Fund | Ticker Symbol | ||||
Gabelli Equity
Income ETF |
GABE | ||||
Gabelli Commercial
Aerospace and Defense ETF |
GCAD | ||||
Listing Exchange:
NYSE Arca |
• |
You may have to pay
more money to trade an ETF’s shares. These ETFs will provide less
information to traders, who tend to charge more for trades when they have
less information about the underlying holdings.
|
• |
The price you pay
to buy ETF shares on an exchange may not match the value of an ETF’s
portfolio. The same is true when you sell shares. These price differences
may be greater for the ETFs offered pursuant to this Prospectus compared
to other ETFs because these ETFs provide less information to traders with
respect to the underlying portfolio holdings.
|
• |
These additional
risks may be even greater in bad or uncertain market conditions.
|
Shareholder
Fees |
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|
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Annual Fund
Operating Expenses |
|||||
|
|||||
Management Fees |
|||||
Other Expenses(1) |
|||||
Total Annual Fund Operating
Expenses |
|||||
Less Fee Waiver and/or Expense Reimbursement(2) |
( |
||||
|
|
||||
Total Annual Fund Operating Expenses After Fee
Waiver |
|||||
|
|
(1) |
(2) | Gabelli Funds, LLC, the Fund’s adviser (the
“Adviser”), has contractually agreed to waive the Fund’s management fee of
0.90% on the first $25 million in net assets until at least
|
1 Year | 3 Years | |
$ |
$ |
• |
have strong free cash flow and pay regular
dividends
|
• |
have potential for long term earnings per share
growth
|
• |
may be subject to a value catalyst, such as
industry developments, regulatory changes, changes in management, sale or
spin-off of a division, or the development of a profitable new business
|
• |
are well managed
|
• |
will benefit from sustainable long term economic
dynamics, such as globalization of an issuer’s industry or an issuer’s
increased focus on productivity or enhancement of services
|
• |
you are a long term investor
|
• |
you are seeking income as well as capital
appreciation |
• |
Non-Transparent
Exchange-Traded Fund (“ETF”) Structure Risk. Unlike most
actively managed ETFs the Fund does not provide daily disclosure of its
portfolio holding. Instead, the Fund provides a verified intraday
indicative value (“VIIV”), calculated and disseminated every second
throughout the trading day. The VIIV is intended to provide investors and
other market participants with a highly correlated per share value of the
underlying portfolio that can be compared to the current market price.
There is, however, a risk that shares of the Fund may trade at a wider
bid/ask spread than ETFs that publish their portfolios on a daily basis,
especially during periods of market disruption or volatility, and
therefore, may cost investors more to trade. Because the Fund trades on
the basis of the VIIV, it may trade at a wider bid/ask spread than
traditional ETFs that publish their portfolios on a daily basis.
Accordingly, the Adviser or its designee will monitor on an ongoing basis
how shares of the Fund trade, including the level of any market price
premium or discount to NAV and the bid/ask spreads on market transactions.
Should there be extended periods of unusually high bid/ask spreads, the
Board will consider the continuing viability of the Fund, whether
shareholders are being harmed, and what, if any, action would be
appropriate to among other things, narrow the premium/discount or spread,
as applicable. Potential actions may include, but are not limited to,
changing lead market makers, listing the Fund on a different exchange,
changing the size of Creation Units, changing the Fund’s investment
objective or strategy, and liquidating the Fund. There is also a risk that
the market price may vary significantly from the NAV and, thus, the
underlying value of the Fund significantly from the underlying NAV of the
Fund. There is also a risk that, despite not disclosing the portfolio
holdings each day, some market participants may seek to use publically
available information, including the VIIV, to identify the Fund’s
investment strategy and engage in certain predatory trading practices that
may have the potential to harm the Fund.
|
• |
Early Close/Trading
Halt Risk. An exchange or
market may close or issue trading halts on specific securities, or the
ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell
certain securities or financial instruments. In such circumstances, the
Fund may be unable to rebalance its portfolio, may be unable to accurately
price its investments and/or may incur substantial trading losses. In
addition, due to the non-transparency of the portfolio a trading halt in a
portfolio security could cause discrepancies between the VIIV and NAV of
the Fund resulting in uncertainty on the part of the AP that results in
wider, less liquid markets. Any security for which trading has been halted
for an extended period of time will be disclosed on the Fund’s website,
www.gabelli.com. |
• |
Authorized
Participant and AP Representative Concentration Risk. The creation and
redemption process for the Fund occurs through a confidential brokerage
account (“Confidential Account”) with an agent, called an AP
Representative, on behalf of an Authorized Participant. Each day, the AP
Representative will be given the names and quantities of the securities to
be deposited, in the case of a creation, or redeemed, in the case of a
redemption (“Creation
|
Basket”), allowing the AP Representative to buy and
sell positions in the portfolio securities to permit creations or
redemptions on the Authorized Participant’s behalf, without disclosing the
information to the Authorized Participant. The Fund may have a limited
number of institutions that act as Authorized Participants and AP
Representatives, none of which are obligated to engage in creation or
redemption transactions. To the extent that these institutions exit the
business or are unable to proceed with creation and/or redemption orders
with respect to the Fund and no other Authorized Participant is able to
step forward to process creation and/or redemption orders, Fund shares may
trade at a discount to NAV and possibly face trading halts and/or
delisting. This risk may be more pronounced in volatile markets,
potentially where there are significant redemptions in ETFs, generally.
The fact that the Fund is offering a novel and unique structure may affect
the number of entities willing to act as Authorized Participants and AP
Representatives. During times of market stress, Authorized Participants
may be more likely to step away from this type of ETF than a traditional
ETF. |
• |
Absence of an
Active Market. Although shares
of the Fund are listed for trading on one or more stock exchanges, there
can be no assurance that an active trading market for such shares will
develop or be maintained by market makers or Authorized Participants.
Authorized Participants are not obligated to execute purchase or
redemption orders for Creation Units. Because this is a novel and unique
structure, this could influence the number of entities willing to act as
Authorized Participants. In periods of market volatility, market makers
and/or Authorized Participants may be less willing to transact in Fund
shares. The absence of an active market for the Fund’s shares may
contribute to the Fund’s shares trading at a premium or discount to net
asset value (“NAV”). If a shareholder purchases Fund shares at a time when
the market price is at a premium to the NAV or sells Fund shares at a time
when the market price is at a discount to the NAV, the shareholder may
sustain losses. |
• |
New Fund
Risk. The Fund is new
with a limited operating history and may have higher expenses. There can
be no assurance that the Fund will grow to or maintain an economically
viable size. The Fund could cease operations, and investors may be
required to liquidate or transfer their assets at a loss. However, the
expense limitation in place limits this risk through the end of its term.
|
• |
Equity
Risk. Equity risk is
the risk that the prices of the securities held by the Fund will
fluctuate, sometimes rapidly and unpredictably, due to general market and
economic conditions, perceptions regarding the industries in which the
companies issuing the securities participate, and the issuer companies’
particular circumstances. Holders of equity securities only have rights to
value in the company only after all issuer debts have been paid and they
could lose their entire investment in a company that encounters financial
difficulty |
• |
American Depositary
Receipts (“ADRs”) Risk. Investment in
ADRs does not eliminate all the risks inherent in investing in securities
of non-U.S. issuers. The market value of ADRs is dependent upon the market
value of the underlying securities and fluctuations in the relative value
of the currencies in which the ADRs and the underlying securities are
quoted. |
• |
Coronavirus
(“COVID-19”) and Global Health Events. COVID-19 and
concerns about its rapid spread and infections have severely impacted
business activity in virtually all economies, markets, and sectors and
negatively impacted the value of many financial and other assets. The
|
duration of the COVID-19 outbreak and its effects
cannot be determined with certainty. These events could have a significant
impact on the Fund’s performance, as well as the performance and viability
of issuers in which it invests.
|
• |
Issuer
Risk. The value of a
security may decline for a number of reasons that directly relate to an
issuer, such as management performance, financial leverage, and reduced
demand for the issuer’s goods or services, as well as the historical and
prospective earnings of the issuer and the value of its assets or factors
unrelated to the issuer’s value, such as investor perception.
|
• |
Management
Risk. If the Adviser
is incorrect in its assessment of the investment prospects of the
securities the Fund holds, then the value of the Fund’s shares may
decline. |
• |
Market Trading
Risk. Individual Fund
shares may be purchased and sold only on a national securities exchange or
alternative trading system through a broker-dealer, and may not be
directly purchased or redeemed from the Fund. There can be no guarantee
that an active trading market for shares will develop or be maintained, or
that their listing will continue unchanged. Buying and selling shares may
require you to pay brokerage commissions and expose you to other trading
costs. Due to brokerage commissions and other transaction costs that may
apply, frequent trading may detract from realized investment returns.
Trading prices of shares may be above, at, or below the Fund’s NAV, will
fluctuate in relation to NAV based on supply and demand in the market for
shares and other factors, and may vary significantly from NAV during
periods of market volatility. The return on your investment will be
reduced if you sell shares at a greater discount or narrower premium to
NAV than when you acquired shares.
|
• |
|
• |
Preferred Stock
Risk. Preferred stocks
are susceptible to general market fluctuations and to volatile increases
and decreases in value as market confidence in and perceptions of their
issuers change. The dividend on a preferred stock may be changed or
omitted by the issuer, and participation in the growth of an issuer may be
limited. |
• |
Trading Issues
Risk. Trading in Fund
shares on NYSE Arca, Inc. (“NYSE Arca”) may be halted in certain
circumstances. There can be no assurance that the requirements of NYSE
Arca necessary to maintain the listing of the Fund will continue to be
met. |
• |
Value Investing
Risk. The Fund invests
in “value” stocks. Value investing refers to buying securities that the
Adviser believes are out of favor and/or undervalued in comparison to
their peers or their prospects for growth. From time to time, “value”
investing falls out of favor with investors. During those periods, the
Fund’s relative performance may suffer.
|
Shareholder
Fees |
|||||
|
|||||
Annual Fund
Operating Expenses |
|||||
|
|||||
Management Fees |
|||||
Other Expenses(1) |
|||||
Total Annual Fund Operating
Expenses |
|||||
Less Fee Waiver and/or Expense Reimbursement(2) |
( |
||||
|
|
||||
Total Annual Fund Operating Expenses After Fee
Waiver |
|||||
|
|
(1) |
(2) | Gabelli Funds, LLC, the Fund’s adviser (the
“Adviser”), has contractually agreed to waive the Fund’s management fee of
0.90% on the first $25 million in net assets until at least
|
1 Year | 3 Years | |
$ |
$ |
• |
have strong free cash flow and pay regular
dividends
|
• |
have potential for long term earnings per share
growth
|
• |
may be subject to a value catalyst, such as
industry developments, regulatory changes, changes in management, sale or
spin‑off of a division, or the development of a profitable new business
|
• |
are well managed
|
• |
will benefit from sustainable long term economic
dynamics, such as globalization of an issuer’s industry or an issuer’s
increased focus on productivity or enhancement of services
|
• |
you are a long term investor
|
• |
you are seeking income as well as capital
appreciation
|
• |
Non-Transparent
Exchange-Traded Fund (“ETF”) Structure Risk. Unlike most
actively managed ETFs the Fund does not provide daily disclosure of its
portfolio holding. Instead, the Fund provides a verified intraday
indicative value (“VIIV”), calculated and disseminated every second
throughout the trading day. The VIIV is intended to provide investors and
other market participants with a highly correlated per share value of the
underlying portfolio that can be compared to the current market price.
There is, however, a risk that shares of the Fund may trade at a wider
bid/ask spread than ETFs that publish their portfolios on a daily basis,
especially during periods of market disruption or volatility, and
therefore, may cost investors more to trade. Because the Fund trades on
the basis of the VIIV, it may trade at a wider bid/ask spread than
traditional ETFs that publish their portfolios on a daily basis.
Accordingly, the Adviser or its designee will monitor on an ongoing basis
how shares of the Fund trade, including the level of any market price
premium or discount to NAV and the bid/ask spreads on market transactions.
Should there be extended periods of unusually high bid/ask spreads, the
Board will consider the continuing viability of the Fund, whether
shareholders are being harmed, and what, if any, action would be
appropriate to among other things, narrow the premium/discount or spread,
as applicable. Potential actions may include, but are not limited to,
changing lead market makers, listing the Fund on a different exchange,
changing the size of Creation Units, changing the Fund’s investment
objective or strategy, and liquidating the Fund. There is also a risk that
the market price may vary significantly from the NAV and, thus, the
underlying value of the Fund significantly from the underlying NAV of the
Fund. There is also a risk that, despite not disclosing the portfolio
holdings each day, some market participants may seek to use publically
available information, including the VIIV, to identify the Fund’s
investment strategy and engage in certain predatory trading practices that
may have the potential to harm the Fund.
|
• |
Aerospace Industry
Risk. Government aerospace regulation and
spending policies can significantly affect the aerospace industry because
many companies involved in the aerospace industry rely to a large extent
on U.S. (and other) Government demand for their products and services.
There are significant inherent risks in government contracting, which
could have a material adverse effect on the business, financial condition
and results of operations of industry participants. . Government spending
in aerospace generally is not correlated with any economic cycle, but
rather, on the cycle of general political support for this type of
spending. However, there is no assurance that future levels of aerospace
and defense spending will increase or that levels of aerospace and defense
spending will not decrease in the future. In addition, the
|
aerospace industry in particular has recently been
affected by adverse economic conditions and consolidation within the
industry. Furthermore, competition in the airline industry continues to
increase as a result of airline deregulation.
|
• |
Defense Industry
Risk. Companies in the defense industry are
subject to numerous risks, including fierce competition, consolidation,
adverse political, economic and governmental developments (both in the
U.S. and abroad), compliance with varying regulation across international
markets, substantial research and development costs, cuts in government
funding, product and technology obsolescence, limited numbers of potential
customers and decreased demand for new equipment. Since defense companies
derive significant revenue from government contracts, they face a number
of specific risks that may adversely affect a company’s financial
condition and outlook. The government may terminate a contract with an
issuer as a result of an issuer’s default, resulting in possible issuer
liability to the government. The government may also terminate a contract
for its own convenience, which may lead to difficulty for the issuer in
recovering costs incurred prior to termination. Such contracts may also be
modified or terminated due to changes in congressional funding levels.
Government contractors are also subject to stringent routine audits and
reviews, which may lead to significant price adjustments for products and
services. The highly competitive bidding environment in which government
contractors operate may also reduce the profitability of certain
government contracts. Companies involved in the commercial aerospace
industry are subject to risks including aircraft order cancellations,
excess capacity, cutbacks in profitable business travel, fuel price hikes,
labor union settlements, adverse changes in international politics and
relations, intense global competition, government regulation and cyclical
market patterns. |
• |
Concentration
Risk. The Fund may be
susceptible to an increased risk of loss, including losses due to adverse
events that affect the Fund’s investments more than the market as a whole,
to the extent that the Fund’s investments are concentrated in the
securities and/or other assets of a particular issuer or issuers, country,
group of countries, region, market, industry, group of industries, sector,
market segment or asset class.
|
• |
Early Close/Trading
Halt Risk. An exchange or
market may close or issue trading halts on specific securities, or the
ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell
certain securities or financial instruments. In such circumstances, the
Fund may be unable to rebalance its portfolio, may be unable to accurately
price its investments and/or may incur substantial trading losses. In
addition, due to the non-transparency of the portfolio a trading halt in a
portfolio security could cause discrepancies between the VIIV and NAV of
the Fund resulting in uncertainty on the part of the AP that results in
wider, less liquid markets. Any security for which trading has been halted
for an extended period of time will be disclosed on the Fund’s website,
www.gabelli.com. |
• |
Large-Capitalization Companies
Risk. Large-capitalization companies may be
less able than smaller capitalization companies to adapt to changing
market conditions. Large-capitalization companies may be more mature and
subject to more limited growth potential compared with smaller
capitalization companies. During different market cycles, the performance
of large capitalization companies has trailed the overall performance of
the broader securities markets.
|
• |
|
• |
Authorized
Participant and AP Representative Concentration Risk. The creation and
redemption process for the Fund occurs through a confidential brokerage
account (“Confidential Account”) with an agent, called an AP
Representative, on behalf of an Authorized Participant. Each day, the AP
Representative will be given the names and quantities of the securities to
be deposited, in the case of a creation, or redeemed, in the case of a
redemption (“Creation Basket”), allowing the AP Representative to buy and
sell positions in the portfolio securities to permit creations or
redemptions on the Authorized Participant’s behalf, without disclosing the
information to the Authorized Participant. The Fund may have a limited
number of institutions that act as Authorized Participants and AP
Representatives, none of which are obligated to engage in creation or
redemption transactions. To the extent that these institutions exit the
business or are unable to proceed with creation and/or redemption orders
with respect to the Fund and no other Authorized Participant is able to
step forward to process creation and/or redemption orders, Fund shares may
trade at a discount to NAV and possibly face trading halts and/or
delisting. This risk may be more pronounced in volatile markets,
potentially where there are significant redemptions in ETFs, generally.
The fact that the Fund is offering a novel and unique structure may affect
the number of entities willing to act as Authorized Participants and AP
Representatives. During times of market stress, Authorized Participants
may be more likely to step away from this type of ETF than a traditional
ETF. |
• |
Absence of an
Active Market. Although shares
of the Fund are listed for trading on one or more stock exchanges, there
can be no assurance that an active trading market for such shares will
develop or be maintained by market makers or Authorized Participants.
Authorized Participants are not obligated to execute purchase or
redemption orders for Creation Units. Because this is a novel and unique
structure, this could influence the number of entities willing to act as
Authorized Participants. In periods of market volatility, market makers
and/or Authorized Participants may be less willing to transact in Fund
shares. The absence of an active market for the Fund’s shares may
contribute to the Fund’s shares trading at a premium or discount to net
asset value (“NAV”). If a shareholder purchases Fund shares at a time when
the market price is at a premium to the NAV or sells Fund shares at a time
when the market price is at a discount to the NAV, the shareholder may
sustain losses. |
• |
New Fund
Risk. The Fund is new
with a limited operating history and may have higher expenses. There can
be no assurance that the Fund will grow to or maintain an economically
viable size. The Fund could cease operations, and investors may be
required to liquidate or transfer their assets at a loss. However, the
expense limitation in place limits this risk through the end of its term.
|
• |
Equity
Risk. Equity risk is
the risk that the prices of the securities held by the Fund will
fluctuate, sometimes rapidly and unpredictably, due to general market and
economic conditions, perceptions regarding the industries in which the
companies issuing the securities participate, and the issuer companies’
particular circumstances. Holders of equity securities only have rights to
value in the company only after all issuer debts have been paid and they
could lose their entire investment in a company that encounters financial
difficulty |
• |
American Depositary
Receipts (“ADRs”) Risk. Investment in
ADRs does not eliminate all the risks inherent in investing in securities
of non-U.S. issuers. The market value of ADRs is dependent upon the market
value of the underlying securities and fluctuations in the relative value
of the currencies in which the ADRs and the underlying securities are
quoted. |
• |
Coronavirus
(“COVID-19”) and Global Health Events. COVID-19 and
concerns about its rapid spread and infections have severely impacted
business activity in virtually all economies, markets, and sectors and
negatively impacted the value of many financial and other assets. The
duration of the COVID-19 outbreak and its effects cannot be determined
with certainty. These events could have a significant impact on the Fund’s
performance, as well as the performance and viability of issuers in which
it invests. |
• |
Issuer
Risk. The value of a
security may decline for a number of reasons that directly relate to an
issuer, such as management performance, financial leverage, and reduced
demand for the issuer’s goods or services, as well as the historical and
prospective earnings of the issuer and the value of its assets or factors
unrelated to the issuer’s value, such as investor perception.
|
• |
Management
Risk. If the Adviser
is incorrect in its assessment of the investment prospects of the
securities the Fund holds, then the value of the Fund’s shares may
decline. |
• |
Market Trading
Risk. Individual Fund
shares may be purchased and sold only on a national securities exchange or
alternative trading system through a broker-dealer, and may not be
directly purchased or redeemed from the Fund. There can be no guarantee
that an active trading market for shares will develop or be maintained, or
that their listing will continue unchanged. Buying and selling shares may
require you to pay brokerage commissions and expose you to other trading
costs. Due to brokerage commissions and other transaction costs that may
apply, frequent trading may detract from realized investment returns.
Trading prices of shares may be above, at, or below the Fund’s NAV, will
fluctuate in relation to NAV based on supply and demand in the market for
shares and other factors, and may vary significantly from NAV during
periods of market volatility. The return on your investment will be
reduced if you sell shares at a greater discount or narrower premium to
NAV than when you acquired shares.
|
• |
Preferred Stock
Risk. Preferred stocks
are susceptible to general market fluctuations and to volatile increases
and decreases in value as market confidence in and perceptions of their
issuers change. The dividend on a preferred stock may be changed or
omitted by the issuer, and participation in the growth of an issuer may be
limited. |
• |
Trading Issues
Risk. Trading in Fund
shares on NYSE Arca, Inc. (“NYSE Arca”) may be halted in certain
circumstances. There can be no assurance that the requirements of NYSE
Arca necessary to maintain the listing of the Fund will continue to be
met. |
• |
Value Investing
Risk. The Fund invests
in “value” stocks. Value investing refers to buying securities that the
Adviser believes are out of favor and/or undervalued in comparison to
their peers or their prospects for growth. From time to time, “value”
investing falls out of favor with investors. During those periods, the
Fund’s relative performance may suffer.
|
• |
Temporary Defensive
Investments. When opportunities for capital
appreciation do not appear attractive or when adverse market or economic
conditions exist, the Fund may temporarily invest all or a portion of its
assets in defensive investments only outside normal
|
market conditions. Such investments include
obligations of the U.S. government and its agencies and instrumentalities
and short term money market investments. When following a defensive
strategy, the Fund will be less likely to achieve its investment goal of
capital appreciation. |
• |
have strong free cash flow and pay regular
dividends |
• |
have potential for long term earnings per share
growth |
• |
may be subject to a value catalyst, such as
industry developments, regulatory changes, changes in management, sale or
spin‑off of a division, or the development of a profitable new business
|
• |
are well managed |
• |
will benefit from sustainable long term economic
dynamics, such as globalization of an issuer’s industry or an issuer’s
increased focus on productivity or enhancement of services
|
• |
have strong free cash flow and pay regular
dividends |
• |
have potential for long term earnings per share
growth |
• |
may be subject to a value catalyst, such as
industry developments, regulatory changes, changes in management, sale or
spin-off of a division, or the development of a profitable new business
|
• |
are well managed |
• |
will benefit from sustainable long term economic
dynamics, such as globalization of an issuer’s industry or an issuer’s
increased focus on productivity or enhancement of services
|
• |
Non-Transparent
Exchange-Traded Fund (“ETF”) Structure Risk. All Funds — Unlike most actively managed
ETFs the Funds do not provide daily disclosure of their portfolio
holdings. Instead, the Funds provide a verified intraday indicative value
(“VIIV”), calculated and disseminated every second throughout the trading
day. The VIIV is intended to provide investors and other market
participants with a highly correlated per share value of the underlying
portfolio that can be compared to the current market price. There is,
however, a risk that shares of the Funds may trade at a wider bid/ask
spread than ETFs that publish their portfolios on a daily basis,
especially during periods of market disruption or volatility, and
therefore, may cost investors more to trade. Because the Funds trade on
the basis of the VIIV, they may trade at a wider bid/ask spread than
traditional ETFs that publish their portfolios on a daily basis.
Accordingly, the Funds’ Adviser or their designee will monitor on an
ongoing basis how shares of the Funds trade, including the level of any
market price premium or discount to NAV and the bid/ask spreads on market
transactions. Should there be extended periods of unusually high bid/ask
spreads, the Board of Trustees (the “Board”) will consider the continuing
viability of the Funds, whether shareholders are being harmed, and what,
if any, action would be appropriate to, among other things, narrow the
premium/discount or spread, as applicable. Potential actions may include,
but are not limited to, changing lead market makers, listing the Funds on
a different exchange, changing the size of Creation Units, changing the
Funds’ investment objectives or strategies, and liquidating the Funds.
There is also a risk that the market price may vary
|
significantly from the NAV and, thus, the
underlying value of the Funds significantly from the underlying NAV of the
Funds. There is also a risk that, despite not disclosing the portfolio
holdings each day, some market participants may seek to use publically
available information, including the VIIV, to identify the Funds’
investment strategies and engage in certain predatory trading practices
that may have the potential to harm the Funds.
|
• |
Early Close/Trading
Halt Risk. All Funds — An exchange or market may
close or issue trading halts on specific securities, or the ability to buy
or sell certain securities or financial instruments may be restricted,
which may result in a Fund being unable to buy or sell certain securities
or financial instruments. In such circumstances, the Funds may be unable
to rebalance their portfolios, may be unable to accurately price their
investments and/or may incur substantial trading losses. In addition, due
to the non-transparency of the portfolio a trading halt in a portfolio
security could cause discrepancies between the VIIV and NAV of the Funds
resulting in uncertainty on the part of the AP that results in wider, less
liquid markets. Any security for which trading has been halted for an
extended period of time will be disclosed on the Funds’ website,
www.gabelli.com. |
• |
Authorized
Participant and AP Representative Concentration Risk. All Funds — The creation and redemption
process for the Funds occurs through a confidential brokerage account
(“Confidential Account”) with an agent, called an AP Representative, on
behalf of an Authorized Participant. Each day, the AP Representative will
be given the names and quantities of the securities to be deposited, in
the case of a creation, or redeemed, in the case of a redemption
(“Creation Basket”), allowing the AP Representative to buy and sell
positions in the portfolio securities to permit creations or redemptions
on the Authorized Participant’s behalf, without disclosing the information
to the Authorized Participant. The Funds may have a limited number of
institutions that act as Authorized Participants and AP Representatives,
none of which are obligated to engage in creation or redemption
transactions. To the extent that these institutions exit the business or
are unable to proceed with creation and/or redemption orders with respect
to the Funds and no other Authorized Participant is able to step forward
to process creation and/or redemption orders, Fund shares may trade at a
discount to NAV and possibly face trading halts and/or delisting. This
risk may be more pronounced in volatile markets, potentially where there
are significant redemptions in ETFs, generally. The fact that the Funds
are offering a novel and unique structure may affect the number of
entities willing to act as Authorized Participants and AP Representatives.
During times of market stress, Authorized Participants may be more likely
to step away from this type of ETF than a traditional ETF.
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• |
Absence of an
Active Market. All Funds — Although shares of the Funds
are listed for trading on one or more stock exchanges, there can be no
assurance that an active trading market for such shares will develop or be
maintained by market makers or Authorized Participants. Authorized
Participants are not obligated to execute purchase or redemption orders
for Creation Units. Because this is a novel and unique structure, this
could influence the number of entities willing to act as Authorized
Participants. In periods of market volatility, market makers and/or
Authorized Participants may be less willing to transact in the Funds’
shares. The absence of an active market for the Funds’ shares may
contribute to the Funds’ shares trading at a premium or discount to NAV.
If a shareholder purchases a Fund’s shares at a time when the market price
is at a premium to the NAV or sells a Fund’s shares at a time when the
market price is at a discount to the NAV, the shareholder may sustain
losses. |
• |
New Fund
Risk. All Funds — Each Fund is new with a
limited operating history and may have higher expenses. There can be no
assurance that a Fund will grow to or maintain an economically viable
size. Each Fund could cease operations, and investors may be required to
liquidate or transfer their assets at a loss. However, the expense
limitation in place limits this risk through the end of its term.
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• |
Aerospace Industry
Risk. Aerospace and Defense Fund only —
Government aerospace regulation and spending policies can significantly
affect the aerospace industry because many companies involved in the
aerospace industry rely to a large extent on U.S. (and other) Government
demand for their products and services. There are significant inherent
risks in government contracting, which could have a material adverse
effect on the business, financial condition and results of operations of
industry participants. . Government spending in aerospace generally is not
correlated with any economic cycle, but rather, on the cycle of general
political support for this type of spending. However, there is no
assurance that future levels of aerospace and defense spending will
increase or that levels of aerospace and defense spending will not
decrease in the future. In addition, the aerospace industry in particular
has recently been affected by adverse economic conditions and
consolidation within the industry. Furthermore, competition in the airline
industry continues to increase as a result of airline deregulation.
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• |
Defense Industry
Risk. Aerospace and Defense Fund only —
Companies in the defense industry are subject to numerous risks, including
fierce competition, consolidation, adverse political, economic and
governmental developments (both in the U.S. and abroad), compliance with
varying regulation across international markets, substantial research and
development costs, cuts in government funding, product and technology
obsolescence, limited numbers of potential customers and decreased demand
for new equipment. Since defense companies derive significant revenue from
government contracts, they face a number of specific risks that may
adversely affect a company’s financial condition and outlook. The
government may terminate a contract with an issuer as a result of an
issuer’s default, resulting in possible issuer liability to the
government. The government may also terminate a contract for its own
convenience, which may lead to difficulty for the issuer in recovering
costs incurred prior to termination. Such contracts may also be modified
or terminated due to changes in congressional funding levels. Government
contractors are also subject to stringent routine audits and reviews,
which may lead to significant price adjustments for products and services.
The highly competitive bidding environment in which government contractors
operate may also reduce the profitability of certain government contracts.
Companies involved in the commercial aerospace industry are subject to
risks including aircraft order cancellations, excess capacity, cutbacks in
profitable business travel, fuel price hikes, labor union settlements,
adverse changes in international politics and relations, intense global
competition, government regulation and cyclical market patterns.
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• |
Concentration
Risk. Aerospace and Defense Fund only — The
Aerospace and Defense Fund may be susceptible to an increased risk of
loss, including losses due to adverse events that affect the Fund’s
investments more than the market as a whole, to the extent that the Fund’s
investments are concentrated in the securities and/or other assets of a
particular issuer or issuers, country, group of countries, region, market,
industry, group of industries, sector, market segment or asset class.
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• |
Equity
Risk. All Funds — Equity risk is the risk that
the prices of the securities held by the Funds will change due to general
market and economic conditions, perceptions regarding the industries in
which the companies issuing the securities participate, and the issuer
companies’ particular circumstances. These fluctuations may cause a
security to be worth less than it was worth when it was purchased by the
Funds. Because the value of securities, and thus shares of the Funds,
could decline, you could lose money. |
• |
American Depositary
Receipts (“ADRs”) Risk. All Funds — Investment in ADRs does not
eliminate all the risks inherent in investing in securities of non-U.S.
issuers. The market value of ADRs is dependent upon the market value of
the underlying securities and fluctuations in the relative value of the
currencies in which the ADRs and the underlying securities are quoted. The
depository bank may not have physical custody of the underlying securities
at all times and may charge fees for various services, including
forwarding dividends and interest and corporate actions. ADRs are
alternatives to directly purchasing the underlying foreign securities in
their national markets and currencies. However, ADRs continue to be
subject to many of the risks associated with investing directly in foreign
securities. |
• |
Concentration
Risk. Aerospace and Defense Fund only — The
Aerospace and Defense Fund may concentrate its investments in securities
issued by aerospace companies and defense companies which means that the
Fund is less diversified than the Fund investing in a broader range of
industries, and is particularly sensitive to general market conditions and
other risks of the aerospace and defense industries, including that the
aerospace industry and the defense industry can be significantly affected
by government regulation and spending policies because companies involved
in this industry rely, to a significant extent, on government demand for
their products and services. The financial condition of these companies is
heavily influenced by government defense spending, which may be reduced in
efforts to control government budgets. The aerospace industry in
particular has recently been affected by adverse economic conditions and
consolidation within the industry. |
• |
Coronavirus
(“COVID-19”) and Global Health Event Risk. All Funds — As of the filing date of
this prospectus, there is an outbreak of a highly contagious form of a
novel coronavirus known as “COVID-19.” COVID-19 has been declared a
pandemic by the World Health Organization and, in response to the
outbreak, the U.S. Health and Human Services Secretary has declared a
public health emergency in the United States. COVID-19 had a devastating
impact on the global economy, including the U.S. economy, and resulted in
a global economic recession. Many states issued orders requiring the
closure of non-essential businesses and/or requiring residents to stay at
home. The COVID-19 pandemic and preventative measures taken to contain or
mitigate its spread have caused, and are continuing to cause, business
shutdowns, cancellations of events and travel, significant reductions in
demand for certain goods and services, reductions in business activity and
financial transactions, supply chain interruptions and overall economic
and financial market instability both globally and in the United States.
Such effects will likely continue for the duration of the pandemic, which
is uncertain, and for some period thereafter. While several countries, as
well as certain states, counties, and cities in the United States, began
to relax the early public health restrictions with a view to partially or
fully reopening their economies, many cities, both globally and in the
United States, continue to experience, from time to time, surges in the
reported number of cases and hospitalizations related to the COVID-19
pandemic. Recurring |
COVID-19 outbreaks, newly discovered variant and
sub-variant strains of the virus and increases in cases can, and has, led
to the re-introduction of restrictions and business shutdowns in certain
states, counties, and cities in the United States and globally, and could
continue to lead to the re-introduction of such restrictions elsewhere.
Even after the COVID-19 pandemic subsides, the U.S. economy and most other
major global economies may continue to experience a substantial economic
downturn or recession, and our business and operations, as well as the
business and operations of our portfolio companies, could be materially
adversely affected by a prolonged economic downturn or recession in the
United States and other major markets. |
• |
Issuer
Risk. All Funds — The value of a security may
decline for a number of reasons that directly relate to an issuer, such as
management performance, financial leverage, and reduced demand for the
issuer’s goods or services, as well as the historical and prospective
earnings of the issuer and the value of its assets or factors unrelated to
the issuer’s value, such as investor perception.
|
• |
Large
Capitalization Company Risk. Aerospace and Defense Fund only —
Companies with $10 billion or more in market
capitalization are considered by the Adviser to be large capitalization
companies. Large capitalization companies generally experience slower
rates of growth in earnings per share than do mid and small capitalization
companies. |
• |
Management
Risk. All Funds — If the portfolio managers
are incorrect in their assessment of the investment prospects of the
securities a Fund holds, then the value of that Fund’s shares may decline.
In addition, the Adviser’s strategy may produce returns that are different
from other funds that invest in similar securities.
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• |
Market Trading
Risk. All Funds — Individual Fund shares may
be purchased and sold only on a national securities exchange or
alternative trading system through a broker-dealer, and may not be
directly purchased or redeemed from a Fund. There can be no guarantee that
an active trading market for shares will develop or be maintained, or that
their listing will continue unchanged. Buying and selling shares may
require you to pay brokerage commissions and expose you to other trading
costs. Due to brokerage commissions and other transaction costs that may
apply, frequent trading may detract from realized investment returns.
Trading prices of shares may be above, at, or below a Fund’s NAV, will
fluctuate in relation to NAV based on supply and demand in the market for
shares and other factors, and may vary significantly from NAV during
periods of market volatility. The return on your investment will be
reduced if you sell shares at a greater discount or narrower premium to
NAV than you acquired shares. |
• |
Non‑Diversification
Risk. Equity Income Fund and Aerospace and Defense
Fund only — The Fund is classified as a “non‑diversified” Fund. As
a non‑diversified Fund, more of a Fund’s assets may be focused in the
securities of a small number of issuers, which may make the value of each
Fund’s shares more sensitive to changes in the market value of a single
issuer or industry than shares of a diversified Fund. The ability to
invest in a more limited number of securities may increase the volatility
of each Fund’s investment performance, as each Fund may be more
susceptible to risks associated with a single economic, political, or
regulatory event than a diversified Fund. If the securities in which each
Fund invests perform poorly, each Fund could incur greater losses than it
would have had if it had been invested in a greater number of securities.
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• |
Preferred Stock
Risk. — A preferred stock is a blend of the
characteristics of a bond and common stock. It can offer the higher yield
of a bond and has priority over common stock in equity ownership, but does
not have the seniority of a bond and, unlike common stock, its
participation in the issuer’s growth may be limited. Preferred stock has
preference over common stock in the receipt of dividends and in any
residual assets after payment to creditors should the issuer be dissolved.
Although the dividend is set at a fixed annual rate, in some circumstances
it can be changed or omitted by the issuer.
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• |
Sector
Risk. Aerospace and Defense Fund only — Under
normal circumstances, the Aerospace and Defense Fund will invest at least
80% of its net assets in aerospace and defense companies, and thus its
investments will be focused in a particular sector. By investing a
significant portion of its assets in a particular sector, the Fund will be
subject to the risk that companies in the same sector are likely to react
similarly to legislative or regulatory changes, adverse market conditions,
increased competition, or other factors affecting that market segment. In
such cases, the Fund would be exposed to an increased risk that the value
of its overall portfolio will decrease because of events that
disproportionately and negatively affect that sector. In addition,
investments in a particular sector may be more volatile than the broader
market as a whole, and the Fund’s investments in such a sector may be
disproportionately susceptible to losses.
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• |
Trading Issues
Risk. All Funds — Shares of a Fund may trade
in the secondary market at times when a Fund does not accept orders to
purchase or redeem shares. At such times, shares may trade in the
secondary market with more significant premiums or discounts than might be
experienced at times when a Fund accepts purchase and redemption orders.
Secondary market |
trading in a Fund’s shares may be halted by a stock
exchange because of market conditions or for other reasons. In addition,
trading in a Fund’s shares on a stock exchange or in any market may be
subject to trading halts caused by extraordinary market volatility
pursuant to “circuit breaker” rules on the stock exchange or market.
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• |
Value Investing
Risk. All Funds — Each Fund invests in “value”
stocks. The portfolio manager may be wrong in the assessment of a
company’s value and the stocks each Fund holds may not reach what the
portfolio manager believes are their full values. From time to time
“value” investing falls out of favor with investors. During those periods,
each Fund’s relative performance may suffer.
|
Name of the Fund | Creation Unit Size | |
Gabelli Equity
Income ETF |
5,000 | |
Gabelli Commercial
Aerospace and Defense ETF |
5,000 |
• |
Free from the Fund’s website at www.gabelli.com.
|
• |
For a fee, by electronic request at
publicinfo@sec.gov, by writing to the Public Reference Section of the SEC,
Washington, DC 20549- 1520, or by calling 202‑551‑8090.
|
• |
Free from the EDGAR Database on the SEC’s website
at www.sec.gov. |