ck0001683471-20211231
PROSPECTUS
TrueShares Eagle Global Renewable Energy Income
ETF (RNWZ)
Listed
on NYSE
Arca, Inc.
November
30, 2022
The
U.S. Securities and Exchange Commission (the “SEC”) has not approved or
disapproved of these securities or passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal
offense.
The TrueShares Eagle Global
Renewable Energy Income ETF (the “Fund”) seeks long-term growth of
capital.
This
table describes the fees and expenses that 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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Shareholder
Fees
(fees paid directly from your investment) |
None |
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Annual
Fund Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
| Management
Fee |
0.75% |
| Distribution
and/or Service Fees |
0.00% |
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Other
Expenses* |
0.00% |
| Total
Annual Fund Operating Expenses |
0.75% |
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*
Estimated for the current
fiscal year.
Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 in the
Fund for the time periods indicated and then 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
Example does not take into account brokerage commissions that you may pay on
your purchases and sales of Shares. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
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Year: |
$77 |
3
Years: |
$240 |
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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 the Total Annual Fund Operating Expenses
or in the Example, affect the Fund’s performance. Because the Fund is newly
organized, portfolio turnover information is not yet
available.
The
Fund is an actively managed exchange-traded fund (“ETF”) that invests primarily
in equity securities of domestic and foreign companies that primarily own or
operate assets used in the development, generation, production, transmission,
storage and sale of alternative and renewable energy such as solar power, wind
power, biofuels, hydropower, nuclear or geothermal power (collectively,
“Renewable Energy Infrastructure Companies”). The Renewable Energy
Infrastructure Companies in which the Fund may invest may range from small- to
large-capitalization companies. The Fund also may invest in American Depository
Receipts (“ADRs”) and Global Depository Receipts (“GDRs”) of Renewable Energy
Infrastructure Companies. Under normal market conditions, the Fund will invest
at least 80% of its net assets, plus borrowings for investment purposes, in
Renewable Energy Infrastructure Companies.
Eagle
Global Advisors, LLC (the “Sub-Adviser”), the Fund’s investment sub-adviser,
selects investments for the Fund’s portfolio from a universe of Renewable Energy
Infrastructure Companies by utilizing a fundamentally-driven investment process
which includes the analysis of global macro-economic and geo-political factors,
fundamental company analysis, internal valuation methods, and the projected rate
of return from the investment given its expected level of risk.
The
Sub-Adviser may sell a security when it no longer meets the criteria for
inclusion in the Fund’s investment universe, when the security has not met or
exceeded its projected rate of return or when a more attractive investment
becomes available.
The
Fund is non-diversified and therefore may invest a larger percentage of its
assets in the securities of a single issuer or smaller number of issuers than
diversified funds. The Fund will concentrate
(i.e., hold more than 25% of its total assets)
in the securities of companies in the Utilities Industry Group within the
Utilities Sector, as classified by the Global Industry Classification
Standard.
Under
normal market conditions, the Fund expects to invest at least 40% of its assets
in the securities of issuers that are tied economically to a number of countries
throughout the world.
As
of the date of this Prospectus, the Fund anticipates having significant
investment exposure to Renewable Energy Infrastructure Companies, the securities
of which are issued and listed in Europe.
The
principal risks of investing in the Fund are summarized below. The
principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears. As with any investment, there is a risk that you could
lose all or a portion of your investment in the Fund. Some or
all of these risks may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and/or ability to meet its investment
objective. The following risks could affect the value of your investment in
the Fund:
•Associated
Risk of Investing in Renewable Energy Infrastructure Companies.
Renewable Energy Infrastructure Companies’ future growth may be dependent upon
government policies that support renewable power generation and enhance the
economic viability of owning renewable electric generation assets. Such policies
can include renewable portfolio standard programs, which mandate that a
specified percentage of electricity sales come from eligible sources of
renewable energy, accelerated cost-recovery systems of depreciation and tax
credits.
The
electricity produced and revenues generated by a renewable energy generation
facility, including solar electric or wind energy, is highly dependent upon
suitable weather conditions. These assets may not be able to operate in extreme
weather conditions, such as during a severe freeze. Furthermore, components used
in the generation of renewable energy could be damaged by severe weather, such
as hailstorms or tornadoes. In addition, replacement and spare parts for key
components may be difficult or costly to acquire or may be unavailable.
Unfavorable weather and atmospheric conditions could impair the effectiveness of
assets or reduce their output beneath their rated capacity or require shutdown
of key equipment, impeding operation of renewable assets. Actual climatic
conditions at a facility site, particularly wind conditions, may not conform to
the historical findings and, therefore, renewable energy facilities may not meet
anticipated production levels or the rated capacity of the generation
assets.
A
portion of revenues from investments in renewable infrastructure assets will be
tied, either directly or indirectly, to the wholesale market price for
electricity in the markets served. Wholesale market electricity prices are
impacted by a number of factors including: the price of fuel (e.g.,
natural gas) that is used to generate electricity; the cost and management of
generation and the amount of excess generating capacity relative to load in a
particular market; and conditions (such as extremely hot or cold weather) that
impact electrical system demand. Owners of renewable infrastructure assets may
attempt to secure fixed prices for their power production through the use of
financial hedges; but may not be able to deliver power to collect such fixed
price, rendering those hedges ineffective or creating economic losses for
renewable infrastructure assets. In addition, there is uncertainty surrounding
the trend in electricity demand growth, which is influenced by macroeconomic
conditions; absolute and relative energy prices; and energy conservation and
demand management. This volatility and uncertainty in power markets could have a
material adverse effect on the assets, liabilities, financial condition,
operations and/or cash flow of the Renewable Energy Infrastructure Companies in
which the Fund invests.
•Currency
Exchange Rate Risk. The
Fund may invest in investments denominated in non-U.S. currencies or in
securities that provide exposure to such currencies. Changes in currency
exchange rates and the relative value of non-U.S. currencies will affect the
value of the Fund’s investment and the value of your Shares. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the value of an investment in the Fund may change quickly and without
warning and you may lose money.
•Cybersecurity
Risk.
Cybersecurity incidents may allow an unauthorized party to gain access to Fund
assets or proprietary information, or cause the Fund, the Adviser (defined
below), the Sub-Adviser and/or other service providers (including custodians and
financial intermediaries) to suffer data breaches or data corruption.
Additionally, cybersecurity failures or breaches of the electronic systems of
the Fund, the Adviser, the Sub-Adviser or the Fund’s other service providers,
market makers, Authorized Participants (“APs”), the Fund’s primary listing
exchange, or the issuers of securities in which the Fund invests have the
ability to disrupt and negatively affect the Fund’s business operations,
including the ability to purchase and sell Fund Shares, potentially resulting in
financial losses to the Fund and its shareholders.
•Depositary
Receipts Risk.
ADRs and GDRs are certificates evidencing ownership of shares of a foreign
issuer and are alternatives to directly purchasing the underlying foreign
securities in their national markets and currencies. However, they continue to
be subject to many of the risks associated with investing directly in foreign
securities. These risks include the social, political and economic risks of the
underlying issuer’s country, as well as in the case of depositary receipts
traded on non-U.S. markets, exchange risk. Issuers of unsponsored ADRs are not
contractually obligated to disclose material information in the U.S., so there
may not be a correlation between such information and the market value of the
unsponsored ADR.
•Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, sectors or companies in which the Fund invests.
Common stocks are generally exposed to greater risk than other types of
securities, such as preferred stocks and debt obligations, because common
stockholders generally have inferior rights to receive payment from issuers.
•ETF
Risks.
The Fund is an ETF, and, as a result of its 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 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 Risk.
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 Risk. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant. Because
securities held by the Fund may trade on foreign exchanges that are closed when
the Fund’s primary listing exchange is open, the Fund is likely to experience
premiums or discounts greater than those of domestic ETFs.
◦Trading
Risk. Although
Shares are listed for trading on the NYSE Arca, Inc. (the “Exchange”) and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
Shares will trade with any volume, or at all, on any stock exchange. In stressed
market conditions, the liquidity of Shares may begin to mirror the liquidity of
the Fund’s underlying portfolio holdings, which can be significantly less liquid
than Shares.
•Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. There may be less information publicly
available about a non-U.S. issuer than a U.S. issuer. Non-U.S. issuers may be
subject to different accounting, auditing, financial reporting and investor
protection standards than U.S. issuers. Investments in non-U.S. securities also
may be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. With respect to certain
countries, there is the possibility of government intervention and expropriation
or nationalization of assets. Because legal systems differ, there also is the
possibility that it will be difficult to obtain or enforce legal judgments in
certain countries. Since foreign exchanges may be open on days when the Fund
does not price its shares, the value of the securities in the Fund’s portfolio
may change on days when shareholders will not be able to purchase or sell the
Fund’s shares. Conversely, Shares may trade on days when foreign exchanges are
closed. Each of these factors can make investments in the Fund more volatile and
potentially less liquid than other types of investments.
•Geographic
Investment Risk.
To the extent that the Fund invests a significant portion of its assets in the
securities of companies of a single country or region, it is more likely to be
impacted by events or conditions affecting that country or region. For example,
political and economic conditions and changes in regulatory, tax, or economic
policy in a country could significantly affect the market in that country and in
surrounding or related countries and have a negative impact on the Fund’s
performance. Currency developments or restrictions, political and social
instability, and changing economic conditions have resulted in significant
market volatility.
◦Europe-Specific
Risk.
The economies and markets of European countries are often closely connected and
interdependent, and events in one country in Europe can have an adverse impact
on other European countries. The Fund makes investments in securities of issuers
that are domiciled in, or have significant operations in, member countries of
the European Union (the “EU”) that are subject to economic and monetary controls
that can adversely affect the Fund’s investments. The European financial markets
have experienced volatility and adverse trends in recent years and these events
have adversely affected the exchange rate of the euro and may continue to
significantly affect other European countries. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro, the default or threat of default by an EU member country on its
sovereign debt, and/or an economic recession in an EU member country may have a
significant adverse effect on the economies of EU member countries and their
trading partners, including some or all of the European countries in which the
Fund invests.
In
addition, on January 31, 2020, the UK formally withdrew from the EU (commonly
referred to as “Brexit”) and entered an 11-month transition period, which
concluded on December 31, 2020, with the UK leaving the EU single market and
customs union under the terms of a new trade agreement. The agreement governs
the new relationship between the UK and EU with respect to trading goods and
services, but critical aspects of the relationship remain unresolved and subject
to further negotiation and agreement. There is still considerable uncertainty
relating to the potential consequences associated with the UK’s exit and whether
its exit will increase the likelihood of other countries also departing the EU.
Any exits from the EU, or the possibility of such exits, may have a significant
impact on the UK, Europe, and global economies, which may result in
increased
volatility and illiquidity, new legal and regulatory uncertainties and
potentially lower economic growth for these economies that could potentially
have an adverse effect on the value of the Fund’s investments. In addition, the
UK has been a target of terrorism in the past. Acts of terrorism in Europe or
the UK or against such countries’ interests abroad may cause uncertainty in the
European or UK financial markets and adversely affect the performance of the
issuers to which the Fund has exposure.
•Management
Risk.
The Fund is actively-managed and may not meet its investment objective based on
the Adviser’s and Sub-Adviser’s success or failure to implement investment
strategies for the Fund. In particular, the Adviser’s and Sub-Adviser’s
evaluations and assumptions regarding global energy needs, the development of
non-carbon-based energy technologies, the effectiveness and marketability of
“clean energy” technologies, and other factors may not successfully achieve the
Fund’s investment objective given actual market conditions.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time. U.S. and international markets have
experienced significant periods of volatility in recent years due to a number of
these factors, including the impact of the COVID-19 pandemic and related public
health issues, growth concerns in the U.S. and overseas, uncertainties regarding
interest rates, trade tensions and the threat of tariffs imposed by the U.S. and
other countries. In addition, local, regional or global events such as war,
including Russia’s invasion of Ukraine, acts of terrorism, spread of infectious
diseases or other public health issues, recessions, rising inflation, or other
events could have a significant negative impact on the Fund and its investments.
These developments as well as other events could result in further market
volatility and negatively affect financial asset prices, the liquidity of
certain securities and the normal operations of securities exchanges and other
markets. It is unknown how long circumstances related to the COVID-19 pandemic
will persist, whether they will reoccur in the future, whether efforts to
support the economy and financial markets will be successful, and what
additional implications may follow from the pandemic. The impact of these events
and other epidemics or pandemics in the future could adversely affect Fund
performance.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and therefore subject to slower growth during
times of economic expansion. Large-capitalization companies also may be unable
to respond quickly to new competitive challenges, such as changes in technology
and consumer tastes.
◦Mid-Capitalization
Investing.
The securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large-capitalization stocks or the stock market
as a whole.
◦Small-Capitalization
Investing.
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
large- or mid-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large- or mid-capitalization stocks or the
stock market as a whole. There is typically less publicly available information
concerning smaller-capitalization companies than for larger, more established
companies.
•New
Fund Risk. The
Fund is a recently organized investment company with no operating history. As a
result, prospective investors have no track record or history on which to base
their investment decision.
•Non-Diversification
Risk.
Because the Fund is “non-diversified,” it may
invest a greater percentage of its assets in the securities of a single issuer
or a lesser number of issuers than if it was a diversified fund. As a result,
the Fund may be more exposed to the risks associated with and developments
affecting an individual issuer or a lesser number of issuers than a fund that
invests more widely. This may increase the Fund’s volatility and cause the
performance of a relatively small number of issuers to have a greater impact on
the Fund’s performance.
•Utilities
Sector Risk.
The Fund intends to concentrate its investments in the Utilities Industry Group
within the Utilities Sector.
◦Utilities
Industry Group Risk.
As a result of the Fund’s concentration in the Utilities Industry Group, the
Fund will be more susceptible to the risks associated with that industry group
than a fund that does not concentrate its investments. The Utilities Industry
Group includes utility companies such as electric, gas and water utilities. It
also includes independent power producers and energy traders and companies that
engage in generation and distribution of electricity using renewable sources.
The Fund is subject to the risk that the securities of such issuers will
underperform the market as a whole due to legislative or regulatory changes,
adverse market conditions and/or increased competition affecting companies in
the Utilities Industry Group. The prices of the securities of companies
operating in the Utilities Industry Group are closely tied to government
regulation and market competition and may be affected by supply and demand,
consumer incentives, operating costs,
government regulation, environmental
factors, liabilities for environmental damage and general civil liabilities, and
rate caps or rate changes, among other factors.
The Fund is new and therefore does not have a
performance history for a full calendar year. In the future,
performance information for the Fund will be presented in this section. Updated
performance information is available on the Fund’s website at www.true-shares.com.
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| Adviser |
TrueMark
Investments, LLC (the “Adviser”) |
| Sub-Adviser |
Eagle
Global Advisors, LLC |
| Portfolio
Managers |
Michael
Cerasoli, CFA, Portfolio Manager for the Sub-Adviser, Alex Meier,
Portfolio Manager for the Sub-Adviser, and Steven S. Russo, Senior Partner
for the Sub-Adviser, have been portfolio managers of the Fund since its
inception in December 2022 |
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.
Shares
are listed on the Exchange, and individual Shares may only be bought and sold in
the secondary market through a broker or dealer 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).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares (the “bid” price) and the
lowest price a seller is willing to accept for Shares (the “ask” price) when
buying or selling Shares in the secondary market. The difference in the bid and
ask prices is referred to as the “bid-ask spread.”
Recent
information regarding the Fund’s NAV, market price, how often Shares traded on
the Exchange at a premium or discount, and bid-ask spreads can be found on the
Fund’s website at www.true-shares.com.
The
Fund’s distributions are generally taxable as ordinary income, qualified
dividend income, or capital gains (or a combination), unless your investment is
in an individual retirement account (“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.
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange-traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
The
Fund’s investment objective has been adopted as a non-fundamental investment
policy and may be changed by the Board of Trustees (the “Board”) of Listed Funds
Trust (the “Trust”) without shareholder approval upon written notice to
shareholders.
The
following information is in addition to, and should be read along with, the
description of the Fund’s principal investment strategies in the section titled
“Fund Summary—Principal Investment Strategies” above.
In
accordance with Rule 35d-1 under the Investment Company Act of 1940 (the “1940
Act”), the Fund has adopted a non-fundamental investment policy to invest, under
normal circumstances, at least 80% of its net assets, plus borrowings for
investment purposes, in Renewable Energy Infrastructure Companies. Such policy
may be changed without shareholder approval upon 60 days’ written notice to the
Fund’s shareholders.
Temporary
Defensive Positions
For
temporary defensive purposes during adverse market, economic, political or other
conditions, the Fund may invest in cash or cash equivalents or short-term
instruments such as commercial paper, money market mutual funds, or short-term
U.S. government securities. Taking a temporary defensive position may result in
the Fund not achieving its investment objective.
An
investment in the Fund entails risks. The Fund could lose money, or its
performance could trail that of other investment alternatives. The following
provides additional information about the Fund’s principal risks. It is
important that investors closely review and understand these risks before making
an investment in the Fund. Just as in the Fund’s summary section, the principal
risks are presented in alphabetical order to facilitate finding particular risks
and comparing them with those of other funds. Each risk summarized below is
considered a “principal risk” of investing in the Fund, regardless of the order
in which it appears.
•Associated
Risks with Investing in Renewable Energy Infrastructure Companies.
Renewable Energy Infrastructure Companies’ future growth may be dependent upon
government policies that support renewable power generation and enhance the
economic viability of owning renewable electric generation assets. Such policies
can include renewable portfolio standard programs, which mandate that a
specified percentage of electricity sales come from eligible sources of
renewable energy, accelerated cost-recovery systems of depreciation and tax
credits.
The
electricity produced and revenues generated by a renewable energy generation
facility, including solar electric or wind energy, is highly dependent upon
suitable weather conditions. These assets may not be able to operate in extreme
weather conditions, such as during a severe freeze. Furthermore, components used
in the generation of renewable energy could be damaged by severe weather, such
as hailstorms or tornadoes. In addition, replacement and spare parts for key
components may be difficult or costly to acquire or may be unavailable.
Unfavorable weather and atmospheric conditions could impair the effectiveness of
assets or reduce their output beneath their rated capacity or require shutdown
of key equipment, impeding operation of renewable assets. Actual climatic
conditions at a facility site, particularly wind conditions, may not conform to
the historical findings and, therefore, renewable energy facilities may not meet
anticipated production levels or the rated capacity of the generation
assets.
A
portion of revenues from investments in renewable infrastructure assets will be
tied, either directly or indirectly, to the wholesale market price for
electricity in the markets served. Wholesale market electricity prices are
impacted by a number of factors including: the price of fuel (for example,
natural gas) that is used to generate electricity; the cost and management of
generation and the amount of excess generating capacity relative to load in a
particular market; and conditions (such as extremely hot or cold weather) that
impact electrical system demand. Owners of renewable infrastructure assets may
attempt to secure fixed prices for their power production through the use of
financial hedges; but may not be able to deliver power to collect such fixed
price, rendering those hedges ineffective or creating economic losses for
renewable infrastructure assets. In addition, there is uncertainty surrounding
the trend in electricity demand growth, which is influenced by macroeconomic
conditions; absolute and relative energy prices; and energy conservation and
demand management. This volatility and uncertainty in power markets could have a
material adverse effect on the assets, liabilities, financial condition, results
of operations and cash flow of the companies in which the Fund invests.
◦Decreases
in Government Budgets, Subsidies, Allowed Rate of Return or Regulations
Risk.
Poor economic conditions could have an effect on government budgets and threaten
the continuation of government subsidies such as regulated revenues, cash
grants, U.S. federal income tax benefits or state renewables portfolio standards
that benefit Renewable Energy Infrastructure Companies. Such conditions may also
lead to adverse changes in laws or, if applicable, the rate of return allowed by
a government for renewable infrastructure assets. A number of states and
municipal authorities are experiencing fiscal pressures as they seek to address
budget deficits. The reduction or elimination of renewable generation targets,
tariffs or subsidies or adverse changes in law could have a material adverse
effect on the profitability of some existing projects, and the
lack
of availability of projects undertaken in reliance on the continuation of such
subsidies could adversely affect the growth plan of Renewable Energy
Infrastructure Companies.
Development
of new renewable energy sources and the overall growth of the renewable energy
industry has recently been supported by state or provincial, national,
supranational and international policies. Some of the companies in which the
Fund may invest benefit from such incentives. The attractiveness of renewable
energy to purchasers of renewable assets, as well as the economic return
available to project sponsors, is often enhanced by such incentives. There is a
risk that regulations that provide incentives for renewable energy could change
or expire in a manner that adversely impacts the market for Renewable Energy
Infrastructure Companies generally. Any such changes may impact the
competitiveness of renewable energy generally and the economic value of new
projects undertaken by Renewable Energy Infrastructure Companies.
Renewable
Energy Infrastructure Companies rely in part on environmental and other
regulations of industrial and local government activities, including regulations
granting subsidies or mandating reductions in carbon or other greenhouse gas
emissions and minimum biofuel content in fuel or use of energy from renewable
sources. If the businesses to which such regulations relate were deregulated or
if such subsidies or regulations were changed or weakened, the profitability of
Renewable Energy Infrastructure Companies could suffer.
The
production from renewable infrastructure assets is often the subject of various
tax relief measures or tax incentives. These assets currently are largely
contingent on public policy mechanisms including, among others, investment tax
credits (ITCs), cash grants, loan guarantees, accelerated depreciation, carbon
trading plans, environmental tax credits and research and development
incentives, all of which play an important role in the profitability of
renewable energy projects. In the future, it is possible that some or all of
these will be suspended, curtailed, not renewed or revoked. These mechanisms
have been implemented at the U.S. federal and state levels and in other
jurisdictions where our assets are located to support the development of
renewable power generation and other clean infrastructure technologies. The
availability and continuation of public policy support mechanisms will drive a
significant part of the economics and viability of clean energy
investments.
◦Hydrology,
Solar and Wind Changes Risk.
The revenues and cash flows generated by renewable infrastructure assets are
often correlated to the amount of electricity generated, which for some assets
is dependent upon available water flows, solar conditions, wind conditions and
weather conditions generally. Hydrology, solar, wind and weather conditions have
natural variations from season to season and from year to year and may also
change permanently because of climate change or other factors. A natural
disaster could also impact water flows within the watersheds in which Renewable
Energy Infrastructure Companies may operate. Wind energy is highly dependent
upon weather conditions and, in particular, on wind conditions. The
profitability of a wind farm depends not only on observed wind conditions at the
site, which are inherently variable, but also on whether observed wind
conditions are consistent with assumptions made during the project development
phase.
◦Operational
Disruption Risk.
Operational disruptions of Renewable Energy Infrastructure Companies or the
third parties on which they depend may be caused by technical breakdowns at
power generation assets, including transmission assets, power stations,
distribution grids, power storage facilities, aged or defective facility
components, insufficient maintenance, failed repairs, power outages, adverse
weather conditions, natural disasters, labor disputes, ill-intentioned acts or
other accidents or incidents. These disruptions could result in shutdowns,
delays or long term decommissioning in production or distribution of energy.
This may materially and adversely affect operations or financial conditions and
cause harm to the reputation of Renewable Energy Infrastructure Companies in
which the Fund may invest.
◦Construction
Risk.
Renewable Energy Infrastructure Companies may invest in projects that are
subject to construction risk and construction delays. The ability of these
projects to generate revenues will often depend upon their successful completion
of the construction and operation of generating assets.
Capital
equipment for renewable energy projects needs to be manufactured, shipped to
project sites, installed and tested on a timely basis. Developers of renewable
energy facilities depend on a limited number of suppliers of solar panels,
inverters, module turbines, towers and other system components and turbines and
other equipment associated with wind and solar power plants. Any shortage, delay
or component price change from these suppliers could result in construction or
installation delays. There have been periods of industry-wide shortage of key
components, including solar panels and wind turbines, in times of rapid industry
growth. The manufacturing infrastructure for some of these components has a long
lead time, requires significant capital investment and relies on the continued
availability of key materials, potentially resulting in an inability to meet
demand for these components. Construction may be delayed as a result of
inclement weather, labor disruptions, technical complications or other reasons,
and material cost over-runs may be incurred, which may result in such projects
being unable to earn positive income, which could negatively impact the value of
Renewable Energy Infrastructure Companies.
◦Renewable
Infrastructure Technology Risk.
Technology related to the production of renewable power and conventional power
generation is continually advancing, resulting in a gradual decline in the cost
of producing electricity. Renewable Energy Infrastructure Companies may invest
in and use newly developed, less proven, technologies in their development
projects or in maintaining or enhancing their existing assets. There is no
guarantee that such new technologies will perform as
anticipated.
The failure of a new technology to perform as anticipated may materially and
adversely affect the profitability of a particular development
project.
◦Increasing
Competition/Market Change Risks.
A significant portion of the electric power generation and transmission capacity
sold by renewable infrastructure assets is sold under long-term agreements with
public utilities, industrial or commercial end-users or governmental entities.
These agreements generally allow the owner of the renewable infrastructure asset
to sell power at an agreed upon fixed price over the course of the contract. If,
for any reason, any of the purchasers of power or transmission capacity under
these agreements are unable or unwilling to fulfill their related contractual
obligations or if they refuse to accept delivery of power delivered thereunder
or if they otherwise terminate such agreements prior to the expiration thereof,
the assets, liabilities, business, financial condition, results of operations
and cash flow of Renewable Energy Infrastructure Companies could be materially
and adversely affected. Furthermore, to the extent any renewable infrastructure
assets’ power or transmission capacity purchasers are controlled by governmental
entities, their facilities may be subject to sovereign risk or legislative or
other political action that may impair their contractual performance. The power
generation industry is characterized by intense competition and electric
generation assets encounter competition from utilities, industrial companies and
other independent power producers, which may impact the ability of Renewable
Energy Infrastructure Companies to replace an expiring or terminated agreement
with an agreement on equivalent terms and conditions, including at prices that
permit operation of the related facility on a profitable basis. If Renewable
Energy Infrastructure Companies are unable to replace an expiring or terminated
agreement to sell electricity at an acceptable price, the affected facility may
temporarily or permanently cease operations.
◦Changes
in Tariffs Risk.
The revenue that renewable infrastructure assets generate from contracted
concessions is often dependent upon regulated tariffs or other long-term fixed
rate arrangements. Under such concession agreements, a tariff structure is
established, and Renewable Energy Infrastructure Companies have limited or no
possibility to independently raise tariffs beyond the established rates and
indexation or adjustment mechanisms. Similarly, under a long-term power purchase
agreement, Renewable Energy Infrastructure Companies may be required to deliver
power at a fixed rate for the contract period, with limited escalation rights.
In addition, Renewable Energy Infrastructure Companies may be unable to adjust
tariffs or rates as a result of fluctuations in prices of raw materials,
exchange rates, labor and subcontractor costs during the operating phase of
these projects. Moreover, in some cases, if renewable infrastructure assets fail
to comply with certain pre-established conditions, the government or customer,
as applicable, may reduce the tariffs or rates payable. In addition, during the
life of a concession, the relevant government authority may unilaterally impose
additional restrictions on tariff rates, subject to the regulatory frameworks
applicable in each jurisdiction.
◦Regulatory
Risk.
Regulatory authorities in the United States or other countries may adopt rules
that restrict the ability of the Fund to fully implement its strategy, either
generally, or with respect to certain securities, industries or countries, which
may impact the Fund’s ability to fully implement its investment strategies.
Regulators may interpret rules differently than the Fund or the mutual fund
industry generally, and disputes over such interpretations can increase in legal
expenses incurred by the Fund.
•Currency
Exchange Rate Risk.
Changes in currency exchange rates and the relative value of non-U.S. currencies
may affect the value of the Fund’s investments and the value of your Shares.
Because the Fund’s NAV is determined based on U.S. dollars, the U.S. dollar
value of your investment in the Fund may go down if the value of the local
currency of the non-U.S. markets in which the Fund invests depreciates against
the U.S. dollar. This is true even if the local currency value of securities in
the Fund’s holdings goes up. Conversely, the dollar value of your investment in
the Fund may go up if the value of the local currency appreciates against the
U.S. dollar. The value of the U.S. dollar measured against other currencies is
influenced by a variety of factors. These factors include: national debt levels
and trade deficits, changes in balances of payments and trade, domestic and
foreign interest and inflation rates, global or regional political, economic or
financial events, monetary policies of governments, actual or potential
government intervention, and global energy prices. Political instability, the
possibility of government intervention and restrictive or opaque business and
investment policies may also reduce the value of a country’s currency.
Government monetary policies and the buying or selling of currency by a
country’s government may also influence exchange rates. Currency exchange rates
can be very volatile and can change quickly and unpredictably. As a result, the
value of an investment in the Fund may change quickly and without warning, and
you may lose money.
•Cybersecurity
Risk.
With the increased use of technologies such as the Internet and the dependence
on computer systems to perform business and operational functions, funds (such
as the Fund) and their service providers may be prone to operational and
information security risks resulting from cyber-attacks and/or technological
malfunctions. In general, cyber-attacks are deliberate, but unintentional events
may have similar effects. Cyber-attacks include, among others, stealing or
corrupting data maintained online or digitally, preventing legitimate users from
accessing information or services on a website, releasing confidential
information without authorization, and causing operational disruption.
Cybersecurity incidents may allow an unauthorized party to gain access to Fund
assets or proprietary information, or cause the Fund, the Adviser, the
Sub-Adviser and/or other service providers (including custodians and financial
intermediaries) to suffer data breaches or data corruption. Additionally,
cybersecurity failures or breaches of the electronic systems of the Fund, the
Adviser, the Sub-Adviser or the Fund’s other service providers, market makers,
APs, the Fund’s primary listing exchange, or the issuers of securities in which
the Fund invests have
the
ability to disrupt and negatively affect the Fund’s business operations,
including the ability to purchase and sell Fund Shares, potentially resulting in
financial losses to the Fund and its shareholders. For instance, cyber-attacks
or technical malfunctions may interfere with the processing of shareholder or
other transactions, affect the Fund’s ability to calculate its NAV, cause the
release of private shareholder information or confidential Fund information,
impede trading, cause reputational damage, and subject the Fund to regulatory
fines, penalties or financial losses, reimbursement or other compensation costs,
and additional compliance costs. Cyber-attacks or technical malfunctions may
render records of Fund assets and transactions, shareholder ownership of Fund
Shares, and other data integral to the functioning of the Fund inaccessible or
inaccurate or incomplete. The Fund also may incur substantial costs for
cybersecurity risk management in order to prevent cyber incidents in the future.
The Fund and its shareholders could be negatively impacted as a
result.
•Depositary
Receipts Risk.
ADRs, GDRs, and IDRs are certificates evidencing ownership of shares of a
foreign issuer and are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. However, they
continue to be subject to many of the risks associated with investing directly
in foreign securities. These risks include the political and economic risks of
the underlying issuer’s country, as well as in the case of depositary receipts
traded on non-U.S. markets, exchange risk. The issuer of a sponsored receipt
typically bears certain expenses of maintaining the depositary receipt facility.
Issuers of unsponsored ADRs are not contractually obligated to disclose material
information in the U.S., so there may not be a correlation between such
information and the market value of the unsponsored ADR. Depositary receipts are
also subject to the risks of investing in foreign securities.
•Equity
Market Risk.
The equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, sectors or companies in which the Fund invests.
Different types of equity securities tend to go through cycles of outperformance
and underperformance in comparison to the general securities markets. Common
stocks are generally exposed to greater risk than other types of securities,
such as preferred stocks and debt obligations, because common stockholders
generally have inferior rights to receive payment from issuers. Recent
unprecedented turbulence in financial markets, reduced liquidity in credit and
fixed income markets, or rising interest rates may negatively affect many
issuers worldwide, which may have an adverse effect on the Fund.
The
respiratory illness COVID-19 has spread globally for over two years, resulting
in a global pandemic and major disruption to economies and markets around the
world, including the United States. During this time, financial markets have
experienced extreme volatility and severe losses, and trading in many
instruments has been disrupted or suspended. Liquidity for many instruments has
been greatly reduced for periods of time. Some sectors of the economy and
individual issuers have experienced particularly large losses. Governments and
central banks, including the Federal Reserve in the U.S., have taken
extraordinary and unprecedented actions to support local and global economies
and the financial markets. The impact of these measures, and whether they will
be effective to mitigate the economic and market disruption, will not be known
for some time. However, the rapid COVID-19 vaccination rollout in the United
States and certain other developed countries, coupled with the passage of
stimulus programs in the U.S. and abroad, have resulted in the re-opening of
businesses, a reduction in quarantine and masking requirements, increased
consumer demand, and the resumption of in-person schooling, travel and events.
As a result, many global economies, including the U.S. economy, have either
re-opened fully or decreased significantly the number of public safety measures
in place that are designed to mitigate virus transmission. Despite these
positive trends, the prevalence of new COVID-19 variants, a failure to achieve
herd immunity, or other unforeseen circumstances may result in the continued
spread of the virus throughout unvaccinated populations or a resurgence in
infections among vaccinated individuals. As a result, it remains unclear if
recent positive trends will continue in developed markets and whether such
trends will spread world-wide to countries with limited access to effective
vaccines that are still experiencing rising COVID-19 hospitalizations and
deaths.
•ETF
Risks.
The Fund is an ETF, and, as a result of its 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 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 Risk.
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 also will 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 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 Risk.
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 and periods when there is limited trading activity for
Shares in the secondary market, in which case such premiums or discounts may be
significant. 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 Adviser believes that, under normal market conditions, large market price
discounts or premiums to NAV will not be sustained because of arbitrage
opportunities. Because securities held by the Fund may trade on foreign
exchanges that are closed when the Fund’s primary listing exchange is open, the
Fund is likely to experience premiums or discounts greater than those of
domestic ETFs.
◦Trading
Risk.
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.
•Foreign
Securities Risk.
Investments in non-U.S. securities involve certain risks that may not be present
with investments in U.S. securities. For example, investments in non-U.S.
securities may be subject to risk of loss due to foreign currency fluctuations
or to political or economic instability. There may be less information publicly
available about a non-U.S. issuer than a U.S. issuer. Non-U.S. issuers may be
subject to different accounting, auditing, financial reporting and investor
protection standards than U.S. issuers. Investments in non-U.S. securities may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. With respect to certain
countries, there is the possibility of government intervention and expropriation
or nationalization of assets. Because legal systems differ, there also is the
possibility that it will be difficult to obtain or enforce legal judgments in
certain countries. Since foreign exchanges may be open on days when the Fund
does not price its shares, the value of the securities in the Fund’s portfolio
may change on days when shareholders will not be able to purchase or sell the
Fund’s shares. Conversely, Shares may trade on days when foreign exchanges are
closed. Each of these factors can make investments in the Fund more volatile and
potentially less liquid than other types of investments.
•Geographic
Investment Risk.
To the extent the Fund invests a significant portion of its assets in the
securities of companies of a single country or region, it is more likely to be
impacted by events or conditions affecting that country or region. For example,
political and economic conditions and changes in regulatory, tax, or economic
policy in a country could significantly affect the market in that country and in
surrounding or related countries and have a negative impact on the Fund’s
performance. Currency developments or restrictions, political and social
instability, and changing economic conditions have resulted in significant
market volatility.
◦Europe-Specific
Risk.
The economies of Europe are highly dependent upon each other, both as key
trading partners and as in many cases as fellow members maintaining the euro.
Reduction in trading activity among European countries may cause an adverse
impact on each nation’s individual economies. European countries that are part
of the Economic and Monetary Union of the EU are required to comply with
restrictions on inflation rates, deficits, interest rates, debt levels, and
fiscal and monetary controls, each of which may significantly affect every
country in Europe. Decreasing imports or exports, changes in governmental or EU
regulations on trade, changes in the exchange rate of the euro, the default or
threat of default by an EU member country on its sovereign debt, and recessions
in an EU member country may have a significant adverse effect on the economies
of EU member countries and their trading partners.
The
European financial markets have recently experienced volatility and adverse
trends due to concerns about rising government debt levels of several European
countries, including Greece, Spain, Ireland, Italy, and Portugal. These events
have adversely affected the exchange rate of the euro and may continue to
significantly affect every country in Europe. For some countries, the ability to
repay sovereign debt is in question, and default is possible, which could affect
their ability to borrow in the future. For example, Greece has been required to
impose harsh austerity measures on its population to receive financial aid from
the International Monetary Fund and EU member countries. These
austerity measures have also led to social uprisings within Greece, as citizens
have protested – at times violently – the actions of their government. The
persistence
of these factors may seriously reduce the economic performance of Greece and
pose serious risks for the country’s economy in the future. Furthermore, there
is the possibility of contagion that could occur if one country defaults on its
debt, and that a default in one country could trigger declines and possible
additional defaults in other countries in the region.
Responses
to the financial problems by European governments, central banks and others,
including austerity measures and reforms, may not work, may result in social
unrest and may limit future growth and economic recovery or have other
unintended consequences. Further defaults or restructurings by governments and
other entities of their debt could have additional adverse effects on economies,
financial markets, and asset valuations around the world. In addition, one or
more countries may abandon the euro, the common currency of the EU, and/or
withdraw from the EU alongside the UK, as discussed below. The impact of these
actions, especially if they occur in a disorderly fashion, is not clear but
could be significant and far-reaching.
In
addition, on January 31, 2020, the UK formally withdrew from the EU (commonly
referred to as “Brexit”) and entered an 11-month transition period, which
concluded on December 31, 2020, with the UK leaving the EU single market and
customs union under the terms of a new trade agreement. The agreement governs
the new relationship between the UK and EU with respect to trading goods and
services, but critical aspects of the relationship remain unresolved and subject
to further negotiation and agreement. There is still considerable uncertainty
relating to the potential consequences associated with the UK’s exit and whether
its exit will increase the likelihood of other countries also departing the EU.
Any exits from the EU, or the possibility of such exits, may have a significant
impact on the UK, Europe, and global economies, which may result in increased
volatility and illiquidity, new legal and regulatory uncertainties and
potentially lower economic growth for these economies that could potentially
have an adverse effect on the value of the Fund’s investments. In addition, the
UK has been a target of terrorism in the past. Acts of terrorism in Europe or
the UK or against such countries’ interests abroad may cause uncertainty in the
European or UK financial markets and adversely affect the performance of the
issuers to which the Fund has exposure.
•Management
Risk.
The Fund is actively-managed and may not meet its investment objective based on
the Adviser’s and Sub-Adviser’s success or failure to implement investment
strategies for the Fund. In particular, the Adviser’s and Sub-Adviser’s
evaluations and assumptions regarding global energy needs, the development of
non-carbon-based energy technologies, the effectiveness and marketability of
“clean energy” technologies, and other factors may not successfully achieve the
Fund’s investment objective given actual market conditions.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time. U.S. and international markets have
experienced significant periods of volatility in recent years due to a number of
economic, political and global macro factors, including public health issues,
growth concerns in the U.S. and overseas, uncertainties regarding interest
rates, trade tensions and the threat of tariffs imposed by the U.S. and other
countries. In addition, local, regional or global events such as war, including
Russia’s invasion of Ukraine, acts of terrorism, spread of infectious diseases
or other public health issues, recessions, rising inflation, or other events
could have a significant negative impact on the Fund and its investments. These
developments as well as other events could result in further market volatility
and negatively affect financial asset prices, the liquidity of certain
securities and the normal operations of securities exchanges and other markets,
which could have an adverse effect on the Fund.
The
COVID-19 pandemic has significantly impacted economies and markets around the
world, including the United States. The pandemic has resulted in a wide range of
social and economic disruptions, including closed borders, voluntary or
compelled quarantines of large populations, stressed healthcare systems, reduced
or prohibited domestic or international travel, supply chain disruptions, and
so-called “stay-at-home” orders throughout much of the United States and many
other countries. Financial markets have experienced extreme volatility and
severe losses, and trading in many instruments has been disrupted. Some sectors
of the economy and individual issuers have experienced particularly large
losses. Such disruptions may continue for an extended period of time or reoccur
in the future to a similar or greater extent. Liquidity for many instruments has
been greatly reduced for periods of time. In response to these disruptions, the
U.S. government and the Federal Reserve have taken extraordinary actions to
support the domestic economy and financial markets. It is unknown how long
circumstances related to the COVID-19 pandemic will persist, whether they will
reoccur in the future, whether efforts to support the economy and financial
markets will be successful, and what additional implications may follow from the
pandemic. The impact of these events and other epidemics or pandemics in the
future could adversely affect Fund performance.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing.
The
securities of large-capitalization companies may be relatively mature compared
to smaller companies and, therefore, subject to slower growth during times of
economic expansion. Large-capitalization
companies
also may be unable to respond quickly to new competitive challenges, such as
changes in technology and consumer tastes.
◦Mid-Capitalization
Investing.
The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large-capitalization stocks or the stock market
as a whole. Some medium capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization companies.
◦Small-Capitalization
Investing.
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
larger capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some small capitalization companies have limited product
lines, markets, and financial and managerial resources and tend to concentrate
on fewer geographical markets relative to larger capitalization companies. There
is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and earnings.
•New
Fund Risk. The
Fund is a recently organized investment company with no operating history. As a
result, prospective investors have no track record or history on which to base
their investment decision. Moreover, investors will not be able to evaluate the
Fund against one or more comparable funds on the basis of relative performance
until the Fund has established a track record.
•Non-Diversification
Risk.
Because the Fund is “non-diversified,” it may invest a greater percentage of its
assets in the securities of a single issuer or a lesser number of issuers than
if it was a diversified fund. As a result, the Fund may be more exposed to the
risks associated with and developments affecting an individual issuer or a
lesser number of issuers than a fund that invests more widely. This may increase
the Fund’s volatility and cause the performance of a relatively small number of
issuers to have a greater impact on the Fund’s performance.
•Utilities
Sector Risk.
The Fund intends to concentrate its investments in the Utilities Industry Group
within the Utilities Sector.
◦Utilities
Industry Group Risk.
As a result of the Fund’s concentration in the Utilities Industry Group, the
Fund is subject to legislative or regulatory changes, adverse market conditions
and/or increased competition affecting companies in such industry group. The
prices of the securities of companies in the Utilities Industry Group may
fluctuate widely due to both federal and state regulations governing rates of
return and services that may be offered, fierce competition for market share,
and competitive challenges in the U.S. from foreign competitors engaged in
strategic joint ventures with U.S. companies, and in foreign markets from both
U.S. and foreign competitors. The prices of the securities of Utilities Industry
Group may fluctuate widely due to government regulation; the effect of interest
rates on capital financing; competitive pressures due to deregulation in the
utilities industry; supply and demand for services; increased sensitivity to the
cost of natural resources required for energy production; and environmental
factors such as conservation of natural resources or pollution control.
Information
about the Fund’s daily portfolio holdings is available at www.true-shares.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 (the “SAI”).
TrueMark
Investments, LLC, a Delaware limited liability company located at 433 West Van
Buren Street, 1150-E, Chicago, Illinois 60607, serves as the investment adviser
for the Fund. The Adviser, subject to the oversight of the Board, provides an
investment management program and oversees the Sub-Adviser’s day-to-day
management of the Fund. The Adviser also arranges for transfer agency, custody,
fund administration, distribution and all other services necessary for the Fund
to operate. An SEC-registered investment adviser formed in 2019, the Adviser is
majority owned by the TrueMark Group, LLC, which in turn is controlled by
Michael Loukas, Jordan Fletcher and Jordan Waldrep.
The
Adviser continuously reviews, supervises, and administers the Fund’s investment
program. In particular, the Adviser provides investment and operational
oversight of the Sub-Adviser. The Board supervises the Adviser and establishes
policies that the Adviser must follow in its day-to-day management activities.
For the services it provides to the Fund, the Adviser is entitled to a unified
management fee, which is calculated daily and paid monthly, at an annual rate of
0.75% of the Fund’s average daily net assets.
Pursuant
to an investment advisory agreement between the Trust, on behalf of the Fund,
and the Adviser (the “Advisory Agreement”), the Adviser has agreed to pay all
expenses of the Fund except the fee payable to the Adviser under the Advisory
Agreement, interest
charges
on any borrowings, dividends and other expenses on securities sold short, taxes,
brokerage commissions and other expenses incurred in placing orders for the
purchase and sale of securities and other investment instruments, acquired fund
fees and expenses, accrued deferred tax liability, extraordinary expenses, and
distribution fees and expenses paid by the Trust under any distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The Adviser, in turn,
compensates the Sub-Adviser from the management fee it receives.
The
basis for the Board’s approval of the Fund’s Advisory Agreement will be
available in the Fund’s first Annual or Semi-Annual Report to
Shareholders.
Manager
of Managers Structure
The
Fund and the Adviser intend to apply for exemptive relief from the SEC
permitting the Adviser (subject to certain conditions and the approval of the
Board to change or select new sub-advisers without obtaining shareholder
approval. The relief would also permit the Adviser to materially amend the terms
of agreements with a sub-adviser (including an increase in the fee paid by the
Adviser to the sub-adviser (and not paid by the Fund)) or to continue the
employment of a sub-adviser after an event that would otherwise cause the
automatic termination of services with Board approval, but without shareholder
approval. Shareholders will be notified of any sub-adviser changes. Unless and
until such exemptive relief is granted and the Fund’s reliance on such relief is
approved by Fund shareholders, shareholder approval will be required for changes
in a sub-adviser agreement or for the addition of a new
sub-adviser.
Eagle
Global Advisors, LLC, a Texas limited liability company located at 1330 Post Oak
Boulevard, Suite 3000, Houston, Texas 77056, is responsible for the day-to-day
management of the Fund. An SEC-registered investment adviser formed in 1996, the
Sub-Adviser is majority owned by Edward Allen and Steven Russo. The Sub-Adviser
provides advisory services to institutions, wealth advisers, family offices,
high net worth individuals, and mutual funds.
The
Sub-Adviser is responsible for trading portfolio securities for the Fund,
including selecting broker-dealers to execute purchase and sale transactions,
subject to the supervision of the Adviser and the Board. For its services, the
Sub-Adviser is entitled to a fee, paid by the Adviser, equal to 50% of the net
profits of the Fund (the total management fees received by the Adviser after
Fund expenses) calculated monthly.
The
basis for the Board’s approval of the Fund’s Investment Sub-Advisory Agreement
will be available in the Fund’s first Annual or Semi-Annual Report to
Shareholders.
The
individuals identified below are jointly and primarily responsible for the day
to day management of the Fund’s portfolio.
Michael
Cerasoli is a Portfolio Manager, Energy Infrastructure Strategies, for the
Sub-Adviser. He leads the Renewables effort at the Sub-Adviser, including the
development of active and passive strategies, and portfolio management. Mr.
Cerasoli also serves as Co-Head of the Eagle Energy Infrastructure team and
Co-Chair of the Energy Infrastructure Investment Committee. He shares Portfolio
Manager responsibilities for the firm’s Energy Infrastructure strategies. Prior
to joining the Sub-Adviser in May 2014, Mr. Cerasoli was employed by
Goldman, Sachs & Co. for ten years, where he covered MLPs for seven years
and small/mid cap Oil Services for three years. He was recognized as an
“Up-and-Comer” by Institutional Investor Magazine in 2009. Prior to his tenure
at Goldman, Mr. Cerasoli worked for three years as a sell-side equity
trader at various Wall Street firms. He earned bachelor’s degrees in Economics
and History from Union College, and an MBA from the Hagan School of Business at
Iona College. Mr. Cerasoli holds the Chartered Financial Analyst designation.
Alex
Meier is a Portfolio Manager, Energy Infrastructure Strategies, for the
Sub-Adviser. He serves as Co-Head of the Eagle Energy Infrastructure Team and
Co-Chair of the Energy Infrastructure Investment Committee. Mr. Meier shares
Portfolio Manager responsibilities for the firm’s Energy Infrastructure
strategies. Prior to joining the Sub-Adviser in 2013, he was employed by
Waterfront Capital Partners as a Portfolio Manager focusing on Exploration &
Production, Midstream & Utilities. Prior to his tenure at Waterfront, Mr.
Meier was a Managing Director at Zimmer Lucas Capital, focused on E&P, MLP
and utility securities. Other past work experience includes corporate
development and financial planning at UniSource Energy and investment banking at
Lehman Brothers. Mr. Meier earned a bachelor’s degree in Economics from the
University of Chicago.
Steven
S. Russo is a co-founder and Senior Partner for the Sub-Advisor. He serves as a
Portfolio Manager and Director of Client Service and is a member of the
investment committees for the firm’s strategies. Mr. Russo is also a
Relationship Manager for a variety of institutional and high net worth clients.
Prior to founding the Sub-Adviser, he was employed by Eagle Management &
Trust Company and Criterion Investment Management Company. Mr. Russo earned a
bachelor’s degree in Finance from the University of Texas and an MBA from Rice
University. He also serves as a Board Member of the M.A. Wright Fund at Rice
University.
The
Fund’s SAI provides additional information about the Portfolio Managers’
compensation structure, other accounts managed by the Portfolio Managers, and
the Portfolio Managers’ ownership of Shares.
Foreside
Fund Services, LLC (the “Distributor”) serves as the principal underwriter and
distributor of the Fund’s Shares. The Distributor’s principal address is Three
Canal Plaza, Suite 100, Portland, Maine 04101. The Distributor will not
distribute shares in less than whole Creation Units, and it does not maintain a
secondary market in the Shares. The Distributor is a broker-dealer registered
under the Securities Exchange Act of 1934, as amended, and a member of the
Financial Industry Regulatory Authority, Inc. (“FINRA”). The Distributor has no
role in determining the policies of the Fund or the securities that are
purchased or sold by the Fund and is not affiliated with the Adviser,
Sub-Adviser, or any of their respective affiliates.
U.S.
Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services,
located at 615 East Michigan Street, Milwaukee, Wisconsin 53202, serves as the
administrator and transfer agent for the Fund.
U.S.
Bank National Association, located at 1555 N. Rivercenter Drive, Suite 302,
Milwaukee, Wisconsin 53212, serves as the custodian for the Fund.
Morgan,
Lewis & Bockius LLP, located at 1111 Pennsylvania Avenue, N.W., Washington,
D.C. 20004, serves as legal counsel to the Trust.
Cohen
& Company, Ltd., located at 1350 Euclid Avenue, Suite 800, Cleveland, Ohio
44115, serves as the Fund’s independent registered public accounting firm. The
independent registered public accounting firm is responsible for auditing the
annual financial statements of the Fund.
The
Fund issues and redeems Shares only in Creation Units at the NAV per share next
determined after receipt of an order from an AP. 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, 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.
Individual 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 spread between the
bid and the offer price in the secondary market on each leg of a round trip
(purchase and sale) transaction. 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.
Shares
are held in book-entry form, which means that no stock certificates are issued.
The Depository Trust Company (the “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.
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 from 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, frequent purchases and
redemptions for cash may increase tracking error and portfolio transaction costs
and lead to the realization of capital gains. The Fund’s fair valuation of its
holdings consistent with the 1940 Act and Rule 2a-5 thereunder and its ability
to impose transaction fees on purchases and redemptions of Creation Units to
cover the custodial and other costs incurred by the Fund in effecting trades
help to minimize the potential adverse consequences of frequent purchases and
redemptions. In addition, the Fund and the Adviser reserve the right to reject
any purchase order at their discretion, provided that such action does not
result in a suspension of sales of Creation Units in contravention of Rule 6c-11
under the 1940 Act and the SEC’s positions thereunder.
The
Fund’s NAV is calculated as of the scheduled close of regular trading on the New
York Stock Exchange (the “NYSE”), generally 4:00 p.m. Eastern time, each day the
NYSE is open for business. The NAV is calculated by dividing the Fund’s net
assets by its Shares outstanding.
In
calculating its NAV, the Fund generally values its assets on the basis of market
quotations, last sale prices, or estimates of value furnished by a pricing
service or brokers who make markets in such instruments. In particular, the Fund
generally values equity securities at their readily available market quotations.
If such information is not available for a security held by the Fund or is
determined to be unreliable, the security will be valued by the Adviser at fair
value pursuant to procedures established by the Adviser and approved by the
Board (as described below).
The
Adviser has been designated by the Board as the valuation designee for the Fund
pursuant to Rule 2a-5 under the 1940 Act. In its capacity as valuation designee,
the Adviser has adopted procedures and methodologies to fair value Fund
securities whose market prices are not “readily available” or are deemed to be
unreliable. For example, such circumstances may arise when: (i) a security has
been de-listed or has had its trading halted or suspended; (ii) a security’s
primary pricing source is unable or unwilling to provide a price; (iii) a
security’s primary trading market is closed during regular market hours; or (iv)
a security’s value is materially affected by events occurring after the close of
the security’s primary trading. Generally, when fair valuing a security held by
the Fund, the Adviser will take into account all reasonably available
information that may be relevant to a particular valuation including, but not
limited to, fundamental analytical data regarding the issuer, information
relating to the issuer’s business, recent trades or offers of the security,
general and/or specific market conditions and the specific facts giving rise to
the need to fair value the security. Fair value determinations are made in good
faith and in accordance with the fair value methodologies established by the
Adviser. Due to the subjective and variable nature of determining the fair value
of a security or other investment, there can be no assurance that the Adviser’s
determined 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 an investment if the Fund were to sell such investment at or near the time
its fair value is determined.
The
Fund intends to pay out dividends quarterly, 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, if any. 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.
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 adviser
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws. This summary does not apply
to Shares held in an IRA or other tax-qualified plans, which are generally not
subject to current tax. Transactions relating to Shares held in such accounts
may, however, be taxable at some time in the future. This summary is based on
current tax laws, which may change.
The
Fund intends to elect and to qualify each year for treatment as a regulated
investment company (“RIC”). 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).
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 receives 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. 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. For such dividends to be
taxed as qualified dividend income to a non-corporate shareholder, the Fund must
satisfy certain holding period requirements with respect to the underlying stock
and the non-corporate shareholder must satisfy holding period requirements with
respect to his or her ownership of the Fund’s Shares. Holding periods may be
suspended for these purposes for stock that is hedged.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from the Fund.
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year. Distributions are generally
taxable even if they are paid from income or gains earned by the Fund before
your investment (and thus were included in the Shares’ NAV when you purchased
your Shares).
You
may wish to avoid investing in the Fund shortly before a dividend or other
distribution, because such a distribution will generally be taxable even though
it may economically represent a return of a portion of your
investment.
If
you are neither a resident nor a citizen of the United States or if you are a
foreign entity, distributions (other than Capital Gain Dividends) paid to you by
the Fund will generally be subject to a U.S. withholding tax at the rate of 30%,
unless a lower treaty rate applies. Gains from the sale or other disposition of
your Shares from 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 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.
Provided
that a shareholder holds Shares as capital assets, any capital gain or loss
realized upon a sale of Shares generally is treated as a long-term capital gain
or loss if Shares have been held for more than one year and as a short-term
capital gain or loss if Shares have been held for one year or less. However, any
capital loss on a sale of Shares held for six months or less is treated as
long-term capital loss to the extent of Capital Gain Dividends paid with respect
to such Shares. Any loss realized on a sale will be disallowed to the extent
Shares of the Fund are acquired, including through reinvestment of dividends,
within a 61-day period beginning 30 days before and ending 30 days after the
disposition of Shares. The ability to deduct capital losses may be
limited.
The
cost basis of Shares of the Fund acquired by purchase will generally be based on
the amount paid for the Shares and then may be subsequently adjusted for other
applicable transactions as required by the Internal Revenue Code of 1986, as
amended. 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.
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 adviser with
respect to whether wash sale rules apply 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.
Net
Investment Income Tax
U.S.
individuals with income exceeding specified thresholds are subject to a 3.8% tax
on all or a portion of their “net investment income,” which includes interest,
dividends, and certain capital gains (generally including capital gains
distributions and capital gains realized on the sale of Shares). This 3.8% tax
also applies to all or a portion of the undistributed net investment income of
certain shareholders that are estates and trusts.
Foreign
Investments by the Fund
Interest
and other income received by the Fund with respect to foreign securities may
give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. If as of the close of a taxable year more than 50% of the
value of the Fund’s assets consists of certain foreign stock or securities, the
Fund will be eligible to elect to “pass through” to investors the amount of
foreign income and similar taxes (including withholding taxes) paid by the Fund
during that taxable year. This means that investors would be considered to have
received as additional income their respective shares of such foreign taxes, but
may be entitled to either a corresponding tax deduction in calculating taxable
income, or, subject to certain limitations, a credit in calculating federal
income tax. If the Fund does not so elect, it will be entitled to claim a
deduction for certain foreign taxes incurred by the Fund. The Fund (or a
financial intermediary, such as a broker, through which a shareholder owns
Shares) will notify you if it makes such an election and provide you with the
information necessary to reflect foreign taxes paid on your income tax return.
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 adviser 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.
The
Board has adopted a Distribution and Service Plan (the “Plan”) pursuant to Rule
12b-1 under the 1940 Act. In accordance with the Plan, the Fund is authorized to
pay an amount up to 0.25% of its average daily net assets each year for certain
distribution-related activities and shareholder services.
No
Rule 12b-1 fees are currently paid by the Fund, and there are no plans to impose
these fees. However, in the event Rule 12b-1 fees are charged in the future,
because the fees are paid out of Fund assets, over time these fees will increase
the cost of your investment and may cost you more than certain other types of
sales charges.
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 is available on the Fund’s website at
www.true-shares.com.
Shares
are not sponsored, endorsed, or promoted by the Exchange. The Exchange is not
responsible for, nor has it participated in the determination of, the timing,
prices, or quantities of Shares to be issued, nor in the determination or
calculation of the equation by which Shares are redeemable. The Exchange has no
obligation or liability to owners of Shares in connection with the
administration, marketing, or trading of Shares.
Without
limiting any of the foregoing, in no event shall the Exchange have any liability
for any lost profits or indirect, punitive, special, or consequential damages
even if notified of the possibility thereof.
The
Adviser and the Fund make no representation or warranty, express or implied, to
the owners of Shares or any member of the public regarding the advisability of
investing in securities generally or in the Fund particularly.
Financial
information is not available because the Fund had not commenced operations prior
to the date of this Prospectus.
TRUESHARES
EAGLE GLOBAL RENEWABLE ENERGY INCOME ETF
|
|
|
|
|
|
|
|
|
|
|
| |
| Adviser |
TrueMark
Investments, LLC
433
West Van Buren Street, 1150-E
Chicago,
Illinois 60607 |
Sub-Adviser |
Eagle
Global Advisors, LLC
1330
Post Oak Boulevard, Suite 3000
Houston,
Texas 77056 |
| Custodian |
U.S.
Bank National Association
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212 |
Transfer
Agent and Administrator |
U.S.
Bancorp Fund Services, LLC
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
| Legal
Counsel |
Morgan,
Lewis & Bockius LLP
1111
Pennsylvania Avenue, NW
Washington,
DC 20004-2541 |
Distributor |
Foreside
Fund Services, LLC
Three
Canal Plaza, Suite 100,
Portland,
Maine 04101 |
| Independent
Registered Public Accounting Firm |
Cohen
& Company, Ltd.
1350
Euclid Avenue, Suite 800
Cleveland,
Ohio 44115 |
| |
Investors
may find more information about the Fund in the following
documents:
Statement
of Additional Information: The
Fund’s SAI provides additional details about the investments of the Fund and
certain other additional information. The SAI is on file with the SEC and is
herein incorporated by reference into this Prospectus. It is legally considered
a part of this Prospectus.
Annual/Semi-Annual
Reports:
Additional information about the Fund’s investments will be available in the
Fund’s annual and semi-annual reports to shareholders. In the annual report,
when available, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund’s performance after
the first fiscal year in which the Fund is in operation.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Fund by contacting the Fund at c/o U.S. Bank Global
Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or by calling
1-800-617-0004.
Shareholder
reports and other information about the Fund are also available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s website at
http://www.sec.gov;
•Free
of charge from the Fund’s Internet web site at www.true-shares.com;
or
(SEC
Investment Company Act File No. 811-23226)