Form 485APOS RBB FUND, INC.

May 23, 2022 2:44 PM EDT

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Filed with the Securities and Exchange Commission on May 23, 2022

 

1933 Act Registration File No. 033-20827

1940 Act Registration File No. 811-05518

 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

 

FORM N-1A

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No.     [     ]
Post-Effective Amendment No. 290   [ X ]

 

and/or

 

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 295   [ X ]
       

(Check Appropriate Box or Boxes)

 

THE RBB FUND, INC. 

(Exact Name of Registrant as Specified in Charter)

 

615 East Michigan Street
Milwaukee, Wisconsin  53202

(Address of Principal Executive Offices, including Zip Code)

 

Registrant’s Telephone Number, including Area Code: (609) 731-6256 

Copies to:

 

SALVATORE FAIA MICHAEL P. MALLOY, ESQUIRE
The RBB Fund, Inc. Faegre Drinker Biddle & Reath LLP
615 East Michigan Street One Logan Square, Suite 2000
Milwaukee, Wisconsin  53202-5207 Philadelphia, Pennsylvania 19103-6996

 

Approximate Date of Proposed Public Offering: As soon as practicable after the Registration Statement becomes effective.

 

[     ] immediately upon filing pursuant to paragraph (b)
[     ] on (date) pursuant to paragraph (b)
[     ] 60 days after filing pursuant to paragraph (a)(1)
[     ] on (date) pursuant to paragraph (a)(1)
[ X ] 75 days after filing pursuant to paragraph (a)(2)
[     ] on (date) pursuant to paragraph (a)(2) of Rule 485.

 

If appropriate, check the following box:

 

[     ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

 

 

 

 

  

The information in this Prospectus 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 where the offer or sale is not permitted.

  

Subject to Completion

Dated May 23, 2022

 

PROSPECTUS

[ ], 2022

 

Genoa Benchmark US Treasury 30 Year Bond ETF | ([exchange]: [ticker])

 

Genoa Benchmark US Treasury 20 Year Bond ETF | ([exchange]: [ticker])

 

Genoa Benchmark US Treasury 10 Year Note ETF | ([exchange]: [ticker])

 

Genoa Benchmark US Treasury 7 Year Note ETF | ([exchange]: [ticker])

 

Genoa Benchmark US Treasury 5 Year Note ETF |([exchange]: [ticker])

 

Genoa Benchmark US Treasury 2 Year Note ETF | ([exchange]: [ticker])

 

Genoa Benchmark US Treasury 12 Month Bill ETF | ([exchange]: [ticker])

 

Genoa Benchmark US Treasury 9 Month Bill ETF | ([exchange]: [ticker])

 

Genoa Benchmark US Treasury 6 Month Bill ETF | ([exchange]: [ticker])

 

Genoa Benchmark US Treasury 3 Month Bill ETF | ([exchange]: [ticker]) 

 

 

 

Each a series of The RBB Fund, Inc.

3050 K Street NW, Suite W-201

Washington, DC 20007

 

The Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.  

 

 

TABLE OF CONTENTS

 

Summary Section 1
Genoa Benchmark US Treasury 30 Year Bond ETF 1
Genoa Benchmark US Treasury 20 Year Bond ETF 7
Genoa Benchmark US Treasury 10 Year Note ETF 13
Genoa Benchmark US Treasury 7 Year Note ETF 19
Genoa Benchmark US Treasury 5 Year Note ETF 25
Genoa Benchmark US Treasury 2 Year Note ETF 31
Genoa Benchmark US Treasury 12 Month Bill ETF 37
Genoa Benchmark US Treasury 9 Month Bill ETF 43
Genoa Benchmark US Treasury 6 Month Bill ETF 49
Genoa Benchmark US Treasury 3 Month Bill ETF 55
Additional Information about the Funds 61
Management of the Funds 67
How to Buy and Sell Shares 68
Dividends, Distributions, and Taxes 70
Distribution 73
Additional Considerations 73
Financial Highlights 75

 

No securities dealer, sales representative, or any other person has been authorized to give any information or to make any representations, other than those contained in this Prospectus or in approved sales literature in connection with the offer contained herein, and if given or made, such other information or representations must not be relied upon as having been authorized by the Genoa Benchmark US Treasury 30 Year Bond ETF, Genoa Benchmark US Treasury 20 Year Bond ETF, Genoa Benchmark US Treasury 10 Year Note ETF, Genoa Benchmark US Treasury 7 Year Note ETF, Genoa Benchmark US Treasury 5 Year Note ETF, Genoa Benchmark US Treasury 2 Year Note ETF, Genoa Benchmark US Treasury 12 Month Bill ETF, Genoa Benchmark US Treasury 9 Month Bill ETF, Genoa Benchmark US Treasury 6 Month Bill ETF, Genoa Benchmark US Treasury 3 Month Bill ETF (each a “Fund” and together the “Funds”) or The RBB Fund, Inc. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction or to any person to whom it is unlawful to make such offer.

 

 

SUMMARY SECTION – Genoa Benchmark US Treasury 30 Year Bond ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 30 Year Bond ETF (the “UST 30 Year Bond Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 30 Year Bond Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 30 Year Bond Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 30 Year Bond Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example 

 

This Example is intended to help you compare the cost of investing in the UST 30 Year Bond Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 30 Year Bond Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 30 Year Bond Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover  

 

The UST 30 Year Bond 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 UST 30 Year Bond Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 30 Year Bond Fund’s performance. No portfolio turnover rate is provided for the UST 30 Year Bond Fund because the UST 30 Year Bond Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 30 Year Bond Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 30 Year Bond Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 30 Year Bond Fund’s investment objective by investing at least 80% of the UST 30 Year Bond Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

 

The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 30 years. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 30 Year Bond Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 30 Year Bond Fund’s investment strategy is to pursue its investment objective. The UST 30 Year Bond Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 30 Year Bond Fund track the Underlying Index. The UST 30 Year Bond Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 30 Year Bond Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 30 Year Bond Fund’s Underlying Index with respect to cash that the UST 30 Year Bond Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 30 Year Bond Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 30 Year Bond Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 30 Year Bond Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 30 Year Bond Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 30 Year Bond Fund’s investments may decrease, which will cause the value of the UST 30 Year Bond Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 30 Year Bond Fund, and there can be no assurance that the UST 30 Year Bond Fund will achieve its investment objective. The UST 30 Year Bond Fund’s 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 UST 30 Year Bond Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 30 Year Bond Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 30 Year Bond Fund’s investments more than the market as a whole, to the extent that the UST 30 Year Bond Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 30 Year Bond Fund’s assets, UST 30 Year Bond Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 30 Year Bond Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 30 Year Bond Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 30 Year Bond Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 30 Year Bond Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 30 Year Bond Fund or its service providers may adversely impact and cause financial losses to the UST 30 Year Bond Fund or its shareholders. Issuers of securities in which the UST 30 Year Bond Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

 

Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 30 Year Bond 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 UST 30 Year Bond Fund has a limited number of financial institutions that are institutional investors and 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, UST 30 Year Bond Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 30 Year Bond Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 30 Year Bond Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

  

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

 

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 30 Year Bond 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 30 Year Bond Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 30 Year Bond Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 30 Year Bond Fund’s share price and increase the UST 30 Year Bond Fund’s liquidity risk, UST 30 Year Bond Fund expenses and/or taxable distributions.

 

Income Risk. The UST 30 Year Bond Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 30 Year Bond Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 30 Year Bond Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 30 Year Bond Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 30 Year Bond Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 30 Year Bond Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 30 Year Bond Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 30 Year Bond Fund receives from it but will generally affect the value of your investment in the UST 30 Year Bond Fund. Changes in interest rates may also affect the liquidity of the UST 30 Year Bond Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 30 Year Bond Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 30 Year Bond Fund’s performance will be negatively impacted. The UST 30 Year Bond Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 30 Year Bond Fund, resulting in a negative impact on the UST 30 Year Bond Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 30 Year Bond Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 30 Year Bond Fund, which may force the UST 30 Year Bond Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 30 Year Bond Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 30 Year Bond Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 30 Year Bond Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 30 Year Bond Fund.

 

Passive Investment Risk. The UST 30 Year Bond Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 30 Year Bond Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 30 Year Bond Fund generally does not attempt to invest the UST 30 Year Bond Fund’s assets in defensive positions under any market conditions, including declining markets.

 

Reinvestment Risk. Reinvestment risk is the risk that income from the UST 30 Year Bond Fund’s portfolio will decline if and when the UST 30 Year Bond Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 30 Year Bond Fund may be subject to tracking error, which is the divergence of the UST 30 Year Bond Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 30 Year Bond Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 30 Year Bond Fund, the UST 30 Year Bond Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 30 Year Bond Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 30 Year Bond Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 30 Year Bond Fund is not included because the UST 30 Year Bond Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 30 Year Bond Fund has at least one calendar year of performance. Updated performance information will be available on the UST 30 Year Bond Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser 

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 30 Year Bond Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 30 Year Bond Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 30 Year Bond Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 30 Year Bond Fund’s website at www.fm-invest.com/benchmarketfs/.

 

The UST 30 Year Bond 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 30 Year Bond Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 30 Year Bond Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 30 Year Bond Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 30 Year Bond Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 30 Year Bond Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 30 Year Bond 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 UST 30 Year Bond Fund over another investment. Any such arrangements do not result in increased UST 30 Year Bond Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.

 

SUMMARY SECTION – Genoa Benchmark US Treasury 20 Year Bond ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 20 Year Bond ETF (the “UST 20 Year Bond Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 20 Year Bond Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 20 Year Bond Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 20 Year Bond Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example

 

This Example is intended to help you compare the cost of investing in the UST 20 Year Bond Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 20 Year Bond Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 20 Year Bond Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover

 

The UST 20 Year Bond 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 UST 20 Year Bond Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 20 Year Bond Fund’s performance. No portfolio turnover rate is provided for the UST 20 Year Bond Fund because the UST 20 Year Bond Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 20 Year Bond Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 20 Year Bond Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 20 Year Bond Fund’s investment objective by investing at least 80% of the UST 20 Year Bond Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

 

The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 20 years. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 20 Year Bond Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 20 Year Bond Fund’s investment strategy is to pursue its investment objective. The UST 20 Year Bond Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 20 Year Bond Fund track the Underlying Index. The UST 20 Year Bond Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 20 Year Bond Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 20 Year Bond Fund’s Underlying Index with respect to cash that the UST 20 Year Bond Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 20 Year Bond Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 20 Year Bond Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 20 Year Bond Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 20 Year Bond Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 20 Year Bond Fund’s investments may decrease, which will cause the value of the UST 20 Year Bond Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 20 Year Bond Fund, and there can be no assurance that the UST 20 Year Bond Fund will achieve its investment objective. The UST 20 Year Bond Fund’s 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 UST 20 Year Bond Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 20 Year Bond Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 20 Year Bond Fund’s investments more than the market as a whole, to the extent that the UST 20 Year Bond Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 20 Year Bond Fund’s assets, UST 20 Year Bond Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 20 Year Bond Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 20 Year Bond Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 20 Year Bond Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 20 Year Bond Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 20 Year Bond Fund or its service providers may adversely impact and cause financial losses to the UST 20 Year Bond Fund or its shareholders. Issuers of securities in which the UST 20 Year Bond Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

 

Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 20 Year Bond 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 UST 20 Year Bond Fund has a limited number of financial institutions that are institutional investors and 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, UST 20 Year Bond Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 20 Year Bond Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 20 Year Bond Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

  

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 20 Year Bond 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 20 Year Bond Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 20 Year Bond Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 20 Year Bond Fund’s share price and increase the UST 20 Year Bond Fund’s liquidity risk, UST 20 Year Bond Fund expenses and/or taxable distributions.

 

Income Risk. The UST 20 Year Bond Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 20 Year Bond Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 20 Year Bond Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 20 Year Bond Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 20 Year Bond Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 20 Year Bond Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 20 Year Bond Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 20 Year Bond Fund receives from it but will generally affect the value of your investment in the UST 20 Year Bond Fund. Changes in interest rates may also affect the liquidity of the UST 20 Year Bond Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 20 Year Bond Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 20 Year Bond Fund’s performance will be negatively impacted. The UST 20 Year Bond Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 20 Year Bond Fund, resulting in a negative impact on the UST 20 Year Bond Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 20 Year Bond Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 20 Year Bond Fund, which may force the UST 20 Year Bond Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 20 Year Bond Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 20 Year Bond Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 20 Year Bond Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 20 Year Bond Fund.

 

Passive Investment Risk. The UST 20 Year Bond Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 20 Year Bond Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 20 Year Bond Fund generally does not attempt to invest the UST 20 Year Bond Fund’s assets in defensive positions under any market conditions, including declining markets.

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Reinvestment Risk. Reinvestment risk is the risk that income from the UST 20 Year Bond Fund’s portfolio will decline if and when the UST 20 Year Bond Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 20 Year Bond Fund may be subject to tracking error, which is the divergence of the UST 20 Year Bond Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 20 Year Bond Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 20 Year Bond Fund, the UST 20 Year Bond Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 20 Year Bond Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 20 Year Bond Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 20 Year Bond Fund is not included because the UST 20 Year Bond Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 20 Year Bond Fund has at least one calendar year of performance. Updated performance information will be available on the UST 20 Year Bond Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 20 Year Bond Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 20 Year Bond Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 20 Year Bond Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 20 Year Bond Fund’s website at www.fm-invest.com/benchmarketfs/.

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The UST 20 Year Bond 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 20 Year Bond Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 20 Year Bond Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 20 Year Bond Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 20 Year Bond Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 20 Year Bond Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 20 Year Bond 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 UST 20 Year Bond Fund over another investment. Any such arrangements do not result in increased UST 20 Year Bond Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.

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SUMMARY SECTION – Genoa Benchmark US Treasury 10 Year Note ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 10 Year Note ETF (the “UST 10 Year Note Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 10 Year Note Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 10 Year Note Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 10 Year Note Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example 

 

This Example is intended to help you compare the cost of investing in the UST 10 Year Note Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 10 Year Note Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 10 Year Note Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover  

 

The UST 10 Year Note 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 UST 10 Year Note Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 10 Year Note Fund’s performance. No portfolio turnover rate is provided for the UST 10 Year Note Fund because the UST 10 Year Note Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 10 Year Note Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 10 Year Note Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 10 Year Note Fund’s investment objective by investing at least 80% of the UST 10 Year Note Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

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The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 10 years. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 10 Year Note Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 10 Year Note Fund’s investment strategy is to pursue its investment objective. The UST 10 Year Note Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 10 Year Note Fund track the Underlying Index. The UST 10 Year Note Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 10 Year Note Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 10 Year Note Fund’s Underlying Index with respect to cash that the UST 10 Year Note Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 10 Year Note Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 10 Year Note Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 10 Year Note Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 10 Year Note Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 10 Year Note Fund’s investments may decrease, which will cause the value of the UST 10 Year Note Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 10 Year Note Fund, and there can be no assurance that the UST 10 Year Note Fund will achieve its investment objective. The UST 10 Year Note Fund’s 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 UST 10 Year Note Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 10 Year Note Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 10 Year Note Fund’s investments more than the market as a whole, to the extent that the UST 10 Year Note Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 10 Year Note Fund’s assets, UST 10 Year Note Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 10 Year Note Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 10 Year Note Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 10 Year Note Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 10 Year Note Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 10 Year Note Fund or its service providers may adversely impact and cause financial losses to the UST 10 Year Note Fund or its shareholders. Issuers of securities in which the UST 10 Year Note Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

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Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 10 Year Note 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 UST 10 Year Note Fund has a limited number of financial institutions that are institutional investors and 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, UST 10 Year Note Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 10 Year Note Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 10 Year Note Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

 

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 10 Year Note 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 10 Year Note Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 10 Year Note Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 10 Year Note Fund’s share price and increase the UST 10 Year Note Fund’s liquidity risk, UST 10 Year Note Fund expenses and/or taxable distributions.

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Income Risk. The UST 10 Year Note Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 10 Year Note Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 10 Year Note Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 10 Year Note Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 10 Year Note Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 10 Year Note Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 10 Year Note Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 10 Year Note Fund receives from it but will generally affect the value of your investment in the UST 10 Year Note Fund. Changes in interest rates may also affect the liquidity of the UST 10 Year Note Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 10 Year Note Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 10 Year Note Fund’s performance will be negatively impacted. The UST 10 Year Note Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 10 Year Note Fund, resulting in a negative impact on the UST 10 Year Note Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 10 Year Note Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 10 Year Note Fund, which may force the UST 10 Year Note Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 10 Year Note Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 10 Year Note Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 10 Year Note Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 10 Year Note Fund.

 

Passive Investment Risk. The UST 10 Year Note Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 10 Year Note Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 10 Year Note Fund generally does not attempt to invest the UST 10 Year Note Fund’s assets in defensive positions under any market conditions, including declining markets.

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Reinvestment Risk. Reinvestment risk is the risk that income from the UST 10 Year Note Fund’s portfolio will decline if and when the UST 10 Year Note Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 10 Year Note Fund may be subject to tracking error, which is the divergence of the UST 10 Year Note Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 10 Year Note Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 10 Year Note Fund, the UST 10 Year Note Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 10 Year Note Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 10 Year Note Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 10 Year Note Fund is not included because the UST 10 Year Note Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 10 Year Note Fund has at least one calendar year of performance. Updated performance information will be available on the UST 10 Year Note Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser 

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 10 Year Note Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 10 Year Note Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 10 Year Note Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 10 Year Note Fund’s website at www.fm-invest.com.

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The UST 10 Year Note 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 10 Year Note Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 10 Year Note Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 10 Year Note Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 10 Year Note Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 10 Year Note Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 10 Year Note 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 UST 10 Year Note Fund over another investment. Any such arrangements do not result in increased UST 10 Year Note Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.

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SUMMARY SECTION – Genoa Benchmark US Treasury 7 Year Note ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 7 Year Note ETF (the “UST 7 Year Note Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 7 Year Note Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 7 Year Note Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 7 Year Note Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example 

 

This Example is intended to help you compare the cost of investing in the UST 7 Year Note Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 7 Year Note Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 7 Year Note Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover  

 

The UST 7 Year Note 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 UST 7 Year Note Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 7 Year Note Fund’s performance. No portfolio turnover rate is provided for the UST 7 Year Note Fund because the UST 7 Year Note Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 7 Year Note Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 7 Year Note Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 7 Year Note Fund’s investment objective by investing at least 80% of the UST 7 Year Note Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

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The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 7 years. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 7 Year Note Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 7 Year Note Fund’s investment strategy is to pursue its investment objective. The UST 7 Year Note Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 7 Year Note Fund track the Underlying Index. The UST 7 Year Note Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 7 Year Note Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 7 Year Note Fund’s Underlying Index with respect to cash that the UST 7 Year Note Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 7 Year Note Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 7 Year Note Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 7 Year Note Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 7 Year Note Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 7 Year Note Fund’s investments may decrease, which will cause the value of the UST 7 Year Note Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 7 Year Note Fund, and there can be no assurance that the UST 7 Year Note Fund will achieve its investment objective. The UST 7 Year Note Fund’s 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 UST 7 Year Note Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 7 Year Note Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 7 Year Note Fund’s investments more than the market as a whole, to the extent that the UST 7 Year Note Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 7 Year Note Fund’s assets, UST 7 Year Note Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 7 Year Note Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 7 Year Note Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 7 Year Note Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 7 Year Note Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 7 Year Note Fund or its service providers may adversely impact and cause financial losses to the UST 7 Year Note Fund or its shareholders. Issuers of securities in which the UST 7 Year Note Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

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Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 7 Year Note 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 UST 7 Year Note Fund has a limited number of financial institutions that are institutional investors and 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, UST 7 Year Note Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 7 Year Note Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 7 Year Note Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

 

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 7 Year Note 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 7 Year Note Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 7 Year Note Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 7 Year Note Fund’s share price and increase the UST 7 Year Note Fund’s liquidity risk, UST 7 Year Note Fund expenses and/or taxable distributions.

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Income Risk. The UST 7 Year Note Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 7 Year Note Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 7 Year Note Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 7 Year Note Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 7 Year Note Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 7 Year Note Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 7 Year Note Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 7 Year Note Fund receives from it but will generally affect the value of your investment in the UST 7 Year Note Fund. Changes in interest rates may also affect the liquidity of the UST 7 Year Note Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 7 Year Note Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 7 Year Note Fund’s performance will be negatively impacted. The UST 7 Year Note Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 7 Year Note Fund, resulting in a negative impact on the UST 7 Year Note Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 7 Year Note Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 7 Year Note Fund, which may force the UST 7 Year Note Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 7 Year Note Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 7 Year Note Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 7 Year Note Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 7 Year Note Fund.

 

Passive Investment Risk. The UST 7 Year Note Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 7 Year Note Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 7 Year Note Fund generally does not attempt to invest the UST 7 Year Note Fund’s assets in defensive positions under any market conditions, including declining markets.

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Reinvestment Risk. Reinvestment risk is the risk that income from the UST 7 Year Note Fund’s portfolio will decline if and when the UST 7 Year Note Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 7 Year Note Fund may be subject to tracking error, which is the divergence of the UST 7 Year Note Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 7 Year Note Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 7 Year Note Fund, the UST 7 Year Note Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 7 Year Note Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 7 Year Note Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 7 Year Note Fund is not included because the UST 7 Year Note Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 7 Year Note Fund has at least one calendar year of performance. Updated performance information will be available on the UST 7 Year Note Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser 

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 7 Year Note Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 7 Year Note Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 7 Year Note Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 7 Year Note Fund’s website at www.fm-invest.com.

23 

 

The UST 7 Year Note 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 7 Year Note Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 7 Year Note Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 7 Year Note Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 7 Year Note Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 7 Year Note Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 7 Year Note 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 UST 7 Year Note Fund over another investment. Any such arrangements do not result in increased UST 7 Year Note Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information. 

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SUMMARY SECTION – Genoa Benchmark US Treasury 5 Year Note ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 5 Year Note ETF (the “UST 5 Year Note Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 5 Year Note Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 5 Year Note Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 5 Year Note Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example 

 

This Example is intended to help you compare the cost of investing in the UST 5 Year Note Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 5 Year Note Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 5 Year Note Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover

 

The UST 5 Year Note 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 UST 5 Year Note Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 5 Year Note Fund’s performance. No portfolio turnover rate is provided for the UST 5 Year Note Fund because the UST 5 Year Note Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 5 Year Note Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 5 Year Note Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 5 Year Note Fund’s investment objective by investing at least 80% of the UST 5 Year Note Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

25 

 

The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 5 years. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 5 Year Note Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 5 Year Note Fund’s investment strategy is to pursue its investment objective. The UST 5 Year Note Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 5 Year Note Fund track the Underlying Index. The UST 5 Year Note Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 5 Year Note Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 5 Year Note Fund’s Underlying Index with respect to cash that the UST 5 Year Note Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 5 Year Note Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 5 Year Note Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 5 Year Note Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 5 Year Note Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 5 Year Note Fund’s investments may decrease, which will cause the value of the UST 5 Year Note Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 5 Year Note Fund, and there can be no assurance that the UST 5 Year Note Fund will achieve its investment objective. The UST 5 Year Note Fund’s 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 UST 5 Year Note Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 5 Year Note Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 5 Year Note Fund’s investments more than the market as a whole, to the extent that the UST 5 Year Note Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 5 Year Note Fund’s assets, UST 5 Year Note Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 5 Year Note Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 5 Year Note Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 5 Year Note Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 5 Year Note Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 5 Year Note Fund or its service providers may adversely impact and cause financial losses to the UST 5 Year Note Fund or its shareholders. Issuers of securities in which the UST 5 Year Note Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

26 

 

Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 5 Year Note 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 UST 5 Year Note Fund has a limited number of financial institutions that are institutional investors and 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, UST 5 Year Note Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 5 Year Note Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 5 Year Note Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

  

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 5 Year Note 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). This risk is heightened in times of market volatility or periods of steep market declines.

 

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 5 Year Note Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 5 Year Note Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 5 Year Note Fund’s share price and increase the UST 5 Year Note Fund’s liquidity risk, UST 5 Year Note Fund expenses and/or taxable distributions.

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Income Risk. The UST 5 Year Note Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 5 Year Note Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 5 Year Note Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 5 Year Note Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 5 Year Note Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 5 Year Note Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 5 Year Note Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 5 Year Note Fund receives from it but will generally affect the value of your investment in the UST 5 Year Note Fund. Changes in interest rates may also affect the liquidity of the UST 5 Year Note Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 5 Year Note Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 5 Year Note Fund’s performance will be negatively impacted. The UST 5 Year Note Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 5 Year Note Fund, resulting in a negative impact on the UST 5 Year Note Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 5 Year Note Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 5 Year Note Fund, which may force the UST 5 Year Note Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 5 Year Note Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 5 Year Note Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 5 Year Note Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 5 Year Note Fund.

 

Passive Investment Risk. The UST 5 Year Note Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 5 Year Note Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 5 Year Note Fund generally does not attempt to invest the UST 5 Year Note Fund’s assets in defensive positions under any market conditions, including declining markets.

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Reinvestment Risk. Reinvestment risk is the risk that income from the UST 5 Year Note Fund’s portfolio will decline if and when the UST 5 Year Note Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 5 Year Note Fund may be subject to tracking error, which is the divergence of the UST 5 Year Note Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 5 Year Note Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 5 Year Note Fund, the UST 5 Year Note Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 5 Year Note Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 5 Year Note Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 5 Year Note Fund is not included because the UST 5 Year Note Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 5 Year Note Fund has at least one calendar year of performance. Updated performance information will be available on the UST 5 Year Note Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 5 Year Note Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 5 Year Note Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 5 Year Note Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 5 Year Note Fund’s website at www.fm-invest.com.

29 

 

The UST 5 Year Note 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 5 Year Note Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 5 Year Note Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 5 Year Note Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 5 Year Note Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 5 Year Note Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 5 Year Note 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 UST 5 Year Note Fund over another investment. Any such arrangements do not result in increased UST 5 Year Note Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.

30 

 

SUMMARY SECTION – Genoa Benchmark US Treasury 2 Year Note ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 2 Year Note ETF (the “UST 2 Year Note Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 2 Year Note Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 2 Year Note Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 2 Year Note Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example 

 

This Example is intended to help you compare the cost of investing in the UST 2 Year Note Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 2 Year Note Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 2 Year Note Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover  

 

The UST 2 Year Note 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 UST 2 Year Note Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 2 Year Note Fund’s performance. No portfolio turnover rate is provided for the UST 2 Year Note Fund because the UST 2 Year Note Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 2 Year Note Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 2 Year Note Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 2 Year Note Fund’s investment objective by investing at least 80% of the UST 2 Year Note Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

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The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 2 years. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 2 Year Note Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 2 Year Note Fund’s investment strategy is to pursue its investment objective. The UST 2 Year Note Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 2 Year Note Fund track the Underlying Index. The UST 2 Year Note Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 2 Year Note Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 2 Year Note Fund’s Underlying Index with respect to cash that the UST 2 Year Note Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 2 Year Note Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 2 Year Note Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 2 Year Note Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 2 Year Note Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 2 Year Note Fund’s investments may decrease, which will cause the value of the UST 2 Year Note Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 2 Year Note Fund, and there can be no assurance that the UST 2 Year Note Fund will achieve its investment objective. The UST 2 Year Note Fund’s 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 UST 2 Year Note Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 2 Year Note Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 2 Year Note Fund’s investments more than the market as a whole, to the extent that the UST 2 Year Note Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 2 Year Note Fund’s assets, UST 2 Year Note Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 2 Year Note Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 2 Year Note Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 2 Year Note Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 2 Year Note Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 2 Year Note Fund or its service providers may adversely impact and cause financial losses to the UST 2 Year Note Fund or its shareholders. Issuers of securities in which the UST 2 Year Note Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

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Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 2 Year Note 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 UST 2 Year Note Fund has a limited number of financial institutions that are institutional investors and 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, UST 2 Year Note Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 2 Year Note Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 2 Year Note Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

  

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 2 Year Note 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 2 Year Note Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 2 Year Note Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 2 Year Note Fund’s share price and increase the UST 2 Year Note Fund’s liquidity risk, UST 2 Year Note Fund expenses and/or taxable distributions.

33 

 

Income Risk. The UST 2 Year Note Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 2 Year Note Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 2 Year Note Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 2 Year Note Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 2 Year Note Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 2 Year Note Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 2 Year Note Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 2 Year Note Fund receives from it but will generally affect the value of your investment in the UST 2 Year Note Fund. Changes in interest rates may also affect the liquidity of the UST 2 Year Note Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 2 Year Note Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 2 Year Note Fund’s performance will be negatively impacted. The UST 2 Year Note Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 2 Year Note Fund, resulting in a negative impact on the UST 2 Year Note Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 2 Year Note Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 2 Year Note Fund, which may force the UST 2 Year Note Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 2 Year Note Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 2 Year Note Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 2 Year Note Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 2 Year Note Fund.

 

Passive Investment Risk. The UST 2 Year Note Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 2 Year Note Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 2 Year Note Fund generally does not attempt to invest the UST 2 Year Note Fund’s assets in defensive positions under any market conditions, including declining markets.

34 

 

Reinvestment Risk. Reinvestment risk is the risk that income from the UST 2 Year Note Fund’s portfolio will decline if and when the UST 2 Year Note Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 2 Year Note Fund may be subject to tracking error, which is the divergence of the UST 2 Year Note Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 2 Year Note Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 2 Year Note Fund, the UST 2 Year Note Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 2 Year Note Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 2 Year Note Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 2 Year Note Fund is not included because the UST 2 Year Note Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 2 Year Note Fund has at least one calendar year of performance. Updated performance information will be available on the UST 2 Year Note Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 2 Year Note Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 2 Year Note Fund Shares

 

Shares are listed on a national securities exchange, the Exchange, and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 2 Year Note Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 2 Year Note Fund’s website at www.fm-invest.com.

35 

 

The UST 2 Year Note 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 2 Year Note Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 2 Year Note Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 2 Year Note Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 2 Year Note Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 2 Year Note Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 2 Year Note 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 UST 2 Year Note Fund over another investment. Any such arrangements do not result in increased UST 2 Year Note Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information. 

36 

 

SUMMARY SECTION – Genoa Benchmark US Treasury 12 Month Bill ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 12 Month Bill ETF (the “UST 12 Month Bill Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 12 Month Bill Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 12 Month Bill Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 12 Month Bill Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example

 

This Example is intended to help you compare the cost of investing in the UST 12 Month Bill Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 12 Month Bill Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 12 Month Bill Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover

 

The UST 12 Month Bill 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 UST 12 Month Bill Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 12 Month Bill Fund’s performance. No portfolio turnover rate is provided for the UST 12 Month Bill Fund because the UST 12 Month Bill Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 12 Month Bill Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 12 Month Bill Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 12 Month Bill Fund’s investment objective by investing at least 80% of the UST 12 Month Bill Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

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The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 9 to 12 months. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 12 Month Bill Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 12 Month Bill Fund’s investment strategy is to pursue its investment objective. The UST 12 Month Bill Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 12 Month Bill Fund track the Underlying Index. The UST 12 Month Bill Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 12 Month Bill Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 12 Month Bill Fund’s Underlying Index with respect to cash that the UST 12 Month Bill Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 12 Month Bill Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 12 Month Bill Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 12 Month Bill Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 12 Month Bill Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 12 Month Bill Fund’s investments may decrease, which will cause the value of the UST 12 Month Bill Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 12 Month Bill Fund, and there can be no assurance that the UST 12 Month Bill Fund will achieve its investment objective. The UST 12 Month Bill Fund’s 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 UST 12 Month Bill Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 12 Month Bill Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 12 Month Bill Fund’s investments more than the market as a whole, to the extent that the UST 12 Month Bill Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 12 Month Bill Fund’s assets, UST 12 Month Bill Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 12 Month Bill Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 12 Month Bill Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 12 Month Bill Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 12 Month Bill Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 12 Month Bill Fund or its service providers may adversely impact and cause financial losses to the UST 12 Month Bill Fund or its shareholders. Issuers of securities in which the UST 12 Month Bill Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

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Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 12 Month Bill 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 UST 12 Month Bill Fund has a limited number of financial institutions that are institutional investors and 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, UST 12 Month Bill Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 12 Month Bill Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 12 Month Bill Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

 

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 12 Month Bill 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 12 Month Bill Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 12 Month Bill Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 12 Month Bill Fund’s share price and increase the UST 12 Month Bill Fund’s liquidity risk, UST 12 Month Bill Fund expenses and/or taxable distributions.

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Income Risk. The UST 12 Month Bill Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 12 Month Bill Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 12 Month Bill Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 12 Month Bill Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 12 Month Bill Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 12 Month Bill Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 12 Month Bill Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 12 Month Bill Fund receives from it but will generally affect the value of your investment in the UST 12 Month Bill Fund. Changes in interest rates may also affect the liquidity of the UST 12 Month Bill Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 12 Month Bill Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 12 Month Bill Fund’s performance will be negatively impacted. The UST 12 Month Bill Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 12 Month Bill Fund, resulting in a negative impact on the UST 12 Month Bill Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 12 Month Bill Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 12 Month Bill Fund, which may force the UST 12 Month Bill Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 12 Month Bill Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 12 Month Bill Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 12 Month Bill Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 12 Month Bill Fund.

 

Passive Investment Risk. The UST 12 Month Bill Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 12 Month Bill Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 12 Month Bill Fund generally does not attempt to invest the UST 12 Month Bill Fund’s assets in defensive positions under any market conditions, including declining markets.

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Reinvestment Risk. Reinvestment risk is the risk that income from the UST 12 Month Bill Fund’s portfolio will decline if and when the UST 12 Month Bill Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 12 Month Bill Fund may be subject to tracking error, which is the divergence of the UST 12 Month Bill Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 12 Month Bill Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 12 Month Bill Fund, the UST 12 Month Bill Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 12 Month Bill Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 12 Month Bill Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 12 Month Bill Fund is not included because the UST 12 Month Bill Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 12 Month Bill Fund has at least one calendar year of performance. Updated performance information will be available on the UST 12 Month Bill Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser 

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 12 Month Bill Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 12 Month Bill Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 12 Month Bill Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 12 Month Bill Fund’s website at www.fm-invest.com.

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The UST 12 Month Bill 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 12 Month Bill Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 12 Month Bill Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 12 Month Bill Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 12 Month Bill Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 12 Month Bill Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 12 Month Bill 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 UST 12 Month Bill Fund over another investment. Any such arrangements do not result in increased UST 12 Month Bill Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.

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SUMMARY SECTION – Genoa Benchmark US Treasury 9 Month Bill ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 9 Month Bill ETF (the “UST 9 Month Bill Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 9 Month Bill Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 9 Month Bill Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 9 Month Bill Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example 

 

This Example is intended to help you compare the cost of investing in the UST 9 Month Bill Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 9 Month Bill Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 9 Month Bill Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover  

 

The UST 9 Month Bill 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 UST 9 Month Bill Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 9 Month Bill Fund’s performance. No portfolio turnover rate is provided for the UST 9 Month Bill Fund because the UST 9 Month Bill Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 9 Month Bill Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 9 Month Bill Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 9 Month Bill Fund’s investment objective by investing at least 80% of the UST 9 Month Bill Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

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The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 6 to 9 months. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 9 Month Bill Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 9 Month Bill Fund’s investment strategy is to pursue its investment objective. The UST 9 Month Bill Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 9 Month Bill Fund track the Underlying Index. The UST 9 Month Bill Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 9 Month Bill Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 9 Month Bill Fund’s Underlying Index with respect to cash that the UST 9 Month Bill Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 9 Month Bill Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 9 Month Bill Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 9 Month Bill Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 9 Month Bill Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 9 Month Bill Fund’s investments may decrease, which will cause the value of the UST 9 Month Bill Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 9 Month Bill Fund, and there can be no assurance that the UST 9 Month Bill Fund will achieve its investment objective. The UST 9 Month Bill Fund’s 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 UST 9 Month Bill Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 9 Month Bill Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 9 Month Bill Fund’s investments more than the market as a whole, to the extent that the UST 9 Month Bill Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 9 Month Bill Fund’s assets, UST 9 Month Bill Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 9 Month Bill Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 9 Month Bill Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 9 Month Bill Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 9 Month Bill Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 9 Month Bill Fund or its service providers may adversely impact and cause financial losses to the UST 9 Month Bill Fund or its shareholders. Issuers of securities in which the UST 9 Month Bill Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

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Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 9 Month Bill 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 UST 9 Month Bill Fund has a limited number of financial institutions that are institutional investors and 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, UST 9 Month Bill Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 9 Month Bill Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 9 Month Bill Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

  

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 9 Month Bill 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 9 Month Bill Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 9 Month Bill Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 9 Month Bill Fund’s share price and increase the UST 9 Month Bill Fund’s liquidity risk, UST 9 Month Bill Fund expenses and/or taxable distributions.

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Income Risk. The UST 9 Month Bill Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 9 Month Bill Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 9 Month Bill Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 9 Month Bill Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 9 Month Bill Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 9 Month Bill Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 9 Month Bill Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 9 Month Bill Fund receives from it but will generally affect the value of your investment in the UST 9 Month Bill Fund. Changes in interest rates may also affect the liquidity of the UST 9 Month Bill Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 9 Month Bill Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 9 Month Bill Fund’s performance will be negatively impacted. The UST 9 Month Bill Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 9 Month Bill Fund, resulting in a negative impact on the UST 9 Month Bill Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 9 Month Bill Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 9 Month Bill Fund, which may force the UST 9 Month Bill Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 9 Month Bill Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 9 Month Bill Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 9 Month Bill Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 9 Month Bill Fund.

 

Passive Investment Risk. The UST 9 Month Bill Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 9 Month Bill Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 9 Month Bill Fund generally does not attempt to invest the UST 9 Month Bill Fund’s assets in defensive positions under any market conditions, including declining markets.

46 

 

Reinvestment Risk. Reinvestment risk is the risk that income from the UST 9 Month Bill Fund’s portfolio will decline if and when the UST 9 Month Bill Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 9 Month Bill Fund may be subject to tracking error, which is the divergence of the UST 9 Month Bill Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 9 Month Bill Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 9 Month Bill Fund, the UST 9 Month Bill Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 9 Month Bill Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 9 Month Bill Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 9 Month Bill Fund is not included because the UST 9 Month Bill Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 9 Month Bill Fund has at least one calendar year of performance. Updated performance information will be available on the UST 9 Month Bill Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 9 Month Bill Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 9 Month Bill Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 9 Month Bill Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 9 Month Bill Fund’s website at www.fm-invest.com.

47 

 

The UST 9 Month Bill 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 9 Month Bill Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 9 Month Bill Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 9 Month Bill Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 9 Month Bill Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 9 Month Bill Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 9 Month Bill 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 UST 9 Month Bill Fund over another investment. Any such arrangements do not result in increased UST 9 Month Bill Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information. 

48 

 

SUMMARY SECTION – Genoa Benchmark US Treasury 6 Month Bill ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 6 Month Bill ETF (the “UST 6 Month Bill Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 6 Month Bill Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 6 Month Bill Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 6 Month Bill Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example 

 

This Example is intended to help you compare the cost of investing in the UST 6 Month Bill Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 6 Month Bill Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 6 Month Bill Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover

 

The UST 6 Month Bill 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 UST 6 Month Bill Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 6 Month Bill Fund’s performance. No portfolio turnover rate is provided for the UST 6 Month Bill Fund because the UST 6 Month Bill Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 6 Month Bill Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 6 Month Bill Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 6 Month Bill Fund’s investment objective by investing at least 80% of the UST 6 Month Bill Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

49 

 

The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of 3 to 6 months. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 6 Month Bill Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 6 Month Bill Fund’s investment strategy is to pursue its investment objective. The UST 6 Month Bill Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 6 Month Bill Fund track the Underlying Index. The UST 6 Month Bill Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 6 Month Bill Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 6 Month Bill Fund’s Underlying Index with respect to cash that the UST 6 Month Bill Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 6 Month Bill Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 6 Month Bill Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 6 Month Bill Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 6 Month Bill Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 6 Month Bill Fund’s investments may decrease, which will cause the value of the UST 6 Month Bill Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 6 Month Bill Fund, and there can be no assurance that the UST 6 Month Bill Fund will achieve its investment objective. The UST 6 Month Bill Fund’s 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 UST 6 Month Bill Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 6 Month Bill Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 6 Month Bill Fund’s investments more than the market as a whole, to the extent that the UST 6 Month Bill Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 6 Month Bill Fund’s assets, UST 6 Month Bill Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 6 Month Bill Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 6 Month Bill Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 6 Month Bill Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 6 Month Bill Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 6 Month Bill Fund or its service providers may adversely impact and cause financial losses to the UST 6 Month Bill Fund or its shareholders. Issuers of securities in which the UST 6 Month Bill Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

50 

 

Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 6 Month Bill 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 UST 6 Month Bill Fund has a limited number of financial institutions that are institutional investors and 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, UST 6 Month Bill Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 6 Month Bill Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 6 Month Bill Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

  

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 6 Month Bill 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 6 Month Bill Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 6 Month Bill Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 6 Month Bill Fund’s share price and increase the UST 6 Month Bill Fund’s liquidity risk, UST 6 Month Bill Fund expenses and/or taxable distributions.

51 

 

Income Risk. The UST 6 Month Bill Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 6 Month Bill Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 6 Month Bill Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 6 Month Bill Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 6 Month Bill Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 6 Month Bill Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 6 Month Bill Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 6 Month Bill Fund receives from it but will generally affect the value of your investment in the UST 6 Month Bill Fund. Changes in interest rates may also affect the liquidity of the UST 6 Month Bill Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 6 Month Bill Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 6 Month Bill Fund’s performance will be negatively impacted. The UST 6 Month Bill Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 6 Month Bill Fund, resulting in a negative impact on the UST 6 Month Bill Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 6 Month Bill Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 6 Month Bill Fund, which may force the UST 6 Month Bill Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 6 Month Bill Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 6 Month Bill Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 6 Month Bill Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 6 Month Bill Fund.

 

Passive Investment Risk. The UST 6 Month Bill Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 6 Month Bill Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 6 Month Bill Fund generally does not attempt to invest the UST 6 Month Bill Fund’s assets in defensive positions under any market conditions, including declining markets.

52 

 

Reinvestment Risk. Reinvestment risk is the risk that income from the UST 6 Month Bill Fund’s portfolio will decline if and when the UST 6 Month Bill Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 6 Month Bill Fund may be subject to tracking error, which is the divergence of the UST 6 Month Bill Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 6 Month Bill Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 6 Month Bill Fund, the UST 6 Month Bill Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 6 Month Bill Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 6 Month Bill Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 6 Month Bill Fund is not included because the UST 6 Month Bill Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 6 Month Bill Fund has at least one calendar year of performance. Updated performance information will be available on the UST 6 Month Bill Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser 

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 6 Month Bill Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 6 Month Bill Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 6 Month Bill Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 6 Month Bill Fund’s website at www.fm-invest.com.

53 

 

The UST 6 Month Bill 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 6 Month Bill Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 6 Month Bill Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 6 Month Bill Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 6 Month Bill Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 6 Month Bill Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 6 Month Bill 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 UST 6 Month Bill Fund over another investment. Any such arrangements do not result in increased UST 6 Month Bill Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.

54 

 

SUMMARY SECTION – Genoa Benchmark US Treasury 3 Month Bill ETF

 

Investment Objective

 

The investment objective of the Genoa Benchmark US Treasury 3 Month Bill ETF (the “UST 3 Month Bill Fund”) is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the Genoa Benchmark US Treasury 3 Month Bill Index.

 

Fees and Expenses

 

This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the UST 3 Month Bill Fund (“Shares”). This table and the Example below do not include the brokerage commissions that investors may pay on their purchases and sales of UST 3 Month Bill Fund Shares.

 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees 0.15 %
Distribution (12b-1) Fees None     
Other Expenses None %
Total Annual Fund Operating Expenses 0.15 %

 

Example 

 

This Example is intended to help you compare the cost of investing in the UST 3 Month Bill Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the UST 3 Month Bill Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that: (1) your investment has a 5% return each year, and (2) the UST 3 Month Bill Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

1 Year 3 Years
$15 $48

 

Portfolio Turnover  

 

The UST 3 Month Bill 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 UST 3 Month Bill Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the UST 3 Month Bill Fund’s performance. No portfolio turnover rate is provided for the UST 3 Month Bill Fund because the UST 3 Month Bill Fund had not commenced operations prior to the date of this Prospectus.

 

Principal Investment Strategies

 

The UST 3 Month Bill Fund is a passively-managed exchange-traded fund (“ETF”) that seeks investment results, before fees and expenses, that correspond generally to the price and yield performance of the Genoa Benchmark US Treasury 3 Month Bill Index (“Underlying Index”). Under normal market conditions, F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) seeks to achieve the UST 3 Month Bill Fund’s investment objective by investing at least 80% of the UST 3 Month Bill Fund’s net assets (plus any borrowings for investment purposes) in the component securities of the Underlying Index.

55 

 

The Underlying Index

 

The Underlying Index was established by in 2022 by Genoa Asset Management LLC (the “Index Provider”). The Underlying Index is comprised of direct obligations of the U.S. Treasury, including Treasury bonds, bills and notes, and investments that provide exposure to direct obligations of the U.S. Treasury including “when-issued” securities. The Underlying Index will primarily include U.S. Treasury securities with a remaining maturity of up to 3 months. The Underlying Index may be comprised of only one or two U.S. Treasury securities at a given time. The components of the Underlying Index change whenever there is a new public sale by the U.S. Government (referred to as an “auction”) of an underlying Treasury Security (or Securities). This periodic transition to the most-recently auctioned Treasury bill, note, or bond of a stated maturity, which is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on one day.

 

The Underlying Index is calculated and administered by Solactive AG (the “Index Calculation Agent”), which is not affiliated with the UST 3 Month Bill Fund or the Adviser. Additional information regarding the Underlying Index, including its value, is available at www.fm-invest.com/benchmarketfs/index/. The UST 3 Month Bill Fund’s investment strategy is to pursue its investment objective. The UST 3 Month Bill Fund generally may invest up to 20% of its total assets in securities or other investments not included in the Underlying Index, but which the Adviser believes will help the UST 3 Month Bill Fund track the Underlying Index. The UST 3 Month Bill Fund may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that UST 3 Month Bill Fund’s Underlying Index, and not for speculative purposes. These instruments will be used primarily as a means to gain exposure to a UST 3 Month Bill Fund’s Underlying Index with respect to cash that the UST 3 Month Bill Fund is otherwise unable to invest directly in U.S. Treasury securities on a cost-effective basis (e.g., cash that remains after the UST 3 Month Bill Fund has acquired appropriate U.S. Treasury securities in the principal amounts in which they are normally traded). In this way, the Adviser will attempt to minimize the amount of UST 3 Month Bill Fund assets held in cash or cash items. Derivative instruments may also be used to adjust the average duration for a UST 3 Month Bill Fund so that it more closely approximates the duration of its Underlying Index, to facilitate trading or to reduce transaction costs.

 

The UST 3 Month Bill Fund has elected to qualify each year for treatment as a regulated investment company (“RIC”) under Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Principal Investment Risks

 

The value of the UST 3 Month Bill Fund’s investments may decrease, which will cause the value of the UST 3 Month Bill Fund’s Shares to decrease. As a result, you may lose money on your investment in the UST 3 Month Bill Fund, and there can be no assurance that the UST 3 Month Bill Fund will achieve its investment objective. The UST 3 Month Bill Fund’s 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 UST 3 Month Bill Fund, regardless of the order in which it appears. Different risks may be more significant at different times depending on market conditions or other factors.

 

Concentration Risk. The UST 3 Month Bill Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the UST 3 Month Bill Fund’s investments more than the market as a whole, to the extent that the UST 3 Month Bill Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. Cyber security risk is the risk of an unauthorized breach and access to the UST 3 Month Bill Fund’s assets, UST 3 Month Bill Fund or customer data (including private shareholder information), or proprietary information, or the risk of an incident occurring that causes the UST 3 Month Bill Fund, the Adviser, custodian, transfer agent, distributor and other service providers and financial intermediaries to suffer data breaches, data corruption or lose operational functionality or prevent the UST 3 Month Bill Fund’s investors from purchasing, redeeming or exchanging shares or receiving distributions. The UST 3 Month Bill Fund and the Adviser have limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to the UST 3 Month Bill Fund or the Adviser. Successful cyber-attacks or other cyber-failures or events affecting the UST 3 Month Bill Fund or its service providers may adversely impact and cause financial losses to the UST 3 Month Bill Fund or its shareholders. Issuers of securities in which the UST 3 Month Bill Fund invests are also subject to cyber security risks, and the value of these securities could decline if the issuers experience cyber-attacks or other cyber-failures.

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Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities will be more volatile and thus more likely to decline in price, and to a greater extent, in a rising interest rate environment than shorter-duration debt securities.

 

ETF Risk. The UST 3 Month Bill 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 UST 3 Month Bill Fund has a limited number of financial institutions that are institutional investors and 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, UST 3 Month Bill Fund Shares may trade at a material discount to net asset value (“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. These events, among others, may lead to the UST 3 Month Bill Fund Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of the UST 3 Month Bill Fund in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

  

Secondary Market Trading Risk. Although Shares are listed on a national securities exchange, [ ] (the “Exchange”), and may be traded on U.S. exchanges other than the Exchange, there can be no assurance that an active or liquid trading market for them will develop or be maintained. In addition, trading in Shares on the Exchange may be halted. During periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

  

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the UST 3 Month Bill 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). This risk is heightened in times of market volatility or periods of steep market declines.

 

Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. An unexpected increase in UST 3 Month Bill Fund redemption requests, including requests from shareholders who may own a significant percentage of the fund’s shares, which may be triggered by market turmoil or an increase in interest rates, could cause the UST 3 Month Bill Fund to sell its holdings at a loss or at undesirable prices and adversely affect the UST 3 Month Bill Fund’s share price and increase the UST 3 Month Bill Fund’s liquidity risk, UST 3 Month Bill Fund expenses and/or taxable distributions.

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Income Risk. The UST 3 Month Bill Fund’s income may decline if interest rates fall. This decline in income can occur because the UST 3 Month Bill Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the UST 3 Month Bill Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. There is no guarantee that the UST 3 Month Bill Fund’s investment results will have a high degree of correlation to those of the Underlying Index or that the UST 3 Month Bill Fund will achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the UST 3 Month Bill Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Errors in index data, index computations or the construction of the Underlying Index in accordance with its methodology may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, which may have an adverse impact on the UST 3 Month Bill Fund and its shareholders. Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance, which could cause the Underlying Index to vary from its normal or expected composition.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the UST 3 Month Bill Fund receives from it but will generally affect the value of your investment in the UST 3 Month Bill Fund. Changes in interest rates may also affect the liquidity of the UST 3 Month Bill Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the UST 3 Month Bill Fund’s yield and may increase the risk that, if followed by rising interest rates, the UST 3 Month Bill Fund’s performance will be negatively impacted. The UST 3 Month Bill Fund is subject to the risk that the income generated by its investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the UST 3 Month Bill Fund, resulting in a negative impact on the UST 3 Month Bill Fund’s performance and NAV. Any interest rate increases could cause the value of the UST 3 Month Bill Fund’s investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the UST 3 Month Bill Fund, which may force the UST 3 Month Bill Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors. The UST 3 Month Bill Fund’s NAV and market price may fluctuate significantly in response to these and other factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. As a result, an investor could lose money over short or long periods of time.

 

New Fund Risk. The UST 3 Month Bill Fund is a newly organized, management investment company with no operating history. In addition, there can be no assurance that the UST 3 Month Bill Fund will grow to, or maintain, an economically viable size, in which case the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) may determine to liquidate the UST 3 Month Bill Fund.

 

Passive Investment Risk. The UST 3 Month Bill Fund is not actively managed and may be affected by a general decline in market segments related to the Underlying Index. The UST 3 Month Bill Fund invests in securities included in, or representative of, the Underlying Index, regardless of their investment merits. The UST 3 Month Bill Fund generally does not attempt to invest the UST 3 Month Bill Fund’s assets in defensive positions under any market conditions, including declining markets.

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Reinvestment Risk. Reinvestment risk is the risk that income from the UST 3 Month Bill Fund’s portfolio will decline if and when the UST 3 Month Bill Fund reinvests the proceeds from the disposition of its portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of the Shares.

 

Tracking Error Risk. The UST 3 Month Bill Fund may be subject to tracking error, which is the divergence of the UST 3 Month Bill Fund’s performance from that of the Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in the UST 3 Month Bill Fund’s portfolio and those included in the Underlying Index, pricing differences, transaction costs incurred by the UST 3 Month Bill Fund, the UST 3 Month Bill Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the Underlying Index or the costs to the UST 3 Month Bill Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because the UST 3 Month Bill Fund incurs fees and expenses, while the Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government.

 

Performance Information: Performance information for the UST 3 Month Bill Fund is not included because the UST 3 Month Bill Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available once the UST 3 Month Bill Fund has at least one calendar year of performance. Updated performance information will be available on the UST 3 Month Bill Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Management

 

Investment Adviser 

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser.

 

Portfolio Managers

 

Team Member Primary Titles Start Date with UST 3 Month Bill Fund
Peter Baden Chief Investment Officer, Genoa Asset Management Inception in 2022
Alexander Morris President and Chief Investment Officer, F/m Investments Inception in 2022
Marcin Zdunek Director of Trading & Assistant Portfolio Manager Inception in 2022

 

Purchase and Sale of UST 3 Month Bill Fund Shares

 

Shares are listed on a national securities exchange, [ ] (the “Exchange”), and investors can only buy and sell Shares through brokers or dealers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) or less than NAV (discount). An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase shares (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, including information on the UST 3 Month Bill Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is available on the UST 3 Month Bill Fund’s website at www.fm-invest.com.

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The UST 3 Month Bill 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. Creation Units generally consist of 25,000 Shares, though this may change from time to time. The UST 3 Month Bill Fund generally issues and redeems Creation Units in exchange for a portfolio of securities closely approximating the holdings of the UST 3 Month Bill Fund (the “Deposit Securities”) and/or a designated amount of U.S. cash.

 

Tax Information

 

UST 3 Month Bill Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains (or a combination), unless your investment is made through an individual retirement account (“IRA”) or other tax-advantaged account. Distributions on investments made through tax-deferred arrangements may be taxed later upon withdrawal of assets from those accounts.

 

Financial Intermediary Compensation

 

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank) (an “Intermediary”), the UST 3 Month Bill Fund’s investment adviser or its affiliates may pay Intermediaries for certain activities related to the UST 3 Month Bill Fund, including participation in activities that are designed to make Intermediaries more knowledgeable about exchange traded products, including the UST 3 Month Bill 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 UST 3 Month Bill Fund over another investment. Any such arrangements do not result in increased UST 3 Month Bill Fund expenses. Ask your salesperson or visit the Intermediary’s website for more information.

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ADDITIONAL INFORMATION ABOUT THE FUNDS

 

Investment Objective

 

The investment objective of each Fund is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of each Fund’s benchmark (each a “Underlying Index” and more than one constituting “Underlying Indices”). Each Fund’s investment objective has been adopted as a non-fundamental investment policy and may be changed without shareholder approval upon 60 days’ written notice to shareholders.

 

Fund Underlying Index
UST 30 Year Bond Fund Genoa Benchmark US Treasury 30 Year Bond Index
UST 20 Year Bond Fund Genoa Benchmark US Treasury 20 Year Bond Index
UST 10 Year Note Fund Genoa Benchmark US Treasury 10 Year Note Index
UST 7 Year Note Fund Genoa Benchmark US Treasury 7 Year Note Index
UST 5 Year Note Fund Genoa Benchmark US Treasury 5 Year Note Index
UST 2 Year Note Fund Genoa Benchmark US Treasury 2 Year Note Index
UST 12 Month Bill Fund Genoa Benchmark US Treasury 12 Month Bill Index
UST 9 Month Bill Fund Genoa Benchmark US Treasury 9 Month Bill Index
UST 6 Month Bill Fund Genoa Benchmark US Treasury 6 Month Bill Index
UST 3 Month Bill Fund Genoa Benchmark US Treasury 3 Month Bill Index

 

Additional Principal Risk Information

 

The value of the Funds’ investments may decrease, which will cause the value of the Fund’s Shares to decrease. As a result, you may lose money on your investment in any of the Funds, and there can be no assurance that any of the Funds will achieve its investment objective. An investment in the Funds is subject to one or more of the principal risks discussed below.

 

Concentration Risk. Any of the Funds may be susceptible to an increased risk of loss, including losses due to adverse events that affect the Fund’s investments more than the market as a whole, to the extent that the Fund’s investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

 

Cyber Security Risk. With the increased use of technologies such as the internet to conduct business, any of the Fund is susceptible to operational, information security and related risks. In general, cyber incidents can result from deliberate attacks or unintentional events. Cyber-attacks include, but are not limited to, gaining unauthorized access to digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (i.e., efforts to make network services unavailable to intended users). Cyber security failures or breaches by the Adviser and other service providers (including, but not limited to, any of the Funds’ accountant, custodian, transfer agent and administrator), and the issuers of securities in which the Fund invests, have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with any of the Funds’ ability to calculate its NAV, impediments to trading, the inability of Fund shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the Adviser has established business continuity plans in the event of, and risk management systems to prevent, such cyber-attacks, there are inherent limitations in such plans and systems including the possibility that certain risks have not been identified. Furthermore, the Funds cannot control the cyber security plans and systems put in place by service providers to the Funds and issuers in which the Funds invest. The Funds and their shareholders could be negatively impacted as a result.

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Duration Risk. Duration is a measure of the price sensitivity of a debt security or portfolio to interest rate changes. Duration risk is the risk that longer-duration debt securities are more volatile and thus more likely to decline in price, and to a greater extent, than shorter-duration debt securities, in a rising interest-rate environment. “Effective duration” attempts to measure the expected percentage change in the value of a bond or portfolio resulting from a change in prevailing interest rates. The change in the value of a bond or portfolio can be approximated by multiplying its duration by a change in interest rates. For example, if a bond has an effective duration of three years, a 1% increase in general interest rates would be expected to cause the bond’s value to decline about 3% while a 1% decrease in general interest rates would be expected to cause the bond’s value to increase 3%. The duration of a debt security may be equal to or shorter than the full maturity of a debt security.

 

ETF Risk. Each of the Funds is an ETF, and, as a result of an ETF’s structure, the Funds are exposed to the following risks:

 

Authorized Participants, Market Makers and Liquidity Providers Concentration Risk. Each Fund may have 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. These events, among others, may lead to a Fund’s Shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than the NAV when you buy Shares of any of the Funds in the secondary market, and you may receive less (or more) than NAV when you sell those Shares in the secondary market. A diminished market for an ETF’s shares substantially increases the risk that a shareholder may pay considerably more or receive significantly less than the underlying value of the ETF shares bought or sold.

 

Secondary Market Trading Risk. Although the Funds’ 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 Shares will develop or be maintained. Trading in the Funds’ 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. 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 the Funds’ Shares may begin to mirror the liquidity of each Fund’s underlying holdings, which can be significantly less liquid than each Fund’s Shares. In addition, during periods of market stress, 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). This risk is heightened in times of market volatility or periods of steep market declines.

 

Shares May Trade at Prices Other Than NAV Risk. As with all ETFs, Shares of the Funds may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate each 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. The market price of Shares during the trading day, like the price of any exchange-traded security, includes a “bid/ask” spread charged by the exchange specialist, market makers or other participants that trade Shares. In times of severe market disruption, the bid/ask spread can increase significantly. At those times, Shares are most likely to be traded at a discount to NAV, and the discount is likely to be greatest when the price of Shares is falling fastest, which may be the time that you most want to sell your Shares. The Adviser believes that, under normal market conditions, large market price discounts or premiums to NAV will not be sustained because of arbitrage opportunities.

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Fixed-Income Market Risk. The market value of a fixed-income security may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The fixed-income securities market can be susceptible to increases in volatility and decreases in liquidity. Liquidity can decline unpredictably in response to overall economic conditions or credit tightening. Increases in volatility and decreases in liquidity may be caused by a rise in interest rates (or the expectation of a rise in interest rates), which currently are at or near historic lows in the United States and in other countries. During periods of reduced market liquidity, any of the Funds may not be able to readily sell fixed-income securities at prices at or near their perceived value. If a Fund needed to sell large blocks of fixed-income securities to meet shareholder redemption requests or to raise cash, those sales could further reduce the prices of such securities. An unexpected increase in a Fund’s redemption requests, including requests from shareholders who may own a significant percentage of a Fund’s Shares, which may be triggered by market turmoil or an increase in interest rates, could cause a Fund to sell its holdings at a loss or at undesirable prices and adversely affect that Fund’s share price and increase that Fund’s liquidity risk, fund expenses and/or taxable distributions. Economic and other market developments can adversely affect fixed-income securities markets. Regulations and business practices, for example, have led some financial intermediaries to curtail their capacity to engage in trading (i.e., “market making”) activities for certain fixed-income securities, which could have the potential to decrease liquidity and increase volatility in the fixed-income securities markets. Policy and legislative changes worldwide are affecting many aspects of financial regulation. The impact of these changes on the markets, and the practical implications for market participants, may not be fully known for some time.

 

Income Risk. The Funds’ income may decline if interest rates fall. This decline in income can occur because the Fund may subsequently invest in lower yielding bonds as bonds in its portfolio mature, are near maturity or are called, bonds in the Underlying Index are substituted, or the Fund otherwise needs to purchase additional bonds.

 

Index Related Risk. The Funds seeks to achieve a return that corresponds generally to the price and yield performance, before fees and expenses, of each Fund’s Underlying Index as published by the sponsor (Solactive AG or the “Index Provider”). There is no assurance that the Index Provider or any agents that may act on its behalf will compile the Underlying Index accurately, or that the Underlying Index will be determined, composed or calculated accurately. While the Index Provider provides descriptions of what each Underlying Index is designed to achieve, neither the Index Provider nor its agents provide any warranty or accept any liability in relation to the quality, accuracy or completeness of the Underlying Indices or its related data, and they do not guarantee that the Underlying Indices will be in line with the Index Provider’s methodology. The Funds’ strategies as described in this Prospectus are to manage each Fund consistently with that Fund’s Underlying Index. The Funds do not provide any warranty or guarantee against the Index Provider’s or any agent’s errors. Errors in respect of the quality, accuracy and completeness of the data used to compile the Underlying Index may occur from time to time and may not be identified and corrected by the Index Provider for a period of time or at all, particularly where the indices are less commonly used as benchmarks by funds or managers. Such errors may negatively or positively impact the Funds and their shareholders. For example, during a period where an Underlying Index contains incorrect constituents, the corresponding Fund would have market exposure to such constituents and would be underexposed to that Underlying Index’s other constituents. Shareholders should understand that any gains from Index Provider errors will be kept by corresponding Fund and its shareholders and any losses or costs resulting from Index Provider errors will be borne by the corresponding Fund and its shareholders.

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Unusual market conditions may cause the Index Provider to postpone a scheduled rebalance to an Underlying Index, which could cause that Underlying Index to vary from its normal or expected composition. The postponement of a scheduled rebalance in a time of market volatility could mean that constituents of that Underlying Index that would otherwise be removed at rebalance due to changes in market value, issuer credit ratings, or other reasons may remain, causing the performance and constituents of that Underlying Index to vary from those expected under normal conditions. Apart from scheduled rebalances, the Index Provider or its agents may carry out additional ad hoc rebalances to the Underlying Indices due to reaching certain weighting constraints, unusual market conditions or corporate events or, for example, to correct an error in the selection of index constituents. When an Underlying Index is rebalanced and the corresponding Fund in turn rebalances its portfolio to attempt to increase the correlation between that Fund’s portfolio and its Underlying Index, any transaction costs and market exposure arising from such portfolio rebalancing will be borne directly by that Fund and its shareholders. Therefore, errors and additional ad hoc rebalances carried out by the Index Provider or its agents to the Underlying Indices may increase the costs to and the tracking error risk of the Fund.

 

Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt instruments tend to fall, and if interest rates fall, the values of debt instruments tend to rise. Changes in the value of a debt instrument usually will not affect the amount of income the Funds receive from it but will generally affect the value of your investment in the Funds. Changes in interest rates may also affect the liquidity of the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Very low or negative interest rates may impact the Funds’ yield(s) and may increase the risk that, if followed by rising interest rates, the Funds’ performance will be negatively impacted. The Funds are subject to the risk that the income generated by their investments may not keep pace with inflation. Actions by governments and central banking authorities can result in increases or decreases in interest rates. Such actions may negatively affect the value of debt instruments held by the Funds, resulting in a negative impact on the Funds’ performance and NAV. Any interest rate increases could cause the value of the Funds’ investments in debt instruments to decrease. Rising interest rates may prompt redemptions from the Fund, which may force the Fund to sell investments at a time when it is not advantageous to do so, which could result in losses.

 

Market Risk. The trading prices of securities and other instruments fluctuate in response to a variety of factors including economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. The Funds’ NAVs and market prices are based upon the market’s perception of value and is not necessarily an objective measure of an investment’s value. There is no assurance that any of the Funds will realize its investment objective, and an investment in any of the Funds is not, by itself, a complete or balanced investment program. You could lose money on your investment in any of the Funds, or any of the Funds could underperform other investments.

 

Periods of unusually high financial market volatility and restrictive credit conditions, at times limited to a particular sector or geographic area, have occurred in the past and may be expected to recur in the future. Some countries, including the United States, have adopted or have signaled protectionist trade measures, relaxation of the financial industry regulations that followed the financial crisis, and/or reductions to corporate taxes. The scope of these policy changes is still developing, but the equity and debt markets may react strongly to expectations of change, which could increase volatility, particularly if a resulting policy runs counter to the market’s expectations. The outcome of such changes cannot be foreseen at the present time. In addition, geopolitical and other risks, including environmental and public health risks, may add to instability in the world economy and markets generally. As a result of increasingly interconnected global economies and financial markets, the value and liquidity of the Funds’ investments may be negatively affected by events impacting a country or region, regardless of whether any of the Funds invests in issuers located in or with significant exposure to such country or region.

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The continuing spread of an infectious respiratory illness caused by a novel strain of coronavirus (known as COVID-19) has caused volatility, severe market dislocations and liquidity constraints in many markets and may adversely affect the Fund’s investments and operations. The outbreak was first detected in December 2019 and subsequently spread globally. The transmission of COVID-19 and efforts to contain its spread have resulted in international and domestic travel restrictions and disruptions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, quarantines, event and service cancellations or interruptions, disruptions to business operations (including staff reductions), supply chains and consumer activity, as well as general concern and uncertainty that has negatively affected the economic environment. These disruptions have led to instability in the marketplace, including stock and credit market losses and overall volatility. The impact of COVID-19, and other infectious illness outbreaks, epidemics or pandemics that may arise in the future, could adversely affect the economies of many nations or the entire global economy, the financial performance of individual issuers, borrowers and sectors and the health of the markets generally in potentially significant and unforeseen ways. Health crises caused by the recent outbreak may heighten other pre-existing political, social and economic risks in a country or region. In the event of a pandemic or an outbreak, there can be no assurance that the Funds and their service providers will be able to maintain normal business operations for an extended period of time or will not lose the services of key personnel on a temporary or long-term basis due to illness or other reasons. Although vaccines for COVID-19 are becoming more widely available, the full impacts of a pandemic or disease outbreaks are unknown and the pace of recovery may vary from market to market, resulting in a high degree of uncertainty for potentially extended periods of time.

 

New Fund Risk. The Funds are newly organized, diversified management investment companies with no operating history. As a result, prospective investors have a limited track record on which to base their investment decision. In addition, there can be no assurance that the Fund will grow to, or maintain, an economically viable size, in which case the Board of the Company may determine to liquidate any or all of the Funds. Like other new funds, large inflows and outflows may impact any of the Funds’ market exposure for limited periods of time. This impact may be positive or negative, depending on the direction of market movement during the period affected. If any of the Funds fails to attract a large amount of assets, shareholders of the Fund may incur higher expenses as the Fund’s fixed costs would be allocated over a smaller number of shareholders.

 

Passive Investment Risk. The Funds are not actively managed and the Adviser will not sell shares of a security due to current or projected underperformance of a security, industry, or sector, unless that security is removed from an Underlying Index or the selling of shares of that security is otherwise required upon a reconstitution of an Underlying Index as addressed in the Index methodology. The Funds invest in securities included in, or representative of securities included in, the Underlying Indices, regardless of their investment merits. The Funds do not take defensive positions under any market conditions, including conditions that are adverse to the performance of the Funds.

 

Reinvestment Risk. Reinvestment risk is the risk that income from the Funds’ portfolios will decline if and when the Fund reinvests the proceeds from the disposition of portfolio securities at market interest rates that are below the portfolio’s current earnings rate. A decline in income could negatively affect the market price of a Fund’s Shares.

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Tracking Error Risk. The Funds may be subject to tracking error, which is the divergence of a Fund’s performance from that of its Underlying Index. Tracking error may occur because of differences between the securities and other instruments held in a Fund’s portfolio and those included in the corresponding Underlying Index, pricing differences, transaction costs incurred by the a Fund, a Fund’s holding of uninvested cash, differences in timing of the accrual of or the valuation of distributions, the requirements to maintain pass-through tax treatment, portfolio transactions carried out to minimize the distribution of capital gains to shareholders, acceptance of custom baskets, changes to the an Underlying Index or the costs to a Fund of complying with various new or existing regulatory requirements. This risk may be heightened during times of increased market volatility or other unusual market conditions. Tracking error also may result because a Fund incurs fees and expenses, while its Underlying Index does not.

 

U.S. Government Obligations Risk. While U.S. treasury obligations are backed by the “full faith and credit” of the U.S. Government, such securities are nonetheless subject to risk. U.S. Government obligations are subject to low but varying degrees of credit risk and are still subject to interest rate and market risk. From time to time, uncertainty regarding congressional action to increase the statutory debt ceiling could: i) increase the risk that the U.S. Government may default on payments on certain U.S. Government securities; ii) cause the credit rating of the U.S. Government to be downgraded or increase volatility in both stock and bond markets; iii) result in higher interest rates; iv) reduce prices of U.S. Treasury securities; and/or v) increase the costs of certain kinds of debt. U.S. Government obligations may be adversely affected by a default by, or decline in the credit quality of, the U.S. Government. In the past, U.S. sovereign credit has experienced downgrades, and there can be no guarantee that it will not be downgraded in the future. Further, if a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of the Fund will be adversely impacted.

 

Additional Information About Non-Principal Risks of the Funds. This section provides additional information regarding certain non-principal risks of investing in the Fund. The risks listed below could have a negative impact on any of the Funds’ performance and trading prices.

 

Costs of Buying or Selling Shares Risk. Investors buying or selling Shares of a Fund 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 the Funds’ 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 a Fund’s Shares (the “bid” price) and the price at which an investor is willing to sell a Fund’s 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 a Fund’s Shares based on trading volume and market liquidity, and is generally lower if a Fund’s Shares have more trading volume and market liquidity and higher if a Fund’s Shares have little trading volume and market liquidity. Further, a relatively small investor base in a Fund, asset swings in a Fund and/or increased market volatility may cause increased bid/ask spreads. Due to the costs of buying or selling a Fund’s Shares, including bid/ask spreads, frequent trading of a Fund’s Shares may significantly reduce investment results and an investment in a Fund’s Shares may not be advisable for investors who anticipate regularly making small investments.

 

Legal and Regulatory Change Risk. The regulatory environment for investment companies is evolving, and changes in regulation may adversely affect the value of any of the Funds’ investments and each Fund’s ability to pursue its trading strategy. In addition, the securities markets are subject to comprehensive statutes and regulations. The SEC and other regulators and self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies. The effect of any future regulatory change on the Funds could be substantial and adverse.

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Regulated Investment Company (“RIC”) Compliance Risk. Each of the Funds has elected to be, and intends to qualify each year for treatment as, a RIC under Subchapter M of Subtitle A, Chapter 1, of the Code. To continue to qualify for federal income tax treatment as a RIC, a Fund must meet certain source-of-income, asset diversification and annual distribution requirements. If for any taxable year a Fund fails to qualify for the special federal income tax treatment afforded to RICs, all of that Fund’s taxable income will be subject to federal income tax at regular corporate rates (without any deduction for distributions to its shareholders) and its income available for distribution will be reduced. Under certain circumstances, a Fund could cure a failure to qualify as a RIC, but in order to do so, that Fund could incur significant Fund-level taxes and could be forced to dispose of certain assets.

 

Disclosure of Portfolio Holdings

 

The Funds’ entire portfolio holdings are publicly disseminated each day the Funds are open for business through the Funds’ website located at www.fm-invest.com/benchmarketfs/ and may be made available through financial reporting and news services or any other medium, including publicly available internet web sites. Additional information regarding the Funds’ policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available in the Funds’ Statement of Additional Information (“SAI”).

 

MANAGEMENT OF THE FUNDS

 

The Board of Company, of which the Funds are each a series, is responsible for supervising the operations and affairs of the Funds. The Adviser is responsible for the daily management and administration of the Funds’ operations.

 

Investment Adviser

 

The investment adviser for each Fund is F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”). The Adviser is located at 3050 K Street NW, Suite W-201, Washington, DC 20007. The Adviser is controlled by F/m Acceleration, LLC, a Delaware limited liability company. Subject to the overall supervision of the Board, the Adviser manages the overall investment operations of each Fund in accordance with the Fund’s investment objective and policies and formulates a continuing investment strategy for the Fund pursuant to the terms of investment advisory agreement between the Company and the Adviser (the “Advisory Agreement”). Under the terms of the Advisory Agreement, each Fund pays the Adviser a unitary management fee that is computed and paid monthly at an annual rate of 0.15% of each Fund’s average daily net assets during the month. From the unitary management fee, the Adviser pays most of the expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services. However, under the Advisory Agreement, the Adviser is not responsible for interest expenses, brokerage commissions and other trading expenses, taxes and other extraordinary costs such as litigation and other expenses not incurred in the ordinary course of business. No information regarding the advisory fees paid by any of the Funds is currently available, as none of the Funds had not commenced operations prior to the date of this Prospectus.

 

A discussion regarding the Board’s approval of the Funds’ Advisory Agreement and the factors the Board considered with respect to its approval will be available in the Funds’ next annual or semi-annual report to shareholders.

 

The Adviser’s Investment Management Team

 

Peter Baden, Alexander Morris, and Marcin Zdunek serve as each Fund’s portfolio managers and are jointly responsible for the portfolio management decisions for the Funds.

 

Peter Baden

 

Peter Baden is the Chief Investment Officer of the Genoa Asset Management, an affiliated entity of the Adviser, and Portfolio Manager for the firm’s taxable bond strategies. Mr. Baden has over 25 years of investment management experience, encompassing portfolio management, mergers and acquisitions, financial institutions, and credit analysis. Prior to joining the Adviser and its predecessor firm, Mr. Baden worked on the mergers and acquisitions team at Star Banc (now US Bancorp) acquiring and integrating multiple banks and savings and loan associations. In the trust department, he managed the REIT allocation for a mutual fund and analyzed US and international bank, insurance, and financial companies, as well as municipalities. Previously, at Pacholder Associates, Mr. Baden managed money market assets in multiple portfolios, and designed and developed proprietary portfolio systems and models for distressed companies, collateralized bond obligations, and legal settlement pools. Mr. Baden has extensive experience with resolution and liquidation for distressed portfolios including the Resolution Trust Corporation.

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Alexander Morris

 

Alexander Morris is the President and Chief Investment Officer of the Adviser. Mr. Morris has over 15 years of investment management experience, encompassing portfolio management, trading, mergers and acquisitions, financial institutions, and security analysis, and has served in a number of senior management roles for various financial institutions. He founded the Adviser in 2019 and has served as its President and Chief Investment Officer since its inception. Prior to founding the Adviser Mr. Morris founded Rowhouse Capital Partners LLC, a boutique strategic advisory firm to financial institutions and previously served as in various capital markets and corporate development roles with Fortigent LLC, a family office services provider and asset manager, as well as with LPL Financial which acquired Fortigent in 2012. Prior to Fortigent Mr. Morris worked served in various analysis roles for financial institutions.

 

Marcin Zdunek

 

Marcin Zdunek is Director of Trading & Assistant Portfolio Manager of credit strategies and is responsible for all aspects of trading and trade support. He joined the Adviser in November 2020 when his prior firm, First Western Capital Management, was acquired. Prior to joining First Western, Mr. Zdunek was a Supervisor in Fixed Income and Equity Trading at AIG Global Investment Group. Mr. Zdunek’s prior positions included Senior Fixed Income Trade Support Specialist at Alliance Capital Management and a Fixed Income Associate/Supervisor at Morgan Stanley.

 

The SAI provides additional information about the compensation of each Portfolio Manager, other accounts managed by them, and their ownership of Shares of the Funds.

 

HOW TO BUY AND SELL SHARES

 

Each of the Funds issue and redeem its Shares at NAV only in Creation Units. Only APs may acquire Shares directly from each Fund, and only APs may tender their Shares for redemption directly to each Fund, at NAV. APs must be (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation, a clearing agency that is registered with the SEC; or (ii) a DTC participant (as discussed below). In addition, each AP must execute a Participant Agreement that has been agreed to by the Distributor, and that has been accepted by the 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.

 

Investors can only 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 a Fund’s 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.

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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 a Fund’s Shares are beneficial owners as shown on the records of DTC or its participants. DTC serves as the securities depository for all Funds’ 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 a Fund’s Shares, you are not entitled to receive physical delivery of stock certificates or to have a Fund’s Shares registered in your name, and you are not considered a registered owner of a Fund’s Shares. Therefore, to exercise any right as an owner of a Fund’s 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.

 

Share Trading Prices on the Exchange

 

Trading prices of the Funds’ Shares on the Exchange may differ from the Fund’s daily NAV. Market forces of supply and demand, economic conditions and other factors may affect the trading prices of Shares. To provide additional information regarding the indicative value of each Fund’s Shares, the Exchange or a market data vendor disseminates information every 15 seconds through the facilities of the Consolidated Tape Association, or other widely disseminated means, an updated “intraday indicative value” (“IIV”) for each Fund’s Shares as calculated by an information provider or market data vendor. The Funds are neither involved in nor responsible for any aspect of the calculation or dissemination of the IIVs and make no representation or warranty as to the accuracy of the IIVs. If the calculation of the IIV is based on the basket of Deposit Securities, such IIV may not represent the best possible valuation of the Funds’ portfolios because the basket of Deposit Securities does not necessarily reflect the precise composition of the current portfolio of any Fund at a particular point in time. The IIV should not be viewed as a “real-time” update of each Fund’s NAV because the IIV may not be calculated in the same manner as the NAV, which is computed only once a day, typically at the end of the business day. The IIV is generally determined by using both current market quotations and/or price quotations obtained from broker-dealers that may trade in the Deposit Securities.

 

Frequent Purchases and Redemptions of Shares

 

The Funds impose no restrictions on the frequency of purchases and redemptions of the Funds’ Shares. In determining not to approve a written, established policy, the Board evaluated the risks of market timing activities by any of the Funds’ shareholders. Purchases and redemptions by APs, who are the only parties that may purchase or redeem any Fund’s Shares directly with a Fund, are an essential part of the ETF process and help keep share trading prices in line with NAV. As such, the Funds accommodate frequent purchases and redemptions by APs. However, 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 or loses. To minimize these potential consequences of frequent purchases and redemptions, the Funds employ fair value pricing and impose transaction fees on purchases and redemptions of Creation Units to cover the custodial and other costs incurred by any of the Funds in effecting trades. In addition, the Funds reserve the right to reject any purchase order at any time.

 

Determination of Net Asset Value

 

Each Fund’s NAV is calculated as of the scheduled close of regular trading on the NYSE, generally 4:00 p.m. Eastern Time, each day the NYSE is open for business. The NAV for each Fund is calculated by dividing that Fund’s net assets by its Shares outstanding.

 

In calculating its NAV, each Fund generally values its assets on the basis of market quotations, last sale prices, or estimates of value furnished by a pricing service or brokers who make markets in such instruments. If such information is not available for a security held by a Fund or is determined to be unreliable, the security will be valued at fair value estimates under guidelines established by the Board.

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Fair Value Pricing

 

If market quotations are unavailable or deemed unreliable by the Funds’ administrator, in consultation with the Adviser, securities will be fair valued by the Adviser in accordance with procedures adopted by the Board and under the Board’s ultimate supervision. Relying on prices supplied by pricing services or dealers or using fair valuation involves the risk that the values used by a Fund to price its investments may be higher or lower than the values used by other investment companies and investors to price the same investments.

 

DIVIDENDS, DISTRIBUTIONS, AND TAXES

 

Dividends and Distributions

 

Each Fund will distribute substantially all of its net investment income and net realized capital gains, if any, to its shareholders. Each Fund expects to declare and pay distributions, if any, quarterly, however it may declare and pay distributions more or less frequently. Net realized capital gains (including net short-term capital gains), if any, will be distributed by each Fund at least annually.

 

Dividend Reinvestment Service

 

Brokers may make the DTC book-entry dividend reinvestment service available to their customers who own a Fund’s Shares. If this service is available and used, dividend distributions of both income and capital gains will automatically be reinvested in additional whole Shares of that Fund purchased on the secondary market. Without this service, investors would receive their distributions in cash. In order to achieve the maximum total return on their investments, investors are encouraged to use the dividend reinvestment service. To determine whether the dividend reinvestment service is available and whether there is a commission or other charge for using this service, consult your broker. Brokers may require a Fund’s shareholders to adhere to specific procedures and timetables.

 

Taxes

 

As with any investment, you should consider how your investment in shares of a Fund will be taxed. The tax information in this Prospectus is provided as general information. Except where otherwise indicated, the discussion relates to investors who are individual United States citizens or residents. You should consult your own tax professional about the tax consequences of an investment in a Fund’s Shares.

 

Unless your investment in a Fund’s Shares is made through a tax-exempt entity or tax-advantaged account, such as an IRA plan, you need to be aware of the possible tax consequences when: (i) a Fund makes distributions; (ii) you sell your Shares listed on the Exchange; and (iii) you purchase or redeem Creation Units.

 

Taxes on Distributions

 

For federal income tax purposes, distributions of investment income are generally taxable as ordinary income or qualified dividend income. Taxes on distributions of capital gains (if any) are determined by how long a Fund owned the investments that generated them, rather than how long a shareholder has owned his or her shares of a Fund. Sales of assets held by a Fund for more than one year generally result in long-term capital gains and losses, and sales of assets held by a Fund for one year or less generally result in short-term capital gains and losses. Distributions of a Fund’s net capital gain (the excess of net long-term capital gains over net short-term capital losses) that are reported by that 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. 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 of a Fund.

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Shortly after the close of each calendar year, you will be informed of the character of any distributions received from the Funds.

 

U.S. individuals with income exceeding specified thresholds are subject to a 3.8% Medicare contribution tax on all or a portion of their “net investment income,” which includes interest, dividends, and certain capital gains (including capital gains distributions and capital gains realized on the sale of shares of the Fund). 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 a Fund before your investment (and thus were included in the shares’ NAV when you purchased your shares of a Fund).

 

You may wish to avoid investing in a Fund shortly before a dividend or other distribution, because such a distribution will generally be taxable to you even though it may economically represent a return of a portion of your investment. This adverse tax result is known as “buying into a dividend.”

 

Taxes When Shares are Sold on the Exchange

 

For federal income tax purposes, any capital gain or loss realized upon a sale of shares of a Fund generally is treated as a long-term capital gain or loss if those shares have been held for more than 12 months and as a short-term capital gain or loss if those shares have been held for 12 months 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 of a Fund. Any loss realized on a sale will be disallowed to the extent shares of a Fund are acquired, including through reinvestment of dividends, within a 61-day period beginning 30 days before and ending 30 days after the sale of shares. If disallowed, the loss will be reflected in an upward adjustment to the basis of the shares acquired.

 

IRAs and Other Tax-Qualified Plans

 

The one major exception to the preceding tax principles is that distributions on and sales of shares of a Fund held in an IRA (or other tax-qualified plan) will not be currently taxable unless it borrowed to acquire the shares.

 

U.S. Tax Treatment of Foreign Shareholders

 

If you are neither a resident nor a citizen of the United States or if you are a foreign entity, distributions (other than Capital Gain Dividends) paid to you by a Fund will generally be subject to a U.S. withholding tax at the rate of 30%, unless a lower treaty rate applies. The Funds 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.

 

Foreign shareholders will generally not be subject to U.S. tax on gains realized on the sale of Funds’ Shares, except that a nonresident alien individual who is present in the United States for 183 days or more in a calendar year will be taxable on such gains and on capital gain dividends from the Fund.

 

In contrast, if a foreign investor conducts a trade or business in the United States and the investment in a Fund is effectively connected with that trade or business, then the foreign investor’s income from that Fund will generally be subject to U.S. federal income tax at graduated rates in a manner similar to the income of a U.S. citizen or resident.

 

The Funds are generally required to withhold 30% on certain payments to shareholders that are foreign entities and that fail to meet prescribed information reporting or certification requirements.

 

All foreign investors should consult their own tax advisors regarding the tax consequences in their country of residence of an investment in any of the Funds.

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Backup Withholding

 

Each Fund (or a financial intermediary, such as a broker, through which a shareholder owns shares of a Fund) generally is required to withhold and remit to the U.S. Treasury a percentage of the taxable distributions and sale or redemption 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 he, she or it is not subject to such backup withholding. The current backup withholding rate is 24%.

 

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 market value of the Creation Units at the time of the exchange and the sum of the AP’s aggregate basis in the securities surrendered plus the amount of cash paid for such Creation Units. The Internal Revenue Service (“IRS”), however, may assert that a loss realized upon an exchange of securities for Creation Units cannot be deducted currently under the rules governing “wash sales,” or on the basis that there has been no significant change in economic position. Any gain or loss realized by an AP upon a creation of Creation Units will be treated as capital gain or loss if the AP holds the securities exchanged therefor as capital assets, and otherwise will be ordinary income or loss. Any capital gain or loss realized upon the creation of Creation Units will generally be treated as long-term capital gain or loss if the securities exchanged for such Creation Units have been held by the AP for more than 12 months, and otherwise will be short-term capital gain or loss.

 

The Company on behalf of the Funds has the right to reject an order for a purchase of Creation Units if the AP (or a group of APs) would, upon obtaining the Creation Units so ordered, own 80% or more of the outstanding shares of any of the Funds and if, pursuant to Section 351 of the Code, any of the Funds would have a basis in the securities different from the market value of such securities on the date of deposit. The Company also has the right to require information necessary to determine beneficial share ownership for purposes of the 80% determination. If a Fund does issue Creation Units to an AP (or group of APs) that would, upon obtaining the Creation Units so ordered, own 80% or more of the outstanding shares of a Fund, the AP (or group of APs) may not recognize gain or loss upon the exchange of securities for Creation Units.

 

An AP who redeems Creation Units will generally recognize a gain or loss equal to the difference between the sum of the aggregate market value of any securities received plus the amount of any cash received for such Creation Units and the AP’s basis in the Creation Units. Any gain or loss realized by an AP upon a redemption of Creation Units will be treated as capital gain or loss if the AP holds the shares comprising the Creation Units as capital assets, and otherwise will be ordinary income or loss. Any capital gain or loss realized upon the redemption of Creation Units will generally be treated as long-term capital gain or loss if the shares comprising the Creation Units have been held by the AP for more than 12 months, and otherwise will generally be short-term capital gain or loss. Any capital loss realized upon a redemption of Creation Units held for six months or less will be treated as a long-term capital loss to the extent of any amounts treated as distributions to the applicable AP of long-term capital gains with respect to the Creation Units (including any amounts credited to the AP as undistributed capital gains).

 

The Funds 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 Funds may sell portfolio securities to obtain the cash needed to distribute redemption proceeds. This may cause a Fund to recognize investment income and/or capital gains or losses that it might not have recognized if it had completely satisfied the redemption in-kind. As a result, a Fund may be less tax efficient if it includes such a cash payment in the proceeds paid upon the redemption of Creation Units.

 

Persons purchasing or redeeming Creation Units should consult their own tax advisers with respect to the tax treatment of any creation or redemption transaction.

 

The foregoing discussion summarizes some of the possible consequences under current federal tax law of an investment in the Funds. It is not a substitute for personal tax advice. You also may be subject to state and local tax on a Fund’s distributions and sales of shares of a Fund. Consult your personal tax advisor about the potential tax consequences of an investment in Shares of the Funds under all applicable tax laws. For more information, please see the section entitled “DIVIDENDS, DISTRIBUTIONS, AND TAXES” in the SAI.

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DISTRIBUTION

 

The Distributor, [ ], 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 [ ].

 

ADDITIONAL CONSIDERATIONS

 

Payments to Financial Intermediaries

 

The Adviser and its affiliates, out of their own resources and without additional cost to the Funds or their shareholders, may pay intermediaries, including affiliates of the Adviser, for the sale of Funds’ Shares and related services, including participation in activities that are designed to make intermediaries more knowledgeable about exchange traded products. Payments are generally made to intermediaries that provide shareholder servicing, marketing and related sales support, educational training or support, or access to sales meetings, sales representatives and management representatives of the intermediary. Payments may also be made to intermediaries for making Shares of the Funds available to their customers generally and in investment programs. The Adviser and its affiliates may also reimburse expenses or make payments from their own resources to intermediaries in consideration of services or other activities the Adviser believes may facilitate investment in the Fund.

 

The possibility of receiving, or the receipt of, the payments described above may provide intermediaries or their salespersons with an incentive to favor sales of Shares of any of the Funds, and other funds whose affiliates make similar compensation available, over other investments that do not make such payments. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to the Fund and other ETFs.

 

Premium/Discount Information

 

Information regarding how often each of the Fund’s Shares traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available, free of charge, on the Fund’s website at www.fm-invest.com/benchmarketfs/.

 

Continuous Offering

 

The method by which Creation Units are purchased and traded may raise certain issues under applicable securities laws. Because new Creation Units are issued and sold by the Fund on an ongoing basis, at any point a “distribution,” as such term is used in the Securities Act of 1933, as amended (the “Securities Act”), may occur. Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the Prospectus delivery and liability provisions of the Securities Act.

 

For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into individual Shares, and sells such Shares directly to customers, or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for Shares. A determination of whether one is an underwriter for purposes of the Securities Act must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to categorization as an underwriter.

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Broker-dealer firms should also note that dealers who are not “underwriters” but are effecting transactions in Shares, whether or not participating in the distribution of Shares, are generally required to deliver a prospectus. This is because the prospectus delivery exemption in Section 4(a)(3) of the Securities Act is not available with respect to such transactions as a result of Section 24(d) of the 1940 Act. As a result, broker dealer-firms should note that dealers who are not underwriters but are participating in a distribution (as contrasted with ordinary secondary market transactions) and thus dealing with Funds’ Shares that are part of an over-allotment within the meaning of Section 4(a)(3)(a) of the Securities Act would be unable to take advantage of the prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act. Firms that incur a prospectus delivery obligation with respect to Shares of the Funds are reminded that under Rule 153 of the Securities Act, a prospectus delivery obligation under Section 5(b)(2) of the Securities Act owed to an exchange member in connection with a sale on the Exchange is satisfied by the fact that the Funds’ Prospectus is available on the SEC’s electronic filing system. The prospectus delivery mechanism provided in Rule 153 of the Securities Act is only available with respect to transactions on an exchange.

 

Additional Information

 

The Funds enter into contractual arrangements with various parties, including among others the Funds’ investment adviser, who provides services to the Funds. Shareholders are not parties to, or intended (or “third party”) beneficiaries of, those contractual arrangements.

 

The Prospectus and the SAI provide information concerning the Funds that you should consider in determining whether to purchase Shares of any of the Funds. The Funds may make changes to this information from time to time. Neither this Prospectus nor the SAI is intended to give rise to any contract rights or other rights in any shareholder, other than any rights conferred explicitly by federal or state securities laws that may not be waived.

 

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND’S SAI INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.

74 

 

FINANCIAL HIGHLIGHTS

 

Financial highlights are not yet available for the Funds as the Funds had not commenced operations prior to the date of this Prospectus.

75 

 

Privacy Notice

 

[add Privacy Notice]

 

 

INVESTMENT ADVISER

 

F/m Investments, LLC d/b/a North Slope Capital, LLC

3050 K Street NW, Suite W-201

Washington, DC 20007

 

ADMINISTRATOR AND
TRANSFER AGENT

 

U.S. Bank Global Fund Services
P.O. Box 701

Milwaukee, Wisconsin 53201-0701

 

CUSTODIAN

 

U.S. Bank, N.A.
1555 North River Center Drive, Suite 302

Milwaukee, Wisconsin 53212

 

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

 

[ ]

 

UNDERWRITER

 

[ ]

 

LEGAL COUNSEL

 

Faegre Drinker Biddle & Reath LLP
One Logan Square, Suite 2000
Philadelphia, Pennsylvania 19103-6996

 

 

FOR MORE INFORMATION

 

For more information about the Funds, the following documents are available free upon request:

 

Annual/Semiannual Reports

 

Once available, additional information about the Funds’ investments will be included in the Funds’ annual and semiannual reports to shareholders. The annual report will contain a discussion of the market conditions and investment strategies that significantly affected any of the Funds’ performance during its most recently completed fiscal year. The Funds’ annual and semi-annual reports to shareholders will be available at the Funds’ website or by calling 1-800-[ ].

 

Statement of Additional Information

 

The SAI dated [ ], 2022, provides more details about the Fund and its policies. The current SAI is on file with the SEC and is incorporated by reference into (and is legally a part of) this Prospectus.

 

TO OBTAIN INFORMATION

 

The SAI is available, without charge, upon request along with the semiannual and annual reports (when available). To obtain a free copy of the SAI, semiannual or annual reports or if you have questions about the Funds:

 

By Internet

 

Go to www.fm-invest.com/benchmarketfs/

 

By Telephone

 

Call 1-800-[ ] or your securities dealer.

 

By Mail

 

Write to:

 

Genoa Benchmark Series Funds

c/o U.S. Bank Global Fund Services
P.O. Box 701

Milwaukee, WI 53201-0701

 

From the SEC

 

Information about the Funds (including the SAI) and other information about the Funds are available on the EDGAR Database on the SEC’s Internet site at www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by sending an electronic request to [email protected]

 

Investment Company Act File Number 811-05518

 

 

 

 

 

The information in this Statement of Additional Information 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 Statement of Additional Information is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

Subject to Completion- Dated May 23, 2022

 

Genoa Benchmark US Treasury 30 Year Bond ETF

 

Genoa Benchmark US Treasury 20 Year Bond ETF

 

Genoa Benchmark US Treasury 10 Year Note ETF

 

Genoa Benchmark US Treasury 7 Year Note ETF

 

Genoa Benchmark US Treasury 5 Year Note ETF

 

Genoa Benchmark US Treasury 2 Year Note ETF

 

Genoa Benchmark US Treasury 12 Month Bill ETF

 

Genoa Benchmark US Treasury 9 Month Bill ETF

 

Genoa Benchmark US Treasury 6 Month Bill ETF

 

Genoa Benchmark US Treasury 3 Month Bill ETF

 

Each a series of The RBB Fund, Inc.

 

 

3050 K Street NW, Suite W-201

Washington, DC 20007

 

Statement of Additional Information

 

Dated [ ], 2022

 

Genoa Benchmark US Treasury 30 Year Bond ETF (“UST 30 Year”), Genoa Benchmark US Treasury 20 Year Bond ETF (“UST 20 Year”), Genoa Benchmark US Treasury 10 Year Note ETF (“UST 10 Year”), Genoa Benchmark US Treasury 7 Year Note ETF (“UST 7 Year”), Genoa Benchmark US Treasury 5 Year Note ETF (“UST 5 Year”), Genoa Benchmark US Treasury 2 Year Note ETF (“UST 2 Year”), Genoa Benchmark US Treasury 12 Month Bill ETF (“UST 12 Month”), Genoa Benchmark US Treasury 9 Month Bill ETF (“UST 9 Month”), Genoa Benchmark US Treasury 6 Month Bill ETF (“UST 6 Month”), Genoa Benchmark US Treasury 3 Month Bill ETF (“UST 3 Month”) (each a “Fund” and together the “Funds”) are diversified series of The RBB Fund, Inc. (the “Company”), an open-end management investment company organized as a Maryland corporation on February 29, 1988.

 

F/m Investments, LLC d/b/a North Slope Capital, LLC serves as the investment adviser to each Fund.

 

Information about the Fund is set forth in the prospectus dated [ ], 2022 (the “Prospectus”) and provides the basic information you should know before investing. To obtain a copy of the Prospectus and/or the Fund’s Annual and Semi-Annual Reports (when available), please write to the Fund c/o U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, WI 53202 or call 800-[ ]. This Statement of Additional Information (“SAI”) is not a prospectus but contains information in addition to and more detailed than that set forth in the Prospectus. It is incorporated by reference in its entirety into the Prospectus. This SAI is intended to provide you with additional information regarding the activities and operations of the Funds and the Company, and it should be read in conjunction with the Prospectus.

 

 

Table of Contents

 

Fund History 1
Investment Policies and Practices 1
Investment Restrictions 15
Exchange Listing and Trading 16
Management of the Company 17
Code of Ethics 24
Principal Holders 24
Investment Advisory Agreement 24
Portfolio Managers 24
Underwriter 25
Purchase and Redemption of Creation Units 26
Portfolio Holdings Information 31
Determination of Net Asset Value 32
Dividends, Distributions, and Taxes 32
Portfolio Transactions and Brokerage 34
Proxy Voting Procedures 35
Payments To Financial Intermediaries 35
Additional Information Concerning Company Shares 36
General Information 37
Financial Statements 38
Appendix A A-1
Appendix B B-1

 

 

FUND HISTORY

 

The Company is an open-end management investment company currently consisting of [ ] separate portfolios.  The Company is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and was organized as a Maryland corporation on February 29, 1988.  This SAI pertains to shares of the Genoa Benchmark US Treasury 30 Year Bond ETF, Genoa Benchmark US Treasury 20 Year Bond ETF, Genoa Benchmark US Treasury 10 Year Note ETF, Genoa Benchmark US Treasury 7 Year Note ETF, Genoa Benchmark US Treasury 5 Year Note ETF, Genoa Benchmark US Treasury 2 Year Note ETF, Genoa Benchmark US Treasury 12 Month Bill ETF, Genoa Benchmark US Treasury 9 Month Bill ETF, Genoa Benchmark US Treasury 6 Month Bill ETF, Genoa Benchmark US Treasury 3 Month Bill ETF. F/m Investments, LLC d/b/a North Slope Capital, LLC (the “Adviser”) serves as the investment adviser to each Fund.

 

The investment objective of each Fund is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of its corresponding benchmark index (“Underlying Index”):

 

Fund Underlying Index
UST 30 Year Genoa Benchmark US Treasury 30 Year Bond Index
UST 20 Year Genoa Benchmark US Treasury 20 Year Bond Index
UST 10 Year Genoa Benchmark US Treasury 10 Year Note Index
UST 7 Year Genoa Benchmark US Treasury 7 Year Note Index
UST 5 Year Genoa Benchmark US Treasury 5 Year Note Index
UST 2 Year Genoa Benchmark US Treasury 2 Year Note Index
UST 12 Month Genoa Benchmark US Treasury 12 Month Bill Index
UST 9 Month Genoa Benchmark US Treasury 9 Month Bill Index
UST 6 Month Genoa Benchmark US Treasury 6 Month Bill Index
UST 3 Month Genoa Benchmark US Treasury 3 Month Bill Index

 

Each Fund offers and issues shares at its net asset value per share (“NAV”) only in aggregations of a specified number of shares (each a “Creation Unit”).  Each Fund also generally offers and issues shares in exchange for a basket of securities (“Deposit Securities”) together with the deposit of a specified cash payment (“Cash Component”).  The Company reserves the right to permit or require the substitution of a “cash in lieu” amount (“Deposit Cash”) to be added to the Cash Component to replace any Deposit Security. The shares of the Funds are listed on the [ ] (the “Exchange”) and trade on the Exchange at market prices. These prices may differ from a Fund’s NAV.  The shares are also redeemable only in Creation Unit aggregations, and generally in exchange for portfolio securities and a specified cash payment.  A Creation Unit of a Fund consists of at least 25,000 Shares.

 

Shares of a Fund may be issued in advance of receipt of Deposit Securities subject to various conditions including a requirement to maintain on deposit with the Company cash at least equal to a specified percentage of the market value of the missing Deposit Securities as set forth in the Participant Agreement (as defined below).  The Company may impose a transaction fee for each creation or redemption (the “Transaction Fee”).  In all cases, such fees will be limited in accordance with the requirements of the Securities and Exchange Commission (the "SEC") applicable to management investment companies offering redeemable securities.  The Funds may charge, either in lieu or in addition to the fixed creation or redemption Transaction Fee, a variable fee for creations and redemptions in order to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades resulting from such transaction, up to a maximum of 2.00% of the NAV per Creation Unit, inclusive of any Transaction Fees charged (if applicable).

 

INVESTMENT POLICIES AND PRACTICES

 

The Funds’ investment objectives and principal investment strategies are described in the Prospectus. The sections below describe some of the different types of investments that may be made by the Funds as part of its non-principal investment strategy. The following information supplements, and should be read in conjunction with, the Prospectus.

 

With respect to the Funds’ investments, unless otherwise noted, if a percentage limitation on investment is adhered to at the time of investment or contract, a subsequent increase or decrease as a result of market movement or redemption will not result in a violation of such investment limitation.

 

During unusual economic or market conditions, or for temporary defensive or liquidity purposes, any of the Funds may invest up to 100% of its assets in money market instruments that would not ordinarily be consistent with that Fund’s objective.

 

There can be no guarantee that the Funds will achieve their investment objectives.  The Funds may not necessarily invest in all of the instruments or use all of the investment techniques permitted by the Funds’ Prospectus and this SAI, or invest in such instruments or engage in such techniques to the full extent permitted by the Funds’ investment policies and limitations

 

Cash Equivalents and Short-Term Investments

The Funds may invest in cash, cash equivalents, and a variety of short-term instruments in such proportions as warranted by prevailing market conditions and the Funds’ principal investment strategies. The Funds may temporarily invest without limit in such instruments for liquidity purposes, or in an attempt to respond to adverse market, economic, political or other conditions. During such periods, a Fund may not be able to achieve its investment objective.

 

Short-term instruments include obligations of the U.S. government or its agencies or instrumentalities (see “U.S. Government Securities” below) and, without limitation, the following:

 

(1)          Certificates of Deposit. The Funds may invest in certificates of deposit issued against funds deposited in a bank or savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return, and are normally negotiable. If such certificates of deposit are non-negotiable, they will be considered illiquid investments and be subject to the Fund’s 15% restriction on investments in illiquid investments. Pursuant to the certificate of deposit, the issuer agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Under current FDIC regulations, the maximum insurance payable as to any one certificate of deposit is $250,000; therefore, certificates of deposit purchased by the Fund may not be fully insured.

 

(2)          Bankers’ Acceptances. The Funds may invest in bankers’ acceptances, which are short-term credit instruments used to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then “accepted” by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an asset or it may be sold in the secondary market at the going rate of interest for a specific maturity.

 

(3)          Repurchase Agreements. The Funds may invest in repurchase agreements which involve purchases of debt securities. In such an action, at the time the Fund purchases the security, it simultaneously agrees to resell and redeliver the security to the seller, who also simultaneously agrees to buy back the security at a fixed price and time. This assures a predetermined yield for the Fund during its holding period since the resale price is always greater than the purchase price and reflects an agreed-upon market rate. Such actions afford an opportunity for the Funds to invest temporarily available cash. The Funds may enter into repurchase agreements only with respect to certain obligations. For the Funds, collateral may consist of any fixed income security which is an eligible investment for the Funds entering into the repurchase agreement. The Funds’ custodian will hold the securities underlying any repurchase agreement, or the securities will be part of the Federal Reserve/Treasury Book Entry System. The market value of the collateral underlying the repurchase agreement will be determined on each business day. If at any time the market value of the collateral falls below the repurchase price under the repurchase agreement (including any accrued interest), the Funds will promptly receive additional collateral (so the total collateral is an amount at least equal to the repurchase price plus accrued interest). Repurchase agreements may be considered loans to the seller, collateralized by the underlying securities. The risk to the Funds is limited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides that the Funds are entitled to sell the underlying collateral. If the value of the collateral declines after the agreement is entered into, however, and if the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase price, the Funds could incur a loss of both principal and interest. The portfolio managers monitor the value of the collateral at the time the action is entered into and at all times during the term of the repurchase agreement. The portfolio managers do so in an effort to determine that the value of the collateral always equals or exceeds the agreed-upon repurchase price to be paid to the Funds. If the seller were to be subject to a federal bankruptcy proceeding, the ability of the Funds to liquidate the collateral could be delayed or impaired because of certain provisions of the bankruptcy laws.

 

(4)          Bank Time Deposits. The Funds may invest in bank time deposits, which are monies kept on deposit with banks or savings and loan associations for a stated period of time at a fixed rate of interest. There may be penalties for the early withdrawal of such time deposits, in which case the yields of these investments will be reduced.

 

(5)          Eurodollar and Yankee Instruments. The Funds may invest in Eurodollar certificates of deposit issued by foreign branches of U.S. or foreign banks; Eurodollar time deposits, which are U.S. dollar-denominated deposits in foreign branches of U.S. or foreign banks; and Yankee certificates of deposit, which are U.S. dollar-denominated certificates of deposit issued by U.S. branches of foreign banks and held in the United States. In each instance, the Fund may only invest in bank instruments issued by an institution which has capital, surplus and undivided profits of more than $100 million or the deposits of which are insured by the Bank Insurance Fund or the Savings Association Insurance Fund.

 

(6)          Money Market Funds and Short-Term Debt Funds. The Funds may invest in money market funds. The Funds will each bear their proportionate share of the money market fund’s fees and expenses (see “Other Investment Companies” below). The Funds may hold securities of other mutual funds that invest primarily in debt obligations with remaining maturities of 13 months or less.

 

Derivatives 

Subject to the limitations set forth below under “Limitations on the Use of CFTC-Regulated Futures, Options on Futures and Swaps,” the Funds may use derivative instruments as described below. Generally, a derivative is a financial contract the value of which depends upon, or is derived from, the value of an underlying asset, reference rate or index. Derivatives generally take the form of contracts under which the parties agree to payments between them based upon the performance of a wide variety of underlying references, such as stocks, bonds, loans, commodities, interest rates, currency exchange rates, and various domestic and foreign indices.

 

The Funds may invest in futures contracts, options and other derivatives instruments only in furtherance of the objective of seeking results, before fees and expenses, that correspond generally to the price and yield performance of that Fund’s Underlying Index, and not for speculative purposes. Derivatives permit the Funds to increase or decrease the level of risk, or change the character of the risk, to which their portfolios are exposed in much the same way as the Funds can increase or decrease the level of risk, or change the character of the risk, of its portfolio by making investments in specific securities. However, derivatives may entail investment exposures that are greater than their cost would suggest. As a result, a small investment in derivatives could have a large impact on the Funds’ performance.

 

While transactions in some derivatives may be effected on established exchanges, many other derivatives are privately negotiated and entered into in the over-the-counter (“OTC”) market with a single counterparty. When exchange-traded derivatives are purchased and sold, a clearing agency associated with the exchange stands between each buyer and seller and effectively guarantees performance of each contract, either on a limited basis through a guaranty fund or to the full extent of the clearing agency’s balance sheet. Transactions in OTC derivatives not subject to a clearing requirement have no such protection. Each party to an uncleared OTC derivative bears the risk that its direct counterparty will default. In addition, OTC derivatives are generally less liquid than exchange-traded derivatives because they often can only be closed out with the other party to the transaction.

 

In October 2020, the SEC adopted a final rule related to the use of derivatives, short sales, reverse repurchase agreements and certain other transactions by registered investment companies. Subject to certain exceptions, the final rule requires the Fund to trade derivatives and other transactions that create future payment or delivery obligations subject to a value-at-risk (“VaR”) leverage limit and certain derivatives risk management program and reporting requirements. Generally, these requirements apply unless the Fund satisfies a “limited derivatives users” exception that is included in the final rule. Under the final rule, when the Fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness (e.g., bank borrowings, if applicable) when calculating the Fund’s asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether the Fund satisfies the limited derivatives users exception, but for funds subject to the VaR testing requirement, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. The SEC also provided guidance in connection with the final rule regarding the use of securities lending collateral that may limit securities lending activities. Compliance with these new requirements will be required after an eighteen-month transition period. Following the compliance date, these requirements may limit the ability of the Funds to use derivatives, short sales, and reverse repurchase agreements and similar financing transactions as part of its investment strategies. These requirements may increase the cost of the Funds’ investments and cost of doing business, which could adversely affect investors. 

 

The particular derivative instruments the Funds can use are described below. The Funds may decide not to employ some or all of these instruments, and there is no assurance that any derivatives strategy used by the Funds will succeed. The Funds may employ new derivative instruments and strategies when they are developed, if those investment methods are consistent with each Fund’s investment objective and are permissible under applicable regulations governing that Fund.

 

Options Transactions

 

The Funds may purchase put and call options on specific securities (including groups or “baskets” of specific securities), interest rates, stock indices, bond indices, commodity indices, and/or foreign currencies. In addition, the Funds may write put and call options on such financial instruments.

 

Options on Securities. The Funds may purchase put and call options on securities. A put option on a security gives the purchaser of the option the right (but not the obligation) to sell, and the writer of the option the obligation to buy, the underlying security at a stated price (the “exercise price”) at any time before the option expires. A call option on a security gives the purchaser the right (but not the obligation) to buy, and the writer the obligation to sell, the underlying security at the exercise price at any time before the option expires. The purchase price for a put or call option is the “premium” paid by the purchaser for the right to sell or buy.

 

The Fund may purchase put options to hedge against a decline in the value of its portfolio. By using put options in this way, the Funds would reduce any profit it might otherwise have realized in the underlying security by the amount of the premium paid for the put option and by transaction costs. In similar fashion, the Funds may purchase call options to protect against an increase in the price of securities that the Funds anticipate purchasing in the future, a practice sometimes referred to as “anticipatory hedging.” The premium paid for the call option plus any transaction costs will reduce the benefit, if any, realized by the Funds upon exercise of the option, and, unless the price of the underlying security rises sufficiently, the option may expire unexercised.

 

Options on Interest Rates and Indices. The Funds may purchase put and call options on interest rates and on stock and bond indices. An option on interest rates or on an index gives the holder the right to receive, upon exercise of the option, an amount of cash if the closing value of the underlying interest rate or index is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. This amount of cash is equal to the difference between the exercise-settlement value of the interest rate option or the closing price of the index and the exercise price of the option expressed in dollars times a specified multiple (the “multiplier”). The writer of the option is obligated, for the premium received, to make delivery of this amount. Settlements for interest rate and index options are always in cash.

 

Options on Currencies. The Funds may purchase put and call options on foreign currencies. A foreign currency option provides the option buyer with the right to buy or sell a stated amount of foreign currency at the exercise price at a specified date or during the option period. A call option gives its owner the right, but not the obligation, to buy the currency, while a put option gives its owner the right, but not the obligation, to sell the currency. The option seller (writer) is obligated to fulfill the terms of the option sold if it is exercised. However, either seller or buyer may close its position during the option period in the secondary market for such options at any time prior to expiration.

 

A foreign currency call option rises in value if the underlying currency appreciates. Conversely, a foreign currency put option rises in value if the underlying currency depreciates. While purchasing a foreign currency option may protect the Fund against an adverse movement in the value of a foreign currency, it would limit the gain which might result from a favorable movement in the value of the currency. For example, if the Funds were holding securities denominated in an appreciating foreign currency and had purchased a foreign currency put to hedge against a decline in the value of the currency, it would not have to exercise its put. In such an event, however, the amount of the Funds’ gain would be offset in part by the premium paid for the option. Similarly, if the Funds entered into a contract to purchase a security denominated in a foreign currency and purchased a foreign currency call to hedge against a rise in the value of the currency between the date of purchase and the settlement date, the Funds would not need to exercise its call if the currency instead depreciated in value. In such a case, the Funds could acquire the amount of foreign currency needed for settlement in the spot market at a lower price than the exercise price of the option.

 

Writing Options. The Funds may write (sell) put and call options. These transactions would be undertaken principally to produce additional income. The Funds receive a premium from writing options which it retains whether or not the option is exercised. The Funds may write straddles consisting of a combination of a call and a put written on the same underlying instrument.

 

A Fund will write a call option on a security only if (a) that Fund owns the security underlying the call, (b) that Fund has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, cash or other liquid assets in such amount are segregated), or (c) that Fund holds a call on the same security where the exercise price of the call is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained by that Fund in segregated liquid assets.

 

A Fund will write a call option on a basket of securities, an index or currency only if (a) that Fund segregates liquid assets in an amount equal to the contract value of the index, basket or currency, or (b) that Fund holds a call on the same index, basket or currency as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained by that Fund in segregated liquid assets.

 

A Fund will write a put option on a security, basket of securities, currency or index only if (a) that Fund segregates liquid assets equal to the exercise price or (b) that Fund holds a put on the same security, basket of securities, currency or index as the put written where the exercise price of the put held is (i) equal to or greater than the exercise price of the put written, or (ii) less than the exercise price of the put written, provided the difference is maintained by that Fund in segregated liquid assets.

 

When a Fund writes a straddle, sufficient assets will be segregated to meet that Fund’s immediate obligations. That Fund may segregate the same liquid assets for both the call and put options in a straddle where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such cases, that Fund will also segregate liquid assets equivalent to the amount, if any, by which the put is “in the money.”

 

Expiration or Exercise of Options. If an option purchased by a Fund expires unexercised, that Fund realizes a capital loss equal to the premium paid. If an option written by that Fund expires unexercised, that Fund realizes a capital gain equal to the premium received at the time the option was written. Prior to the earlier of exercise or expiration, an exchange traded option may be closed out by an offsetting purchase or sale of an option of the same series (type, exchange, underlying security, currency or index, exercise price, and expiration). There can be no assurance, however, that a closing purchase or sale transaction can be effected when a Fund desires.

 

A Fund may sell put or call options it has previously purchased, which could result in a net gain or loss depending on whether the amount realized on the sale is more or less than the premium and other transaction costs paid on the put or call option which is sold. Prior to exercise or expiration, an option may be closed out by an offsetting purchase or sale of an option of the same series. That Fund will realize a capital gain from a closing purchase transaction if the cost of the closing option is less than the premium received from writing the option, or, if it is more, that Fund will realize a capital loss. If the premium received from a closing sale transaction is more than the premium paid to purchase the option, the Fund will realize a capital gain or, if it is less, the Fund will realize a capital loss. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security, currency or index in relation to the exercise price of the option, the volatility of the underlying security, currency or index, and the time remaining until the expiration date.

 

Futures

 

The Funds may engage in futures transactions. The Funds may buy and sell futures contracts that relate to (1) interest rates, (2) debt securities, (3) bond indices, (4) commodities and commodities indices, (5) foreign currencies, (6) stock indices, and (7) individual stocks. The Funds may only enter into futures contracts which are standardized and traded on a U.S. or foreign exchange, board of trade or similar entity, or quoted on an automated quotation system.

 

A futures contract is an agreement between two parties to buy and sell a security, index, interest rate, currency or commodity (each a “financial instrument”) for a set price on a future date. Certain futures contracts, such as futures contracts relating to individual securities, call for making or taking delivery of the underlying financial instrument. However, these contracts generally are closed out before delivery by entering into an offsetting purchase or sale of a matching futures contract. Other futures contracts, such as futures contracts on interest rates and indices, do not call for making or taking delivery of the underlying financial instrument, but rather are agreements pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the financial instrument at the close of the last trading day of the contract and the price at which the contract was originally written. These contracts also may be settled by entering into an offsetting futures contract.

 

Unlike when the Funds purchase or sell a security, no price is paid or received by the Funds upon the purchase or sale of a futures contract. Initially, the Funds will be required to deposit with its futures broker (also known as a futures commission merchant (“FCM”)) an amount of cash or securities equal to a specified percentage of the contract amount. This amount is known as initial margin. The margin deposit is intended to ensure completion of the contract. Minimum initial margin requirements are established by the futures exchanges and may be revised. In addition, FCMs may establish margin deposit requirements that are higher than the exchange minimums. Cash held as margin is generally invested by the FCM in high-quality instruments permitted under CFTC regulations, with returns retained by the FCM and interest paid to the Funds on the cash at an agreed-upon rate. The Funds will also receive any interest paid from coupon-bearing securities, such as Treasury securities, held in margin accounts. Subsequent payments to and from the FCM, called variation margin, will be made on a daily basis as the price of the underlying financial instrument fluctuates, making the futures contract more or less valuable, a process known as marking the contract to market. Changes in variation margin are recorded by the Funds as unrealized gains or losses. At any time prior to expiration of the futures contract, the Funds may elect to close the position by taking an opposite position that will operate to terminate its position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Funds, and the Funds realizes a gain or loss. In the event of the bankruptcy or insolvency of an FCM that holds margin on behalf of the Funds, the Funds may be entitled to the return of margin owed to it only in proportion to the amount received by the FCM’s other customers, potentially resulting in losses to the Funds. Futures transactions also involve brokerage costs.

 

Most U.S. futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of futures contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses.

 

Options on Futures

 

The Funds may also purchase or write put and call options on the futures contracts in which they invest and write straddles, which consist of a call and put option on the same futures contract. A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price prior to the expiration of the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true. Prior to exercise or expiration, a futures option may be closed out by an offsetting purchase or sale of a futures option of the same series.

 

The Funds may use options on futures contracts in connection with hedging strategies. The writing of a call option or the purchasing of a put option on a futures contract constitutes a partial hedge against declining prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration of a written call option is below the exercise price, the Funds will retain the full amount of the option premium which provides a partial hedge against any decline that may have occurred in the Fund’s holdings of securities. If the futures price when the option is exercised is above the exercise price, however, the Fund will incur a loss, which may be offset, in whole or in part, by the increase in the value of the securities held by the Funds that were being hedged. Writing a put option or purchasing a call option on a futures contract serves as a partial hedge against an increase in the value of the securities the Funds intends to acquire.

 

When writing a call option, a Fund must either segregate liquid assets with a value equal to the fluctuating market value of the optioned futures contract, or that Fund must own an option to purchase the same futures contract having an exercise price that is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained by that Fund in segregated liquid assets.

 

When writing a put option, the Funds must segregate liquid assets in an amount not less than the exercise price, or own a put option on the same futures contract where the exercise price of the put held is (i) equal to or greater than the exercise price of the put written, or (ii) less than the exercise price of the put written, provided the difference is maintained by the Funds in segregated liquid assets.

 

When a Fund writes a straddle, sufficient assets will be segregated by that Fund to meet its immediate obligations. That Fund may segregate the same liquid assets for both the call and put options in a straddle where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such cases, that Fund will also segregate liquid assets equivalent to the amount, if any, by which the put is “in the money.”

 

As with investments in futures contracts, a Funds is required to deposit and maintain margin with respect to put and call options on futures contracts written by it.

 

Forward Currency Contracts and Other Foreign Currency Transactions

 

A Fund may enter into forward currency contracts. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders (usually large commercial banks) and their customers. Unlike futures contracts, which are standardized contracts, forward contracts can be specifically drawn to meet the needs of the parties that enter into them. The parties to a forward currency contract may agree to offset or terminate the contract before its maturity, or may hold the contract to maturity and complete the contemplated exchange. Because forward contracts are not traded on an exchange, a Fund is subject to the credit and performance risk of the counterparties to such contracts.

 

The following, among others, are types of currency management strategies involving forward contracts that may be used by the Fund. The Fund also may use currency futures contracts and options thereon, put and call options on foreign currencies and currency swaps for the same purposes.

 

Transaction Hedges. When a Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when it anticipates receiving dividend payments in a foreign currency, the Fund might wish to lock in the U.S. dollar price of the security or the U.S. dollar equivalent of the dividend payments. To do so, the Fund could enter into a forward contract for the purchase or sale of the amount of foreign currency involved in the underlying transaction at a fixed amount of U.S. dollars per unit of the foreign currency. This is known as a “transaction hedge.” A transaction hedge will protect the Fund against a loss from an adverse change in the currency exchange rate during the period between the date on which the security is purchased or sold or on which the payment is declared, and the date on which the payment is made or received. Forward contracts to purchase or sell a foreign currency may also be used by such Fund in anticipation of future purchases or sales of securities denominated in a foreign currency, even if the specific investments have not yet been selected by the Adviser. This strategy is sometimes referred to as “anticipatory hedging.”

 

Position Hedges. A Fund could also use forward contracts to lock in the U.S. dollar value of portfolio positions. This is known as a “position hedge.” When a Fund believes that a foreign currency might suffer a substantial decline against the U.S. dollar, it could enter into a forward contract to sell an amount of that foreign currency approximating the value of some or all of that Fund’s portfolio securities denominated in that foreign currency. When a Fund believes that the U.S. dollar might suffer a substantial decline against a foreign currency, it could enter into a forward contract to buy that foreign currency for a fixed dollar amount. Alternatively, a Fund could enter into a forward contract to sell a different foreign currency for a fixed U.S. dollar amount if that Fund believes that the U.S. dollar value of that foreign currency will fall whenever there is a decline in the U.S. dollar value of the currency in which portfolio securities of that Fund are denominated. This is referred to as a “cross hedge.”

 

Shifting Currency Exposure. A Fund may also enter into forward contracts to shift its investment exposure from one currency into another. This may include shifting exposure from U.S. dollars to foreign currency or from one foreign currency to another foreign currency. This strategy tends to limit exposure to the currency sold, and increase exposure to the currency that is purchased, much as if a Fund had sold a security denominated in one currency and purchased an equivalent security denominated in another currency.

 

Swap Transactions

 

A Fund may enter into interest rate, currency, total return and credit default swap agreements. A Fund may also enter into options on the foregoing types of swap agreements (“swap options”) and in bonds issued by special purpose entities that are backed by a pool of swaps.

 

A Fund may enter into swap transactions for any purpose consistent with its investment objectives and strategies, such as for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, to protect against currency fluctuations, as a duration management technique, to protect against an increase in the price of securities the Fund anticipates purchasing at a later date, to reduce risk arising from the ownership of a particular instrument, or to gain exposure to certain securities, reference rates, sectors or markets.

 

Swap agreements are two party contracts entered into primarily by institutional investors for a specified period of time. In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on a particular predetermined asset, reference rate or index. The gross returns to be exchanged or swapped between the parties are generally calculated with respect to a notional amount, e.g., the return on or increase in value of a particular dollar amount invested at a particular interest rate or in a basket of securities representing a particular index. The notional amount of the swap agreement generally is only used as a basis upon which to calculate the obligations that the parties to the swap agreement have agreed to exchange.

 

Interest Rate Swaps. Interest rate swaps are financial instruments that involve the exchange of one type of interest rate for another type of interest rate cash flow on specified dates in the future. Some of the different types of interest rate swaps are “fixed-for-floating rate swaps,” “termed basis swaps” and “index amortizing swaps.” Fixed-for-floating rate swaps involve the exchange of fixed interest rate cash flows for floating rate cash flows. Termed basis swaps entail cash flows to both parties based on floating interest rates, where the interest rate indices are different. Index amortizing swaps are typically fixed-for-floating swaps where the notional amount changes if certain conditions are met. Like a traditional investment in a debt security, a Fund could lose money by investing in an interest rate swap if interest rates change adversely.

 

Currency Swaps. A currency swap is an agreement between two parties in which one party agrees to make interest rate payments in one currency and the other promises to make interest rate payments in another currency. A Fund may enter into a currency swap when it has one currency and desires a different currency. Typically the interest rates that determine the currency swap payments are fixed, although occasionally one or both parties may pay a floating rate of interest. Unlike an interest rate swap, however, the principal amounts are exchanged at the beginning of the contract and returned at the end of the contract. Changes in non-U.S. exchange rates and changes in interest rates may negatively affect currency swaps.

 

Total Return Swaps. In a total return swap, one party agrees to pay the other the “total return” of a defined underlying asset during a specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. A total return swap may be applied to any underlying asset but is most commonly used with equity indices, single stocks, bonds and defined baskets of loans and mortgages. The Fund might enter into a total return swap involving an underlying index or basket of securities to create exposure to a potentially widely-diversified range of securities in a single trade. An index total return swap can be used by the portfolio managers to assume risk, without the complications of buying the component securities from what may not always be the most liquid of markets.

 

Credit Default Swaps. A credit default swap is a bilateral contract that enables an investor to buy or sell protection against a defined-issuer credit event. A Fund may enter into credit default swap agreements either as a buyer or a seller. A Fund may buy protection to attempt to mitigate the risk of default or credit quality deterioration in one or more of its individual holdings or in a segment of the fixed income securities market to which it has exposure, or to take a “short” position in individual bonds or market segments which it does not own. The Fund may sell protection in an attempt to gain exposure to the credit quality characteristics of particular bonds or market segments without investing directly in those bonds or market segments.

 

As the buyer of protection in a credit default swap, A Fund will pay a premium (by means of an upfront payment or a periodic stream of payments over the term of the agreement) in return for the right to deliver a referenced bond or group of bonds to the protection seller and receive the full notional or par value (or other agreed upon value) upon a default (or similar event) by the issuer(s) of the underlying referenced obligation(s). If no default occurs, the protection seller would keep the stream of payments and would have no further obligation to that Fund. Thus, the cost to that Fund would be the premium paid with respect to the agreement. If a credit event occurs, however, the Fund may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity that may have little or no value. The Fund bears the risk that the protection seller may fail to satisfy its payment obligations.

 

If a Fund is a seller of protection in a credit default swap and no credit event occurs, that Fund would generally receive an up-front payment or a periodic stream of payments over the term of the swap. If a credit event occurs, however, generally that Fund would have to pay the buyer the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity that may have little or no value. As the protection seller, a Fund effectively adds economic leverage to its portfolio because, in addition to being subject to investment exposure on its total net assets, a Fund is subject to investment exposure on the notional amount of the swap. Thus, a Fund bears the same risk as it would by buying the reference obligations directly, plus the additional risks related to obtaining investment exposure through a derivative instrument discussed below under “Risks Associated with Swap Transactions.”

 

Swap Options. A swap option is a contract that gives a counterparty the right (but not the obligation), in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement at some designated future time on specified terms. A cash-settled option on a swap gives the purchaser the right, in return for the premium paid, to receive an amount of cash equal to the value of the underlying swap as of the exercise date. A Fund may write (sell) and purchase put and call swap options. Depending on the terms of the particular option agreement, the Fund generally will incur a greater degree of risk when it writes a swap option than when it purchases a swap option. When the Fund purchases a swap option, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when the Fund writes a swap option, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.

 

Risks Associated with Swap Transactions. The use of swap transactions is a highly specialized activity which involves strategies and risks different from those associated with ordinary portfolio security transactions. If the Adviser is incorrect in its forecasts of default risks, market spreads or other applicable factors the investment performance of a Fund would diminish compared with what it would have been if these techniques were not used. As the protection seller in a credit default swap, a Fund effectively adds economic leverage to its portfolio because, in addition to being subject to investment exposure on its total net assets, the Fund is subject to investment exposure on the notional amount of the swap. A Fund may only close out a swap or other two-party contract with its particular counterparty, and may only transfer a position with the consent of that counterparty. In addition, the price at which a Fund may close out such a two-party contract may not correlate with the price change in the underlying reference asset. If the counterparty defaults, a Fund will have contractual remedies, but there can be no assurance that the counterparty will be able to meet its contractual obligations or that such Fund will succeed in enforcing its rights. It also is possible that developments in the derivatives market, including potential government regulation, could adversely affect a Fund’s ability to terminate existing swap or other agreements or to realize amounts to be received under such agreements.

 

Interest Rate Caps, Collars and Floors

 

A Fund may enter into interest rate caps, floors and collars. Caps and floors have an effect similar to buying or writing options. In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the other party. For example, the buyer of an interest rate cap obtains the right to receive payments to the extent that a specified interest rate exceeds an agreed-upon level. The seller of an interest rate floor is obligated to make payments to the extent that a specified interest rate falls below an agreed-upon level. An interest rate collar involves selling a cap and purchasing a floor or vice versa to protect a Fund against interest rate movements exceeding given minimum or maximum levels.

 

Limitations on the Use of CFTC-Regulated Futures, Options on Futures and Swaps

 

Each Fund will limit its direct investments in CFTC-regulated futures, options on futures and swaps (“CFTC Derivatives”) to the extent necessary for the Adviser to claim the exclusion from regulation as a commodity pool operator with respect to each Fund under CFTC Rule 4.5, as such rule may be amended from time to time. Under Rule 4.5 as currently in effect, each Fund will limit its trading activity in CFTC Derivatives (excluding activity for “bona fide hedging purposes,” as defined by the CFTC) such that it meets one of the following tests:

 

  Aggregate initial margin and premiums required to establish its positions in CFTC Derivatives do not exceed 5% of the liquidation value of the Fund’s portfolio, after taking into account unrealized profits and losses on such positions; or
     
  Aggregate net notional value of its positions in CFTC Derivatives does not exceed 100% of the liquidation value of the Funds or the Fund’s portfolio, after taking into account unrealized profits and losses on such positions.

 

With respect to each Fund, the Adviser has filed a notice of eligibility for exclusion from the definition of the term commodity pool operator under the Commodity Exchange Act and therefore is not subject to registration or regulation as a commodity pool operator thereunder.

 

The requirements for qualification as a regulated investment company may also limit the extent to which each Fund may invest in CFTC Derivatives.

 

Federal Income Tax Treatment of Futures Contracts and Options

 

A Fund’s transactions in futures contracts and options will be subject to special provisions of the Code, that, among other things, may affect the character of gains and losses realized by the Fund (i.e., may affect whether gains or losses are ordinary or capital, or short-term or long-term), may accelerate recognition of income to the Fund and may defer the Fund’s losses. These rules could, therefore, affect the character, amount and timing of distributions to shareholders. These provisions also (a) will require the Fund to mark-to-market certain types of the positions in its portfolio (i.e., treat them as if they were closed out) and (b) may cause the Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the 90% distribution requirement for qualifying to be taxed as a regulated investment company and the distribution requirement for avoiding excise taxes.

 

Risks and Special Considerations Concerning Derivatives

 

The use of derivative instruments involves certain general risks and considerations as described below.

 

(1)          Market Risk. Market risk is the risk that the value of the underlying assets may go up or down. Adverse movements in the value of an underlying asset can expose a Fund to losses. The successful use of derivative instruments depends upon a variety of factors, particularly the portfolio managers’ ability to predict movements in the relevant markets, which may require different skills than predicting changes in the prices of individual securities. There can be no assurance that any particular strategy adopted will succeed.

 

(2)          Counterparty Risk. Counterparty risk is the risk that a loss may be sustained as a result of the failure of a counterparty to comply with the terms of a derivative instrument. The counterparty risk for exchange-traded derivatives is generally less than for OTC derivatives, since generally a clearing agency, which is the issuer or counterparty to each exchange-traded instrument, provides a guarantee of performance. For many OTC instruments, there is no similar clearing agency guarantee and there is less regulation or supervision of transactions. In all transactions, a Fund will bear the risk that the counterparty will default, and this could result in a loss of the expected benefit of the derivative transactions and possibly other losses to a Fund. A Fund will enter into derivatives transactions only with counterparties that its portfolio managers reasonably believe are capable of performing under the contract.

 

(3)          Correlation Risk. Correlation risk is the risk that there might be an imperfect correlation, or even no correlation, between price movements of a derivative instrument and price movements of investments being hedged. When a derivative transaction is used to completely hedge another position, changes in the market value of the combined position (the derivative instrument plus the position being hedged) result from an imperfect correlation between the price movements of the two instruments. With a perfect hedge, the value of the combined position remains unchanged with any change in the price of the underlying asset. With an imperfect hedge, the value of the derivative instrument and its hedge are not perfectly correlated. For example, if the value of a derivative instrument used in a short hedge (such as writing a call option, buying a put option or selling a futures contract) increased by less than the decline in value of the hedged investments, the hedge would not be perfectly correlated. This might occur due to factors unrelated to the value of the investments being hedged, such as speculative or other pressures on the markets in which these instruments are traded. The effectiveness of hedges using instruments on indices will depend, in part, on the degree of correlation between price movements in the index and the price movements in the investments being hedged.

 

(4)          Liquidity Risk. Liquidity risk is the risk that a derivative instrument cannot be sold, closed out or replaced quickly at or very close to its fundamental value. Generally, exchange contracts are very liquid because the exchange clearinghouse is the counterparty of every contract. OTC transactions are less liquid than exchange-traded derivatives since they often can only be closed out with the other party to the transaction. A Fund might be required by applicable regulatory requirements to maintain assets as “cover,” maintain segregated accounts, and/or make margin payments when it takes positions in derivative instruments involving obligations to third parties (i.e., instruments other than purchase options). If a Fund is unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expires, matures or is closed out. These requirements might impair a Fund’s ability to sell a security or make an investment at a time when it would otherwise be favorable to do so, or require that a Fund sell a portfolio security at a disadvantageous time. A Fund’s ability to sell or close out a position in an instrument prior to expiration or maturity depends upon the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the counterparty to enter into a transaction closing out the position. There is no assurance that any derivatives position can be sold or closed out at a time and price that is favorable to a Fund.

 

(5)          Legal Risk. Legal risk is the risk of loss caused by the unenforceability of a party’s obligations under the derivative. While a party seeking price certainty agrees to surrender the potential upside in exchange for downside protection, the party taking the risk is looking for a positive payoff. Despite this voluntary assumption of risk, a counterparty that has lost money in a derivative transaction may try to avoid payment by exploiting various legal uncertainties about certain derivative products.

 

(6)          Systemic or “Interconnection” Risk. Systemic or interconnection risk is the risk that a disruption in the financial markets will cause difficulties for all market participants. In other words, a disruption in one market will spill over into other markets, perhaps creating a chain reaction. Much of the OTC derivatives market takes place among the OTC dealers themselves, thus creating a large interconnected web of financial obligations. This interconnectedness raises the possibility that a default by one large dealer could create losses for other dealers and destabilize the entire market for OTC derivative instruments.

 

(7)          Leverage Risk. Leverage risk is the risk that a Fund may be more volatile than if it had not been leveraged due to leverage’s tendency to exaggerate the effect of any increase or decrease in the value of a Fund’s portfolio securities. The use of leverage may also cause a Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements.

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(8)          Regulatory Risk. The Dodd-Frank Act Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) has initiated a dramatic revision of the U.S. financial regulatory framework and covers a broad range of topics, including (among many others) a reorganization of federal financial regulators; a process intended to improve financial systemic stability and the resolution of potentially insolvent financial firms; and new rules for derivatives trading. Instruments in which a Fund may invest, or the issuers of such instruments, may be affected by the new legislation and regulation in ways that are unforeseeable. Many of the implementing regulations have not yet been finalized. Accordingly, the ultimate impact of the Dodd-Frank Act, including on the derivative instruments in which a Fund may invest, is not yet certain.

 

Illiquid Investments

Pursuant to Rule 22e-4 under the 1940 Act, a Fund may invest up to 15% of its net assets in illiquid investments. An illiquid investment as defined in Rule 22e-4 is an investment that a Fund reasonably expects cannot be sold or disposed of in current market conditions within 7 calendar days or less without the sale or disposition significantly changing the market value of the investment. These investments may include restricted securities and repurchase agreements maturing in more than 7 days. Restricted securities are securities that may not be sold to the public without an effective registration statement under the Securities Act of 1933, as amended (the “1933 Act”), and thus may be sold only in privately negotiated transactions or pursuant to an exemption from registration. Subject to the adoption of guidelines by the Board of Directors of the Company (“Board”), certain restricted securities that may be sold to institutional investors pursuant to Rule 144A under the 1933 Act and non-exempt commercial paper may be determined to be liquid by the Adviser. Illiquid investments involve the risk that the investments will not be able to be sold at the time the Adviser desires or at prices approximating the value at which a Fund is carrying the investments. To the extent an investment held by a Fund is deemed to be an illiquid investment or a less liquid investment, a Fund will be exposed to a greater liquidity risk.

 

The Company has implemented a liquidity risk management program and related procedures to identify illiquid investments pursuant to Rule 22e-4. If the limitation on illiquid investments is exceeded, other than by a change in market values, the condition will be reported to the Board and, when required by the Liquidity Rule, to the SEC.

 

Inflation Protected Securities

Each Fund may invest in inflation protected securities. Inflation protected securities are fixed income securities designed to provide protection against the negative effects of inflation. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the inflation accruals as part of a semiannual coupon.

 

Inflation protected securities issued by the U.S. Treasury have maturities of five, ten, twenty or thirty years, although it is possible that securities with other maturities will be issued in the future. The U.S. Treasury securities pay interest on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted principal amount. For example, if a Fund purchased an inflation protected bond with a par value of $1,000 and a 3% real rate of return coupon (payable 1.5% semi-annually), and inflation over the first six months was 1%, the mid-year par value of the bond would be $1,010 and the first semi-annual interest payment would be $15.15 ($1,010 times 1.5%). If inflation during the second half of the year resulted in the whole years’ inflation equaling 3%, the end-of-year par value of the bond would be $1,030 and the second semi-annual interest payment would be $15.45 ($1,030 times 1.5%).

 

If the periodic adjustment rate measuring inflation falls, the principal value of U.S. Treasury inflation protected securities will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation protected bonds, even during a period of deflation. However, the current market value of the bonds is not guaranteed, and will fluctuate. Other inflation-protected securities that accrue inflation into their principal value may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

 

The value of inflation-protected securities is expected to change in response to changes in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation protected securities. In contrast, if nominal interest rates increased at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-protected securities.

 

The periodic adjustment of U.S. inflation protected bonds is tied to the Consumer Price Index for Urban Consumers (“CPI-U”), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation protected securities issued by a foreign government are generally adjusted to reflect a comparable inflation index, calculated by that government. There can be no assurance that the CPI-U or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will be correlated to the rate of inflation in the United States. If the market perceives that the adjustment mechanism of an inflation-protected security does not accurately adjust for inflation, the value of the security could be adversely affected.

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While inflation protected securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. The calculation of the inflation index ratio for inflation protected securities issued by the U.S. Treasury incorporates an approximate three-month lag, which may have an effect on the trading price of the securities, particularly during periods of significant, rapid changes in the inflation index. To the extent that inflation has increased during the three months prior to an interest payment, that interest payment will not be protected from the inflation increase. Further, to the extent that inflation has increased during the final three months of a security’s maturity, the final value of the security will not be protected against that increase, which will negatively impact the value of the security. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in inflation-protected securities may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.

 

Any increase in the principal amount of an inflation-protected security will be considered taxable income to the Fund, even though the Fund does not receive its principal until maturity.

 

Lending Portfolio Securities

A Fund may lend its portfolio securities to brokers, dealers, and financial institutions in an amount not exceeding 33 1/3% of the value of a Fund’s total assets. These loans will be secured by collateral (consisting of cash, U.S. Government Securities, or irrevocable letters of credit) maintained in an amount equal to at least 100% of the market value, determined daily, of the loaned securities. A Fund may, subject to certain notice requirements, at any time call the loan and obtain the return of the securities loaned. A Fund will be entitled to payments equal to the interest and dividends on the loaned securities and may receive a premium for lending the securities. The advantage of such loans is that a Fund continues to receive the income on the loaned securities while earning interest on the cash amounts deposited as collateral, which will be invested in short-term investments.

 

A loan may be terminated by the borrower on one business day’s notice, or by the Company on two business days’ notice. If the borrower fails to deliver the loaned securities within four days after receipt of notice, the Company may use the collateral to replace the securities while holding the borrower liable for any excess of replacement cost exceeding the collateral. As with any extensions of credit, there are risks of delay in recovery and, in some cases, even loss of rights in the collateral, should the borrower of the securities fail financially. In addition, securities lending involves a form of leverage, and a Fund may incur a loss if securities purchased with the collateral from securities loans decline in value or if the income earned does not cover a Fund’s transaction costs. However, loans of securities will be made only to companies the Board deems to be creditworthy (such creditworthiness will be monitored on an ongoing basis) and when the income that can be earned from such loans justifies the attendant risks. Upon termination of the loan, the borrower is required to return the securities. Any gain or loss in the market price during the loan period would inure to the Fund.

 

When voting or consent rights that accompany loaned securities pass to the borrower, the Company will follow the policy of calling the loaned securities, to be delivered within one day after notice, to permit the exercise of such rights if the matters involved would have a material effect on the investment in such loaned securities. A Fund will pay reasonable finder’s, administrative, and custodial fees in connection with loans of securities.

 

LIBOR Discontinuance or Unavailability Risk

Many financial instruments may be tied to the London Interbank Offered Rate, or “LIBOR,” to determine payment obligations, financing terms, hedging strategies, or investment value. LIBOR is the offered rate for short-term Eurodollar deposits between major international banks. As of December 31.2021, all non-U.S. dollar LIBOR publications have been phased out and a majority of U.S. dollar LIBOR settings will cease publication after June 30, 2023. It is possible that a subset of LIBOR settings will be published after these dates on a “synthetic” basis, but any such publications would be considered non-representative of the underlying market. The U.S. Federal Reserve, based on the recommendations of the New York Federal Reserve's Alternative Reference Rate Committee (comprised of major derivative market participants and their regulators), has begun publishing SOFR that is intended to replace U.S. dollar LIBOR. Proposals for alternative reference rates for other currencies have also been announced or have already begun publication. Markets are slowly developing in response to these new reference rates. Uncertainty related to the liquidity impact of the change in rates, and how to appropriately adjust these rates at the time of transition, poses risks for the Fund. The effect of any changes to, or discontinuation of, LIBOR on the Fund will depend on, among other things, (1) existing fallback or termination provisions in individual contracts and (2) whether, how, and when industry participants develop and adopt new reference rates and fallbacks for both legacy and new instruments and contracts. The expected discontinuation of LIBOR could have a significant impact on the financial markets in general and may also present heightened risk to market participants, including public companies, investment advisers, investment companies, and broker-dealers. The risks associated with this discontinuation and transition will be exacerbated if the work necessary to effect an orderly transition to an alternative reference rate is not completed in a timely manner. For example, current information technology systems may be unable to accommodate new instruments and rates with features that differ from LIBOR. Accordingly, it is difficult to predict the full impact of the transition away from LIBOR on the Fund until new reference rates and fallbacks for both legacy and new instruments and contracts are commercially accepted and market practices become settled.

12 

 

Other Investment Companies

Each Fund may invest in other investment companies, including open-end funds, closed-end funds, unit investment trusts, and exchange-traded funds (“ETFs”) registered under the 1940 Act that invest primarily in Fund eligible investments. Under the 1940 Act, a Fund’s investment in such securities is generally limited to 3% of the total voting stock of any one investment company; 5% of such Fund’s total assets with respect to any one investment company; and 10% of such Fund’s total assets in the aggregate. A Fund’s investments in other investment companies may include money market mutual funds. Investments in money market funds are not subject to the percentage limitations set forth above.

 

Many ETFs, however, have obtained exemptive relief from the SEC to permit unaffiliated funds to invest in their shares beyond these statutory limits, subject to certain conditions and pursuant to contractual arrangements between the ETFs and the investing funds. A Fund may rely on these exemptive orders that permit a Fund to invest in these ETFs beyond the limits contained in the 1940 Act, subject to certain terms and conditions. Generally, these terms and conditions require the Board to approve policies and procedures relating to certain of a Fund’s investments in ETFs. These policies and procedures require, among other things, that (i) the Adviser conducts a Fund’s investment in ETFs without regard to any consideration received by the Fund or any of its affiliated persons and (ii) the Adviser certifies to the Board quarterly that it has not received any consideration in connection with an investment by a Fund in an ETF, or if it has, the amount and purpose of the consideration will be reported to the Board and an equivalent amount of advisory fees shall be waived by the Adviser.

 

The SEC recently adopted certain regulatory changes and took other actions related to the ability of an investment company to invest in the securities of another investment company. These changes include, among other things, the rescission of certain SEC exemptive orders permitting investments in excess of the statutory limits and the withdrawal of certain related SEC staff no-action letters, and the adoption of Rule 12d1-4 under the 1940 Act. Rule 12d1-4 permits a Fund to invest in other investment companies beyond the statutory limits, subject to certain conditions. Notable conditions include those relating to: (i) control and voting that prohibit an acquiring fund, its investment adviser and their respective affiliates from beneficially owning more than 25% of the outstanding voting securities of an unaffiliated acquired fund; (ii) certain required findings relating to complexity, fees and undue influence (among other things); (iii) fund of funds investment agreements; and (iv) general limitations on an acquired fund’s investments in other investment companies and private funds to no more than 10% of the acquired fund’s asset, except in certain circumstances.

 

ETFs in which a Fund may invest are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a portfolio of securities designed to track a particular market index. ETFs can give exposure to all or a portion of the U.S. market, a foreign market, a region, a commodity, a currency, or to any other index that an ETF tracks. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although lack of liquidity in an ETF could result in it being more volatile and ETFs have management fees that increase their costs. An ETF may fail to accurately track the returns of the market segment or index that it is designed to track, and the price of an ETF’s shares may fluctuate. In addition, because they, unlike traditional mutual funds, are traded on an exchange, ETFs are subject to the following risks: (i) the performance of the ETF may not replicate the performance of the underlying index that it is designed to track; (ii) the market price of the ETF’s shares may trade at a premium or discount to the ETF’s NAV; (iii) an active trading market for an ETF may not develop or be maintained; and (iv) there is no assurance that the requirements of the exchange necessary to maintain the listing of the ETF will continue to be met or remain unchanged. Trading in an ETF may be halted if the trading in one or more of the ETF’s underlying securities is halted, which could result in the ETF being more volatile. In the event substantial market or other disruptions affecting ETFs should occur in the future, the liquidity and value of the Fund’s shares could also be substantially and adversely affected.

 

If a Fund invests in other investment companies, Fund shareholders will bear not only their proportionate share of the Fund’s expenses, but also, indirectly, the similar expenses of the underlying investment companies. Shareholders would also be exposed to the risks associated not only with the Fund, but also with the portfolio investments of the underlying investment companies. Shares of certain closed-end funds may at times be acquired at market prices representing premiums to their NAVs. Shares acquired at a premium to their NAV may be more likely to subsequently decline in price, resulting in a loss to the Fund and its shareholders.

13 

 

U.S. Government Securities

Each Fund may invest in U.S. government securities, including bills, notes and bonds differing as to maturity and rates of interest, which are either issued or guaranteed by the U.S. Treasury or by U.S. government agencies or instrumentalities. U.S. government agency securities include securities issued by (a) the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, and the Government National Mortgage Association, whose securities are supported by the full faith and credit of the United States; (b) the Federal Home Loan Banks, Federal Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities are supported by the right of the agency to borrow from the U.S. Treasury; (c) the Federal National Mortgage Association, whose securities are supported by the discretionary authority of the U.S. government to purchase certain obligations of the agency or instrumentality; and (d) the Student Loan Marketing Association, whose securities are supported only by its credit. While the U.S. government provides financial support to such U.S. government-sponsored agencies or instrumentalities, no assurance can be given that it always will do so since it is not so obligated by law. The U.S. government, its agencies and instrumentalities do not guarantee the market value of their securities, and consequently, the value of such securities may fluctuate.

 

U.S. Treasury obligations include separately traded interest and principal component parts of such obligations, known as Separately Traded Registered Interest and Principal Securities (“STRIPS”), which are transferable through the Federal book-entry system. STRIPS are sold as zero-coupon securities, which means that they are sold at a substantial discount and redeemed at face value at their maturity date without interim cash payments of interest or principal. This discount is accreted over the life of the security, and such accretion will constitute the income earned on the security for both accounting and tax purposes. Because of these features, such securities may be subject to greater interest rate volatility than interest paying U.S. Treasury obligations.

 

When-Issued and Delayed Delivery Transactions

Each Fund may purchase securities on a when-issued or delayed delivery basis. When such a transaction is negotiated, the purchase price is fixed at the time the purchase commitment is entered, but delivery of and payment for the securities take place at a later date. A Fund will not accrue income with respect to securities purchased on a when-issued or delayed delivery basis prior to their stated delivery date.

 

The purchase of securities on a when-issued or delayed delivery basis exposes a Fund to risk because the securities may decrease in value prior to delivery. In addition, a Fund’s purchase of securities on a when-issued or delayed delivery basis while remaining substantially fully invested could increase the amount of a Fund’s total assets that are subject to market risk, resulting in increased sensitivity of NAV to changes in market prices. A seller’s failure to deliver securities to a Fund could prevent the Fund from realizing a price or yield considered to be advantageous.

 

When a Fund agrees to purchase securities on a when-issued or delayed delivery basis, a Fund will segregate cash or liquid securities in an amount sufficient to meet the Fund’s purchase commitments. It may be expected that a Fund’s net assets will fluctuate to a greater degree when it sets aside securities to cover such purchase commitments than when it sets aside cash. In addition, because a Fund will set aside cash or liquid securities to satisfy its purchase commitments, its liquidity and the ability of the Adviser to manage it might be affected in the event its commitments to purchase when-issued or delayed delivery securities ever became significant. Under normal market conditions, however, a Fund’s commitments to purchase when-issued or delayed delivery securities will not exceed 25% of the value of its total assets.

 

Zero-Coupon and Step Coupon Securities

Each Fund may invest in zero-coupon and step coupon securities. Zero-coupon securities pay no cash income to their holders until they mature. When held to maturity, their entire return comes from the difference between their purchase price and their maturity value. Step coupon securities are debt securities that may not pay interest for a specified period of time and then, after the initial period, may pay interest at a series of different rates. Both zero-coupon and step coupon securities are issued at substantial discounts from their value at maturity. Because interest on these securities is not paid on a current basis, the values of securities of this type are subject to greater fluctuations than are the value of securities that distribute income regularly and may be more speculative than such securities. Accordingly, the values of these securities may be highly volatile as interest rates rise or fall. In addition, while such securities generate income for purposes of generally accepted accounting standards, they do not generate cash flow and thus could cause a Fund to be forced to liquidate securities at an inopportune time in order to distribute cash, as required by the Code.

14 

 

Temporary Investments

During periods of adverse market or economic conditions, a Fund may temporarily invest all or a substantial portion of its assets in high-quality, fixed-income securities, money market instruments, and shares of money market mutual funds, or it may hold cash. At such times, a Fund would not be pursuing its stated investment objective with its usual investment strategies. A Fund may also hold these investments for liquidity purposes. Fixed-income securities will be deemed to be of high quality if they are rated “A” or better by S&P or Moody’s or, if unrated, are determined to be of comparable quality by the Adviser. Money market instruments are high-quality, short-term fixed-income obligations (which generally have remaining maturities of one year or less) and may include U.S. Government Securities, commercial paper, certificates of deposit and banker’s acceptances issued by domestic branches of U.S. banks that are members of the Federal Deposit Insurance Corporation, and repurchase agreements for U.S. Government Securities. In lieu of purchasing money market instruments, the Fund may purchase shares of money market mutual funds that invest primarily in U.S. Government Securities and repurchase agreements involving those securities, subject to certain limitations imposed by the 1940 Act. A Fund, as an investor in a money market fund, will indirectly bear that fund’s fees and expenses, which will be in addition to the fees and expenses of the Fund. Repurchase agreements involve certain risks not associated with direct investments in debt securities.

 

Portfolio Turnover

Portfolio securities may be sold without regard to the time they have been held when investment considerations warrant such action. A higher portfolio turnover rate would result in higher brokerage costs to a Fund and could also result in the realization of larger amounts of capital gains, including short-term capital gains. Capital gains are generally taxable when distributed to shareholders, and distributions of short-term capital gains are generally taxable at ordinary income tax rates.

 

Pandemic Risk

Disease outbreaks that affect local economies or the global economy may materially and adversely impact a Fund and/or the Adviser’s business. For example, uncertainties regarding the novel Coronavirus (“COVID-19”) outbreak have resulted in serious economic disruptions across the globe. These types of outbreaks can be expected to cause severe decreases in core business activities such as manufacturing, purchasing, tourism, business conferences and workplace participation, among others. These disruptions lead to instability in the market place, including stock market losses and overall volatility, as has occurred in connection with COVID-19. In the face of such instability, governments may take extreme and unpredictable measures to combat the spread of disease and mitigate the resulting market disruptions and losses. The Adviser has in place business continuity plans reasonably designed to ensure that it maintains normal business operations, and it periodically tests those plans. However, in the event of a pandemic or an outbreak, there can be no assurance that the Adviser or a Fund’s service providers will be able to maintain normal business operations for an extended period of time or will not lose the services of key personnel on a temporary or long-term basis due to illness or other reasons. Although vaccines for COVID-19 are becoming more widely available, the full impacts of a pandemic or disease outbreaks are unknown and the pace of recovery may vary from market to market, resulting in a high degree of uncertainty for potentially extended periods of time.

 

Cyber Security Risk

A Fund and its service providers may be prone to operational and information security risks resulting from breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause a Fund to lose proprietary information, suffer data corruption, or lose operational capacity. Breaches in cyber security include, among other behaviors, stealing or corrupting data maintained online or digitally, denial of service attacks on websites, the unauthorized release of confidential information or various other forms of cyber-attacks. Cyber security breaches affecting a Fund, the Adviser, custodian, transfer agent, intermediaries and other third-party service providers may adversely impact a Fund. For instance, cyber security breaches may interfere with the processing of shareholder transactions, impact a Fund’s ability to calculate its NAVs, cause the release of private shareholder information or confidential business information, impede trading, subject a Fund to regulatory fines or financial losses and/or cause reputational damage. A Fund may also incur additional costs for cyber security risk management purposes. Similar types of cyber security risks are also present for issuers of securities in which a Fund may invest, which could result in material adverse consequences for such issuers and may cause a Fund’s investment in such companies to lose value. While each Fund and its service providers have established IT and data security programs and have in place business continuity plans and other systems designed to prevent losses and mitigate cyber security risk, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified or that cyber-attacks may be highly sophisticated. Furthermore, a Fund has limited ability to prevent or mitigate cyber security incidents affecting third-party service providers, and such third-party service providers may have limited indemnification obligations to a Fund and the Adviser.

 

INVESTMENT RESTRICTIONS

 

The Company has adopted the following investment restrictions as fundamental policies with respect to each Fund. These restrictions cannot be changed with respect to each Fund without the approval of the holders of a majority of that Fund’s outstanding voting securities. For the purposes of the 1940 Act, a “majority of outstanding shares” means the vote of the lesser of: (1) 67% or more of the voting securities of the Fund present at the meeting if the holders of more than 50% of the Fund’s outstanding voting securities are present or represented by proxy; or (2) more than 50% of the outstanding voting securities of the Fund.

15 

 

Except with the approval of a majority of the outstanding voting securities, each Fund may not:

 

1.Concentrate its investments (i.e., hold more than 25% of its total assets) in any industry or group of related industries. For purposes of this limitation, securities of the U.S. government (including its agencies and instrumentalities), repurchase agreements collateralized by U.S. government securities, and tax-exempt securities of state or municipal governments and their political subdivisions are not considered to be issued by members of any industry.

 

2.Borrow money or issue senior securities (as defined under the 1940 Act), except to the extent permitted under the 1940 Act.

 

3.Make loans, except to the extent permitted under the 1940 Act.

 

4.Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments, except to the extent permitted under the 1940 Act. This shall not prevent the Fund from investing in securities or other instruments backed by real estate, real estate investment trusts or securities of companies engaged in the real estate business.

 

5.Purchase or sell commodities or commodity contracts, except as permitted by the 1940 Act, as amended, and as interpreted or modified by the regulatory authority having jurisdiction from time to time

 

6.Underwrite securities issued by other persons, except to the extent permitted under the 1940 Act.

 

7.With respect to 75% of its total assets, purchase securities of an issuer (other than (i) securities issued by other investment companies, (ii) securities issued by the U.S. government, its agencies, instrumentalities or authorities, or (iii) repurchase agreements fully collateralized by U.S. government securities) if (a) such purchase would, at the time, cause more than 5% of the Fund’s total assets taken at market value to be invested in the securities of such issuer; or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by the Fund.

  

Group of related industries is defined as three or more industries based on the Adviser’s classification for the purpose of this section.

 

In addition to the foregoing fundamental investment policies, each Fund is also subject to the following non-fundamental restrictions and policies, which may be changed by the Board of Directors. Each Fund may not:

 

1.Acquire any illiquid investment if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid investments.

 

If a percentage limitation is adhered to at the time of investment or contract, a later increase or decrease in percentage resulting from any change in value or total or net assets will not result in a violation of such restriction, except that the percentage limitations with respect to the borrowing of money and illiquid investments will be observed continuously. If the percentage of the Fund’s net assets invested in illiquid investments exceeds 15% due to market activity or changes in the Fund’s portfolio, the Fund will take appropriate measures to reduce its holdings of illiquid investments as soon as reasonably practicable, in a manner consistent with prudent management and the interests of the Fund.

 

EXCHANGE LISTING AND TRADING

 

Shares are listed for trading and trade throughout the day on [ ] (the “Exchange”).

 

There can be no assurance that a Fund will continue to meet the requirements of the Exchange necessary to maintain the listing of shares. The Exchange will consider the suspension of trading in, and will initiate delisting proceedings of, the shares of a Fund under any of the following circumstances: (i) if any of the requirements set forth in the Exchange rules are not continuously maintained; (ii) if the Exchange files separate proposals under Section 19(b) of the 1940 Act and any of the statements regarding (a) the description of the Fund; (b) limitations on a Fund’s portfolio holdings or reference assets; (c) dissemination and availability of the intraday indicative values; or (d) the applicability of the Exchange listing rules specified in such proposals are not continuously maintained; (iii) if, following the initial 12-month period beginning at the commencement of trading of a Fund, there are fewer than 50 beneficial owners of shares of the Fund; (iv) if the intraday indicative value is no longer disseminated at least every 15 seconds during the Exchange’s regular market session and the interruption to the dissemination persists past the trading day in which it occurred; or (v) such other event shall occur or condition shall exist that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. The Exchange will remove the shares from listing and trading upon termination of a Fund.

16 

 

The Company reserves the right to adjust the price levels of its shares in the future to help maintain convenient trading ranges for investors. Any adjustments would be accomplished through stock splits or reverse stock splits, which would have no effect on the net assets of a Fund.

 

As in the case of other stocks traded on the Exchange, broker’s commissions on transactions will be based on negotiated commission rates at customary levels.

 

To provide additional information regarding the indicative value of shares, the Exchange or a market data vendor disseminates information every 15 seconds through the facilities of the Consolidated Tape Association, or other widely disseminated means, an updated “intraday indicative value” (“IIV”) for the Fund as calculated by an information provider or market data vendor. The Company is not involved in or responsible for any aspect of the calculation or dissemination of the IIVs and makes no representation or warranty as to the accuracy of the IIVs.

 

MANAGEMENT OF THE COMPANY

 

The business and affairs of the Company are managed under the oversight of the Board, subject to the laws of the State of Maryland and the Company’s Charter. The Directors are responsible for deciding matters of overall policy and overseeing the actions of the Company’s service providers. The officers of the Company conduct and supervise the Company’s daily business operations.

 

Directors who are not deemed to be “interested persons” of the Company (as defined in the 1940 Act) are referred to as “Independent Directors.” Directors who are deemed to be “interested persons” of the Company are referred to as “Interested Directors.” The Board is currently composed of seven Independent Directors and one Interested Director. The Board has selected Arnold M. Reichman, an Independent Director, to act as Chairman. Mr. Reichman’s duties include presiding at meetings of the Board and interfacing with management to address significant issues that may arise between regularly scheduled Board and Committee meetings. In the performance of his duties, Mr. Reichman will consult with the other Independent Directors and the Company’s officers and legal counsel, as appropriate. The Chairman may perform other functions as requested by the Board from time to time.

 

The Board meets as often as necessary to discharge its responsibilities. Currently, the Board conducts regular, in-person meetings at least four times a year, and holds special in-person or telephonic meetings as necessary to address specific issues that require attention prior to the next regularly scheduled meeting. The Board also relies on professionals, such as the Company’s independent registered public accounting firms and legal counsel, to assist the Directors in performing their oversight responsibilities.

 

The Board has established seven standing committees — Audit, Contract, Executive, Nominating and Governance, Product Development, Regulatory Oversight, and Valuation Committees. The Board may establish other committees, or nominate one or more Directors to examine particular issues related to the Board’s oversight responsibilities, from time to time. Each Committee meets periodically to perform its delegated oversight functions and reports its findings and recommendations to the Board. For more information on the Committees, see the section entitled “Standing Committees.”

 

The Board has determined that the Company’s leadership structure is appropriate because it allows the Board to effectively perform its oversight responsibilities.

 

Directors and Executive Officers

 

The Directors and executive officers of the Company, their ages, business addresses and principal occupations during the past five years are set forth in this section.

17 

 

Name,  Address, and Age Position(s)
Held with
Company

Term of Office
and Length of
Time Served1

Principal  Occupation(s)
During Past 5  Years
Number of
Portfolios in
Fund Complex
Overseen by
Director*
Other  Directorships Held by Director  
INDEPENDENT DIRECTORS

Julian A. Brodsky

615 East Michigan Street

Milwaukee, WI 53202

Age: 88

 

Director 1988 to present From 1969 to 2011, Director and Vice Chairman, Comcast Corporation (cable television and communications). [ ] AMDOCS Limited (service provider to telecommunications companies).

Gregory P. Chandler

615 East Michigan Street

Milwaukee, WI 53202

Age: 55

 

Director 2012 to present Since 2020, Chief Financial Officer, Herspiegel Consulting LLC (life sciences consulting services); 2020, Chief Financial Officer, Avocado Systems Inc. (cyber security software provider); 2009-2020, Chief Financial Officer, Emtec, Inc. (information technology consulting/services). [ ] FS Energy and Power Fund (business development company);
Wilmington Funds (12 portfolios) (registered investment company).

Lisa A. Dolly

615 East Michigan Street

Milwaukee, WI, 53202

Age: 55

 

Director October 2021 to present From July 2019-December 2019, Chairman, Pershing LLC (broker dealer, clearing and custody firm); January 2016-June 2019, Chief Executive Officer, Pershing, LLC. [ ] Allfunds Group PLC (United Kingdom wealthtech and fund distribution provider); Securities Industry and Financial Markets Association (trade association for broker dealers, investment banks and asset managers); Hightower Advisors (wealth management firm).

Nicholas A. Giordano

615 East Michigan Street

Milwaukee, WI 53202

Age: 78

 

Director 2006 to present Since 1997, Consultant, financial services organizations. [ ] IntriCon Corporation (biomedical device
manufacturer); Wilmington Funds (12 portfolios) (registered investment company).

Arnold M. Reichman

615 East Michigan Street

Milwaukee, WI 53202

Age: 73

 

Chairman

Director

2005 to present

1991 to present
Retired. [ ] EIP Investment Trust (registered investment company).

Brian T. Shea

615 East Michigan Street
Milwaukee, WI 53202

Age: 61

 

Director 2018 to present From 2014-2017, Chief Executive Officer, BNY Mellon Investment Services (fund services, global custodian and securities clearing firm); from 1983-2014, Chief Executive Officer and various positions, Pershing LLC (broker dealer, clearing and custody firm). [ ] WisdomTree Investments, Inc. (asset management company) (until March 2019); Fidelity National Information Services, Inc. (financial services technology company); Ameriprise Financial, Inc. (financial services company).
Robert A. Straniere
615 East Michigan Street
Milwaukee, WI 53202
Age: 80
Director 2006 to present Since 2009, Administrative Law Judge, New York City; since 1980, Founding Partner, Straniere Law Group (law firm). [ ] None.

18 

 

INTERESTED DIRECTOR2

Robert Sablowsky

615 East Michigan Street

Milwaukee, WI 53202

Age: 83

 

Vice Chairman

Director

2016 to present

 

1991 to present

Since 2002, Senior Director – Investments and, prior thereto, Executive Vice President, of Oppenheimer & Co., Inc. (a registered broker-dealer). [ ] None.
OFFICERS

Salvatore Faia, JD, CPA, CFE

Vigilant Compliance, LLC

Gateway Corporate

Center, Suite 216

223 Wilmington West

Chester Pike

Chadds Ford, PA 19317

Age: 59

 

President

Chief Compliance Officer
2009 to present

2004 to present
Since 2004, President, Vigilant Compliance, LLC (investment management services company); since 2005, Independent Trustee of EIP Investment Trust (registered investment company). Since 2021, President and Chief Compliance Officer of Penn Capital Funds Trust. N/A N/A

James G. Shaw

615 East Michigan Street
Milwaukee, WI 53202

Age: 61

 

Treasurer
and
Secretary
2016 to present Treasurer and Secretary of The RBB Fund, Inc. (since 2016) and Penn Capital Funds Trust (since 2021); from 2005 to 2016, Assistant Treasurer of The RBB Fund, Inc.; from 1995 to 2016, Senior Director and Vice President of BNY Mellon Investment Servicing (US) Inc. (financial services company). N/A N/A
Craig A. Urciuoli
615 East Michigan Street Milwaukee, WI 53202
Age: 47
Director of Marketing & Business Development 2019 to present Director of Marketing & Business Development of The RBB Fund, Inc. (since 2019) and Penn Capital Funds Trust (since 2021); from 2000-2019, Managing Director, Third Avenue Management LLC (investment advisory firm). N/A N/A

Jennifer Witt

615 East Michigan Street
Milwaukee, WI 53202

Age: 39

 

Assistant Treasurer 2018 to present Since 2020, Vice President, U.S. Bank Global Fund Services (fund administrative services firm); from 2016 to 2020, Assistant Vice President, U.S. Bank Global Fund Services; from 2007 to 2016, Supervisor, Nuveen Investments (registered investment company). N/A N/A

Edward Paz

615 East Michigan Street

Milwaukee, WI 53202

Age: 51

 

Assistant Secretary 2016 to present Since 2007, Vice President and Counsel, U.S. Bank Global Fund Services (fund administrative services firm). N/A N/A

19 

 

Michael P. Malloy
One Logan Square
Ste. 2000
Philadelphia, PA 19103
Age: 62
Assistant
Secretary
1999 to present Since 1993, Partner, Faegre Drinker Biddle & Reath LLP (law firm). N/A N/A
Jillian L. Bosmann
One Logan Square
Ste. 2000
Philadelphia, PA 19103
Age: 43
Assistant
Secretary
2017 to present Since 2017, Partner, Faegre Drinker Biddle & Reath LLP (law firm). N/A N/A

 

*Each Director oversees [ ] portfolios of the fund complex, consisting of the series in the Company and in Penn Capital Funds Trust (7 portfolios).
1.Subject to the Company’s Retirement Policy, each Director may continue to serve as a Director until the last day of the calendar year in which the applicable Director attains age 75 or until his or her successor is elected and qualified or his or her death, resignation or removal. The Board reserves the right to waive the requirements of the Policy with respect to an individual Director. The Board has approved waivers of the policy with respect to Messrs. Brodsky, Giordano, Sablowsky and Straniere. Each officer holds office at the pleasure of the Board until the next special meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns or is removed.
2.Mr. Sablowsky is considered an “interested person” of the Company as that term is defined in the 1940 Act and is referred to as an “Interested Director.” Mr. Sablowsky is considered an “Interested Director” of the Company by virtue of his position as a senior officer of Oppenheimer & Co., Inc., a registered broker-dealer.

 

Director Experience, Qualifications, Attributes and/or Skills

 

The information above includes each Director’s principal occupations during the last five years.  Each Director possesses extensive additional experience, skills and attributes relevant to his qualifications to serve as a Director.  The cumulative background of each Director led to the conclusion that each Director should serve as a Director of the Company. Mr. Brodsky has over 40 years of senior executive-level management experience in the cable television and communications industry.  Mr. Chandler has demonstrated leadership and management abilities as evidenced by his senior executive level positions in the investment technology consulting/services and investment banking/brokerage industries, and also serves on various boards. Ms. Dolly has over three decades of experience in the financial services industry, and she has demonstrated her leadership and management abilities by serving in numerous senior executive-level positions. Mr. Giordano has years of experience as a consultant to financial services organizations and also serves on the boards of other registered investment companies. Mr. Reichman brings decades of investment management experience to the Board, in addition to senior executive-level management experience.  Mr. Sablowsky has demonstrated leadership and management abilities as evidenced by his senior executive-level positions in the financial services industry. Mr. Shea has demonstrated leadership and management abilities as evidenced by his senior executive-level positions in the brokerage, clearing, and investment services industry, including service on the boards of industry regulatory organizations and a university.  Mr. Straniere has been a practicing attorney for over 30 years and has served on the boards of an asset management company and another registered investment company. 

 

Standing Committees

 

The responsibilities of each Committee of the Board and its members are described below.

 

Audit Committee. The Board has an Audit Committee comprised of three Independent Directors. The current members of the Audit Committee are Messrs. Brodsky, Chandler and Giordano. The Audit Committee, among other things, reviews results of the annual audit and approves the firm(s) to serve as independent auditors. The Audit Committee convened six times during the fiscal year ended August 31, 2021.

 

Contract Committee. The Board has a Contract Committee comprised of the Interested Director and four Independent Directors. The current members of the Contract Committee are Ms. Dolly and Messrs. Brodsky, Chandler, Sablowsky and Straniere. The Contract Committee reviews and makes recommendations to the Board regarding the approval and continuation of agreements and plans of the Company. The Contract Committee convened six times during the fiscal year ended August 31, 2021.

 

Executive Committee. The Board has an Executive Committee comprised of the Interested Director and three Independent Directors. The current members of the Executive Committee are Messrs. Chandler, Giordano, Reichman and Sablowsky. The Executive Committee may generally carry on and manage the business of the Company when the Board is not in session. The Executive Committee did not meet during the fiscal year ended August 31, 2021.

 

Nominating and Governance Committee. The Board has a Nominating and Governance Committee comprised of three Independent Directors. The current members of the Nominating and Governance Committee are Messrs. Brodsky, Giordano and Reichman. The Nominating and Governance Committee recommends to the Board all persons to be nominated as Directors of the Company. The Nominating and Governance Committee will consider nominees recommended by shareholders. Recommendations should be submitted to the Committee care of the Company’s Secretary. The Nominating and Governance Committee convened four times during the fiscal year ended August 31, 2021.

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Product Development Committee. The Board has a Product Development Committee comprised of the Interested Director and three Independent Directors. The current members of the Product Development Committee are Messrs. Chandler, Reichman, Sablowsky and Shea. The Product Development Committee oversees the process regarding the addition of new investment advisers and investment products to the Company. The Product Development Committee convened three times during the fiscal year ended August 31, 2021.

 

Regulatory Oversight Committee. The Board has a Regulatory Oversight Committee comprised of the Interested Director and four Independent Directors. The current members of the Regulatory Oversight Committee are Ms. Dolly and Messrs. Sablowsky, Shea and Straniere. The Regulatory Oversight Committee monitors regulatory developments in the mutual fund industry and focuses on various regulatory aspects of the operation of the Company. The Regulatory Oversight Committee convened four times during the fiscal year ended August 31, 2021.

 

Valuation Committee. The Board has a Valuation Committee comprised of the Interested Director and two officers of the Company. The members of the Valuation Committee are Messrs. Faia, Sablowsky and Shaw. The Valuation Committee is responsible for reviewing fair value determinations. The Valuation Committee convened four times during the fiscal year ended August 31, 2021.

 

Risk Oversight

 

The Board performs its risk oversight function for the Company through a combination of (1) direct oversight by the Board as a whole and Board committees and (2) indirect oversight through the Company’s investment advisers and other service providers, Company officers and the Company’s Chief Compliance Officer ("CCO"). The Company is subject to a number of risks, including but not limited to investment risk, compliance risk, operational risk, reputational risk, credit risk and counterparty risk. Day-to-day risk management with respect to the Company is the responsibility of the Company’s investment advisers or other service providers (depending on the nature of the risk) that carry out the Company’s investment management and business affairs. Each of the investment advisers and the other service providers have their own independent interest in risk management and their policies and methods of risk management will depend on their functions and business models and may differ from the Company’s and each other’s in the setting of priorities, the resources available or the effectiveness of relevant controls.

 

The Board provides risk oversight by receiving and reviewing on a regular basis reports from the Company’s investment advisers or other service providers, receiving and approving compliance policies and procedures, periodic meetings with the Company’s portfolio managers to review investment policies, strategies and risks, and meeting regularly with the Company’s CCO to discuss compliance reports, findings and issues. The Board also relies on the Company’s investment advisers and other service providers, with respect to the day-to-day activities of the Company, to create and maintain procedures and controls to minimize risk and the likelihood of adverse effects on the Company’s business and reputation.

 

Board oversight of risk management is also provided by various Board Committees. For example, the Audit Committee meets with the Company’s independent registered public accounting firms to ensure that the Company’s respective audit scopes include risk-based considerations as to the Company’s financial position and operations. The Board may, at any time and in its discretion, change the manner in which it conducts risk oversight. The Board’s oversight role does not make the Board a guarantor of the Company’s investments or activities.

 

Director Ownership of Shares of the Company

 

The following table sets forth the dollar range of equity securities beneficially owned by each Director in the Funds and in all of the portfolios of the Company (which for each Director comprise all registered investment companies within the Company’s family of investment companies overseen by him or her), as of December 31, 2021, including amounts through the deferred compensation plan.

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Name of Director Dollar Range of
Equity Securities in the Funds*

Aggregate Dollar Range of

Equity Securities in All

Registered Investment Companies

Overseen by Director within the

Family of Investment Companies

INDEPENDENT DIRECTORS  
Julian A. Brodsky None Over $100,000
Gregory P. Chandler None Over $100,000
Lisa A. Dolly(1) None None
Nicholas A. Giordano None $10,001-$50,000
Arnold M. Reichman None Over $100,000
Brian T. Shea None $10,001-$50,000
Robert A. Straniere None $10,001-$50,000
INTERESTED DIRECTOR  
Robert Sablowsky None Over $100,000

 

*The Funds had not commenced operations prior to the date of this SAI.

(1)Ms. Dolly began serving as a Director effective October 1, 2021.

 

Directors’ and Officers’ Compensation

Effective January 1, 2022, the Company and Penn Capital Funds Trust, based on an allocation formula, pay each Director a retainer at the rate of $125,000 annually, $13,500 for each regular meeting of the Board, $3,500 for each committee meeting attended in-person, and $2,000 for each committee meeting attended telephonically or special meeting of the Board attended in-person or telephonically. The Chairman of the Audit Committee and Chairman of the Regulatory Oversight Committee each receives an additional fee of $20,000 for his services. The Chairman of the Contract Committee and the Chairman of the Nominating and Governance Committee each receives an additional fee of $10,000 per year for his services. The Vice Chairman of the Board receives an additional fee of $35,000 per year for his services in this capacity and the Chairman of the Board receives an additional fee of $75,000 per year for his services in this capacity.

 

From April 1, 2019, through December 31, 2021, the Company paid each Director a retainer at the rate of $125,000 annually, $10,000 for each regular meeting of the Board, $3,500 for each committee meeting attended in-person, and $2,000 for each committee meeting attended telephonically or special meeting of the Board attended in-person or telephonically. The Chairman of the Audit Committee and Chairman of the Regulatory Oversight Committee each received an additional fee of $20,000 for his services. The Chairman of the Contract Committee and the Chairman of the Nominating and Governance Committee each received an additional fee of $10,000 per year for his services. The Vice Chairman of the Board received an additional fee of $35,000 per year for his services in this capacity and the Chairman of the Board received an additional fee of $75,000 per year for his services in this capacity.

 

Directors are reimbursed for any reasonable out-of-pocket expenses incurred in attending meetings of the Board or any committee thereof. An employee of Vigilant Compliance, LLC serves as President and CCO of the Company. Vigilant Compliance, LLC is compensated for the services provided to the Company, and such compensation is determined by the Board. For the fiscal year ended August 31, 2021, Vigilant Compliance LLC received $690,000 in the aggregate from all series of the Company for its services. Employees of the Company serve as Treasurer, Secretary and Director of Marketing & Business Development, and are compensated for services provided. For the fiscal year ended August 31, 2021, each of the following members of the Board and the Treasurer, Secretary and Director of Marketing & Business Development received compensation from the Company in the following amounts:

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Name of Director/Officer Aggregate
Compensation
from the Funds*
Pension or  
Retirement
Benefits Accrued as
Part of Funds
Expenses
Total  
Compensation  
From Fund
Complex  Paid to
Directors or
Officers
Independent Directors:      
Julian A. Brodsky, Director $0 N/A $198,000
J. Richard Carnall, Director (1) $0 N/A $190,000
Gregory P. Chandler, Director $0 N/A $224,500
Lisa A. Dolly, Director (2) $0 N/A $0
Nicholas A. Giordano, Director $0 N/A $202,000
Arnold M. Reichman, Director and Chairman $0 N/A $275,500
Brian T. Shea, Director $0 N/A $191,875
Robert A. Straniere, Director $0 N/A $196,000
Interested Director:      
Robert Sablowsky, Director $0 N/A $258,000
Officers:      
James G. Shaw, Treasurer and Secretary $0 N/A $299,000
Craig Urciuoli, Director of Marketing & Business Development $0 N/A $247,200

 

*The Funds had not commenced operations prior to the date of this SAI.

(1)Mr. Carnall retired from his role as a Director effective October 1, 2021.

(2)Ms. Dolly was appointed as a Director effective October 1, 2021.

 

Each compensated Director is entitled to participate in the Company’s deferred compensation plan (the “DC Plan”). Under the DC Plan, a compensated Director may elect to defer all or a portion of his or her compensation and have the deferred compensation treated as if it had been invested by the Company in shares of one or more of the portfolios of the Company. The amount paid to the Directors under the DC Plan will be determined based upon the performance of such investments.

 

As of December 31, 2021, the Independent Directors and their respective family members (spouse or dependent children) did not own beneficially or of record any securities of the Company’s investment advisers or distributor, or of any person directly or indirectly controlling, controlled by, or under common control with the investment advisers or distributor.

 

Director Emeritus Program

 

The Board has created a position of Director Emeritus, whereby an incumbent Director who has attained at least the age of 75 and completed a minimum of fifteen years of service as a Director, may, in the sole discretion of the Nominating and Governance Committee of the Company (“Committee”), be recommended to the full Board to serve as Director Emeritus.

 

A Director Emeritus that has been approved as such receives an annual fee in an amount equal to up to 50% of the annual base compensation paid to a Director. Compensation will be determined annually by the Committee and the Board with respect to each Director Emeritus. In addition, a Director Emeritus will be reimbursed for any expenses incurred in connection with their service, including expenses of travel and lodging incurred in attendance at Board meetings. A Director Emeritus will continue to receive relevant materials concerning the Funds, will be expected to attend at least one regularly scheduled quarterly meeting of the Board each year (which attendance may be via telephone), and will be available to consult with the Directors at reasonable times as requested. However, a Director Emeritus does not have any voting rights at Board meetings and is not subject to election by shareholders of the Funds.

 

A Director Emeritus will be permitted to serve in such capacity from year to year at the pleasure of the Committee and the Board for up to three years. Effective October 1, 2021, J. Richard Carnall serves as a Director Emeritus of the Company.

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CODE OF ETHICS

 

The Company, the Adviser, and [ ] (the “Distributor”), have each adopted a code of ethics (“Code of Ethics”) pursuant to Rule 17j-1 under the 1940 Act, which governs personal securities trading by their respective personnel. Each Code of Ethics permits such individuals to purchase and sell securities, including securities that are purchased, sold, or held by the Funds, but only subject to certain conditions designed to ensure that purchases and sales by such individuals do not adversely affect the Funds’ investment activities.

 

PRINCIPAL HOLDERS

 

As of the date of this SAI, no shares of the Funds were outstanding.

 

INVESTMENT ADVISORY AGREEMENT

 

Investment Advisory Agreement

 

The Adviser is a Delaware limited liability company with offices at 3050 K Street NW, Suite W-201, Washington, DC 20007. The Adviser is controlled by F/m Acceleration, LLC, a Delaware limited liability company.

 

The Adviser provides investment advisory services to each Fund pursuant to the terms of an Investment Advisory Agreement (the “Advisory Agreement”) between the Company and the Adviser. After the initial two year-term, the Advisory Agreement may be continued in effect from year to year with the approval of (1) the Board or (2) vote of a majority (as defined by the 1940 Act) of the outstanding voting securities of each Fund, provided that in either event the continuance must also be approved by a majority of the Independent Directors by vote cast in person at a meeting called for the purpose of voting on such approval. The Advisory Agreement terminates automatically in the event of its assignment, as defined in the 1940 Act and the rules thereunder.

 

The Adviser manages each Fund’s investments in accordance with the stated policies of the Fund, subject to the supervision of the Board. The Adviser provides such additional administrative services as the Company may require beyond those furnished by the Administrator and furnishes, at its own expense, such office space, facilities, equipment, clerical help, and other personnel and services as may reasonably be necessary in connection with the operations of the Company.

 

Pursuant to the terms of the Advisory Agreement, in consideration of the services provided by the Adviser, each Fund pays the Adviser a unitary management fee that is computed and paid monthly at an annual rate of 0.15% of the Fund’s average daily net assets during the month. From the unitary management fee, the Adviser pays most of the expenses of each Fund, including transfer agency, custody, fund administration, legal, audit and other services. However, under the Advisory Agreement, the Adviser is not responsible for interest expenses, brokerage commissions and other trading expenses, acquired fund fees and expenses, taxes and other extraordinary costs such as litigation and other expenses not incurred in the ordinary course of business. The Adviser will not be liable for any error of judgment, mistake of law, or for any loss suffered by a Fund in connection with the performance of the Advisory Agreement, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Adviser in the performance of its duties, or from reckless disregard of its obligations and duties under the Advisory Agreement.

 

PORTFOLIO MANAGERS

 

Peter Baden, Alexander Morris and Marcin Zdunek are the portfolio managers responsible for investment-related services provided to the Fund. The following table provides information regarding accounts managed by each portfolio manager as of March 31, 2022.

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Portfolio Manager;
Other Accounts
Total Accounts Accounts With
Performance-Based Fees
Number Assets Number Assets
Peter Baden        
Registered Investment Companies 0 0 0 0
Other Pooled Investment Vehicles 0 0 0 0
Other Accounts 862 $560 million 0 0
         
Alexander Morris        
Registered Investment Companies 1 $94 million 0 0
Other Pooled Investment Vehicles 0 0 0 0
Other Accounts 0 0 0 0
         
Marcin Zdunek        
Registered Investment Companies 0 0 0 0
Other Pooled Investment Vehicles 0 0 0 0
Other Accounts 0 0 0 0

 

Portfolio Manager Compensation

 

The compensation structure for the portfolio managers is based upon a fixed salary as well as a discretionary bonus determined by the management of the Adviser.  Salaries are determined by management and are based upon an individual’s position and overall value to the firm.  Bonuses are also determined by management and are based upon an individual’s overall contribution to the success of the firm and the profitability of the firm.  Salaries and bonuses are not based upon criteria such as performance of the Funds or the value of assets included in the Funds’ portfolio.

 

Material Conflicts of Interest

 

The portfolio managers’ management of other accounts may give rise to potential conflicts of interest in connection with their management of a Fund’s investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as a Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby a portfolio manager could favor one account over another. Another potential conflict could include the portfolio managers’ knowledge about the size, timing and possible market impact of Fund trades, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of a Fund. However, the Adviser has established policies and procedures to ensure that the purchase and sale of securities and other investments among all accounts it manages are fairly and equitably allocated. In accordance with the Adviser’s trade rotation policy, there will be cases where a Fund will trade after other accounts.

 

Ownership of Fund Shares by the Portfolio Managers

 

The portfolio managers did not own any shares of the Funds as no shares of the Funds were outstanding prior to the date of this SAI.

 

UNDERWRITER

 

The Company has entered into a distribution agreement (the “Distribution Agreement”) with [ ] (the “Distributor”), located at [ ], pursuant to which the Distributor acts as each Fund’s principal underwriter and distributes shares. Shares are continuously offered for sale by the Distributor only in Creation Units. Each Creation Unit is made up of at least 25,000 shares. The Distributor will not distribute shares in amounts less than a Creation Unit.

 

Under the Distribution Agreement, the Distributor, as agent for the Company, will receive orders for the purchase and redemption of Creation Units, provided that any subscriptions and orders will not be binding on the Company until accepted by the Company. The Distributor will deliver prospectuses and, upon request, Statements of Additional Information to persons purchasing Creation Units and will maintain records of orders placed with it. The Distributor is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and a member of the Financial Industry Regulatory Authority.

25 

 

The Distributor may also enter into agreements with securities dealers (“Soliciting Dealers”) who will solicit purchases of Creation Units of shares. Such Soliciting Dealers may also be Authorized Participants (as discussed in “Procedures for Creation of Creation Units” below) or DTC participants (as defined below).

 

The Distribution Agreement has an initial term of up to two years and will continue in effect only if such continuance is specifically approved at least annually by the Board of Directors or by vote of a majority of a Fund’s outstanding voting securities and, in either case, by a majority of the Independent Directors. The Distribution Agreement is terminable without penalty by the Company, on behalf of a Fund, on 60 days’ written notice when authorized either by a majority vote of a Fund’s shareholders or by vote of a majority of the Board of Directors, including a majority of the Directors who are not “interested persons” (as defined under the 1940 Act) of the Company, or by the Distributor on 60 days’ written notice, and will automatically terminate in the event of its “assignment,” as defined in the 1940 Act.

 

PURCHASE AND REDEMPTION OF CREATION UNITS

 

Purchase and Issuance of Creation Units

 

The Company issues and sells shares of a Fund only: (i) in Creation Units on a continuous basis through the Distributor, without a sales load (but subject to transaction fees), at their NAV next determined after receipt of an order, on any Business Day, in proper form pursuant to the terms of the Authorized Participant Agreement (“Participant Agreement”); or (ii) pursuant to the Dividend Reinvestment Service (defined below).  The NAV of a Fund’s shares is calculated each business day as of the close of regular trading on the Exchange, generally 4:00 p.m., Eastern Time.  A Fund will not issue fractional Creation Units.  A Business Day is any day on which the Exchange is open for business.

 

FUND DEPOSIT.  The consideration for purchase of a Creation Unit of a Fund generally consists of the in-kind deposit of a designated portfolio of securities (the “Deposit Securities”) per each Creation Unit, constituting a substantial replication of a Fund and a Cash Component (defined below), computed as described below. Notwithstanding the foregoing, the Company reserves the right to permit or require the substitution of a “cash in lieu” amount (“Deposit Cash”) to be added to the Cash Component to replace any Deposit Security.  When accepting purchases of Creation Units for all or a portion of Deposit Cash, a Fund may incur additional costs associated with the acquisition of Deposit Securities that would otherwise be provided by an in-kind purchaser.  These additional costs associated with the acquisition of Deposit Securities (“Non-Standard Charges”) may be recoverable from the purchaser of creation units.

 

Together, the Deposit Securities or Deposit Cash, as applicable, and the Cash Component constitute the “Fund Deposit,” which represents the minimum initial and subsequent investment amount for a Creation Unit of a Fund.  The “Cash Component” is an amount equal to the difference between the NAV of the shares (per Creation Unit) and the market value of the Deposit Securities or Deposit Cash, as applicable.  If the Cash Component is a positive number (i.e., the NAV per Creation Unit exceeds the market value of the Deposit Securities or Deposit Cash, as applicable), the Cash Component will be such positive amount.  If the Cash Component is a negative number (i.e., the NAV per Creation Unit is less than the market value of the Deposit Securities or Deposit Cash, as applicable), the Cash Component shall be such negative amount and the creator will be entitled to receive cash in an amount equal to the Cash Component.  The Cash Component serves the function of compensating for any differences between the NAV per Creation Unit and the market value of the Deposit Securities or Deposit Cash, as applicable.  Computation of the Cash Component excludes any stamp duty or other similar fees and expenses payable upon transfer of beneficial ownership of the Deposit Securities, if applicable, which will be the sole responsibility of the Authorized Participant (as defined below).

 

Each Fund, through NSCC, makes available on each Business Day, immediately prior to the opening of business on the Exchange (currently 9:30 a.m., Eastern time), the list of the names and the required number of shares of each Deposit Security or the required amount of Deposit Cash, as applicable, to be included in the current Fund Deposit (based on information at the end of the previous Business Day) for a Fund.  Such Fund Deposit is subject to any applicable adjustments as described below, in order to effect purchases of Creation Units of a Fund until such time as the next-announced composition of the Deposit Securities or the required amount of Deposit Cash, as applicable, is made available.

 

The identity and number of shares of the Deposit Securities or the amount of Deposit Cash, as applicable, required for the Fund Deposit for a Fund changes as rebalancing adjustments and corporate action events are reflected from time to time by the Adviser with a view to the investment objectives of a Fund. 

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The Company reserves the right to permit or require the substitution of an amount of cash (i.e., a “cash in lieu” amount) to replace any Deposit Security, which will be added to the Deposit Cash, if applicable, and the Cash Component, including, without limitation, in situations where the Deposit Security: (i) may not be available in sufficient quantity for delivery; (ii) may not be eligible for transfer through the systems of DTC for corporate securities and municipal securities; (iii) may not be eligible for trading by an Authorized Participant (as defined below) or the investor for which it is acting; (iv) would be restricted under the securities laws or where the delivery of the Deposit Security to the Authorized Participant would result in the disposition of the Deposit Security by the Authorized Participant becoming restricted under the securities laws; or (v) in certain other situations (collectively, “cust