(each, a “Fund,” and collectively, the “Funds”)
Supplement dated
To each Fund’s currently effective Prospectus and Summary Prospectus
(together, the “Prospectuses”) and Statement of Additional Information (“SAI”)
This supplement provides new and additional information beyond that contained in the Prospectuses and SAI for each Fund and should be read in conjunction with those documents.
| · | Applicable to the Cabana Target Drawdown 7 ETF |
Effective on or about January 5, 2024, the Fund’s name and investment objective will change as follows:
| Current | New | |
| Name | Cabana Target Drawdown 7 ETF | Cabana Target Beta ETF |
| Investment Objective | The Fund seeks to provide long-term growth within a targeted risk parameter. | The Fund seeks to provide long-term growth. |
In addition, as part of the change in the Fund’s focus from target drawdown to target beta, the Fund’s principal investment strategies will change and the “Principal Investment Strategies” section of the Fund’s Prospectuses will be replaced with the language below. Corresponding revisions may be made to other sections of the Fund’s Prospectus as needed.
Principal Investment Strategies
The Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective with limited volatility and reduced correlation to the overall performance of the equity markets by allocating its assets among the following five major asset classes – equities, fixed income securities, real estate, currencies, and commodities. The Fund operates in a manner that is commonly referred to as a “fund of funds,” meaning that it obtains investment exposure to an asset class primarily by investing in one or more ETFs designed to track the performance of the asset class. The ETFs in which the Fund invests may invest in a broad range of securities, including equity securities of any market capitalization of US and foreign (including emerging markets) issuers and fixed income securities of any duration, maturity, and quality (including high yield or non-investment grade securities, commonly referred to as “junk bonds”). In addition, the Fund may invest directly in securities and other instruments that provide the desired exposure to the asset class.
Cabana Asset Management (the “Sub-Adviser”) selects investments for the Fund pursuant to an asset allocation strategy designed to manage portfolio volatility and reduce exposure to down markets. The Sub-Adviser utilizes its Cyclical Asset Reallocation Algorithm (“CARA”), a proprietary algorithm developed by the Sub-Adviser that monitors market conditions to identify assets that are particularly attractive at a given time in the business cycle. CARA incorporates various fundamental economic and technical price data, including public information concerning the yield curve (i.e., the spread between short- and long-term interest rates), earnings of a broad spectrum of U.S. companies, and equity price trends. CARA also uses this information to identify significant market deteriorations and provide corresponding signals, when appropriate, to move to a more conservative allocation (e.g., short term treasuries). The Sub-Adviser, through CARA, monitors the Fund’s investments daily and allocates or reallocates assets among less correlated and inversely-correlated asset classes in an effort to reduce exposure to potential market declines.
The Fund’s portfolio construction process generally seeks to maintain an aggregate one-year rolling target beta relative to the S&P 500 Equal Weight Index (the “Reference Index”) of 0.35, although the beta exposure is not a fixed amount and will vary based on CARA’s output in response to market conditions. The Sub-Adviser believes a target beta of approximately 0.35 relative to the Reference Index will provide the potential for long-term capital appreciation while maintaining lower volatility than the Reference Index. Beta is intended to measure the volatility of an asset class relative to the applicable overall market. For example, an asset class that has a beta of 1 has the same volatility as the applicable overall market, an asset class that has a beta less than 1 has less volatility than the applicable overall market, and an asset class that has a beta greater than 1 has more volatility than the applicable overall market. The Sub-Adviser strives to emphasize stability throughout the economic cycle and protection of capital, as well as accumulation of bond interest and equity dividends. Although the Sub-Adviser anticipates that it will purchase or sell securities based on the signals provided by CARA, the Sub-Adviser maintains full decision-making power and may override CARA if it determines that a breakdown or systemic change has occurred in the methods for which capital is deployed within the worldwide economic system or if it believes that CARA does not signal appropriate changes to risk assets as the economic cycle evolves. The Sub-Adviser expects the Fund, during normal market conditions, to be fully invested at all times.
| · | Applicable to the Cabana Target Drawdown 13 ETF and Cabana Target Drawdown 16 ETF |
The Board of Trustees of Exchange Listed Funds Trust (the “Trust”) has approved the reorganization of the Funds into the Cabana Target Drawdown 10 ETF (the “Acquiring Fund”), another series of the Trust. The Acquiring Fund has substantially similar investment objective and principal investment strategies as the Funds. Exchange Traded Concepts, LLC, which serves as the investment adviser to each Fund, and Cabana Asset Management, which serves as the sub-adviser to each Fund, serves as the Acquiring Fund’s investment adviser and sub-adviser, respectively. Each Fund and the Acquiring Fund have the same management fee and currently are subject to the same expense limitation arrangement; however, as part of the reorganization, the expense limitation agreement will be amended to further limit the Acquiring Fund’s total annual fund operating expenses when the combined net assets of the Acquiring Fund and related funds exceed a certain level.
The reorganization will occur by transferring all of the assets of the Funds to the Acquiring Fund in exchange for shares of the Acquiring Fund and the assumption of all the liabilities of the Funds by the Acquiring Fund. As a result, shareholders of each Fund will become shareholders of the Acquiring Fund and will receive shares of the Acquiring Fund with a value equal to the aggregate net asset value of their shares of the applicable Fund held immediately prior to the reorganization. The proposed reorganization is expected to be a tax-free transaction for federal income tax purposes.
The reorganization does not require shareholder approval but is subject to the satisfaction of certain closing conditions. An information statement describing the reorganization will be mailed to shareholders in advance of the closing of the reorganization. If the closing conditions are satisfied, the reorganization is expected to occur on or around December 15, 2023. Until the reorganization is complete, each Fund will continue to be managed in the ordinary course of business and shares of the Funds will continue to trade on the Nasdaq Stock Market LLC.
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| · | Applicable to the Cabana Target Leading Sector Aggressive ETF and Cabana Target Leading Sector Conservative ETF |
The Board of Trustees of the Trust has approved the reorganization of the Funds into the Cabana Target Leading Sector Moderate ETF (the “Acquiring Fund”), another series of the Trust. The Acquiring Fund has substantially similar investment objective and principal investment strategies as the Funds. Exchange Traded Concepts, LLC, which serves as the investment adviser to each Fund, and Cabana Asset Management, which serves as the sub-adviser to each Fund, serves as the Acquiring Fund’s investment adviser and sub-adviser, respectively. Each Fund and the Acquiring Fund have the same management fee and currently are subject to the same expense limitation arrangement; however, as part of the reorganization, the expense limitation agreement will be amended to further limit the Acquiring Fund’s total annual fund operating expenses when the combined net assets of the Acquiring Fund and related funds exceed a certain level.
The reorganization will occur by transferring all of the assets of the Funds to the Acquiring Fund in exchange for shares of the Acquiring Fund and the assumption of all the liabilities of the Funds by the Acquiring Fund. As a result, shareholders of each Fund will become shareholders of the Acquiring Fund and will receive shares of the Acquiring Fund with a value equal to the aggregate net asset value of their shares of the applicable Fund held immediately prior to the reorganization. The proposed reorganization is expected to be a tax-free transaction for federal income tax purposes.
The reorganization does not require shareholder approval but is subject to the satisfaction of certain closing conditions. An information statement describing the reorganization will be mailed to shareholders in advance of the closing of the reorganization. If the closing conditions are satisfied, the reorganization is expected to occur on or around December 15, 2023. Until the reorganization is complete, each Fund will continue to be managed in the ordinary course of business and shares of the Funds will continue to trade on the Nasdaq Stock Market LLC.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
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