ck0001359057-20230630
Vert
Global Sustainable Real Estate ETF (VGSR)
Listed
on Nasdaq Stock Market LLC
Prospectus
November 9,
2023
Telephone:
1-844-740-VERT
www.vertfunds.com
The
Securities and Exchange Commission (“SEC”) has not approved or disapproved of
these securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Vert
Global Sustainable Real Estate ETF
a
series of Manager Directed Portfolios (the “Trust”)
FUND
SUMMARY
Investment
Objective
The
Vert Global
Sustainable Real Estate ETF (the “Fund”) seeks to achieve
long-term capital appreciation.
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) |
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Management
Fees |
0.40% |
Other
Expenses(1) |
0.22% |
Total
Annual Fund Operating Expenses |
0.62% |
Less:
Fee Waivers and/or Expense Reimbursements |
-0.17% |
Total
Annual Fund Operating Expenses After Fee Waivers and/or Expense
Reimbursements(2) |
0.45% |
(1)On December 4, 2023, the
Fund is expected to acquire the assets of the Vert Global Sustainable Real
Estate Fund (the “Predecessor Fund”), as part of a tax-free reorganization.
Accordingly, “Other Expenses” are based on amounts estimated to be incurred for
the current fiscal year after giving effect to this
transaction.
(2)Vert Asset
Management, LLC (the “Advisor”), the Fund’s investment advisor, has
contractually agreed to waive a portion of its fees and reimburse certain
expenses for the Fund to limit the total annual fund operating expenses
(excluding certain expenses such as taxes, extraordinary expenses, expenses
incurred in connection with borrowings made by the Fund, interest (including
interest incurred in connection with bank and custody overdrafts), brokerage
commissions and other transactional expenses, expenses incurred with any merger
or reorganization, dividends or interest on short positions, acquired fund fees
and expenses or extraordinary expenses such as litigation (collectively,
“Excludable Expenses”)) to 0.45% of the Fund’s average daily net assets. To the
extent the Fund incurs Excludable Expenses, Total Annual Fund Operating Expenses
After Fee Waivers and/or Expense Reimbursements may be greater than 0.45%. The
waivers and reimbursements will remain in effect through December 4,
2026 unless terminated sooner by mutual agreement of the Fund’s
Board of Trustees (the “Board”) and the Advisor. The Advisor may request
recoupment of previously waived fees and paid expenses from the Fund for three
years from the date such fees and expenses were waived or paid, if such
reimbursement will not cause the Fund's total expense ratio to exceed the lesser
of: (1) the expense limitation in place at the time of the waiver and/or expense
payment; or (2) the expense limitation in place at the time of the
recoupment.
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.
The fee waiver/expense reimbursement agreement discussed above is
reflected only through December 4, 2026. Although your
actual costs may be higher or lower, based on these assumptions, your costs
would be:
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One
Year |
Three
Years |
Five
Years |
Ten
Years |
$46 |
$144 |
$292 |
$723 |
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 year ended June 30, 2023, the Predecessor Fund’s portfolio turnover rate
was 9%
of the average value of its portfolio.
Principal Investment
Strategies
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to provide
exposure to a broad portfolio of sustainable real estate companies.
Under normal market conditions, the
Fund will invest at least 80% of its net assets in securities of companies
principally engaged in the real estate industry that meet the Advisor’s
environmental, social and governance (“ESG”) criteria, as described
below. The Fund invests in the securities of U.S. and non-U.S.
companies with a focus on real estate investment trusts (“REITs”) or other
pooled investment vehicles or companies that manage a portfolio of income
producing real estate or real estate-related loans and that the Advisor
considers to be similar to REITs because of the way they are treated by tax
authorities or because of the way they are required to conduct their business
(“REIT-like entities”). REIT-like entities may include companies that own
properties, real estate developers and operating companies with substantial real
estate holdings.
REITs
and REIT-like entities are types of real estate companies that pool investors’
funds for investment primarily in income-producing real estate or real estate
related loans or interests, and may include foreign REIT-like entities. The Fund
generally considers a company to be principally engaged in the real estate
industry if the company: (i) derives at least 50% of its revenue or profits
from the ownership, management, development, construction, or sale of
residential, commercial, industrial, or other real estate; (ii) has at
least 50% of the value of its assets invested in residential, commercial,
industrial, or other real estate; or (iii) is organized as a REIT or
REIT‑like entity.
The
Advisor takes into account the impact that real estate companies have on the
environment and other sustainability considerations when making investment
decisions for the Fund’s investment portfolio. In assessing sustainability, the
Advisor will consider ESG criteria. Some of the environmental criteria the
Advisor will consider include emissions, energy use, water use, waste, and risks
due to climate change vulnerability such as flood risk, among others. Some of
the social criteria the Advisor will consider include employee policies and
labor management, health and safety, and tenant engagement, among others. Some
of the governance criteria that the Advisor will consider include reporting and
disclosure, board diversity and independence, and bribery and corruption, among
others. The Advisor sources data from company disclosures, industry bodies, and
research companies. The Advisor seeks data that is aligned to an international
reporting standard or framework. Data that has the potential for material
financial impact is prioritized. The Advisor avoids using third-party ESG
ratings where possible.
The
Fund invests in the securities of companies associated with countries that the
Advisor has identified as approved markets for investment for the Fund (which
may include issuers in emerging markets). As of the date of this Prospectus, the
Fund may invest in securities of companies associated with: Australia, Austria,
Belgium, Brazil, Canada, Finland, France, Germany, Greece, Hong Kong, India,
Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, New Zealand, Norway,
Philippines, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland,
Taiwan, Thailand, Turkey, United Kingdom, and the United States (collectively,
the “Approved Markets”). The Advisor also may authorize other countries for
investment in the future, in addition to the Approved Markets listed above. In
addition, the Fund may continue to hold securities of countries that are not
listed above as Approved Markets, but had been authorized for investment in the
past, and may reinvest distributions received in connection with such existing
investments in such previously Approved Markets.
The
Fund invests in companies principally engaged in the real estate industry using
a modified market capitalization weighted approach. A company’s market
capitalization is the number of its shares outstanding times its price per
share. In general, the higher the relative market capitalization of a real
estate company within an Approved Market, the greater its representation in the
Fund. The Advisor may modify such market capitalization weightings by adjusting
the representation in the Fund of an eligible company, or excluding a company,
after considering the sustainability of the company, as well as free float,
momentum, trading strategies, liquidity, profitability, and other factors that
the Advisor determines to be appropriate. The Advisor also may limit or fix the
Fund’s exposure to a particular country or issuer.
The
Advisor has engaged Dimensional Fund Advisors LP (“DFA” or the “Sub-Advisor”) as
sub-advisor to provide portfolio management and trading services to the Fund
with respect to securities identified as eligible for the Fund by the
Advisor.
The
Fund may lend portfolio securities to generate additional income.
As part of the Fund’s ESG strategy, the Advisor participates in
shareholder engagement, which typically includes dialogue with company
management, proxy voting on ESG matters (through the Sub-Advisor’s voting of the
proxies), and/or participation with shareholder resolutions.
Principal
Risks
Before
investing in the Fund, you should carefully consider your own investment goals,
the amount of time you are willing to leave your money invested, and the amount
of risk you are willing to take. Remember, in addition
to possibly not achieving your investment goals, you could lose all or a portion of your
investment in the Fund over long or even short periods of
time. The principal risks of investing in the Fund
are:
•Equity
Market Risk. Equity
securities are susceptible to general stock market fluctuations due to economic,
market, political and issuer-specific considerations and to potential volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change.
•General
Market Risk; Recent Market Events.
The market value of a security may move up or down, sometimes rapidly and
unpredictably. These fluctuations may cause a security to be worth less than the
price originally paid for it, or less than it was worth at an earlier time.
Market risk may affect a single issuer, industry, sector of the economy or the
market as a whole. U.S. and international markets have experienced volatility in
recent months and years due to a number of economic, political and global macro
factors, including rising inflation, problems in the banking sector, the war
between Russia and Ukraine and the impact of the coronavirus (COVID-19) global
pandemic. While U.S. and global economies are recovering from the effects of
COVID-19, labor shortages and the inability to meet consumer demand have
restricted growth. Uncertainties regarding the level of central banks’ interest
rate increases, political events, the Russia-Ukraine conflict, trade tensions
and the possibility of a national or global recession have also contributed to
market volatility.
Global economies and financial markets are increasingly
interconnected, which increases the possibility that conditions in one country
or region might adversely impact issuers in a different country or region.
Continuing market volatility as a result of recent market conditions or other
events may have adverse effects on the Fund’s returns. The Advisor and
Sub-Advisor will monitor developments and seek to manage the Fund in a manner
consistent with achieving the Fund’s investment objective, but there can be no
assurance that they will be successful in doing so.
•Real
Estate Investment Risk.
The risks related to investments in real estate securities include, but are not
limited to, adverse changes in general economic and local market conditions;
adverse developments in employment; changes in supply or demand for similar or
competing properties; unfavorable changes in applicable taxes, governmental
regulations, or interest rates; operating or developmental expenses and lack of
available financing.
•Real Estate-Related Securities Concentration
Risk. The Fund could lose money due to the performance of real
estate-related securities even if securities markets generally are experiencing
positive results.
•Foreign
Securities and Currency Risk. Foreign
securities are subject to risks relating to political, social and economic
developments abroad and differences between U.S. and foreign regulatory
requirements and market practices, including fluctuations in foreign currencies.
Income earned on foreign securities may be subject to foreign withholding taxes.
The Fund may invest in emerging market countries, which can involve higher
degrees of risk as compared with developed
economies.
•Sustainability
Considerations Risk. The
Fund’s focus on sustainability considerations (ESG criteria) may limit the
number of investment opportunities available to the Fund, and as a result, at
times, the Fund may underperform funds that are not subject to similar
investment considerations.
•REIT
Risk.
A REIT’s share price may decline because of adverse developments affecting the
real estate industry, including changes in interest rates. The returns from
REITs may trail returns from the overall market. The Fund’s investments in REITs
may be subject to special tax rules, or a particular REIT may fail to qualify
for the favorable federal income tax treatment applicable to REITs, the effect
of which may have adverse tax consequences for the Fund and
shareholders.
•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 net asset
value (“NAV”) and possibly face delisting: (i) APs exit the business or
otherwise become unable to process creation and/or redemption orders and no
other APs step forward to perform these services, or (ii) market makers
and/or liquidity providers exit the business or significantly reduce their
business activities and no other entities step forward to perform their
functions.
◦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 the
Fund’s investments have exposure to securities that may trade on foreign
exchanges that are closed when the Fund’s primary listing exchange is open,
there are likely to be deviations between the current price of a security and
the security’s last quoted price from the closed foreign market. This may result
in premiums and discounts that are greater than those experienced by domestic
ETFs.
◦Trading. Although
Shares are listed for trading on Nasdaq
Stock Market LLC (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.
•Operational
Risk.
Operational risks include human error, changes in personnel, system changes,
faults in communication, and failures in systems, technology, or processes.
Various operational events or circumstances are outside the Advisor’s or
Sub-Advisor’s control, including instances at third parties. The Fund, the
Advisor and the Sub-Advisor seek to reduce these operational risks through
controls and procedures. However, these measures do not address every possible
risk and may be inadequate to address these risks.
•Liquidity Risk. The Fund may make investments that are illiquid or that may become
less liquid in response to market developments or adverse investor perceptions.
Illiquid investments may be more difficult to value. Liquidity risk may be the
result of, among other things, the reduced number and capacity of traditional
market participants to make a market in the specific security type or the lack
of an active market.
•Management
Risk. Investment
strategies employed by the Advisor or Sub-Advisor in selecting investments for
the Fund may not result in an increase in the value of your investment or in
overall performance equal to other investments.
•Cybersecurity
Risk. With
the increased use of technologies such as the Internet to conduct business, the
Fund is susceptible to operational, information security, and related risks.
Cyber incidents affecting the Fund or its service providers may cause
disruptions and impact business operations, potentially resulting in financial
losses, interference with the Fund’s ability to calculate its NAV, impediments
to trading, the inability of shareholders to transact business, violations of
applicable privacy and other laws, regulatory
fines, penalties, reputational damage, reimbursement or other
compensation costs, or additional compliance
costs.
•Securities Lending Risk. Securities lending involves the risk that the borrower may fail to
return the securities in a timely manner or at all. As a result, the Fund may
lose money and there may be a delay in recovering the loaned securities. The
Fund could also lose money if it does not recover the securities and/or the
value of the collateral falls, including the value of investments made with cash
collateral. Securities lending also may have certain adverse tax
consequences.
•Passive
Foreign Investment Company (“PFIC”) Risk.
Many foreign entities that operate similarly to REITs may be deemed for U.S.
federal income tax purposes to be PFICs, which could result in taxable
distributions to you at unfavorable tax rates.
Performance
Information
The
Fund is the successor to the Vert Global Sustainable Real Estate Fund (the
“Predecessor Fund”), a series of the Trust, as a result of the reorganization of
the Predecessor Fund into the Fund that is expected to occur on or about
December 4, 2023 (the “Reorganization”). As a result of the Reorganization, the
Fund will adopt the financial and performance history of the Predecessor Fund.
Accordingly, the performance shown in the bar chart and performance table for
periods prior to the Reorganization represents the performance of the
Predecessor Fund, which operated as a mutual fund. The Predecessor Fund was also
advised by the Advisor and sub-advised by the Sub-Advisor and had the same
investment objective and substantially similar investment strategies as the
Fund. The Fund will commence operations on the date of the Reorganization.
Returns of the Fund will be different from returns of the Predecessor Fund
because they have different expenses.
The performance
information demonstrates the risks of investing in the Fund by showing changes
in the Fund’s (and the Predecessor Fund’s) performance from year to year and by
showing how the Fund’s (and the Predecessor Fund’s) average annual returns for
the one-year, five-year, and since inception periods compare with those of a
broad measure of market performance. Remember, the
Fund’s past performance, before and after taxes, is not necessarily an
indication of how the Fund will perform in the future. Had the
Predecessor Fund been organized as an ETF, its performance may have differed
from the performance shown below. Updated performance information is available
on the Fund’s website at www.vertfunds.com
or by calling 1-844-740-VERT.
Calendar Year Returns as of
December 31
The
Predecessor Fund’s calendar year-to-date return as of
September 30, 2023 was
-3.58%. During
the period of time shown in the bar chart, the highest return for a
calendar quarter was 15.36% for the quarter ended March 31, 2019, and the
lowest return for a calendar
quarter was -28.98% for the quarter ended March 31,
2020.
Average
Annual Total Returns
(For
the periods ended December 31, 2022)
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| 1
Year |
5
Year |
Since
Inception (10/31/2017) |
Return Before
Taxes |
-26.19 |
% |
-0.20 |
% |
0.51 |
% |
Return After
Taxes on Distributions |
-26.47 |
% |
-1.06 |
% |
-0.36 |
% |
Return After
Taxes on Distributions and Sale of Shares |
-15.32 |
% |
-0.33 |
% |
0.20 |
% |
S&P
Global REIT Index
(Net)
(reflects reinvested
dividends net of withholding taxes, but reflects no deduction for fees,
expenses, or taxes) |
-24.36 |
% |
0.92 |
% |
1.67 |
% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who are exempt from tax or
hold their Shares through tax-deferred or other tax-advantaged arrangements such
as 401(k) plans or individual retirement accounts (“IRAs”).
In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund 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 benefit to the
investor.
Management
Investment
Advisor and Sub-Advisor. Vert
Asset Management, LLC is the Fund’s investment advisor. Dimensional Fund
Advisors LP is the Fund’s sub-advisor.
Portfolio
Managers.
Samuel
Adams, Chief Executive Officer of the Advisor, has been responsible for the
oversight of the Fund, the Predecessor Fund, and the Sub-Advisor since
inception. Mr. Adams has been responsible for the day-to-day management of the
Fund since October 2019.
Jed
S. Fogdall, Vice President, Global Head of Portfolio Management, and a
Senior Portfolio Manager of DFA, and Allen Pu, Vice President, Deputy Head
of Portfolio Management, North America, and a Senior Portfolio Manager of DFA,
have managed the Fund and the Predecessor Fund since inception in October 2017.
William B. Collins-Dean, Senior Portfolio Manager and Vice President of DFA, has
managed the Fund and the Predecessor Fund since March 2019. Joseph F. Hohn,
Senior Portfolio Manager and Vice President of DFA, has managed the Fund since
the
Reorganization.
Each of the Sub-Advisor’s portfolio managers are equally responsible for the
day-to-day management of the Fund.
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”). When available, information about the
Fund, including its NAV, market price, premiums and discounts, and bid-ask
spreads will be available on the Fund’s website at
www.vertfunds.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 Advisor 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 advisor to recommend the Fund
over another investment. Any such arrangements do not result in increased Fund
expenses. Ask your advisor or visit the Intermediary’s website for more
information.
ADDITIONAL
INFORMATION ABOUT THE FUND
Investment
Objective
The
Fund seeks to achieve long-term capital appreciation.
Change
in Investment Objective and 80% Policy.
The Fund’s investment objective may be changed without the approval of the
Fund’s shareholders upon Board approval and 60 days’ prior written notice to
shareholders. However, the Fund will not make any change in its investment
policy of investing at least 80% of its net assets in investments suggested by
the Fund’s name without first changing the Fund’s name and providing
shareholders with at least 60 days’ prior written notice.
Principal
Investment Strategies
The
Fund is an actively managed ETF that seeks to provide exposure to a broad
portfolio of sustainable real estate companies. Under normal market conditions,
the Fund invests at least 80% of its net assets in securities of companies
principally engaged in the real estate industry that meet the Advisor’s ESG
criteria, as described below. The Fund invests in the securities of U.S. and
non-U.S. companies, with a focus on REITs and REIT-like entities. REIT-like
entities may include companies that own properties, real estate developers and
operating companies with substantial real estate holdings. The Fund may invest
in companies of any size.
REITs
and REIT-like entities are types of real estate companies that pool investors’
funds for investment primarily in income-producing real estate or real estate
related loans or interests. The Fund may invest in U.S. REITs and similar REIT
and REIT-like entities domiciled in foreign countries. While the Fund is not
limited to investing in REITs and REIT-like entities, the Fund focuses on these
types of entities.
The
Fund generally considers a company to be principally engaged in the real estate
industry if the company: (i) derives at least 50% of its revenue or profits
from the ownership, management, development, construction, or sale of
residential, commercial, industrial, or other real estate; (ii) has at
least 50% of the value of its assets invested in residential, commercial,
industrial, or other real estate; or (iii) is organized as a REIT or
REIT‑like entity.
The
Fund purchases securities of companies associated with countries that the
Advisor has identified as Approved Markets. The Advisor also may authorize other
countries for investment in the future, in addition to the Approved Markets. In
addition, the Fund may continue to hold securities of countries that are not
listed as Approved Markets, but had been authorized for investment in the past,
and may reinvest distributions received in connection with such existing
investments in such previously Approved Markets. The Fund invests a substantial
portion of its assets in the securities of issuers located in multiple countries
throughout the world. Under normal market conditions, the Fund invests in
securities of issuers from at least three different countries (including the
U.S.). An issuer is considered to be of a country if it is organized, has the
majority of its assets, or derives a majority of its income in that country.
The
Fund invests in companies principally engaged in the real estate industry using
a modified market capitalization weighted approach. A company’s market
capitalization is the number of its shares outstanding times its price per
share. In general, the higher the relative market capitalization of a real
estate company within an eligible country, the greater its representation in the
Fund. The Advisor may modify such market capitalization weightings by adjusting
the representation in the Fund of an eligible company, or excluding a company,
after considering the sustainability of the company, as well as free float,
momentum, trading strategies, liquidity, profitability, and other factors that
the Advisor determines to be appropriate. The Advisor also may limit or fix the
Fund’s exposure to a particular country or issuer.
The
Fund expects to generally invest in companies for the long term however there
are situations where the Fund may sell a security. If a company has a serious
controversy of an ESG nature, the Fund may divest. The Fund may also sell a
company if it falls into severe financial distress, has excessive leverage, has
filed for bankruptcy, or is under investigation or facing material legal
proceedings. The Advisor will also regularly assess whether companies are
maintaining a commitment to sustainability, at least annually, and more
frequently if new information becomes available, and will sell firms that do not
continue to perform well on ESG criteria.
The
Fund may lend portfolio securities to generate additional income. To respond to
adverse market, economic, political, or other conditions, the Fund may invest up
to 100% of its assets in a temporary defensive manner by holding all or a
substantial portion of its assets in cash, cash equivalents, or other high
quality short-term investments. Examples of temporary defensive investments
include short-term U.S. government securities,
commercial
paper, bank obligations, repurchase agreements, money market fund shares, and
other money market instruments. The Fund may invest in other investment
companies, including other ETFs, in a temporary defensive manner. The Fund also
may invest in these types of defensive investments or hold cash while looking
for suitable investment opportunities or to maintain liquidity. In these
circumstances, the Fund may be unable to achieve its investment objective.
About
ESG Investing
The
Advisor takes into account the impact that real estate companies have on the
environment and other sustainability considerations when making investment
decisions for the Fund’s investment portfolio. In assessing sustainability, the
Advisor will consider ESG criteria. Some of the environmental criteria the
Advisor will consider include emissions, energy use, water use, waste, and risks
due to climate change vulnerability such as flood risk, among others. Some of
the social criteria the Advisor will consider include employee policies and
labor management, health and safety, and tenant engagement, among others. Some
of the governance criteria that the Advisor will consider include reporting and
disclosure, board diversity and independence, and bribery and corruption, among
others. The Advisor sources data from company disclosures, industry bodies, and
research companies. The Advisor seeks data that is aligned to an international
reporting standard or framework. Data that has the potential for material
financial impact is prioritized. The Advisor avoids using third-party ESG
ratings where possible.
Company
Engagement
The
Advisor believes that shareholder advocacy is a critical component of ESG
investing and is actively involved in advocating for positive changes in
companies. The Advisor uses strategic engagement to press for greater
environmental, social, and corporate governance accountability. The Fund’s and
the Advisor’s activities may include, but are not limited to:
•Direct
Dialogue with Company Management.
The Advisor may initiate dialogue with management through phone calls, letters,
and in-person meetings. Through its interaction, the Advisor seeks to advocate
for improvement on ESG issues.
•Proxy
Voting.
The Sub-Advisor votes proxies consistent with the Fund’s proxy voting
guidelines. In doing so, the Fund has an opportunity to express its views on ESG
issues.
•Shareholder
Resolutions.
The Advisor, on behalf of the Fund, may propose, or participate in the creation
of, shareholder resolutions on a variety of sustainability issues. In doing so,
the Advisor is encouraging companies to take action.
Principal
Risks of Investing in the Fund
Before
investing in the Fund, you should carefully consider your own investment goals,
the amount of time you are willing to leave your money invested, and the amount
of risk you are willing to take. Remember, in addition to possibly not achieving
your investment goals, you
could lose all or a portion of your investment in the Fund.
The following principal risks are applicable to investments in the
Fund:
Equity
Market Risk. Equity
securities are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. These investor perceptions are based on various and
unpredictable factors including: expectations regarding government, economic,
monetary and fiscal policies; inflation and interest rates; economic expansion
or contraction; and global or regional political, economic and banking crises.
If you hold common stock, or common stock equivalents, of any given issuer you
will generally be exposed to greater risk than 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.
General
Market Risk; Recent Market Events.
The market value of a security may move up or down, sometimes rapidly and
unpredictably. These fluctuations may cause a security to be worth less than the
price originally paid for it, or less than it was worth at an earlier time.
Market risk may affect a single issuer, industry, sector of the economy or the
market as a whole. U.S. and international markets have experienced volatility in
recent months and years due to a number of economic, political and global macro
factors, including rising inflation, problems in the banking sector, the war
between Russia and Ukraine and the impact of COVID-19. While U.S. and global
economies are
recovering
from the effects of COVID-19, labor shortages and the inability to meet consumer
demand have restricted growth. Uncertainties regarding the level of central
banks’ interest rate increases, political events, the Russia-Ukraine conflict,
trade tensions and the possibility of a national or global recession have also
contributed to market volatility.
Global
economies and financial markets are increasingly interconnected, which increases
the possibility that conditions in one country or region might adversely impact
issuers in a different country or region. In particular, a rise in protectionist
trade policies, slowing global economic growth, risks associated with epidemic
and pandemic diseases, risks surrounding the uncertainty of the UK’s economy,
the risk of trade disputes, and the possibility of changes to some international
trade agreements, could affect the economies of many nations, including the
United States, in ways that cannot necessarily be foreseen at the present time.
Continuing market volatility as a result of recent market conditions or other
events may have adverse effects on your account. The Advisor and Sub-Advisor
will monitor developments and seek to manage the Fund in a manner consistent
with achieving the Fund’s investment objective, but there can be no assurance
that it will be successful in doing so.
Real
Estate Investment Risk. Investments
in real estate-related companies are subject to numerous risks, including, but
not limited to, adverse changes in general economic and local market conditions;
adverse developments in employment or local economic performance; changes in
supply or demand for similar or competing properties; unfavorable changes in
applicable taxes, governmental regulations or interest rates, and lack of
available financing. Real estate-related companies may improve or operate real
properties as well as buy and sell them, and accordingly those investments are
also subject to risks associated with improving and operating property, such as
the inability to maintain rental rates and occupancy levels in highly
competitive markets, unavailability or increases in the cost of insurance,
unexpected increases in the costs of refurbishment and improvements, unfavorable
rent control laws and costs of complying with environmental
regulations.
Real
Estate-Related Securities Concentration Risk.
The Fund’s investment portfolio is expected to be largely composed of securities
that are real estate-related, principally shares of REITs and other real
estate-related companies. Because the investment strategies of the Fund are
focused principally on real estate-related securities, the Fund does not intend
to diversify its investments among securities from issuers in other industries.
Due to this investment strategy focus, the performance of investments made by
the Fund may be determined to a great extent by the current status of the real
estate industry in general, or on other factors (such as interest rates and the
availability of loan capital) that may affect the real estate industry, even if
other industries would not be so affected. Consequently, the Fund’s investment
strategies could lead to securities investment results that may be significantly
different from investments in securities of other industries or sectors (e.g.,
technology, financial services, retail or manufacturing) or in a more
broad-based portfolio generally. The Fund could lose money due to the
performance of real estate-related securities even if stock markets generally
are experiencing positive results.
Foreign
Securities and Currency Risk.
Foreign securities risks include risks relating to political, social and
economic developments abroad and differences between U.S. and foreign regulatory
requirements and market practices. Those risks are increased for investments in
emerging markets. Securities that are denominated in foreign currencies are
subject to the further risk that the value of the foreign currency will fall in
relation to the U.S. dollar and/or will be affected by volatile currency markets
or actions of U.S. and foreign governments or central banks. Income earned on
foreign securities may be subject to foreign withholding taxes.
Sustainability
Considerations Risk. Sustainability
considerations such as ESG criteria applied to the Fund’s investment decisions
may limit the number of investment opportunities available to the Fund, and as a
result, at times, the Fund may produce more modest gains than funds that are not
subject to similar investment considerations. For example, the Fund may decline
to purchase or underweight its investment in certain securities due to
sustainability considerations when other investment considerations would suggest
that a more significant investment in such securities would be advantageous. In
addition, the Fund may sell certain securities due to sustainability
considerations when it is otherwise disadvantageous to do so. The sustainability
considerations may cause the Fund’s industry allocation to deviate from that of
funds without these considerations and from conventional benchmarks.
REIT
Risk.
Due to certain special considerations that apply to REITs, investments in REITs
may carry additional risks not necessarily present in investments in other
securities. As discussed below, REIT securities (including those trading on
national exchanges) typically have trading volumes that are less than those of
common stocks of non-real
estate-related
companies traded on national exchanges, which may affect the Fund’s ability to
trade or liquidate those securities. In addition, an investment in REITs may be
adversely affected or lost if the REIT fails to comply with applicable laws and
regulations. Specifically, to qualify as a REIT under the Internal Revenue Code
of 1986, as amended (the “Code”), a REIT must satisfy certain important
requirements. For example, to qualify as a REIT in the U.S., and to avoid
federal income taxes at the REIT level, a REIT is generally required to
distribute 90% of its net income on an annual basis. In addition, to avoid
federal excise tax, a REIT must generally distribute in each calendar year an
amount at least equal to the sum of 85% of its ordinary income for the calendar
year plus 95% of its capital gain net income for the calendar year.
Consequently, a REIT may be required to dispose of its holdings under
disadvantageous circumstances if the REIT’s obligation to distribute its income
exceeds its available cash to meet those distribution requirements. Further, at
least 75% of a REIT’s gross income generally must be derived from rents from
real property, gain from the sale or disposition of real property (excluding
gross income from the sale or disposition of real property held for sale to
customers in the ordinary course of a trade or business), interest on loans
secured by mortgages on real property or certain other types of real
estate-related income; and at least 75% of a REIT’s total assets must consist of
certain real estate assets, cash and cash items, or government securities. REITs
are also subject to special ownership requirements that are imposed by law or,
in some cases, by the terms of their governing instruments. For example, to
qualify as a REIT, the REIT must have at least one hundred beneficial owners. No
more than 50% of the outstanding shares of a REIT may be owned directly or
indirectly by five or fewer shareholders, and for purposes of that calculation,
shares owned by entities such as a corporation, partnership or trust are treated
as being owned proportionately by its shareholders, partners or beneficiaries.
In addition to these requirements imposed by the Code, the governing instrument
of a REIT may also impose more stringent restrictions on the ownership of the
REIT. The Fund will not be in a position to assure that a REIT in which it
invests will comply at all times with such requirements. Failure to qualify with
any of these requirements or other requirements applicable to REITs could
jeopardize a company’s status as a REIT. The Fund will have no control over the
operations and policies of the REITs, and the Fund will have no ability to cause
a REIT to take the actions necessary to qualify as a REIT. If the Fund invests
in a REIT that subsequently fails to qualify as a REIT under the Code, it is
highly likely that the REIT will be subject to a substantial additional federal
income tax liability that could cause it to liquidate investments or borrow
funds under adverse conditions. In addition, if a company fails to qualify as a
REIT for a year, even after re-qualifying as a REIT in a subsequent tax year,
the company may incur additional federal income tax liability in such subsequent
time periods relating to the prior REIT disqualification. Because the Fund’s
investment in securities issued by a REIT may be based on the assumption that
the company will continue to qualify as a REIT, any such disqualification or
failure to comply with REIT regulation could adversely affect the value of the
Fund’s investment in those securities.
“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.
ETF
Risks.
The Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
•APs,
Market Makers, and Liquidity Providers Concentration Risk.
The Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the business or
significantly reduce their business activities and no other entities step
forward to perform their functions.
•Costs
of Buying or Selling Shares.
Investors buying or selling Shares in the secondary market will pay brokerage
commissions or other charges imposed by brokers, as determined by that broker.
Brokerage commissions are often a fixed amount and may be a significant
proportional cost for investors seeking to buy or sell relatively small amounts
of Shares. In addition, secondary market investors will also incur the cost of
the difference between the price at which an investor is willing to buy Shares
(the “bid” price) and the price at which an investor is willing to sell Shares
(the “ask” price). This difference in bid and ask prices is often referred to as
the “spread” or “bid-ask spread.” The bid-ask spread varies over time for Shares
based on trading volume and market liquidity, and the spread is generally lower
if Shares have more trading volume and market liquidity and higher if Shares
have little trading volume and market liquidity. Further, a relatively small
investor base in the Fund, asset swings in the Fund, and/or increased market
volatility may cause increased bid-ask spreads. Due to the costs of buying or
selling Shares, including bid-ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small
investments.
•Shares
May Trade at Prices Other Than NAV.
As with all ETFs, Shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of Shares will
approximate the Fund’s NAV, there may be times when the market price of Shares
is more than the NAV intra-day (premium) or less than the NAV intra-day
(discount) due to supply and demand of Shares or during periods of market
volatility. This risk is heightened in times of market volatility or periods of
steep market declines. The market price of Shares during the trading day, like
the price of any exchange-traded security, includes a “bid-ask” spread charged
by the exchange specialist, market makers or other participants that trade
Shares. In times of severe market disruption, the bid-ask spread can increase
significantly. At those times, Shares are most likely to be traded at a discount
to NAV, and the discount is likely to be greatest when the price of Shares is
falling fastest, which may be the time that you most want to sell your Shares.
The Advisor believes that, under normal market conditions, large market price
discounts or premiums to NAV will not be sustained because of arbitrage
opportunities. Because the Fund’s investments have exposure to securities that
may trade on foreign exchanges that are closed when the Fund’s primary listing
exchange is open, there are likely to be deviations between the current price of
a security and the security’s last quoted price from the closed foreign market.
This may result in premiums and discounts that are greater than those
experienced by 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.
Operational
Risk.
Operational risks include human error, changes in personnel, system changes,
faults in communication, and failures in systems, technology, or processes.
Various operational events or circumstances are outside the Advisor’s or
Sub-Advisor’s control, including instances at third parties. The Fund, the
Advisor, and the Sub-Advisor seek to reduce these operational risks through
controls and procedures. However, these measures do not address every possible
risk and may be inadequate to address these risks.
Liquidity
Risk. When
there is little or no active trading market for specific types of securities,
such as securities that are not publicly traded, it can become more difficult to
sell the securities in a timely manner at or near their perceived value. In such
a market, the value of such securities and the Fund's share price may fall
dramatically. Additionally, illiquid investments may be more difficult to value.
Liquidity risk may be the result of, among other things, the reduced number and
capacity of traditional market participants to make a market in the specific
security type or the lack of an active market.
Liquidity
risk also may refer to the risk that the Fund will not be able to pay redemption
proceeds within the allowable time period stated in this prospectus because of
unusual market conditions, an unusually high volume of redemption requests, or
other reasons. To meet redemption requests, the Fund may be forced to sell
securities at an unfavorable time and/or under unfavorable conditions, which may
adversely affect the Fund's share price.
Management
Risk.
The ability of the Fund to meet its investment objective is directly related to
the Advisor’s and Sub-Advisor’s management of the Fund. The value of your
investment in the Fund may vary with the effectiveness of the Advisor’s
research, analysis and asset allocation among portfolio securities. If the
investment strategies do not produce the expected results, your investment could
be diminished or even lost.
Cybersecurity
Risk. With
the increased use of technologies such as the Internet to conduct business, the
Fund is susceptible to operational, information security, and related risks. In
general, cyber incidents can result from deliberate attacks or unintentional
events. Cyber attacks include, but are not limited to, gaining unauthorized
access to digital systems (e.g.,
through “hacking” or malicious software coding) for purposes of misappropriating
assets or sensitive information, corrupting data, or causing operational
disruption. Cyber attacks may also be carried out in a manner that does not
require gaining unauthorized access, such as causing denial-of-service attacks
on websites (i.e.,
efforts to make network services unavailable to intended users). Cyber incidents
affecting the Fund or its service providers may cause disruptions and impact
business operations, potentially resulting in financial losses, interference
with the Fund’s ability to calculate its NAV, impediments to trading, the
inability of shareholders to transact business, violations of applicable privacy
and other laws, regulatory fines, penalties, reputational damage, reimbursement
or other compensation costs, or additional compliance costs. Similar adverse
consequences could result from cyber incidents affecting issuers of securities
in which the Fund invests, counterparties with which the Fund engages in
transactions, governmental and other regulatory authorities, exchange and other
financial market operators, banks, brokers, dealers, insurance companies and
other financial institutions (including financial intermediaries and service
providers for shareholders) and other parties. In addition, substantial costs
may be incurred in order to prevent any cyber incidents in the future. While the
Fund’s service providers have established business continuity plans in the event
of, and risk management systems to prevent, such cyber incidents, there are
inherent limitations in such plans and systems including the possibility that
certain risks have not been identified. Furthermore, the Fund cannot control the
cyber security plans and systems put in place by its service providers or any
other third parties whose operations may affect the Fund or its shareholders. As
a result, the Fund and its shareholders could be negatively impacted.
Securities
Lending Risk.
The Fund may lend securities from its portfolio. Securities lending involves the
risk of a default or insolvency of the borrower. In either of these cases, the
Fund could experience delays in recovering securities or collateral or could
lose all or part of the value of the loaned securities. The Fund also could lose
money in the event of a decline in the value of the collateral provided for
loaned securities. Additionally, the loaned portfolio securities may not be
available to the Fund on a timely basis and the Fund may therefore lose the
opportunity to sell the securities at a desirable price. Any decline in the
value of a security that occurs while the security is out on loan would continue
to be borne by the Fund.
Passive
Foreign Investment Company (“PFIC”) Risk.
Many foreign entities that operate similarly to REITs may be deemed for U.S.
federal income tax purposes to be PFICs, which could result in taxable
distributions to you at unfavorable tax rates. In general, a PFIC is any foreign
corporation if 75% or more of its gross income for its taxable year is passive
income, or 50% or more of its average assets (determined by value or by adjusted
basis of assets) are held for the production of passive income. When investing
in PFIC stock, the Fund intends to make an election to mark-to-market such
stock, which will cause the Fund to recognize any unrealized gains in the stock
as ordinary income at the end of the Fund’s fiscal year, regardless of whether
the Fund sells the stock or receives any distributions. Deductions for
unrealized losses on any PFIC stock are allowable only to the extent of any net
mark-to-market gains with respect to that stock included in the Fund’s gross
income for prior taxable years under the election. These gains (reduced by
allowable losses) are treated as ordinary income that the Fund is required to
distribute, even though it has not sold or received dividends from the PFIC
stock. You should also be aware that the designation of a foreign corporation as
a PFIC will cause its dividends to fall outside of the definition of qualified
foreign corporation dividends. Thus PFIC dividends generally will not qualify
for the reduced rate of federal income taxation on qualified dividends when
distributed to you by the Fund. Due to various complexities in identifying
PFICs, the Fund can give no assurances that it will be able to identify
portfolio securities in foreign corporations that are PFICs in time for the Fund
to make a mark-to-market election. If the Fund is unable to identify a foreign
corporation
that the Fund invests in as a PFIC and thus does not make a mark-to-market
election, the Fund may be subject to U.S. federal income taxes on any “excess
distribution” in respect of PFIC stock even if such income is distributed as a
taxable dividend by the Fund to its shareholders. Generally, excess
distributions are distributions received by the Fund from a PFIC, with respect
to which the Fund has not made a mark-to-market election, which are greater than
125% of the average annual distributions received by the Fund in the three
preceding taxable years, or, the Fund’s holding period, if the Fund’s holding
period is less than three years. Additionally, gain on the sale of a PFIC stock
is treated as if it were an excess distribution. If there were an excess
distribution, an amount of the excess distribution would be allocated pro rata
to each day the Fund owned stock in the PFIC. The amount allocated to the
current year would be included as ordinary income in the Fund’s gross income for
the current year. Any amounts allocated to prior PFIC years would be subject to
tax at the highest rate of tax in effect for the Fund in that year, and an
interest charge would be imposed with respect to the resulting tax attributable
to each such other taxable year. Any such taxes or interest charges could in
turn reduce the Fund’s distributions paid to you.
PORTFOLIO
HOLDINGS INFORMATION
Information
about the Fund’s daily portfolio holdings is available at www.vertfunds.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”).
VOLUNTARY
FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS
Service
providers to the Fund may, from time to time, voluntarily waive all or a portion
of any fees to which they are entitled and/or reimburse certain expenses as they
may determine from time to time. The Fund’s service providers may discontinue or
modify these voluntary actions at any time without notice. The Fund’s
performance will reflect the voluntary waiver of fees and/or the reimbursement
of expenses, if any. Without these waivers and/or expense reimbursements,
performance would be less favorable.
MANAGEMENT
Investment
Advisor and Sub-Advisor
Investment
Advisor.
Vert Asset Management, LLC, located at 85 Liberty Ship Way, Suite 201,
Sausalito, CA 94965, provides sustainable investment management and education
services. The Advisor is an SEC-registered investment advisory firm formed in
2016. Pursuant to an investment advisory agreement between the Trust, on behalf
of the Fund, and the Advisor, and subject to general oversight by the Board of
Trustees, the Advisor manages and supervises the investment operations and
business affairs of the Fund. The Advisor is responsible for overseeing and
implementing the Fund’s investment program and provides oversight of portfolio
management, investment research, and security selection for the Fund. The
Advisor also screens securities for ESG considerations and provides an eligible
securities list to the Sub-Advisor. The Advisor also conducts research into the
sustainability of individual securities, and the real estate industry in
general. The Advisor also furnishes the Fund with office space and certain
administrative services and provides personnel needed to fulfill its obligations
under its advisory agreement.
For
its services, the Advisor receives a fee from the Fund, based on 0.40% of the
Fund’s average daily net assets. Prior to the Reorganization, the Advisor had
entered into an advisory agreement with the Trust, on behalf of the Predecessor
Fund, pursuant to which the Advisor also received a fee from the Predecessor
Fund equal to 0.40% of the Fund’s average daily net assets. For the fiscal year
ended June 30, 2023, the Advisor received 0.28%
in advisory fees of the Predecessor Fund after waiving fees pursuant to the
Predecessor Fund’s expense limitation agreement.
Sub-Advisor.
Dimensional Fund Advisors LP, located at 6300 Bee Cave Road, Austin, TX 78746,
provides global investment management and investment advisory services to
investment companies. The Advisor has retained the Sub-Advisor to manage on a
day-to-day basis the Fund’s portfolio assets, subject to oversight by the
Advisor. The Sub-Advisor is an SEC-registered investment advisory firm formed in
1981.
Subject
to supervision by the Advisor and the oversight of the Board of Trustees, the
Sub-Advisor provides a continual investment program for the Fund, including the
purchase, retention and disposition of investments in the Fund’s portfolio, in
accordance with the Fund’s investment objective, policies and restrictions. The
Advisor has ultimate responsibility to oversee the Sub-Advisor and recommend to
the Board of Trustees its hiring, termination,
and
replacement. In this capacity, the Advisor, among other things: (i) monitors the
compliance of the Sub-Advisor with the investment objective and related policies
of the Fund; (ii) reviews the performance of the Sub-Advisor; and (iii) reports
periodically on such performance to the Board of Trustees. For its services as
sub-advisor to the Fund, the Sub-Advisor is paid a sub-advisory fee by the
Advisor.
Fund
Expenses.
The Fund is responsible for its own operating expenses. However, pursuant to an
operating expense limitation agreement between the Advisor and the Fund, the
Advisor has agreed to waive its management fees and/or reimburse expenses to
ensure that the total amount of the Fund’s operating expenses (excluding
Excludable Expenses) does not exceed 0.45% of the Fund’s average daily net
assets. To the extent the Fund incurs Excludable Expenses, Total Annual Fund
Operating Expenses After Fee Waiver and/or Expense Reimbursement may exceed
0.45%. The Advisor may request recoupment of previously waived fees and paid
expenses from the Fund for three years from the date such fees and expenses were
waived or paid, subject to the operating expense limitation agreement, if such
reimbursement will not cause the Fund’s total expense ratio to exceed the lesser
of: (1) the expense limitation in place at the time of the waiver and/or expense
payment; or (2) the expense limitation in place at the time of the recoupment.
The Fund must pay its current ordinary operating expenses before the Advisor is
entitled to any recoupment of management fees and/or expenses. This operating
expense limitation agreement is in effect through at least December
4, 2026,
and may be terminated only by, or with the consent of, the Board of Trustees.
Prior to the Reorganization, the Advisor agreed to waive its management fees
and/or reimburse expenses to ensure that the total amount of the Predecessor
Fund’s operating expenses (excluding Excludable Expenses) did not exceed 0.50%
of the Fund’s average daily net assets (the “Predecessor Expense Limitation
Agreement”). The Advisor may not recoup any previously waived fees or reimbursed
expenses under the Predecessor Expense Limitation Agreement.
A
discussion regarding the basis for the Board’s approval of the investment
advisory agreement between the Advisor and the Trust, on behalf of the Fund, and
the sub‑advisory agreement between the Advisor and the Sub-Advisor will be
included in the Fund’s next annual or semi-annual report to
shareholders.
Portfolio
Managers
The
portfolio managers perform trading and day‑to‑day portfolio management for the
Fund according to investment guidelines established by the Advisor using the
investment strategies and policies described in this Prospectus and the eligible
securities list provided by the Advisor.
Vert
Asset Management, LLC
Samuel
Adams is Chief Executive Officer and co-founded the Advisor in 2016. Mr. Adams
has a BA from University of Colorado, Boulder and an MBA from UC Davis Graduate
School of Management. Prior to founding the Advisor, Mr. Adams worked at
Dimensional Fund Advisors LP for 17 years in various roles, including the Head
of Financial Advisor Services for Europe, Middle East and Africa.
Dimensional
Fund Advisors LP
Jed
S. Fogdall is Global Head of Portfolio Management, Chair of the Sub-Advisor’s
Investment Committee, Vice President, and a Senior Portfolio Manager of the
Sub-Advisor. Mr. Fogdall has an MBA from the University of California, Los
Angeles and a BS from Purdue University. Mr. Fogdall joined the Sub-Advisor as a
portfolio manager in 2004.
Allen
Pu is Deputy Head of Portfolio Management, North America, member of the
Sub-Advisor’s Investment Committee, Vice President, and a Senior Portfolio
Manager of the Sub-Advisor. Mr. Pu has an MBA from the University of California,
Los Angeles, an MS and PhD from the California Institute of Technology, and a BS
from Cooper Union for the Advancement of Science and Art. Mr. Pu joined the
Sub-Advisor as a portfolio manager in 2006.
William
B. Collins-Dean is a Senior Portfolio Manager and Vice President of the
Sub-Advisor. Mr. Collins-Dean has an MBA from the University of Chicago, with
honors, and with concentrations in analytic finance, economics, econometrics,
and statistics. He earned a BS from Wake Forest University. Mr. Collins-Dean
joined the Sub-Advisor in 2014 and has been a portfolio manager since
2016.
Joseph
F. Hohn is a Senior Portfolio Manager and Vice President of the Sub-Advisor. Mr.
Hohn has an MBA from the UCLA Anderson School of Management with a concentration
in finance. He also holds a MS in aerospace
engineering
from the University of Southern California and a BS in aerospace engineering
from Iowa State University. Mr. Hohn joined the Sub-Advisor in 2012 and has been
a portfolio manager since 2015.
The
portfolio managers are equally responsible for the day-to-day management of the
Fund.
The
SAI provides additional information about the portfolio managers’ compensation,
other accounts managed by the portfolio managers and the portfolio managers’
ownership of securities in the Fund.
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 Advisor 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 Advisor at fair value pursuant to procedures
established by the Advisor and approved by the Board (as described
below).
Fair
Value Pricing
The
Advisor has been designated by the Board as the valuation designee for the Fund
pursuant to Rule 2a-5 under the 1940 Act, subject to the oversight of the Board.
In its capacity as valuation designee, the Advisor has adopted procedures and
methodologies to fair value Fund securities whose market
prices
are not “readily available” or are deemed to be unreliable. For example, such
circumstances may arise when: (i) a security has been de-listed or has had its
trading halted or suspended; (ii) a security’s primary pricing source is unable
or unwilling to provide a price; (iii) a security’s primary trading market is
closed during regular market hours; or (iv) a security’s value is materially
affected by events occurring after the close of the security’s primary trading
market. Generally, when fair valuing a security held by the Fund, the Advisor
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 Advisor. 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 Advisor’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
the 1940 Act, or the rules promulgated thereunder.
Delivery
of Shareholder Documents – Householding
Householding
is an option available to certain investors of the Fund. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for the Fund is available through certain broker-dealers. If
you are interested in enrolling in householding and receiving a single copy of
prospectuses and other shareholder documents, please contact your broker-dealer.
If you are currently enrolled in householding and wish to change your
householding status, please contact your broker-dealer.
DIVIDENDS,
DISTRIBUTIONS, AND TAXES
Dividends
and Distributions
The
Fund intends to pay out dividends, if any, and distribute any net realized
capital gains to its shareholders at least annually. The Fund will declare and
pay capital gain distributions in cash. Distributions in cash may be reinvested
automatically in additional whole Shares only if the broker through whom you
purchased Shares makes such option available. Your broker is responsible for
distributing the income and capital gain distributions to you.
Taxes
The
following discussion is a summary of some important U.S. federal income tax
considerations generally applicable to investments in the Fund. Your investment
in the Fund may have other tax implications. Please consult your tax advisor
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws. 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, potentially with retroactive effect, and could impact the
Fund’s investments or the tax consequences to you.
The
Fund intends to elect and qualify each year for treatment as a regulated
investment company (“RIC”) under the Code. If it meets certain minimum
distribution requirements, a RIC is not subject to tax at the fund level on
income and gains from investments that are timely distributed to shareholders.
However, the Fund’s failure to qualify as a RIC or to meet minimum distribution
requirements would result (if certain relief provisions were not available) in
fund-level taxation and, consequently, a reduction in income available for
distribution to shareholders.
Unless
your investment in Shares is made through a tax-exempt entity or tax-advantaged
account, such as an IRA, you need to be aware of the possible tax consequences
when the Fund makes distributions, when you sell your Shares listed on the
Exchange, and when you purchase or redeem Creation Units (APs only).
Taxes
on Distributions
The
Fund intends to distribute, at least annually, substantially all of its net
investment income and net capital gains. For federal income tax purposes,
distributions of investment income are generally taxable as ordinary income or
qualified dividend income. Taxes on distributions of capital gains (if any) are
determined by how long the Fund owned the investments that generated them,
rather than how long a shareholder has owned his or her Shares. Sales of assets
held by the Fund for more than one year generally result in long-term capital
gains and losses, and sales of assets held by the Fund for one year or less
generally result in short-term capital gains and losses. Distributions of the
Fund’s net capital gain (the excess of net long-term capital gains over net
short-term capital losses) that are reported by the Fund as capital gain
dividends (“Capital Gain Dividends”) will be taxable as long-term capital gains,
which for non-corporate shareholders are subject to tax at reduced rates of up
to 20% (lower rates apply to individuals in lower tax brackets). Distributions
of short-term capital gain will generally be taxable as ordinary income.
Dividends and distributions are generally taxable to you whether you receive
them in cash or reinvest them in additional Shares.
Distributions
reported by the Fund as “qualified dividend income” are generally taxed to
non-corporate shareholders at rates applicable to long-term capital gains,
provided holding period and other requirements are met. “Qualified dividend
income” generally is income derived from dividends paid by U.S. corporations or
certain foreign corporations that are either incorporated in a U.S. possession
or eligible for tax benefits under certain U.S. income tax treaties. In
addition, dividends that the Fund received in respect of stock of certain
foreign corporations may be qualified dividend income if that stock is readily
tradable on an established U.S. securities market. Dividends received by the
Fund from an ETF, a REIT, or an underlying fund taxable as a RIC may be treated
as qualified dividend income generally only to the extent so reported by such
ETF, REIT or underlying fund. Corporate shareholders may be entitled to a
dividends received deduction for the portion of dividends they receive from the
Fund that are attributable to dividends received by the Fund from U.S.
corporations, subject to certain limitations.
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
addition to federal income tax, certain 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). The net investment income tax is imposed on the
lesser of: (i) the taxpayer’s investment income, net of deductions properly
allocable to such income; or (ii) the amount by which the taxpayer’s modified
adjusted gross income exceeds certain thresholds ($250,000 for married
individuals filing jointly, $200,000 for unmarried individuals and $125,000 for
married individuals filing separately). This 3.8% tax also applies to all or a
portion of the undistributed net investment income of certain shareholders that
are estates and trusts.
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions declared in October, November or
December and paid in January of the following year, 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.
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. Under “wash sale” rules, 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. In some countries a portion of these taxes is
recoverable, the non-recoverable portion will reduce the return on the Fund’s
securities.
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.
PREMIUM/DISCOUNT
INFORMATION
When
available, 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 per Share will be
available, free of charge, on the Fund’s website at
www.vertfunds.com.
ADDITIONAL
NOTICES
Shares
of the Trust are not sponsored, endorsed, or promoted by the Exchange. The
Exchange makes no representation or warranty, express or implied, to the owners
of the shares of the Fund. The Exchange is not
responsible
for, nor has it participated in, the determination of the timing of, prices of,
or quantities of the shares of the Fund to be issued, or in the determination or
calculation of the equation by which the shares are redeemable.
The
Exchange has no obligation or liability to owners of the shares of the Fund in
connection with the administration, marketing, or trading of the shares of the
Fund. 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
Advisor and the Fund make no representation or warranty, express or implied, to
the owners of shares of the Fund or any members of the public regarding the
advisability of investing in securities generally or in the Fund particularly.
FINANCIAL
HIGHLIGHTS
On
or about December 4, 2023, the Fund is expected to acquire all of the assets and
liabilities of the Predecessor Fund in exchange for shares of beneficial
interest of the Fund. As a result of such reorganization, the Fund will adopt
the financial and performance history of the Predecessor Fund. The financial
highlights table below is intended to help you understand the Fund’s (and
Predecessor Fund’s) financial performance information for the Fund’s (and
Predecessor Fund’s) five most recent fiscal years. The financial highlights for
the Fund include the historical financial highlights of the Predecessor Fund for
the periods prior to December 4, 2023. Certain information reflects financial
results for a single Share. The total returns in the table represent the rate
that you would have earned (or lost) on an investment in the Fund (and the
Predecessor Fund) (assuming investment of all dividends and other
distributions).
Information
in the table for the fiscal year ended June 30, 2023 has been audited by Cohen
& Company, Ltd. (“Cohen”), the independent registered public accounting firm
of the Predecessor Fund. Information in the table for prior fiscal years was
audited by BBD, LLP. Cohen’s report, along with the Predecessor Fund’s financial
statements, is included in the Predecessor Fund’s 2023 annual
report
to shareholders, which is available, without charge, upon request.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For
a capital share outstanding throughout each year |
Institutional
Shares |
Year
Ended June 30, 2023 |
| Year
Ended June 30, 2022 |
| Year
Ended June 30, 2021 |
| Year
Ended June 30, 2020 |
| Year
Ended June 30, 2019 |
Net
Asset Value – Beginning of Year |
$ |
9.62 |
|
| $ |
11.39 |
|
| $ |
8.59 |
|
| $ |
10.45 |
| |
$ |
10.13 |
|
Income
from Investment Operations: |
|
|
|
|
|
| |
|
|
Net
investment income1 |
0.30 |
|
| 0.21 |
|
| 0.19 |
|
| 0.32 |
| |
0.28 |
|
Net
realized and unrealized |
|
|
|
|
|
| |
|
|
gain
(loss) on investments |
(0.67) |
|
| (1.55) |
|
| 2.76 |
|
| (1.84) |
| |
0.38 |
|
Total
from investment operations |
(0.37) |
|
| (1.34) |
|
| 2.95 |
|
| (1.52) |
| |
0.66 |
|
Less
Distributions: |
|
|
|
|
|
| |
|
|
Dividends
from net investment income |
(0.04) |
|
| (0.26) |
|
| (0.15) |
|
| (0.34) |
|
| (0.33) |
|
Distributions
from net realized gains |
(0.10) |
|
| (0.17) |
|
| — |
|
| — |
|
| (0.01) |
|
Total
distributions |
(0.14) |
|
| (0.43) |
|
| (0.15) |
|
| (0.34) |
|
| (0.34) |
|
|
|
|
|
|
|
|
|
| |
Net
Asset Value – End of Year |
$ |
9.11 |
|
| $ |
9.62 |
|
| $ |
11.39 |
|
| $ |
8.59 |
| |
$ |
10.45 |
|
|
|
|
|
|
|
|
|
| |
Total
Return |
(3.84) |
% |
| (12.41) |
% |
| 34.72 |
% |
| (15.14) |
% |
| 6.64 |
% |
|
|
|
|
|
|
|
|
| |
Ratios
and Supplemental Data: |
|
|
|
|
|
| |
|
|
Net
assets, end of year (thousands) |
$ |
291,849 |
|
| $ |
159,356 |
|
| $ |
125,923 |
|
| $ |
50,637 |
| |
$ |
24,184 |
|
Ratio
of operating expenses to average net assets: |
|
|
|
|
|
| |
|
|
Before
reimbursements |
0.62 |
% |
| 0.67 |
% |
| 0.80 |
% |
| 1.12 |
% |
| 1.92 |
% |
After
reimbursements |
0.50 |
% |
| 0.50 |
% |
| 0.50 |
% |
| 0.50 |
% |
| 0.50 |
% |
Ratio
of net investment income to average net assets: |
|
|
|
|
|
| |
|
|
Before
reimbursements |
3.11 |
% |
| 1.64 |
% |
| 1.66 |
% |
| 2.64 |
% |
| 1.36 |
% |
After
reimbursements |
3.23 |
% |
| 1.80 |
% |
| 1.96 |
% |
| 3.26 |
% |
| 2.78 |
% |
Portfolio
turnover rate |
9 |
% |
| 11 |
% |
| 19 |
% |
| 18 |
% |
| 10 |
% |
|
|
|
|
| |
1 |
The
net investment income per share was calculated using the average shares
outstanding method. |
VERT
GLOBAL SUSTAINABLE REAL ESTATE ETF
|
|
|
|
|
|
|
|
|
|
| |
Advisor |
Vert
Asset Management, LLC
85
Liberty Ship Way, Suite 201
Sausalito,
California 94965 |
Sub-Advisor |
Dimensional
Fund Advisors LP
6300
Bee Cave Road
Austin,
Texas 78746 |
Transfer
Agent, Fund Accountant and Fund Administrator |
U.S.
Bancorp Fund Services, LLC
d/b/a
U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Custodian |
U.S.
Bank, N.A.
1555
N. Rivercenter Drive
Suite
302
Milwaukee,
Wisconsin 53212 |
Legal
Counsel |
Godfrey
& Kahn, S.C.
833
East Michigan Street
Suite
1800
Milwaukee,
Wisconsin 53202 |
Independent
Registered Public Accounting Firm |
Cohen
& Company, Ltd.
1835
Market Street, Suite 310
Philadelphia,
PA 19103 |
Distributor |
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202 |
| |
You
can find more information about the Fund in the following
documents:
Statement
of Additional Information
The
SAI provides additional details about the investments and techniques of the Fund
and certain other additional information. A current SAI is on file with the SEC
and is incorporated into this Prospectus by reference. This means that the SAI
is legally considered a part of this Prospectus even though it is not physically
within this Prospectus.
Annual
and Semi-Annual Reports
The
Fund’s (and Predecessor Fund’s) annual and semi-annual reports provide
additional information about the Fund’s investments, including the most recent
financial reports and portfolio holdings. The annual reports contain a
discussion of the market conditions and investment strategies that affected the
Fund’s performance during the Fund’s (and Predecessor Fund’s) prior fiscal
year.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Fund by contacting the Fund at Vert Global
Sustainable Real Estate ETF, c/o U.S. Bank Global Fund Services, P.O. Box 701,
Milwaukee, Wisconsin 53201-0701 or calling 1-844-740-VERT.
Reports
and other information about the Fund are also available:
•free
of charge from the SEC’s EDGAR database on the SEC’s Internet website at
http://www.sec.gov; or
•for
a fee, by electronic request at the following e-mail address:
[email protected].
(The
Trust’s SEC Investment Company Act of 1940 file number is
811‑21897)