ck0001683471-20211231
PROSPECTUS
TrueShares Technology, AI & Deep Learning
ETF (LRNZ)
TrueShares ESG Active Opportunities
ETF (ECOZ)
TrueShares Low Volatility Equity Income
ETF (DIVZ)
Listed
on the NYSE Arca, Inc.
April 30,
2022
The
U.S. Securities and Exchange Commission (the “SEC”) has not approved or
disapproved of these securities or passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal
offense.
TABLE
OF CONTENTS
Investment Objective
The TrueShares Technology, AI
& Deep Learning ETF (the “Fund” or “AI ETF”) seeks 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 |
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Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
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Management
Fee |
0.68% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.68% |
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: |
$69 |
3
Years: |
$218 |
5
Years: |
$379 |
10
Years: |
$847 |
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, 2021, the Fund’s portfolio turnover rate
was 14% of the average value of its
portfolio.
Principal Investment
Strategies
The Fund is an actively-managed
exchange-traded fund (“ETF”) that pursues its investment objective by investing,
under normal circumstances, at least 80% of its net assets (plus any borrowings
made for investment purposes) in the common stock of technology, artificial
intelligence and deep learning companies. The Fund generally
considers a company to be a technology, artificial intelligence and/or deep
learning company if it derives 50% or more of its revenues or profits from the
development, advancement and/or use of technology, including artificial
intelligence-and/or deep learning-related technologies, or if it has committed
50% or more of its research and development-dedicated capital to the
development, advancement and/or use of such technology, each measured at the
time of investment. In addition, Black Hill Capital Partners, LLC, the Fund’s
sub-adviser (“Black Hill” or the “Sub-Adviser”), seeks to select companies that
have a competitive advantage with respect to the development and utilization of
artificial intelligence, machine learning, or other deep learning technologies.
“Artificial intelligence,” or AI, refers to the development or use by a business
of computer systems that perform tasks previously requiring human intelligence
such as decision-making or audio or visual identification or perception.
“Machine learning” refers to technologies that enable a computer to “learn” from
data it has processed to incorporate different assumptions or past experience
into future computations or analyses. “Deep learning” refers to a more advanced
level of “learning” and involves minimal human interference at the beginning of
the learning process.
The
Sub-Adviser selects companies for the Fund’s portfolio by assessing whether the
company’s business is a secular growth business, a cyclical growth business, or
a newly public company and then evaluates the value and growth prospects for
each company using the following criteria.
•Secular
Growth Companies - Companies that do not closely track a seasonal or cyclical
trend. In selecting such companies for the Fund’s portfolio, the Sub-Adviser
seeks companies that it believes are in the best position to succeed in what is
a very competitive technology space. Research on these companies is also
continuously augmented with information from additional sources such as Wall
Street sell-side investment banks (e.g.,
Merrill Lynch, Morgan Stanley, etc.) and other
proprietary
information sources from many parts of the technology sector. The Sub-Adviser
expects to establish buy-and-hold positions in these companies and does not
expect significant turnover of these companies within the portfolio. The
Sub-Adviser expects to let these investments grow over time from positive trends
in their sector, market positioning and superior products. The Fund will likely
invest in secular growth companies to a greater extent than in cyclical growth
or newly public companies.
•Cyclical
Growth Companies - Companies that are known for following the cycles of an
economy through expansion, peak, recession, and recovery. Most cyclical stocks
belong to companies that sell non-essential items consumers can afford to buy
more of during a booming economy. These stocks are also from companies that
consumers choose to spend less with or cut back on during a recession. In
selecting such companies for the Fund’s portfolio, the Sub-Adviser utilizes
fundamental analysis, with an emphasis on revenue growth, margins, and select
balance sheet items which it believes are more consistent indicators of cyclical
bottoms. The Fund will seek to sell its cyclical growth holdings when their
margins peak in the economic cycle.
•Newly
Public Companies - Companies that have recently gone through an initial public
offering (“IPO”) and are now publicly traded on a stock exchange. In selecting
such companies for the Fund’s portfolio, the Sub-Adviser follows developments in
the private market to seek to identify companies that will fit the Fund’s
investment profile at the time of their IPO. When a new company that fits the
Fund’s investment profile enters the market via an IPO, the Sub-Adviser will
generally seek to build the Fund’s position in that company over the course of a
four to six month period following the IPO.
The
Sub-Adviser expects that the Fund’s portfolio will be primarily composed of
common stock of U.S. companies, although the portfolio may include common stock
of non-U.S. companies from time to time. The Fund’s portfolio is expected to
typically be comprised of the 20 to 30 most attractive securities based on the
Sub-Adviser’s analysis.
The
Sub-Adviser anticipates keeping a significant portion of the Fund’s portfolio in
cash (up to 20%) during periods when the Sub-Adviser believes it is merited.
These cash positions will be utilized to purchase securities when the
Sub-Adviser identifies an event-based investment opportunity in a secular growth
company that has driven down share prices but will not, in the Sub-Adviser’s
opinion, impact the secular nature of the company. The cash positions also may
be used in the event of a bear market or an instance in which the Sub-Adviser
believes that the market is experiencing a valuation correction (i.e.,
a move that is not reflected in overall economic data).
After
initial purchase, company weightings will typically fluctuate with the market.
The Sub-Adviser will manage inflows and outflows (i.e.,
fluctuations in Fund assets from creations and redemptions of Fund shares) by
referencing existing stock weights coupled with its view of a company’s forward
rate of return potential.
While
many portfolio holdings will have a larger capitalization, the Fund may also
invest in small and medium capitalized companies, as TrueMark Investments, LLC
(the “Adviser”), the Fund’s investment adviser, believes these relatively
smaller companies may provide above average capital appreciation and dividend
yield.
The
Fund is non-diversified and may invest a greater percentage of its assets in a
particular issuer than a diversified fund.
The
Fund will concentrate at least 25% of its investments in one or more industries
within the Information Technology Sector. While the Fund’s exposure to the
industries within the Information Technology Sector may vary over time, as of
March 31, 2022, the Fund’s holdings are concentrated within the Software
Industry. For purposes of this policy, each sector and industry is defined by
the Global Industry Classification Standard, a widely recognized industry
classification methodology developed by MSCI, Inc. and Standard & Poor’s
Financial Services LLC.
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 those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears. As with any investment, there is a risk that you could
lose all or a portion of your investment in the Fund. Some or
all of these risks may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and/or ability to meet its
objective. The following risks could affect the value of your investment in
the Fund:
•Artificial
Intelligence, Machine Learning and Deep Learning Investment Risk. Companies
across a wide variety of industries, primarily in the technology sector, are
exploring the possible applications of artificial intelligence, machine learning
and other deep learning technologies. The extent of such technologies’
versatility has not yet been fully explored. Consequently, the Fund’s holdings
may include equity securities of operating companies that focus on or have
exposure to a wide variety of activities in addition to their AI, machine
learning and deep learning activities, and the economic fortunes of such
companies may be tied to such other activities. Currently, there are few public
companies for which artificial intelligence, machine learning and deep learning
technologies represent an attributable and significant revenue or profit stream,
and such
technologies
may not ultimately have a material effect on the economic returns of companies
in which the Fund invests. Companies that do have a focus on such technologies
may rely on a combination of patents, copyrights, trademarks and trade secret
laws to establish and protect their proprietary rights in their products and
technologies. These companies also tend to engage in significant amounts
of spending on research and development, and there is no guarantee that these
products or services will be successful. The securities of such companies,
especially smaller, start-up companies, are also typically more volatile than
those of companies that do not rely heavily on technology.
•Cash
and Cash Equivalents Risk.
Holding cash or cash equivalents rather than securities or other instruments,
even strategically, may cause the Fund to risk losing opportunities to
participate in market appreciation, and may cause the Fund to experience
potentially lower returns than other funds that remain fully invested.
•Concentration
Risk.
The Fund may, at various times, concentrate in the securities of a particular
industry, group of industries, or sector. To the extent the Fund’s investments
are so concentrated, the Fund may be adversely affected by political,
regulatory, and market conditions affecting the particular industry, group of
industries, or sector.
•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”) or the issuers of securities in which the Fund
invests have the ability to cause disruptions and negatively impact the Fund's
business operations, 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. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the
business or significantly reduce their business activities and no other entities
step forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid/ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant. Because
securities held by the Fund may trade on foreign exchanges that are closed when
the Fund’s primary listing exchange is open, the Fund is likely to experience
premiums or discounts greater than those of domestic ETFs.
◦Trading. Although
Shares are listed for trading on the NYSE Arca, Inc. (the “Exchange”) and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
Shares will trade with any volume, or at all, on any stock exchange. In stressed
market conditions, the liquidity of Shares may begin to mirror the liquidity of
the Fund’s underlying portfolio holdings, which can be significantly less liquid
than Shares.
•Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. 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.
•Growth
Investing Risk. Growth
stocks can be volatile for several reasons. Since those companies usually invest
a high portion of earnings in their businesses, they may lack the dividends of
value stocks that can cushion stock prices in a falling
market.
The prices of growth stocks are based largely on projections of the issuer’s
future earnings and revenues. If a company’s earnings or revenues fall short of
expectations, its stock price may fall dramatically.
•Information
Technology Sector Risk.
The Fund expects to concentrate (i.e.,
invest more than 25% of its net assets) its investments in a limited number of
issuers conducting business in the same industry or group of related industries
within the Information Technology Sector. To the extent the Fund does so, the
Fund is more vulnerable to adverse market, economic, regulatory, political or
other developments affecting that industry or group of related industries than a
fund that invests its assets more broadly. As of March 31, 2022, the Fund’s
investments are concentrated in securities issued by companies in the Software
Industry. When the Fund focuses its investments in a particular industry or
sector, financial, economic, business, and other developments affecting issuers
in that industry, market, or economic sector will have a greater effect on the
Fund than if it had not done so. Market or economic factors impacting technology
companies and companies that rely heavily on technological advances could have a
major effect on the value of the Fund’s investments. Stocks of technology
companies and companies that rely heavily on technology, especially those of
smaller, less-seasoned companies, tend to be more volatile than the overall
market. Additionally, companies in the technology sector may face dramatic and
often unpredictable changes in growth rates and competition for the services of
qualified personnel.
◦Software
Industry Risk. Computer
software companies can be significantly affected by competitive pressures,
aggressive pricing, technological developments, changing domestic demand, the
ability to attract and retain skilled employees and availability and price of
components. The market for products produced by computer software companies is
characterized by rapidly changing technology, rapid product obsolescence,
cyclical market patterns, evolving industry standards and frequent new product
introductions. The success of computer software companies depends in substantial
part on the timely and successful introduction of new products and the ability
to service such products. An unexpected change in one or more of the
technologies affecting an issuer’s products or in the market for products based
on a particular technology could have a material adverse effect on a
participant’s operating results.
Many
computer software companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their proprietary
rights in their products and technologies. There can be no assurance that the
steps taken by computer software companies to protect their proprietary rights
will be adequate to prevent misappropriation of their technology or that
competitors will not independently develop technologies that are substantially
equivalent or superior to such companies’ technology.
•IPO
Risk. The
Fund may at times have the opportunity to invest in IPO shares. The market value
of IPO shares can have significant volatility due to factors such as the absence
of a prior public market, unseasoned trading, a small number of shares available
for trading and limited information about the issuer. The purchase of IPO shares
may involve high transaction costs and the Fund may lose money on an investment
in such securities.
•Management
Risk.
Your
investment in the Fund varies with the success and failure of the Fund
management team’s investment strategies and the Fund management team’s research,
analysis, and determination of portfolio securities. If the Adviser’s and
Sub-Adviser’s investment strategies, including their stop loss and goal setting
process, do not produce the expected results, the value of the Fund would
decrease.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time. U.S. and international markets have
experienced significant periods of volatility in recent years due to a number of
these factors, including the impact of the COVID-19 pandemic and related public
health issues, growth concerns in the U.S. and overseas, uncertainties regarding
interest rates, trade tensions and the threat of tariffs imposed by the U.S. and
other countries. These developments as well as other events could result in
further market volatility and negatively affect financial asset prices, the
liquidity of certain securities and the normal operations of securities
exchanges and other markets. It is unknown how long circumstances related to the
pandemic will persist, whether they will reoccur in the future, whether efforts
to support the economy and financial markets will be successful, and what
additional implications may follow from the pandemic. The impact of these events
and other epidemics or pandemics in the future could adversely affect Fund
performance.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and therefore subject to slower growth during
times of economic expansion. Large-capitalization companies may also be unable
to respond quickly to new competitive challenges, such as changes in technology
and consumer tastes.
◦Mid-Capitalization
Investing.
The securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large capitalization stocks or the stock market
as a whole.
◦Small-Capitalization
Investing.
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
large- or mid-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large- or mid-capitalization stocks or the
stock market as a whole. There is typically less publicly available information
concerning smaller-capitalization companies than for larger, more established
companies.
•New
Issuer Risk.
The market value of shares of newly-public companies may fluctuate considerably
due to limited information about a company’s business model, quality of
management, earnings growth potential, and other criteria used to evaluate its
investment prospects. Accordingly, investments in shares of new issuers involve
greater risks than investments in shares of companies that have traded publicly
on an exchange for extended periods of time.
•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 following
performance information indicates some of the risks of investing in the
Fund. The bar chart 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
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 Total
Return
The calendar year-to-date total return of the
Fund as of March 31, 2022 was
-17.92%. During the period of time shown in the bar
chart, the highest quarterly return
was 12.72% for the quarter ended June 30, 2021, and the
lowest quarterly return was
-14.87% for the quarter ended March 31,
2021.
Average
Annual Total Returns
(for
periods ended December 31, 2021)
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TrueShares
Technology, AI & Deep Learning ETF |
1-Year |
Since
Inception
(2/28/2020) |
Return Before
Taxes |
-0.90% |
41.19% |
Return After Taxes on
Distributions |
-0.95% |
41.15% |
Return After Taxes on Distributions and
Sale of Shares |
-0.53% |
32.36% |
NASDAQ
Composite Total Return Index
(reflects no deduction for
fees, expenses, or taxes) |
22.18% |
39.73% |
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 |
Sub-Adviser |
Black
Hill Capital Partners, LLC |
Portfolio
Managers |
Sangbum
Kim, CEO of the Sub-Adviser, has been portfolio manager of the Fund since
July 2020 |
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Jordan
C. Waldrep, CFA, Chief Investment Officer of the Adviser, has been
portfolio manager of the Fund since June
2020 |
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
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.
Investment Objective
The TrueShares ESG Active
Opportunities ETF (the “Fund” or “ESG ETF”) seeks 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 |
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Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
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Management
Fee |
0.58% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.58% |
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: |
$59 |
3
Years: |
$186 |
5
Years: |
$324 |
10
Years: |
$726 |
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, 2021, the Fund’s portfolio turnover rate
was 14% of the average value of its
portfolio.
Principal Investment
Strategies
The Fund is an actively managed
exchange-traded fund (“ETF”) that pursues its investment objective by investing,
under normal circumstances, at least 80% of its net assets (plus any borrowings
made for investment purposes) in the common stock of environmental, social, and
governance (“ESG”) companies. The Fund considers ESG companies
to be those that adhere to ESG best practices, measured at the time of
investment using the Adviser’s and Sub-Adviser’s proprietary screening and
selection process. For purposes of the foregoing policy, “ESG best practices”
consist of promotion of leadership diversity, reduction of carbon emissions, and
implementation of minority hiring practices. At a minimum, the Fund will
evaluate companies with a heavy emphasis on the quantitative data (i.e.,
numerical data) that is available, specifically with regard to total carbon
emissions. Management evaluations will be supplemented with third party scores
to provide a secondary check on corporate ESG best practices. The Fund focuses
its investments in equity securities issued by U.S. listed large-capitalization
companies. The Fund generally considers a company to be a large-cap company if
it has a market capitalization, at the time of purchase, over $10 billion.
TrueMark
Investments, LLC, the Fund’s adviser (the “Adviser”), and Purview Investments,
LLC, the Fund’s sub-adviser (“Purview” or “Sub-Adviser”), will utilize a two
phase process in selecting companies for the portfolio. In the initial phase,
the Adviser and Sub-Adviser will utilize a proprietary ESG best practices
screening process which is comprised of hundreds of data points from various
sources, including the companies and third party providers, to evaluate ESG
characteristics. This initial screen specifically includes quantitative measures
that score the carbon emissions of each company. In the final step of the
initial phase, the companies are screened against traditional aspects of ESG
best practices (e.g.,
promotion of leadership diversity, reduction of carbon emissions, and
implementation of minority hiring practices). Once completed, the initial phase
produces an investable universe of approximately 100-150 companies, and each
company in the universe is then assigned an ESG rating (“ESG Rating”).
The
second phase of the portfolio construction process entails the application of
additional proprietary analytics to the universe of investable companies. Their
value, quality and outlook within their respective industries and the market are
thoroughly assessed to establish management’s opinion of the underlying value of
the businesses. The Adviser and Sub-Adviser define this as “Intrinsic
Value”
and compares a company’s Intrinsic Value to its share prices in the market to
determine its “Relative Value.” The Adviser and Sub-Adviser believe that
equities with positive Relative Value offer the best risk/reward opportunity for
investors. The focus of this second phase is geared towards identifying
companies that not only received a high ESG Rating, but can also deliver better
than average returns as indicated by Relative Value.
At
the conclusion of the second phase, the companies are ranked based on their ESG
Rating and Relative Value to prioritize investment in companies that the Adviser
and Sub-Adviser believe offer the best combination for the Fund. The final
portfolio will include approximately 75-125 securities. The portfolio is then
monitored by the Adviser and Sub-Adviser and the weightings are adjusted
regularly with a focus on each company’s ESG Rating and Relative Value.
The
Fund is actively managed and does not seek to track the performance of any
particular index.
The
Fund invests in securities of companies operating in a broad range of
industries, and will not invest more than 25% of its assets in any single
industry.
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 those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears. As with any investment, there is a risk that you could
lose all or a portion of your investment in the Fund. Some or
all of these risks may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and/or ability to meet its
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”) or the issuers of securities in which the Fund
invests have the ability to cause disruptions and negatively impact the Fund's
business operations, potentially resulting in financial losses to the Fund and
its shareholders.
•Environmental,
Social, Governance Risk. Applying
ESG and sustainability criteria to the investment process may exclude securities
of certain issuers for non-investment reasons and therefore the Fund may forgo
some market opportunities available to funds that do not use ESG or
sustainability criteria. The Fund’s incorporation of ESG considerations may
affect its exposure to certain sectors and/or types of investments, and may
adversely impact the Fund’s performance depending on whether such sectors or
investments are in or out of favor in the market.
•Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, sectors or companies in which the Fund invests.
Common stocks are generally exposed to greater risk than other types of
securities, such as preferred stocks and debt obligations, because common
stockholders generally have inferior rights to receive payment from issuers.
•ETF
Risks.
The Fund is an ETF, and, as a result of its structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the
business or significantly reduce their business activities and no other entities
step forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid/ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant.
◦Trading. Although
Shares are listed for trading on the NYSE Arca, Inc. (the “Exchange”) and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
Shares will trade with any volume, or at all, on any stock
exchange.
In stressed market conditions, the liquidity of Shares may begin to mirror the
liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than Shares.
•Management
Risk.
Your
investment in the Fund varies with the success and failure of the Fund
management team’s investment strategies and the Fund management team’s research,
analysis, and determination of portfolio securities. If the Adviser’s and
Sub-Adviser’s investment strategies, including their stop loss and goal setting
process, do not produce the expected results, the value of the Fund would
decrease.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time. U.S. and international markets have
experienced significant periods of volatility in recent years due to a number of
these factors, including the impact of the COVID-19 pandemic and related public
health issues, growth concerns in the U.S. and overseas, uncertainties regarding
interest rates, trade tensions and the threat of tariffs imposed by the U.S. and
other countries. These developments as well as other events could result in
further market volatility and negatively affect financial asset prices, the
liquidity of certain securities and the normal operations of securities
exchanges and other markets. It is unknown how long circumstances related to the
pandemic will persist, whether they will reoccur in the future, whether efforts
to support the economy and financial markets will be successful, and what
additional implications may follow from the pandemic. The impact of these events
and other epidemics or pandemics in the future could adversely affect Fund
performance.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing. The securities of large-capitalization
companies may be relatively mature compared to smaller companies and therefore
subject to slower growth during times of economic expansion.
Large-capitalization companies may also be unable to respond quickly to new
competitive challenges, such as changes in technology and consumer
tastes.
Performance
The following
performance information indicates some of the risks of investing in the Fund.
The bar chart shows the Fund’s performance for the calendar year ended December
31. The table illustrates how the Fund’s average annual returns
for the 1-year and since inception periods compare with those of a broad measure
of market performance. 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 Total
Return
The calendar year-to-date total return of the
Fund as of March 31, 2022 was
-7.74%. During the period of time shown in the bar
chart, the highest quarterly return
was 9.08% for the quarter ended December 31, 2021, and
the lowest quarterly return was
-1.61% for the quarter ended September 30,
2021.
Average
Annual Total Returns
(for
periods ended December 31, 2021)
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TrueShares
ESG Active Opportunities ETF |
1-Year |
Since
Inception
(2/28/2020) |
Return Before
Taxes |
18.40% |
32.06% |
Return After Taxes on
Distributions |
18.28% |
31.93% |
Return After Taxes on Distributions and
Sale of Shares |
10.97% |
25.06% |
S&P
500 Total Return Index
(reflects no deduction for
fees, expenses, or taxes) |
28.71% |
31.74% |
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.
Portfolio
Management
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Adviser |
TrueMark
Investments, LLC |
Sub-Adviser |
Purview
Investments, LLC |
Portfolio
Managers |
Linda
H. Zhang, Ph.D., CEO of the Sub-Adviser, has been portfolio manager of the
Fund since July 2020 |
|
Jordan
C. Waldrep, CFA, Chief Investment Officer for the Adviser, has been
portfolio manager of the Fund since its inception in 2020
|
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
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.
Investment Objective
The TrueShares Low Volatility
Equity Income ETF (the “Fund” or “Income ETF”) seeks to provide capital
appreciation with lower volatility and a higher dividend yield compared to the
S&P 500 Index.
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 |
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|
Annual
Fund Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
|
|
Management
Fee |
0.65% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.65% |
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: |
$66 |
3
Years: |
$208 |
5
Years: |
$362 |
10
Years: |
$810 |
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 period January
27, 2021 (commencement of operations) through December 31, 2021, the Fund’s
portfolio turnover rate was 55% of the average value of its
portfolio.
Principal Investment
Strategy
The
Fund is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by purchasing 25-35 stocks of companies that pay
dividends and expect to grow the dividends over time and are trading at
attractive valuations at the time of the investment. The Fund’s investment
adviser, TrueMark Investments, LLC (the “Adviser”), and sub-adviser, Titleist
Asset Management, Ltd. (the “Sub-Adviser”), will seek to invest in such
companies that are established businesses with high cash flow, stable revenue
streams, and more disciplined capital reinvestment programs which may, in turn,
experience lower volatility relative to the overall equity market.
The
Adviser and Sub-Adviser will focus on companies whose stock is listed on a U.S.
exchange with market capitalizations greater than $8 billion, but may include
companies with market capitalizations of less than $8 billion if their dividend
yields are above the market average. The Adviser and Sub-Adviser will select
companies for the Fund that, in the Sub-Adviser’s determination, provide the
best combination of dividend yield with potential for dividend growth and are
currently under-valued in the market. Under normal circumstances, at least 80%
of the Fund’s net assets, plus borrowings for investment purposes, will be
invested in equity securities, including common stocks and American Depositary
Receipts (“ADRs”).
The
Sub-Adviser makes its initial identification of potential portfolio securities
based on its assessment of a company’s ability and commitment to sustain and
grow its dividends. The Sub-Adviser seeks to identify such companies by
utilizing a combination of quantitative and qualitative indicators of the
company’s financial position, growth opportunities, historical payouts, and
management commentary, as well as the competitive landscape.
The
Sub-Adviser will then review the current market valuation of these companies
which the Sub-Adviser believes are under-valued. The Sub-Adviser first
identifies “high quality companies,” which are generally defined as companies
with a sustainable competitive
advantage,
offering stable and growing free cash flows, and quality management teams that
have the capital discipline to distribute dividends to shareholders. The
Sub-Adviser then selects companies whose stock is trading at a valuation that it
believes offers an opportunity to generate above average returns over time. The
Sub-Adviser utilizes a variety of metrics (e.g.,
price compared to earnings ratio, market capitalization compared to book value,
free cash flow yield, etc.) in the valuation process and seeks to identify
companies that are attractively priced both in absolute terms and relative to
their peers with a preference of companies with higher free cash flow.
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.
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 those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears. As with any investment, there is a risk that you could
lose all or a portion of your investment in the Fund. Some or
all of these risks may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and/or ability to meet its
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”) or the issuers of securities in which the Fund
invests have the ability to cause disruptions and negatively impact the Fund's
business operations, potentially resulting in financial losses to the Fund and
its shareholders.
•Depositary
Receipts Risk.
Depositary receipts, including ADRs, involve risks similar to those associated
with investments in foreign securities, such as changes in political or economic
conditions of other countries and changes in the exchange rates of foreign
currencies. Depositary receipts listed on U.S. exchanges are issued by banks or
trust companies, and entitle the holder to all dividends and capital gains that
are paid out on the underlying foreign shares (“Underlying Shares”). When the
Fund invests in depositary receipts as a substitute for an investment directly
in the Underlying Shares, the Fund is exposed to the risk that the depositary
receipts may not provide a return that corresponds precisely with that of the
Underlying Shares. Because the Underlying Shares trade on foreign exchanges that
may be closed when the Fund’s primary listing exchange is open, the Fund may
experience premiums and discounts greater than those of funds without exposure
to such Underlying Shares.
•Dividend
Paying Security Risk.
Securities that pay high dividends as a group can fall out of favor with the
market, causing these companies to underperform companies that do not pay high
dividends. Also, companies owned by the Fund that have historically paid a
dividend may reduce or discontinue their dividends, thus reducing the yield of
the Fund.
•Equity
Market Risk. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. These investor perceptions are based on various and
unpredictable factors including: expectations regarding government, economic,
monetary and fiscal policies; inflation and interest rates; economic expansion
or contraction; and global or regional political, economic and banking crises.
If you held common stock, or common stock equivalents, of any given issuer, you
would generally be exposed to greater risk than if you held preferred stocks and
debt obligations of the issuer because common stockholders, or holders of
equivalent interests, generally have inferior rights to receive payments from
issuers in comparison with the rights of preferred stockholders, bondholders,
and other creditors of such issuers.
•ETF
Risks.
The Fund is an ETF, and, as a result of its structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the
business or significantly reduce their business activities and no other entities
step forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid/ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility,
periods
of steep market declines, and periods when there is limited trading activity for
Shares in the secondary market, in which case such premiums or discounts may be
significant.
◦Trading. Although
Shares are listed for trading on the NYSE Arca, Inc. (the “Exchange”) and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
Shares will trade with any volume, or at all, on any stock exchange. In stressed
market conditions, the liquidity of Shares may begin to mirror the liquidity of
the Fund’s underlying portfolio holdings, which can be significantly less liquid
than Shares.
•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
Fund is actively-managed and may not meet its investment objective based on the
Adviser’s and Sub-Adviser’s success or failure to implement investment
strategies for the Fund.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time. U.S. and international markets have
experienced significant periods of volatility in recent years due to a number of
these factors, including the impact of the COVID-19 pandemic and related public
health issues, growth concerns in the U.S. and overseas, uncertainties regarding
interest rates, trade tensions and the threat of tariffs imposed by the U.S. and
other countries. These developments as well as other events could result in
further market volatility and negatively affect financial asset prices, the
liquidity of certain securities and the normal operations of securities
exchanges and other markets. It is unknown how long circumstances related to the
pandemic will persist, whether they will reoccur in the future, whether efforts
to support the economy and financial markets will be successful, and what
additional implications may follow from the pandemic. The impact of these events
and other epidemics or pandemics in the future could adversely affect Fund
performance.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and therefore subject to slower growth during
times of economic expansion. Large-capitalization companies may also be unable
to respond quickly to new competitive challenges, such as changes in technology
and consumer tastes.
◦Mid-Capitalization
Investing.
The securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large capitalization stocks or the stock market
as a whole.
◦Small-Capitalization
Investing.
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
large- or mid-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large- or mid-capitalization stocks or the
stock market as a whole. There is typically less publicly available information
concerning smaller-capitalization companies than for larger, more established
companies.
•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.
•Tax
Risk.
To qualify for the favorable tax treatment generally available to a regulated
investment company (a “RIC”) within the meaning of Subchapter M of the Internal
Revenue Code of 1986, as amended (the “Internal Revenue Code”), the Fund must
satisfy, among other requirements described in the SAI, certain diversification
requirements. Given the concentration of the Fund’s investments in a relatively
small number of securities, it may not always be possible for the Fund to fully
implement its investment strategy while satisfying these diversification
requirements. The Fund’s efforts to pursue its investment strategy may cause it
inadvertently to fail to satisfy the diversification requirements. If the Fund
were to fail to satisfy the diversification requirements, it could be eligible
for relief provisions if the failure is due to reasonable cause and not willful
neglect and if a penalty tax is paid with respect to each failure to satisfy the
applicable requirements. Additionally, relief is provided for certain de minimis
failures of the diversification requirements where the Fund corrects the failure
within a specified period. If the Fund were to fail to qualify as a RIC for a
tax year, and the relief provisions are not available, it would be taxed in the
same manner as an ordinary corporation, and distributions to its shareholders
would not be deductible by the Fund in computing its taxable income. In such
case, its shareholders would be taxed as if they received ordinary dividends,
although corporate shareholders could be
eligible
for the dividends received deduction (subject to certain limitations) and
individuals may be able to benefit from the lower tax rates available to
qualified dividend income. In addition, the Fund could be required to recognize
unrealized gains, pay substantial taxes and interest, and make substantial
distributions before requalifying as a RIC.
•Value
Investing Risk. Because
the Fund may utilize a value style of investing, the Fund could suffer losses or
produce poor results relative to other funds, even in a rising market, if the
Adviser’s and Sub-Adviser’s assessment of a company’s value or prospects for
exceeding earnings expectations or market conditions is
incorrect.
Performance
Performance information for the Fund is not
included because the Fund did not have a full calendar year of performance prior
to the date of this Prospectus. In the future, performance
information for the Fund will be presented in this section. Updated performance
information is available on the Fund’s website at www.true-shares.com.
Portfolio
Management
|
|
|
|
|
|
Adviser |
TrueMark
Investments, LLC |
Sub-Adviser |
Titleist
Asset Management, Ltd. |
Portfolio
Managers |
Austin
Graff, CFA, Co-Chief Investment Officer for the Sub-Adviser, has been
portfolio manager of the Fund since January 2021 |
|
Jordan
C. Waldrep, CFA, Chief Investment Officer for the Adviser, has been
portfolio manager of the Fund since its inception in January
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
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 has been adopted as a non-fundamental investment
policy and may be changed 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.
In
accordance with Rule 35d-1 under the 1940 Act, the AI ETF has adopted a
non-fundamental investment policy to invest at least 80% of its net assets, plus
the amount of borrowings for investment purposes, in the common stock of
technology, artificial intelligence and deep learning companies. The AI ETF
generally considers a company to be a technology, artificial intelligence and/or
deep learning company if it derives 50% or more of its revenue or profits from
the development, advancement and/or use of technology, including artificial
intelligence- and/or deep learning-related technologies, or if it has committed
50% or more of its research and development-dedicated capital to the
development, advancement and/or use of technology, each measured at the time of
investment.
In
accordance with Rule 35d-1 under the 1940 Act, the ESG ETF, as described in
the SAI, has adopted a non-fundamental investment policy to invest at least 80%
of its net assets, plus the amount of borrowings for investment purposes, in the
common stock of ESG companies. The ESG ETF considers ESG companies to be those
that adhere to ESG best practices, measured at the time of investment using the
Adviser’s and Sub-Adviser’s proprietary screening and selection process. For
purposes of the foregoing policy, “ESG best practices” consist of promotion of
leadership diversity, reduction of carbon emissions, and implementation of
minority hiring practices.
In
accordance with Rule 35d-1 under the 1940 Act, the Income ETF has adopted a
non-fundamental investment policy to invest at least 80% of its net assets, plus
the amount of borrowings for investment purposes, in equity securities,
including common stocks and ADRs.
The
foregoing policies may be changed without shareholder approval upon 60 days’
written notice to shareholders.
For
temporary defensive purposes, the Funds may invest in short-term instruments
such as commercial paper and/or repurchase agreements collateralized by U.S.
government securities. Taking a temporary defensive position may result in a
Fund not achieving its investment objective.
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 the Funds’ 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 above, 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.
•Artificial
Intelligence and Machine Learning
Risk
(AI ETF only).
Companies
across a wide variety of industries, primarily in the technology sector, are
exploring the possible applications of artificial intelligence, machine learning
and other deep learning technologies. The extent of such technologies’
versatility has not yet been fully explored. Consequently, the Fund’s holdings
may include equity securities of operating companies that focus on or have
exposure to a wide variety of industries, and the economic fortunes of certain
companies held by the Fund may not be significantly tied to such technologies.
Currently, there are few public companies for which artificial intelligence,
machine learning and deep learning technologies represent an attributable and
significant revenue or profit stream, and such technologies may not ultimately
have a material effect on the economic returns of companies in which the Fund
invests. Companies that do have a focus on such technologies may rely on a
combination of patents, copyrights, trademarks and trade secret laws to
establish and protect their proprietary rights in their products and
technologies. These companies also tend to engage in significant amounts
of spending on research and development, and there is no guarantee that these
products or services will be successful. The securities of such companies,
especially smaller, start-up companies, are also typically more volatile than
those of companies that do not rely heavily on technology.
•Cash
and Cash Equivalents Risk (AI
ETF only).
Holding cash or cash equivalents rather than securities or other instruments in
which the Fund primarily invests, even strategically, may cause the Fund to risk
losing opportunities to participate in market appreciation, and may cause the
Fund to experience potentially lower returns than the Fund’s benchmark or other
funds that remain fully invested. In rising markets, holding cash or cash
equivalents will negatively affect the Fund’s performance relative to its
benchmark.
•Concentration
Risk
(AI
ETF only).
The Fund may, at various times, concentrate in the securities of a particular
industry, group of industries, or sector. To the extent the Fund’s investments
are so concentrated, the Fund may be adversely affected by political,
regulatory, and market conditions affecting the particular industry, group of
industries, or sector.
•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
or the issuers of securities in which such Fund invests have the ability to
cause disruptions and negatively impact the Fund’s business operations,
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 Fund Shares, and other data integral to the functioning
of a Fund inaccessible or inaccurate or incomplete. A Fund may also incur
substantial costs for cybersecurity risk management in order to prevent cyber
incidents in the future. A Fund and its respective shareholders could be
negatively impacted as a result.
•Depositary
Receipts Risk (Income
ETF only).
The
Fund may hold the securities of non-U.S. companies in the form of depositary
receipts, including ADRs. ADRs are negotiable certificates issued by a U.S.
financial institution that represent a specified number of shares in a foreign
stock and trade on a U.S. national securities exchange, such as the New York
Stock Exchange. Sponsored ADRs are issued with the support of the issuer of the
foreign stock underlying the ADRs and carry all of the rights of common shares,
including voting rights. The Underlying Shares are usually denominated or quoted
in currencies other than the U.S. dollar. As a result, changes in foreign
currency exchange rates may affect the value of the Fund’s portfolio. In
addition, because the Underlying Shares trade on foreign exchanges at times when
the U.S. markets are not open for trading, the value of the Underlying Shares
may change materially at times when the U.S. markets are not open for trading,
regardless of whether there is an active U.S. market for shares.
•Dividend
Paying Security Risk (Income
ETF only).
Securities that pay high dividends as a group can fall out of favor with the
market, causing these companies to underperform companies that do not pay high
dividends. Also, companies owned by the Fund that have historically paid a
dividend may reduce or discontinue their dividends, thus reducing the yield of
the Fund.
•Environmental,
Social, Governance Risk (ESG
ETF only). Applying
ESG and sustainability criteria to the investment process may exclude securities
of certain issuers for non-investment reasons and therefore the Fund may forgo
some market opportunities available to funds that do not use ESG or
sustainability criteria. The Fund’s incorporation of ESG considerations may
affect its exposure to certain sectors and/or types of investments, and may
adversely impact the Fund’s performance depending on whether such sectors or
investments are in or out of favor in the market. In addition, the Fund’s
investments in certain companies may be susceptible to various factors that may
impact their businesses or operations, including costs associated with
government budgetary constraints that impact publicly funded projects and clean
energy initiatives, the effects of general economic conditions throughout the
world, increased competition from other providers of services, unfavorable tax
laws or accounting policies and high leverage.
•Equity
Market Risk. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. These investor perceptions are based on various and
unpredictable factors including: expectations regarding government, economic,
monetary and fiscal policies; inflation and interest rates; economic expansion
or contraction; and global or regional political, economic and banking crises.
If you held common stock, or common stock equivalents, of any given issuer, you
would generally be exposed to greater risk than if you held preferred stocks and
debt obligations of the issuer because common stockholders, or holders of
equivalent interests, generally have inferior rights to receive payments from
issuers in comparison with the rights of preferred stockholders, bondholders,
and other creditors of such issuers.
Beginning
in the first quarter of 2020, financial markets in the United States and around
the world experienced extreme and in many cases unprecedented volatility and
severe losses due to the global pandemic caused by COVID‑19, a novel
coronavirus. The pandemic has resulted in a wide range of social and economic
disruptions, including closed borders, voluntary or compelled quarantines of
large populations, stressed healthcare systems, reduced or prohibited domestic
or international travel, supply chain disruptions, and so-called “stay-at-home”
orders throughout much of the United States and many other countries. The
fall-out
from
these disruptions has included the rapid closure of businesses deemed
“non-essential” by federal, state, or local governments and rapidly increasing
unemployment, as well as greatly reduced liquidity for certain instruments at
times. Some sectors of the economy and individual issuers have experienced
particularly large losses. Such disruptions may continue for an extended
period of time or reoccur in the future to a similar or greater extent. In
response, the U.S. government and the Federal Reserve have taken extraordinary
actions to support the domestic economy and financial markets, resulting in very
low interest rates and in some cases negative yields. It is unknown how long
circumstances related to the pandemic will persist, whether they will reoccur in
the future, whether efforts to support the economy and financial markets will be
successful, and what additional implications may follow from the pandemic. The
impact of these events and other epidemics or pandemics in the future could
adversely affect Fund performance.
•ETF
Risks.
Each Fund is an ETF, and, as a result of the structure, is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk.
The Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the business or
significantly reduce their business activities and no other entities step
forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Investors buying or selling Shares in the secondary market will pay brokerage
commissions or other charges imposed by brokers, as determined by that broker.
Brokerage commissions are often a fixed amount and may be a significant
proportional cost for investors seeking to buy or sell relatively small amounts
of Shares. In addition, secondary market investors will also incur the cost of
the difference between the price at which an investor is willing to buy Shares
(the “bid” price) and the price at which an investor is willing to sell Shares
(the “ask” price). This difference in bid and ask prices is often referred to as
the “spread” or “bid/ask spread.” The bid/ask spread varies over time for Shares
based on trading volume and market liquidity, and is generally lower if Shares
have more trading volume and market liquidity and higher if Shares have little
trading volume and market liquidity. Further, a relatively small investor base
in the Fund, asset swings in the Fund and/or increased market volatility may
cause increased bid/ask spreads. Due to the costs of buying or selling Shares,
including bid/ask spreads, frequent trading of Shares may significantly reduce
investment results and an investment in Shares may not be advisable for
investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV.
As with all ETFs, Shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of Shares will
approximate the Fund’s NAV, there may be times when the market price of Shares
is more than the NAV intra-day (premium) or less than the NAV intra-day
(discount) due to supply and demand of Shares or during periods of market
volatility. This risk is heightened in times of market volatility or periods of
steep market declines 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.
◦Trading.
Although Shares are listed for trading on the Exchange and may be listed or
traded on U.S. and non-U.S. stock exchanges other than the Exchange, there can
be no assurance that an active trading market for such Shares will develop or be
maintained. Trading in Shares may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to Exchange “circuit breaker”
rules, which temporarily halt trading on the Exchange when a decline in the
S&P 500 Index during a single day reaches certain thresholds (e.g.,
7%, 13%, and 20%). Additional rules applicable to the Exchange may halt trading
in Shares when extraordinary volatility causes sudden, significant swings in the
market price of Shares. There can be no assurance that Shares will trade with
any volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of Shares may begin to mirror the liquidity of the Fund’s underlying
portfolio holdings, which can be significantly less liquid than Shares.
•Foreign
Securities Risk (AI
ETF only).
Investments in non-U.S. securities involve certain risks that may not be present
with investments in U.S. securities. For example, investments in non-U.S.
securities may be subject to risk of loss due to foreign currency fluctuations
or to political or economic instability. There may be less information publicly
available about a non-U.S. issuer than a U.S. issuer. Non-U.S. issuers may be
subject to different accounting, auditing, financial reporting and investor
protection standards than U.S. issuers. Investments in non-U.S. securities may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. With respect to certain
countries, there is the possibility
of
government intervention and expropriation or nationalization of assets. Because
legal systems differ, there is also the possibility that it will be difficult to
obtain or enforce legal judgments in certain countries. Since foreign exchanges
may be open on days when the Fund does not price its shares, the value of the
securities in the Fund’s portfolio may change on days when shareholders will not
be able to purchase or sell the Fund’s shares. Conversely, Shares may trade on
days when foreign exchanges are close. Each of these factors can make
investments in the Fund more volatile and potentially less liquid than other
types of investments.
•Growth
Investing Risk (AI
ETF only). Growth
stocks can be volatile for several reasons. Since those companies usually invest
a high portion of earnings in their businesses, they may lack the dividends of
value stocks that can cushion stock prices in a falling market. The prices of
growth stocks are based largely on projections of the issuer’s future earnings
and revenues. If a company’s earnings or revenues fall short of expectations,
its stock price may fall dramatically. Growth stocks may be more expensive
relative to their earnings or assets compared to value or other
stocks.
•Information
Technology Sector Risk (AI
ETF only).
When
the Fund focuses its investments in a particular industry or sector, financial,
economic, business, and other developments affecting issuers in that industry,
market, or economic sector will have a greater effect on the Fund than if it had
not focused its assets in that industry, market, or economic sector, which may
increase the volatility of the Fund. Market or economic factors impacting
technology companies and companies that rely heavily on technological advances
could have a major effect on the value of the Fund’s investments. The value of
stocks of technology companies and companies that rely heavily on technology is
particularly vulnerable to rapid changes in technology product cycles, rapid
product obsolescence, government regulation and competition, both domestically
and internationally, including competition from foreign competitors with lower
production costs. Stocks of technology companies and companies that rely heavily
on technology, especially those of smaller, less-seasoned companies, tend to be
more volatile than the overall market. Technology companies are heavily
dependent on patent and intellectual property rights, the loss or impairment of
which may adversely affect profitability. Additionally, companies in the
technology sector may face dramatic and often unpredictable changes in growth
rates and competition for the services of qualified personnel.
◦Software
Industry Risk. Computer
software companies can be significantly affected by competitive pressures,
aggressive pricing, technological developments, changing domestic demand, the
ability to attract and retain skilled employees and availability and price of
components. The market for products produced by computer software companies is
characterized by rapidly changing technology, rapid product obsolescence,
cyclical market patterns, evolving industry standards and frequent new product
introductions. The success of computer software companies depends in substantial
part on the timely and successful introduction of new products and the ability
to service such products. An unexpected change in one or more of the
technologies affecting an issuer’s products or in the market for products based
on a particular technology could have a material adverse effect on a
participant’s operating results.
Many
computer software companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their proprietary
rights in their products and technologies. There can be no assurance that the
steps taken by computer software companies to protect their proprietary rights
will be adequate to prevent misappropriation of their technology or that
competitors will not independently develop technologies that are substantially
equivalent or superior to such companies’ technology.
•IPO
Risk (AI
ETF Only).
The Fund may invest in companies that have recently completed an initial public
offering. The stocks of such companies are unseasoned equities lacking a trading
history, a track record of reporting to investors, and widely available research
coverage. IPOs are thus often subject to extreme price volatility and
speculative trading. These stocks may have above-average price appreciation in
connection with the IPO. In addition, IPOs share similar illiquidity risks of
private equity and venture capital. The free float shares held by the public in
an IPO are typically a small percentage of the market capitalization. The
ownership of many IPOs often include large holdings by venture capital and
private equity investors who seek to sell their shares in the public market in
the months following an IPO when shares restricted by lock-up are released,
causing greater volatility and possible downward pressure during the time that
locked-up shares are released.
•Limited
Operating History Risk (Income
ETF only).
Each
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
skill of the Adviser and Sub-Adviser will play a significant role in the
respective Fund’s ability to achieve its investment objective. A Fund’s ability
to achieve its investment objective depends on the ability of the Adviser and
respective Sub-Adviser to correctly identify economic trends, especially with
regard to accurately forecasting projected dividend and growth rates and
inflationary and deflationary periods. In addition, a Fund’s ability to achieve
its investment objective depends on the Adviser’s and respective Sub-Adviser’s
ability to select stocks, particularly in volatile stock markets. The Adviser
and respective Sub-Adviser could be incorrect in its analysis of industries,
companies’ projected dividends and growth rates and the relative attractiveness
of value stocks and other matters. In addition, the Adviser’s and respective
Sub-Adviser’s stop loss and goal setting process may not perform as expected,
which may negatively impact a Fund.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time. U.S. and international markets have
experienced significant periods of volatility in recent years due to a number of
these factors, including the impact of the COVID-19 pandemic and related public
health issues, growth concerns in the U.S. and overseas, uncertainties regarding
interest rates, trade tensions and the threat of tariffs imposed by the U.S. and
other countries. These developments as well as other events could result in
further market volatility and negatively affect financial asset prices, the
liquidity of certain securities and the normal operations of securities
exchanges and other markets. It is unknown how long circumstances related to the
pandemic will persist, whether they will reoccur in the future, whether efforts
to support the economy and financial markets will be successful, and what
additional implications may follow from the pandemic. The impact of these events
and other epidemics or pandemics in the future could adversely affect Fund
performance.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing.
The
securities of large-capitalization companies may be relatively mature compared
to smaller companies and therefore subject to slower growth during times of
economic expansion. Large-capitalization companies may also be unable to respond
quickly to new competitive challenges, such as changes in technology and
consumer tastes.
◦Mid-Capitalization
Investing (AI ETF and Income ETF only).
The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large capitalization stocks or the stock market
as a whole. Some medium capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization companies.
◦Small-Capitalization
Investing (AI ETF and Income 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.
•New
Issuer Risk (AI
ETF only).
The market value of shares of newly-public companies may fluctuate considerably
due to limited information about a company’s business model, quality of
management, earnings growth potential, and other criteria used to evaluate its
investment prospects. Accordingly, investments in shares of new issuers involve
greater risks than investments in shares of companies that have traded publicly
on an exchange for extended periods of time.
•Non-Diversification
Risk (AI
ETF and Income ETF only).
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.
•Tax
Risk (Income
ETF only).
To qualify for the favorable tax treatment generally available to a RIC within
the meaning of Subchapter M of the Internal Revenue Code, the Fund must satisfy,
among other requirements described in the SAI, certain diversification
requirements. Given the concentration of the Fund’s investments in a relatively
small number of securities, it may not always be possible for the Fund to fully
implement its investment strategy while satisfying these diversification
requirements. The Fund’s efforts to pursue its investment strategy may cause it
inadvertently to fail to satisfy the diversification requirements. If the Fund
were to fail to satisfy the diversification requirements, it could be eligible
for relief provisions if the failure is due to reasonable cause and not willful
neglect and if a penalty tax is paid with respect to each failure to satisfy the
applicable requirements. Additionally, relief is provided for certain de minimis
failures of the diversification requirements where the Fund corrects the failure
within a specified period. If the Fund were to fail to qualify as a RIC for a
tax year, and the relief provisions are not available, it would be taxed in the
same manner as an ordinary corporation, and distributions to its shareholders
would not be deductible by the Fund in computing its taxable income. In such
case, its shareholders would be taxed as if they received ordinary dividends,
although corporate shareholders could be eligible for the dividends received
deduction (subject to certain limitations) and individuals may be able to
benefit from the lower tax rates available to qualified dividend income. In
addition, the Fund could be required to recognize unrealized gains, pay
substantial taxes and interest, and make substantial distributions before
requalifying as a RIC.
•Value
Investing Risk (Income
ETF only).
Because
the Fund may utilize a value style of investing, the Fund could suffer losses or
produce poor results relative to other funds, even in a rising market, if the
Adviser’s or Sub-Adviser’s assessment of a company’s value or prospects for
exceeding earnings expectations or market conditions is incorrect.
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 (“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 each Fund. The Adviser, subject to the oversight of the Board, provides an
investment management program and co-manages each Fund. The Adviser also
arranges for transfer agency, custody, fund administration, distribution and all
other services necessary for each Fund to operate. An SEC-registered investment
adviser formed in 2019, the Adviser is majority owned by the TrueMark Group,
LLC, which in turn is controlled by Michael Loukas, Jordan Fletcher and Jordan
Waldrep.
The
Adviser continuously reviews, supervises, and administers each Fund’s investment
program. In particular, the Adviser provides investment and operational
oversight of each 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 |
TrueShares
Technology, AI & Deep Learning ETF |
0.68% |
TrueShares
ESG Active Opportunities ETF |
0.58% |
TrueShares
Low Volatility Equity Income ETF |
0.65% |
Pursuant
to an investment advisory agreement between the Trust, on behalf of each Fund,
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 each Sub-Adviser from the management fee it
receives.
The
basis for the Board’s approval of the continuation of the Advisory Agreement
with respect to the AI ETF and ESG ETF is available in the Funds’ Annual
Report to Shareholders
for the period ended December 31, 2021. The basis for the Board’s approval of
the Advisory Agreement with respect to the Income ETF is available in the Funds’
Semi-Annual
Report
to Shareholders
for the period ended June 30, 2021.
Sub-Adviser
- Black Hill Capital Partners, LLC (AI ETF)
Black
Hill Capital Partners, LLC, a Delaware limited liability company located at 101
California Street, San Francisco, California 94111, is responsible for the
day-to-day management of the AI ETF. An SEC-registered investment adviser formed
in 1999, the Sub-Adviser is majority owned by Sangbum Kim. Black Hill provides
advisory services to ETFs, including the AI ETF.
Black
Hill is responsible for trading portfolio securities for the AI ETF, including
selecting broker-dealers to execute purchase and sale transactions, subject to
the supervision of the Adviser and the Board. For its services, the Sub-Adviser
is entitled to a fee by the Adviser, which fee is 50% of the Adviser’s net
profits (“Net Profits”). Net Profits are calculated as follows: the Adviser’s
Fees received from the AI ETF during a fiscal period, less 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
basis for the Board’s approval of the continuation of the Sub-Advisory Agreement
with Black Hill is available in the Funds’ Annual
Report to Shareholders
for the period ended December 31, 2021.
Sub-Adviser
- Purview Investments, LLC (ESG ETF)
Purview
Investments, LLC, a Delaware limited liability company located at 208 East 51st
Street, New York, New York 10022, is responsible for the day-to-day management
of the ESG ETF. An SEC-registered investment adviser formed in 2017, the
Sub-Adviser is majority owned by Linda H. Zhang. Purview provides advisory
services to ETFs, including the ESG ETF.
Purview
is responsible for trading portfolio securities for the ESG ETF, including
selecting broker-dealers to execute purchase and sale transactions, subject to
the supervision of the Adviser and the Board. For its services, the Sub-Adviser
is entitled to a fee by the Adviser, which fee is 50% of the Adviser’s net
profits (“Net Profits”). Net Profits are calculated as follows: the Adviser’s
Fees received from the ESG ETF during a fiscal period, less 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
basis for the Board’s approval of the continuation of the Sub-Advisory Agreement
with Purview is available in the Funds’ Annual
Report to Shareholders
for the period ended December 31, 2021.
Sub-Adviser
- Titleist Asset Management, Ltd. (Income ETF)
Titleist
Asset Management, Ltd., a Texas limited liability company located at 777 East
Sonterra Boulevard, Suite 330, San Antonio, Texas 78258, co-manages the
day-to-day investment of the Fund’s assets. An SEC-registered investment adviser
formed in 2003, the Sub-Adviser is majority owned by Byron L. Fields.
Titleist
is responsible for trading portfolio securities for the Fund, including
selecting broker-dealers to execute purchase and sale transactions, subject to
the supervision of the Adviser and the Board. For its services, Titleist is
entitled to a fee paid by the Adviser, which is based on the net profits of the
Fund (the total management fees received by the Adviser after Fund expenses) and
calculated as follows:
|
|
|
|
|
|
|
|
|
Net
Daily Average AUM |
Titleist
Profit Percentage |
TrueMark
Profit Percentage |
less
than $75 Million |
75% |
25% |
$75
Million but less than $150 Million |
65% |
35% |
greater
than $150 Million |
50% |
50% |
The
basis for the Board’s approval of the Sub-Advisory Agreement with Titleist is
available in the Funds’ Semi-Annual
Report to Shareholders
for the period ended June 30, 2021.
Portfolio
Managers
The
individuals identified below are jointly and primarily responsible for
day-to-day management of a Fund’s portfolio, as indicated in the below
table.
|
|
|
|
|
|
Fund |
Portfolio
Managers |
TrueShares
Technology, AI & Deep Learning ETF |
Sangbum
Kim and Jordan Waldrep |
TrueShares
ESG Active Opportunities ETF |
Linda
H. Zhang and Jordan Waldrep |
TrueShares
Low Volatility Equity Income ETF |
Austin
Graff and Jordan Waldrep |
Jordan
Waldrep brings over 16 years of investment experience to TrueMark. Previously,
Mr. Waldrep was the Senior Portfolio Manager of the Vice President and
Co-Portfolio Manager of the Navigator Fund at USA Mutuals. Before managing
public mutual funds, Mr. Waldrep was a founder and principal at Blackfin
Capital acting as the portfolio manager of two equity portfolios focused on
delivering lower volatility equity returns to investors. Prior to that, he was a
principal at Hourglass Capital where he was responsible for research in the
Health Care and Information Technology sectors for a long/short hedge fund and
several equity portfolios. Mr. Waldrep received his MBA in Finance from the
University of Texas, McCombs School of Business in 2004 and his bachelor’s
degree in Biology and History from Texas A&M University in 1999. Mr. Waldrep
is also a Chartered Financial Analyst.
Sangbum
Kim has been in the investment management industry for over 25 years,
specializing in investment, research and analysis of secular growth companies,
largely in technology related sectors. Prior to founding BH Capital Partners,
Mr. Kim was a Senior Analyst at Amerindo Investment Advisors, a top-tier Wall
Street investment management company that focused on investing in long term
secular growth companies in the science and technology sectors. During his
tenure at Amerindo, in addition to covering newly public companies, he was also
active in analyzing and investing in late stage private companies. Prior to his
financial career, Mr. Kim acquired first-hand knowledge in designing large
scale, real-time software and communication systems as a Systems
Analyst/Consultant at Teledyne Browne Engineering and a Software Systems
Engineer at Raytheon Corporation. He received a BS in Bio-
Medical
Engineering; a MS in Computer Engineering from Boston University; and a MS in
Management from the Sloan School of Management at MIT.
Linda
H Zhang, Ph.D, is the CEO and the founder of Purview, an SEC-registered
investment firm specializing in climate resilience and ESG investing based in
New York City. Purview manages global climate impact ESG ETF portfolio
strategies. Dr. Zhang has developed expertise in ESG research, ETF managed
portfolios, macro investing and portfolio management in large institutional
firms. She had served as a lead portfolio manager at Blackrock, Charles Schwab
and MFS. Dr. Zhang is a frequent contributor to Bloomberg News, TV and Radio,
New York Times, Fund Intelligence and a speaker at industry conferences. She has
published her research on Journal of Index Investing, Journal of Investing,
ETF.com, ETFtrends.com. Dr. Zhang is a co-founder and a board member of Women in
ETFs. She is a recipient of Top Women in Asset Management Awards by Money
Management Executives. She holds a BS from University of Regina, Canada, and an
MS in Economics and Ph.D in finance from University of Massachusetts at
Amherst.
Austin
Graff brings over 16 years of investment experience to Titleist. Previously, Mr.
Graff was a Senior Vice President and Portfolio Manager at Pimco where he
co-managed a suite of global equity strategies. He was previously a Vice
President in Investment Banking at Goldman Sachs where he advised
infrastructure, industrial and financial institution clients on strategic
transactions and restructurings. Prior to that he was a financial analyst at the
Indiana Finance Authority where he worked on multiple transformational projects,
helping finance key initiatives for state and local governments. Mr. Graff
received a BS and MBA from Purdue University’s Krannert School of Management.
Mr. Graff earned the Chartered Financial Analyst designation in
2012.
Foreside
Fund Services, LLC (the “Distributor”) is the principal underwriter and
distributor of each Fund’s shares. The Distributor’s principal address is Three
Canal Plaza, Suite 100, Portland, ME 04101. The Distributor will not distribute
Shares in less than a whole Creation Unit, 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 the
Funds and is not affiliated with the Adviser, Sub-Advisers, 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 N. 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 (“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 with 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 may lead to the realization of capital gains. To minimize these potential
consequences of frequent purchases and redemptions, the Funds employ fair value
pricing and may impose transaction fees on purchases and redemptions of Creation
Units to cover the custodial and other costs incurred by the Funds in effecting
trades. In addition, the Funds reserve the right to reject any purchase order at
their discretion.
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. The values of
non-U.S. dollar denominated securities are converted to U.S. dollars using
foreign currency exchange rates generally determined as of 4:00 p.m., Eastern
time (NYSE close). If such information is not available for a security held by a
Fund or is determined to be unreliable, the security will be valued at fair
value estimates under guidelines established by the Board (as described
below).
Fair
Value Pricing
The
Board has adopted procedures and methodologies to fair value Fund securities
whose market prices are not “readily available” or are deemed to be unreliable.
For example, such circumstances may arise when: (i) a security has been
de-listed or has had its trading halted or suspended; (ii) a security’s primary
pricing source is unable or unwilling to provide a price; (iii) a security’s
primary trading market is closed during regular market hours; or (iv) a
security’s value is materially affected by events occurring after the close of
the security’s primary trading market. Generally, when fair valuing a security,
the Funds will take into account all reasonably available information that may
be relevant to a particular valuation including, but not limited to, fundamental
analytical data regarding the issuer, information relating to the issuer’s
business, recent trades or offers of the security, general and/or specific
market conditions and the specific facts giving rise to the need to fair value
the security. Fair value determinations are made in good faith and in accordance
with the fair value methodologies included in the Board-adopted valuation
procedures. Due to the subjective and variable nature of fair value pricing,
there can be no assurance that the Adviser or Sub-Adviser will be able to obtain
the fair value assigned to the security upon the sale of such
security.
DIVIDENDS,
DISTRIBUTIONS, AND TAXES
Dividends
and Distributions
The
AI ETF and ESG ETF intend to pay out dividends, if any, and distribute any net
realized capital gains to its respective shareholders at least annually. The
Income ETF intends to pay out dividends, if any, and distribute any net realized
capital gains to its shareholders at least quarterly. Each Fund will declare and
pay capital gain distributions, if any, in cash. Distributions in cash may be
reinvested automatically in additional whole Shares only if the broker through
whom you purchased Shares makes such option available. Your broker is
responsible for distributing the income and capital gain distributions to you.
The
following discussion is a summary of some 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 (or intends to elect) and intends to qualify each year for
treatment as a RIC. If it meets certain minimum distribution requirements, a RIC
is not subject to tax at the fund level on income and gains from investments
that are timely distributed to shareholders. However, 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 plan, you need to be aware of the possible tax
consequences when a Fund makes distributions, when you sell your Shares listed
on the Exchange, and when you purchase or redeem Creation Units (APs only).
Each
Fund intends to distribute, at least annually, substantially all of its net
investment income and net capital gains income. 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.
Under
legislation generally known as “FATCA” (the Foreign Account Tax Compliance Act),
a Fund is required to withhold 30% of certain ordinary dividends it pays to
shareholders that are foreign entities and that fail to meet prescribed
information reporting or certification requirements.
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.
Any
capital gain or loss realized upon a sale of Shares generally is treated as a
long-term capital gain or loss if Shares have been held for more than one year
and as a short-term capital gain or loss if Shares have been held for one year
or less. However, any capital loss on a sale of Shares held for six months or
less is treated as long-term capital loss to the extent of Capital Gain
Dividends paid with respect to such Shares. Any loss realized on a sale will be
disallowed to the extent Shares of a Fund are acquired, including through
reinvestment
of dividends, within a 61-day period beginning 30 days before and ending 30 days
after the disposition of Shares. The ability to deduct capital losses may be
limited.
The
cost basis of Shares of a Fund acquired by purchase will generally be based on
the amount paid for the Shares and then may be subsequently adjusted for other
applicable transactions as required by the Internal Revenue Code. The difference
between the selling price and the cost basis of Shares generally determines the
amount of the capital gain or loss realized on the sale or exchange of Shares.
Contact the broker through whom you purchased your Shares to obtain information
with respect to the available cost basis reporting methods and elections for
your account.
An
AP having the U.S. dollar as its functional currency for U.S. federal income tax
purposes who exchanges securities for Creation Units generally recognizes a gain
or a loss. The gain or loss will be equal to the difference between the value of
the Creation Units at the time of the exchange and the exchanging AP’s aggregate
basis in the securities delivered plus the amount of any cash paid for the
Creation Units. An AP who exchanges Creation Units for securities will generally
recognize a gain or loss equal to the difference between the exchanging AP’s
basis in the Creation Units and the aggregate U.S. dollar market value of the
securities received, plus any cash received for such Creation Units. The
Internal Revenue Service may assert, however, that a loss that is realized upon
an exchange of securities for Creation Units may not be currently deducted under
the rules governing “wash sales” (for an AP who does not mark-to-market 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.
Any
gain or loss realized upon redemption of Creation Units is treated as capital
gain or loss or ordinary gain or loss depending on the circumstances. Any
capital gain or loss realized upon redemption of Creation Units is generally
treated as 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.
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.
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.
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. If as of the close of a taxable year more than 50% of the
value of a Fund’s assets consists of certain foreign stock or securities, each
such Fund will be eligible to elect to “pass through” to investors the amount of
foreign income and similar taxes (including withholding taxes) paid by such Fund
during that taxable year. This means that investors would be considered to have
received as additional income their respective shares of such foreign taxes, but
may be entitled to either a corresponding tax deduction in calculating taxable
income, or, subject to certain limitations, a credit in calculating federal
income tax. If a Fund does not so elect, each such Fund will be entitled to
claim a deduction for certain foreign taxes incurred by such Fund. A Fund (or a
financial intermediary, such as a broker, through which a shareholder owns
Shares) will notify you if it makes such an election and provide you with the
information necessary to reflect foreign taxes paid on your income tax return.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in 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
Shares
are not sponsored, endorsed, or promoted by the Exchange. The Exchange is not
responsible for, nor has it participated in the determination of, the timing,
prices, or quantities of Shares to be issued, nor in the determination or
calculation of the equation by which Shares are redeemable. The Exchange has no
obligation or liability to owners of Shares in connection with the
administration, marketing, or trading of Shares.
Without
limiting any of the foregoing, in no event shall the Exchange have any liability
for any lost profits or indirect, punitive, special, or consequential damages
even if notified of the possibility thereof.
The
Adviser and the 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 the Funds particularly.
FINANCIAL
HIGHLIGHTS
The
following financial highlights table shows the financial performance information
for a 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 each Fund, whose report, along with each
Fund’s financial statements, is included in the Funds’ Annual
Report,
which is available upon request.
TrueShares
ETFs
Financial
Highlights
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Per
Share Operating Performance (For a share outstanding throughout each
period) |
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Income
from Investment Operations |
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Less
Distributions Paid From |
|
Net
Asset Value, Beginning of Period |
Net
investment
income (loss)(1) |
Net
realized and unrealized gain (loss) on investments |
Total
from investment operations |
|
Net
investment income |
Return
of capital |
Net
realized gains |
Total
distributions paid |
TrueShares
Technology, AI & Deep Learning ETF |
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For
the year 01/01/2021 - 12/31/2021 |
$47.61 |
(0.31) |
(0.12) |
(0.43) |
|
— |
— |
(0.06) |
(0.06) |
For
the period 02/28/2020(7)
- 12/31/2020 |
$25.00 |
(0.19) |
22.80 |
22.61 |
|
— |
— |
— |
— |
TrueShares
ESG Active Opportunities ETF |
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For
the year 01/01/2021 - 12/31/2021 |
$35.10 |
0.16 |
6.29 |
6.45 |
|
(0.16) |
— |
— |
(0.16) |
For
the period 02/28/2020(7)
- 12/31/2020 |
$25.00 |
0.17 |
10.07 |
10.24 |
|
(0.14) |
(0.00) |
— |
(0.14) |
TrueShares
Low Volatility Equity Income ETF |
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For
the period 01/27/2021(7)
- 12/31/2021 |
$25.00 |
0.81 |
4.19 |
5.00 |
|
(0.69) |
— |
(0.42) |
(1.11) |
(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)
The returns reflect the actual performance for the period and do not include the
impact of trades executed on the last business day of the period that were
recorded on the first business day of the next period.
(7)
Commencement of operations.
TrueShares
ETFs
Financial
Highlights
For
a Share Outstanding Throughout Each Period (Continued)
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Per
Share Operating Performance (For a share outstanding throughout each
period) |
|
Ratios/Supplemental
Data |
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|
|
Ratios
to Average Net Assets of:(2) |
|
Net
Asset Value, End of Period |
|
Total
return, at NAV(3)(4) |
Total
return at Market(3)(4) |
Net
assets, end of period (000’s) |
Expenses |
Net
investment income (loss) |
Portfolio
turnover rate(4)(5) |
|
|
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|
$47.12 |
|
(0.90)% |
(0.96)% |
$37,694 |
0.68% |
(0.67)% |
14% |
$47.61 |
|
90.43% |
90.52% |
$27,374 |
0.68% |
(0.59)% |
30% |
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|
$41.39 |
|
18.40% |
18.42% |
$10,348 |
0.58% |
0.42% |
14% |
$35.10 |
|
40.94% |
40.93% |
$7,020 |
0.58% |
0.70% |
29% |
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|
$28.89 |
|
20.10%(6) |
20.17%(6) |
$46,225 |
0.65% |
3.08% |
55% |
TRUESHARES
TECHNOLOGY, AI & DEEP LEARNING ETF
TRUESHARES
ESG ACTIVE OPPORTUNITIES ETF
TRUESHARES
LOW VOLATILITY EQUITY INCOME ETF
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Adviser |
TrueMark
Investments, LLC
433
West Van Buren Street, 1150-E
Chicago,
Illinois 60607 |
Transfer
Agent and Administrator |
U.S.
Bancorp Fund Services, LLC
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Sub-Adviser |
Black
Hill Capital Partners, LLC
101
California Street
San
Francisco, California 94111 |
Sub-Adviser |
Purview
Investments, LLC
208
East 51st Street
New
York, New York 10022 |
Sub-Adviser |
Titleist
Asset Management, Ltd.
777
East Sonterra Boulevard, Suite 330
San
Antonio, Texas 78258 |
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 each Fund and
certain other additional information. A current 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 a Fund’s investments is available in the Fund’s annual and
semi-annual reports to shareholders. In the Annual
Report,
you will find a discussion of the market conditions and investment strategies
that significantly affected a Fund’s performance.
You
can obtain free copies of these documents, request other information or make
general inquiries about a Fund 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 a Fund are also available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s website at www.sec.gov;
or
•Free
of charge from the Funds’ Internet web site at www.true-shares.com;
or
(SEC
Investment Company Act File No. 811-23226)