EXCHANGE TRADED CONCEPTS TRUST
Yorkville High Income MLP ETF
(the “Fund”)
Supplement dated March 6, 2013, to the
currently effective
Prospectus and SAI
The Fund invests at
least 80% of its total assets in securities of the Solactive High Income MLP Index (the “Index”). On February 27, 2013,
Structured Solutions AG, the creator and the administrator of the Index, announced changes to the Index methodology. Changes to
the Index methodology are described more fully below. Index adjustments reflecting the revised methodology will be made at the
Index’s annual rebalancing this month. As a result of the changes to the Index methodology, the Prospectus and SAI are revised,
effective as of the Index rebalancing date, as described below.
Summary of Index Methodology Changes
Royalty Trusts
Royalty trusts are
no longer eligible for inclusion on the Index.
Revisions to the Definition of “High
Income” Master Limited Partnerships (“MLPs”)
The definition of “High
Income” MLP has been expanded to include MLPs operating with one of the following as a substantial business segment:
|
·
|
Wholesale marketing of propane, natural gas liquids, gasoline and other fuels;
|
|
·
|
Energy services to the oil and gas industry;
|
|
·
|
Leasing of mineral reserves; and
|
|
·
|
Operating as the general partner of any business listed above.
|
Additional Selection Criterion
The criteria that must be satisfied
by an MLP to be considered for inclusion on the Index has been expanded by requiring an MLP to have a “Minimum Quarterly
Distribution” policy in place. A “Minimum Quarterly Distribution” policy is a minimum distribution that the MLP
plans to pay its common and subordinated unit holders upon initial public offering (assuming the MLP is able to generate sufficient
cash flow from its operations after the payment of fees and expenses and other expenditures).
Prospectus and SAI Changes
As a result of the
foregoing, the following changes are made to the Prospectus and SAI.
|
1.
|
The Fund will no longer invest in royalty trusts. All references to royalty trusts in the Prospectus
and SAI are deleted.
|
|
2.
|
The following replaces the first sentence in the second paragraph of the “Principal Investment
Strategies” on page 2 of the Fund’s Prospectus:
|
The Index consists of MLPs operating
with one of the following as a substantial business segment: exploration and production of oil and/or natural gas; sale, distribution
and retail and wholesale marketing of propane, natural gas liquids, gasoline and other fuels; marine transportation of one or more
of the following: crude oil, dry bulk, refined products, liquefied natural gas (“LNG”), and other commodities; direct
mining, production and marketing of natural resources, including timber, fertilizers, coal and other minerals; energy services
to the oil and gas industry; oil refining; leasing of mineral reserves; and operating as the general partner of any business listed
above.
|
3.
|
The following replaces the section “Information Regarding the Index” beginning on
page 22 of the Prospectus:
|
Information Regarding the Index
The Solactive High Income MLP
Index is a rules-based index designed to provide investors a means of tracking the performance of selected MLPs which are publicly
traded on a U.S. securities exchange. The Index is comprised of MLPs that meet certain criteria relating to current yield, coverage
ratio and distribution growth as determined by Structured Solutions. Market capitalization and liquidity screens will be applied
in addition to the fundamental screens for current yield, coverage ratio and distribution growth to ensure sufficient market size
and liquidity of the Index components.
To be eligible for inclusion
in the Index, a company must be structured as an MLP and be classified as a “High Income” MLP. High Income MLPs include
all MLPs operating with one of the following as a substantial business segment: exploration and production of oil and/or natural
gas; sale, distribution and retail and wholesale marketing of propane, natural gas liquids, gasoline and other fuels; marine transportation
of one or more of the following: crude oil, dry bulk, refined products, liquefied natural gas (“LNG”), and other commodities;
direct mining, production and marketing of natural resources, including timber, fertilizers, coal and other minerals; energy services
to the oil and gas industry; oil refining; leasing of mineral reserves; and operating as the general partner of any business listed
above. As of February 28, 2013 the Index was concentrated in the energy sector. As of February 28, 2013, the Index included 25
MLPs.
Constituent securities of the
Index must have a market capitalization of at least $400 million on a rebalancing date to be eligible for inclusion in the Index.
Rebalancing occurs annually. Securities whose market capitalizations fall below $400 million upon the rebalancing of the Index
will no longer be eligible for inclusion in the Index. As of February 28, 2013, the average market capitalization of companies
included in the Index was $2.1 billion. Securities must have a three-month average daily trading volume value of at least $1 million
to be eligible for the Index. An MLP must have a Minimum Quarterly Distribution policy in place, meaning that it intends to pay
a minimum distribution to its common and subordinated unit holders upon initial public offering (assuming the MLP is able to generate
sufficient cash flow from its operations after the payment of fees and expenses and other expenditures). Additionally, the MLP
must have paid at least one distribution to shareholders to be eligible for inclusion in the Index. Only securities whose shares
trade on a recognized U.S. securities exchange will be eligible for inclusion in the Index.
The Index was created and is
maintained by Structured Solutions. Structured Solutions is a leading company in the structuring and indexing business for institutional
clients.
|
4.
|
The following replaces the section “Additional Index Information” on page 1 of the
SAI:
|
Solactive High Income MLP
Index
The Solactive High Income MLP
Index (the “Index”) is a rules-based index designed to provide investors a means of tracking the performance of selected
Master Limited Partnerships (“MLPs”) which are publicly traded on a U.S. securities exchange. The Index is comprised
of MLPs that meet certain criteria relating to current yield, coverage ratio and distribution growth.
To qualify for Index inclusion,
a company must meet the following criteria:
|
·
|
A market capitalization of at least $400 million;
|
|
·
|
An average daily value traded in the last three months of at least $1 million;
|
|
·
|
Listing on a securities exchange in the United States;
|
|
·
|
Classified as a High Income MLP (defined below);
|
|
·
|
Have a Minimum Quarterly Distribution (“MQD”) (defined below) policy in place; and
|
|
·
|
At least one distribution has been paid out to shareholders.
|
A “High Income” MLP
includes all MLPs operating with one of the following as a substantial business segment: exploration and production of oil and/or
natural gas; sale, distribution and retail and wholesale marketing of propane, natural gas liquids, gasoline and other fuels; marine
transportation of one or more of the following: crude oil, dry bulk, refined products, liquefied natural gas (“LNG”),
and other commodities; direct mining, production and marketing of natural resources, including timber, fertilizers, coal and other
minerals; energy services to the oil and gas industry; oil refining; leasing of mineral reserves; and operating as the general
partner of any business listed above.
An MQD policy is a minimum distribution
an MLP plans to pay its common and subordinated unit holders upon initial public offering (assuming the MLP is able to generate
sufficient cash flow from its operations after the payment of fees and expenses and other expenditures).
On the first Business Day (as
defined in the methodology) of the week of the third Friday in March, each Index component is grouped according to liquidity. Based
on each Index component’s three month average daily value traded, such Index components are grouped into three liquidity
tiers - Tier 1 contains the most liquid and Tier 3 the least liquid Index components. Each Tier has a different index weighting
and each Index component is then assigned an equal weighting within each Tier. This weighting scheme may be amended from time to
time to ensure sufficient diversification and compliance with financial product regulations in the United States.
Companies are ranked according
to certain criteria relating to current yield, coverage ratio and distribution growth. Subsequently the three ranks are weighted
and added up for each company with the rank for current yield receiving the highest weight (“Total Rank”) and the companies
are ranked again based on their Total Rank. The 25 highest ranked companies are then chosen as Index components. It is intended
that the minimum number of Index components will be 20 and the maximum number of Index components will be 25. However, these figures
are subject to change as market conditions and the availability of suitable Index components may change over time.
The composition and weightings
of the Index are ordinarily adjusted once annually as addressed in the Index methodology. Changes to the Index will be published
to Structured Solutions’ website at www.structured-solutions.eu before changes are effected.
Information regarding the Index
will be disseminated through Reuters and Bloomberg.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE
REFERENCE.
YCM-SK-004-0100
Faithshares Catholic Values Fund (NYSE:FCV)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Faithshares Catholic Values Fund (NYSE:FCV)
Historical Stock Chart
Von Jun 2023 bis Jun 2024