Subject
to completion
Dated
November 21, 2023
The
information herein is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This Prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any
jurisdiction in which the offer or sale is not permitted.
Range
Cancer Therapeutics ETF
(CNCR)
Each
listed on The Nasdaq Stock Market LLC
PROSPECTUS
[
], 2023
The
U.S. Securities and Exchange Commission (“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.
Range
Cancer Therapeutics ETF
TABLE
OF CONTENTS
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FUND
SUMMARY – RANGE CANCER THERAPEUTICS ETF |
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ADDITIONAL
INFORMATION ABOUT THE FUND |
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PORTFOLIO
HOLDINGS INFORMATION |
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MANAGEMENT |
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HOW
TO BUY AND SELL SHARES |
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DIVIDENDS,
DISTRIBUTIONS, AND TAXES |
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DISTRIBUTION |
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PREMIUM/DISCOUNT
INFORMATION |
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ADDITIONAL
NOTICES |
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FINANCIAL
HIGHLIGHTS |
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FUND
SUMMARY – RANGE CANCER THERAPEUTICS
ETF |
Investment
Objective
The
Range Cancer Therapeutics ETF (the “Fund”) seeks to track the total return
performance, before fees and expenses, of the Range Cancer Therapeutics Index
(the “Index”).
Fees
and Expenses of the Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fees |
0.79% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.79% |
Expense
Example
This
Example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then continue to hold or
redeem all of your Shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund’s operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
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1
Year: |
$81 |
3
Years: |
$252 |
5
Years: |
$439 |
10
Years: |
$978 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the Example, affect the Fund’s performance. For the
fiscal year ended August 31, 2023, the Fund’s portfolio turnover rate was 86% of
the average value of its portfolio.
Principal
Investment Strategies
The
Fund uses a “passive management” (or indexing) approach to track the
performance, before fees and expenses, of the Index.
Range
Cancer Therapeutics Index
The
Index was established in 2023 by Range Fund Holdings (the “Index Provider”)
a nd
tracks the performance of a portfolio of U.S. exchange-listed pharmaceutical or
biotechnology stocks or American Depositary Receipts (“ADRs”) with a market
capitalization of more than $250 million. To be eligible for inclusion in the
Index, companies must either derive (i) 50% or more of their commercial revenue
from oncology products or (ii) 50% or more of their pipeline value (as defined
by the Index Provider) from oncology drugs in development (collectively, “Cancer
Therapeutics Companies”). Companies based in China are not eligible for
inclusion in the Index. The Index is equal-weighted at the time of its
semi-annual reconstitution and rebalance, which takes place on the third Tuesday
of June and December.
The
Fund’s Investment Strategy
The
Fund attempts to invest all, or substantially all, of its assets in the
component securities that make up the Index. Under normal circumstances, at
least 80% of the Fund’s total assets (exclusive of any collateral held from
securities lending) will be invested in the component securities of the Index.
Exchange Traded Concepts, LLC (“ETC” or the “Adviser”), the Fund’s investment
adviser, expects that, over time, the correlation between the Fund’s performance
and that of the Index, before fees and expenses, will be 95% or better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it generally will invest in all of the component securities
of the Index. However, the Fund may use a “representative sampling” strategy,
meaning it may invest in a sample of the securities in the Index whose risk,
return and other characteristics closely resemble the risk, return
and
other characteristics of the Index as a whole, when the Adviser believes it is
in the best interests of the Fund ( e.g.
,
when replicating the Index involves practical difficulties or substantial costs,
an Index constituent becomes temporarily illiquid, unavailable or less liquid,
or as a result of legal restrictions or limitations that apply to the Fund but
not to the Index).
The
Fund generally may invest up to 20% of its total assets (exclusive of any
collateral held from securities lending) in securities or other investments not
included in the Index, but which the Adviser believes will help the Fund track
the Index. For example, the Fund may invest in securities that are not
components of the Index to reflect various corporate actions and other changes
to the Index (such as reconstitutions, additions and deletions).
To
the extent the Index concentrates ( i.e.
,
holds more than 25% of its total assets) in the securities of a particular
industry or group of related industries, the Fund will concentrate its
investments to approximately the same extent as the Index.
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 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 per share (“NAV”), trading price, yield, total
return and/or ability to meet its objective. For more information about the
risks of investing in the Fund, see the section in the Fund’s Prospectus titled
“Additional Information About the Funds—Principal Investment Risks.”
•
Cancer
Therapeutics Companies Risk. The
success of Cancer Therapeutics Companies heavily depends on the outcomes of
clinical trials and obtaining necessary regulatory approvals for the development
of new drugs and other treatments for cancer-related conditions. These companies
face risks related to the failure of clinical trials, unforeseen safety issues,
delays in the regulatory approval process, or failure to obtain approvals
altogether. Cancer Therapeutics Companies are highly dependent on the
development, procurement and marketing of drugs and the protection and
exploitation of intellectual property rights. Changes in healthcare policies,
reimbursement rates, patent laws, or regulations governing drug development and
commercialization can significantly impact the industry and individual
companies. These changes may affect profitability, market access, and the
viability of certain products or technologies.
A
Cancer Therapeutics Company’s valuation can also be greatly affected if one of
its products is proven or alleged to be unsafe, ineffective or unprofitable. The
stock prices of Cancer Therapeutics Companies have been and will likely continue
to be very volatile.
The
costs associated with developing new drugs can be significant, and the results
are unpredictable. Newly developed drugs may be susceptible to product
obsolescence due to intense competition from new products and less costly
generic products. Moreover, the process for obtaining regulatory approval by the
U.S. Food and Drug Administration or other governmental regulatory authorities
is long and costly and there can be no assurance that the necessary approvals
will be obtained or maintained.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. The international operations of many Cancer
Therapeutics Companies expose them to risks associated with instability and
changes in economic and political conditions, foreign currency fluctuations,
changes in foreign regulations and other risks inherent to international
business.
•
Depositary
Receipt Risk .
Depositary
Receipts 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.
•
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, or sectors in which the Fund invests. Common
stocks are generally exposed to greater risk than other types of securities,
such as preferred stock and debt obligations, because common stockholders
generally have inferior rights to receive payment from issuers. In addition,
local, regional or global events such as war, including Russia’s invasion of
Ukraine, acts of terrorism, spread of infectious diseases or other public health
issues (such as the global pandemic caused by the COVID-19 virus), recessions,
rising inflation, or other events could have a significant negative impact on
the Fund and its investments. Such events may affect certain geographic regions,
countries,
sectors and industries more significantly than others. Such events could
adversely affect the prices and liquidity of the Fund’s portfolio securities or
other instruments and could result in disruptions in the trading markets.
•ETF
Risks.
The
Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that may act as Authorized
Participants (“APs”). In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, Shares may trade at a material discount to 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 or periods of steep market declines.
Because the Underlying Shares of certain securities held by the Fund trade on
foreign exchanges that are closed when the Fund’s primary listing exchange is
open, the Fund is likely to experience premiums and discounts greater than those
of domestic ETFs.
◦Trading. Although
Shares are listed for trading on The Nasdaq Stock Market LLC (the “Exchange”)
and may be traded on U.S. exchanges other than the Exchange, there can be no
assurance that Shares will trade with any volume, or at all, on any stock
exchange. In stressed market conditions, the liquidity of Shares may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than Shares, and this could lead to differences
between the market price of the Shares and the underlying value of those
Shares.
•
Foreign
Markets Risk .
Investments
in ADRs that provide exposure to non-U.S. securities involve certain risks that
may not be present with investments in U.S. securities. For example, the value
of non-U.S. securities may be subject to risk of decline due to foreign currency
fluctuations or to political or economic instability. Investments in ADRs also
may be subject to withholding or other taxes and may be indirectly 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.
•
Passive
Investment Risk .
The Fund is not actively managed, and would not sell shares of an equity
security due to current or projected underperformance of a security, industry,
or sector, unless that security is removed from the Index or the selling of
shares of that security is otherwise required upon a reconstitution or
rebalancing of the Index in accordance with the Index methodology.
•Sector
Risk.
To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors. The Fund’s investments will be concentrated in an industry
or group of industries to the extent the Index is so concentrated.
The
Fund may be susceptible to an increased risk of loss, including losses due to
adverse occurrences affecting the Fund more than the market as a whole, to the
extent that the Fund’s investments are concentrated in the securities of a
particular industry, group of industries, or sector. A significant portion of
the Fund’s assets will be invested in the biotechnology and pharmaceutical
industries, which expose the Fund to the risks of the following
sector:
◦Health
Care Sector Risk. Companies
in the health care sector are subject to extensive government regulation and
their profitability can be significantly affected by restrictions on government
reimbursement for medical expenses, rising costs of medical products and
services, pricing pressure (including price discounting), limited product lines,
an increased emphasis on the delivery of healthcare through outpatient services,
loss or impairment of intellectual property rights and litigation regarding
product or service liability.
•Smaller
Companies Risk.
The Fund may invest in the securities of smaller-capitalization companies. As a
result, the Fund may be more volatile than funds that invest in larger, more
established companies. The securities of smaller-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. Smaller-capitalization companies may be particularly
sensitive to changes in interest rates, government regulation, borrowing costs
and earnings.
•Tracking
Error Risk.
As
with all index funds, the performance of the Fund and the Index may differ from
each other for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by the Index. In addition,
the Fund may not be fully invested in the securities of the Index at all times
or may hold securities not included in the Index.
Performance
Effective
June 20, 2023, the Fund's name, index, investment objective and principal
investment strategy were changed. Performance for periods prior to June 20, 2023
does not reflect the Fund’s current investment objective and principal
investment strategy ;
rather, it reflects the Fund’s prior investment objective to track the total
return performance, before fees and expenses, of the Loncar Cancer Immunotherapy
Index. The
following performance information indicates some of the risks of investing in
the Fund. The bar chart shows the Fund’s performance for calendar years ended
December 31. The table illustrates how the Fund’s average annual returns for the
1-year, 5-year, and since inception periods compare with those of a broad
measure of market performance and the Fund’s prior underlying index, the Loncar
Cancer Immunotherapy Index. 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.RangeCNCR.com.
Calendar
Year Total Returns
For
the year-to-date period ended September 30, 2023, the Fund’s total return was
-20.65%.
During
the period of time shown in the bar chart, the Fund’s highest quarterly return
was 36.76% for the quarter ended June 30, 2020 and the lowest quarterly return
was -24.18% for the quarter ended March 31, 2022.
Average
Annual Total Returns
For
the Periods Ended December 31, 2022
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Range
Cancer Therapeutics ETF |
1
Year |
5
Years |
Since
Inception
(10/13/2015) |
Return
Before Taxes |
-41.81% |
-8.77% |
-6.60% |
Return
After Taxes on Distributions |
-41.81% |
-8.98% |
-6.84% |
Return
After Taxes on Distributions and Sale of Fund Shares |
-24.75% |
-6.37% |
-4.76% |
Loncar
Cancer Immunotherapy Index1
(reflects
no deduction for fees, expenses, or taxes) |
-41.22% |
-8.08% |
-5.83% |
S&P
500 Index
(reflects
no deduction for fees, expenses, or taxes) |
-18.11% |
9.42% |
11.50% |
1
Effective
June 20, 2023, the Fund's Index was changed from the Loncar Cancer Immunotherapy
Index to the Range Cancer Therapeutics Index.
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: |
Exchange
Traded Concepts, LLC |
Portfolio
Managers: |
Andrew
Serowik, Todd Alberico, Gabriel Tan, and Brian Cooper each a Portfolio
Manager of the Adviser, serve as the portfolio managers of the Fund. Mr.
Serowik, Mr. Alberico, Mr. Tan, and Mr. Cooper have been portfolio
managers of the Fund since April 2023. |
Purchase
and Sale of Shares
Shares
are listed on the Exchange, and individual Shares may only be bought and sold in
the secondary market through brokers at market prices, rather than NAV. Because
Shares trade at market prices rather than NAV, Shares may trade at a price
greater than NAV (premium) or less than NAV (discount).
The
Fund issues and redeems Shares at NAV only in large blocks known as “Creation
Units,” which only APs (typically, broker-dealers) may purchase or redeem. The
Fund generally issues and redeems Creation Units in exchange for a portfolio of
securities and/or a designated amount of U.S. cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its NAV, market price, premiums and discounts, and bid-ask spreads is
available on the Fund’s website at www.RangeCNCR.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Financial
Intermediary Compensation
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the 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 FUND
Investment
Objective
The
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 Risks
This
section provides additional information regarding the principal risks described
in the Fund Summary. As in the Fund Summary, the principal risks below are
presented in alphabetical order to facilitate finding particular risks and
comparing them with other funds. Each risk described below is considered a
“principal risk” of investing in the Fund, regardless of the order in which it
appears. Each of the factors below could have a negative impact on the Fund’s
performance and trading prices.
•
Cancer
Therapeutics Companies. The
success of Cancer Therapeutics Companies is highly dependent on the development,
procurement and marketing of drugs and other treatments for cancer-related
conditions. The values of such companies are also dependent on the development,
protection and exploitation of intellectual property rights and other
proprietary information, and profitability may be significantly affected by such
things as the expiration of patents or the loss of, or the inability to enforce,
intellectual property rights. There can be no assurance that the steps taken by
Cancer Therapeutics Companies to protect their proprietary rights will be
adequate to prevent misappropriation of their
proprietary
rights or that competitors will not independently develop products that are
substantially equivalent or superior to such companies’ products. Cancer
Therapeutics Companies also rely on trade secrets, know-how and technology,
which are not protected by patents, to maintain their competitive position. If
any trade secret, know-how or other technology not protected by a patent were
disclosed to, or independently developed by, a competitor, that company’s
business and financial condition could be materially adversely affected.
The
research and other costs associated with developing or procuring new drugs and
the related intellectual property rights can be significant, and the results of
such research and expenditures are unpredictable. There can be no assurance that
those efforts or costs will result in the development of a profitable drug.
Cancer Therapeutics Companies may be susceptible to product obsolescence and
face intense competition from new products and less costly generic products.
Moreover, the process for obtaining regulatory approval by the U.S. Food and
Drug Administration or other governmental regulatory authorities is long and
costly and there can be no assurance that the necessary approvals will be
obtained or maintained. Cancer Therapeutics Companies are also subject to laws
and regulations governing the protection of the environment and occupational
health and safety, including laws regulating air emissions, wastewater
discharges, the management and disposal of hazardous materials and wastes, and
the health and safety of employees. Failure to comply with applicable domestic
and/or foreign requirements can result in civil and criminal fines or other
enforcement actions, recall or seizure of products, total or partial suspension
of production, withdrawal of existing product approvals or clearances, refusal
to approve or clear new applications or notifications, increased quality control
costs, criminal prosecution, other penalties and, in some instances, exclusion
of participation in government sponsored programs such as Medicare, Medicaid and
other government sponsored programs.
There
can be no assurance that any individual cancer-related treatment will be
effective or approved by the applicable regulatory agency. Consequently, there
may be companies included in the Index that do not (and may never) generate
significant revenue or profit from cancer-related treatments. Additionally,
because the pharmaceutical companies included in the Index may be dependent on
the sales of drugs other than cancer-related treatments, the performance of such
companies may be adversely affected by factors unrelated to the market for
cancer-related treatments.
Cancer
Therapeutics Companies are also subject to rapid and significant technological
change and competitive forces that may make drugs obsolete or make it difficult
to raise prices and, in fact, may result in price discounting. Cancer
Therapeutics Companies may also be subject to expenses and losses from extensive
litigation based on intellectual property, product liability and similar
claims.
Cancer
Therapeutics Companies may be adversely affected by government regulation and
changes in reimbursement rates. The ability of many such companies to
commercialize current and any future products depends in part on the extent to
which reimbursement for the cost of such products and related treatments are
available from third party payors, such as Medicare, Medicaid and other
government sponsored programs, private health insurance plans and health
maintenance organizations. Third-party payors are increasingly challenging the
price and cost-effectiveness of medical products. Significant uncertainty exists
as to the reimbursement status of healthcare products, and there can be no
assurance that adequate third-party coverage will be available for companies to
obtain satisfactory price levels for their products.
The
international operations of many Cancer Therapeutics Companies expose them to
risks associated with instability and changes in economic and political
conditions, foreign currency fluctuations, changes in foreign regulations and
other risks inherent to international business. Additionally, a company’s
valuation can often be based largely on the potential or actual performance of a
limited number of products. A company’s valuation can also be greatly affected
if one of its products proves unsafe, ineffective or unprofitable. Cancer
Therapeutics Companies also may be characterized by thin capitalization and
limited markets, financial resources or personnel, as well as dependence on
wholesale distributors. The stock prices of Cancer Therapeutics Companies have
been and will likely continue to be very volatile. Some of the companies in the
Index are engaged in other lines of business unrelated to cancer-related
treatments, and they may experience problems with these lines of business which
could adversely affect their operating results. The operating results of these
companies may fluctuate as a result of these additional risks and events in the
other lines of business. In addition, a company’s ability to engage in new
activities may expose it to business risks with which it has less experience
than it has with the business risks associated with its traditional businesses.
Despite a company’s possible success in cancer-related treatments, there can be
no assurance that the other lines of business in which these companies are
engaged will not have an adverse effect on a company’s business or financial
condition.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability, the possibility that
foreign
governmental restrictions may be adopted which might adversely affect such
securities and that the selection of such securities may be more difficult
because there may be less publicly available information concerning such
non-U.S. issuers or the accounting, auditing and financial reporting standards,
practices and requirements applicable to non-U.S. issuers may differ from those
applicable to U.S. issuers.
•
Depositary
Receipt Risk.
The
F und
may hold 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. GDRs are similar to ADRs, but may be issued in bearer
form and are typically offered for sale globally and held by a foreign branch of
an international bank. The underlying issuers of certain depositary receipts,
particularly unsponsored or unregistered depositary receipts, are under no
obligation to distribute shareholder communications to the holders of such
receipts, or to pass through to them any voting rights with respect to the
deposited securities. Issuers of unsponsored depositary receipts are not
contractually obligated to disclose material information in the U.S. and,
therefore, such information may not correlate to the market value of the
unsponsored depositary receipt. The underlying securities of the ADRs and GDRs
in the Fund’s portfolio 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 securities of ADRs and GDRs trade on foreign exchanges at times when
the U.S. markets are not open for trading, the value of the securities
underlying the ADRs and GDRs 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 .
•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; local, regional or global events
such
as acts of terrorism or war, including Russia’s invasion of Ukraine; and global
or regional political, economic, public health, 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 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, and supply chain disruptions affecting the United
States and many other countries. Some sectors of the economy and individual
issuers experienced particularly large losses as a result of these disruptions.
Although the immediate effects of the COVID-19 pandemic have begun to dissipate,
global markets and economies continue to contend with the ongoing and long-term
impact of the COVID-19 pandemic and the resultant market volatility and economic
disruptions. 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 .
The
Fund is an ETF, and, as a result of an ETF’s structure, it is exposed to the
following risks:
◦APs,
Market Makers, and Liquidity Providers Concentration Risk.
The Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (i) APs exit the business or otherwise become unable to process
creation and/or redemption orders and no other APs step forward to perform these
services, or (ii) market makers and/or liquidity providers exit the business or
significantly reduce their business activities and no other entities step
forward to perform their functions.
◦Costs
of Buying or Selling Shares.
Investors buying or selling Shares in the secondary market will pay brokerage
commissions or other charges imposed by brokers, as determined by that broker.
Brokerage commissions are often a fixed amount and may be a significant
proportional cost for investors seeking to buy or sell relatively small amounts
of Shares. In addition, secondary market investors will also incur the cost of
the difference between the price at which an investor is willing to buy Shares
(the “bid” price) and the price at which an investor is willing to sell Shares
(the “ask” price). This difference in bid and ask prices is often referred to as
the “spread” or “bid-ask spread.”
The
bid-ask spread varies over time for Shares based on trading volume and market
liquidity, and the spread is generally lower if Shares have more trading volume
and market liquidity and higher if Shares have little trading volume and market
liquidity. Further, a relatively small investor base in the Fund, asset swings
in the Fund, and/or increased market volatility may cause increased bid-ask
spreads. Due to the costs of buying or selling Shares, including bid-ask
spreads, frequent trading of Shares may significantly reduce investment results
and an investment in Shares may not be advisable for investors who anticipate
regularly making small investments.
◦
Shares
May Trade at Prices Other Than NAV. As
with all ETFs, Fund shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of the shares of
the Fund will approximate the Fund’s NAV, there may be times when the market
price of the shares is more than the NAV intra-day (premium) or less than the
NAV intra-day (discount) due to supply and demand of the Fund’s shares or during
periods of market volatility. This risk is heightened in times of market
volatility or periods of steep market declines. The market price of Fund 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 the Fund shares. In times of severe market disruption,
the bid/ask spread can increase significantly. At those times, Fund shares are
most likely to be traded at a discount to NAV, and the discount is likely to be
greatest when the price of Fund shares is falling fastest, which may be the time
that you most want to sell your Fund shares. The Adviser believes that, under
normal market conditions, large market price discounts or premiums to NAV will
not be sustained because of arbitrage opportunities. Because the Underlying
Shares of ADRs held by the Fund trades on foreign exchanges that are closed when
the Fund’s primary listing exchange is open, there are likely to be deviations
between the current price of an underlying security and the security’s last
quoted price from the closed foreign market. This may result in premiums and
discounts that are greater than those experienced by domestic ETFs.
◦Trading.
Although Shares are listed for trading on the Exchange and may be listed or
traded on U.S. and non-U.S. stock exchanges other than the Exchange, there can
be no assurance that an active trading market for such Shares will develop or be
maintained. Trading in Shares may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to Exchange “circuit breaker”
rules, which temporarily halt trading on the Exchange when a decline in the
S&P 500®
Index during a single day reaches certain thresholds (e.g.,
7%, 13%, and 20%). Additional rules applicable to the Exchange may halt trading
in Shares when extraordinary volatility causes sudden, significant swings in the
market price of Shares. There can be no assurance that Shares will trade with
any volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of Shares may begin to mirror the liquidity of the Fund’s underlying
portfolio holdings, which can be significantly less liquid than Shares, and this
could lead to differences between the market price of the Shares and the
underlying value of those Shares.
•
Foreign
Markets Risk .
Investments in ADRs that provide exposure to non-U.S. companies involve certain
risks that may not be present with investments in U.S. companies. For example,
investments in non-U.S. companies 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.
Securities of non-U.S. companies may be subject to different accounting,
auditing, financial reporting and investor protection standards than those of
U.S. companies. Investments tied to non-U.S. companies may be subject to
withholding or other taxes and may be subject to additional trading, settlement,
custodial, and operational risks. 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 their Shares, the value of the securities in the Fund’s
portfolios may change on days when shareholders will not be able to purchase or
sell Shares. Conversely, Shares may trade on days when foreign exchanges are
closed. Each of these factors can make investments in the Fund more volatile and
potentially less liquid than other types of investments.
•Market
Capitalization Risk.
◦Small-Capitalization
Investing. The
securities of small-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
larger-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some small capitalization companies have limited product
lines, markets, and financial and managerial resources and tend to concentrate
on fewer geographical markets relative to larger capitalization companies. There
is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established
companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and earnings.
•
Passive
Investment Risk. The
Fund is not actively managed and would not sell shares of an equity security due
to current or projected underperformance of a security, industry or sector,
unless that security is removed from the Fund’s Index or the selling of shares
of that security is otherwise required upon a reconstitution of the Fund’s Index
in accordance with the Index methodology. The Fund invests in securities
included in, or representative of securities included in, their respective
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of such Fund.
•Sector
Risk.
To the extent the Fund invests more heavily in particular sectors of the
economy, its performance will be especially sensitive to developments that
significantly affect those sectors. The Fund’s investments will be concentrated
in an industry or group of industries to the extent the Index is so
concentrated.
The
Fund may be susceptible to an increased risk of loss, including losses due to
adverse occurrences affecting the Fund more than the market as a whole, to the
extent that the Fund’s investments are concentrated in the securities of a
particular industry, group of industries, or sector. A significant portion of
the Fund’s assets will be invested in the biotechnology and pharmaceutical
industries, which expose the Fund to the risks of the following
sector:
◦Health
Care Sector Risk.
Companies in the health care sector are subject to extensive government
regulation and their profitability can be significantly affected by restrictions
on government reimbursement for medical expenses, rising costs of medical
products and services, pricing pressure (including price discounting), limited
product lines and an increased emphasis on the delivery of healthcare through
outpatient services. Companies in the health care sector are heavily dependent
on obtaining and defending patents, which may be time consuming and costly, and
the expiration of patents may also adversely affect the profitability of these
companies. Healthcare companies are also subject to extensive litigation based
on product liability and similar claims. In addition, their products can become
obsolete due to industry innovation, changes in technologies or other market
developments. Many new products in the health care sector require significant
research and development and may be subject to regulatory approvals, all of
which may be time consuming and costly with no guarantee that any product will
come to market.
Health
care companies may rely on trade secrets, know-how, and technology that are not
protected by patents, to maintain their competitive position. If any trade
secret, know-how, or other technology not protected by a patent were disclosed
to, or independently developed by, a competitor, that company’s business and
financial condition could be materially adversely affected.
The
research and other costs associated with developing or procuring new drugs and
the related intellectual property rights can be significant, and the results of
such research and expenditures are unpredictable. There can be no assurance that
those efforts or costs will result in the development of a profitable drug.
Moreover, the process for obtaining regulatory approval by the FDA, NMPA, or
other foreign or domestic governmental regulatory authorities, as applicable, is
long and costly and there can be no assurance that the necessary approvals will
be obtained or maintained. Such companies are also subject to laws and
regulations governing the protection of the environment and occupational health
and safety, including laws regulating air emissions, wastewater discharges, the
management and disposal of hazardous materials and wastes, and the health and
safety of employees. Failure to comply with applicable domestic and/or foreign
requirements can result in civil and criminal fines or other enforcement
actions, recall or seizure of products, total or partial suspension of
production, withdrawal of existing product approvals or clearances, refusal to
approve or clear new applications or notifications, increased quality control
costs, criminal prosecution, other penalties and, in some instances, exclusion
of participation in government sponsored programs such as Medicare, Medicaid and
other government sponsored programs.
The
international operations of many healthcare companies expose them to risks
associated with instability and changes in economic and political conditions,
foreign currency fluctuations, changes in foreign regulations and other risks
inherent to international business. Additionally, a company’s valuation can
often be based largely on the potential or actual performance of a limited
number of products. A company’s valuation can also be greatly affected if one of
its products proves unsafe, ineffective or unprofitable. The stock prices of
biotech and pharmaceutical companies have been and will likely continue to be
very volatile.
•
Tracking
Error Risk .
As with all index funds, the performance of the Fund and the Index may vary
somewhat for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by the Index. In addition,
the Fund may not be fully invested in the securities of the Index at all times
or may hold securities not included in the Index. The Fund may use a
representative sampling strategy to achieve its investment objective, if the
Fund’s
Adviser believes it is in the best interest of the Fund, which generally can be
expected to produce a greater non-correlation risk.
PORTFOLIO
HOLDINGS
INFORMATION
Information
about the Fund’s daily portfolio holdings is available at www.RangeCNCR.com. A
complete description of the Fund’s policies and procedures with respect to the
disclosure of the Fund’s portfolio holdings is available in the Fund’s Statement
of Additional Information (“SAI”).
MANAGEMENT
Investment
Adviser
Exchange
Traded Concepts, LLC, serves as the investment adviser and has overall
responsibility for the general management and administration of the Funds. The
Adviser also arranges for transfer agency, custody, fund administration, and all
other non-distribution related services necessary for the Funds to operate. The
Adviser has provided investment advisory services to individual and
institutional accounts since 2009. The Adviser is an Oklahoma limited liability
company and is located at 10900 Hefner Pointe Drive, Suite 400, Oklahoma City,
Oklahoma 73120.
Under
the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of
the Funds except for the fee paid to the Adviser pursuant to the Investment
Advisory Agreement, interest charges on any borrowings, taxes, brokerage
commissions and other expenses incurred in placing orders for the purchase and
sale of securities and other investment instruments, acquired fund fees and
expenses, accrued deferred tax liability, extraordinary expenses, and
distribution fees and expenses paid by the Trust under any distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, “Excluded
Expenses”). For the services it provides to the Fund, the Fund pays the Adviser
a unified management fee, which is calculated daily and paid monthly, at an
annual rate of 0.79% of the Fund’s average daily net assets.
The
basis for the Board of Trustees’ approval of the Investment Advisory Agreement
is available in the Fund’s Semi-Annual
Report to
Shareholders for the period ended February 28, 2023.
Portfolio
Managers
Andrew
Serowik, Todd Alberico, Gabriel Tan, and Brian Cooper are jointly and primarily
responsible for the day-to-day management of the Fund’s portfolio.
Mr.
Serowik joined the Adviser from Goldman Sachs in May 2018. He began his career
at Spear, Leeds & Kellogg (“SLK”), continuing with Goldman after its
acquisition of SLK in September 2000. During his career of more than 19 years at
the combined companies, he held various roles, including managing the global
Quant ETF Strats team and One Delta ETF Strats. He designed and developed
systems for portfolio risk calculation, algorithmic ETF trading, and execution
monitoring, with experience across all asset classes. He graduated from the
University of Michigan with a Bachelor of Business Administration degree in
Finance.
Mr.
Alberico joined the Adviser in November 2020 as a Portfolio Manager. From 2005
to 2011, he worked on the ETF trading and portfolio risk management team at
Goldman Sachs. He subsequently held roles at Cantor Fitzgerald (from 2011 to
2013) and Virtu Financial (from 2013 to 2020). Mr. Alberico has worked on
several different facets of ETF trading, from lead market-making and electronic
trading to customer facing institutional business developing models for block
trading as well as transitional trades. Mr. Alberico graduated from St. John’s
University in NY with a Bachelor of Science degree in Finance.
Mr.
Tan joined the Adviser in May 2019 as an Associate Portfolio Manager and was
promoted to Portfolio Manager in December 2020. From 2013 to 2017, Mr. Tan
worked at UBS and BBR Partners where he served as a financial planning analyst
and a portfolio strategist. During his time there, he developed comprehensive
wealth management solutions focused on portfolio optimization, trust and estate
planning, and tax planning. Mr. Tan graduated from the University of North
Carolina at Chapel Hill with a Bachelor of Science in Business Administration
with a concentration in Investments, a Bachelor of Arts in Economics, and a
Minor in Chinese.
Mr.
Cooper joined the Adviser in November 2021. Previously, Mr. Cooper had roles in
trade operations for Constellation Advisers from March 2017 until April 2018 and
for QFR Capital Management from April 2018 until July 2020 and in the middle
office derivatives group of Elliot Capital Management from September 2020 until
November 2021. Prior to these roles, he spent 14 years working in various
operational roles for Falcon Management Corporation, a global macro family
office, gaining exposure to a variety of asset classes with a focus on
operations, accounting, and technology. Mr. Cooper graduated from Pennsylvania
State University in 2002 with a Bachelor of Science in Finance and a minor in
Business Law.
The
Fund’s SAI provides additional information about the Portfolio Managers’
compensation structure, other accounts managed by the Portfolio Managers, and
the Portfolio Managers’ ownership of Shares.
Index
Provider
Range
Fund Holdings (the “Sponsor”), the Index Provider for the Fund, has entered into
a licensing and expense reimbursement agreement with the Adviser, pursuant to
which the Sponsor agrees to license the use of the Fund’s underlying index to
the Adviser. The Sponsor also provides marketing support for the Fund including,
but not limited to, distributing the Fund’s materials and providing the Fund
with access to and the use of the Sponsor’s other marketing capabilities,
including communications through print and electronic media discussing the
Index. The Sponsor does not act as an investment adviser or otherwise provide
investment advice to the Fund.
HOW
TO
BUY
AND
SELL
SHARES
The
Fund issues and redeems Shares at NAV only in Creation Units. Only APs may
acquire Shares directly from the Fund, and only APs may tender their Shares for
redemption directly to the Fund, at NAV. APs must be a member or participant of
a clearing agency registered with the SEC and must execute a Participant
Agreement that has been agreed to by the Distributor (defined below), and that
has been accepted by the Fund’s transfer agent, with respect to purchases and
redemptions of Creation Units. Once created, Shares trade in the secondary
market in quantities less than a Creation Unit.
Most
investors buy and sell Shares in secondary market transactions through brokers.
Shares are listed for trading on the secondary market on the Exchange and can be
bought and sold throughout the trading day like other publicly traded
securities.
When
buying or selling Shares through a broker, you will incur customary brokerage
commissions and charges, and you may pay some or all of the 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
Fund imposes no restrictions on the frequency of purchases and redemptions of
Shares. In determining not to approve a written, established policy, the Board
evaluated the risks of market timing activities by Fund shareholders. Purchases
and redemptions by APs, who are the only parties that may purchase or redeem
Shares directly with the Fund, are an essential part of the ETF process and help
keep Share trading prices in line with NAV. As such, the Fund accommodates
frequent purchases and redemptions by APs. However, the Board has also
determined that frequent purchases and redemptions for cash may increase
tracking error and portfolio transaction costs and may lead to the realization
of capital gains. To minimize these potential consequences of frequent purchases
and redemptions, the Fund employs fair value pricing and may impose transaction
fees on purchases and redemptions of Creation Units to cover the custodial and
other costs incurred by the Fund in effecting trades. In addition, the Fund and
the Adviser reserve the right to reject any purchase order at any time.
Determination
of NAV
The
Fund’s NAV is calculated as of the scheduled close of regular trading on the New
York Stock Exchange (“NYSE”), generally 4:00 p.m. Eastern time, each day
the NYSE is open for business. The NAV is calculated by dividing the Fund’s net
assets by its Shares outstanding.
In
calculating its NAV, the Fund generally values its assets on the basis of market
quotations, last sale prices, or estimates of value furnished by a pricing
service or brokers who make markets in such instruments. If such information is
not available for a security held by the Fund or is determined to be unreliable,
the security will be valued by the Adviser at fair value pursuant to procedures
established by the Adviser and approved by the Board (as described
below).
In
calculating its NAV, the Fund generally values equity securities (including
preferred stock) traded on any recognized U.S. or non-U.S. exchange at the last
sale price or official closing price on the exchange or system on which they are
principally traded. In addition, the Fund may invest in money market funds that
are valued at their NAV per share.
Fair
Value Pricing
The
Adviser has been designated by the Board as the valuation designee for the Fund
pursuant to Rule 2a-5 under the 1940 Act. In its capacity as valuation designee,
the Adviser has adopted procedures and methodologies to fair value Fund
securities whose market prices are not “readily available” or are deemed to be
unreliable. For example, such circumstances may arise when: (i) a security has
been de-listed or has had its trading halted or suspended; (ii) a security’s
primary pricing source is unable or unwilling to provide a price; (iii) a
security’s primary trading market is closed during regular market hours; or (iv)
a security’s value is materially affected by events occurring after the close of
the security’s primary trading market. The Board has appointed the Adviser as
the Fund’s valuation designee to perform all fair valuations of the Fund’s
portfolio investments, subject to the Board’s oversight. Accordingly, the
Adviser has established procedures for its fair valuation of the Fund’s
portfolio investments. Generally, when fair valuing a security held by the Fund,
the Adviser will take into account all reasonably available information that may
be relevant to a particular valuation including, but not limited to, fundamental
analytical data regarding the issuer, information relating to the issuer’s
business, recent trades or offers of the security, general and/or specific
market conditions and the specific facts giving rise to the need to fair value
the security. Fair value determinations are made in good faith and in accordance
with the fair value methodologies established by the Adviser. Due to the
subjective and variable nature of determining the fair value of a security or
other investment, there can be no assurance that the Adviser’s fair value will
match or closely correlate to any market quotation that subsequently becomes
available or the price quoted or published by other sources. In addition, the
Fund may not be able to obtain the fair value assigned to the security upon the
sale of such security.
Investments
by Registered Investment Companies
Section 12(d)(1)
of the 1940 Act restricts investments by registered investment companies in the
securities of other investment companies, including Shares. Registered
investment companies are permitted to invest in the Fund beyond the limits set
forth in section 12(d)(1) subject to certain terms and conditions set forth in
Rule 12d1-4 under the 1940 Act, including that such investment companies enter
into an agreement with the Fund.
Delivery
of Shareholder Documents – Householding
Householding
is an option available to certain investors of the Fund. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for the Fund is available through certain broker-dealers. If
you are interested in enrolling in householding and receiving a single copy of
prospectuses and other shareholder documents, please contact your broker-dealer.
If you are currently enrolled in householding and wish to change your
householding status, please contact your broker-dealer.
DIVIDENDS,
DISTRIBUTIONS,
AND
TAXES
Dividends
and Distributions
The
Fund intends to pay out dividends, if any, and distribute any net realized
capital gains to its shareholders at least annually. The Fund will declare and
pay capital gain distributions, 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.
Taxes
The
following discussion is a summary of certain important U.S. federal income tax
considerations generally applicable to investments in the Fund. Your investment
in the Fund may have other tax implications. Please consult your tax advisor
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws. This summary does not apply
to Shares held in an IRA or other tax-qualified plans, which are generally not
subject to current tax. Transactions relating to Shares held in such accounts
may, however, be taxable at some time in the future. This summary is based on
current tax laws, which may change.
The
Tax Cuts and Jobs Act (the “Tax Act”) made significant changes to the U.S.
federal income tax rules for taxation of individuals and corporations, generally
effective for taxable years beginning after December 31, 2017. Many of the
changes applicable to individuals are temporary and only apply to taxable years
beginning after December 31, 2017 and before January 1, 2026. There are
only minor changes with respect to the specific rules applicable to a RIC under
the Internal Revenue Code of 1986, as amended, such as the Fund. The Tax Act,
however, made numerous other changes to the tax rules
that
may affect shareholders and the Fund. You are urged to consult with your own tax
advisor regarding how the Tax Act affects your investment in the Fund.
The
Fund intends to elect and qualify each year for treatment as a RIC under the
Code. If it meets certain minimum distribution requirements, a RIC is not
subject to tax at the fund level on income and gains from investments that are
timely distributed to shareholders. However, the Fund’s failure to qualify as a
RIC or to meet minimum distribution requirements would result (if certain relief
provisions were not available) in fund-level taxation and, consequently, a
reduction in income available for distribution to shareholders.
Unless
your investment in Shares is made through a tax-exempt entity or tax-advantaged
account, such as an IRA, you need to be aware of the possible tax consequences
when the Fund makes distributions, when you sell your Shares listed on the
Exchange, and when you purchase or redeem Creation Units (APs only).
Taxes
on Distributions
The
Fund intends to distribute, at least annually, substantially all of its net
investment income and net capital gains. For federal income tax purposes,
distributions of investment income are generally taxable as ordinary income or
qualified dividend income. Taxes on distributions of capital gains (if any) are
determined by how long the Fund owned the investments that generated them,
rather than how long a shareholder has owned his or her Shares. Sales of assets
held by the Fund for more than one year generally result in long-term capital
gains and losses, and sales of assets held by the Fund for one year or less
generally result in short-term capital gains and losses. Distributions of the
Fund’s net capital gain (the excess of net long-term capital gains over net
short-term capital losses) that are reported by the Fund as capital gain
dividends (“Capital Gain Dividends”) will be taxable as long-term capital gains,
which for non-corporate shareholders are subject to tax at reduced rates of up
to 20% (lower rates apply to individuals in lower tax brackets). Distributions
of short-term capital gain will generally be taxable as ordinary income.
Dividends and distributions are generally taxable to you whether you receive
them in cash or reinvest them in additional Shares.
Distributions
reported by the Fund as “qualified dividend income” are generally taxed to
non-corporate shareholders at rates applicable to long-term capital gains,
provided holding period and other requirements are met. “Qualified dividend
income” generally is income derived from dividends paid by U.S. corporations or
certain foreign corporations that are either incorporated in a U.S. possession
or eligible for tax benefits under certain U.S. income tax treaties. In
addition, dividends that the Fund received in respect of stock of certain
foreign corporations may be qualified dividend income if that stock is readily
tradable on an established U.S. securities market. Corporate shareholders may be
entitled to a dividends-received deduction for the portion of dividends they
receive from the Fund that are attributable to dividends received by the Fund
from U.S. corporations, subject to certain limitations.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from the Fund.
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.
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year. Distributions are generally
taxable even if they are paid from income or gains earned by the Fund before
your investment (and thus were included in the Shares’ NAV when you purchased
your Shares).
You
may wish to avoid investing in the Fund shortly before a dividend or other
distribution, because such a distribution will generally be taxable even though
it may economically represent a return of a portion of your investment.
If
the Fund’s distributions exceed its earnings and profits, all or a portion of
the distributions made for a taxable year may be recharacterized as a return of
capital to shareholders. A return of capital distribution will generally not be
taxable, but will reduce each shareholder’s cost basis in Shares and result in a
higher capital gain or lower capital loss when the Shares are sold. After a
shareholder’s basis in Shares has been reduced to zero, distributions in excess
of earnings and profits in respect of those Shares will be treated as gain from
the sale of the Shares.
If
you are neither a resident nor a citizen of the United States or if you are a
foreign entity, distributions (other than Capital Gain Dividends) paid to you by
the Fund will generally be subject to a U.S. withholding tax at the rate of 30%,
unless a lower treaty rate applies. Gains from the sale or other disposition of
Shares by non-U.S. shareholders generally are not subject to U.S. taxation,
unless you are a nonresident alien individual who is physically present in the
U.S. for 183 days or more per
year.
The Fund may, under certain circumstances, report all or a portion of a dividend
as an “interest-related dividend” or a “short-term capital gain dividend,” which
would generally be exempt from this 30% U.S. withholding tax, provided
certain other requirements are met. Different tax consequences may result if you
are a foreign shareholder engaged in a trade or business within the United
States or if a tax treaty applies.
The
Fund (or a financial intermediary, such as a broker, through which a shareholder
owns Shares) generally is required to withhold and remit to the U.S. Treasury a
percentage (currently 24%) of the taxable distributions and sale proceeds paid
to any shareholder who fails to properly furnish a correct taxpayer
identification number, who has underreported dividend or interest income, or who
fails to certify that the shareholder is not subject to such withholding.
Taxes
When Shares are Sold on the Exchange
Provided
that a shareholder holds Shares as capital assets, any capital gain or loss
realized upon a sale of Shares generally is treated as a long-term capital gain
or loss if Shares have been held for more than one year and as a short-term
capital gain or loss if Shares have been held for one year or less. However, any
capital loss on a sale of Shares held for six months or less is treated as
long-term capital loss to the extent of Capital Gain Dividends paid with respect
to such Shares. Any loss realized on a sale will be disallowed to the extent
Shares of the Fund are acquired, including through reinvestment of dividends,
within a 61-day period beginning 30 days before and ending 30 days after the
disposition of Shares. The ability to deduct capital losses may be limited.
The
cost basis of Shares of the Fund acquired by purchase will generally be based on
the amount paid for the Shares and then may be subsequently adjusted for other
applicable transactions as required by the Code. The difference between the
selling price and the cost basis of Shares generally determines the amount of
the capital gain or loss realized on the sale or exchange of Shares. Contact the
broker through whom you purchased your Shares to obtain information with respect
to the available cost basis reporting methods and elections for your account.
Taxes
on Purchases and Redemptions of Creation Units
An
AP having the U.S. dollar as its functional currency for U.S. federal income tax
purposes who exchanges securities for Creation Units generally recognizes a gain
or a loss. The gain or loss will be equal to the difference between the value of
the Creation Units at the time of the exchange and the exchanging AP’s aggregate
basis in the securities delivered, plus the amount of any cash paid for the
Creation Units. An AP who exchanges Creation Units for securities will generally
recognize a gain or loss equal to the difference between the exchanging AP’s
basis in the Creation Units and the aggregate U.S. dollar market value of the
securities received, plus any cash received for such Creation Units. The IRS may
assert, however, that a loss that is realized upon an exchange of securities for
Creation Units may not be currently deducted under the rules governing “wash
sales” (for an AP who does not mark-to-market its holdings), or on the basis
that there has been no significant change in economic position. APs exchanging
securities should consult their own tax advisor with respect to whether the wash
sales rule applies and when a loss might be deductible.
The
Fund may include a payment of cash in addition to, or in place of, the delivery
of a basket of securities upon the redemption of Creation Units. The Fund may
sell portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause the Fund to recognize investment income and/or capital
gains or losses that it might not have recognized if it had completely satisfied
the redemption in-kind. As a result, the Fund may be less tax efficient if it
includes such a cash payment in the proceeds paid upon the redemption of
Creation Units.
Foreign
Investments
Interest
and other income received by the Fund with respect to foreign securities may
give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. If as of the close of a taxable year more than 50% of the
value of the Fund’s assets consists of certain foreign stock or securities, 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 the Fund does not so elect, such Fund will be entitled to claim a
deduction for certain foreign taxes incurred by such Fund. The Fund (or a
financial intermediary, such as a broker, through which a shareholder owns
Shares) will notify you if it makes such an election and provide you with the
information necessary to reflect foreign taxes paid on your income tax
return.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in the Fund. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Fund
distributions and sales of Shares. Consult your personal tax advisor about the
potential tax consequences of an investment in Shares under all applicable tax
laws. For more information, please see the section entitled “Federal Income
Taxes” in the SAI.
DISTRIBUTION
The
Distributor, Quasar Distributors, LLC, a wholly-owned subsidiary of Foreside
Financial Group, LLC (d/b/a ACA Group), is a broker-dealer registered with the
SEC. The Distributor distributes Creation Units for the Fund on an agency basis
and does not maintain a secondary market in Shares. The Distributor has no role
in determining the policies of the Fund or the securities that are purchased or
sold by the Fund. The Distributor’s principal address is 111 East Kilbourn
Avenue, Suite 2200, Milwaukee, Wisconsin 53202.
The
Board has adopted a Distribution and Service Plan (the “Plan”) pursuant to Rule
12b-1 under the 1940 Act. In accordance with the Plan, the Fund is authorized to
pay an amount up to 0.25% of its average daily net assets each year for certain
distribution-related activities and shareholder services.
No
Rule 12b-1 fees are currently paid by the Fund, and there are no plans to impose
these fees. However, in the event Rule 12b-1 fees are charged in the future,
because the fees are paid out of the Fund’s 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 Shares of the Fund trade on the Exchange at a price above
( i.e.
,
at a premium) or below ( i.e.
,
at a discount) the NAV of such Fund is available, free of charge, on the Fund’s
website at www.RangeCNCR.com.
ADDITIONAL
NOTICES
Shares
are not sponsored, endorsed, or promoted by the Exchange. The Exchange makes no
representation or warranty, express or implied, to the owners of Shares or any
member of the public regarding the ability of the Fund to track the total return
performance of the Index or the ability of the Index identified herein to track
the performance of its constituent securities. The Exchange is not responsible
for, nor has it participated in, the determination of the compilation or the
calculation of the Index, nor in the determination of the timing, prices, or
quantities of Shares to be issued, nor in the determination or calculation of
the equation by which Shares are redeemable. The Exchange has no obligation or
liability to owners of Shares in connection with the administration, marketing,
or trading of the Shares.
The
Exchange does not guarantee the accuracy and/or the completeness of the Index or
the data included therein. The Exchange makes no warranty, express or implied,
as to results to be obtained by the Fund, owners of Shares, or any other person
or entity from the use of the Index or the data included therein. The Exchange
makes no express or implied warranties, and hereby expressly disclaims all
warranties of merchantability or fitness for a particular purpose with respect
to the Index or the data included therein. Without limiting any of the
foregoing, in no event shall the Exchange have any liability for any lost
profits or indirect, punitive, special, or consequential damages even if
notified of the possibility thereof.
The
Adviser, the Index Provider, and the Fund makes no representation or warranty,
express or implied, to the owners of Shares or any member of the public
regarding the advisability of investing in securities generally or in the Fund
particularly. The Index Provider is a licensor of certain trademarks, service
marks and trade names of the Fund. The Index Provider has no obligation to take
the needs of the Fund or the owners of Shares into consideration in determining,
composing, or calculating the Indexes. The Index Provider is not responsible
for, and has not participated in, the determination of the timing of, prices of,
or quantities of Shares to be issued or in the determination or calculation of
the equation by which Shares are redeemable. The Fund and the Adviser do not
guarantee the accuracy, completeness, or performance of the Indexes or the data
included therein and shall have no liability in connection with the Indexes or
Index calculations. The Index Calculation Agent maintains and calculates the
Indexes used by the Fund. The Index Calculation Agent shall have no liability
for any errors or omissions in calculating the Indexes.
FINANCIAL
HIGHLIGHTS
The
financial highlights table is intended to help you understand the Fund’s
financial performance for the Fund’s five most recent fiscal years. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Cohen & Company, Ltd.,
the Fund’s independent registered public accounting firm, whose report, along
with the Fund’s financial statements, is included in the Fund’s annual report,
which is available upon request.
Range
Cancer Therapeutics ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year
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Year
Ended August 31, |
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2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
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Net
asset value, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
beginning
of year |
$ |
15.49 |
|
|
$ |
30.65 |
|
|
$ |
26.86 |
|
|
$ |
19.54 |
|
|
$ |
25.73 |
|
|
|
|
|
|
|
|
|
|
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|
INCOME
(LOSS) FROM |
|
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|
INVESTMENT
OPERATIONS: |
|
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|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
(0.05) |
|
|
(0.06) |
|
|
(0.11) |
|
|
(0.07) |
|
|
(0.05) |
|
|
|
|
|
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|
Net
realized and unrealized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gain
(loss) on investments |
(3.39) |
|
|
(13.25) |
|
|
4.19 |
|
|
7.39 |
|
|
(6.14) |
|
|
|
|
|
|
|
Total
from investment operations |
(3.44) |
|
|
(13.31) |
|
|
4.08 |
|
|
7.32 |
|
|
(6.19) |
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|
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DISTRIBUTIONS
TO SHAREHOLDERS: |
|
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|
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|
|
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
— |
|
|
(0.61) |
|
|
(0.29) |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Tax
return of capital to shareholders |
— |
|
|
(1.24) |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
Total
distributions to shareholders |
— |
|
|
(1.85) |
|
|
(0.29) |
|
|
— |
|
|
— |
|
|
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|
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|
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|
CAPITAL
SHARE TRANSACTIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
fees |
0.00 |
|
(2) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
asset value, end of year |
$ |
12.05 |
|
|
$ |
15.49 |
|
|
$ |
30.65 |
|
|
$ |
26.86 |
|
|
$ |
19.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
return |
-22.21 |
% |
|
-45.54 |
% |
|
15.11 |
% |
|
37.47 |
% |
|
-24.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
SUPPLEMENTAL
DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets at end of year (000’s) |
$ |
9,640 |
|
|
$ |
23,234 |
|
|
$ |
44,439 |
|
|
$ |
40,293 |
|
|
$ |
34,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
RATIOS
TO AVERAGE NET ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
to average net assets |
0.79 |
% |
|
0.79 |
% |
|
0.79 |
% |
|
0.79 |
% |
|
0.79 |
% |
|
|
|
|
|
|
Net
investment income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to
average net assets |
(0.40) |
% |
|
(0.27) |
% |
|
(0.37) |
% |
|
(0.32) |
% |
|
(0.26) |
% |
|
|
|
|
|
|
Portfolio
turnover rate (3) |
86 |
% |
|
64 |
% |
|
58 |
% |
|
53 |
% |
|
58 |
% |
|
|
|
|
|
|
(1)
Calculated
based on average shares outstanding during the year.
(2)
Less
than $0.005.
(3)
Excludes
the impact of in-kind transactions.
Range
Cancer Therapeutics ETF
|
|
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|
Adviser |
Exchange
Traded Concepts, LLC
10900
Hefner Pointe Drive, Suite 400
Oklahoma
City, Oklahoma 73120 |
Sponsor |
Range
Fund Holdings
7307
SW Belevand Road
Tigard,
Oregon 97223 |
Transfer
Agent, Fund Accountant and Fund Administrator |
U.S.
Bancorp Fund Services, LLC
d/b/a
U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Distributor |
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202 |
Custodian |
U.S.
Bank National Association
1555
N. Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212 |
Legal
Counsel |
Morgan,
Lewis & Bockius LLP
1111
Pennsylvania Avenue, NW
Washington,
DC 20004 |
Independent Registered
Public Accounting Firm |
Cohen
& Company, Ltd.
342
North Water Street, Suite 830
Milwaukee,
Wisconsin 53202 |
|
|
Investors
may find more information about the Fund in the following documents:
Statement
of Additional Information: The
Fund’s SAI provides additional details about the investments and techniques of
the Fund and certain other additional information. A current SAI dated [ ], 2023
is on file with the SEC and is herein incorporated by reference into this
Prospectus. It is legally considered a part of this Prospectus.
Annual/Semi-Annual
Reports: Additional
information about the Fund’s investments 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 the Fund’s performance.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Fund by contacting the Fund at:
Range
ETF
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
1-800-617-0004
Shareholder
reports and other information about the Fund is also available:
•
Free
of charge from the SEC’s EDGAR database on the SEC’s website at
http://www.sec.gov; or
•
Free
of charge from the Fund’s Internet web site at www.RangeCNCR.com; or
(SEC
Investment Company Act File No. 811-22668)