ck0001683471-20231231
RiverNorth Patriot
ETF (FLDZ)
RiverNorth Enhanced
Pre-Merger SPAC ETF
(SPCZ)
Principal
U.S. Listing Exchange: Cboe BZX Exchange, Inc.
April 30,
2024
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.
TABLE
OF CONTENTS
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DELIVERY
OF SHAREHOLDER DOCUMENTS – HOUSEHOLDING |
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RIVERNORTH
PATRIOT ETF - FUND SUMMARY |
Investment
Objective
The RiverNorth Patriot ETF (the “Patriot ETF” or the “Fund”) seeks
capital growth.
Fees and Expenses of the
Fund
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 |
Annual
Fund Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fee |
0.70% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Acquired
Fund Fees and Expenses* |
0.07% |
Total
Annual Fund Operating Expenses |
0.77% |
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*
Acquired Fund Fees
and Expenses (“AFFE”) are the indirect costs of investing in other investment
companies. Total Annual Fund Operating Expenses do not correlate to the expense
ratios in the Fund’s Financial Highlights because the Financial Highlights
include only the direct operating expenses incurred by the Fund and exclude
AFFE.
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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1
Year: |
$79 |
3
Years: |
$246 |
5
Years: |
$428 |
10
Years: |
$954 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Shares are
held in a taxable account. These costs, which are not reflected in the Total
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
For the fiscal year ended December 31, 2023, the Fund’s portfolio turnover
rate was 46% of the average value of its
portfolio.
Principal Investment
Strategies
The Fund
is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve its
investment objective by investing in equity securities, including common stock
of mid-cap and large-cap companies, tied to the economy of the U.S. RiverNorth
Capital Management, LLC (the “Sub-Adviser”), the Fund’s sub-adviser, will
consider a company to be tied to the U.S. economy if: 1) the company is
organized under the laws of the U.S.; 2) the shares of the company are traded
principally in the U.S.; and 3) the company generates at least 90% of its
revenue from its activities in the U.S. In addition, to be eligible for
inclusion in the Fund’s portfolio, a company must have, at the time of purchase,
a market capitalization over $5 billion.
The
portfolio will be constructed at the discretion of the Sub-Adviser. In
constructing the Fund’s portfolio, the Sub-Adviser may consider a variety of
factors, including its overall market sector and industry weighting, and no one
factor is expected to be determinative of investment decisions. Weightings of
positions and sectors and industries may be adjusted at any time at the
discretion of the Sub-Adviser.
The
Fund is classified as a non-diversified investment company under the Investment
Company Act of 1940 (the “1940 Act”).
Folds
of Honor
The
Sub-Adviser will donate a majority of its sub-advisory fee or 100% of the profit
derived from its management of the Fund, whichever is greater, to the Folds of
Honor Foundation, a charity focused on providing scholarships to families of
veterans. Folds of Honor is a 501(c)(3) non‐profit organization, rated “4‐star”
by Charity Navigator and platinum by GuideStar, that provides educational
scholarships to the families of military men and women who have fallen or been
disabled while on active duty in the United States
armed
forces. Since 2007, a cumulative average ratio of 91% of every dollar raised by
Folds of Honor has been contributed to its scholarship program (91% in 2022),
which has awarded approximately 52,000 in educational scholarships.
Impact
Investing
The Fund is designed to provide an alternative approach to charity
and seeks to deliver true impact investing. While “Impact Investing” can mean
many things, the application of the term here is about delivering real dollars
to a charity that directly supports education for the children and families of
U.S. service members who were disabled or killed in action. The Fund is designed
to deliver real world benefits to those in need now.
Principal Investment
Risks
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 the risks 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:
•Cybersecurity
Risk. 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, 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 Shares, potentially resulting in
financial losses to the Fund and its shareholders.
•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. Shares may trade at a material
discount to NAV and possibly face delisting if either: (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.
◦Trading
Risk. Although Shares are listed for trading
on the Cboe BZX Exchange, 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 the Shares.
•Management
Risk. The
Fund is actively managed and its ability to achieve its investment objective is
dependent on the Sub-Adviser’s successful implementation of the Fund’s
investment strategies.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing Risk.
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 Risk. The securities of mid-capitalization
companies may be more vulnerable to adverse issuer, market, political, or
economic developments than securities of large-capitalization companies. The
securities of mid-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.
•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 and trade tensions. In
addition, local, regional or global events such as war, including Russia’s
invasion of Ukraine, acts of terrorism, 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.
•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.
Performance
The performance
information presented below provides some indication of the risks of investing
in the Fund by showing the extent to which the Fund’s performance can change
from year to year and over time. The bar chart below shows the
Fund’s performance for the calendar years ended December 31. The table
illustrates how the Fund’s average annual returns for the 1 year and since
inception periods compare with those of the S&P 900 Index Total Return,
which reflects a broad measure of market performance. The Fund’s
past performance, before and after taxes, does not necessarily indicate how it
will perform in the future. Updated performance information is
available on the Fund’s website at www.true-shares.com.
Calendar
Year
Return
The calendar year-to-date total return of the
Fund as of March 31, 2024 was
9.45%. During the
period of time shown in the bar chart, the highest quarterly
return was 10.73% for the quarter ended December 31, 2023, and
the lowest quarterly return was
-13.94% for the quarter ended June 30,
2022.
Average
Annual Total Returns
(for
periods ended December 31, 2023)
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RiverNorth
Patriot ETF |
1
Year |
Since
Inception
(12/31/2021) |
Return
Before Taxes |
12.18% |
-0.58% |
Return
After Taxes on Distributions |
11.82% |
-0.92% |
Return
After Taxes on Distributions and Sale of Shares |
7.48% |
-0.45% |
S&P
900 Index Total Return
(reflects no deduction for
fees, expenses, or taxes) |
25.70% |
1.63% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above and do not reflect the impact
of state and local taxes. Actual after-tax returns depend on an
investor’s tax situation and may differ from those shown. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts. In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Shares” may be higher than the other return figures for the same period.
A higher after-tax return results when a capital loss occurs upon redemption and
provides an assumed tax deduction that benefits the
investor.
Portfolio
Management
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Adviser |
TrueMark
Investments, LLC (the “Adviser”) |
Sub-Adviser |
RiverNorth
Capital Management, LLC |
Portfolio
Managers |
Patrick
W. Galley, CFA®
and
Joseph Bailey, CFA®
and CAIA have been the portfolio managers of the Fund since its inception
in December 2021 |
Purchase
and Sale of Shares
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.
Tax
Information
The
Fund’s distributions are generally taxable as ordinary income, qualified
dividend income, or capital gains (or a combination), unless your investment is
held in an IRA or other tax-advantaged account. Distributions on investments
made through tax-deferred arrangements may be taxed later upon withdrawal of
assets from those accounts.
Financial
Intermediary Compensation
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange-traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
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RIVERNORTH
ENHANCED PRE-MERGER SPAC ETF - FUND
SUMMARY |
Investment
Objective
The RiverNorth Enhanced Pre-Merger SPAC ETF (the “Enhanced
Pre-Merger SPAC ETF” or the “Fund”) seeks to preserve capital and provide
incremental total return.
Fees and Expenses of the
Fund
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 |
Annual
Fund Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fee |
0.89% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Acquired
Fund Fees and Expenses* |
0.01% |
Total
Annual Fund Operating Expenses |
0.90% |
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*
Acquired Fund Fees
and Expenses (“AFFE”) are the indirect costs of investing in other investment
companies. Total Annual Fund Operating Expenses do not correlate to the expense
ratios in the Fund’s Financial Highlights because the Financial Highlights
include only the direct operating expenses incurred by the Fund and exclude
AFFE.
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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1
Year: |
$92 |
3
Years: |
$287 |
5
Years: |
$498 |
10
Years: |
$1,108 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Shares are
held in a taxable account. These costs, which are not reflected in the Total
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
For the fiscal year ended December 31, 2023, the Fund’s portfolio turnover rate
was 132% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund is actively managed using a strategy designed around the unique
characteristics of “Pre-Combination” (defined below) SPAC securities. Under
normal market conditions, the Fund seeks to achieve its investment objective by
investing primarily in units made up of common stock, warrants and rights of
U.S.-listed special purpose acquisition companies (“SPACs”). A warrant is a
derivative that gives the holder the right, but not the obligation, to buy or
sell a security at a certain price prior to the expiration of the warrant. A
right is a privilege granted to existing holders of a company’s stock to receive
additional shares of common stock before it is offered to the public.
A
SPAC is a “blank check” company with no commercial operations that is designed
to raise capital via an initial public offering (“IPO”) for the purpose of
engaging in a merger, acquisition, reorganization, or similar business
combination (a “Combination”) with one or more operating companies. Sponsors of
SPACs typically pay the SPAC’s offering costs and underwriting fees and
contribute all or a portion of its working capital in exchange for participation
in the common stock and derivatives (such as warrants and rights) of the SPAC. A
SPAC IPO typically involves the sale of units consisting of one share of common
stock and a warrant or right (or portion of a warrant or right) to purchase
common stock at a fixed price upon or after the consummation of a Combination.
The capital raised in the IPO is typically placed into a trust. The proceeds of
the IPO may be used only to consummate a Combination and for other limited
purposes such as paying taxes owed by the SPAC. “Pre-Combination” SPACs (also
referred to herein as “Pre-Merger” SPACs) are SPACs that are either seeking a
target for a Combination or have not yet completed a Combination with an
identified target. Pre-Combination SPACs often have predetermined time frames
within which to consummate a Combination (typically two years) or the SPAC will
seek to extend the time frame or liquidate.
RiverNorth
Capital Management, LLC (the “Sub-Adviser”), the Fund’s investment sub-adviser,
is responsible for the day-to-day management of the Fund, subject to the
oversight of TrueMark Investments, LLC (the “Adviser”), the Fund’s investment
adviser. The investment universe for the Fund will be all Pre-Combination SPACs
and their rights and warrants. Such SPACs may be formed, operated and listed in
the U.S. or outside of the U.S. The Sub-Adviser will apply quantitative and
qualitative analyses, including fundamental and technical analyses, to assess
the relative risk/reward potential of the SPACs, in the investment universe and
select those SPACs with the greatest risk/reward potential for investment by the
Fund. The Sub-Adviser will also evaluate the sponsors of the SPACs as they are
crucial to the success of a SPAC acquisition. SPAC sponsors will be evaluated
based on the team’s strategy, experience, deal flow, and demonstrated track
record in building enterprise value, which is a measure of the value of an
operating business determined by calculating the company’s market cap plus total
debt minus cash and cash equivalents. If management has any history of growing
operating businesses, the Sub-Adviser will take into account their history.
Additionally, the Sub-Adviser will evaluate a SPAC’s market value relative to
the value of the Fund’s share of the SPAC to realize additional value for
shareholders.
Weightings
in the Fund will be determined by the Sub-Adviser based on its evaluation of the
opportunities in the market. The Fund expects to participate in IPOs of SPACs,
secondary market transactions, private placement in public equities and
investments in vehicles formed by SPAC sponsors to hold founder shares, which
are private rights and other interests issued by a SPAC.
In
seeking to achieve the Fund’s investment objective, the Sub-Adviser will monitor
the Fund’s portfolio and adjust positions based on changes in expectations of
the investments or the availability of better alternatives. The Fund generally
will not hold a SPAC’s common stock past the date on which it no longer has the
ability to redeem the stock for its share of the underlying collateral held in
trust. Instead, prior to the completion of a Combination, the Sub-Adviser
intends to sell the SPAC’s shares if they are trading at a premium relative to
the trust collateral or tender out of the shares using the Fund’s redemption
rights. Warrants acquired during the SPAC lifecycle may be held by the Fund for
as long as the Sub-Adviser believes they offer appropriate value for the Fund
and its shareholders, even after a Combination has been completed.
In
addition, to the extent permitted by the Investment Company Act of 1940 (the
“1940 Act”), the Fund may use swaps to seek to leverage the returns of the
Fund’s portfolio. The use of leverage could magnify the Fund’s gains or losses.
Under
normal circumstances, at least 80% of the Fund’s net assets, plus borrowings for
investment purposes, will be invested in Pre-Merger SPACs (along with the
warrants or rights issued in connection with the IPOs of SPACs).
The Fund is considered to be non-diversified, which means that it
may invest more of its assets in the securities of a single issuer or a lesser
number of issuers than if it were a diversified fund. The SPACs in which the
Fund invests will generally be small or mid-capitalization
companies.
Principal Investment
Risks
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 the risks 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
Risks of Pre-Combination SPACs. The Fund invests in equity securities, warrants and rights of
SPACs, which raise funds to seek potential Combination opportunities. Unless and
until a Combination is completed, a SPAC generally invests its assets in U.S.
government securities, money market securities, and cash. Because SPACs have no
operating history or ongoing business other than seeking Combinations, the value
of their securities is particularly dependent on the ability of the entity’s
management to identify and complete a profitable Combination. There is no
guarantee that the SPACs in which the Fund invests will complete a Combination
or that any Combination that is completed will be profitable. Public
stockholders of SPACs may not be afforded a meaningful opportunity to vote on a
proposed initial Combination because certain stockholders, including
stockholders affiliated with the management of the SPAC, may have sufficient
voting power, and a financial incentive, to approve such a transaction without
support from public stockholders. As a result, a SPAC may complete a Combination
even though a majority of its public stockholders do not support such a
Combination. Some SPACs may pursue Combinations only within certain industries
or regions, which may increase the volatility of their prices. In addition, the
Fund may invest in vehicles formed by SPAC sponsors to hold founder shares,
which may be subject to forfeiture or expire worthless and which generally have
more limited liquidity than SPAC shares issued in an IPO. In addition, the Fund
may invest in vehicles formed by SPAC sponsors to hold founder shares, which may
be subject to forfeiture or expire worthless and which generally have more
limited liquidity than SPAC shares issued in an IPO.
•Borrowing
and Leverage Risk.
Borrowing magnifies the potential for gain or loss by the Fund and, therefore,
increases the possibility of fluctuation in the Fund’s NAV. This is the
speculative factor known as leverage. Because the Fund’s investments will
fluctuate in value, while the interest on borrowed amounts may be fixed, the
Fund’s NAV may tend to increase more as the value of its investments increases,
or to decrease more as the value of its investments decreases, during times of
borrowing.
Unless profits on investments acquired with borrowed funds exceed
the costs of borrowing, the use of borrowing will cause the Fund’s investment
performance to decrease. Borrowing also may cause the Fund to liquidate
positions under adverse market conditions to satisfy its repayment obligations.
Borrowing increases the risk of loss and may increase the volatility of the
Fund.
•Counterparty
Risk.
Counterparty risk is the risk that a counterparty to Fund transactions
(e.g.,
prime brokerage or securities lending arrangement or derivatives transaction)
will be unable or unwilling to perform its contractual obligation to the Fund.
The Fund may use swap agreements to gain exposure to a particular group of
securities, index, asset class or other reference asset without actually
purchasing those securities or investments, to hedge a position, or for other
investment purposes. Through these investments and related arrangements
(e.g., prime brokerage or securities lending arrangements or derivatives
transactions), the Fund is exposed to credit risks that the counterparty may be
unwilling or unable to make timely payments or otherwise to meet its contractual
obligations. If the counterparty becomes bankrupt or defaults on (or otherwise
becomes unable or unwilling to perform) its payment or other obligations to the
Fund, the Fund may not receive the full amount that it is entitled to receive or
may experience delays in recovering the collateral or other assets held by, or
on behalf of, the counterparty. If this occurs, the value of your shares in the
Fund will decrease.
•Cybersecurity
Risk. 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, 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 Shares, potentially resulting in
financial losses to the Fund and its shareholders.
•Derivatives
Risk.
Derivatives are financial instruments that have a value which depends upon, or
is derived from, a reference asset, such as one or more underlying securities,
pools of securities, indexes, rates or currencies. Derivatives may result in
investment exposures that are greater than their cost would suggest; in other
words, a small investment in a derivative may have a large impact on Fund
performance. The successful use of derivatives generally depends on the ability
to predict market movements. The use of these instruments requires special
skills and knowledge of investment techniques that are different than those
normally required for purchasing and selling securities. If the Sub-Adviser uses
a derivative instrument at the wrong time or judges market conditions
incorrectly, or if the derivative instrument does not perform as expected, these
strategies may significantly reduce the Fund’s return. The Fund could also
experience losses if it is unable to close out a position because the market for
an instrument or position is or becomes illiquid.
◦Swap
Agreements Risk. Swap agreements are contracts among
the Fund and a counterparty to exchange the return of the pre-determined
underlying investment (such as the rate of return of the underlying index). Swap
agreements may be negotiated bilaterally and traded OTC between two parties or,
for certain standardized swaps, must be exchange-traded through a futures
commission merchant and/or cleared through a clearinghouse that serves as a
central counterparty. Risks associated with the use of swap agreements are
different from those associated with ordinary portfolio securities transactions,
due in part to the fact they could be considered illiquid and many swaps trade
on the OTC market. Swaps are particularly subject to counterparty credit,
correlation, valuation, liquidity and leveraging risks. While exchange trading
and central clearing are intended to reduce counterparty credit risk and
increase liquidity, they do not make swap transactions risk-free. Additionally,
applicable regulators have adopted rules imposing certain margin requirements,
including minimums, on OTC swaps, which may result in the Fund and its
counterparties posting higher margin amounts for OTC swaps, which could increase
the cost of swap transactions to the Fund and impose added operational
complexity.
•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 stock, warrants, and rights 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. Shares may trade at a material
discount to NAV and possibly face delisting if either: (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.
◦Trading
Risk. Although Shares are listed for trading
on the Cboe BZX Exchange, 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 the Shares.
•Foreign
Securities Risk. Investments in non-U.S. securities involve certain risks that may
not be present with investments in U.S. securities. For example, investments in
non-U.S. securities may be subject to risk of loss due to foreign currency
fluctuations or to political or economic instability. Investments in non-U.S.
securities also may be subject to withholding or other taxes and may be subject
to additional trading, settlement, custodial, and operational risks. These and
other factors can make investments in the Fund more volatile and potentially
less liquid than other types of investments.
•Illiquidity
Risk. Illiquidity risk exists when particular investments are difficult
to purchase or sell, possibly preventing the Fund from selling these illiquid
investments at an advantageous price or at the time desired. A lack of liquidity
may also cause the value of investments to decline. Illiquid investments may
also be difficult to value.
•Limited
Operating History Risk. The Fund is a recently organized investment company with a limited
operating history. As a result, prospective investors have a limited track
record or history on which to base their investment decision.
•Management
Risk. The Sub-Adviser continuously evaluates the Fund’s holdings,
purchases and sales with a view to achieving the Fund’s investment objective.
However, achievement of the stated investment objective cannot be guaranteed.
The Sub-Adviser’s judgment about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company performance,
and these factors may affect the return on your investment.
•Market
Capitalization Risk.
◦Mid-Capitalization
Investing Risk. The securities of mid-capitalization companies may be more
vulnerable to adverse issuer, market, political, or economic developments than
securities of large-capitalization companies. The securities of
mid-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 Risk. 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.
•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 and trade tensions. In
addition, local, regional or global events such as war, including Russia’s
invasion of Ukraine, acts of terrorism, 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.
•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.
•Rights
and Warrants Risk. The
Fund may purchase rights and warrants to purchase equity securities. Investments
in rights and warrants are pure speculation in that they have no voting rights,
pay no dividends and have no rights with respect to the assets of the
corporation issuing them. They do not represent ownership of the securities, but
only the right to buy them. Rights and
warrants
involve the risk that the Fund could lose the purchase value of the right or
warrant if the right or warrant is not exercised or sold prior to its
expiration.
◦Post-Combination
SPAC Warrants. Although the Fund generally will not
hold the common stock of a Post-Combination SPAC, the Fund may hold warrants to
buy the stock of companies that are derived from a SPAC. Post-Combination SPACs
may be unseasoned and lack a trading history, a track record of reporting to
investors, and widely available research coverage. Post-Combination SPACs are
thus often subject to extreme price volatility and speculative trading. The
stocks underlying the warrants may have above average price appreciation that
may not continue and the performance of these stocks may not replicate the
performance exhibited in the past, which could adversely affect the value of the
warrants the Fund holds.
•Transactions
in Cash Risk. Paying redemption proceeds in cash rather than through in-kind
delivery of portfolio securities may require the Fund to dispose of or sell
portfolio investments at an inopportune time to obtain the cash needed to pay
redemption proceeds. This may cause the Fund to incur certain costs, such as
brokerage costs, and to recognize gains or losses that it might not have
incurred if it had paid redemption proceeds in kind. As a result, the Fund may
pay out higher or lower annual capital gains distributions than an ETF that
redeems in kind. In addition, the costs imposed on the Fund will decrease the
Fund’s NAV unless such costs are offset by a transaction fee payable by an
AP.
Performance
The performance
information presented below provides some indication of the risks of investing
in the Fund by showing the extent to which the Fund’s performance can change
from year to year and over time. The bar chart below shows the
Fund’s performance for the calendar year ended December 31. The table
illustrates how the Fund’s average annual returns for the 1 year and since
inception periods compare with those of the ICE BofA 0-3 Year U.S. Treasury
Index, which reflects a broad measure of market performance. The
Fund’s past performance, before and after taxes, does not necessarily indicate
how it will perform in the future. Updated performance
information is available on the Fund’s website at www.true-shares.com.
Calendar Year
Return
The calendar year-to-date total return of the
Fund as of March 31, 2024 was
1.77%. During the
period of time shown in the bar chart, the highest quarterly
return was 2.03% for the quarter ended March 31, 2023, and the
lowest quarterly return was
0.16% for the quarter ended December 31,
2023.
Average
Annual Total Returns
(for
periods ended December 31, 2023)
|
|
|
|
|
|
|
| |
RiverNorth
Enhanced Pre-Merger SPAC ETF |
1
Year |
Since
Inception
(7/11/2022) |
Return
Before Taxes |
5.71% |
5.25% |
Return
After Taxes on Distributions |
3.75% |
3.86% |
Return
After Taxes on Distributions and Sale of Shares |
3.48% |
3.47% |
ICE
BofA 0-3 Year U.S. Treasury Index
(reflects no deduction for
fees, expenses, or taxes) |
4.55% |
2.99% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above and do not reflect the impact
of state and local taxes. Actual after-tax returns depend on an
investor’s tax situation and may differ from those shown. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts. In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Shares” may be higher than the other return figures for the same period.
A higher after-tax return results when a capital loss occurs upon redemption and
provides an assumed tax deduction that benefits the
investor.
Portfolio
Management
|
|
|
|
| |
Adviser |
TrueMark
Investments, LLC |
Sub-Adviser |
RiverNorth
Capital Management, LLC |
Portfolio
Managers |
Patrick
W. Galley, CFA®
and
Eric Pestrue, CFA®
have been the portfolio managers of the Fund since its inception in June,
2022. |
Purchase
and Sale of Shares
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.
Tax
Information
The
Fund’s distributions are generally taxable as ordinary income, qualified
dividend income, or capital gains (or a combination), unless your investment is
held 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.
Financial
Intermediary Compensation
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange-traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
ADDITIONAL
INFORMATION ABOUT THE FUNDS
Investment
Objectives
Each
Fund’s investment objective may be changed by the Board of Trustees (the
“Board”) of Listed Funds Trust (the “Trust”) without shareholder approval upon
written notice to shareholders.
Principal
Investment Strategies
The
following information is in addition to, and should be read along with, the
description of each Fund’s principal investment strategies in each section
titled “Fund Summary—Principal Investment Strategies” above.
As
it pertains to the Enhanced Pre-Merger SPAC ETF, in accordance with Rule 35d-1
under 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 the
amount of any borrowing for investment purposes) in Pre-Merger SPACs (along with
the warrants or rights issued in connection with the IPOs of SPACs). Such policy
may be changed without shareholder approval upon 60 days’ written notice to the
Fund’s shareholders.
Temporary
Defensive Positions.
To
respond to adverse market, economic, political, or other conditions, each Fund
may invest up to 100% of its assets in a temporary defensive manner by holding
all or a substantial portion of its assets in cash, cash equivalents, or other
high quality short-term investments. Temporary defensive investments generally
may include short-term U.S. government securities, commercial paper, bank
obligations, repurchase agreements, money market fund shares, and other money
market instruments.
Principal
Investment Risks
An
investment in a Fund entails risks. A Fund could lose money, or its performance
could trail that of other investment alternatives. The following provides
additional information about each Fund’s principal risks. It is important that
investors closely review and understand these risks before making an investment
in a Fund. Each risk applies to each Fund unless otherwise specified. Just as in
each Fund’s summary section, the principal risks below 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 applicable Fund, regardless of the order in which it
appears.
•Associated
Risks of Pre-Combination SPACs
(Enhanced
Pre-Merger SPAC ETF only).
The
Fund invests in equity securities and warrants and rights of SPACs, which raise
assets to seek potential Combination opportunities. Unless and until a
Combination is completed, a SPAC generally invests its assets in U.S. government
securities, money market securities, and cash. If a Combination that meets the
requirements for the SPAC is not completed within a pre-established period of
time (e.g.,
18-24 months), the invested funds are returned to the entity’s shareholders.
Because SPACs have no operating history or ongoing business other than seeking
Combinations, the value of their securities is particularly dependent on the
ability of the entity’s management to identify and complete a profitable
Combination. Public stockholders of SPACs may not be afforded a meaningful
opportunity to vote on a proposed initial Combination because certain
stockholders, including stockholders affiliated with the management of the SPAC,
may have sufficient voting power, and a financial incentive, to approve such a
transaction without support from public stockholders. As a result, a
Pre-Combination SPAC may complete a Combination even though a majority of its
public stockholders do not support such a Combination. There is no guarantee
that the SPACs in which the Fund invests will complete a Combination or that any
Combinations that are completed will be profitable. Some SPACs may pursue
Combinations only within certain industries or regions, which may increase the
volatility of their prices. In addition, these securities, which are typically
traded in the over-the-counter market, may be considered illiquid and/or be
subject to restrictions on resale. SPACs may also encounter intense competition
from other entities having a similar business objective, such as private
investors or investment vehicles and other SPACs, competing for the same
Combination opportunities, which could make completing an attractive Combination
more difficult. In certain circumstances, the Fund may continue to hold the
warrants and rights of companies that were issued by a SPAC after the relevant
Combination occurs. In addition, the Fund may invest in vehicles formed by SPAC
sponsors to hold founder shares, which may be subject to forfeiture or expire
worthless and which generally have more limited liquidity than SPAC shares
issued in an IPO.
•Borrowing
and Leverage Risk
(Enhanced
Pre-Merger SPAC ETF only).
Borrowing
magnifies the potential for gain or loss by the Fund and, therefore, increases
the possibility of fluctuation in the Fund’s net asset values. This is the
speculative factor known as leverage. Because the Fund’s investments will
fluctuate in value, while the interest on borrowed amounts may be fixed, the
Fund’s net asset value may tend to increase more as the value of its investments
increases, or to decrease more as the value of its investments decreases, during
times of borrowing. Unless profits on investments acquired with borrowed funds
exceed the costs of borrowing, the use of borrowing will cause the Fund’s
investment performance to decrease.
•Counterparty
Risk
(Enhanced
Pre-Merger SPAC ETF only).
Counterparty
risk is the risk that a counterparty to Fund transactions (e.g.,
prime brokerage or securities lending arrangement or derivatives transaction)
will be unable or unwilling to perform its contractual obligation to the Fund.
Counterparty risk is the risk that a counterparty to Fund transactions
(e.g.,
prime brokerage or securities lending arrangement or derivatives transaction)
will be unable or unwilling to perform its contractual
obligation
to the Fund. The Fund may use swap agreements to gain exposure to a particular
group of securities, index, asset class or other reference asset without
actually purchasing those securities or investments, to hedge a position, or for
other investment purposes. Through these investments and related arrangements
(e.g.,
prime brokerage or securities lending arrangements or derivatives transactions),
the Fund is exposed to credit risks that the counterparty may be unwilling or
unable to make timely payments or otherwise to meet its contractual obligations.
If the counterparty becomes bankrupt or defaults on (or otherwise becomes unable
or unwilling to perform) its payment or other obligations to the Fund, the Fund
may not receive the full amount that it is entitled to receive or may experience
delays in recovering the collateral or other assets held by, or on behalf of,
the counterparty. If this occurs, the value of your shares in the Fund will
decrease.
•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 a 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 a 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 a Fund, the
Adviser, the Sub-Adviser or a Fund’s other service providers, market makers,
APs, a Fund’s primary listing exchange or the issuers of securities in which
such Fund invests have the ability to disrupt and negatively affect the Fund’s
business operations, including the ability to purchase and sell 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 a 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 a 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 Shares, and other data integral to the functioning of a
Fund inaccessible or inaccurate or incomplete. A Fund also may incur substantial
costs for cybersecurity risk management to prevent cyber incidents in the
future. A Fund and its respective shareholders could be negatively impacted as a
result.
•Derivatives
Risk
(Enhanced
Pre-Merger SPAC ETF
only).
Put
and call options are referred to as “derivative” instruments since their values
are based on, or derived from, an underlying reference asset, such as an index.
Derivatives can be volatile, and a small investment in a derivative can have a
large impact on the performance of the Fund as derivatives can result in losses
in excess of the amount invested. The return on a derivative instrument may not
correlate with the return of its underlying reference asset. Derivative
instruments may be difficult to value and may be subject to wide swings in
valuations caused by changes in the value of the underlying instrument. Other
risks of investments in derivatives include risks that the transactions may
result in losses that partially or completely offset gains in portfolio
positions, risks associated with leverage, and risks that the derivative
transaction may not be liquid.
◦Swap
Agreements Risk.
Swap agreements are contracts among the Fund and a counterparty to exchange the
return of the pre-determined underlying investment (such as the rate of return
of the underlying index). Swap agreements may be negotiated bilaterally and
traded OTC between two parties or, for certain standardized swaps, must be
exchange-traded through a futures commission merchant and/or cleared through a
clearinghouse that serves as a central counterparty. Risks associated with the
use of swap agreements are different from those associated with ordinary
portfolio securities transactions, due in part to the fact they could be
considered illiquid and many swaps trade on the OTC market. Swaps are
particularly subject to counterparty credit, correlation, valuation, liquidity
and leveraging risks. While exchange trading and central clearing are intended
to reduce counterparty credit risk and increase liquidity, they do not make swap
transactions risk-free. Additionally, applicable regulators have adopted rules
imposing certain margin requirements, including minimums, on OTC swaps, which
may result in the Fund and its counterparties posting higher margin amounts for
OTC swaps, which could increase the cost of swap transactions to the Fund and
impose added operational complexity.
•Equity
Market Risk. The
equity securities held in a 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 a 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.
Each Fund is an ETF and, as a result of its structure, is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk.
Each 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. Shares may trade at a material discount to NAV and
possibly face delisting if either: (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 a Fund, asset swings in a 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 a Fund may trade on foreign exchanges
that are closed when a Fund’s primary listing exchange is open, each Fund is
likely to experience premiums and 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
(Enhanced
Pre-Merger SPAC ETF only).
Investments in non-U.S. securities involve certain risks that may not be present
with investments in U.S. securities. These include risks of adverse changes in
foreign economic, political, regulatory and other conditions, or changes in
currency exchange rates or exchange control regulations (including limitations
on currency movements and exchanges). The securities of some foreign companies
may be less liquid and, at times, more volatile than securities of comparable
U.S. companies. 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.
•Illiquidity
Risk
(Enhanced
Pre-Merger SPAC ETF only).
Illiquidity
risk exists when particular investments are difficult to purchase or sell,
possibly preventing the Fund from selling these illiquid investments at an
advantageous price or at the time desired. A lack of liquidity may also cause
the value of investments to decline. Illiquid investments may also be difficult
to value.
•Limited
Operating History Risk (Enhanced
Pre-Merger SPAC ETF only).
The
Fund is a recently organized investment company with a limited operating
history. As a result, prospective investors have a limited track record or
history on which to base their investment decision.
•Management
Risk.
Each Fund is actively managed and its ability to achieve its investment
objective is dependent on the Sub-Adviser’s successful implementation of the
Fund’s investment strategies.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing Risk (Patriot ETF
only).
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 Risk.
The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-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 mid-capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization companies.
◦Small-Capitalization
Investing Risk (Enhanced Pre-Merger SPAC ETF
only).
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.
•Market
Risk.
Market risks, including political, regulatory, market, and economic or other
developments, and developments that impact specific economic sectors, industries
or segments of the market, can affect the value of a Fund’s Shares. Each Fund is
subject to the risk that the prices of, and the income generated by, securities
held by the Fund may decline significantly and/or rapidly in response to adverse
conditions or other developments, such as interest rate fluctuations, and events
directly involving specific issuers that may cause broad changes in market
value, public perceptions concerning these developments, and adverse investor
sentiment. Such events may cause the value of securities owned by a Fund to go
up or down, sometimes rapidly or unpredictably. There also is a risk that policy
and legislative changes by the U.S. Government and/or Federal Reserve, or
certain foreign governments and central banks, could cause increased volatility
in financial markets and higher levels of Fund redemptions, which could have a
negative impact on a Fund. These events may lead to periods of volatility and
increased redemptions, which could cause a Fund to experience a loss when
selling securities to meet redemption requests by shareholders. The risk of loss
increases if the redemption requests are unusually large or frequent. Markets
also tend to move in cycles, with periods of rising and falling prices. If there
is a general decline in the securities and other markets, your investment in a
Fund may lose value, regardless of the individual results of the securities and
other instruments in which a Fund invests.
Local,
regional, or global events, such as war, acts of terrorism, natural disasters,
public health issues, recessions, or other events could have a significant
impact on the market generally and on specific securities. The COVID-19
pandemic, Russia’s invasion of Ukraine, the Israel-Hamas conflict, and higher
inflation have resulted in extreme volatility in the financial markets, economic
downturns around the world, and severe losses, particularly to some sectors of
the economy and individual issuers, and reduced liquidity of certain
instruments. These events have caused significant disruptions to business
operations, strained healthcare systems, disruptions to supply chains , large
expansion of government deficits and debt as a result of government actions to
mitigate the effects of such events, and widespread uncertainty regarding the
long-term effects of such events. These or similar events could be prolonged and
could adversely affect the value and liquidity of a Fund’s investments, impair a
Fund’s ability to satisfy redemption requests, and negatively impact a Fund’s
performance. Further, economies and financial markets throughout the world are
becoming increasingly interconnected. As a result, whether or not a Fund invests
in securities of issuers located in or with significant exposure to countries
experiencing economic and financial difficulties, the value and liquidity of the
Fund’s investments may be negatively affected.
•Non-Diversification
Risk.
Because each 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, a 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
a Fund’s volatility and cause the performance of a relatively small number of
issuers to have a greater impact on such Fund’s performance.
•Rights
and Warrants Risk
(Enhanced
Pre-Merger SPAC ETF
only).
The
Fund may purchase rights and warrants to purchase equity securities. Investments
in rights and warrants are pure speculation in that they have no voting rights,
pay no dividends and have no rights with respect to the assets of the
corporation issuing them. They do not represent ownership of the securities, but
only
the right to buy them. The prices of rights (if traded independently) and
warrants do not necessarily move parallel to the prices of the underlying
securities. Rights and warrants involve the risk that the Fund could lose the
purchase value of the right or warrant if the right or warrant is not exercised
prior to its expiration. They also involve the risk that the effective price
paid for the right or warrant added to the subscription price of the related
security may be greater than the value of the subscribed security’s market
price.
◦Post-Combination
SPAC Warrants.
Although the Fund generally will not hold the common stock of a Post-Combination
SPAC, the Fund may hold warrants to buy the stock of companies that are derived
from a SPAC. Post-Combination SPACs may be unseasoned and lack a trading
history, a track record of reporting to investors, and widely available research
coverage. Post-Combination SPACs are thus often subject to extreme price
volatility and speculative trading. The stocks underlying the warrants may have
above average price appreciation that may not continue and the performance of
these stocks may not replicate the performance exhibited in the past, which
could adversely affect the value of the warrants the Fund holds.
•Transactions
in Cash Risk
(Enhanced
Pre-Merger SPAC ETF only).
Paying
redemption proceeds in cash rather than through in-kind delivery of portfolio
securities may require the Fund to dispose of or sell portfolio investments at
an inopportune time to obtain the cash needed to pay redemption proceeds. This
may cause the Fund to incur certain costs, such as brokerage costs, and to
recognize gains or losses that it might not have incurred if it had paid
redemption proceeds in kind. As a result, the Fund may pay out higher or lower
annual capital gains distributions than an ETF that redeems in kind. In
addition, the costs imposed on the Fund will decrease the Fund’s NAV unless such
costs are offset by a transaction fee payable by an AP.
PORTFOLIO
HOLDINGS INFORMATION
Information
about each Fund’s daily portfolio holdings is available at www.true-shares.com.
A complete description of the Funds’ policies and procedures with respect to the
disclosure of the Funds’ portfolio holdings is available in the Funds’ Statement
of Additional Information (the “SAI”).
MANAGEMENT
Investment
Adviser
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 Funds. The Adviser oversees the day-to-day operations of the Funds,
subject to the general supervision and oversight of the Board of Trustees (the
“Board”) and the officers of Listed Funds Trust (the “Trust”). The Adviser also
arranges for sub-advisory, transfer agency, custody, fund administration,
distribution and all other services necessary for the Funds to operate. The
Adviser is an SEC-registered investment adviser formed in 2019.
The
Adviser continuously reviews, supervises, and administers each 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 Funds, the Adviser is entitled to a unified
management fee, which is calculated daily and paid monthly, at an annual rate
based on each Fund’s average daily net assets as set forth in the table
below.
|
|
|
|
| |
Fund
|
Management
Fee |
RiverNorth
Patriot ETF |
0.70% |
RiverNorth
Enhanced Pre-Merger SPAC ETF |
0.89% |
Pursuant
to an investment advisory agreement between the Trust, on behalf of the Funds,
and the Adviser (the “Advisory Agreement”), the Adviser has agreed to pay all
expenses of the Funds 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 (12b-1) fees and expenses (if any). The
Adviser, in turn, compensates the Sub-Adviser from the management fee it
receives.
A
discussion of the basis for the Board’s approval of the continuation of Advisory
Agreement for the Funds is available in the Funds’ Annual
Report
to Shareholders for the period ended December 31, 2023.
Investment
Sub-Adviser
Pursuant
to a sub-advisory agreement between the Adviser and the Sub-Adviser (the
“Sub-Advisory Agreement”), RiverNorth Capital Management, LLC, a Delaware
limited liability company located at 360 South Rosemary Avenue, Suite 1420, West
Palm Beach, Florida 33401, manages the day-to-day investment of each Fund’s
assets, subject to the supervision of the Adviser and the Board. An
SEC-registered investment adviser formed in 2000, the Sub-Adviser is majority
owned by RiverNorth Financial Holdings, LLC.
The
Sub-Adviser is responsible for trading the Funds’ portfolio investments,
including selecting broker-dealers to execute purchase and sale transactions of
the Funds. For the services it provides with respect to each Fund, the
Sub-Adviser is entitled to a fee payable by the Adviser, which fee is calculated
daily and paid monthly, as set forth in the table below.
|
|
|
|
| |
Fund
|
Sub-Advisory
Fee |
RiverNorth
Patriot ETF |
0.60%
based on the daily net assets of the Fund |
RiverNorth
Enhanced Pre-Merger SPAC ETF |
75%
of the Adviser’s net profits* |
*
“Net profits” refers to the amount remaining (if any) of the advisory fee
following the payment of the Fund’s operating expenses by the
Adviser.
A
discussion of the basis for the Board’s approval of the Sub-Advisory Agreement
for the Funds is available in the Funds’ Annual
Report
to Shareholders for the period ended December 31, 2023.
Portfolio
Managers
The
individuals identified below (collectively, the “Portfolio Managers”) are
responsible for day-to-day management of each Fund’s portfolio, as
indicated.
|
|
|
|
| |
Fund |
Portfolio
Managers |
RiverNorth
Patriot ETF |
Patrick
W. Galley and Joseph Bailey |
RiverNorth
Enhanced Pre-Merger SPAC ETF |
Patrick
W. Galley and Eric Pestrue |
Patrick
W. Galley, CFA®
joined
the Sub-Adviser in 2004 and serves as Chief Executive Officer and Chief
Investment Officer. Prior to joining the Sub-Adviser, Mr. Galley was Vice
President at Bank of America in the Global Investment Bank’s Portfolio
Management group where he specialized in analyzing and structuring corporate
transactions for investment management firms in addition to closed-end and
open-end funds, hedge funds, fund of funds, structured investment vehicles and
insurance/reinsurance companies. He graduated with honors from Rochester
Institute of Technology with a B.S. in Finance. Mr. Galley is a CFA
charterholder and member of the CFA Institute and the CFA Society of
Chicago.
Joseph
Bailey, CFA®
and CAIA, joined the Sub-Adviser in 2017 and serves as a Portfolio Manager and
Investment Analyst. Mr. Bailey supports the firm’s business development,
marketing and investment teams, providing analytical insights and developing
processes to enhance efficiency. Prior to joining the Sub-Adviser, he worked at
a venture capital firm where he focused on market analysis and outreach. Mr.
Bailey graduated from Loyola University Chicago with a B.S. in Biology where he
also earned his M.S. in Finance. He is a CFA and CAIA charterholder and member
of the CFA Institute and CFA Society of Chicago.
Eric
Pestrue, CFA®
serves
as Senior Investment Analyst for the Sub-Adviser. He is responsible for
assisting with research and trading. Prior to joining the Sub-Adviser, Mr.
Pestrue was a Project Manager in Morningstar’s Data division, where he worked
extensively on the closed-end fund database and led the creation of the unit
investment trust database. Prior to Morningstar, he was a Quantitative Research
Analyst with First Trust Portfolios where he helped back-test quantitative
investment strategies and select holdings for unit investment trusts. Mr.
Pestrue graduated from the University of Michigan with a B.A. in Economics and
earned his MBA, with honors, from the University of Chicago Booth School Of
Business. He is a CFA Charterholder and member of the CFA Institute and the CFA
Society of Chicago.
The
Funds’ SAI provides additional information about the Portfolio Managers’
compensation structure, other accounts managed by the Portfolio Managers, and
the Portfolio Managers’ ownership of Shares.
Other
Service Providers
Foreside
Fund Services, LLC, a wholly-owned subsidiary of Foreside Financial Group, LLC
(doing business as ACA Group) (the “Distributor”), serves as the principal
underwriter and distributor of each 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 and a member of the
Financial Industry Regulatory Authority, Inc. (“FINRA”). The Distributor has no
role in determining the policies of the Funds or the securities that are
purchased or sold by a 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 Funds.
U.S.
Bank National Association, located at 1555 North Rivercenter Drive, Suite 302,
Milwaukee, Wisconsin 53212, serves as the custodian for the Funds.
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 Funds’ independent registered public accounting firm. The
independent registered public accounting firm is responsible for auditing the
annual financial statements of the Funds.
HOW
TO BUY AND SELL SHARES
Each
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 a Fund, and only APs may tender their Shares for redemption
directly to a 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 Funds’
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.
Book
Entry
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.
Frequent
Purchases and Redemptions of Shares
The
Funds impose 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 Funds, are an essential part of the ETF process and
help keep Share trading prices in line with NAV. As such, the Funds accommodate
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 Funds’ fair valuation of their
holdings consistent with the 1940 Act and Rule 2a-5 thereunder and their ability
to impose transaction fees on purchases and redemptions of Creation Units to
cover the custodial and other costs incurred by the Funds in effecting trades
help to minimize the potential adverse consequences of frequent purchases and
redemptions.
Determination
of Net Asset Value
Each
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 for a Fund is calculated by dividing the
applicable Fund’s net assets by its Shares outstanding.
In
calculating its NAV, each 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. For example, a
Fund generally values equity securities at their readily available market
quotations. If such information is not available for an investment held by a
Fund or is determined to be unreliable, the investment will be valued by the
Adviser at fair value pursuant to procedures established by the Adviser and
approved by the Board (as described below).
Fair
Value Pricing
The
Adviser has been designated by the Board as the valuation designee for the Funds
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
investments whose market prices are not “readily available” or are deemed to be
unreliable. For example, such circumstances may arise when: (i) an investment
has been de-listed or has had its trading halted or suspended; (ii) an
investment’s primary pricing source is unable or unwilling to provide a price;
(iii) an investment’s primary trading market is closed during regular market
hours; or (iv) an investment’s value is
materially
affected by events occurring after the close of the investment’s primary trading
market. Generally, when fair valuing an investment held by a 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 investment, general and/or specific market conditions
and the specific facts giving rise to the need to fair value the investment.
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, a 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.
Investments
by Registered Investment Companies
Section
12(d)(1) of the 1940 Act and the rules thereunder limit investments by
registered investment companies in the securities of other investment companies.
Registered investment companies are permitted to invest in a Fund beyond the
limits set forth in section 12(d)(1), subject to certain terms and conditions,
including that such investment companies enter into an agreement with such
Fund.
Delivery
of Shareholder Documents – Householding
Householding
is an option available to certain investors of the Funds. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for the Funds is available through certain broker-dealers.
If you are interested in enrolling in householding and receiving a single copy
of prospectuses and other shareholder documents, please contact your
broker-dealer. If you are currently enrolled in householding and wish to change
your householding status, please contact your broker-dealer.
DIVIDENDS,
DISTRIBUTIONS, AND TAXES
Dividends
and Distributions
Each
Fund intends to pay out dividends in cash, if any, and distribute any net
realized capital gains to its shareholders at least annually. Each 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.
Taxes
The
following discussion is a summary of certain important U.S. federal income tax
considerations generally applicable to investments in the Funds. Your investment
in a Fund may have other tax implications. Please consult your tax advisor about
the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws. This summary does not apply
to Shares held in an IRA or other tax-qualified plans, which are generally not
subject to current tax. Transactions relating to Shares held in such accounts
may, however, be taxable at some time in the future. This summary is based on
current tax laws, which may change.
Each
Fund has elected and intends to qualify each year for treatment as a regulated
investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of
1986, as amended (the “Code”). If it meets certain minimum distribution
requirements, a RIC is not subject to tax at the fund level on income and gains
from investments that are timely distributed to shareholders. However, a 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 a Fund makes distributions, when you sell your Shares listed on an
Exchange, and when you purchase or redeem Creation Units (APs only).
Taxes
on Distributions
Each
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 a Fund owned the investments that generated them, rather
than how long a shareholder has owned his or her Shares. Sales of assets held by
a Fund for more than one year generally result in long-term capital gains and
losses, and sales of assets held by a Fund for one year or less generally result
in short-term capital gains and losses. Distributions of a Fund’s net capital
gain (the excess of net long-term capital gains over net short-term capital
losses) that are reported by such 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 a 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 a 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
a 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, a 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 such 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 a 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 a Fund before your
investment (and thus were included in the Shares’ NAV when you purchased your
Shares).
You
may wish to avoid investing in a 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
a 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. A 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.
A
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.
Taxes
When Shares Are Sold on the Exchange
Provided
that a shareholder holds Shares as capital assets, any capital gain or loss
realized upon a sale or exchange 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 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 acquired by purchase will generally be based on the amount
paid for the Shares and then may be subsequently adjusted for other applicable
transactions as required by the Code. The difference between the selling price
and the cost basis of Shares generally determines the amount of the capital gain
or loss realized on the sale or exchange of Shares. Contact the broker through
whom you purchased your Shares to obtain information with respect to the
available cost basis reporting methods and elections for your
account.
Taxes
on Purchases and Redemptions of Creation Units
An
AP having the U.S. dollar as its functional currency for U.S. federal income tax
purposes who exchanges securities for Creation Units generally recognizes a gain
or a loss. The gain or loss will be equal to the difference between the value of
the Creation Units at the time of the exchange and the exchanging AP’s aggregate
basis in the securities delivered plus the amount of any cash paid for the
Creation Units. An AP who exchanges Creation Units for securities will generally
recognize a gain or loss equal to the difference between the exchanging AP’s
basis in the Creation Units and the aggregate U.S. dollar market value of the
securities received, plus any cash received for such Creation Units. The
Internal Revenue Service (“IRS”) may assert, however, that a loss that is
realized upon an exchange of securities for Creation Units may not be currently
deducted under the rules governing “wash sales” (for an AP who does not
mark-to-market their holdings) or on the basis that there has been no
significant change in economic position. APs exchanging securities should
consult their own tax advisor with respect to whether wash sale rules apply and
when a loss might be deductible.
A
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. A Fund may sell
portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause a 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, a 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 a Fund
Interest
and other income received by a 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.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in each Fund. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Fund
distributions and sales of Shares. Consult your personal tax advisor about the
potential tax consequences of an investment in Shares
under
all applicable tax laws. For more information, please see the section entitled
“Federal Income Taxes” in the SAI.
DISTRIBUTION
PLAN
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, each 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 Funds, 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.
PREMIUM/DISCOUNT
INFORMATION
Information
regarding how often each Fund’s Shares traded on the Exchange at a price above
(i.e.,
at a premium) or below (i.e.,
at a discount) its NAV is available on the Funds’ website at
www.true-shares.com.
ADDITIONAL
NOTICES
The
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 the 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, the Sub-Adviser, and the Funds 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 a Fund
particularly.
FINANCIAL
HIGHLIGHTS
The
following financial highlights table shows the financial performance information
for each Fund’s five most recent fiscal years (or the life of a Fund, if
shorter). Certain information reflects financial results for a single share of a
Fund. The total returns in the table represent the rate that you would have
earned or lost on an investment in a Fund (assuming you reinvested all
distributions). This information has been audited by Cohen & Company, Ltd.,
the independent registered public accounting firm of the Funds, whose report,
along with each Fund’s financial statements, is included in the Funds’
Annual
Report,
which is available upon request.
RiverNorth
Patriot ETF
For
a Share Outstanding Throughout each Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| For
the year 01/01/2023 - 12/31/2023 |
| For
the year 01/01/2022 - 12/31/2022 |
|
For
the period 12/31/2021(6)
- 12/31/2021 |
|
Net
Asset Value, Beginning of Period
|
|
| $ |
21.70 |
|
| $ |
25.00 |
|
| $ |
25.00 |
| |
|
|
|
|
|
|
|
| |
Income
from Investment Operations |
|
|
|
|
|
|
| |
Net
investment income (loss)(1) |
|
| 0.32 |
|
| 0.34 |
|
| — |
| |
Net
realized and unrealized gain (loss) on investments |
|
| 2.32 |
|
| (3.31) |
|
| — |
| |
Total
from investment operations |
|
| 2.64 |
|
| (2.97) |
|
| — |
| |
|
|
|
|
|
|
|
| |
Less
Distributions Paid From |
|
|
|
|
|
|
| |
Net
investment income |
|
| (0.33) |
|
| (0.33) |
|
| — |
| |
Return
of capital |
|
| — |
|
|
(0.00)(7) |
| — |
| |
Net
realized gains |
|
| — |
|
| — |
|
| — |
| |
Total
distributions paid |
|
| (0.33) |
|
| (0.33) |
|
| — |
| |
|
|
|
|
|
|
|
| |
Net
Asset Value, End of Period
|
|
| $ |
24.01 |
|
| $ |
21.70 |
|
| $ |
25.00 |
| |
|
|
|
|
|
|
|
| |
Ratios/Supplemental
Data |
|
|
|
|
|
|
| |
Total
return, at NAV(3)(4) |
|
| 12.18 |
% |
| (11.89) |
% |
| — |
% |
|
Total
return, at Market(3)(4) |
|
| 12.16 |
% |
| (11.90) |
% |
| — |
% |
|
Net
assets, end of period (000’s) |
|
| $ |
3,362 |
|
| $ |
3,255 |
|
| $ |
1,250 |
| |
|
|
|
|
|
|
|
| |
Ratios
to Average Net Assets of: |
|
|
|
|
|
|
| |
Expenses(2) |
|
| 0.70 |
% |
| 0.70 |
% |
| 0.70 |
% |
|
Net
investment income (loss)(2) |
|
| 1.43 |
% |
| 1.50 |
% |
| — |
% |
|
Portfolio
turnover rate(4)(5) |
|
| 46 |
% |
| 31 |
% |
| — |
% |
|
(1)
Per share net investment income (loss) was calculated using average shares
outstanding.
(2)
Annualized for periods less than one year.
(3)
Total return in the table represents the rate that the investor would have
earned or lost on an investment in the Fund, assuming reinvestment of
dividends.
(4)
Not annualized for periods less than one year.
(5)
Excludes in-kind transactions associated with creations and redemptions of the
Fund.
(6)
Commencement of Operations.
(7)
Less than $(0.005).
RiverNorth
Enhanced Pre-Merger SPAC ETF
For
a Share Outstanding Throughout the Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
For
the year 01/01/2023 - 12/31/2023 |
|
For
the period 07/11/2022(6)
- 12/31/2022 |
|
Net
Asset Value, Beginning of Period
|
|
| $ |
25.45 |
|
| $ |
25.00 |
| |
|
|
|
|
|
| |
Income
from Investment Operations: |
|
|
|
|
| |
Net
investment income (loss)(1) |
|
| (0.14) |
|
| (0.09) |
| |
Net
realized and unrealized gain (loss) on investments |
|
| 1.62 |
|
| 0.60 |
| |
Total
from investment operations |
|
| 1.48 |
|
| 0.51 |
| |
|
|
|
|
|
| |
Less
Distributions Paid From |
|
|
|
|
| |
Net
investment income |
|
| (0.73) |
|
| (0.06) |
| |
Return
of capital |
|
| — |
|
| — |
| |
Net
realized gains |
|
| (0.56) |
|
| — |
| |
Total
distributions paid |
|
| (1.29) |
|
| (0.06) |
| |
|
|
|
|
|
| |
Net
Asset Value, End of Period
|
|
| $ |
25.64 |
|
| $ |
25.45 |
| |
|
|
|
|
|
| |
Supplemental
Data and Ratios: |
|
|
|
|
| |
Total
return, at NAV(3)(4) |
|
| 5.71 |
% |
| 2.02 |
% |
|
Total
return, at Market(3)(4) |
|
| 5.95 |
% |
| 2.18 |
% |
|
Net
assets, end of period (000’s) |
|
| $ |
5,769 |
|
| $ |
3,818 |
| |
|
|
|
|
|
| |
Ratios
to Average Net Assets of: |
|
|
|
|
| |
Expenses(2) |
|
| 0.89 |
% |
| 0.89 |
% |
|
Net
investment income (loss)(2) |
|
| (0.55) |
% |
| (0.76) |
% |
|
Portfolio
turnover rate(4)(5) |
|
| 132 |
% |
| 43 |
% |
|
(1)
Per share net investment income (loss) was calculated using average shares
outstanding.
(2)
Annualized for periods less than one year.
(3)
Total return in the table represents the rate that the investor would have
earned or lost on an investment in the Fund, assuming reinvestment of
dividends.
(4)
Not annualized for periods less than one year.
(5)
Excludes in-kind transactions associated with creations and redemptions of the
Fund.
(6)
Commencement of Operations.
RiverNorth
Patriot ETF
RiverNorth
Enhanced Pre-Merger SPAC ETF
|
|
|
|
|
|
|
|
|
|
| |
Adviser |
TrueMark
Investments, LLC
433
West Van Buren Street, 1150-E
Chicago,
Illinois 60607 |
Transfer
Agent and Administrator |
U.S.
Bancorp Fund Services, LLC
d/b/a
U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Sub-Adviser |
RiverNorth
Capital Management, LLC
360
South Rosemary Avenue, Suite 1420
West
Palm Beach, Florida 33401 |
Distributor |
Foreside
Fund Services, LLC
Three
Canal Plaza, Suite 100
Portland,
Maine 04101 |
Custodian |
U.S.
Bank National Association
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212 |
Legal
Counsel |
Morgan,
Lewis & Bockius LLP
1111
Pennsylvania Avenue, NW
Washington,
DC 20004-2541 |
Independent
Registered Public Accounting Firm |
Cohen
& Company, Ltd.
1350
Euclid Avenue, Suite 800
Cleveland,
Ohio 44115 |
| |
Investors
may find more information about the Funds in the following
documents:
Statement
of Additional Information: The
Funds’ SAI provides additional details about the investments of the Funds 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 Funds’ investments is available in the Funds’ Annual and
Semi-Annual Reports to shareholders and in Form N-CSR. In the Annual
Report,
you will find a discussion of the market conditions and investment strategies
that significantly affected the Funds’ performance during its last fiscal year.
In Form N-CSR, you will find the Funds’ annual and semi-annual financial
statements.
You
can obtain free copies of these documents request other information or make
general inquiries about the Funds by contacting the Funds 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 Funds also are 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 Funds’ Internet web site at www.true-shares.com;
or
(SEC
Investment Company Act File No. 811-23226)