SAN DIEGO--(BUSINESS WIRE)--The Board of Trustees of the Reality Shares ETF Trust (the "Board") has decided to liquidate and close the Reality Shares Nasdaq NexGen Economy China ETF (BCNA) and the Reality Shares Fundstrat DQM Long ETF (DQML) (each, a "Fund" and collectively, the "Funds") based on the recommendation of Reality Shares Advisors, LLC ("Reality Shares"), the Funds' investment advisor.
BCNA will cease trading on the Nasdaq Stock Market (“Nasdaq”), DQML will cease trading on the NYSE Arca, Inc. ("NYSE"), and the Funds will be closed to purchase by investors as of the close of regular trading on the Nasdaq and NYSE on October 22, 2019 (the "Closing Date"). The Funds will not accept purchase orders after the Closing Date.
Shareholders may sell their holdings in the Funds prior to the Closing Date, and customary brokerage charges may apply to these transactions. This process will result in a Fund increasing its cash holdings and, as a consequence, not tracking its underlying index, which is inconsistent with each Fund's investment objective and strategy.
On or about the Liquidation Date, each Fund will liquidate its assets and distribute cash pro rata to all remaining shareholders. From October 22, 2019, through October 29, 2019 (the "Liquidation Date"), shareholders may only be able to sell their shares to certain broker-dealers and there is no assurance that there will be a market for a Fund's shares during this time period. Between the Closing Date and the Liquidation Date, each Fund will be in the process of closing down and shareholders who have not previously redeemed or exchanged their shares. These distributions are taxable events. In addition, these payments to shareholders will include accrued capital gains and dividends, if any. As calculated on the Liquidation Date, each Fund's net asset value will reflect the costs of closing the Fund. Once the distributions are complete, the Funds will terminate.
About Reality Shares
At Reality Shares, we strive to deliver ETFs based on innovative investment methodologies. Ranging from disruptive fintech to a proprietary dividend health rating system called DIVCON™, Reality Shares is focused on offering investors access to innovative market segments.
Carefully consider the investment objective, risks, charges and expenses before investing in Reality Shares ETFs. This and other important information can be found in the Fund’s prospectus, which may be obtained by calling 855-595-0240 or by visiting us at realityshares.com. Please read the prospectus carefully before investing.
Investing involves risks, including the risk of loss of principal. For BCNA, the Fund may be more susceptible to a single adverse economic or other occurrence and may therefore be more volatile than a more diversified fund. Fund risks include Authorized Participant Concentration Risk, Blockchain Technology Risk, Depositary Receipt Risk, Emerging Markets Risk, Equity Risk, Non-Blockchain Technology Business Line Risk, Index Performance Risk, Index Tracking Error Risk, Sector Risk, Industry Concentration Risk, Market Risk, and Non-Diversification Risk. See prospectus for full description of risks, which may negatively impact the Fund’s investment strategy and could cause the Fund to lose money, cause the value of an investment in the Fund to decline over short- and long-term periods. The principal value of debt securities typically decrease when interest rates rise. This risk is usually greater for longer-term debt securities. The Fund may also invest in foreign securities, which involve political, economic, and currency risks, greater volatility, and differences in accounting methods. Special risks associated with investments in Chinese companies include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and differing auditing and legal standards the nature and extent of intervention by the Chinese government in the Chinese securities markets, and the potential unavailability of shares. Index reconstitution may result in high portfolio turnover which may result in higher transaction costs and may result in higher taxes when the Fund shares are held in a taxable account. Although the Fund’s shares are listed on an exchange, there can be no assurance that an active, liquid or otherwise orderly trading market for shares will be established or maintained. Blockchain technology is a new and developing technology protocol developed by companies in a manner for optimizing business practices. Blockchain technology is not a product or service with an individually attributable revenue stream. Blockchain technology may never develop optimized transactional processes that lead to increased economic returns to any company in which the Fund invests. There can be no assurance that blockchain technology will affect the primary lines of business in the Fund’s portfolio companies to have a positive impact on a company’s financial condition. Shares are not FDIC insured.
For DQML, Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The fund is subject to large-cap risk and may underperform other segments of the equity market or the equity market as a whole. The prices of equity securities in which the fund invests rise and fall daily. The fund's net value will generally decline when the market value of its targeted index declines. Although the Fund’s shares are listed on an exchange, there can be no assurance that an active, liquid or otherwise orderly trading market for shares will be established or maintained. The Fund may have portfolio turnover, which may cause an adverse cost impact. There may be additional portfolio turnover risk as active market trading of the fund’s shares may cause more frequent creation or redemption activities that could, in certain circumstances, increase the number of portfolio transactions as well as tracking error to the Index and as high levels of transactions increase brokerage and other transaction costs and may result in increased taxable capital gains. The fund’s use of leverage allows for investment exposure in excess of net assets, thereby magnifying volatility of returns and risk of loss. Swaps, futures, forwards and options investments may be affected by the overall market and industry- and specific factors, and may be more volatile and less liquid than other investments. Investing in derivatives is a specialized activity that involves special risks that subject the fund to significant loss potential, including when used as leverage, and may result in greater fluctuation in fund value. The Fund will invest at least 80% of its assets, other than collateral held from securities lending, if any, in component securities of the Index. The Fund may also invest up to 20% of its assets in swaps, futures, forwards, options, exchange-traded funds As a non-diversified fund, fewer investments could have a greater effect on performance. The fund is passively managed and seeks to track the performance of an index. The fund may not sell a poorly performing security unless it was removed from the index. There is no guarantee that the index will achieve positive returns. Risk exists that the index provider may not follow its methodology for index construction. Errors may result in a negative fund performance. This fund is newly organized and has limited operating history. Shares are not FDIC insured.
ETF shares are bought and sold at market price (not NAV) and are not individually redeemable. Investors buy and sell shares on a secondary market. Shares may trade at a premium or discount to the NAV. Only market makers or "authorized participants" may trade directly with the Fund(s), typically in blocks of 25,000 shares. Shares are not FDIC insured and may lose value.
Reality Shares Advisors, LLC is the Investment Advisor. ALPS Distributors, Inc. is the Distributor for the Fund and is not affiliated with Reality Shares Advisors, LLC.
RLT001128 Exp. 12/31/2019.