subject to a
minimum weighting of 0.2% for all Index components and a maximum weighting of 7%
for psychedelic treatment companies and 4% for neurology biopharmaceuticals
companies. For companies that have a market capitalization greater than $100
billion, the maximum weighting of that company is 2.5%. Additionally, the
aggregate weight of companies with an individual weight greater than 5% is
capped at 45%, and any remaining companies are capped at 4.5%.
The
Index tracks companies that are involved in the development of regulated and
controlled pharmaceuticals and therapies, under the applicable country’s laws,
in the psychedelics and neurology biopharmaceuticals industries that could
potentially be used to confront specific illnesses that are not being fully
addressed with currently available treatments. To date, no psychedelic drug
product other than ketamine has received marketing approval on the basis of
safety and efficacy from the U.S. Food and Drug Administration (“FDA”) or Health
Canada (Canada’s governmental agency responsible for national health policy)
and, accordingly, may not be commercially marketed or sold. Companies with
business operations in these fields include companies that develop
pharmaceuticals and therapies using psychedelics or neurology biopharmaceuticals
for the potential treatment of medical conditions. Psychedelics, sometimes
referred to as hallucinogens, are substances that alter perception, mood, and
cognitive processes. Ketamine is a dissociative drug that is sometimes labeled a
psychedelic and may produce psychedelic effects. Ketamine-based products have
been approved by the FDA for certain therapeutics.
The
Index is reconstituted annually on the first Wednesday in March based on
information as of ten business days before the scheduled reconstitution date.
The Index is rebalanced quarterly on the first Wednesday in each March, June,
September, and December.
As
of November 15, 2021, the Index was composed of 25 constituents, 18 of which
were classified by Solactive as psychedelic treatment companies and seven of
which were classified by Solactive as neurology biopharmaceuticals companies.
The Index was developed in 2021 and is owned by Elemental Advisors LLC (the
“Index Provider”). The Index is administered and calculated by Solactive, the
Index calculation agent. The Index Provider is independent of Solactive, the
Fund, and the Fund’s investment adviser.
The
Fund’s Investment Strategy
The
Fund will not invest directly in or hold ownership in any companies that engage
in psychedelics-related business unless permitted by national and local laws of
the relevant jurisdiction, including U.S. federal and state laws. Accordingly,
the Fund does not currently invest (directly or indirectly) in companies located
in the United States if their psychedelics-related business activities are
illegal under U.S. federal law, even if such activities are legal under state
law.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning the Fund will generally invest in all of the component
securities of the Index in the same approximate proportions as in the
Index. However, the Fund may use a “representative sampling” strategy, meaning
it may invest in a sample of the securities in the Index whose risk, return, and
other characteristics closely resemble the risk, return, and other
characteristics of the Index as a whole, when the Fund’s adviser believes it is
in the best interests of the Fund (e.g.,
when replicating the Index involves practical difficulties or substantial costs,
an Index constituent becomes temporarily illiquid, unavailable, or less liquid,
or as a result of legal restrictions or limitations that apply to the Fund but
not to the Index).
To
the extent the Index concentrates (i.e.,
holds more than 25% of its total assets) in the securities of a particular
industry or group of related industries, the Fund will concentrate its
investments to approximately the same extent as the Index.
The
Fund expects to invest a significant portion of its assets in small- and mid-cap
companies. The Fund is considered to be non-diversified, which means that it may
invest more of its assets in the securities of a single issuer or a smaller
number of issuers than if it were a diversified fund.
Principal
Investment Risks
The
principal risks of investing in the Fund are summarized below. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears. As with any investment, there is a
risk that you could lose all or a portion of your investment in the Fund. Some
or all of these risks may adversely affect the Fund’s net asset value per share
(“NAV”), trading price, yield, total return and/or ability to meet its
objectives. For more information about the risks of investing in the Fund, see
the section in the Fund’s Prospectus titled “Additional Information About the
Fund.”
•A
ssociated
Risks of Psychedelic Treatment Companies. In
Canada, certain psychedelic drugs, including psilocybin, are classified as
Schedule III drugs under the Controlled Drugs and Substances Act (“CDSA”) and as
such, medical and recreational use is illegal under Canadian federal law. In the
United States, most psychedelic drugs, including psilocybin, are classified as
Schedule I drugs under the Controlled Substances Act (“CSA”) (21 U.S.C. § 811)
and as such, medical and recreational use is illegal. There is no guarantee that
psychedelic drugs or psychedelic inspired drugs will ever be approved for a
therapeutic or medicinal use in either jurisdiction.
In
the United States, the U.S. Drug Enforcement Administration (“DEA”) scheduling
determinations for removing a substance from Schedule I are dependent on FDA
approval of a substance or a specific formulation of a substance for therapeutic
or medicinal use. Unless and until psilocybin, psilocin, or other
psychedelics-based products receive FDA approval, such products are prohibited
from sale, which limits the growth opportunities for certain companies held by
the Fund. Even if approved by the FDA, the manufacture, importation,
exportation, domestic distribution, storage, sale, and legitimate use of such
products will continue to be subject to a significant degree of regulation by
the DEA. There can be no guarantees that such approvals or administrative
actions will happen or be favorable for psychedelics companies. Such actions may
be subject to lengthy delays and may require lengthy and expensive clinical
trials. Additionally, therapies containing controlled substances may generate
public controversy and carry reputational risk. Political and social pressures
and adverse publicity could lead to delays in approval of, and increased
expenses for, psychedelics companies and any future therapeutic candidates they
may develop. All of these factors and others may prevent psychedelics companies
from becoming profitable, which may materially affect the value of certain Fund
investments. In addition, psychedelics companies are subject to the risks
associated with the pharmaceutical industry.
•
Neurology
Biopharmaceuticals Company Risk. The
neurology biopharmaceuticals industry includes companies from each of the
biotechnology, pharmaceutical, and life sciences industries. Such companies are
engaged in the research and development of a variety of products and services
including, but not limited to, products and services for use in internal
medicine, vaccines, oncology, immunology, rare diseases, and consumer
healthcare. Neurology biopharmaceutical companies may also engage in product
research and development related to genomics, gene therapy, or gene editing.
Genomics generally refers to the use of genomic information in the provision of
medical care. Set forth below are specific risk considerations with respect to
each of the biotechnology, life sciences, and pharmaceutical industries, which
includes those companies that could benefit from long-term growth and innovation
in genomics, immunology, and bioengineering. Such risks collectively represent
the risks applicable to the neurology biopharmaceuticals industry. Securities
representing the companies in the neurology biopharmaceuticals industry may be
highly volatile for the reasons discussed below.
◦
Biotechnology
Industry Risk. Companies
in the biotechnology industry, as traditionally defined, spend heavily on
research and development, and their products or services may not prove
commercially successful or may become obsolete quickly. The biotechnology
industry is subject to a significant amount of governmental regulation, and
changes in governmental policies and the need for regulatory approvals may have
a material adverse effect on this industry. Companies in the biotechnology
industry are subject to risks of new technologies and competitive pressures and
are heavily dependent on patents and intellectual property rights. The loss or
impairment of these rights may adversely affect the profitability of these
companies.
◦
Pharmaceuticals
Industry Risk. Companies
in the pharmaceuticals industry are subject to competitive forces that may make
it difficult to raise prices and, in fact, may result in price discounting. The
profitability of some companies in the pharmaceuticals industry may be dependent
on a relatively limited number of products. In addition, their products can
become obsolete due to industry innovation, changes in technologies, or other
market developments. Many new products in the pharmaceuticals industry are
subject to government approvals, regulation, and reimbursement rates. The
process of obtaining government approvals may be long and costly. Many companies
in the pharmaceuticals industry are heavily dependent on patents and
intellectual property rights. The loss or impairment of these rights may
adversely affect the profitability of these companies.
◦
Life
Sciences Industry Risk. The
life sciences industry is comprised primarily of companies enabling drug
discovery, development, and production by providing analytical tools,
instruments, consumables and supplies, clinical trial services and contract
research services. Companies in the life sciences industry primarily service the
pharmaceutical and biotechnology industries. The life sciences industry is
heavily influenced by technology, government funding, government regulation,
efforts by governments, healthcare providers’ and health plans’ efforts to
reduce costs, changing consumer demographics, and intellectual property rights,
among other factors. Regulations may restrict a company’s ability to pursue or
use potentially
profitable
research. The products and services of life sciences companies may experience
rapid obsolescence due to a number of factors, including technological advances,
supply chain issues, or the expiration of their patents.
•Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, or sectors in which the Fund invests. Common
stocks are generally exposed to greater risk than other types of securities,
such as preferred stock and debt obligations, because common stockholders
generally have inferior rights to receive payment from issuers. In addition,
local, regional or global events such as war, acts of terrorism, spread of
infectious diseases or other public health issues, recessions, or other events
could have a significant negative impact on the Fund and its investments. For
example, the global pandemic caused by COVID-19, a novel coronavirus, and the
aggressive responses taken by many governments, including closing borders,
restricting international and domestic travel, and the imposition of prolonged
quarantines or similar restrictions, has had negative impacts, and in many cases
severe impacts, on markets worldwide. The COVID-19 pandemic has caused prolonged
disruptions to the normal business operations of companies around the world and
the impact of such disruptions is hard to predict. Such events may affect
certain geographic regions, countries, sectors and industries more significantly
than others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•
Index
Methodology Risk. The
Index may not include all psychedelic treatment or neurology biopharmaceuticals
companies around the globe because the Index includes only those companies in
the Index Universe. In addition, ARTIS may not identify companies that would
otherwise have been included in the Index if the publicly available data for
those companies had used the key words analyzed by the algorithm. ARTIS has a
limited ability to recognize key words in context of relevant business exposure
to psychedelic treatment and neurology biopharmaceuticals, and the frequency of
key words is not necessarily indicative of relevancy. The Index’s use of natural
language processing may result in the Index including companies that discuss
psychedelics or neurology biopharmaceuticals in publicly available data but do
not have business activity in the fields of psychedelic treatment or neurology
biopharmaceuticals used to address medical conditions. In addition, ARTIS may
identify companies for inclusion in the Index that may derive only a small
portion of revenue or profits from the development and use of psychedelics or
neurology biopharmaceuticals to address medical conditions.
•
ADR
Risk. ADRs
involve risks similar to those associated with investments in foreign
securities. ADRs listed on U.S. exchanges are issued by banks or trust
companies, and entitle the holder to all dividends and capital gains that are
paid out on the underlying foreign shares. Investments in ADRs that provide
exposure to non-U.S. securities involve certain risks that may not be present
with investments in U.S. securities. For example, the value of non-U.S.
securities may be subject to risk of decline due to foreign currency
fluctuations or to political or economic instability. Investments in ADRs also
may be subject to withholding or other taxes and may be indirectly subject to
additional trading, settlement, custodial, and operational risks. These and
other factors can make investments in the Fund more volatile and potentially
less liquid than other types of investments.
•
Currency
Exchange Rate Risk. The
underlying foreign shares of ADRs in which the Fund invests may be denominated
in non-U.S. currencies. Changes in currency exchange rates and the relative
value of non-U.S. currencies may affect the value of the ADRs and the value of
your Shares. Currency exchange rates can be very volatile and can change quickly
and unpredictably. As a result, the value of an investment in the Fund may
change quickly and without warning and you may lose money.
•ETF
Risks. 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. The
Fund has a limited number of financial institutions that may act as Authorized
Participants (“APs”). In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, Shares may trade at a material discount to 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.
◦Costs
of Buying or Selling Shares.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid-ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Shares 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, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant.
◦Trading. Although
Shares are listed for trading on NYSE Arca, Inc. (the “Exchange”) and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
Shares will trade with any volume, or at all, on any stock exchange.
In
stressed market conditions, the liquidity of Shares may begin to mirror the
liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than Shares, and this could lead to differences
between the market price of the Shares and the underlying value of those Shares.
•
Foreign
Securities Risk. Investments
in non-U.S. securities through ADRs involve certain risks that may not be
present with investments in U.S. securities. For example, investments in
non-U.S. securities may be subject to risk of loss due to foreign currency
fluctuations or to political or economic instability. Investments in non-U.S.
securities also may be subject to withholding or other taxes and may be subject
to additional trading, settlement, custodial, and operational risks. These and
other factors can make investments in the Fund more volatile and potentially
less liquid than other types of investments.
•Index
Provider Risk. There
is no assurance that the Index Provider, or any agents that act on its behalf,
will compile the Index accurately, or that the Index will be determined,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. The Adviser relies upon the Index Provider and its agents to
compile, determine, construct, reconstitute, rebalance, compose, calculate (or
arrange for an agent to calculate), and disseminate the Index accurately. Any
losses or costs associated with errors made by the Index Provider or its agents
generally will be borne by the Fund and its shareholders.
•Market
Capitalization Risk. The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid- and small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some mid- and small-capitalization companies have limited
product lines, markets, financial resources, and management personnel and tend
to concentrate on fewer geographical markets relative to large-capitalization
companies. There is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and earnings.
•New
Fund Risk. The
Fund is a recently organized investment company with no operating history. As a
result, prospective investors have no track record or history on which to base
their investment decision.
•
Non-Diversification
Risk. The
Fund is considered to be non-diversified, which means that it may invest more of
its assets in the securities of a single issuer or a smaller number of issuers
than if it were a diversified fund. As a result, the Fund may be more exposed to
the risks associated with and developments affecting an individual issuer or a
smaller number of issuers than a fund that invests more widely. This may
increase the Fund’s volatility and cause the performance of a relatively smaller
number of issuers to have a greater impact on the Fund’s performance. However,
the Fund intends to satisfy the diversification requirements for qualifying as a
regulated investment company (a “RIC”) under Subchapter M of the Internal
Revenue Code of 1986, as amended (the “Code”).
•Passive
Investment Risk.
The Fund is not actively managed, and its Adviser would not sell shares of an
equity security due to current or projected underperformance of a security,
industry, or sector, unless that security is removed from the Index, the selling
of shares of that security is otherwise required upon a reconstitution or
rebalancing of the Index in accordance with the Index methodology.
•Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors. The Fund may invest a significant portion of its assets in
the following sectors and, therefore, the performance of the Fund could be
negatively impacted by events affecting each of these sectors.
•Tax
Risk.
To qualify for the favorable tax treatment generally available to regulated
investment companies, the Fund must satisfy certain diversification
requirements. In particular, the Fund generally may not acquire a security if,
as a result of the acquisition, more than 50% of the value of the Fund’s assets
would be invested in (a) issuers in which the Fund has, in each case, invested
more than 5% of the Fund’s assets or (b) issuers more than 10% of whose
outstanding voting securities are owned by the Fund. Given the concentration of
the Index in a relatively small number of securities, it may not always be
possible for the Fund to fully implement a replication strategy or a
representative sampling strategy while satisfying these diversification
requirements. The Fund’s efforts to satisfy the diversification requirements may
affect the Fund’s execution of its investment strategy and may cause the Fund’s
return to deviate from that of the Index, and the Fund’s efforts to replicate or
represent the Index may cause it inadvertently to fail to satisfy the
diversification requirements. If the Fund were to fail to satisfy the
diversification requirements, it could incur penalty taxes and be forced to
dispose of certain assets, or it could fail to qualify as a regulated investment
company. If the Fund were to fail to qualify as a regulated investment company,
it would be taxed in the same manner as an ordinary corporation, and
distributions to its shareholders would not be deductible by the Fund in
computing its taxable income.
•Tracking
Error Risk. As
with all index funds, the performance of the Fund and the Index may differ from
each other for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by the Index. In addition,
the Fund may not be fully invested in the securities of the Index at all times
or may hold securities not included in the Index.
Performance
Performance
information for the Fund is not included because the Fund had not yet commenced
operations as of the date of this Prospectus. In the future, performance
information for the Fund will be presented in this section. Updated performance
information is available on the Fund’s website at www.psyk-etf.com.
Management
|
|
|
|
|
|
Investment
Adviser: |
Exchange
Traded Concepts, LLC (the “Adviser”) serves as the Fund’s investment
adviser. |
Portfolio
Managers: |
Andrew
Serowik, Todd Alberico, and Gabriel Tan, each a Portfolio Manager of the
Adviser, have been portfolio managers of the Fund since its inception in [
] 2022. |
Purchase
and Sale of Shares
Shares
are listed on the Exchange, and individual Shares may only be bought and sold in
the secondary market through brokers at market prices, rather than NAV. Because
Shares trade at market prices rather than NAV, Shares may trade at a price
greater than NAV (premium) or less than NAV (discount).
The
Fund issues and redeems Shares at NAV only in large blocks known as “Creation
Units,” which only APs (typically, broker-dealers) may purchase or redeem. The
Fund generally issues and redeems Creation Units in exchange for a portfolio of
securities and/or a designated amount of U.S. cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its NAV, market price, premiums and discounts, and bid-ask spreads is
available on the Fund’s website at www.psyk-etf.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Financial
Intermediary Compensation
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
ADDITIONAL
INFORMATION ABOUT THE FUND
Additional
Information about the Fund’s Investment Objective. The
Fund’s investment objective has been adopted as a non-fundamental investment
policy and may be changed without shareholder approval upon written notice to
shareholders.
Additional
Information about the Index. The
Index is owned and developed by
Elemental
Advisors LLC (the “Index Provider”). The Index is calculated and administered by
Solactive, an independent third-party that is not affiliated with the Fund, the
Adviser, the Index Provider, the Fund’s distributor, or any of their respective
affiliates. Solactive provides information to the Fund about the Index
constituents and does not provide investment advice with respect to the
desirability of investing in, purchasing, or selling securities.
The
Index Provider is not affiliated with ETF Series Solutions (the “Trust”), the
Adviser, the Fund’s administrator, custodian, transfer agent or the Distributor
(defined below), or any of their respective affiliates. The Index Provider
provides information to the Fund about the constituents of the Index and does
not make investment decisions, provide investment advice, or otherwise act in
the capacity of an investment adviser to the Fund. The Adviser has entered into
a licensing agreement with the Index Provider pursuant to which the Adviser pays
a fee to use the Index. The Adviser is sub-licensing rights to the Index to the
Fund at no charge. As part of the arrangement between the Adviser and the Index
Provider, the Index Provider has agreed to pay all expenses of the Fund (except
the Excluded Expenses (defined below)) and, to the extent applicable, pay the
Adviser’s minimum fee under the arrangement. In addition, the Index Provider
assists with the development of the Fund and provides marketing support for the
Fund, including distributing marketing materials related to the Fund.
At
each annual reconstitution, companies are added to the Index as
follows:
•
Companies
in the Index Universe are analyzed by ARTIS and are ranked based on the number
and quality of key word “hits” in the company’s data. Solactive reviews the
rankings determined by ARTIS for a company’s relevance to psychedelic companies
(or neurology biopharmaceuticals companies);
•All
ten of the highest ranked psychedelic treatment companies are selected as Index
components (regardless of whether they are currently included in the
Index);
•Current
Index components that are psychedelic treatment companies with a rank from 11 to
45 are added to the Index until the total number of companies in the Index
reaches a maximum 35; and
•If
the total number of Index components is still below 35 after the previous steps,
the highest ranked psychedelic treatment companies are added to the Index,
subject to the maximum of 35 Index components.
If
there are fewer than 25 psychedelic treatment companies included in the Index
after this process, neurology biopharmaceuticals companies are added
successively by market capitalization in descending order until there is a
minimum of 25 Index components.
The
Index Provider may make adjustments to the constituents or their weights in the
Index in between scheduled reconstitutions of the Index if a corporate action in
relation to an Index component occurs. The Index is not rebalanced
extraordinarily.
Additional
Information about the Fund’s Principal Risks. This
section provides additional information regarding the principal risks described
in the Fund Summary. Each risk described below is considered a “principal risk”
of investing in the Fund, regardless of the order in which it appears. Each of
the factors below could have a negative impact on the Fund’s performance and
trading prices.
•Associated
Risks of Psychedelic Treatment Companies. In
Canada, certain psychedelic drugs, including psilocybin, are classified as
Schedule III drugs under the CDSA and as such, medical and recreational use is
illegal under Canadian federal law. In the United States, most psychedelic
drugs, including psilocybin, are classified as Schedule I drugs under the CSA
and, as such, medical and recreational use is illegal under the U.S. federal
law. There is no guarantee that psychedelic drugs or psychedelic inspired drugs
will ever be approved for a therapeutic or medicinal use in either jurisdiction.
In
the United States, to the extent a company is conducting research with such
psychedelic-based products, the company would need to comply with applicable
federal law and the FDA’s regulations thereunder regarding research, would need
to be DEA registered, would need to comply with applicable federal law and the
DEA’s regulations thereunder, and would need to comply with any applicable state
laws and regulations. Scheduling determinations by the DEA are dependent on FDA
approval of a substance or a specific formulation of a substance for a
therapeutic or medicinal use. Unless and until psilocybin, psilocin, or other
psychedelic-based products receive FDA approval, such products are prohibited
from sale, which limits the growth opportunities for certain companies held by
the Fund. Even if approved by the FDA, the manufacture, importation,
exportation, domestic distribution, storage, sale, and legitimate use of such
products will continue to be subject to a significant degree of regulation by
the DEA, FDA, and other governmental authorities. There can be no guarantees
that such approvals or administrative actions will happen or be favorable for
psychedelics companies. Such actions may be subject to lengthy delays and may
require lengthy and expensive clinical trials. Additionally, therapies
containing controlled substances may generate public controversy and carry
reputational risk. Political and social pressures and adverse publicity could
lead to delays in approval of, and increased expenses for, psychedelics
companies and any future therapeutic candidates they may develop. All of these
factors and others may prevent psychedelics companies from becoming profitable,
which may materially affect the value of certain Fund investments. In addition,
psychedelics companies are subject to the risks associated with the
pharmaceutical industry.
•
Neurology
Biopharmaceuticals Company Risk. The
neurology biopharmaceuticals industry includes companies from each of the
biotechnology, pharmaceutical, and life sciences industries. Such companies are
engaged in the research and development of a variety of products and services
including, but not limited to, products and services for use in internal
medicine, vaccines, oncology, immunology, rare diseases, and consumer
healthcare. Neurology biopharmaceutical companies may also engage in product
research and development related to genomics, gene therapy, or gene editing.
Genomics generally refers to the use of genomic information in the provision of
medical care. Set forth below are specific risk considerations with respect to
each of the biotechnology, life sciences, and pharmaceutical industries, which
includes those companies that could benefit from long-term growth and innovation
in genomics, immunology, and bioengineering. Such risks collectively represent
the risks applicable to the neurology biopharmaceuticals industry. Securities
representing the companies in the neurology biopharmaceuticals industry may be
highly volatile for the reasons discussed below.
◦
Biotechnology
Industry Risk. Companies
in the biotechnology industry, as traditionally defined, spend heavily on
research and development, and their products or services may not prove
commercially successful or may become obsolete quickly. The biotechnology
industry is subject to a significant amount of governmental regulation, and
changes in governmental policies and the need for regulatory approvals may have
a material adverse effect on this industry. Companies in the biotechnology
industry are subject to risks of new technologies and competitive pressures and
are heavily dependent on patents and intellectual property rights. The loss or
impairment of these rights may adversely affect the profitability of these
companies.
◦
Pharmaceuticals
Industry Risk. Companies
in the pharmaceuticals industry are subject to competitive forces that may make
it difficult to raise prices and, in fact, may result in price discounting. The
profitability of some companies in the pharmaceuticals industry may be dependent
on a relatively limited number of products. In addition, their products can
become obsolete due to industry innovation, changes in technologies or other
market developments. Many new products in the pharmaceuticals industry are
subject to government approvals, regulation and reimbursement rates. The process
of obtaining government approvals may be long and costly. Many companies in the
pharmaceuticals industry are heavily dependent on patents and intellectual
property rights. The loss or impairment of these rights may adversely affect the
profitability of these companies. Companies in the pharmaceutical industry may
be subject to extensive litigation based on product liability and similar
claims. Pharmaceutical companies may also be dependent on one or more
wholesalers for product distribution. If a significant pharmaceutical wholesaler
should encounter financial or other difficulties, a pharmaceutical company might
be unable to collect all or any of the amounts that the wholesaler owes such
company. In addition, consolidation and integration of pharmacy chains and
wholesalers may increase competitive and pricing pressures on pharmaceutical
companies.
◦
Life
Sciences Industry Risk. The
life sciences industry is comprised primarily of companies enabling drug
discovery, development, and production by providing analytical tools,
instruments, consumables and supplies, clinical trial services, and contract
research services. Companies in the life sciences industry primarily service the
pharmaceutical and biotechnology industries. The life sciences industry is
heavily influenced by technology, government funding, government regulation,
efforts by governments, healthcare providers’ and health plans’ efforts to
reduce costs, changing consumer demographics, and intellectual property rights,
among other factors. Regulations may restrict a company’s ability to pursue or
use potentially profitable research. The products and services of life sciences
companies may experience rapid obsolescence due to a number of factors,
including technological advances, supply chain issues, or the expiration of
their patents. The life sciences industry is highly competitive, and companies
in the life sciences industry often invest in new and uncertain innovations. The
success of such companies may depend upon a relatively small number of products
or services with long development cycles and large capital requirements that
have a high chance of failure. In addition, changes in patent protection,
government approvals, regulations or funding, patent infringement, or medical
litigation may adversely affect the value of such companies.
•Equity
Market Risk.
Common stocks are susceptible to general stock market fluctuations and to
volatile increases and decreases in value as market confidence in and
perceptions of their issuers change. These investor perceptions are based on
various and unpredictable factors including: expectations regarding government,
economic, monetary and fiscal policies; inflation and interest rates; economic
expansion or contraction; and global or regional political, economic, public
health, and banking crises. If you held common stock, or common stock
equivalents, of any given issuer, you would generally be exposed to greater risk
than if you held preferred stocks and debt obligations of the issuer because
common stockholders, or holders of equivalent interests, generally have inferior
rights to receive payments from issuers in comparison with the rights of
preferred stockholders, bondholders, and other creditors of such
issuers.
Beginning
in the first quarter of 2020, financial markets in the United States and around
the world experienced extreme and, in many cases, unprecedented volatility and
severe losses due to the global pandemic caused by COVID-19, a novel
coronavirus. The pandemic has resulted in a wide range of social and economic
disruptions, including closed borders, voluntary or compelled quarantines of
large populations, stressed healthcare systems, reduced or prohibited domestic
or international travel, and supply chain disruptions affecting the United
States and many other countries. Some sectors of the economy and individual
issuers have experienced particularly large losses as a result of these
disruptions, and such disruptions may continue for an extended period of time or
reoccur in the future to a similar or greater extent. In response, the U.S.
government and the Federal Reserve have taken
extraordinary
actions to support the domestic economy and financial markets, resulting in very
low interest rates and in some cases negative yields. It is unknown how long
circumstances related to the pandemic will persist, whether they will reoccur in
the future, whether efforts to support the economy and financial markets will be
successful, and what additional implications may follow from the pandemic. The
impact of these events and other epidemics or pandemics in the future could
adversely affect Fund performance.
•
Index
Methodology Risk. The
Index may not include all psychedelic treatment or neurology biopharmaceuticals
companies around the globe because the Index includes only those companies in
the Index Universe. In addition, ARTIS may not identify companies that would
otherwise have been included in the Index if the publicly available data for
those companies had used the key words analyzed by the algorithm. ARTIS has a
limited ability to recognize key words in context of relevant business exposure
to psychedelic treatment and neurology biopharmaceuticals, and the frequency of
key words is not necessarily indicative of relevancy. The Index’s use of natural
language processing may result in the Index including companies that discuss
psychedelics or neurology biopharmaceuticals in publicly available data but do
not have business activity in the fields of psychedelic treatment used to
address medical conditions or neurology biopharmaceuticals. In addition, ARTIS
may identify companies for inclusion in the Index that may derive only a small
portion of revenue or profits from the development and use of psychedelics to
address medical conditions.
The
Index relies on various sources of information to assess the companies included
in the Index, including information that may be based on assumptions or
estimates. There is no assurance that the calculation methodology or sources of
information will provide an accurate assessment of the Index’s companies or that
the Index will identify all psychedelic treatment companies or neurology
biopharmaceuticals companies. Errors in Index data, Index computations or the
construction of the Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Index Provider for a
period of time or at all, which may have an adverse impact on the Fund and its
shareholders.
•
ADR
Risk. The
Fund may hold the securities of non-U.S. companies in the form of ADRs. ADRs are
negotiable certificates issued by a U.S. financial institution that represent a
specified number of shares in a foreign stock and trade on a U.S. national
securities exchange, such as the New York Stock Exchange. Sponsored ADRs are
issued with the support of the issuer of the foreign stock underlying the ADRs
and carry all of the rights of common shares, including voting rights. The
underlying securities of the ADRs in the Fund’s portfolio are usually
denominated or quoted in currencies other than the U.S. Dollar. As a result,
changes in foreign currency exchange rates may affect the value of the Fund’s
portfolio. In addition, because the underlying securities of ADRs trade on
foreign exchanges at times when the U.S. markets are not open for trading, the
value of the securities underlying the ADRs may change materially at times when
the U.S. markets are not open for trading, regardless of whether there is an
active U.S. market for shares. Investments in non-U.S. companies may be subject
to risk of loss due to foreign currency fluctuations or to political or economic
instability. There may be less information publicly available about a non-U.S.
issuer than a U.S. issuer. Securities of non-U.S. companies may be subject to
different accounting, auditing, financial reporting and investor protection
standards than those of U.S. companies. Investments tied to non-U.S. companies
may be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. Because legal systems
differ, there is also the possibility that it will be difficult to obtain or
enforce legal judgments in certain countries.
•
Currency
Exchange Rate Risk. Changes
in currency exchange rates and the relative value of non-U.S. currencies will
affect the value of the Fund’s investments in ADRs and the value of your Shares.
Because the Fund’s NAV is determined on the basis of U.S. dollars, the U.S.
dollar value of your investment in the Fund may go down if the value of the
local currency of the non-U.S. markets in which the Fund invests through ADRs
depreciates against the U.S. dollar. This is true even if the local currency
value of securities in an ADR held by the Fund goes up. Conversely, the dollar
value of your investment in the Fund may go up if the value of the local
currency appreciates against the U.S. dollar. The value of the U.S. dollar
measured against other currencies is influenced by a variety of factors. These
factors include: national debt levels and trade deficits, changes in balances of
payments and trade, domestic and foreign interest and inflation rates, global or
regional political, economic or financial events, monetary policies of
governments, actual or potential government intervention, and global energy
prices. Political instability, the possibility of government intervention and
restrictive or opaque business and investment policies may also reduce the value
of a country’s currency. Government monetary policies and the buying or selling
of currency by a country’s government may also influence exchange rates.
Currency exchange rates can be very volatile and can change quickly and
unpredictably. As a result, the value of an investment in the Fund may change
quickly and without warning, and you may lose money.
•ETF
Risks. The
Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
◦APs,
Market Makers, and Liquidity Providers Concentration Risk.
The Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares may trade at a material discount to 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.
◦Costs
of Buying or Selling Shares.
Investors buying or selling Shares in the secondary market will pay brokerage
commissions or other charges imposed by brokers, as determined by that broker.
Brokerage commissions are often a fixed amount and may be a significant
proportional cost for investors seeking to buy or sell relatively small amounts
of Shares. In addition, secondary market investors will also incur the cost of
the difference between the price at which an investor is willing to buy Shares
(the “bid” price) and the price at which an investor is willing to sell Shares
(the “ask” price). This difference in bid and ask prices is often referred to as
the “spread” or “bid-ask spread.” The bid-ask spread varies over time for Shares
based on trading volume and market liquidity, and the spread is generally lower
if Shares have more trading volume and market liquidity and higher if Shares
have little trading volume and market liquidity. Further, a relatively small
investor base in the Fund, asset swings in the Fund, and/or increased market
volatility may cause increased bid-ask spreads. Due to the costs of buying or
selling Shares, including bid-ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV.
As with all ETFs, Shares 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, periods of
steep market declines, and periods when there is limited trading activity for
Shares in the secondary market, in which case such premiums or discounts may be
significant.
◦Trading.
Although 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 such Shares will develop or be
maintained. Trading in Shares may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
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 when a decline in the
S&P 500®
Index during a single day reaches certain thresholds (e.g.,
7%, 13%, and 20%). 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. In stressed market conditions, the
liquidity of Shares may begin to mirror the liquidity of the Fund’s underlying
portfolio holdings, which can be significantly less liquid than Shares, and this
could lead to differences between the market price of the Shares and the
underlying value of those Shares.
•
Foreign
Securities Risk. Investments
in non-U.S. securities through ADRs involve certain risks that may not be
present with investments in U.S. securities. For example, investments in
non-U.S. securities may be subject to risk of loss due to foreign currency
fluctuations or to political or economic instability. There may be less
information publicly available about a non-U.S. issuer than a U.S. issuer.
Non-U.S. issuers may be subject to different accounting, auditing, financial
reporting and investor protection standards than U.S. issuers. Investments in
non-U.S. securities may be subject to withholding or other taxes and may be
subject to additional trading, settlement, custodial, and operational risks.
With respect to certain countries, there is the possibility of government
intervention and expropriation or nationalization of assets. Because legal
systems differ, there is also the possibility that it will be difficult to
obtain or enforce legal judgments in certain countries. Since foreign exchanges
may be open on days when the Fund does not price its Shares, the value of the
securities in the Fund’s portfolio may change on days when shareholders will not
be able to purchase or sell the Shares. Conversely, Shares may trade on days
when foreign exchanges are closed. Each of these factors can make investments in
the Fund more volatile and potentially less liquid than other types of
investments.
•Index
Provider Risk. There
is no assurance that the Index Provider, or any agents that act on its behalf,
will compile the Index accurately, or that the Index will be determined,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. The Adviser relies upon the Index Provider and its agents to
compile, determine, construct, reconstitute, rebalance, compose, calculate (or
arrange for an agent to calculate), and disseminate the Index accurately. Any
losses or costs associated with errors made by the Index Provider or its agents
generally will be borne by the Fund and its shareholders. To correct any such
error, the Index Provider or its agents may carry out an unscheduled rebalance
of the Index or other modification of Index constituents or weightings. When the
Fund in turn rebalances its portfolio, any transaction costs and market exposure
arising from such portfolio rebalancing will be borne by the Fund and its
shareholders. Unscheduled rebalances also expose the Fund to additional tracking
error risk. Errors in respect of the quality, accuracy, and completeness of the
data used to compile the Index may occur from time to time and may not be
identified and corrected by the Index Provider for a period of time or at all,
particularly where the Index is less commonly used as a benchmark by funds or
advisors. For example, during a period where the Index contains incorrect
constituents, the Fund tracking the Index would have market exposure to such
constituents and would be underexposed to the Index’s other constituents. Such
errors may negatively impact the Fund and its shareholders. The Index Provider
and its agents rely on various sources of information to assess the criteria of
issuers included in the Index, including information that may be based on
assumptions and estimates. Neither the Fund nor the Adviser can offer assurances
that the Index’s calculation methodology or sources of information will provide
an accurate assessment of included issuers.
•Market
Capitalization Risk.
◦Mid-Capitalization
Investing. The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies, but they may also be subject to slower growth
than small-capitalization companies during times of economic expansion. The
securities of mid-capitalization companies generally trade in lower volumes and
are subject to greater and more unpredictable price changes than large
capitalization stocks or the stock market as a whole, but they may also be
nimbler and more responsive to new challenges than large-capitalization
companies. Some mid-capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization
companies.
◦Small-Capitalization
Investing. The
securities of small-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
larger-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some small capitalization companies have limited product
lines, markets, and financial and managerial resources and tend to concentrate
on fewer geographical markets relative to larger capitalization companies. There
is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and earnings.
•New
Fund Risk. The
Fund is a recently organized investment company with no operating history. As a
result, prospective investors have no track record or history on which to base
their investment decision.
•
Non-Diversification
Risk. The
Fund is considered to be non-diversified, which means that it may invest more of
its assets in the securities of a single issuer or a smaller number of issuers
than if it were a diversified fund. As a result, the Fund may be more exposed to
the risks associated with and developments affecting an individual issuer or a
smaller number of issuers than a fund that invests more widely. This may
increase the Fund’s volatility and cause the performance of a relatively smaller
number of issuers to have a greater impact on the Fund’s performance. However,
the Fund intends to satisfy the diversification requirements for qualifying as a
regulated investment company (a “RIC”) under Subchapter M of the Internal
Revenue Code of 1986, as amended (the “Code”).
•Passive
Investment Risk.
The Fund invests in the securities included in, or representative of, the Index
regardless of their investment merit. The Fund does not attempt to outperform
the Index or take defensive positions in declining markets. As a result, the
Fund’s performance may be adversely affected by a general decline in the market
segments relating to the Index. The returns from the types of securities in
which the Fund invests may underperform returns from the various general
securities markets or different asset classes. This may cause the Fund to
underperform other investment vehicles that invest in different asset classes.
Different types of securities (for example, large-, mid- and
small-capitalization stocks) tend to go through cycles of doing better – or
worse – than the general securities markets. In the past, these periods have
lasted for as long as several years.
•Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors. The Fund may invest a significant portion of its assets in
the following sectors and, therefore, the performance of the Fund could be
negatively impacted by events affecting each of these sectors.
•Tax
Risk.
To qualify for the favorable tax treatment generally available to regulated
investment companies, the Fund must satisfy certain diversification
requirements. In particular, the Fund generally may not acquire a security if,
as a result of the acquisition, more than 50% of the value of the Fund’s assets
would be invested in (a) issuers in which the Fund has, in each case, invested
more than 5% of the Fund’s assets or (b) issuers more than 10% of whose
outstanding voting securities are owned by the Fund. Given the concentration of
the Index in a relatively small number of securities, it may not always be
possible for the Fund to fully implement a replication strategy or a
representative sampling strategy while satisfying these diversification
requirements. The Fund’s efforts to satisfy the diversification requirements may
affect the Fund’s execution of its investment strategy and may cause the Fund’s
return to deviate from that of the Index, and the Fund’s efforts to replicate or
represent the Index may cause it inadvertently to fail to satisfy the
diversification requirements. If the Fund were to fail to satisfy the
diversification requirements, it could incur penalty taxes and be forced to
dispose of certain assets, or it could fail to qualify as a regulated investment
company. If the Fund were to fail to qualify as a regulated investment company,
it would be taxed in the same manner as an ordinary corporation, and
distributions to its shareholders would not be deductible by the Fund in
computing its taxable income.
•Tracking
Error Risk.
As with all index funds, the performance of the Fund and the Index may vary
somewhat for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by the Index. In addition,
the Fund may not be fully invested in the securities of the Index at all times
or may hold securities not included in the Index. The Fund may use a
representative sampling strategy to achieve its investment objective, if the
Fund’s Adviser believes it is in the best interest of the Fund, which generally
can be expected to produce a greater non-correlation risk.
PORTFOLIO
HOLDINGS INFORMATION
Information
about the Fund’s daily portfolio holdings is available at www.psyk-etf.com. A
complete description of the Fund’s policies and procedures with respect to the
disclosure of the Fund’s portfolio holdings is available in the Fund’s Statement
of Additional Information (“SAI”).
MANAGEMENT
Investment
Adviser
Exchange
Traded Concepts, LLC, serves as the investment adviser and has overall
responsibility for the general management and administration of the Fund. The
Adviser also arranges for transfer agency, custody, fund administration, and all
other non-distribution related services necessary for the Fund to operate. The
Adviser has provided investment advisory services to individual and
institutional accounts since 2009. The Adviser is an Oklahoma limited liability
company and is located at 10900 Hefner Pointe Drive, Suite 400, Oklahoma City,
Oklahoma 73120. For the services it provides to the Fund, the Fund pays the
Adviser a unified management fee, which is calculated daily and paid monthly, at
an annual rate of 0.90% of the Fund’s average daily net assets. The Adviser has
agreed to waive 15 basis points (0.15%) of its management fees for the Fund
until at least [ ].
Under
the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of
the Fund except for the fee paid to the Adviser pursuant to the Investment
Advisory Agreement, interest charges on any borrowings, taxes, brokerage
commissions and other expenses incurred in placing orders for the purchase and
sale of securities and other investment instruments, acquired fund fees and
expenses, accrued deferred tax liability, extraordinary expenses, and
distribution fees and expenses paid by the Trust under any distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, “Excluded
Expenses”).
As
part of the arrangement between the Adviser and the Index Provider, the Index
Provider has agreed to pay all expenses of the Fund (except the Excluded
Expenses) and, to the extent applicable, pay the Adviser’s minimum fee under the
arrangement as described in the section above entitled “Additional Information
about the Fund – Additional Information about the Index.”
The
basis for the Board of Trustees’ approval of the Fund’s Investment Advisory
Agreement will be available in the Fund’s first Annual or Semi-Annual Report to
Shareholders.
Portfolio
Managers
Andrew
Serowik, Todd Alberico, and Gabriel Tan are jointly and primarily responsible
for the day-to-day management of the Fund’s portfolio.
Mr.
Serowik joined the Adviser from Goldman Sachs. He began his career at Spear,
Leeds & Kellogg (“SLK”), continuing with Goldman after its acquisition of
SLK in September 2000. During his career of more than 19 years at the combined
companies, he held various roles, including managing the global Quant ETF Strats
team and One Delta ETF Strats. He designed and developed systems for portfolio
risk calculation, algorithmic ETF trading, and execution monitoring, with
experience across all asset classes. He graduated from the University of
Michigan with a Bachelor of Business Administration degree in Finance.
Mr.
Alberico joined the Adviser in November 2020. From 2013 to 2020, Mr. Alberico
worked in ETF trading at Virtu Financial. Prior to Virtu Financial, Mr. Alberico
spent time in ETF trading at Goldman Sachs and Cantor Fitzgerald. He spent most
of that time focused on the Trading and Portfolio Risk Management of ETFs
exposed to international and domestic equity. He has worked on several different
strategies including lead market-making and electronic trading, to customer
facing institutional business developing models for block trading as well as
transitional trades. Mr. Alberico graduated from St. John’s University in NY
with a Bachelor of Science degree in Finance.
Mr.
Tan joined the Adviser in May 2019 as an Associate Portfolio Manager and was
promoted to Portfolio Manager in December 2020. From 2013 to 2017, Mr. Tan
worked at UBS and BBR Partners where he served as a financial planning analyst
and a portfolio strategist. During his time there, he developed comprehensive
wealth management solutions focused on portfolio optimization, trust and estate
planning, and tax planning. Mr. Tan graduated from the University of North
Carolina at Chapel Hill with a Bachelor of Science in Business Administration
with a concentration in Investments, a Bachelor of Arts in Economics, and a
Minor in Chinese.
The
Fund’s SAI provides additional information about the Portfolio Managers’
compensation structure, other accounts that the Portfolio Managers manage and
the Portfolio Managers’ ownership of Shares.
HOW
TO BUY AND SELL SHARES
The
Fund issues and redeems Shares at NAV only in Creation Units. Only APs may
acquire Shares directly from the Fund, and only APs may tender their Shares for
redemption directly to the Fund, at NAV. APs must be a member or participant of
a clearing agency registered with the SEC and must execute a Participant
Agreement that has been agreed to by the Distributor (defined below), and that
has been accepted by the Fund’s transfer agent, with respect to purchases and
redemptions of Creation Units. Once created, Shares trade in the secondary
market in quantities less than a Creation Unit.
Most
investors buy and sell Shares in secondary market transactions through brokers.
Shares are listed for trading on the secondary market on the Exchange and can be
bought and sold throughout the trading day like other publicly traded
securities.
When
buying or selling Shares through a broker, you will incur customary brokerage
commissions and charges, and you may pay some or all of the bid-ask spread on
your transactions. In addition, because secondary market transactions occur at
market prices, you may pay more than NAV when you buy Shares and receive less
than NAV when you sell those Shares.
Book
Entry
Shares
are held in book-entry form, which means that no stock certificates are issued.
The Depository Trust Company (“DTC”) or its nominee is the record owner of all
outstanding Shares.
Investors
owning Shares are beneficial owners as shown on the records of DTC or its
participants. DTC serves as the securities depository for all Shares. DTC’s
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” through your brokerage account.
Frequent
Purchases and Redemptions of Shares
The
Fund imposes no restrictions on the frequency of purchases and redemptions of
Shares. In determining not to approve a written, established policy, the Board
evaluated the risks of market timing activities by Fund shareholders. Purchases
and redemptions by APs, who are the only parties that may purchase or redeem
Shares directly with the Fund, are an essential part of the ETF process and help
keep Share trading prices in line with NAV. As such, the Fund accommodates
frequent purchases and redemptions by APs. However, the Board has also
determined that frequent purchases and redemptions for cash may increase
tracking error and portfolio transaction costs and may lead to the realization
of capital gains. To minimize these potential consequences of frequent purchases
and redemptions, the Fund employs fair value pricing and may impose transaction
fees on purchases and redemptions of Creation Units to cover the custodial and
other costs incurred by the Fund in effecting trades. In addition, the Fund and
the Adviser reserve the right to reject any purchase order at any
time.
Determination
of Net Asset Value
The
Fund’s NAV is calculated as of the scheduled close of regular trading on the New
York Stock Exchange (“NYSE”), generally 4:00 p.m. Eastern time, each day
the NYSE is open for business. The NAV is calculated by dividing the Fund’s net
assets by its Shares outstanding.
In
calculating its NAV, the 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. In particular, the Fund
generally values equity securities traded on any recognized U.S. or non-U.S.
exchange at the last sale price or official closing price on the exchange or
system on which they are principally traded. If such information is not
available for a security held by the Fund or is determined to be unreliable, the
security will be valued at fair value estimates under guidelines established by
the Board (as described below).
Fair
Value Pricing
The
Board has adopted procedures and methodologies to fair value Fund securities
whose market prices are not “readily available” or are deemed to be unreliable.
For example, such circumstances may arise when: (i) a security has been
de-listed or has had its trading halted or suspended; (ii) a security’s
primary pricing source is unable or unwilling to provide a price; (iii) a
security’s primary trading market is closed during regular market hours; or
(iv) a security’s value is materially affected by events occurring after
the close of the security’s primary trading market. Generally, when fair valuing
a security, the Fund will take into account all reasonably available information
that may be relevant to a particular valuation including, but not limited to,
fundamental analytical data regarding the issuer, information relating to the
issuer’s business, recent trades or offers of the security, general and/or
specific market conditions and the specific facts giving rise to the need to
fair value the security. Fair value determinations are made in good faith and in
accordance with the fair value methodologies included in the Board-adopted
valuation procedures. Due to the subjective and variable nature of fair value
pricing, there can be no assurance that the Adviser will be able to obtain the
fair value assigned to the security upon the sale of such security.
Investments
by Registered Investment Companies
Section 12(d)(1)
of the 1940 Act restricts investments by registered investment companies in the
securities of other investment companies, including Shares. Registered
investment companies are permitted to invest in the Fund beyond the limits set
forth in section 12(d)(1) subject to certain terms and conditions set forth in
an SEC exemptive order issued to the Adviser or rule under the 1940 Act,
including that such investment companies enter into an agreement with the
Fund.
Delivery
of Shareholder Documents – Householding
Householding
is an option available to certain investors of the Fund. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for the Fund is available through certain
broker-
dealers.
If you are interested in enrolling in householding and receiving a single copy
of prospectuses and other shareholder documents, please contact your
broker-dealer. If you are currently enrolled in householding and wish to change
your householding status, please contact your broker-dealer.
DIVIDENDS,
DISTRIBUTIONS, AND TAXES
Dividends
and Distributions
The
Fund intends to pay out dividends, if any, and distribute any net realized
capital gains to its shareholders at least annually. The Fund will declare and
pay capital gain distributions in cash. Distributions in cash may be reinvested
automatically in additional whole Shares only if the broker through whom you
purchased Shares makes such option available. Your broker is responsible for
distributing the income and capital gain distributions to you.
Taxes
The
following discussion is a summary of some important U.S. federal income tax
considerations generally applicable to investments in the Fund. Your investment
in the Fund may have other tax implications. Please consult your tax advisor
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws.
The
Fund intends to elect and qualify each year for treatment as a regulated
investment company (“RIC”) under the Code. If it meets certain minimum
distribution requirements, a RIC is not subject to tax at the fund level on
income and gains from investments that are timely distributed to shareholders.
However, the Fund’s failure to qualify as a RIC or to meet minimum distribution
requirements would result (if certain relief provisions were not available) in
fund-level taxation and, consequently, a reduction in income available for
distribution to shareholders.
Unless
your investment in Shares is made through a tax-exempt entity or tax-advantaged
account, such as an IRA plan, you need to be aware of the possible tax
consequences when the Fund makes distributions, when you sell your Shares listed
on the Exchange, and when you purchase or redeem Creation Units (APs only).
Taxes
on Distributions
The
Fund intends to distribute, at least annually, substantially all of its net
investment income and net capital gains. For federal income tax purposes,
distributions of investment income are generally taxable as ordinary income or
qualified dividend income. Taxes on distributions of capital gains (if any) are
determined by how long the Fund owned the investments that generated them,
rather than how long a shareholder has owned his or her Shares. Sales of assets
held by the Fund for more than one year generally result in long-term capital
gains and losses, and sales of assets held by the Fund for one year or less
generally result in short-term capital gains and losses. Distributions of the
Fund’s net capital gain (the excess of net long-term capital gains over net
short-term capital losses) that are reported by the Fund as capital gain
dividends (“Capital Gain Dividends”) will be taxable as long-term capital gains,
which for non-corporate shareholders are subject to tax at reduced rates of up
to 20% (lower rates apply to individuals in lower tax brackets). Distributions
of short-term capital gain will generally be taxable as ordinary income.
Dividends and distributions are generally taxable to you whether you receive
them in cash or reinvest them in additional Shares.
Distributions
reported by the Fund as “qualified dividend income” are generally taxed to
non-corporate shareholders at rates applicable to long-term capital gains,
provided holding period and other requirements are met. “Qualified dividend
income” generally is income derived from dividends paid by U.S. corporations or
certain foreign corporations that are either incorporated in a U.S. possession
or eligible for tax benefits under certain U.S. income tax treaties. In
addition, dividends that the Fund received in respect of stock of certain
foreign corporations may be qualified dividend income if that stock is readily
tradable on an established U.S. securities market.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from the Fund.
U.S.
individuals with income exceeding specified thresholds are subject to a 3.8% tax
on all or a portion of their “net investment income,” which includes interest,
dividends, and certain capital gains (generally including capital gains
distributions and capital gains realized on the sale of Shares). This 3.8% tax
also applies to all or a portion of the undistributed net investment income of
certain shareholders that are estates and trusts.
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year. Distributions are generally
taxable even if they are paid from income or gains earned by the Fund before
your investment (and thus were included in the Shares’ NAV when you purchased
your Shares).
You
may wish to avoid investing in the Fund shortly before a dividend or other
distribution, because such a distribution will generally be taxable even though
it may economically represent a return of a portion of your investment.
If
the Fund’s distributions exceed its earnings and profits, all or a portion of
the distributions made for a taxable year may be recharacterized as a return of
capital to shareholders. A return of capital distribution will generally not be
taxable, but will reduce each
shareholder’s
cost basis in Shares and result in a higher capital gain or lower capital loss
when the Shares are sold. After a shareholder’s basis in Shares has been reduced
to zero, distributions in excess of earnings and profits in respect of those
Shares will be treated as gain from the sale of the Shares.
If
you are neither a resident nor a citizen of the United States or if you are a
foreign entity, distributions (other than Capital Gain Dividends) paid to you by
the Fund will generally be subject to a U.S. withholding tax at the rate of 30%,
unless a lower treaty rate applies. Gains from the sale or other disposition of
your Shares generally are not subject to U.S. taxation, unless you are a
nonresident alien individual who is physically present in the U.S. for 183 days
or more per year. The Fund may, under certain circumstances, report all or a
portion of a dividend as an “interest-related dividend” or a “short-term capital
gain dividend,” which would generally be exempt from this 30%
U.S. withholding tax, provided certain other requirements are met.
Different tax consequences may result if you are a foreign shareholder engaged
in a trade or business within the United States or if a tax treaty applies.
Under
legislation generally known as “FATCA” (the Foreign Account Tax Compliance Act),
the Fund is required to withhold 30% of certain ordinary dividends it pays to
shareholders that are foreign entities and that fail to meet prescribed
information reporting or certification requirements.
The
Fund (or a financial intermediary, such as a broker, through which a shareholder
owns Shares) generally is required to withhold and remit to the U.S. Treasury a
percentage of the taxable distributions and sale or redemption proceeds paid to
any shareholder who fails to properly furnish a correct taxpayer identification
number, who has underreported dividend or interest income, or who fails to
certify that he, she or it is not subject to such withholding.
Taxes
When Shares are Sold on the Exchange
Any
capital gain or loss realized upon a sale of Shares generally is treated as a
long-term capital gain or loss if Shares have been held for more than one year
and as a short-term capital gain or loss if Shares have been held for one year
or less. However, any capital loss on a sale of Shares held for six months or
less is treated as long-term capital loss to the extent of Capital Gain
Dividends paid with respect to such Shares. Any loss realized on a sale will be
disallowed to the extent Shares of the Fund are acquired, including through
reinvestment of dividends, within a 61-day period beginning 30 days before and
ending 30 days after the disposition of Shares. The ability to deduct capital
losses may be limited.
The
cost basis of Shares of the Fund acquired by purchase will generally be based on
the amount paid for the Shares and then may be subsequently adjusted for other
applicable transactions as required by the Code. The difference between the
selling price and the cost basis of Shares generally determines the amount of
the capital gain or loss realized on the sale or exchange of Shares. Contact the
broker through whom you purchased your Shares to obtain information with respect
to the available cost basis reporting methods and elections for your account.
Taxes
on Purchases and Redemptions of Creation Units
An
AP having the U.S. dollar as its functional currency for U.S. federal income tax
purposes who exchanges securities for Creation Units generally recognizes a gain
or a loss. The gain or loss will be equal to the difference between the value of
the Creation Units at the time of the exchange and the exchanging AP’s aggregate
basis in the securities delivered, plus the amount of any cash paid for the
Creation Units. An AP who 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 U.S. dollar market value of the
securities received, plus any cash received for such Creation Units. The
Internal Revenue Service may assert, however, that a loss that is realized upon
an exchange of securities for Creation Units may not be currently deducted under
the rules governing “wash sales” (for an AP who does not mark-to-market their
holdings), or on the basis that there has been no significant change in economic
position. APs exchanging securities should consult their own tax advisor with
respect to whether wash sale rules apply and when a loss might be deductible.
Any
gain or loss realized upon a creation or redemption of Creation Units will be
treated as capital or ordinary gain or loss, depending on the circumstances. Any
capital gain or loss realized upon redemption of Creation Units is generally
treated as long-term capital gain or loss if Shares have been held for more than
one year and as a short-term capital gain or loss if Shares have been held for
one year or less.
The
Fund may include a payment of cash in addition to, or in place of, the delivery
of a basket of securities upon the redemption of Creation Units. The Fund may
sell portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause the Fund to recognize investment income and/or capital
gains or losses that it might not have recognized if it had completely satisfied
the redemption in-kind. As a result, the Fund may be less tax efficient if it
includes such a cash payment in the proceeds paid upon the redemption of
Creation Units.
Foreign
Taxes
To
the extent the Fund invests in foreign securities, it may be subject to foreign
withholding taxes with respect to dividends or interest the Fund received from
sources in foreign countries.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in the Fund. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Fund
distributions and sales of Shares.
Consult
your personal tax advisor about the potential tax consequences of an investment
in Shares under all applicable tax laws. For more information, please see the
section entitled “Federal Income Taxes” in the SAI.
DISTRIBUTION
The
Distributor, Quasar Distributors, LLC, is a broker-dealer registered with the
SEC. The Distributor distributes Creation Units for the Fund on an agency basis
and does not maintain a secondary market in Shares. The Distributor has no role
in determining the policies of the Fund or the securities that are purchased or
sold by the Fund. The Distributor’s principal address is 111 East Kilbourn
Avenue, Suite 2200, Milwaukee, Wisconsin 53202.
The
Board has adopted a Distribution and Service Plan (the “Plan”) pursuant to Rule
12b-1 under the 1940 Act. In accordance with the Plan, the Fund is authorized to
pay an amount up to 0.25% of its average daily net assets each year for certain
distribution-related activities and shareholder services.
No
Rule 12b-1 fees are currently paid by the Fund, and there are no plans to impose
these fees. However, in the event Rule 12b-1 fees are charged in the future,
because the fees are paid out of the Fund’s assets, over time these fees will
increase the cost of your investment and may cost you more than certain other
types of sales charges.
PREMIUM/DISCOUNT
INFORMATION
Information
regarding how often Shares are traded on the Exchange at a price above
(i.e.,
at a premium) or below (i.e.,
at a discount) the NAV per Share will be available, free of charge, on the
Fund’s website at www.psyk-etf.com.
ADDITIONAL
NOTICES
Shares
are not sponsored, endorsed, or promoted by the Exchange. The Exchange makes no
representation or warranty, express or implied, to the owners of Shares or any
member of the public regarding the ability of the Fund to track the total return
performance of the Index or the ability of the Index identified herein to track
the performance of its constituent securities. The Exchange is not responsible
for, nor has it participated in, the determination of the compilation or the
calculation of the Index, nor in the determination of the timing, prices, or
quantities of Shares to be issued, nor in the determination or calculation of
the equation by which Shares are redeemable. The Exchange has no obligation or
liability to owners of Shares in connection with the administration, marketing,
or trading of the Shares.
The
Exchange does not guarantee the accuracy and/or the completeness of the Index or
the data included therein. The Exchange makes no warranty, express or implied,
as to results to be obtained by the Fund, owners of Shares, or any other person
or entity from the use of the Index or the data included therein. The Exchange
makes no express or implied warranties, and hereby expressly disclaims all
warranties of merchantability or fitness for a particular purpose with respect
to the Index or the data included therein. Without limiting any of the
foregoing, in no event shall the Exchange have any liability for any lost
profits or indirect, punitive, special, or consequential damages even if
notified of the possibility thereof.
The
Adviser, the Index Provider, Solactive, the Exchange, and the Fund make no
representation or warranty, express or implied, to the owners of Shares or any
member of the public regarding the advisability of investing in securities
generally or in the Fund particularly or the ability of the Index to track
general stock market performance. The Index Provider has no obligation to take
the needs of the Fund or the owners of Shares into consideration in determining,
composing, or calculating the Index. The Index Provider is not responsible for,
and has not participated in, the determination of the timing of, prices of, or
quantities of Shares to be issued or in the determination or calculation of the
equation by which Shares are redeemable. The Fund and the Adviser do not
guarantee the accuracy, completeness, or performance of the Index or the data
included therein and shall have no liability in connection with the Index or
Index calculation. Solactive calculates the Index used by the Fund. Solactive
shall have no liability for any errors or omissions in calculating an
Index.
FINANCIAL
HIGHLIGHTS
Financial
information is not available because the Fund had not commenced operations prior
to the date of this Prospectus.
PSYK
ETF
|
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|
|
|
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|
Adviser |
Exchange
Traded Concepts, LLC
10900
Hefner Pointe Drive, Suite 401
Oklahoma
City, Oklahoma 73120 |
Index
Provider |
Elemental
Advisors LLC
1330
Main Street, Unit 4
Sarasota,
Florida 34236 |
Transfer
Agent |
U.S.
Bancorp Fund Services, LLC
d/b/a
U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Administrator |
U.S.
Bancorp Fund Services, LLC
d/b/a
U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Custodian |
U.S.
Bank, N.A.
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212 |
Distributor |
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202 |
Legal
Counsel |
Morgan,
Lewis & Bockius LLP
1111
Pennsylvania Avenue, NW
Washington,
DC 20004-2541 |
Independent
Registered Public Accounting Firm |
Cohen
& Company, Ltd.
342
North Water Street, Suite 830
Milwaukee,
Wisconsin 53202 |
Investors
may find more information about the Fund in the following documents:
Statement
of Additional Information: The
Fund’s SAI provides additional details about the investments and techniques of
the Fund and certain other additional information. A current SAI dated [ ] is on
file with the SEC and is herein incorporated by reference into this Prospectus.
It is legally considered a part of this Prospectus.
Annual/Semi-Annual
Reports:
Additional information about the Fund’s investments will be available in the
Fund’s annual and semi-annual reports to shareholders. In the annual report,
when available, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund’s performance after
the first fiscal year the Fund is in operation.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Fund by contacting the Fund at PSYK ETF, c/o U.S.
Bank Global Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or
calling 1-800-617-0004.
Shareholder
reports and other information about the Fund are also available:
• Free
of charge from the SEC’s EDGAR database on the SEC’s website at
http://www.sec.gov; or
• Free
of charge from the Fund’s website at www.psyk-etf.com; or
(SEC
Investment Company Act File No. 811-22668)