ck0001540305-20221031
ETFB Green SRI REITs
ETF
(RITA)
Listed
on NYSE
Arca, Inc.
PROSPECTUS
February
28, 2023
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.
ETFB
Green SRI REITs ETF
FUND
SUMMARY
Investment Objective
The ETFB Green SRI REITs ETF
(the “Fund”) seeks to track the performance, before fees and expenses, of the
FTSE EPRA Nareit IdealRatings Developed REITs Islamic Green Capped 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.
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fees |
0.50% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.50% |
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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 continue to hold or 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:
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1
Year |
3
Years |
5
Years |
10
Years |
$51 |
$160 |
$280 |
$628 |
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. For the fiscal period December 8, 2021
(commencement of operations) through October 31, 2022, the Fund’s portfolio
turnover rate was 7% of the average value of its
portfolio.
Principal Investment
Strategy
The
Fund uses a “passive management” (or indexing) approach to track the
performance, before fees and expenses, of the Index. The Index was established
in 2020 by FTSE
Russell and IdealRatings, Inc.
(together, the “Index Providers”).
FTSE
EPRA Nareit IdealRatings Developed REITs Islamic Green Capped Index
The
Index is composed of a portfolio of exchange-listed real estate investment
trusts (“REITs”) in developed markets meeting the business, financial, socially
responsible investing (“SRI”), and green investing criteria described below, as
determined by IdealRatings, Inc.
Business
Screening. To
be eligible for inclusion in the Index, companies must meet the following
criteria:
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The
company invests at least 75% of its total assets in real
estate; |
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The
company derives at least 75% of its gross income from rents from real
property; |
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The
company pays at least 90% of its taxable income annually in the form of
shareholder dividends; |
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The
company is taxed as a corporation; |
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The
company is managed by a board of directors or trustees;
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The
company has at least 100 shareholders; and |
• |
The
company has no more than 50% of its shares held by fewer than five
individuals. |
Financial
Screening. Eligible
companies are further screened to eliminate REITs whose interest-bearing debt
exceeds 33% of the market value of the REIT’s assets (or book value, if higher).
SRI
Screening. Consistent
with Shariah principles, eligible REITs are screened to eliminate REITs earning
more than 5% of their income from interest-bearing investments or from the
following business activities or tenants engaged in such activities:
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Alcoholic
Beverages |
Tobacco |
Gambling
/ Casino |
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Firearms |
Military
/ Weapons of Mass Destruction |
Adult
Entertainment |
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Music
and Radio |
Cinema
and Television |
Conventional
Financial Services |
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Embryonic
Stem Cells |
Pork
Related Products |
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Green
Screening.
Eligible REITs are further screened to eliminate any REITs that have not
received a Green Certification from an eligible third-party certifying body
(e.g.,
LEED certifications from the U.S. Green Building Council or BREEAM
certifications from Building Research Establishment Ltd.). Green Certifications
are determined based on the share of total net leasable area owned and/or
managed by a constituent that is certified as part of an eligible green
certification scheme. Third-party rating agencies award Green Certification to
buildings that pass such agencies’ minimum scoring criteria across their life
cycles (design, construction, maintenance, and operations). The Green
Certification scoring scheme covers Sustainable Sites, Water Efficiency, Energy
and Atmosphere, Materials and Resources, and Indoor Environmental Quality. The
Index relies on the FTSE EPRA Nareit Green rules to determine which Green
Certifications are required for a REIT to be eligible for inclusion in the Index
based on data provided to FTSE Russell by GeoPhy.
Green
Certifications assure public availability of a list of certified buildings and
transparency with respect to the evaluation process for sustainability
performance. The evaluation process covers multiple sustainability indicators,
one of which must be energy focused performance. Certifying bodies also make
available their robust certification procedures, as well as the data validation
process conducted during certification. Certification bodies follow a rigorous
scoring and rating criteria to assess different aspects of buildings, including
Management, Health Wellbeing, Energy, Transport, Water Efficiency, Waste, Land
Use and Ecology, Pollution, Innovation, Material and Resources, and
Environmental Quality.
Green
Tilt.
REITs meeting the above screens are included in the Index at the time of each
quarterly rebalance and reconstitution of the Index. The Index is rebalanced and
reconstituted effective at the market open on the Monday following the third
Friday of each March, June, September, and December based on data as of an
earlier date. Companies are given weights based on their relative free float
market capitalization to the aggregate free float market capitalization of the
Index’s investment universe, subject to a minimum individual company weight of
0.5% and a maximum individual company weight of 20%. Additionally, the aggregate
weight for all companies with a weight greater than 4.5% is “capped” at a
maximum of 48% at the time of each rebalance and reconstitution of the Index.
Additionally,
data regarding each company’s Green Certifications and Energy Usage (described
below) is normalized cross-sectionally to create a score for each REIT, which
score is then used to adjust (tilt) the constituents’ weights towards REITs with
higher green scores (i.e.,
higher levels of Green Certifications and more favorable Energy Usage).
Adjustments to Index weights are limited such that the total adjustment does not
change any sector or country weight within the Index by more than 2% of its
original weight before adjusting.
Energy
Usage refers to the average modeled energy consumption per square meter of net
leasable area owned and/or managed by a constituent. Energy Usage data is
aggregated by third-party providers for each constituent’s portfolio of real
estate based on data from national statistics offices and utilities data,
combined with each building’s key characteristics (e.g.,
square footage, number of floors), from public reports, including regulatory
filings, tax filings, and land registries, to estimate expected energy usage per
square foot. REITs with no Energy Usage data are given low scores, which results
in excluding them from the Index during the adjustment process.
As
of January 31, 2023, the Index was composed of 55 constituents, 29 of which were
non-U.S. companies, and U.S. companies represented 77.94% of the Index weight.
The
Fund’s Investment Strategy
Under
normal circumstances, the Fund will invest at least 80% of its net assets in
REITs that meet the Index’s SRI Screening and Green Screening criteria (each as
described above) as of the most recent reconstitution of the Index. This policy
may be changed without shareholder approval upon 60 days’ written notice to
shareholders.
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 Index is expected to be concentrated in
REITs.
Principal Investment
Risks
The
principal risks of investing in the Fund are summarized below. The first three
principal risks are prioritized by order of importance, while the remaining
principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. 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.”
•Concentration
in REITs Risk.
The Index, and consequently the Fund, is expected to concentrate its investments
(i.e.,
hold more than 25% of its total assets) in REITs. As a result, the value of the
Fund’s shares may rise and fall more than the value of shares of a fund that
invests in securities of companies in a broader range of industries. In
addition, at times, the real estate industry may be out of favor and
underperform other industries or groups of industries.
Investments
in REITs involve unique risks. REITs may have limited financial resources, may
trade less frequently and in limited volume, and may be more volatile than other
securities. In addition, to the extent the Fund holds interests in REITs, it is
expected that investors in the Fund will bear two layers of asset-based
management fees and expenses (directly at the Fund level and indirectly at the
REIT level). The risks of investing in REITs include certain risks associated
with the direct ownership of real estate and the real estate industry in
general. These include risks related to general, regional and local economic
conditions; fluctuations in interest rates and property tax rates; shifts in
zoning laws, environmental regulations and other governmental action such as the
exercise of eminent domain; increased operating expenses; lack of availability
of mortgage funds or other limits to accessing the credit or capital markets;
losses due to natural disasters; overbuilding; losses due to casualty or
condemnation; changes in property values and rental rates; and other
factors.
In
addition to these risks, REITs are dependent upon management skills and
generally may not be diversified. REITs are also subject to heavy cash flow
dependency, defaults by borrowers or lessees and self-liquidation. In addition,
U.S. REITs are subject to special U.S. federal tax requirements. A U.S. REIT
that fails to comply with such tax requirements may be subject to U.S. federal
income taxation, which may affect the value of the REIT and the characterization
of the REIT’s distributions. The U.S. federal tax requirement that a REIT
distributes substantially all of its net income to its shareholders may result
in the REIT having insufficient capital for future expenditures. A REIT that
successfully maintains its qualification may still become subject to U.S.
federal, state and local taxes, including excise, penalty, franchise, payroll,
mortgage recording, and transfer taxes, both directly and indirectly through its
subsidiaries. In the event of a default by a borrower or lessee, the REIT may
experience delays in enforcing its rights as a mortgagee or lessor and may incur
substantial costs associated with protecting investments.
•Green
and SRI Screening Criteria Risk.
Because the methodology of the Index selects securities of issuers based, in
part, on non-financial reasons, the Fund may underperform the broader equity
market or other funds that do not utilize such criteria when selecting
investments. For example, the Index considers Green Certification, Energy Usage,
and SRI factors and specifically excludes REITs earning income from tenants in
certain businesses as part of the criteria for a REIT’s inclusion in the Index.
Additionally, the methodology of Index will result in certain types of REITs
that generally derive more than 5% of their income from interest, such as
mortgage REITs, being excluded from the Index. There can be no guarantee that a
company meeting the Index’s SRI Screening and Green Screening criteria as of the
most recent reconstitution of the Index will continue to meet such criteria in
the future.
•Third
Party Data Risk.
The composition of the Index is heavily dependent on proprietary information and
data supplied by a third party (“Third Party Data”). When Third Party Data
proves to be incorrect or incomplete, any decisions made in reliance thereon may
lead to the inclusion or exclusion of securities from the Index that would have
been excluded or included had the Third Party Data been correct and complete. If
the composition of the Index reflects such errors, the Fund’s portfolio can be
expected to reflect the errors, too.
•Currency
Exchange Rate Risk.
The Fund may invest in investments denominated in non-U.S. currencies or in
securities that provide exposure to such currencies. Changes in currency
exchange rates and the relative value of non-U.S. currencies will affect the
value of the Fund’s
investment 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.
•Equity
Market Risk.
The
equity securities, including REITs, 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, including Russia’s
invasion of Ukraine, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, rising inflation, 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.
•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.
◦Cash
Redemption Risk.
The Fund’s investment strategy may require it to redeem shares for cash or to
otherwise include cash as part of its redemption proceeds. The Fund may be
required to sell or unwind portfolio investments to obtain the cash needed to
distribute redemption proceeds. This may cause the Fund to recognize a capital
gain that it might not have recognized if it had made a redemption in-kind. As a
result, the Fund may pay out higher annual capital gain distributions than if
the in-kind redemption process was used.
◦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. Because
securities held by the Fund may trade on foreign exchanges that are closed when
the Fund’s primary listing exchange is open, the Fund is likely to experience
premiums and discounts greater than those of domestic ETFs.
◦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 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 Providers, or any agents that act on their
behalf, will compile the Index accurately, or that the Index will be determined,
maintained, constructed, reconstituted, rebalanced, composed, calculated or
disseminated accurately. The adviser relies upon the Index Providers and their
agents to compile, determine, maintain, 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
Providers or their agents generally will be borne by the Fund and its
shareholders.
•Limited
Operating History Risk.
The
Fund is a recently organized investment company with a limited operating
history. As a result, prospective investors have a limited 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 or the
selling of shares of that security is otherwise required upon a reconstitution
or rebalancing of the Index in accordance with the Index
methodology.
•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
The following
performance information indicates some of the risks of investing in the
Fund. The bar chart shows the Fund’s performance for the most
recent calendar year ended December 31. The table illustrates how the Fund’s
average annual returns for the 1-year and since inception periods compare with
those of a broad measure of market performance and the
Index. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is available on the
Fund’s website at www.ritaetf.com.
Calendar Year Total
Return
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 5.02% for the quarter ended December 31, 2022, and
the lowest quarterly return was
-19.15% for the quarter ended June 30,
2022.
Average Annual Total Returns
For the Period Ended December 31,
2022
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ETFB
Green SRI REITs ETF |
1-Year |
Since
Inception (12/8/2021) |
Return Before
Taxes |
-28.85% |
-24.37% |
Return After Taxes on
Distributions |
-29.34% |
-24.90% |
Return After Taxes on Distributions and
Sale of Shares |
-16.89% |
-18.61% |
FTSE
EPRA Nareit IdealRatings Dev REITs Islamic Green Capped Index
(reflects
no deduction for fees, expenses, or taxes) |
-29.13% |
-24.70% |
S&P
500® Index
(reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-16.00% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above and do not reflect the impact
of state and local taxes. Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown. After-tax
returns shown are not relevant to investors who hold their Shares through
tax-deferred arrangements such as an individual retirement account (“IRA”) or
other tax-advantaged accounts. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Shares” may be
higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the
investor.
Management
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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
December 2021. |
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.ritaetf.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 Providers created and are responsible for maintaining and applying the
rules-based methodology of the Index. The Index is calculated by FTSE Russell
(the “Index Calculation Agent”), which is not affiliated with the Fund, the
Adviser, the Fund’s distributor, or any of their respective affiliates. The
Index Calculation Agent 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
enterprise value of a REIT will be used for the market value of the REIT’s
assets for REITs based in the United States, Canada, or Japan, and the Index
defines “enterprise value” as the sum of the average market value of the REIT’s
common shares, plus preferred equity, liabilities, and any minority interest,
less the REIT’s cash. REITs with fixed income preferred shares are also not
eligible for inclusion in the Index.
The
Index Universe is screened to eliminate REITs earning more than 5% of their
income from interest-bearing investments or from the following business
activities or tenants engaged in such activities:
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Alcoholic
Beverages |
distillers,
vintners, and producers of alcoholic beverages, including producers of
beer and malt liquors; owners and operators of bars and
pubs |
Tobacco |
manufacturers
and retailers of cigarettes and other tobacco products |
Pork
Related Products |
manufacturers
and retailers of pork products |
Conventional
Financial Services |
commercial
banks involved in retail banking, corporate lending, or investment
banking; companies involved in mortgage and mortgage related services;
providers of financial services, including insurance, capital markets, and
specialized finance; credit agencies; stock exchanges; specialty
boutiques; consumer finance services, including personal credit, credit
cards, lease financing, travel-related money services, and pawn shops;
financial institutions primarily engaged in investment management, related
custody and securities fee-based services; companies operating mutual
funds, closed-end funds, and unit investment trusts; financial
institutions primarily engaged in investment banking and brokerage
services in conventional or conventional derivative instruments, including
equity and debt underwriting, mergers, and acquisitions; securities
lending and advisory services institutions; and insurance and
reinsurance-brokerage firms, including companies providing property,
casualty, life disability, indemnity or supplemental health
insurance. |
Military
/ Weapons of Mass Destruction |
manufacturers
of military, aerospace, nuclear, chemical, and biological weapons or
components |
Gambling
/ Casino |
owners
and operators of casinos and gaming facilities, including companies
providing lottery and betting services |
Music
and Radio |
producers
and distributors of music, owners and operators of radio broadcasting
systems |
Cinema
and Television |
tenants
engaged in the production, distribution, and screening of movies and
television shows; owners and operators of television broadcasting systems;
and providers of cable or satellite television services involved in the
introduction of certain cinema and entertainment programs not including
kids, cultural, and sports production |
Adult
Entertainment |
owners
and operators of adult entertainment products and activities |
Embryonic
Stem Cells |
embryonic
stem cell operations including clinics and hospitals involved in intended
abortion, donation based fertility, and
surrogacy |
The
Index is a subset of the FTSE EPRA Nareit Developed REIT Index (the “FTSE
Index”), which is owned and managed by FTSE Russell and administered and
calculated by FTSE International Limited. The European Public Real Estate
Association (“EPRA”) and Nareit are responsible for conducting the analysis of
financial statement related eligibility tests including the EBITDA test for
potential and current constituents to establish their eligibility for inclusion
in the FTSE Index and their allocation to the emerging and developed markets
classifications.
The
FTSE Index is comprised of REITs in developed markets where recognized REIT
legislation is in operation in the country in which the Index constituent is
domiciled. Such REITs must be operating as a REIT in their country of domicile
according to their latest published financial accounts or regulatory
announcements as verified by FTSE Russell, EPRA, and Nareit. The specific
countries whose securities are eligible for inclusion in the FTSE Index are
those considered to be
developed
market countries for purposes of the FTSE Index. Companies organized as limited
liability partnerships, limited partnerships, master limited partnerships,
publicly traded partnerships, limited liability companies, and business
development companies, as well as preferred securities, are not eligible for
inclusion in the FTSE Index.
Management
of the Fund. The
Fund and the Adviser have received an exemptive order from the SEC permitting
the Adviser (subject to certain conditions and the Board’s approval) to select
or change sub-advisers without obtaining shareholder approval. The order also
permits the Adviser to materially amend the terms of agreements with a
sub-adviser (including an increase in the fee paid by the Adviser to the
sub-adviser (and not paid by the Fund)) or to continue the employment of a
sub-adviser after an event that would otherwise cause the automatic termination
of services with Board approval, but without shareholder approval. Shareholders
will be notified of any sub-adviser changes.
Additional
Information about the Fund’s Principal Risks. This
section provides additional information regarding the principal risks described
in the Fund Summary. As in the Fund Summary, the first three principal risks are
prioritized by order of importance, while the remaining principal risks are
presented in alphabetical order to facilitate finding particular risks and
comparing them with other funds. 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.
•Concentration
in REITs Risk.
The Index, and consequently the Fund, is expected to concentrate its investments
(i.e.,
hold more than 25% of its total assets) in REITs. As a result, the value of the
Fund’s shares may rise and fall more than the value of shares of a fund that
invests in securities of companies in a broader range of industries. In
addition, at times, the real estate industry may be out of favor and
underperform other industries or groups of industries.
Investments
in REITs involve unique risks. REITs may have limited financial resources, may
trade less frequently and in limited volume, and may be more volatile than other
securities. In addition, to the extent the Fund holds interests in REITs, it is
expected that investors in the Fund will bear two layers of asset-based
management fees and expenses (directly at the Fund level and indirectly at the
REIT level). The risks of investing in REITs include certain risks associated
with the direct ownership of real estate and the real estate industry in
general. These include risks related to general, regional and local economic
conditions; fluctuations in interest rates and property tax rates; shifts in
zoning laws, environmental regulations and other governmental action such as the
exercise of eminent domain; increased operating expenses; lack of availability
of mortgage funds or other limits to accessing the credit or capital markets;
losses due to natural disasters; overbuilding; losses due to casualty or
condemnation; changes in property values and rental rates; and other
factors.
In
addition to these risks, REITs are dependent upon management skills and
generally may not be diversified. REITs are also subject to heavy cash flow
dependency, defaults by borrowers or lessees and self-liquidation. In addition,
U.S. REITs are subject to special U.S. federal tax requirements. A U.S. REIT
that fails to comply with such tax requirements may be subject to U.S. federal
income taxation, which may affect the value of the REIT and the characterization
of the REIT’s distributions. The U.S. federal tax requirement that a REIT
distributes substantially all of its net income to its shareholders may result
in the REIT having insufficient capital for future expenditures. A REIT that
successfully maintains its qualification may still become subject to U.S.
federal, state and local taxes, including excise, penalty, franchise, payroll,
mortgage recording, and transfer taxes, both directly and indirectly through its
subsidiaries. In the event of a default by a borrower or lessee, the REIT may
experience delays in enforcing its rights as a mortgagee or lessor and may incur
substantial costs associated with protecting investments.
•Green
and SRI Screening Criteria Risk.
Because the methodology of the Index selects securities of issuers based, in
part, on non-financial reasons, the Fund may underperform the broader equity
market or other funds that do not utilize such criteria when selecting
investments. For example, the Index considers Green Certification, Energy Usage,
and SRI factors and specifically excludes REITs earning income from tenants in
certain businesses as part of the criteria for a REIT’s inclusion in the Index.
Additionally, the methodology of Index will result in certain types of REITs
that generally derive more than 5% of their income from interest, such as
mortgage REITs, being excluded from the Index. There can be no guarantee that a
company meeting the Index’s SRI Screening and Green Screening criteria as of the
most recent reconstitution of the Index will continue to meet such criteria in
the future.
•Third
Party Data Risk. The
composition of the Index is heavily dependent on Third Party Data. When Third
Party Data prove to be incorrect or incomplete, any decisions made in reliance
thereon may lead to the inclusion or exclusion of securities from the Index that
would have been excluded or included had the Third Party Data been correct and
complete. If the composition of the Index reflects such errors, the Fund’s
portfolio can be expected to reflect the errors, too.
•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 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 depreciates against the U.S.
dollar. This is true even if the local currency value of securities in the
Fund’s holdings 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.
•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; local, regional or global events
such
as acts of terrorism or war, including Russia’s invasion of Ukraine; 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 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. Many countries, including the U.S.,
are subject to few restrictions related to the spread of COVID-19. 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.
•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.
◦Cash
Redemption Risk.
ETFs generally are able to make in-kind redemptions and avoid being taxed on
gain on the distributed portfolio securities at the Fund level. Because the Fund
may effect redemptions partly or entirely in cash, rather than in-kind, it may
be required to sell portfolio securities to obtain the cash needed to distribute
redemption proceeds. If the Fund recognizes gain on these sales, this generally
will cause the Fund to recognize gain it might not otherwise have recognized, or
to recognize such gain sooner than would otherwise be required if it were to
distribute portfolio securities in-kind. The Fund generally intends to
distribute these gains to shareholders to avoid being taxed on this gain at the
Fund level and otherwise comply with the special tax rules that apply to it.
This strategy may cause shareholders to be subject to tax on gains they would
not otherwise be subject to, or at an earlier date than, if they had made an
investment in a different ETF. Moreover, cash transactions may have to be
carried out over
several
days if the securities market is relatively illiquid and may involve
considerable brokerage fees and taxes. These brokerage fees and taxes, which
will be higher than if the Fund sold and redeemed its shares principally
in-kind, could be imposed on the Fund and thus decrease the Fund’s NAV to the
extent they are not offset by the creation and redemption transaction fees paid
by purchasers and redeemers of Creation Units.
◦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 or periods of
steep market declines. The market price of Fund shares during the trading day,
like the price of any exchange-traded security, includes a “bid-ask” spread
charged by the exchange specialist, market makers or other participants that
trade the Fund shares. In times of severe market disruption, the bid-ask spread
can increase significantly. At those times, Fund shares are most likely to be
traded at a discount to NAV, and the discount is likely to be greatest when the
price of Fund shares is falling fastest, which may be the time that you most
want to sell your Fund shares. The Adviser believes that, under normal market
conditions, large market price discounts or premiums to NAV will not be
sustained because of arbitrage opportunities. Because securities held by the
Fund may trade on foreign exchanges that are closed when the Fund’s primary
listing exchange is open, the Fund is likely to experience premiums and
discounts greater than those of domestic ETFs.
◦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 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 Providers, or any agents that act on their
behalf, will compile the Index accurately, or that the Index will be determined,
maintained, constructed, reconstituted, rebalanced, composed, calculated or
disseminated accurately. The Adviser relies upon the Index Providers and their
agents to compile, determine, maintain, 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
Providers or their agents generally will be borne by the Fund and its
shareholders. To correct any such error, the Index Providers or their 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
Providers 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 Providers and their 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.
•Limited
Operating History Risk.
The
Fund is a recently organized investment company with a limited operating
history. As a result, prospective investors have a limited track record or
history on which to base their investment decision.
•Non-Diversification
Risk.
Although the Fund intends to invest in a variety of securities and instruments,
the Fund will be 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.
•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.
•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 its Index may vary
somewhat for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by its Index. In addition,
the Fund may not be fully invested in the securities of its Index at all times
or may hold securities not included in its Index. The use of sampling techniques
may affect the Fund’s ability to achieve close correlation with its
Index.
The Fund may use a representative sampling strategy to achieve its investment
objective, if the 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.ritaetf.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 0.50% of the Fund’s average daily net assets.
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”). The Adviser has entered into an agreement with the Sponsor (defined
below) pursuant to which the Sponsor has agreed to assume the obligation of the
Adviser 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.
The
basis for the Board of Trustees’ approval of the Fund’s Investment Advisory
Agreement is available in the Fund’s Semi-Annual
Report
to Shareholders for the period ended April 30, 2022.
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 in May 2018. 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.
INDEX
PROVIDERS
Neither
of the Index Providers is 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
Providers provide information to the Fund about the constituents of the Index
and do not provide investment advice with respect to the desirability of
investing in, purchasing or selling securities. The Adviser has entered into a
sub-licensing agreement with the Fund’s sponsor (described below) 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.
FUND
SPONSOR
The
Adviser has entered into an agreement with Exchange Traded Funds Bureau, Inc.
(the “Sponsor”), under which the Sponsor agrees to (i) assist with the
development of and provide other support to the Fund and (ii) assume the
obligation of the Adviser to pay all expenses of the Fund, except Excluded
Expenses, and, to the extent applicable, pay the Adviser’s minimum fee for its
services under the arrangement. The Sponsor will also provide marketing support
for the Fund, including distributing marketing materials related to the Fund.
For its services, the Sponsor is entitled to a fee from the Adviser, which is
calculated daily and paid monthly, based on a percentage of the average daily
net assets of the Fund.
The
Sponsor is a privately held business focused on bringing Shariah-compliant
investment products to Islamic and non-Islamic investors worldwide.
The
Sponsor does not make investment decisions, provide investment advice, or
otherwise act in the capacity of an investment adviser to the Fund.
Additionally, the Sponsor is not involved in the maintenance of the Index and
does not otherwise act in the capacity of an index provider.
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 NAV
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. If such information is
not available for a security held by the Fund or is determined to be unreliable,
the security will be valued by the Adviser at fair value pursuant to procedures
established by the Adviser and approved by the Board (as described below).
Fair
Value Pricing
The
Adviser has been designated by the Board as the valuation designee for the Fund
pursuant to Rule 2a-5 under the 1940 Act. In its capacity as valuation designee,
the Adviser 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. The Board has appointed the Adviser as
the Fund’s valuation designee to perform all fair valuations of the Fund’s
portfolio investments, subject to the Board’s oversight. Accordingly, the
Adviser has established procedures for its fair valuation of the Fund’s
portfolio investments. Generally, when fair valuing a security held by the Fund,
the Adviser 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 established by the Adviser. Due to the
subjective and variable nature of determining the fair value of a security or
other investment, there can be no assurance that the Adviser’s fair value will
match or closely correlate to any market quotation that subsequently becomes
available or the price quoted or published by other sources. In addition, the
Fund may not 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
Rule 12d1-4 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, if any, 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. This summary does not apply
to Shares held in an IRA or other tax-qualified plans, which are generally not
subject to current tax. Transactions relating to Shares held in such accounts
may, however, be taxable at some time in the future. This summary is based on
current tax laws, which may change.
The
Fund intends to elect and qualify each year for treatment as a 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, 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), provided that
certain capital gain dividends attributable to dividends the Fund receives form
REITs (i.e.,
“unrecaptured section 1250 gain”) may be taxable to non-corporate shareholders
at a rate of 25%. 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. Dividends received by the
Fund from a REIT may be treated as qualified dividend income generally only to
the extent so reported by such REIT. Due
to the Fund’s investments in REITs it is expected that a significant portion of
the Fund’s distributions will not qualify to be treated as qualified dividend
income.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from the Fund.
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
Shares by non-U.S. shareholders 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.
Non-U.S.
persons are generally subject to U.S. tax on a disposition of a “United States
real property interest” (a “USRPI”). Gain on such a disposition is generally
referred to as “FIRPTA gain.” The Code provides a look-through rule for
distributions of so-called FIRPTA gain by the Fund if certain requirements are
met. If the look-through rule applies, certain distributions attributable to
income received by the Fund, from a REIT, may be treated as gain from the
disposition of a USRPI, causing distributions to be subject to U.S. withholding
tax at rates of up to 21%, and requiring non-U.S. investors to file nonresident
U.S. income tax returns. Also, gain may be subject to a 30% branch profits tax
in the hands of a foreign stockholder that is treated as a corporation for
federal income tax purposes. Under certain circumstances, Fund shares may
qualify as USRPIs, which could result in 15% withholding on certain
distributions and gross redemption proceeds paid to certain non-U.S.
shareholders.
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 (currently 24%) of the taxable distributions and sale 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 the shareholder is not subject to such
withholding.
Taxes
When Shares are Sold on the Exchange
Provided
that a shareholder holds Shares as capital assets, 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 its
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 the wash sales rule applies and when a loss might be
deductible.
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.
Taxation
of REIT Investments
The
Fund invests in REITs. “Qualified REIT dividends” (i.e.,
ordinary REIT dividends other than capital gain dividends and portions of REIT
dividends designated as qualified dividend income eligible for capital gain tax
rates) are eligible for a 20% deduction by non-corporate taxpayers. This
deduction, if allowed in full, equates to a maximum effective tax rate of 29.6%
(37% top rate applied to income after 20% deduction). Pursuant to proposed
Treasury regulations on which the Fund may rely, distributions by the Fund to
its shareholders that are attributable to qualified REIT dividends received by
the Fund and which the Fund properly reports as “section 199A dividends,” are
treated as “qualified REIT dividends” in the hands of non-corporate
shareholders. A section 199A dividend is treated as a qualified REIT dividend
only if the shareholder receiving such dividend holds the dividend-paying RIC
shares for at least 46 days of the 91-day period beginning 45 days before the
shares become ex-dividend, and is not under an obligation to make related
payments with respect to a position in substantially similar or related
property. The Fund is permitted to report such part of its dividends as section
199A dividends as are eligible, but is not required to do so.
REITs
in which the Fund invests often do not provide complete and final tax
information to the Fund until after the time that the Fund issues a tax
reporting statement.
As
a result, the Fund may at times find it necessary to reclassify the amount and
character of its distributions to you after it issues your tax reporting
statement. When such reclassification is necessary, the Fund (or a financial
intermediary, such as a broker, through which a shareholder owns Shares) will
send you a corrected, final Form 1099-DIV to reflect the reclassified
information. If you receive a corrected Form 1099-DIV, use the information on
this corrected form, and not the information on the previously issued tax
reporting statement, in completing your tax returns.
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.
Net
Investment Income Tax
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.
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, a wholly owned subsidiary of Foreside
Financial Group, LLC (d/b/a ACA Group), 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 traded on the Exchange at a price above (i.e.,
at a premium) or below (i.e.,
at a discount) the NAV of the Fund is available, free of charge, on the Fund’s
website at www.ritaetf.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 Providers, 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. The Fund does 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. The Index Providers
own the Index and the Index methodology and are a licensor of the Index to the
Sponsor, which in turn is a sub-licensor of the Index to the Adviser and index
receipt agent. The Index Providers have contracted with the Index Calculation
Agent to maintain and calculate the Index used by the Fund. The Index
Calculation Agent maintains and calculates the Index used by the Fund. The index
calculation agent shall have no liability for any errors or omissions in
calculating the Index.
FINANCIAL
HIGHLIGHTS
The
financial highlights table is intended to help you understand the Fund’s
financial performance for the Fund’s five most recent fiscal years (or the life
of the Fund, if shorter). Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Cohen & Company, Ltd., the Fund’s independent registered public
accounting firm, whose report, along with the Fund’s financial statements, is
included in the Fund’s annual report, which is available upon request.
For
a capital share outstanding throughout the period
|
|
|
|
|
|
|
|
|
| |
|
|
|
Period
Ended
October
31
2022(1) |
|
Net
asset value, beginning of period |
|
| $ |
25.20 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
investment income (loss)(2) |
|
| 0.40 |
| |
Net
realized and unrealized gain (loss) on investments |
|
| (7.31) |
|
|
Total
from investment operations |
|
| (6.91) |
| |
|
|
|
| |
DISTRIBUTIONS
TO SHAREHOLDERS: |
|
|
| |
Distributions
from: |
|
|
| |
Net
investment income |
|
| (0.35) |
| |
Total
distributions to shareholders |
|
| (0.35) |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
fees |
|
| 0.00 |
|
(3) |
|
|
|
| |
Net
asset value, end of period |
|
| $ |
17.94 |
| |
|
|
|
| |
Total
return |
|
| -27.59 |
% |
(4) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
assets at end of period (000’s) |
|
| $ |
11,213 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to average net assets |
|
| 0.50 |
% |
(5) |
Net
investment income (loss) to average net assets |
|
| 2.06 |
% |
(5) |
Portfolio
turnover rate (6) |
|
| 7 |
% |
(4) |
(1)Commencement
of operations on December 8, 2021.
(2)Calculated
based on average shares outstanding during the period.
(3)Represents
less than $0.005 per share.
(4)Not
annualized.
(5)Annualized.
(6)Excludes
the impact of in-kind transactions.
ETFB
Green SRI REITs ETF
|
|
|
|
|
|
|
|
|
|
| |
Adviser
|
Exchange
Traded Concepts, LLC
10900
Hefner Pointe Drive, Suite 400
Oklahoma
City, Oklahoma 73120 |
Administrator |
U.S.
Bancorp Fund Services, LLC,
d/b/a
U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Transfer
Agent |
U.S.
Bancorp Fund Services, LLC,
d/b/a
U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Distributor |
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202 |
Custodian |
U.S.
Bank, N.A.
1555
N. Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212 |
Independent
Registered Public Accounting Firm |
Cohen
& Company, Ltd.
342
North Water Street, Suite 830
Milwaukee,
Wisconsin 53202 |
Legal
Counsel |
Morgan,
Lewis & Bockius LLP
1111
Pennsylvania Avenue, NW
Washington,
DC 20004-2541 |
| |
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 February
28, 2023 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 is available in the Fund’s
annual
and semi-annual
reports to shareholders. In the annual report you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund’s performance.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Fund by contacting the Fund at
ETFB
Green SRI REITs 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 Internet website at www.ritaetf.com; or
(SEC
Investment Company Act File No. 811-22668)