RealitySharesETFTrust · The prices of forwards on a Large Cap Securities Index are influenced by the aggregate trading prices of the Large Cap Securities, exposure to interest rate

P R O S P E C T U S

February 28, 2020

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Reality Shares ETF Trust

PRINCIPAL U.S. LISTING EXCHANGE TICKER SYMBOL

Reality Shares DIVS ETF NYSE Arca, Inc. DIVY

Reality Shares DIVCON Leaders Dividend ETF Cboe BZX Exchange, Inc. LEAD

Reality Shares DIVCON Dividend Defender ETF Cboe BZX Exchange, Inc. DFND

Reality Shares DIVCON Dividend Guard ETF Cboe BZX Exchange, Inc. GARD

Reality Shares Nasdaq NexGen Economy ETF The NASDAQ Stock Market LLC BLCN

INVESTMENT ADVISER:REALITY SHARES ADVISORS, LLC

THE U.S. SECURITIES AND EXCHANGE COMMISSION AND COMMODITIES FUTURES TRADING COMMISSION HAVE

NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THISPROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of each Fund’s shareholder reportswill no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such asa broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time areport is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not takeany action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communicationselectronically.

You may elect to receive all future reports in paper free of charge. Please contact your financial intermediary to inform them thatyou wish to continue receiving paper copies of your shareholder reports and for details about whether your election to receivereports in paper will apply to all funds held with your financial intermediary.

About This ProspectusThis prospectus has been arranged into different sections so that youcan easily review this important information. For detailed informationabout each Fund please see:

Table of Contents

Page

Reality Shares DIVS ETFInvestment Objective . . . . . . . . 2Fund Fees and Expenses . . . . 2Principal Investment Strategies . 2Principal Risks . . . . . . . . . . . . 6Performance Information . . . . . 9Investment Adviser . . . . . . . . . 9Portfolio Manager . . . . . . . . . . 9Purchase and Sale of FundShares . . . . . . . . . . . . . . . 10

Tax Information . . . . . . . . . . . 10Payments to Broker-Dealers andOther FinancialIntermediaries . . . . . . . . . . 10

Reality Shares DIVCONLeaders Dividend ETFInvestment Objective . . . . . . . . 11Fund Fees and Expenses . . . . 11Principal Investment Strategies . 11Principal Risks . . . . . . . . . . . . 12Performance Information . . . . . 15Investment Adviser . . . . . . . . . 16Portfolio Manager . . . . . . . . . . 16Purchase and Sale of FundShares . . . . . . . . . . . . . . . 16


Page

Reality Shares DIVCON DividendDefender ETFInvestment Objective . . . . . . . . 17Fund Fees and Expenses . . . . 17Principal Investment Strategies . 17Principal Risks . . . . . . . . . . . . 19Performance Information . . . . . 22Investment Adviser . . . . . . . . . 23Portfolio Manager . . . . . . . . . . 23Purchase and Sale of FundShares . . . . . . . . . . . . . . . 23


Reality Shares DIVCON DividendGuard ETFInvestment Objective . . . . . . . . 24Fund Fees and Expenses . . . . 24Principal Investment Strategies . 24Principal Risks . . . . . . . . . . . . 26Performance Information . . . . . 29Investment Adviser . . . . . . . . . 30Portfolio Manager . . . . . . . . . . 30Purchase and Sale of FundShares . . . . . . . . . . . . . . . 30


Page

Reality Shares Nasdaq NexGenEconomy ETFInvestment Objective . . . . . . . . 32Fund Fees and Expenses . . . . 32Principal Investment Strategies . 32Principal Risks . . . . . . . . . . . . 34Performance Information . . . . . 38Investment Adviser . . . . . . . . . 39Portfolio Manager . . . . . . . . . . 39Purchase and Sale of FundShares . . . . . . . . . . . . . . . 39


More Information about EachFund . . . . . . . . . . . . . . . . . . 40

Information about PortfolioHoldings . . . . . . . . . . . . . . . . 54

Investment Adviser and PortfolioManager . . . . . . . . . . . . . . . . 54

Purchasing and Selling FundShares . . . . . . . . . . . . . . . . . 55

Frequent Purchases andRedemptions of Fund Shares . . 55

Pricing of Fund Shares . . . . . . . . 56Dividends and Distributions . . . . . 56Taxes . . . . . . . . . . . . . . . . . . . 57Premium/Discount Information . . . 60Investments by RegisteredInvestment Companies . . . . . . 61

Financial Highlights . . . . . . . . . . 62Additional Information . . . . . . . . 67How to Obtain More Informationabout the Funds. . . . . . . Back Cover

Reality Shares ETF Trust Prospectus 1

Reality Shares DIVS ETF

Investment ObjectiveThe Reality Shares DIVS ETF (the “Fund”) seeks to produce long-term capital appreciation.

Fund Fees and ExpensesThis table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Mostinvestors also will incur customary brokerage commissions when buying or selling shares of the Fund, which arenot reflected in the table or the Example.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

Management Fees 0.85%

Other Expenses 0.00%

Total Annual Fund Operating Expenses 0.85%

ExampleThis Example is intended to help you compare the cost of investing in the Fund with the cost of investing in otherfunds.

The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all ofyour shares at the end of those periods. The Example also assumes that your investment has a 5% return eachyear and that the Fund’s operating expenses remain the same. The Example does not take into account brokeragecommissions that you may pay when purchasing or selling shares of the Fund. If the commissions were includedin the Example, your costs would be higher.

Although your actual costs may be higher or lower,based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years$87 $271 $471 $1,049

Portfolio TurnoverThe Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes whenFund shares are held in a taxable account. These costs, which are not reflected in total annual Fund operatingexpenses or in the Example, affect the Fund’s performance. During the most recent full fiscal year, the Fund’sportfolio turnover rate was 0.00% of the value of its portfolio. However, the Fund’s portfolio turnover rate iscalculated without regard to cash instruments and most derivatives. If such instruments were included, the Fund’sportfolio turnover rate might be significantly higher.

Principal Investment Strategies

Overview of Principal Investment StrategiesThe Fund’s principal investment strategy is designed to provide exposure to the aggregate value of ordinarydividends expected to be paid on a portfolio of large capitalization equity securities listed for trading in theU.S. (“Large Cap Securities”). These are sometimes referred to as the “expected dividend values” of the LargeCap Securities. Reality Shares Advisors, LLC (the “Adviser”), the Fund’s investment adviser, believes expecteddividend values generally correspond to the aggregate value of actual dividend payments on the Large CapSecurities. Unlike more traditional products, the Fund does not seek to produce returns based on appreciation inthe stock market price of Large Cap Securities. Instead, the Fund seeks to produce more stable investmentreturns with lower volatility and lower equity and fixed income market correlation based primarily on increases inthe expected dividend values of Large Cap Securities. The Fund may use a variety of investment strategies toachieve this objective. Under normal circumstances, the Fund generally invests in a combination of dividendswaps, dividend futures and forwards on indexes of Large Cap Securities (“Large Cap Securities Indexes”).These strategies and instruments are described in more detail below.

2 Reality Shares ETF Trust Prospectus

Description of Principal Investment Strategies and Instruments

Dividend SwapsThe Fund may enter into index dividend swaps in order to gain exposure to changes in the expected dividendvalue of the Large Cap Securities. Index dividend swaps are over-the-counter derivative contracts that allowinvestors to obtain exposure to the actual dividend value that will be paid by the constituents of an index over aperiod of time. In a typical index dividend swap transaction, the buyer and seller agree at inception to theaggregate value of dividends expected to be paid on the index constituents over the term of the contract — theexpected dividend value. At maturity of the contract, the buyer pays to or receives from the seller the netdifference between the expected dividend value and the aggregate value of actual dividends paid by the indexconstituents — the actual dividend value. During the term of the index dividend swap, the contract is valued onthe current expected dividend value of the index for the specific contract period. As the contract approachesmaturity, the expected dividend value will change primarily based on information about actual dividends until finalsettlement of the contract where expected dividend value and actual dividend value converge.

Dividend Futures ContractsThe Fund may buy index dividend futures contracts in order to gain exposure to changes in the expecteddividend value of the Large Cap Securities. Index dividend futures contracts allow investors to take a view on theactual dividend value that will be paid by the constituents of an index over a period of time. A dividend futurescontract, or “dividend futures,” provides for the future sale by one party and purchase by another party of aspecified dividend value of a specific index at a specified future time and at a specified price (with or withoutdelivery required). Dividend futures contracts are standardized contracts traded on a recognized exchange.

ForwardsA forward contract involves the obligation to purchase or sell either a specified financial asset or the cashequivalent of said asset at a future date at a price set at the time of the contract.

The prices of forwards on a Large Cap Securities Index are influenced by the aggregate trading prices of theLarge Cap Securities, exposure to interest rate changes, and expected dividend values, among other factors.The Fund may use combinations of forwards to gain exposure to the expected dividend value of Large CapSecurities reflected in those portfolio holdings’ prices.

Money Market InstrumentsThe Fund may also invest in money market mutual funds, short term fixed income securities, commercial paperand other money market instruments, including short-term bank obligations and cash sweep programs, to serveas collateral for its derivatives positions. Subject to the provisions of the Investment Company Act of 1940, asamended (the “1940 Act”), the Fund may invest up to 80% of its assets in swaps, futures and forwards, and anyone type of such portfolio holdings or any combination of such portfolio holdings may represent a substantialportion of the Fund’s portfolio at any time.

Before making an investment in the Fund you should know:◾ The Fund generally will have a positive rate of return if the actual future growth in dividends

exceeds the expected growth in dividends as reflected in the market prices at which the Fundbuys and sells the instruments that are used to implement the Fund’s investment strategy.

◾ The Fund generally will have a zero rate of return, excluding fees and transaction costs, if theactual future growth in dividends equals the expected growth in dividends as reflected in themarket prices at which the Fund buys and sells the instruments that are used to implement theFund’s investment strategy, even though actual dividends may have grown during the holdingperiod of this investment.

◾ The Fund generally will have a negative rate of return if the actual future growth in dividends isbelow the expected growth in dividends as reflected in the market prices at which the Fund buysand sells the instruments that are used to implement the Fund’s investment strategy, even thoughactual dividends may have grown during the holding period of this investment.

◾ Unlike more traditional products, the Fund does not seek returns based on appreciation in thestock market price of equity securities. This means that the returns on your Fund investment arenot intended to correlate to the returns of the overall stock market (for example, the value of yourFund investment may go down when overall equity markets go up, or vice versa).


◾ The Fund does not produce qualified dividend income and is not an appropriate investment if youare seeking dividend income.

◾ The investment returns of the Fund are treated for tax purposes as ordinary income or capitalgains or losses, as applicable. See the section of this Prospectus entitled “Taxes” for moreinformation.

Correlation of Actual and Expected Dividend ValuesThe Adviser’s research indicates there historically has been a high correlation between the value of actualdividend payments and expected dividend values. While actual dividend value and expected dividend value mayat times differ significantly, the following diagrams present three scenarios illustrating the potential impact ofchanges in the value of actual dividend payments on the expected dividend values reflected in the prices of theFund’s portfolio holdings and how this may change the value of the Fund. The following diagrams do notrepresent all market scenarios, but are presented to show the potential relationship between actual dividendvalues and expected dividend values in accordance with the Adviser’s research. The diagrams do notrepresent the actual performance of the Fund.

The Black Dot in each diagram represents the starting (or purchased) expected dividend value reflected in theprices of the Fund’s portfolio holdings. The Gray Dot represents the actual dividend value on the same day. TheSquare reflects the point in time when the actual dividend value and expected dividend value converge.

Scenario 1: Actual dividend value increases and exceeds expected dividend value.In this scenario, actual dividend value grows over time and pulls the expected dividend value reflected in theprices of the Fund’s instruments up from the starting (or purchased) value. It is expected the value of the Fundwill increase commensurate to a level where the expected dividend value reflected in the prices of the Fund’sinstruments exceed the starting (or purchased) value.

Fund is expected to Increase

Expected Dividend ValueFund Value Increases

Actual Dividend Value

Today Future


Scenario 2: Actual dividend value decreases and expected dividend value also decreases.In this scenario, actual dividend value decreases over time and pulls the expected dividend value reflected in theprices of the Fund’s instruments below the starting (or purchased) value. It is expected the value of the Fundwill decrease commensurate to a level where the expected dividend value reflected in the prices of the Fund’sinstruments fall from the starting (or purchased) value.

Fund is expected to Decrease

Expected Dividend Value

Fund Value Decreases


Today Future

Scenario 3: Actual dividend value increases but is below expected dividend value.In this scenario, actual dividend value increases but to a level that is still below the expected dividend valuereflected in the prices of the Fund’s instruments. It is expected the value of the Fund will decrease.

Fund is expected to Decrease

Expected Dividend Value

Fund Value Decreases


Today Future

Market Capitalization and DiversificationThe Adviser considers U.S. large capitalization companies to be those with market capitalizations within therange of market capitalizations of the companies included in the S&P 500 Index. As of January 31, 2020, themarket capitalizations of companies included in the S&P 500 Index ranged from approximately $4.4 billionto $1.35 trillion.

The Fund is considered to be “non-diversified” under the Investment Company Act of 1940, as amended, andmay invest in fewer instruments or in the securities of fewer issuers than a diversified fund.


Principal RisksAs with all investments, the value of your investment in the Fund can be expected to go up or down. You canlose money on your investment, including the possible loss of the entire principal amount of your investment. Aninvestment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit InsuranceCorporation or any other government agency. The principal risk factors affecting your investments in the Fundare set forth below. Each of these factors could cause the value of an investment in the Fund to decline overshort- or long-term periods.

Dividend Payout Risk — The success of the Fund’s investment strategy is highly dependent on the expecteddividend values reflected in the prices of the Fund’s portfolio holdings. The value of an investment in the Fundwill decrease, and you could lose money, if the expected dividend values reflected in the prices of the Fund’sportfolio holdings decrease. This generally will occur if the value of actual dividends paid on the Large CapSecurities goes down. The value of actual dividends paid on the Large Cap Securities and expected dividendvalues reflected in the prices of the Fund’s portfolio holdings may be lower for a variety of reasons, including anactual or potential decline in the health of the overall economy, lower corporate earnings levels, changes tocorporate dividend policies, fluctuating interest rates and other factors. Each of these factors could have anegative impact on the value of the actual dividend payments on large the Large Cap Securities and theexpected dividend values reflected in the prices of the Fund’s portfolio holdings and could have a negativeimpact on Fund returns. Further, the expected dividend value reflected in the price of an instrument held by theFund reflects only ordinary dividends and does not reflect the issuance of special dividends. Therefore, the valueof your investment in the Fund is not expected to increase in response to the issuance of any special dividendspaid on the Large Cap Securities.

Active Management Risk — The Fund is actively managed using proprietary investment strategies. As with allactively managed funds, there can be no guarantee the Adviser’s strategies will be successful. As a result, youmay lose money on your investment, including the possible loss of the entire principal amount of your investment.

Authorized Participant Concentration Risk — Only an Authorized Participant may engage in creation or redemptiontransactions directly with the Fund. The Fund has a limited number of institutions that serve as AuthorizedParticipants. To the extent that these institutions exit the business or are unable to proceed with creation and/orredemption orders with respect to the Fund and no other Authorized Participant is able to step forward to createor redeem, Fund shares may trade at a discount to net asset value (“NAV”) and possibly face delisting.

Cash Transactions Risk — Most ETFs effect creations and redemptions for in-kind securities. The Fund,however, anticipates that it will effect its creations and redemptions principally for cash due to its investmentstrategy. As a result, the Fund (i) will be required to sell its investments in order to obtain the cash needed todistribute redemption proceeds, and may have to do so at a different time than if it had effected redemptionsin-kind, (ii) may recognize gains that it might not have incurred if it had effected redemptions in-kind and (iii) maypay out higher annual capital gains distributions than if it had effected redemptions in-kind.

Counterparty Credit Risk — The Fund may invest in financial instruments involving counterparties that attempt togain exposure to a particular group of securities, index or asset class without actually purchasing thosesecurities or investments, or to hedge a position. The Fund’s use of such financial instruments, including swapagreements, involves risks that are different from those associated with ordinary portfolio securities transactions.For example, the Fund is exposed to the risk that the counterparty may be unwilling or unable to make timelypayments to meet its unsettled or open contractual obligations or may fail to return holdings that are subject tothe agreement with the counterparty. If the counterparty becomes bankrupt or defaults on its payment obligationsto the Fund, the Fund may not receive the full amount that it is entitled to receive. If this occurs, the value ofyour shares in the Fund will decrease. In addition, the Fund may engage in such investment transactions with alimited number of counterparties, which may increase the Fund’s exposure to counterparty credit risk. Listedfutures contracts can be traded on futures exchanges without material counterparty credit risk.

Dividend Volatility Risk — The value of actual dividend payments on the Large Cap Securities and the expecteddividend values reflected in the prices of the Fund’s portfolio holdings are not constant and will vary from year toyear and quarter to quarter. Companies and industries that have historically paid dividends may lower theirdividends or may cease making such payments altogether. These changes can happen without warning and the


variation in the value of actual dividends and expected dividend values from quarter to quarter or year to yearcan be significant. Furthermore, as with other securities based on future values, the expected dividend valuesreflected in the prices of the Fund’s portfolio holdings may go up or down as a result of uncertainty of information,perceived differences in the value of the instruments over time, changes in supply and demand, and otherfactors. Each of these factors could have a negative impact on the performance of the Fund and cause Fundreturns to vary significantly (i.e., go up or down) from period to period.

Dividend Isolation Strategy Risk — The investment returns of the Fund are based primarily on the change inexpected dividend values reflected in the prices of the Fund’s portfolio holdings. More specifically, the investmentreturns of the Fund generally are expected to increase (or decrease) as actual dividend payments on the LargeCap Securities increase (or decrease) and these changes cause the expected dividend values reflected in theprices of the Fund’s portfolio holdings to increase (or decrease) over time. There can be no guarantees that thisinvestment strategy will be successful or that this strategy will produce positive investment returns. Furthermore,although the Adviser’s research indicates the value of actual dividend payments has historically been highlycorrelated to expected dividend values, there can be no guarantee that this correlation will continue or that theFund’s investment returns will be highly correlated to the value of actual dividends paid on the Large CapSecurities over short or even long periods. Factors other than the value of actual dividends paid may, from timeto time, cause an increase or decrease in the expected dividend values reflected in the prices of the Fund’sportfolio holdings. For example, as with other types of market projections, expected dividend values reflected inthe price of an instrument held by the Fund may go up or down as a result of uncertainty of information andperceived differences in value, changes in supply and demand or in response to market and other events, suchas corporate earnings announcements, changing interest rates or potential economic or political developments.Although it is anticipated that actual dividend payments and expected dividend values will be highly correlated,there may be instances where the value of actual dividends paid on the Large Cap Securities increases, but theexpected dividend value reflected in the prices of the Fund’s portfolio holdings decreases. This would have anegative impact on the Fund’s performance and could cause you to lose money.

ETF Trading Risk — The Fund’s shares are listed on a national securities exchange (the “Exchange”). However,there can be no assurance that an active trading market for Fund shares will be maintained. An unanticipatedearly closing of the Exchange or a halt in the trading of Fund shares on the Exchange may result in your inabilityto buy or sell shares of a Fund on that day. Active market trading of the Fund’s shares may cause morefrequent creation or redemption activities that could, in certain circumstances, increase the number of portfoliotransactions. High levels of transactions increase brokerage and other transaction costs and may result inincreased taxable capital gains. Similar to shares of other issuers listed on a stock exchange, shares of the Fundmay be sold short and are therefore subject to the risk of increased volatility in the trading price of the Fund’sshares. While the Fund expects that Authorized Participants’ ability to create and redeem Fund shares at NAVwill be effective in reducing any such volatility, there is no guarantee that it will eliminate the volatility associatedwith short sales. In addition, from time to time shares of the Fund may be thinly traded, making it difficult forshareholders to purchase and sell shares at a particular time or price.

Leverage Risk — The Fund’s use of derivatives may result in the Fund’s total investment exposure substantiallyexceeding the value of its portfolio securities and the Fund’s investment returns depending substantially on theperformance of securities that the Fund may not directly own. The use of leverage can amplify the effects ofmarket volatility on the Fund’s share price and may also cause the Fund to liquidate portfolio positions when itwould not be advantageous to do so in order to satisfy its obligations. The Fund’s use of leverage may result in aheightened risk of investment loss. The Fund’s derivative investments will be consistent with its investmentobjective and will not be used to produce leveraged returns. The Fund will not borrow to produce leverage.

Liquidity Risk — Liquidity risk is the risk that certain derivative instruments may be difficult or impossible to buyor sell at the time and at a price that the Fund would like. The Fund may need to accept a lower price to sell theinstrument, sell other instruments to raise cash, or forego an investment opportunity, any of which could have anegative effect on Fund performance. With respect to swaps, volatile markets and lack of market-makingparticipation by swap dealers may increase the risk of illiquidity by both making swap positions more difficult toliquidate and increasing the losses incurred while trying to do so. There can be no guarantee that the tradingmarkets of the Fund’s portfolio holdings that trade on an exchange will be liquid at all times.


Market Risk — Market risk is the risk that the market price of an instrument may move up and down, sometimesrapidly and unpredictably. The market prices of the Fund’s portfolio holdings are influenced by many factors.Although the Fund seeks to limit the influence of all such factors other than the expected dividend value reflectedin the prices of its portfolio holdings, there can be no guarantees these strategies will be successful. As aresult, the performance of the Fund could vary from its stated objective and you could lose money.

Non-Correlation Risk — The Fund is not designed to produce investment returns based on the stock market priceof the Large Cap Securities. This means that the returns on your Fund investment are not intended to correlateto the stock market returns of the Large Cap Securities or equity securities in general. The value of your Fundinvestment may go down when the stock market return of the Large Cap Securities or equity securities in generalare up.

Non-Diversification Risk — The Fund is non-diversified, which means that it may invest in fewer instruments orissuers than a diversified fund. As a result, the Fund may be more susceptible to a single adverse economic orother occurrence and may therefore be more volatile than a more diversified fund. However, the Fund intends tosatisfy the asset diversification requirements for qualification as a regulated investment company underSubchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

Shares of the Fund May Trade at Prices Other Than NAV — As with all ETFs, Fund shares may be bought andsold in the secondary market at market prices. Although market prices for Fund shares generally are expected toclosely correspond to the Fund’s NAV, it is expected that, as with all ETFs, there will be times when the marketprice of the Fund’s shares are higher (i.e., premium) or lower (i.e., discount) than the NAV of such shares. Ifa shareholder purchases shares at a time when the market price is at a premium to the NAV or sells shares at atime when the market price is at a discount to the NAV, the shareholder may pay significantly more or receivesignificantly less than the underlying value of the shares that were bought or sold or the shareholder may beunable to sell his or her shares. The risk that shares of the Fund may trade at prices other than NAV isheightened in times of market stress or volatility. There can be no guarantee that an active market for Fundshares will develop or be maintained.

Tax Risk — The Fund’s investments in derivative instruments, such as swaps or futures tied to dividend returns,will generally not generate income eligible to be treated as qualified dividend income subject to lower capitalgains rates when received by individual shareholders or be eligible for the dividends-received deduction whenreceived by corporate shareholders. There is also uncertainty regarding characterization of the Fund’sinvestments in certain derivative instruments with respect to the income and asset diversification tests applicableto the Fund’s qualification as a regulated investment company under the Code. If the Internal Revenue Service(“IRS”) were to issue public guidance that results in an adverse determination relating to the treatment of theFund’s investments in such complex securities, it could fail to qualify as a regulated investment company andmay likely need to significantly change its investment strategies, which could adversely affect the Fund. Ifthe Fund fails to qualify as a regulated investment company, it would be subject to tax at the regular corporaterate without any deduction for distributions to shareholders, and its distributions would generally be taxable asdividends, although corporate shareholders could be eligible for the dividends received deduction (subject tocertain limitations) and individuals may be able to benefit from the lower tax rates available to qualified dividendincome. Please see the Fund’s Statement of Additional Information (“SAI”) for a more detailed discussion,including the availability of relief for certain de minimis failures by the Fund to qualify as a regulated investmentcompany.

U.S. Government Securities Risk — Although U.S. Government securities are considered to be among the safestinvestments, they are not guaranteed against price movements due to changing interest rates. Obligationsissued by some U.S. Government agencies are backed by the U.S. Treasury, while others are backed solely bythe ability of the agency to borrow from the U.S. Treasury or by the agency’s own resources.

Use of Derivatives Risk — Investments in swaps, forwards and futures contracts are subject to a number of risks,including correlation risk, market risk, leverage risk and liquidity risk. Correlation risk is the risk that changes inthe value of the derivative may not correlate perfectly with the derivative’s underlying reference asset, rate orindex. Market risk, leverage risk and liquidity risk are described above. The Fund’s use of swaps and forwards isalso subject to counterparty credit risk and valuation risk. Counterparty credit risk is described above. Valuation


risk is the risk that the derivative instrument may be difficult to value and/or valued incorrectly. Each of thesefactors could have a negative impact on the Fund’s ability to implement its investment strategy, could cause theFund to lose money and could have a negative impact on the value of your investment.

Volatility Risk — The prices of the instruments held by the Fund, and, therefore, the value of your investment,may change rapidly and without warning throughout the trading day.

Performance InformationThe bar chart and the performance table below illustrate the risks of an investment in the Fund by showing theFund’s performance from year to year and by showing how the Fund’s average annual total returns for 1 year,5 years and since inception compare with those of a broad measure of market performance. Of course, theFund’s past performance (before and after taxes) does not necessarily indicate how the Fund will perform in thefuture.

Updated performance for the Fund is available at http://www.realityshares.com

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and donot reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation andmay differ from those shown. In addition, the after-tax returns shown are not relevant to investors who holdshares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

-4%

-2%

0%

2%

4%

6%

8%

10%

20192018201720162015

2.24%

Annual Total Returns as of December 31

8.07%

4.60%

8.68%

-2.08%

During the periods shown in the bar chart above, the Fund’s highest quarterly return was 4.66% (quarter endedDecember 31, 2019) and the Fund’s lowest quarterly return was -5.63% (quarter ended December 31, 2018).

Average Annual Total Returns for the Periods Ended December 31, 2019

1 Year 5 Years

SinceInception(12/18/14)

Return Before Taxes 8.68% 4.23% 4.45%

Return After Taxes on Distributions 7.52% 3.73% 3.96%

Return After Taxes on Distributions and Sale of Fund Shares 5.54% 3.16% 3.34%

HFRX Global Hedge Fund Index(reflects no deduction for fees, expenses or taxes)

8.62% 1.19% 1.54%

Barclays US Aggregate Bond Index(reflects no deduction for fees, expenses or taxes)

8.72% 3.05% 3.00%

S&P 500 Total Return Index(reflects no deduction for fees, expenses or taxes)

31.49% 11.69% 12.11%

Investment AdviserReality Shares Advisors, LLC

Portfolio ManagerEric Ervin, President of the Adviser, has managed the Fund since its inception in December 2014.


Purchase and Sale of Fund SharesMost investors will buy and sell shares of the Fund on the Exchange. Individual shares can be bought and soldthroughout the trading day like other publicly traded securities through a broker-dealer on the Exchange. Thesetransactions do not involve the Fund. The price of an individual Fund share is based on market prices, which maybe different from the Fund’s NAV. As a result, the Fund’s shares may trade at a price greater than the NAV (at apremium) or less than the NAV (at a discount). Most investors will incur customary brokerage commissions orother charges when buying or selling shares of the Fund through a broker-dealer.

The Fund issues and redeems shares at NAV only in large blocks of 25,000 shares or more (“Creation Units”)and only with large institutional investors that have entered into an agreement with the Fund’s distributor inexchange for the deposit or delivery of a basket of securities and/or cash. Except when aggregated in CreationUnits, shares of the Fund are not redeemable securities.

Tax InformationThe Fund’s distributions are taxable and will generally be taxed as ordinary income or capital gains, unless yourinvestment is in an individual retirement account or other tax-advantaged retirement account. Investment throughsuch accounts may be subject to taxation upon withdrawal.

Payments to Broker-Dealers and Other Financial IntermediariesIf you purchase Fund shares through a broker-dealer or other financial intermediary (such as a bank), the Fundand its related companies may pay the intermediary for the sale of Fund shares and related services. Thesepayments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your sales person or visit your financialintermediary’s website for more information.


Reality Shares DIVCON Leaders Dividend ETF

Investment ObjectiveThe investment objective of the Reality Shares DIVCON Leaders Dividend ETF (the “Fund”) is to seek long-termcapital appreciation by tracking the performance, before fees and expenses, of the Reality Shares DIVCONLeaders Dividend Index (the “Index”).







The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all ofyour shares at the end of those periods. The Example also assumes that your investment has a 5% return eachyear and that the Fund’s operating expenses remain the same. The Example does not take into accountbrokerage commissions that you may pay when purchasing or selling shares of the Fund. If the commissionswere included in the Example, your costs would be higher.


1 Year 3 Years 5 Years 10 Years$44 $138 $241 $542

Portfolio TurnoverThe Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxeswhen Fund shares are held in a taxable account. These costs, which are not reflected in total annual fundoperating expenses or in the Example, affect the Fund’s performance. During the most recent full fiscal year, theFund’s portfolio turnover rate was 65.52% of the value of its portfolio.

Principal Investment StrategiesThe Fund seeks to track the performance, before fees and expenses, of the Index. The Index was developed byReality Shares, Inc. (“Reality Shares” or the “Index Provider”), the parent company of Reality Shares Advisors,LLC (the “Adviser”), the Fund’s investment adviser. The Index is designed to capitalize on the theory that, overtime, companies that consistently grow their dividends tend to have investment returns above overall marketreturns (each a “Dividend Grower” or “High Quality Company”), and companies that do not grow (or cut) theirdividends tend to have investment returns below overall market returns (each a “Dividend Cutter” or “Low QualityCompany”). The Index is designed to select the companies that have the highest probability of increasing theirdividend in a 12-month period, the High Quality Dividend Growers. These Dividend Growers (or High QualityCompanies) are determined by Reality Shares’ DIVCON Dividend Health Scoring system, which is a proprietary,rules-based scoring and weighting methodology, and are chosen based on a ranking of each company asdetermined by its DIVCON Score and DIVCON Rating.

The DIVCON Dividend Health Scoring system begins by identifying the 500 largest U.S. companies based onmarket capitalization as of the Index reconstitution date and then narrows this universe to those companies thatpaid an ordinary dividend and announced a future dividend payment during the 12 months preceding such date.The DIVCON Dividend Health Scoring system analyzes seven quantitative factors that Reality Shares has


determined to be correlated to a company’s likelihood to increase or decrease future dividends, and weightseach factor based on its effectiveness in predicting dividend changes to produce a company’s DIVCON Score.After a DIVCON Score is calculated for each company, it is assigned a rating from 1 to 5 according to theDIVCON Rating system: DIVCON 1, DIVCON 2, DIVCON 3, DIVCON 4 and DIVCON 5. Companies in theDIVCON 1 category are those determined most likely to decrease their dividend in the next twelve months.Companies in the DIVCON 5 category are those determined most likely to increase their dividend in the nexttwelve months. All DIVCON 5 stocks or the 30 stocks with the highest DIVCON Scores, whichever is greater, areselected for inclusion in the Index. Companies are weighted in the index based on their DIVCON Scores, withhigher DIVCON Scores weighted more heavily. The Index is reconstituted annually on the first Friday inDecember. As of December 30, 2019, the market capitalizations of the 500 largest U.S. companies included inthe DIVCON Dividend Health Scoring System ranged from $9.98 billion to $1.3 trillion.

The Adviser employs a passive indexing investment approach. Under normal circumstances, at least 80% of theFund’s assets (other than collateral held from securities lending, if any) will be invested in component securitiesof the Index. The Fund generally uses a “replication” strategy to achieve its investment objective, meaning that itwill invest in all of the securities included in the Index. The Fund may, however, use a representative samplingapproach to achieve its investment objective when the Adviser believes it is in the best interest of the Fund,meaning that the Fund may invest in a subset, or “sample,” of the securities included in the Index and whose risk,return and performance characteristics generally match the risk, return and performance characteristics of theIndex as a whole. The Fund reserves the right to invest up to 20% of its assets in swaps, futures, forwards,options, exchange traded funds (“ETFs”) and other securities that are not components of the Index that theAdviser believes will help the Fund track the Index.

The Fund seeks to remain fully invested at all times in securities and or financial instruments that, in combination,provide exposure to the Index without regard to market conditions, trends or direction.

To the extent the Index has significant exposure to a particular sector or is concentrated in a particular industry,the Fund will necessarily have significant exposure to that sector or be concentrated in that industry. As of thedate of this Prospectus, the Fund has significant exposure to the Consumer Discretionary Sector, FinancialsSector, Health Care Sector, Industrials Sector and Information Technology Sector, as each sector is defined bythe Global Industry Classification Standard, a widely recognized industry classification methodology developedby MSCI, Inc. and Standard & Poor’s Financial Services LLC.



Equity Risk — The prices of equity securities in which the Fund invests rise and fall daily. These price movementsmay result from factors affecting individual companies, industries or the securities market as a whole. Individualcompanies may report poor results or be negatively affected by industry and/or economic trends anddevelopments. The prices of securities issued by such companies may decline in response. In addition, theequity market tends to move in cycles which may cause stock prices to fall over short or extended periods oftime.

ETF Trading Risk — The Fund’s shares are listed on a national securities exchange (the “Exchange”). However,there can be no assurance that an active trading market for Fund shares will be maintained. An unanticipatedearly closing of the Exchange or a halt in the trading of Fund shares on the Exchange may result in your inability


to buy or sell shares of a Fund on that day. Active market trading of the Fund’s shares may cause more frequentcreation or redemption activities that could, in certain circumstances, increase the number of portfolio transactions.High levels of transactions increase brokerage and other transaction costs and may result in increased taxablecapital gains. Similar to shares of other issuers listed on a stock exchange, shares of the Fund may be sold shortand are therefore subject to the risk of increased volatility in the trading price of the Fund’s shares. While theFund expects that Authorized Participants’ ability to create and redeem Fund shares at NAV will be effective inreducing any such volatility, there is no guarantee that it will eliminate the volatility associated with short sales. Inaddition, from time to time shares of the Fund may be thinly traded, making it difficult for shareholders topurchase and sell shares at a particular time or price.

Index Performance Risk — There is no guarantee or assurance that the methodology used to create the Indexwill result in the Fund achieving positive returns. The Index may underperform more traditional indices. In turn,the Fund could lose value while other indices or measures of market performance increase in value.

Index Production Risk — Neither the Adviser nor the Index Provider is able to guarantee the continuousavailability or timeliness of the production of the Index. The calculation and dissemination of the Index valuesmay be delayed if the information technology or other facilities of the Index Provider, calculation agent, dataproviders and/or relevant stock exchange malfunction for any reason. A significant delay may cause trading inshares of the Fund to be suspended. Errors in Index data, computation and/or the construction in accordancewith its methodology may occur from time to time and may not be identified and corrected by the Index Provider,calculation agent or other applicable party for a period of time or at all, which may have an adverse impact onthe Fund and its shareholders.

Investments in Other ETFs Risk — The risks of owning shares of an ETF generally reflect the risks of owning theunderlying securities of the ETF, although lack of liquidity in an ETF could result in its value being more volatilethan the underlying portfolio securities. When the Fund invests in an ETF, in addition to directly bearing theexpenses associated with its own operations, it will bear a pro rata portion of the ETF’s expenses.

Large-Capitalization Securities Risk — The Fund is subject to the risk that large-capitalization stocks mayunderperform other segments of the equity market or the equity market as a whole. Larger, more establishedcompanies may be unable to respond quickly to new competitive challenges such as changes in technology andmay not be able to attain the high growth rate of smaller companies, especially during extended periods ofeconomic expansion.

Market Risk — Market risk is the risk that the market price of a security may move up and down, sometimesrapidly and unpredictably. The market prices of the Fund’s portfolio holdings are influenced by many factors. As aresult, the performance of the Fund could vary from its stated objective and you could lose money.

Passive Investment Risk — The Fund is not actively managed and the Adviser does not attempt to takedefensive positions in declining markets. Therefore, the Fund may be subject to greater losses in a decliningmarket than a fund that is actively managed.

Quantitative Model Risk — The Index is constructed using a rules-based methodology based on quantitativemodels developed by Reality Shares. These quantitative models may be incomplete, flawed or based oninaccurate assumptions and, therefore, may lead to the selection of assets for inclusion in the Index that produceinferior investment returns or provide exposure to greater risk of loss. As a result, the Fund’s performance maybe lower or the Fund may be subject to greater risk than if the Index had not been constructed using quantitativemodeling because the Fund invests a substantial portion of its assets in the component securities of the Index.

Sector Risk — The Fund is subject to the following Sector Risks:

Consumer Discretionary Sector Risk. The Fund’s investments are exposed to issuers conducting businessin the Consumer Discretionary Sector. The manufacturing segment of the Consumer Discretionary Sectorincludes automotive, household durable goods, leisure equipment and textiles and apparel. The servicessegment includes hotels, restaurants and other leisure facilities, media production and services, andconsumer retailing and services. The Fund is subject to the risk that the securities of such issuers willunderperform the market as a whole due to legislative or regulatory changes, adverse market conditionsand/or increased competition affecting the Consumer Discretionary Sector. The performance of companies


operating in the Consumer Discretionary Sector has historically been closely tied to the performance of theoverall economy, and is also affected by economic growth, consumer confidence, attitudes and spending.Changes in demographics and consumer tastes can also affect the demand for, and success of, consumerproducts in the marketplace. Moreover, the Consumer Discretionary Sector encompasses those businessesthat tend to be the most sensitive to economic cycles.

Financials Sector Risk. The Fund’s investments are exposed to issuers conducting business in theFinancials Sector. The Financials Sector includes companies involved in banking, thrifts and mortgagefinance, specialized finance, consumer finance, asset management and custody banks, investment bankingand brokerage and insurance. It also includes Financial Exchanges and Data and Mortgage REITs. TheFund is subject to the risk that the securities of such issuers will underperform the market as a whole due tolegislative or regulatory changes, adverse market conditions and/or increased competition affecting theFinancials Sector. Companies operating in the Financials Sector are subject to extensive governmentregulation, which may limit the financial commitments they can make and the interest rates and fees they cancharge. Profitability is largely dependent on the availability and cost of capital funds, and can fluctuatesignificantly when interest rates change or due to increased competition.

Health Care Sector Risk. The Fund’s investments are exposed to issuers conducting business in the HealthCare Sector. The Health Care Sector includes health care providers and services, companies that manufactureand distribute health care equipment and supplies, and health care technology companies. It also includescompanies involved in the research, development, production and marketing of pharmaceuticals andbiotechnology products. The Fund is subject to the risk that the securities of such issuers will underperformthe market as a whole due to legislative or regulatory changes, adverse market conditions and/or increasedcompetition affecting the Health Care Sector. The prices of the securities of companies operating in theHealth Care Sector are closely tied to government regulation and approval of their products and services,which can have a significant effect on the price and availability of those products and services.

Industrials Sector Risk. The Fund’s investments are exposed to issuers conducting business in theIndustrials Sector. The Industrials Sector includes manufacturers and distributors of capital goods such asaerospace and defense, building projects, electrical equipment and machinery and companies that offerconstruction and engineering services. It also includes providers of commercial and professional servicesincluding printing, environmental and facilities services, office services and supplies, security and alarmservices, human resource and employment services, research and consulting services. It also includescompanies that provide transportation services. The Fund is subject to the risk that the securities of suchissuers will underperform the market as a whole due to legislative or regulatory changes, adverse marketconditions and/or increased competition affecting the Industrials Sector. The prices of the securities ofcompanies operating in the Industrials Sector may fluctuate due to the level and volatility of commodityprices, the exchange value of the dollar, import controls, worldwide competition, liability for environmentaldamage, depletion of resources, and mandated expenditures for safety and pollution control devices.

Information Technology Sector Risk. The Fund’s investments are exposed to issuers conducting businessin the Information Technology Sector. The Information Technology Sector includes companies that offersoftware and information technology services, manufacturers and distributors of technology hardware andequipment such as communications equipment, cellular phones, computers and peripherals, electronicequipment and related instruments and semiconductors. The Fund is subject to the risk that the securities ofsuch issuers will underperform the market as a whole due to legislative or regulatory changes, adversemarket conditions and/or increased competition affecting the Information Technology Sector. The prices ofthe securities of companies operating in the Information Technology Sector are closely tied to marketcompetition, increased sensitivity to short product cycles and aggressive pricing, and problems with bringingproducts to market.

Shares of the Fund May Trade at Prices Other Than NAV — As with all ETFs, Fund shares may be bought andsold in the secondary market at market prices. Although market prices for Fund shares generally are expected toclosely correspond to the Fund’s NAV, it is expected that, as with all ETFs, there will be times when the marketprice of the Fund’s shares are higher (i.e., premium) or lower (i.e., discount) than the NAV of such shares. Ifa shareholder purchases shares at a time when the market price is at a premium to the NAV or sells shares at a


time when the market price is at a discount to the NAV, the shareholder may pay significantly more or receivesignificantly less than the underlying value of the shares that were bought or sold or the shareholder may beunable to sell his or her shares. The risk that shares of the Fund may trade at prices other than NAV isheightened in times of market stress or volatility. There can be no guarantee that an active market for Fundshares will develop or be maintained.

Tracking Error Risk — As with all index funds, the performance of the Fund may vary from the performance ofthe Index as a result of Fund fees and expenses, the use of representative sampling and other factors. Therefore,although the performance of the Fund is designed to track the performance of the Index, there can be noguarantees that the Fund will achieve this objective.

Use of Derivatives Risk — Investments in options, swaps, forward contracts and futures contracts are subject toa number of risks, including correlation risk, market risk, leverage risk and liquidity risk. Correlation risk is the riskthat changes in the value of the derivative may not correlate perfectly with the derivative’s underlying referenceasset, rate or index. Market risk is described above. Leverage risk is the risk that the use of a derivative willamplify the effects of market volatility on the Fund’s share price or cause the Fund to liquidate portfolio positionswhen it would not be advantageous to do so in order to satisfy its obligations pursuant to the derivative contract.Liquidity risk is the risk that certain instruments may be difficult or impossible to buy or sell at the time and theprice that the Fund would like. The Fund may have to lower the price, sell other securities instead or forego aninvestment opportunity, any of which could have a negative effect on Fund management or performance. TheFund’s use of forward contracts and swaps is also subject to counterparty credit risk and valuation risk.Counterparty credit risk is the risk that the counterparty to a contract will default or otherwise become unable tohonor a financial obligation. Valuation risk is the risk that the derivative may be difficult to value and/or valuedincorrectly. Each of these factors could have a negative impact on the Fund’s ability to implement its investmentstrategy, could cause the Fund to lose money and could have a negative impact on the value of your investment.

Performance InformationThe bar chart and the performance table below illustrate the risks of an investment in the Fund by showing theFund’s performance from year to year and by showing how the Fund’s average annual total returns for 1year and since inception compare with those of the Index and a broad measure of market performance. Ofcourse, the Fund’s past performance (before and after taxes) does not necessarily indicate how the Fund willperform in the future.




25.07%

-6.01%

33.38%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

201920182017

During the periods shown in the bar chart above, the Fund’s highest quarterly return was 14.08% (quarter endedMarch 31, 2019) and the Fund’s lowest quarterly return was -13.61% (quarter ended December 31, 2018).



1 Year


Return Before Taxes 33.38% 14.24%

Return After Taxes on Distributions 32.59% 13.74%

Return After Taxes on Distributions and Sale of Fund Shares 19.72% 11.10%

DIVCON Leaders Dividend Index(reflects no deduction for fees, expenses or taxes)

34.01% 14.86%


31.49% 14.86%


Portfolio ManagerEric Ervin, President of the Adviser, has managed the Fund since February 26, 2016.






Reality Shares DIVCON Dividend Defender ETF

Investment ObjectiveThe investment objective of the Reality Shares DIVCON Dividend Defender ETF (the “Fund”) is to seek long-termcapital appreciation by tracking the performance, before fees and expenses, of the Reality Shares DIVCONDividend Defender Index (the “Index”).




Other Expenses

Dividend Expenses on Securities Sold Short1 0.59%

Borrowing Expenses on Securities Sold Short2 0.00%

Total Annual Fund Operating Expenses3 1.44%

1 When a cash dividend is declared on a stock the Fund has sold short, the Fund must pay an amount equal to that dividend to the partythat lent the stock to the Fund and record the payment of the dividend as an expense.

2 The Fund may be charged a fee or receive income on borrowed stock in connection with its short sales. This fee or income is calculateddaily, based upon the market value of the borrowed stock and a variable rate that is dependent upon the availability of the stock. A netamount of fees is listed as Borrow Expenses on Securities Sold Short.

3 Excluding dividend and borrowing expenses on securities sold short, the Total Annual Fund Operating Expenses are 0.85%.





Portfolio TurnoverThe Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxeswhen Fund shares are held in a taxable account. These costs, which are not reflected in total annual fundoperating expenses or in the Example, affect the Fund’s performance. During the most recent full fiscal year, theFund’s portfolio turnover rate was 57.30% of the value of its portfolio. However, the Fund’s portfolio turnoverrate is calculated without regard to securities received or delivered as a result of in-kind creations andredemptions of the Fund’s shares. If such instruments were included, the Fund’s portfolio turnover rate might besignificantly higher.

Principal Investment StrategiesThe Fund seeks to track the performance, before fees and expenses, of the Index. The Index was developed byReality Shares, Inc. (“Reality Shares” or the “Index Provider”), the parent company of the Adviser. The Index isdesigned to capitalize on the theory that, over time, companies that consistently grow their dividends tend tohave investment returns above overall market returns (each a “Dividend Grower” or “High Quality Company”),


and companies that do not grow (or cut) their dividends tend to have investment returns below overall marketreturns (each a “Dividend Cutter” or “Low Quality Company”). The Index is designed to select the companies fora long position that have the highest probability of increasing their dividend in a 12-month period, the HighQuality Dividend Growers, and select the companies for a short position that have the highest probability ofdecreasing their dividend in a 12-month period, the Low Quality Dividend Cutters. These Dividend Growers andDividend Cutters (or High Quality Companies and Low Quality Companies) are determined by Reality Shares’DIVCON Dividend Health Scoring system, which is a proprietary, rules-based scoring and weightingmethodology, and are chosen based on a ranking of each company as determined by its DIVCON Score andDIVCON Rating.

The DIVCON Dividend Health Scoring system begins by identifying the 500 largest U.S. companies based onmarket capitalization as of the Index reconstitution date and then narrows this universe to those companies thatpaid an ordinary dividend and announced a future dividend payment during the 12 months preceding such date.The DIVCON Dividend Health Scoring system analyzes seven quantitative factors that Reality Shares hasdetermined to be correlated to a company’s likelihood to increase or decrease future dividends, and weightseach factor based on its effectiveness in predicting dividend changes to produce a company’s DIVCON Score.After a DIVCON Score is calculated for each company, it is assigned a rating from 1 to 5 according to theDIVCON Rating system: DIVCON 1, DIVCON 2, DIVCON 3, DIVCON 4 and DIVCON 5. Companies in theDIVCON 1 category are those determined most likely to decrease their dividend in the next twelve months.Companies in the DIVCON 5 category are those determined most likely to increase their dividend in the nexttwelve months.

The Index consists of a “Long Portfolio” and a “Short Portfolio” (together a “Long/Short Portfolio”). This Long/Short Portfolio seeks to provide more stable investment returns with lower volatility and lower equity marketcorrelation than a long-only portfolio. The Long Portfolio consists of all DIVCON 5 stocks or the 30 stocks withthe highest DIVCON Scores, whichever is greater. All stocks in the Long Portfolio are reflected as long positionsin such stocks. The value of the Long Portfolio reflected in the Index is expected to increase if the prices of stocksincluded in the Long Portfolio increase. The Short Portfolio consists of all DIVCON 1 stocks or the 10 stockswith the lowest DIVCON Scores, whichever is greater. All stocks in the Short Portfolio are reflected as shortpositions in such stocks. The value of the Short Portfolio reflected in the Index is expected to increase if theprices of stocks included in the Short Portfolio decrease. Companies are weighted in each Portfolio based ontheir DIVCON Scores. Companies with higher DIVCON Scores are weighted more heavily in the Long Portfolio,and companies with lower DIVCON Scores are weighted more heavily in the Short Portfolio.

The Index will direct approximately 75% exposure to the Long Portfolio and approximately 25% exposure to theShort Portfolio. The Index is rebalanced at the end of any calendar quarter if the value of the Short Portfolio hasincreased 10% or more from the last rebalancing date. The Index also is rebalanced if the value of either thesum of or difference between the Long Portfolio and Short Portfolio changes in an amount greater thanpredetermined levels, effective the next business day. The Index is reconstituted annually on the first Friday inDecember. As of December 30, 2019, the market capitalizations of the 500 largest U.S. companies included inthe DIVCON Scoring System ranged from $9.98 billion to $1.3 trillion.




To the extent the Index has significant exposure to a particular sector or is concentrated in a particular industry,the Fund will necessarily have significant exposure to that sector or be concentrated in that industry. As of thedate of this Prospectus, the Fund has significant exposure to the Consumer Discretionary Sector, FinancialsSector, Health Care Sector, Industrials Sector, and Information Technology Sector, as each sector is defined bythe Global Industry Classification Standard, a widely recognized industry classification methodology developedby MSCI, Inc. and Standard & Poor’s Financial Services LLC.




ETF Trading Risk — The Fund’s shares are listed on a national securities exchange (the “Exchange”). However,there can be no assurance that an active trading market for Fund shares will be maintained. An unanticipatedearly closing of the Exchange or a halt in the trading of Fund shares on the Exchange may result in your inabilityto buy or sell shares of a Fund on that day. Active market trading of the Fund’s shares may cause morefrequent creation or redemption activities that could, in certain circumstances, increase the number of portfoliotransactions. High levels of transactions increase brokerage and other transaction costs and may result inincreased taxable capital gains. Similar to shares of other issuers listed on a stock exchange, shares of the Fundmay be sold short and are therefore subject to the risk of increased volatility in the trading price of the Fund’sshares. While the Fund expects that Authorized Participants’ ability to create and redeem Fund shares at NAVwill be effective in reducing any such volatility, there is no guarantee that it will eliminate the volatility associatedwith short sales. In addition, from time to time shares of the Fund may be thinly traded, making it difficult forshareholders to purchase and sell shares at a particular time or price. This risk is heightened for smaller andnewly established ETFs.



Investments in Other ETFs Risk — The risks of owning shares of an ETF generally reflect the risks of owning theunderlying securities of the ETF, although lack of liquidity in an ETF could result in its value being more volatile


than the underlying portfolio securities. When the Fund invests in an ETF, in addition to directly bearing theexpenses associated with its own operations, it will bear a pro rata portion of the ETF’s expenses.






Consumer Discretionary Sector Risk. The Fund’s investments are exposed to issuers conducting businessin the Consumer Discretionary Sector. The manufacturing segment of the Consumer Discretionary Sectorincludes automotive, household durable goods, leisure equipment and textiles and apparel. The servicessegment includes hotels, restaurants and other leisure facilities, media production and services, andconsumer retailing and services. The Fund is subject to the risk that the securities of such issuers willunderperform the market as a whole due to legislative or regulatory changes, adverse market conditionsand/or increased competition affecting the Consumer Discretionary Sector. The performance of companiesoperating in the Consumer Discretionary Sector has historically been closely tied to the performance of theoverall economy, and is also affected by economic growth, consumer confidence, attitudes and spending.Changes in demographics and consumer tastes can also affect the demand for, and success of, consumerproducts in the marketplace. Moreover, the Consumer Discretionary Sector encompasses those businessesthat tend to be the most sensitive to economic cycles.






Shares of the Fund May Trade at Prices Other Than NAV — As with all ETFs, Fund shares may be bought andsold in the secondary market at market prices. Although market prices for Fund shares generally are expected toclosely correspond to the Fund’s NAV, it is expected that, as with all ETFs, there will be times when the marketprice of the Fund’s shares are higher (i.e., premium) or lower (i.e., discount) than the NAV of such shares. Ifa shareholder purchases shares at a time when the market price is at a premium to the NAV or sells shares at atime when the market price is at a discount to the NAV, the shareholder may pay significantly more or receivesignificantly less than the underlying value of the shares that were bought or sold or the shareholder may beunable to sell his or her shares. The risk that shares of the Fund may trade at prices other than NAV isheightened in times of market stress or volatility. There can be no guarantee that an active market for Fundshares will develop or be maintained.

Short Sales Risk — A short sale involves the sale of a security that the Fund does not own in the expectation ofpurchasing the same security (or a security exchangeable therefore) at a later date at a lower price. Short salesexpose the Fund to the risk that it will be required to buy the security sold short (also known as “covering” theshort position) at a time when the security has appreciated in value, thus resulting in a loss to the Fund that ispotentially unlimited. Investment in short sales may also cause the Fund to incur expenses related to borrowingsecurities. There can be no guarantee that a stock included in the Short Portfolio of the Index will be available onthe open market for the Fund to sell short. Under these circumstances, the Fund may sell short a differentsecurity in order to provide a similar economic effect as if the stock or stocks in the Short Portfolio were available.However, such strategy may not prove successful, and the Fund could experience a loss or its performancecould deviate from the performance of the Index.


Use of Derivatives Risk — Investments in options, swaps, forward contracts and futures contracts are subject toa number of risks, including correlation risk, market risk, leverage risk and liquidity risk. Correlation risk is the riskthat changes in the value of the derivative may not correlate perfectly with the derivative’s underlying referenceasset, rate or index. Market risk is described above. Leverage risk is the risk that the use of a derivative willamplify the effects of market volatility on the Fund’s share price or cause the Fund to liquidate portfolio positions


when it would not be advantageous to do so in order to satisfy its obligations pursuant to the derivative contract.Liquidity risk is the risk that certain instruments may be difficult or impossible to buy or sell at the time and theprice that the Fund would like. The Fund may have to accept a lower price to sell the instrument, sell otherinstruments to raise cash or forego an investment opportunity, any of which could have a negative effect on Fundmanagement or performance. The Fund’s use of forward contracts and swaps is also subject to counterpartycredit risk and valuation risk. Counterparty credit risk is the risk that the counterparty to a contract will default orotherwise become unable to honor a financial obligation. Valuation risk is the risk that the derivative may bedifficult to value and/or valued incorrectly. Each of these factors could have a negative impact on the Fund’sability to implement its investment strategy, could cause the Fund to lose money and could have a negativeimpact on the value of your investment.

Performance InformationThe bar chart and the performance table below illustrate the risks of an investment in the Fund by showing theFund’s performance for year to year and by showing how the Fund’s average annual total returns for 1 year andsince inception compare with those of the Index and a broad measure of market performance. Of course, theFund’s past performance (before and after taxes) does not necessarily indicate how the Fund will perform in thefuture.




15.77%

18.81%

-0.85%

-5%

0%

5%

10%

15%

20%

201920182017

During the periods shown in the bar chart above, the Fund’s highest quarterly return was 7.06% (quarter endedMarch 31, 2019) and the Fund’s lowest quarterly return was -6.04% (quarter ended December 31, 2018).


1 Year





DIVCON Dividend Defender Index(reflects no deduction for fees, expenses or taxes)

19.05% 8.43%

HFRX Equity Hedge Index(reflects no deduction for fees, expenses or taxes)

10.71% 3.50%


31.49% 16.82%









REALITY SHARES DIVCON DIVIDEND GUARD ETF

Investment ObjectiveThe investment objective of the Reality Shares DIVCON Dividend Guard ETF (the “Fund”) is to seek long-termcapital appreciation by tracking the performance, before fees and expenses, of the Reality Shares DIVCONDividend Guard Index (the “Index”).




Other Expenses

Dividend Expenses on Securities Sold Short1 0.73%

Borrowing Expenses on Securities Sold Short2 0.00%

Total Annual Fund Operating Expenses3 1.58%

1 When a cash dividend is declared on a stock the Fund has sold short, the Fund must pay an amount equal to that dividend to the partythat lent the stock to the Fund and record the payment of the dividend as an expense.

2 The Fund may be charged a fee or receive income on borrowed stock in connection with its short sales. This fee or income is calculateddaily, based upon the market value of the borrowed stock and a variable rate that is dependent upon the availability of the stock. A netamount of fees is listed as Borrow Expenses on Securities Sold Short.

3 Excluding dividend and borrowing expenses on securities sold short, the Total Annual Fund Operating Expenses are 0.85%.





Portfolio TurnoverThe Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxeswhen Fund shares are held in a taxable account. These costs, which are not reflected in total annual fundoperating expenses or in the Example, affect the Fund’s performance. During the most recent full fiscal year, theFund’s portfolio turnover rate was 64.70% of the value of its portfolio. However, the Fund’s portfolio turnoverrate is calculated without regard to securities received or delivered as a result of in-kind creations andredemptions of the Fund’s shares. If such instruments were included, the Fund’s portfolio turnover rate might besignificantly higher.

Principal Investment StrategiesThe Fund seeks to track the performance, before fees and expenses, of the Index. The Index was developed byReality Shares, Inc. (“Reality Shares” or the “Index Provider”), the parent company of Reality Shares Advisors,LLC (the “Adviser”), the Fund’s investment adviser. The Index is designed to capitalize on the theory that, overtime, companies that consistently grow their dividends tend to have investment returns above overall market


returns (each a “Dividend Grower” or “High Quality Company”), and companies that do not grow (or cut) theirdividends tend to have investment returns below overall market returns (each a “Dividend Cutter” or “Low QualityCompany”). The Index is designed to select the companies for a long position that have the highest probabilityof increasing their dividend in a 12-month period, the High Quality Dividend Growers, and select the companiesfor a short position that have the highest probability of decreasing their dividend in a 12-month period, the LowQuality Dividend Cutters. These Dividend Growers and Dividend Cutters (or High Quality Companies andLow Quality Companies) are determined by Reality Shares’ DIVCON Dividend Health Scoring system, which is aproprietary, rules-based scoring and weighting methodology, and are chosen based on a ranking of eachcompany as determined by its DIVCON Score and DIVCON Rating.

The DIVCON Dividend Health Scoring system begins by identifying the 500 largest U.S. companies based onmarket capitalization as of the Index reconstitution date and then narrows this universe to those companies thatpaid an ordinary dividend and announced a future dividend payment during the 12 months preceding such date.The DIVCON Dividend Health Scoring system analyzes seven quantitative factors that Reality Shares hasdetermined to be correlated to a company’s likelihood to increase or decrease future dividends, and weightseach factor based on its effectiveness in predicting dividend changes to produce a company’s DIVCON Score.After a DIVCON Score is calculated for each company, it is assigned a rating from 1 to 5 according to theDIVCON Rating system: DIVCON 1, DIVCON 2, DIVCON 3, DIVCON 4 and DIVCON 5. Companies in theDIVCON 1 category are those determined most likely to decrease their dividend in the next twelve months.Companies in the DIVCON 5 category are those determined most likely to increase their dividend in the nexttwelve months.

The Index uses a proprietary, rules-based methodology to direct its exposure to two possible positions: (i) 100%exposure to a Long Portfolio or (ii) 50% exposure to a Long Portfolio and 50% exposure to a Short Portfolio (the“Long/Short Portfolio”). The Long/Short Portfolio seeks to provide more stable investment returns with lowervolatility and lower equity market correlation than a long-only portfolio. The Long Portfolio consists of all DIVCON5 stocks or the 30 stocks with the highest DIVCON Scores, whichever is greater. All stocks in the Long Portfolioare reflected as long positions in such stocks. The value of the Long Portfolio reflected in the Index is expected toincrease if the prices of stocks included in the Long Portfolio increase. The Short Portfolio consists of allDIVCON 1 stocks or the 10 stocks with the lowest DIVCON Scores, whichever is greater. All stocks in the ShortPortfolio are reflected as short positions in such stocks. The value of the Short Portfolio reflected in the Index isexpected to increase if the prices of stocks included in the Short Portfolio decrease. Companies are weighted ineach Portfolio based on their DIVCON Scores. Companies with higher DIVCON Scores are weighted moreheavily in the Long Portfolio, and companies with lower DIVCON Scores are weighted more heavily in the ShortPortfolio.

Whether the Index will consist of the Long Portfolio or Long/Short Portfolio depends on whether its proprietaryGuard Indicator is triggered. The Guard Indicator establishes the Long Portfolio or Long/Short Portfolio marketexposure of the Index based on its quantitative forecast of overall market strength. The Guard Indicator isdetermined by calculating the relationship between short-term and long-term trends in both market price andvolatility of each of the 11 sectors represented in the Index. The Guard Indicator can range from a level of 1-11,representing the number of sectors indicated to be showing strength. When the Guard Indicator is 9 or greater,which indicates that 9 or more sectors are showing strength, then the Index will consist of the Long Portfolio.When the Guard Indicator is 8 or less, which indicates that 8 or fewer sectors are showing strength, then theIndex will consist of the Long/Short Portfolio, effective the next business day. The Index will continue to consistof the Long/Short Portfolio until the Guard Indicator returns to a level of 9 or greater, at which point the Indexagain will consist of the Long Portfolio, effective the next business day. The Guard Indicator is measured as ofthe close of trading on the New York Stock Exchange each day (typically 4:00 p.m. Eastern time).

The following sectors are represented in the Index: consumer discretionary, consumer staples, energy, financials,real estate, health care, industrials, information technology, materials, telecommunication services, and utilities.The Index is rebalanced at the end of any calendar quarter if the value of the Short Portfolio has increased 10%or more from the last rebalancing date. The Index also is rebalanced if the value of either the sum of ordifference between the Long Portfolio and Short Portfolio changes in an amount greater than predeterminedlevels, effective the next business day. The Index is reconstituted annually on the first Friday in December. As ofDecember 30, 2019, the market capitalizations of the 500 largest U.S. companies included in the DIVCONScoring System ranged from $9.98 billion to $1.3 trillion.




To the extent the Index has significant exposure to a particular sector or is concentrated in a particular industry,the Fund will necessarily have significant exposure to that sector or be concentrated in that industry. As of thedate of this Prospectus, the Fund has significant exposure to the Consumer Discretionary Sector, FinancialsSector, Health Care Sector, Industrials Sector, and Information Technology Sector, as each sector is defined bythe Global Industry Classification Standard, a widely recognized industry classification methodology developedby MSCI, Inc. and Standard & Poor’s Financial Services LLC.






Guard Indicator Lag Risk — The Index switches directing its exposure from the Long Portfolio to the Long/ShortPortfolio and vice versa based on its proprietary methodology for measuring market strength. To the extent thatmarkets are experiencing strength, but the Index’s methodology does not detect such strength, the Index maycontinue directing its exposure to the Long/Short Portfolio. Under such a scenario, the Index, and consequentlythe Fund, may not participate in gains to the extent that it would had it been exposed 100% to the Long Portfolio.Conversely, to the extent that markets are declining, but the Index’s methodology does not detect such decline,the Index may continue directing its exposure 100% to the Long Portfolio. Under such a scenario, the Index, andconsequently the Fund, may experience losses to a greater extent than it would had it been exposed to theLong/Short Portfolio.



Investments in Other ETFs Risk — The risks of owning shares of an ETF generally reflect the risks of owning theunderlying securities of the ETF, although lack of liquidity in an ETF could result in its value being more volatilethan the underlying portfolio securities. When the Fund invests in an ETF, in addition to directly bearing theexpenses associated with its own operations, it will bear a pro rata portion of the ETF’s expenses.






Consumer Discretionary Sector Risk. The Fund’s investments are exposed to issuers conducting businessin the Consumer Discretionary Sector. The manufacturing segment of the Consumer Discretionary Sectorincludes automotive, household durable goods, leisure equipment and textiles and apparel. The servicessegment includes hotels, restaurants and other leisure facilities, media production and services, andconsumer retailing and services. The Fund is subject to the risk that the securities of such issuers willunderperform the market as a whole due to legislative or regulatory changes, adverse market conditionsand/or increased competition affecting the Consumer Discretionary Sector. The performance of companies


operating in the Consumer Discretionary Sector has historically been closely tied to the performance of theoverall economy, and is also affected by economic growth, consumer confidence, attitudes and spending.Changes in demographics and consumer tastes can also affect the demand for, and success of, consumerproducts in the marketplace. Moreover, the Consumer Discretionary Sector encompasses those businessesthat tend to be the most sensitive to economic cycles.





Shares of the Fund May Trade at Prices Other Than NAV — As with all ETFs, Fund shares may be bought andsold in the secondary market at market prices. Although market prices for Fund shares generally are expected toclosely correspond to the Fund’s NAV, it is expected that, as with all ETFs, there will be times when the marketprice of the Fund’s shares are higher (i.e., premium) or lower (i.e., discount) than the NAV of such shares. Ifa shareholder purchases shares at a time when the market price is at a premium to the NAV or sells shares at a


time when the market price is at a discount to the NAV, the shareholder may pay significantly more or receivesignificantly less than the underlying value of the shares that were bought or sold or the shareholder may beunable to sell his or her shares. The risk that shares of the Fund may trade at prices other than NAV isheightened in times of market stress or volatility. There can be no guarantee that an active market for Fundshares will develop or be maintained.

Short Sales Risk — A short sale involves the sale of a security that the Fund does not own in the expectation ofpurchasing the same security (or a security exchangeable therefore) at a later date at a lower price. Short salesexpose the Fund to the risk that it will be required to buy the security sold short (also known as “covering” theshort position) at a time when the security has appreciated in value, thus resulting in a loss to the Fund that ispotentially unlimited. Investment in short sales may also cause the Fund to incur expenses related to borrowingsecurities. There can be no guarantee that a stock included in the Short Portfolio of the Index will be available onthe open market for the Fund to sell short. Under these circumstances, the Fund may sell short a differentsecurity in order to provide a similar economic effect as if the stock or stocks in the Short Portfolio were available.However, such strategy may not prove successful, and the Fund could experience a loss or its performancecould deviate from the performance of the Index.


Use of Derivatives Risk — Investments in options, swaps, forward contracts and futures contracts are subject toa number of risks, including correlation risk, market risk, leverage risk and liquidity risk. Correlation risk is the riskthat changes in the value of the derivative may not correlate perfectly with the derivative’s underlying referenceasset, rate or index. Market risk is described above. Leverage risk is the risk that the use of a derivative willamplify the effects of market volatility on the Fund’s share price or cause the Fund to liquidate portfolio positionswhen it would not be advantageous to do so in order to satisfy its obligations pursuant to the derivative contract.Liquidity risk is the risk that certain instruments may be difficult or impossible to buy or sell at the time and theprice that the Fund would like. The Fund may have to accept a lower price to sell the instrument, sell otherinstruments to raise cash or forego an investment opportunity, any of which could have a negative effect on Fundmanagement or performance. The Fund’s use of forward contracts and swaps is also subject to counterpartycredit risk and valuation risk. Counterparty credit risk is the risk that the counterparty to a contract will default orotherwise become unable to honor a financial obligation. Valuation risk is the risk that the derivative may bedifficult to value and/or valued incorrectly. Each of these factors could have a negative impact on the Fund’sability to implement its investment strategy, could cause the Fund to lose money and could have a negativeimpact on the value of your investment.





-5%

0%

5%

10%

15%

20%

20182017

Annual Total Returns as of December 3119.04%

2019

13.11%

-2.98%

During the periods shown in the bar chart above, the Fund’s highest quarterly return was 9.79% (quarter endedDecember 31, 2019) and the Fund’s lowest quarterly return was -7.65% (quarter ended December 31, 2018).


1 Year





DIVCON Dividend Guard Index(reflects no deduction for fees, expenses or taxes)

13.47% 4.36%


31.49% 16.82%









Reality Shares Nasdaq NexGen Economy ETF

Investment ObjectiveThe Reality Shares Nasdaq NexGen Economy ETF (the “Fund”) seeks long-term growth by tracking theinvestment returns, before fees and expenses, of the Reality Shares Nasdaq Blockchain Economy Index (the“Index”).

Fund Fees and ExpensesThis table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. The feesare expressed as a percentage of the Fund’s average daily net assets. This table and the Example below do notinclude the brokerage commissions that investors may pay on their purchases and sales of Fund shares. Ifcommissions were included in the table and the Example, the costs shown would be higher.


Management Fee 0.68%



ExampleThis Example is intended to help you compare the cost of investing in the Fund with the cost of investing in otherFunds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then sellall of your shares at the end of those periods. The Example also assumes that your investment has a 5% returneach year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher orlower, based on these assumptions your cost would be:

1 Year 3 Years 5 Years 10 Years$69 $218 $379 $847

Portfolio TurnoverThe Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxeswhen the Fund shares are held in a taxable account. These costs, which are not reflected in annual fundoperating expenses or the Example, affect the Fund’s performance. During the most recent full fiscal year, theFund’s portfolio turnover rate was 20.72% of the value of its portfolio.

Principal Investment StrategyThe Fund seeks long-term growth by tracking the investment returns, before fees and expenses, of the Index.The Index was developed through a partnership between Reality Shares, Inc. (“Reality Shares”), the parentcompany of Reality Shares Advisors, LLC (the “Adviser”), the Fund’s investment adviser, and Nasdaq, Inc.(“Nasdaq” and together, the “Index Providers”).

The Index is designed to measure the returns of companies that are committing material resources to developing,researching, supporting, innovating or utilizing blockchain technology for their proprietary use or for use byothers (“Blockchain Companies”). These Blockchain Companies are committing material resources to further theuse and deployment of blockchain technology to, for example, streamline the distribution and verification ofcross-border payments; more efficiently store and secure cloud-based digital data; facilitate trusted transactionsbased on data security and privacy; and mitigate risk in supply chain management, among other uses.

Blockchain technology is an emerging technology that is redefining how a record of value is transacted.Blockchain technology seeks to solve transactional challenges of counterparty trust and the need for a centralrepository or ledger by providing a transparent and secure process to transfer and digitally record information ona shared transaction database through a secure, decentralized, peer-to-peer distributed ledger. In this regard,it is designed to facilitate the transfer of information or property between users such that the transfer is


guaranteed to be secure and known to all participants and shared across a distributed network where, onceverified, the legitimacy of the transfer cannot be challenged. Blockchain technology may be used to support avast array of business applications in many different industries and markets, and the extent of its versatility hasnot yet been fully explored. As a result, the Index may include equity securities of operating companies that focuson or have exposure to a wide variety of industries and countries, including emerging markets.

The Index universe of Blockchain Companies is identified based on research and analysis conducted by theIndex Providers. The Index universe is then narrowed to include only those Blockchain Companies with marketcapitalizations greater than $200 million, the shares of which are exchange-traded and have a six-month averagedaily trading volume greater than $1,000,000 as of the Index’s reconstitution date.

The remaining Blockchain Companies are then ranked to determine the leading Blockchain Companies asmeasured by their Blockchain Score™ which is a proprietary ranking system developed by the Index Providersdesigned to identify those Blockchain Companies expected to benefit most (e.g., from increased economic profit,operational efficiencies or transformational business practices) from the innovation, adoption, deployment andcommercialization of blockchain technology. The 50 to 100 leading Blockchain Companies with the highestBlockchain Scores™ are then selected as the Index constituents. Constituents are weighted in the Index basedon their Blockchain Scores™, with Blockchain Companies having higher Blockchain Scores™ weighted moreheavily. The Index is reconstituted semi-annually in March and September. As of December 18, 2019, the Indexincluded companies with a capitalization range of $252.7 million to $1.19 trillion.

Under normal circumstances, at least 80% of the Fund’s assets, other than collateral held from securities lending,if any, will be invested in component securities of the Index. The Fund may invest up to 20% of its assets inother securities that are not components of the Index that the Adviser believes will help the Fund seek to trackthe Index. The Fund expects to invest in common stocks, American Depositary Receipts (“ADRs”) and GlobalDepositary Receipts (“GDRs”). The Fund does not intend to invest in cryptocurrency directly, but may haveindirect exposure to cryptocurrency by virtue of its investments in companies that may use one or morecryptocurrencies, such as in exchange for a company’s goods or services; trade financial instruments that aredirectly tied to cryptocurrencies; or invest in other companies that interact with cryptocurrency.

The Fund generally uses a “replication” strategy to achieve its investment objective, meaning that it will invest inall of the securities included in the Index in approximately the same proportions as the Index. The Fund may,however, use a representative sampling approach to achieve its investment objective when the Adviser believesit is in the best interest of the Fund, meaning that the Fund may invest in a subset, or “sample,” of the securitiesincluded in the Index and whose risk, return and performance characteristics generally match the risk, returnand performance characteristics of the Index as a whole. The Adviser expects that, over time, the correlationbetween the Fund’s performance and that of the Index, before fees and expenses, will exceed 95%. A correlationpercentage of 100% would indicate perfect correlation. If the Fund uses a replication strategy, it can be expectedto have greater correlation to the Index than if it uses a representative sampling strategy.

The Fund seeks to remain fully invested at all times in securities that provide exposure to the Index withoutregard to market conditions, trends or direction. The Fund is considered to be “non-diversified” under theInvestment Company Act of 1940, as amended (the “1940 Act”), and may invest in the securities of fewer issuersthan a diversified fund.

To the extent the Index has significant exposure to a particular sector or is concentrated in a particular industry,the Fund will necessarily have significant exposure to that sector or be concentrated in that industry. As of thedate of this Prospectus, the Fund has significant exposure to the Financials Sector, Information TechnologySector and Telecommunication Services Sector, as each sector is defined by the Global Industry ClassificationStandard, a widely recognized industry classification methodology developed by MSCI, Inc. and Standard &Poor’s Financial Services LLC. In addition, as of the date of this Prospectus, the Index components, and thus theFund’s investments, are concentrated (i.e., 25% or more of its assets) in securities issued by companies in theSoftware & Services Industry, a separate industry within the Information Technology Sector. The industriesin which the Index components, and thus the Fund’s investments, may be concentrated will vary as thecomposition of the Index changes over time.




Blockchain Technology Risk — Blockchain technology is a new and developing technology protocol deployed bycompanies in a manner for optimizing business practices. Blockchain technology is not a product or servicewith an individually attributable revenue stream. Blockchain technology may never develop optimizedtransactional processes that lead to increased realized economic returns to any company in which the Fundinvests.

Currency Risk — The Fund’s indirect and direct exposure to foreign currencies subjects the Fund to the risk thatthose currencies will decline in value relative to the U.S. dollar. The Fund also may incur transaction costs inconnection with conversions between various currencies.

Depositary Receipt Risk — The Fund may hold the securities of non-U.S. companies in the form of ADRs andGDRs. The underlying securities of the ADRs and GDRs in the Fund’s portfolio are subject to fluctuations inforeign currency exchange rates that may affect the value of the Fund’s portfolio. In addition, the value of thesecurities underlying the ADRs and GDRs may change materially when the U.S. markets are not open fortrading. Investments in the underlying foreign securities also involve political and economic risks distinct fromthose associated with investing in the securities of U.S. issuers.

Emerging Markets Risk — Certain of the Fund’s investments will expose the Fund’s portfolio to the risks ofinvesting in emerging markets. Emerging markets, which consist of countries with low to middle incomeeconomies as classified by the World Bank and less developed or liquid equity markets as determined by theAdviser, can be subject to greater social, economic, regulatory, and political uncertainties and can be extremelyvolatile.




Foreign Issuer Exposure Risk — The Fund may invest in securities of foreign companies directly, or in financialinstruments, such as ADRs and GDRs, that are indirectly linked to the performance of foreign issuers. TheFund’s exposure to foreign issuers and investments in foreign securities are subject to additional risks incomparison to U.S. securities and U.S. issuers, including currency fluctuations, adverse political and economicdevelopments, unreliable or untimely information, less liquidity, limited legal recourse and higher transactionalcosts.

Geographic Concentration Risk — Funds that are less diversified across countries or geographic regions aregenerally riskier than more geographically diversified funds, and risks associated with such countries orgeographic regions may negatively affect the Fund. To the extent that the Fund’s investments are concentrated ina particular country or region, the Fund will be susceptible to loss due to adverse market, political, regulatory,and geographic events affecting that country or region. The Fund’s exposure generally will be concentrated in aparticular country or region to the same extent as the Index. The Fund anticipates that it will have concentratedinvestment exposure to the regions listed below.

China. Investments in Chinese issuers are subject to certain additional risks that may adversely impact theFund’s investments, which include (i) controls placed on currency exchanges by the Chinese government,(ii) Chinese government intervention in the Chinese securities markets, (iii) nationalization or expropriation ofassets or imposition of confiscatory taxes, (iv) the discontinuation by the Chinese government for supportof economic development programs, (v) limitations on the use of brokers, (vi) higher rates of inflation,(vii) greater political, economic and social unrest or uncertainty, (viii) adverse economic impacts caused byregional territorial conflicts or natural disasters or the potential thereof, (ix) increased trade limitations,(x) restrictions on foreign ownership, and (xi) different and less stringent financial reporting standards.

Europe. The European economy is diverse and includes both large, competitive economies and small,struggling economies. The European economy is vulnerable to decreasing imports or exports, changes ingovernmental regulations on trade, changes in the exchange rate of the euro and recessions in EUeconomies. The European financial markets have recently experienced volatility due to concerns about risinggovernment debt levels of several European countries and increased unemployment levels. Economicuncertainty may have an adverse effect on the value of the Fund’s investments.

Japan. The Fund’s investments in Japan are subject to the political, social or economic disruptions thatoccur in Japan. Japan’s economy is heavily dependent on international trade and has been adverselyaffected by trade tariffs and competition from emerging economies. As such, economic growth is heavilydependent on continued growth in international trade, government support of the financial services sector,among other troubled sectors, and consistent government policy. Any changes or trends in these economicfactors could have a significant impact on Japan’s economy overall and may negatively affect the Fund’sinvestment.

European Market Risk. For Reality Shares Nasdaq NexGen Economy ETF — The risk of investing in Europemay be heightened due to the recent issues surrounding the referendum in which the United Kingdom votedto withdraw from membership in the European Union (“Brexit”). In addition, if one or more countries were to exitthe European Union or abandon the use of the euro as a currency, the value of investments tied to thosecountries or the euro could decline significantly and unpredictably. Any such event could have a material adverseimpact on the value and risk profile of the Fund’s portfolio.

Index Performance Risk — There is no guarantee or assurance that the methodology used to create the Indexwill result in the Fund achieving positive returns. The Index may underperform more traditional indices. In turn,the Fund could lose value while other indices or measures of market performance increase in value. In addition,the Index was formed in September 2017. Accordingly, the Index has limited historical performance.

Index Production Risk — Neither the Adviser nor the Index Providers are able to guarantee the continuousavailability or timeliness of the production of the Index. The calculation and dissemination of the Index valuesmay be delayed if the information technology or other facilities of the Index Providers, calculation agent, dataproviders and/or relevant stock exchange malfunction for any reason. A significant delay may cause trading inshares of the Fund to be suspended. Errors in Index data, computation and/or the construction in accordancewith its methodology may occur from time to time and may not be identified and corrected by the Index Providers,calculation agent or other applicable party for a period of time or at all, which may have an adverse impact onthe Fund and its shareholders.


Industry Concentration Risk — The Fund may concentrate its investments in a limited number of issuersconducting business in the same industry or group of related industries. As a result, the Fund is more vulnerableto adverse market, economic, regulatory, political or other developments affecting such industry or group ofindustries than a fund that invests its assets more broadly. As of the date of this Prospectus, the Indexcomponents, and thus the Fund’s investments, are concentrated (i.e., 25% or more of its assets) in securitiesissued by companies in the industries described below. The industries in which the Index components, and thusthe Fund’s investments, may be concentrated will vary as the composition of the Index changes over time.

Software & Services Industry. As a result of the Fund’s concentration in the Software & Services IndustryGroup, the Fund will be more susceptible to the risks associated with that industry group than a fund thatdoes not concentrate its investments. The prices of the securities of companies in the Software & ServicesIndustry Group may fluctuate widely due to competitive pressures, increased sensitivity to short productcycles and aggressive pricing, changing domestic demand and heavy expenses incurred for research anddevelopment of products that prove unsuccessful. Furthermore, the market for products produced bycompanies in the Software & Services Industry Group is characterized by rapidly changing technology, rapidproduct obsolescence, and cyclical market patterns, all of which may affect the success of software andsoftware services companies. The Software & Services Industry Group is a separate industry groupcomprising the Information Technology Sector.


Liquidity and Valuation Risk — In certain circumstances, it may be difficult for the Fund to purchase and sell aparticular investment within a reasonable time at a fair price, or the price at which it has been valued by theAdviser for purposes of the Fund’s NAV, causing the Fund to be less liquid. While the Fund intends to invest inliquid securities and financial instruments, under certain market conditions, such as when trading in a particularinvestment has been halted temporarily by an exchange because the maximum price change of that investmenthas been realized, it may be difficult or impossible for the Fund to liquidate such investments. In addition, theability of the Fund to assign an accurate daily value to certain investments may be difficult, and the Adviser maybe required to fair value the investments.


Mid-Capitalization Securities Risk — The Fund is subject to the risk that medium-capitalization stocks mayunderperform other segments of the equity market or the equity market as a whole. Securities ofmedium-capitalization companies may experience more price volatility, greater spreads between their bid andask prices, lower trading volumes, and cyclical or static growth prospects. Medium-capitalization companies oftenhave limited product lines, markets or financial resources, and may therefore be more vulnerable to adversedevelopments than larger capitalization companies.

Non-Blockchain Technology Business Line Risk — Blockchain technology is a technology protocol and not adirect product or service that can be bought and sold for profit. All of the companies in the Index are engaged inprimary lines of business whose revenue is derived from a product or service that may utilize or otherwise standto benefit from blockchain technology, but not directly derived from the sale of blockchain technology. As such,financial operating results for each company in which the Fund invests are principally driven by the productsand/or services that constitute each such company’s primary business offerings. The Fund invests in companieswith the ability to use blockchain technology to develop new business opportunities or make current operationsmore efficient, thereby affecting future profitability. There can be no assurance that blockchain technology willaffect the primary lines of business in the Fund’s portfolio companies to have a positive impact on a company’sfinancial condition.


Non-Diversification Risk — The Fund is non-diversified, which means that it may invest in fewer instruments orissuers than a diversified fund. As a result, the Fund may be more susceptible to a single adverse economic orother occurrence and may therefore be more volatile than a more diversified fund. However, the Fund intends tosatisfy the asset diversification requirements for qualification as a regulated investment company underSubchapter M of the Code.


Sector Risk — The Fund is subject to the Sector Risks described below.

Financials Sector Risk. The Fund’s investments are exposed to issuers conducting business in theFinancials Sector. The Financials Sector includes companies involved in banking, thrifts and mortgagefinance, specialized finance, consumer finance, asset management and custody banks, investment bankingand brokerage and insurance. It also includes Financial Exchanges and Data and Mortgage Real EstateInvestment Trusts. The Fund is subject to the risk that the securities of such issuers will underperform themarket as a whole due to legislative or regulatory changes, adverse market conditions and/or increasedcompetition affecting the Financials Sector. Companies operating in the Financials Sector are subject toextensive government regulation, which may limit the financial commitments they can make and the interestrates and fees they can charge. Profitability is largely dependent on the availability and cost of capital funds,and can fluctuate significantly when interest rates change or due to increased competition.


Telecommunication Services Sector Risk is the risk that the securities of, or financial instruments tied to theperformance of, issuers in the Telecommunication Services Sector that the Fund purchases will underperformthe market as a whole. To the extent that the Fund’s investments are exposed to issuers conducting businessin the Telecommunication Services Sector (“Telecommunication Services Companies”), the Fund is subjectto legislative or regulatory changes, adverse market conditions and/or increased competition affecting theTelecommunication Services Sector. The prices of the securities of Telecommunication Services Companiesmay fluctuate widely due to both federal and state regulations governing rates of return and services thatmay be offered, fierce competition for market share, and competitive challenges in the U.S. from foreigncompetitors engaged in strategic joint ventures with U.S. companies, and in foreign markets from both U.S.and foreign competitors. In addition, recent industry consolidation trends may lead to increased regulation ofTelecommunication Services Companies in their primary markets.

Shares of the Fund May Trade at Prices Other Than NAV — As with all ETFs, Fund shares may be bought andsold in the secondary market at market prices. Although market prices for Fund shares generally are expected toclosely correspond to the Fund’s NAV, it is expected that, as with all ETFs, there will be times when the marketprice of the Fund’s shares are higher (i.e., premium) or lower (i.e., discount) than the NAV of such shares. Ifa shareholder purchases shares at a time when the market price is at a premium to the NAV or sells shares at atime when the market price is at a discount to the NAV, the shareholder may pay significantly more or receivesignificantly less than the underlying value of the shares that were bought or sold or the shareholder may beunable to sell his or her shares. The risk that shares of the Fund may trade at prices other than NAV isheightened in times of market stress or volatility. Because securities held by the Fund trade on foreign exchangesthat are closed when the Fund’s primary listing exchange is open, the Fund is likely to experience premiumsand discounts greater than those experienced by domestic ETFs. There can be no guarantee that an activemarket for Fund shares will develop or be maintained.


Small-Capitalization Securities Risk — The Fund is subject to the risk that small capitalization stocks mayunderperform other segments of the equity market or the equity market as a whole. Small-capitalization companiesmay be more vulnerable than larger, more established organizations to adverse business or economicdevelopments. Securities of small-capitalization companies may experience much more price volatility, greaterspreads between their bid and ask prices, significantly lower trading volumes, and cyclical or static growthprospects. Small-capitalization companies often have limited product lines, markets or financial resources, andmay therefore be more vulnerable to adverse developments than larger capitalization companies.

Tracking Error Risk — As with all index funds, the performance of the Fund may vary from the performance ofthe Index as a result of Fund fees and expenses, the use of representative sampling and other factors. Therefore,although the performance of the Fund is designed to track the performance of the Index, there can be noguarantee that the Fund will achieve its objective.




Annual Total Returns as of December 3133.85%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2019

During the periods shown in the bar chart above, the Fund’s highest quarterly return was 16.84% (quarter endedMarch 31, 2019) and the Fund’s lowest quarterly return was -0.49% (quarter ended September 30, 2019).

Returns after taxes on distributions and sale of shares may be higher than before-tax returns when a net capitalloss occurs upon the redemption of shares.


1 Year


Return Before Taxes 33.85 5.11%

Return After Taxes on Distributions 32.99 4.68%

Return After Taxes on Distributions and Sale of Fund Shares 19.99 3.78%

Nasdaq Blockchain Economy Index(reflects no deduction for fees, expenses or taxes)

34.68% 5.46%

MSCI Index(reflects no deduction for fees, expenses or taxes)

26.60% 5.02%


Investment AdviserReality Shares Advisors, LLC serves as the investment adviser to the Fund.

Portfolio ManagerEric Ervin, President of the Adviser, has served as portfolio manager of the Fund since its inception.




Payments to Broker-Dealers and Other Financial IntermediariesIf you purchase shares of the Fund through a broker-dealer or other financial intermediary, the Adviser or otherrelated companies may pay the intermediary for the sale of shares and related services. These paymentsmay create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson torecommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s websitefor more information.


More Information About Each Fund

More Information About Each Fund’s Investment ObjectiveEach Fund’s investment objective is non-fundamental and may be changed by the board of trustees (the “Board”)of Reality Shares ETF Trust (the “Trust”) without shareholder approval.

Reality Shares DIVS ETF investment objective is to seek to produce long term capital appreciation.

Reality Shares DIVCON Leaders Dividend ETF investment objective is to seek long term capital appreciation bytracking the performance, before fees and expenses, of the Reality Shares DIVCON Leaders Dividend Index.

Reality Shares DIVCON Dividend Defender ETF investment objective is to seek long term capital appreciation bytracking the performance, before fees and expenses, of the Reality Shares DIVCON Dividend Defender Index.

Reality Shares DIVCON Dividend Guard ETF investment objective is to seek long term capital appreciationby tracking the performance, before fees and expenses, of the Reality Shares DIVCON Dividend Guard Index.

Reality Shares Nasdaq NexGen Economy ETF investment objective is to seek long-term growth by tracking theinvestment returns, before fees and expenses, of the Reality Shares Nasdaq Blockchain Economy Index.

More Information About the Funds’ Indexes

Reality Shares Nasdaq NexGen Economy ETFThe Reality Shares Nasdaq Blockchain Economy Index is designed to measure the returns of BlockchainCompanies. The Index universe of Blockchain Companies is identified based on research and analysis conductedby the Index Providers. The Index universe is then narrowed to include only those Blockchain Companies withmarket capitalizations greater than $200 million, the shares of which are exchange-traded and have a six-monthaverage daily trading volume greater than $1,000,000 as of the Index’s reconstitution date.

The remaining Blockchain Companies are then ranked to determine the leading Blockchain Companies asmeasured by their Blockchain Score™, which is a proprietary ranking system developed by the Index Providersdesigned to identify those Blockchain Companies expected to benefit most (e.g., from increased economic profit,operational efficiencies or transformational business practices) from the innovation, adoption, deployment andcommercialization of blockchain technology. The Blockchain Score™ system seeks to identify companies thathave the potential to capitalize on transformational technology that may potentially disrupt the markets in whichthey operate. Companies that deploy and benefit from such applications have the potential to be the disrupters intheir industries and to profit at the expense of the disrupted companies that do not deploy such applications. Acompany’s Blockchain Score™ is assigned based on the application of several factors relating to the company’srole in the blockchain technology ecosystem and its participation in industry groups, the degree to which thecompany’s blockchain technology is developed, innovative, economically impactful and publicly referenced andthe company’s general research and development expenditures.

The 50 to 100 leading Blockchain Companies with the highest Blockchain Scores™ are then selected as theIndex constituents. Constituents are weighted in the Index based on their Blockchain Scores™, with BlockchainCompanies having higher Blockchain Scores™ weighted more heavily. Each constituent weighting is capped at15% of the Index and the cumulative weight of the five most heavily-weighted constituents may not in theaggregate account for more than 60% of the weight of the Index. The Index is reconstituted semi-annually on thethird Friday in March and September.

The Index ProvidersReality Shares DIVCON Leaders Dividend Index, Reality Shares DIVCON Dividend Defender Index andReality Shares DIVCON Dividend Guard Index (the “Reality Shares Index”)

Reality Shares is the parent company of the Adviser and is located at 402 West Broadway, Suite 2800, SanDiego, California 92101. Reality Shares develops, owns and publishes the Realty Shares Index. Reality Sharesand the Trust, on behalf of the Fund, has entered into a licensing agreement pursuant to which Reality Shareslicenses the use of the Reality Shares Index and certain trademarks and trade names to the Trust for the benefitof the Fund. The Fund does not pay a fee for the use of the Reality Shares Index. Reality Shares has no


obligation to take the needs of the Fund or its shareholders into consideration in determining or constructing theReality Shares Index and does not guarantee the timeliness, accuracy and/or completeness of the RealityShares Index or any data related thereto.

Reality Shares Nasdaq Blockchain Economy Index (the “Reality Shares/Nasdaq Index”)

The Reality Shares/Nasdaq Index is developed, owned and published by Reality Shares and Nasdaq pursuant tothe terms of a Co-Developed Index Agreement. Reality Shares, in its capacity as an Index Provider, licensesthe use of the Reality Shares/Nasdaq Index and certain trademarks and trade names to the Trust for the benefitof the Fund. The Fund does not pay a fee for the use of its Reality Shares/Nasdaq Index. Reality Shares andNasdaq have no obligation to take the needs of the Fund or its shareholders into consideration in determining orconstructing the Reality Shares/Nasdaq Index and do not guarantee the timeliness, accuracy and/or completenessof the Reality Shares/Nasdaq Index or any data related thereto.

The Calculation AgentsEach of the Reality Shares DIVCON Leaders Dividend Index, Reality Shares DIVCON Dividend Defender Indexand Reality Shares DIVCON Dividend Guard Index are calculated by ICE Data Indices, LLC and the RealityShares Nasdaq Blockchain Economy Index is calculated by Nasdaq (the “Calculation Agent”). The CalculationAgent calculates and administers the Index and publishes information regarding the market value of the Index.The Index Provider will have no role in, or any control over, the calculation of a Index.

More Information About Each Fund’s Principal Investment StrategiesEach of the Reality Shares DIVCON Leaders Dividend ETF, Reality Shares DIVCON Dividend Defender ETF,Reality Shares DIVCON Dividend Guard ETF, and Reality Shares Nasdaq NexGen Economy ETF will invest,under normal circumstances, at least 80% of its net assets, plus any borrowings for investment purposes, in thesecurities included in its Index.

Below is additional information about certain securities and other instruments that a Fund may purchase or sell inconnection with its principal investment strategies.

SwapsExcept for the Reality Shares Nasdaq NexGen Economy ETF, each Fund may engage in swap transactions. In atypical swap transaction, the parties agree to make future payments to each other based on the change invalue a specified rate, index, or asset. Swap transactions are usually done on a net basis, the Fund receiving orpaying only the net amount of the two payments. Each Fund may engage in dividend swap, total return swap andinterest rate swap transactions. In a typical dividend swap transaction, the buyer pays the swap counterparty anegotiated value to receive the difference between the expected dividend value of the underlying stock or indexconstituents and the actual dividend value paid on the stock or index constituents during the term of the swapcontract if the contract was held to maturity. In a typical total return swap, the buyer pays the swap counterpartya premium and is entitled to receive the total return of the underlying security or index, consisting of dividends,capital gains and price appreciation or depreciation. In a typical interest rate swap transaction, one stream offuture interest payments is exchanged for another. Such transactions often take the form of an exchange of afixed payment for a variable payment based on a future interest rate.

OptionsExcept for the Reality Shares DIVS ETF and Reality Shares Nasdaq NexGen Economy ETF, each Fund mayenter into option contracts. An option is a type of financial contract in which the purchaser of the contract has theright, but not the obligation, to buy or sell a financial asset, such as a stock, index or ETF, at an agreed uponprice known as the “strike price” during a specific period or on a specific date. Each Fund may buy (i.e., hold a“long” position in) and sell (i.e., hold a “short” position in) put and call options. A put option gives the purchaser ofthe option the right to sell, and the issuer of the option the obligation to buy, the underlying security or indexduring the option period. A call option gives the purchaser of the option the right to buy, and the seller of theoption the obligation to sell, the underlying security or index during the option period.

When a put or call option on a security is exercised, the underlying security is delivered at settlement. Put andcall options on indices are similar to options on securities except that options on an index give the holder the rightto receive, upon exercise of the option, an amount of cash if the closing level of the underlying index is greaterthan (or less than, in the case of puts) the exercise price of the option. This amount of cash is equal to the


difference between the closing price of the index and the exercise price of the option, expressed in dollarsmultiplied by a specified number. Thus, unlike options on individual securities, all settlements are in cash, andgain or loss depends on price movements in the particular market represented by the index generally, rather thanthe price movements in individual securities.

When a Fund sells an option, it receives premium payments from the option’s purchaser. The Fund retains thepremium if the purchaser does not exercise the option before the option’s expiration date. If the purchaserexercises the option, the Fund will pay the purchaser the difference between the value of the underlying index orsecurity and the exercise price of the option. The Fund’s gain or loss when selling an option typically will bedetermined by the premium, the exercise price and the value of the underlying security or index. At the time ofselling a call option, the Fund may cover the call option by owning, among other things: (i) the underlying securityor, with respect to an index, the portfolio of securities that corresponds to the index; (ii) a call option on thesame security or index with the same or lesser exercise price; (iii) a call option on the same security or index witha greater exercise price and segregating cash or liquid securities in an amount equal to the difference betweenthe exercise prices, or (iv) cash or liquid securities equal to at least the market value of the underlying securitiesor index. At the time of selling a put option, the Fund may cover the put option by, among other things:(i) purchasing a put option on the same security or index with the same or greater exercise price; (ii) purchasinga put option on the same security or index with a lesser exercise price and segregating cash or liquid securities inan amount equal to the difference between the exercise prices; or (iii) maintaining the entire exercise price incash or liquid securities.

Futures Contracts and Forward ContractsExcept for the Reality Shares Nasdaq NexGen Economy ETF, each Fund also may invest in exchange listedfutures contracts and forward contracts.

Futures contracts, or “futures,” provide for the future sale by one party and purchase by another party of aspecified amount of a specific security, index, rate or other asset at a specified future time and at a specifiedprice (with or without delivery required). Futures contracts are standardized contracts traded on a recognizedexchange.

Forward contracts, or “forwards,” involve a negotiated obligation to purchase or sell a security, index, rate orother asset at a future date (with or without delivery required), which may be any fixed number of days from thedate of the contract agreed upon by the parties, at a price set at the time of the contract. Forward contracts arenot traded on exchanges; rather, a bank or dealer will act as agent or as principal in order to make or takefuture delivery of a specified lot of the underlying asset for the Fund’s account.

Temporary Defensive MeasuresThe Reality Shares DIVS ETF may, from time to time, invest up to 100% of its assets in cash or money marketinstruments that would not ordinarily be consistent with its investment objective in attempting to respond toadverse market, economic, political, or other conditions. If the Fund invests in this manner, it may not achieve itsinvestment objective. The Fund will do so only if the Adviser believes that the risk of loss outweighs theopportunity to pursue its investment objective.

The Adviser does not engage in temporary defensive investing with respect to the Reality Shares DIVCONLeaders Dividend ETF, Reality Shares DIVCON Dividend Defender ETF, Reality Shares DIVCON DividendGuard ETF or Reality Shares Nasdaq NexGen Economy ETF. The Adviser keeps each such Fund’s assets fullyinvested in all market environments. As a result, each such Fund may be more vulnerable to market movementsthat are adverse to the Fund’s investment objective than funds that engage in temporary defensive investingstrategies. The Adviser monitors each such Fund on an ongoing basis, and makes adjustments to its portfolio, asnecessary, to minimize tracking error and to maximize liquidity.

Additional InvestmentsThis prospectus describes each Fund’s principal investment strategies and risks, and each Fund will normallyinvest in the types of instruments described in this prospectus. In addition to the instruments and strategiesdescribed in this prospectus, each Fund may invest in other instruments, or use other investment strategies to alesser extent. These instruments and strategies are described in detail in the Funds’ SAI (for information on howto obtain a copy of the SAI see the back cover of this prospectus).


As with all investments, there is no guarantee that the Fund will achieve its investment goal.

More Information About Each Fund’s Principal RisksInvesting in each Fund involves risk. There is no guarantee that any Fund will achieve its goals. In fact, no matterhow good a job the Adviser does, you could lose money on your investment in the Fund, just as you could withother investments. Each of the below risk factors could cause the value of an investment in a Fund to decline.

The value of your investment in a Fund is based on the value of the instruments the Fund holds. These priceschange daily due to economic and other events that affect particular instruments and the market as a whole.These price movements, sometimes called volatility, may be greater or lesser depending on the types ofinstruments a Fund owns and the markets in which it trades. The impact on a Fund of a change in the value of asingle instrument will depend in part on how widely the Fund diversifies its holdings.

The following descriptions provide additional information about some of the risks of investing in the Funds:

Authorized Participant Concentration Risk (All Funds) — Only an Authorized Participant may engage in creationor redemption transactions directly with a Fund. Each Fund has a limited number of institutions that serve asAuthorized Participants. To the extent that these institutions exit the business or are unable to proceed withcreation and/or redemption orders with respect to a Fund and no other Authorized Participant is able to stepforward to create or redeem, Fund shares may trade at a discount to net asset value (“NAV”) and possibly facedelisting.

Blockchain Technology Risk (Reality Shares Nasdaq NexGen Economy ETF only) — Blockchain technology is anew and developing technology protocol deployed by companies in a manner for optimizing business practices.Blockchain technology is not a product or service with an individually attributable revenue stream. Blockchaintechnology may never develop optimized transactional processes that lead to increased realized economicreturns to any company in which the Fund invests.

Cash Transactions Risk (Reality Shares DIVS ETF only) — The Fund anticipates that it will effect its creationsand redemptions principally for cash, whereas most ETFs effect creations and redemptions for in-kind securities.As a result, the Fund may have to sell its investments in order to obtain the cash needed to distribute redemptionproceeds, which may cause the Fund to recognize capital gains that it might not have recognized, or recognizesuch gains sooner, and pay out higher annual capital gain distributions than if it had made a redemption in-kind.Shareholders may be subject to tax on gains they would not otherwise be subject to, or at an earlier date than, ifthey had invested in an ETF that was able to effect creations and redemptions in-kind.

Further, if the Fund is unable to sell its investments needed to satisfy a redemption request, the Fund willcontinue to be exposed to the risk that such investments will decrease in value until it can sell them, which couldresult in losses to the Fund and its investors to which they may not otherwise be exposed if the Fund was able tosatisfy redemption requests with in-kind securities. Such losses could be significant.

The Fund will incur transaction costs in effecting cash transactions. To the extent they are not offset by thetransaction fee payable by Authorized Participants, such costs will cause a decrease in the Fund’s NAV and maycause the Fund to experience greater tracking error or wider bid/ask spreads or otherwise adversely impact thetrading of the Fund’s shares.

Currency Risk (Reality Shares Nasdaq NexGen Economy ETF only) — The Fund’s indirect and direct exposureto foreign currencies subjects the Fund to the risk that those currencies will decline in value relative to the U.S.dollar, which would cause a decline in the U.S. value of the holdings of the Fund. Currency rates in foreigncountries may fluctuate significantly over short periods of time for a number of reasons, including changes insovereign debt levels and trade deficits; domestic and foreign inflation and interest rates and investors’expectations concerning those rates; currency exchange rates; investment and trading activities of other funds,including hedge funds and currency funds; and global or regional political, economic or financial events andsituations and the imposition of currency controls or other political developments in the U.S. or abroad. The Fundmay incur transaction costs in connection with conversions between various currencies.

Counterparty Credit Risk (Each Fund, except Reality Shares Nasdaq NexGen Economy ETF) — The Fund mayinvest in financial instruments involving counterparties for the purpose of attempting to gain exposure to aparticular group of securities, index or asset class without actually purchasing those securities or investments, orto hedge a position. Such financial instruments may include, among others, dividend, total return, index, and


interest rate swap agreements. The Fund may use short term counterparty agreements to exchange the returns(or differentials in rates of return) earned or realized in particular predetermined investments or instruments. Theuse of swap agreements and similar instruments involves risks that are different from those associated withordinary portfolio securities transactions. For example, the Fund bears the risk of loss of the amount expected tobe received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.If a counterparty defaults on its payment obligations to the Fund, the default will likely cause the value of yourinvestment in the Fund to decrease. The Fund may experience significant delays in obtaining any recovery in abankruptcy or other reorganization proceeding and the Fund may obtain only limited recovery or may obtain norecovery in such circumstances. The Funds seek to mitigate risks by generally requiring that the counterpartiesfor the Fund agree to post collateral for the benefit of the Fund, marked to market daily, in an amount approximatelyequal to what the counterparty owes the Fund, subject to certain minimum thresholds. To the extent any suchcollateral is insufficient or there are delays in accessing the collateral, the Fund will be exposed to the risksdescribed above. The Fund also generally structures agreements with counterparties to permit either party toterminate the contract without penalty prior to the termination date.

Each Fund may enter into swap agreements with a limited number of counterparties, which may increase theFund’s exposure to counterparty credit risk. The Fund, however, will not enter into any agreement with acounterparty unless the Adviser believes that such counterparty is creditworthy. The Adviser considers factorssuch as counterparty credit ratings and financial statements, among others, when determining whether acounterparty is creditworthy. The Adviser regularly monitors the creditworthiness of each counterparty with whichthe Fund transacts. The counterparties with which the Fund transacts generally are major, global financialinstitutions. To the extent the Fund’s financial instrument counterparties are concentrated in the financial servicessector, the Fund bears the risk that those counterparties may be adversely affected by legislative or regulatorychanges, adverse market conditions, increased competition, and/or wide scale credit losses resulting fromfinancial difficulties or borrowers affecting that economic sector.

Although the counterparty to a centrally cleared swap agreement and/or exchange-traded futures contract isoften backed by a futures commission merchant (“FCM”) or clearing organization that is further backed bya group of financial institutions, there may be instances in which the FCM or the clearing organization could failto perform its obligations, causing significant losses to the Fund. For example, the Fund could lose marginpayments it has deposited with a clearing organization as well as any gains owed but not paid to the Fund, if theclearing organization becomes insolvent or otherwise fails to perform its obligations. Under current CommodityFutures Trading Commission (“CFTC”) regulations, a FCM maintains customers’ assets in a bulk segregatedaccount. If a FCM fails to do so, or is unable to satisfy a substantial deficit in a customer account, its othercustomers may be subject to risk of loss of their funds in the event of that FCM’s bankruptcy. In that event, in thecase of futures and options on futures, the FCM’s customers are entitled to recover, even in respect of propertyspecifically traceable to them, only a proportional share of all property available for distribution to all of thatFCM’s customers.

Depositary Receipt Risk (Reality Shares Nasdaq NexGen Economy ETF only) — The Fund may hold thesecurities of non-U.S. companies in the form of ADRs and GDRs. ADRs are negotiable certificates issued by aU.S. financial institution that represent a specified number of shares in a foreign stock and trade on a U.S.national securities exchange, such as the New York Stock Exchange. The Fund will primarily invest in sponsoredADRs, which are issued with the support of the issuer of the foreign stock underlying the ADRs and which carryall of the rights of common shares, including voting rights. GDRs are similar to ADRs, but may be issued inbearer form and are typically offered for sale globally and held by a foreign branch of an international bank. Theunderlying securities of the ADRs and GDRs in the Fund’s portfolio are usually denominated or quoted incurrencies other than the U.S. dollar. As a result, changes in foreign currency exchange rates may affect thevalue of the Fund’s portfolio. Generally, when the U.S. dollar rises in value against a foreign currency, a securitydenominated in that currency loses value because the currency is worth fewer U.S. dollars. In addition, becausethe securities underlying ADRs and GDRs trade on foreign exchanges at times when the U.S. markets are notopen for trading, the value of those securities may change materially at times when the U.S. markets are notopen for trading, regardless of whether there is an active U.S. market for shares of the Fund. Investments in theunderlying foreign securities may involve risks not typically associated with investing in U.S. companies. Foreignsecurities markets generally have less trading volume and less liquidity than U.S. markets, and prices in some


foreign markets can be extremely volatile due to increased risks of adverse issuer, political, regulatory, market, oreconomic developments. Many foreign countries lack accounting and disclosure standards comparable to thosethat apply to U.S. companies, and it may be more difficult to obtain reliable information regarding a foreignissuer’s financial condition and operations. In addition, transaction costs and costs associated with custodyservices are generally higher for foreign securities than they are for U.S. securities.

Dividend Payout Risk (Reality Shares DIVS ETF only) — The value of dividends paid by issuers is not constantand will vary from year to year and quarter to quarter. Companies that have historically paid dividends may lowertheir dividends or may cease making such payments. The success of the Fund’s strategy is highly dependenton the expected dividend values reflected in the prices of the Fund’s portfolio holdings. The Fund’s returns canbe expected to be lower and the Fund may not produce positive investment returns if expected dividend values oractual dividend values remain flat or declines. The aggregate value of actual dividends paid on the securitiesunderlying the Fund’s portfolio holdings and expected dividend values reflected in the prices of the Fund’sportfolio holdings may be lower than expected for a variety of reasons, including an actual or potential decline inthe health of the overall economy, lower corporate earnings levels, changes to corporate dividend policies,fluctuating interest rates and other factors. Such declines may be unexpected and can be short term or last for anumber of years. Since the value of your investment in the Fund is based largely on the expected dividend valuesreflected in the prices of the Fund’s portfolio holdings, decreases in the amount of actual dividends paid orexpected dividend values generally will adversely affect the value of the Fund and lower your investment return.Further, the expected dividend values reflected in the prices of the Fund’s portfolio holdings reflects only ordinarydividends and does not reflect the issuance of special dividends. Therefore, the value of your investment in theFund is not expected to increase in response to the issuance of any special dividends.

Dividend Isolation Strategy Risk (Reality Shares DIVS ETF only) — Unlike more traditional funds, the Fund doesnot seek investment returns based on increases in the secondary market trading price of their portfolio holdingsover short or long periods of time. Instead, the Fund seeks to produce investment returns based on strategiesdesigned to provide exposure to the expected dividend values reflected in the prices of their portfolio holdings.The value of an investment in the Fund is generally expected to increase as the expected dividend valuesreflected in the prices of its portfolio holdings goes up. The value of an investment in the Fund is generallyexpected to decrease as the expected dividend values reflected in the prices of its portfolio holdings goes down.The value of an investment in the Fund is not intended to track the price returns of the securities underlying itsportfolio holdings or general equity market returns. There can be no guarantee that the Fund’s investmentstrategies will be successful or that this strategy will produce positive investment returns.

Emerging Markets Risk (Reality Shares Nasdaq NexGen Economy ETF only) — The Fund may invest inemerging markets. Emerging markets generally consist of countries that have an emerging stock market asdefined by Standard & Poor’s®, countries or markets with low- to middle-income economies as classified by theWorld Bank, and other countries or markets with similar characteristics as determined by the Adviser. Emergingmarkets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory,market, or economic developments and perform differently from the U.S. market. Emerging markets are oftendependent upon commodity prices and international trade and can be subject to greater social, economic,regulatory, and political uncertainties and can be extremely volatile. As a result, the securities of emerging marketissuers may present market, credit, currency, liquidity, legal, political and other risks different from, or greaterthan, the risks of investing in securities of developed foreign countries. For example, investments in emergingmarkets are subject to a greater risk of loss due to expropriation, nationalization, confiscation of assets and otherproperty. In addition, the risks associated with investing in a narrowly defined geographic area are generallymore pronounced with respect to investments in emerging market countries.

Equity Risk (All Funds, except Reality Shares DIVS ETF) — The Fund is subject to the risk that the value of theequity securities in the Fund’s portfolio will decline or fluctuate dramatically from day to day due to volatility in theequity market. Such volatility could cause equity securities to underperform other segments of the market as awhole. The equity market is volatile and can experience increased volatility for a variety of reasons, including asa result of general market and economic conditions, perceptions regarding particular industries represented in theequity market, or factors relating to specific companies to which the Fund has investment exposure. Equitysecurities generally have greater price volatility than fixed income securities.


ETF Trading Risk (All Funds) — Although a Fund’s shares are listed on its Exchange, there can be no assurancethat an active trading market for Fund shares will be maintained. An unanticipated early closing of the Exchangemay result in your inability to buy or sell shares of a Fund on that day. The Exchange may halt trading in Fundshares because of market conditions or other reasons. You may temporarily be unable to purchase or sell sharesof the Fund if a trading halt occurs, and as a result, you may not be able to exit your position during periods ofmarket declines. Similar to shares of other issuers listed on a stock exchange, shares of a Fund may be soldshort and are therefore subject to the risk of increased volatility in the trading price of the Fund’s shares. Whileeach Fund expects that Authorized Participants’ ability to create and redeem Fund shares at NAV will be effectivein reducing any such volatility, there is no guarantee that it will eliminate the volatility associated with shortsales. In addition, from time to time shares of the Fund may be thinly traded, making it difficult for shareholders topurchase and sell shares at a particular time or price. This risk is heightened for smaller and newly establishedETFs.

Foreign Issuer Exposure Risk (Reality Shares Nasdaq NexGen Economy ETF only) — The Fund may invest insecurities of foreign companies directly, or in financial instruments, such as ADRs and GDRs, that are indirectlylinked to the performance of foreign issuers. Foreign markets can be more volatile than the U.S. market due toincreased risks of adverse issuer, political, regulatory, market or economic developments and can performdifferently from the U.S. market. Investing in securities of foreign companies directly, or in financial instrumentsthat are indirectly linked to the performance of foreign issuers, may involve risks not typically associated withinvesting in U.S. issuers. The value of financial instruments denominated in foreign currencies, and ofdistributions from such financial instruments, can change significantly when foreign currencies strengthen orweaken relative to the U.S. dollar. Foreign securities markets generally have less trading volume and lessliquidity than U.S. markets, and prices in some foreign markets may fluctuate more than those of financialinstruments traded on U.S. markets. Many foreign countries lack accounting and disclosure standardscomparable to those that apply to U.S. companies, and it may be more difficult to obtain reliable informationregarding a foreign issuer’s financial condition and operations. Transaction costs and costs associated withcustody services are generally higher for foreign securities than they are for U.S. securities. Some foreigngovernments levy withholding taxes against dividend and interest income. Although in some countries portions ofthese taxes are recoverable, the non-recovered portion will reduce the income received by the Fund.

Forward Contracts Risk (All Funds, except Reality Shares Nasdaq NexGen Economy ETF) — The Fund maypurchase a forward contract, or a “forward,” which involves a negotiated obligation to purchase or sell a specificsecurity or currency at a future date (with or without delivery required), which may be any fixed number of daysfrom the date of the contract agreed upon by the parties, at a price set at the time of the contract. Forwardcontracts are not traded on exchanges; rather, a bank or dealer will act as agent or as principal in order to makeor take future delivery of a specified lot of a particular security or currency for the Fund’s account. Risksassociated with forwards may include: (i) an imperfect correlation between the movement in prices of forwardcontracts and the securities or currencies underlying them; (ii) an illiquid market for forwards; (iii) difficulty inobtaining an accurate value for the forwards; and (iv) the risk that the counterparty to the forward contract willdefault or otherwise fail to honor its obligation. Because forwards require only a small initial investment inthe form of a deposit or margin, they involve a high degree of leverage.

Forwards are also subject to credit risk, liquidity risk and leverage risk. Credit risk is the risk that the Fund couldlose money if a counterparty to a derivative contract fails to make timely payment or otherwise honor itsobligations. Liquidity risk exists when particular investments are difficult to purchase or sell. The market forcertain investments may become illiquid due to specific adverse changes in the conditions of a particular issueror under adverse market or economic conditions independent of the issuer. The Fund’s investments in illiquidsecurities may reduce the returns of the Fund because it may be unable to sell the illiquid securities at anadvantageous time or price. Further, transactions in illiquid securities may entail transaction costs that are higherthan those for transactions in liquid securities. The use of leverage can amplify the effects of market volatilityon the Fund’s share prices and make the Fund’s returns more volatile. This is because leverage tends toexaggerate the effect of any increase or decrease in the value of the Fund’s portfolio securities. The use ofleverage may also cause the Fund to liquidate portfolio positions when it would not be advantageous to do so inorder to satisfy their obligations.

Futures Contracts Risk (All Funds, except Reality Shares Nasdaq NexGen Economy ETF) — The Fund maypurchase futures contracts, or “futures,” provide for the future sale by one party and purchase by another party ofa specified amount of a specific security or asset at a specified future time and at a specified price (with or


without delivery required). The risks of futures include: (i) leverage risk; (ii) correlation or tracking risk and (iii)liquidity risk. Because futures require only a small initial investment in the form of a deposit or margin, theyinvolve a high degree of leverage. Accordingly, the fluctuation of the value of futures in relation to the underlyingassets upon which they are based is magnified. Thus, the Fund may experience potentially unlimited losses thatexceed losses experienced by funds that do not use futures contracts. There may be imperfect correlation, oreven no correlation, between price movements of a futures contract and price movements of investmentsfor which futures are used as a substitute, or which futures are intended to hedge.

Lack of correlation (or tracking) may be due to factors unrelated to the value of the investments being substitutedor hedged, such as speculative or other pressures on the markets in which these instruments are traded.Consequently, the effectiveness of futures as a security substitute or as a hedging vehicle will depend, in part, onthe degree of correlation between price movements in the futures and price movements in underlying securitiesor assets. While futures contracts are generally liquid instruments, under certain market conditions they maybecome illiquid. Futures exchanges may impose daily or intra-day price change limits and/or limit the volume oftrading.

Additionally, government regulation may further reduce liquidity through similar trading restrictions. As a result,the Fund may be unable to close out their futures contracts at a time that is advantageous. If movements in themarkets for security futures contracts or the underlying security decrease the value of the Fund’s positions insecurity futures contracts, the Fund may be required to have or make additional funds available to its carryingfirm as margin. If the Fund’s account is under the minimum margin requirements set by the exchange or thebrokerage firm, its position may be liquidated at a loss, and the Fund will be liable for the deficit, if any, in itsaccount. The Fund may also experience losses due to systems failures or inadequate system back-up orprocedures at the brokerage firm(s) carrying the Fund’s positions. The successful use of futures depends upon avariety of factors, particularly the ability of the Adviser to predict movements of the underlying securitiesmarkets, which requires different skills than predicting changes in the prices of individual securities. There can beno assurance that any particular futures strategy adopted will succeed.

Geographic Concentration Risk (Reality Shares Nasdaq NexGen Economy ETF only) — Funds that are lessdiversified across countries or geographic regions are generally riskier than more geographically diversifiedfunds. A fund that focuses on a single country or a specific region is more exposed to that country’s or region’seconomic cycles, currency exchange rates, stock market valuations and political risks (including defenseconcerns), among others, compared with a more geographically diversified fund. The economies and financialmarkets of certain regions, such as Europe or Japan, can be interdependent and may be adversely affected bythe same events. In addition, many of these countries and regions have recently experienced economicdownturns, making their markets more volatile than U.S. markets.

China (Reality Shares Nasdaq NexGen Economy ETF only). The government of the People’s Republic ofChina is dominated by the one-party rule of the Chinese Communist Party. China’s economy has transitionedfrom a rigidly central-planned state-run economy to one that has been only partially reformed by moremarket-oriented policies. Economic development could be disrupted by military conflicts due to internal socialunrest or conflicts with other countries. For example, the Chinese economy is vulnerable to the long-runningdisagreements with Hong Kong related to integration and religious and nationalist disputes with Tibet and theXinjiang region. China has a complex territorial dispute regarding the sovereignty of Taiwan that hasincluded threats of invasion; Taiwan-based companies and individuals are significant investors in China.Military conflict between China and Taiwan may adversely affect securities of Chinese issuers. In addition,China has strained international relations with Japan, India, Russia and other neighbors due to territorialdisputes, historical animosities and other defense concerns. China could be affected by military events onthe Korean peninsula or internal instability within North Korea. These situations may cause uncertainty in theChinese market and may adversely affect the performance of the Chinese economy.

Although the Chinese government has implemented economic reform measures, reduced state ownership ofcompanies and established better corporate governance practices, a substantial portion of productiveassets in China are still owned by the Chinese government. The Chinese government continues to exercisesignificant control over industrial development and, ultimately, control over China’s economic growth throughthe allocation of resources, controlling payment of foreign currency-denominated obligations, setting


monetary policy and providing preferential treatment to particular industries or companies. Accordingly,investments in China are subject to risks associated with greater governmental control over the economy.China manages its currency at artificial levels relative to the U.S. dollar rather than at levels determined bythe market. This type of system can lead to sudden and large adjustments in the currency, which, in turn, canhave a disruptive and negative effect on foreign investors. China may also restrict the free conversion of itscurrency into foreign currencies, including the U.S. dollar. Currency repatriation restrictions may have theeffect of making securities and instruments tied to China relatively illiquid, particularly in connection withredemption requests.

Economic reform programs in China have contributed to growth, but there is no guarantee that such reformswill continue. The recent global economic crisis slowed China’s economic growth, causing the country’sexports and foreign investments to decline and China to slip into a recession. Also, China’s aginginfrastructure, declining environmental conditions and rapidly widening urban and rural income gap, which allcarry political and economic implications, have contributed to China’s major challenges. The Chineseeconomy has shown signs of improvement, but a full recovery of China’s economy will depend on its tradingpartners and the recovery of other world-wide economies. Economic growth in China historically has beenaccompanied by periods of high inflation. Beginning in 2004, the Chinese government commenced theimplementation of various measures to control inflation and restrain the rate of economic growth, whichincluded the tightening of the money supply, the raising of interest rates and more stringent control overcertain industries. If these measures are unsuccessful, and if inflation were to steadily increase, theperformance of the Chinese economy and the value of the Fund’s investments could be negatively impacted.In addition, there is less regulation and monitoring of Chinese securities markets and the activities ofinvestors, brokers and other participants than in the United States.

Europe (Reality Shares Nasdaq NexGen Economy ETF only). The European economy is diverse andincludes both large, competitive economies and small, struggling economies. As a whole, the EuropeanUnion is the wealthiest and largest economy in the world. However, recent market events affecting several ofthe European Union (EU) member countries have adversely affected the sovereign debt issued by thosecountries, and contributed to increased volatility in the value of the euro. The Economic and Monetary Unionof the EU requires compliance with restrictions on inflation rates, deficits, interest rates, debt levels and fiscaland monetary controls, each of which may significantly affect every country in Europe. Decreasing importsor exports, changes in governmental regulations on trade, changes in the exchange rate of the euro, andrecessions in EU economies may have a significant adverse effect on the economies of EU membercountries and their trading partners. The European financial markets have recently experienced volatility dueto concerns about rising government debt levels of several European countries, including Greece, Spain,Ireland, Italy and Portugal. In addition, the United Kingdom recently voted via referendum to exit the EU. Theprecise details and the resulting impact of the United Kingdom’s vote to leave the EU, commonly referredto as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on thenature of trade relations with the EU following its exit, which is a matter to be negotiated. The decision maycause increased volatility which may be sustained for some period of time and have a significant adverseimpact on world financial markets, other international trade agreements, and the United Kingdom andEuropean economies, as well as the broader global economy for some time. These uncertainties havecontributed to increased volatility in various currencies.

Japan (Reality Shares Nasdaq NexGen Economy ETF only). The Fund may invest in Japan. The Japaneseeconomy has recently emerged from a prolonged economic downturn. Since 2000, Japan’s economicgrowth rate has remained relatively low. Its economy is characterized by government intervention andprotectionism, an unstable financial services sector and relatively high unemployment. Japan’s economy isheavily dependent on international trade and has been adversely affected by trade tariffs and competitionfrom emerging economies. As such, economic growth is heavily dependent on continued growth ininternational trade, government support of the financial services sector, among other troubled sectors, andconsistent government policy. Any changes or trends in these economic factors could have a significantimpact on Japan’s economy overall and may negatively affect the Fund’s investment. Japan’s economy isalso closely tied to its two largest trading partners, the U.S. and China. Economic volatility in either nationmay create volatility for Japan’s economy as well. Additionally, as China has increased its role with Japan asa trading partner, political tensions between the countries has become strained. Any increase or decreasein such tension may have consequences for investment in or exposure to Japanese issuers.


Index Performance and Production Risk (All Funds, except Reality Shares DIVS ETF) — There is no guaranteeor assurance that the methodology used to create the Fund’s Index will result in the Fund achieving positivereturns. The Index may underperform more traditional indices. In turn, the Fund could lose value while otherindices or measures of market performance increase in value. Each Fund is not “actively” managed and seeks tocorrespond to the price and yield performance, before fees and expenses, of the Index. The Index Provider(s)has the right to make adjustments to the Index or to cease providing the Index without regard to the particularinterests of the Fund or its shareholders. While the Index Provider(s) provides a rules-based methodologythat describes what the Index is designed to achieve, neither the Index Provider(s), its agents nor data providersprovide any warranty or accept any liability in relation to the quality, accuracy or completeness of the Index, itscalculation, valuation or its related data, and they do not guarantee that the Index will be in line with the IndexProvider’s methodology, regardless of whether or not the Index Provider is affiliated with the Adviser. Thecomposition of the Index is dependent on data from one or more third parties and/or or the application of suchdata within the rules of the index methodology, which may be based on assumptions or estimates. If theinformation technology or other facilities of the Index Provider(s), Calculation Agent, data providers and/orrelevant stock exchange malfunction for any reason, calculation and dissemination of Index values may bedelayed and trading in Fund shares may be suspended for a period of time. Errors in Index data, computationsand/or the construction of the Index may occur from time to time and may not be identified and/or corrected bythe Index Provider(s), Calculation Agent or other applicable party for a period of time or at all, which may have anadverse impact on the Fund and its shareholders. The potential risk of continuing error may be particularlyheightened in the case of the Index, which is generally not used as benchmarks by other funds or managers. Anyof the foregoing may lead to the inclusion of securities in the Index, exclusion of securities from the Index or theweighting of securities in the Index that would have been different had data or other information been correct orcomplete, which may lead to a different investment outcome than would have been the case had such eventsnot occurred. Losses or costs associated with the Index’s errors or other risks described above will generally beborne by the Fund and its shareholders and neither the Adviser nor its affiliates or agents make anyrepresentations or warranties regarding the foregoing.

Industry Concentration Risk (Reality Shares Nasdaq NexGen Economy ETF only) — The Fund may concentrateits investments in a limited number of issuers conducting business in the same industry or group of relatedindustries. To the extent that the Fund’s investments are concentrated in issuers conducting business in thesame industry or group of related industries, the Fund is subject to legislative or regulatory changes, adversemarket conditions and/or increased competition affecting that industry, which may adversely affect the Fund’sperformance. For information regarding the Fund’s industry concentration, please see the Fund’s Summarysection.

Large-Capitalization Securities Risk (All Funds) — The Fund’s investments may be composed primarily of, orhave significant exposure to, large-capitalization securities. As a result, the Fund may be subject to the risk thatlarge-capitalization securities represented in the Fund’s portfolio may underperform other segments of the equitymarket or the equity market as a whole. Larger, more established companies may be unable to respond quicklyto new competitive challenges such as changes in technology and may not be able to attain the high growth rateof smaller companies, especially during extended periods of economic expansion.

Leverage Risk (All Funds, except Reality Shares Nasdaq NexGen Economy ETF) — Each Fund’s derivativetransactions may give rise to a form of leverage. The use of leverage can amplify the effects of market volatilityon the Fund’s share prices and make the Fund’s returns more volatile. This is because leverage tends toexaggerate the effect of any increase or decrease in the value of the Fund’s portfolio securities. The use ofleverage may also cause the Fund to liquidate portfolio positions when it would not be advantageous to do so inorder to satisfy its obligations.

Liquidity Risk (All Funds, except Reality Shares Nasdaq NexGen Economy ETF) — Liquidity risk exists whenparticular investments are difficult to purchase or sell. The market for certain investments may become illiquiddue to specific adverse changes in the conditions of a particular issuer or under adverse market or economicconditions independent of the issuer. To the extent a Fund invests in illiquid securities, such investments mayreduce the returns of the Fund because it may be unable to sell the illiquid securities at an advantageous time orprice. Further, transactions in illiquid securities may entail transaction costs that are higher than those fortransactions in liquid securities.


In addition, during periods of reduced market liquidity or in the absence of readily available market quotations forparticular investments in the Fund’s portfolio, the ability of the Fund to assign an accurate daily value to theseinvestments may be difficult and the Adviser may be required to fair value the investments. For additionalinformation about fair valuation, see “Calculating NAV.”

Market Risk (All Funds) — Each Fund is subject to the market risk associated with its portfolio holdings. Marketrisk is the risk that the market price of an instrument may move up and down, sometimes rapidly andunpredictably.

Market risk may affect a single issuer, an instrument type, an industry, a sector or markets as a whole. As aresult, the price of a Fund’s investments, and therefore the price of Fund shares, may fluctuate significantly. Youcould lose money on your investment over short or long periods of time.

Non-Blockchain Technology Business Line Risk (Reality Shares Nasdaq NexGen Economy ETF only) —Blockchain technology is a technology protocol and not a direct product or service that can be bought and soldfor profit. All of the companies in the Index are engaged in primary lines of business whose revenue is derivedfrom a product or service that may utilize or otherwise stand to benefit from blockchain technology, but notdirectly derived from the sale of blockchain technology. As such, financial operating results for each company inwhich the Fund invests are principally driven by the products and/or services that constitute each such company’sprimary business offerings. The Fund invests in companies with the ability to use blockchain technology todevelop new business opportunities or make current operations more efficient, thereby affecting futureprofitability. There can be no assurance that blockchain technology will affect the primary lines of business in theFund’s portfolio companies to have a positive impact on a company’s financial condition.

Non-Diversification Risk (Reality Shares DIVS ETF and Reality Shares NexGen Economy ETF only) — To theextent that the Fund invests a significant percentage of its assets in a limited number of issuers, the Fund issubject to the risks of investing in those few issuers, and may be more susceptible to a single adverse economicor regulatory occurrence. As a result, changes in the market value of a single issuer’s securities could causegreater fluctuations in the value of Fund shares than would occur in a diversified fund. However, each Fundintends to satisfy the asset diversification requirements for qualification as a regulated investment company underSubchapter M of the Code.

Options Risk (Reality Shares DIVCON Leaders Dividend ETF, Reality Shares DIVCON Dividend Defender ETF,and Reality Shares DIVCON Dividend Guard ETF only) — Each Fund may utilize various options strategies, and,therefore, a Fund is subject to options risk. An option is a contract between two parties for the purchase andsale of a financial instrument for a specified price at any time during the option period. Unlike a futures contract,an option grants a right (not an obligation) to buy or sell a financial instrument. For example, an option on afutures contract gives the purchaser the right, in exchange for a premium, to assume a position in a futurescontract at a specified exercise price during the term of the option. The seller of an uncovered call optionassumes the risk of a theoretically unlimited increase in the market price of the underlying security above theexercise price of the option. The securities necessary to satisfy the exercise of the call option may be unavailablefor purchase except at much higher prices. Purchasing securities to satisfy the exercise of the call option canitself cause the price of the securities to rise further, sometimes by a significant amount, thereby exacerbating theloss. The buyer of a call option assumes the risk of losing its entire premium invested in the call option. Theseller (writer) of a put option that is covered (e.g., the writer has a short position in the underlying security)assumes the risk of an increase in the market price of the underlying security above the sales price (inestablishing the short position) of the underlying security plus the premium received and gives up the opportunityfor gain on the underlying security below the exercise price of the option. The seller of an uncovered put optionassumes the risk of a decline in the market price of the underlying security below the exercise price of the option.The buyer of a put option assumes the risk of losing his entire premium invested in the put option.

Passive Investment Risk (All Funds, except Reality Shares DIVS ETF) — The Fund is not actively managed andmay be affected by a general decline in market segments relating to the Index. The Fund invests in securitiesincluded in, or representative of, the Index regardless of their investment merits. The Adviser does not attempt totake defensive positions in declining or rising markets, as applicable. As a result, the Fund may be subject togreater losses in a declining market than a fund that does take defensive positions.


Sector Risk — The Sector Risks applicable to the Funds are as follows. For information regarding the specificSector Risk applicable to each Fund, please see the Fund’s Summary section.

Consumer Discretionary Sector Risk (Reality Shares DIVCON Leaders Dividend ETF, Reality SharesDIVCON Dividend Defender ETF, and Reality Shares DIVCON Dividend Guard ETF only). The risk that thesecurities of, or financial instruments tied to the performance of, issuers in the Consumer DiscretionarySector that the Fund purchases will underperform the market as a whole. To the extent that the Fund’sinvestments are exposed to issuers conducting business in the Consumer Discretionary Sector (“ConsumerDiscretionary Companies”), the Fund is subject to legislative or regulatory changes, adverse marketconditions and/or increased competition affecting the Consumer Discretionary Sector. The performance ofConsumer Discretionary Companies has historically been closely tied to the performance of the overalleconomy, and is may be widely affected by interest rates, competition, consumer confidence and relativelevels of disposable household income and seasonal consumer spending. Changes in demographics andconsumer tastes can also affect the demand for, and success of, consumer products in the marketplace. Inaddition, companies doing business in the Consumer Discretionary Sector may be adversely affected andlose value more quickly in periods of economic downturns. The products offered by Consumer DiscretionaryCompanies may be viewed as luxury items during times of economic downturn.

Consumer Staples Sector Risk. The risk that the securities of, or financial instruments tied to the performanceof, issuers in the Consumer Staples Sector that the Fund purchases will underperform the market as awhole. To the extent that the Fund’s investments are exposed to issuers conducting business in theConsumer Staples Sector (“Consumer Staples Companies”), the Fund is subject to legislative or regulatorychanges, adverse market conditions and/or increased competition affecting the Consumer Staples Sector.The performance of Consumer Staples Companies has historically been closely tied to the performance ofthe overall economy, and may fluctuate widely due to interest rates, competition, consumer confidence andrelative levels of disposable household income and seasonal consumer spending. The performance ofConsumer Staples Companies are subject to government regulations, such as those affecting thepermissibility of using various food additives and production methods, which could affect company profitability.Tobacco companies may be adversely affected by the adoption of proposed legislation and/or by litigation.Also, the success of food and soft drinks may be strongly affected by fads, marketing campaigns and otherfactors affecting supply and demand.

Energy Sector Risk (Reality Shares DIVCON Dividend Guard ETF). The risk that the securities of, orfinancial instruments tied to the performance of, issuers in the Energy Sector that the Fund purchases willunderperform the market as a whole either by declining in value or failing to perform as well. To the extentthat the Fund’s investments are exposed to issuers conducting business in the Energy Sector (“EnergySector Companies”), the Fund is subject to legislative or regulatory changes, adverse market conditionsand/or increased competition affecting the Energy Sector. The prices of the securities of energy companiesmay fluctuate widely due to the supply and demand both for their specific products or services and for energyproducts in general, the price of oil and gas, exploration and production spending, governmental regulationand environmental issues, and world events and economic conditions generally affecting energy supplycompanies. The prices of the securities of Energy Companies also may fluctuate widely due to changes invalue and dividend yield, which depend largely on the price and supply of energy resources, internationalpolitical events relating to oil producing countries, energy conservation, the success of exploration projects,and tax and other governmental regulatory policies.

Financials Sector Risk (All Funds, except Reality Shares DIVS ETF.) The risk that the securities of, orfinancial instruments tied to the performance of, issuers in the Financials Sector that the Fund purchases willunderperform the market as a whole. To the extent the Fund’s investments are exposed to issuers conductingbusiness in the Financials Sector (“Financials Companies”), the Fund is subject to legislative or regulatorychanges, adverse market conditions and/or increased competition affecting the Financials Sector. FinancialsCompanies are subject to extensive governmental regulation which may limit both the amounts and typesof loans and other financial commitments they can make, and the interest rates and fees they can charge.Profitability is largely dependent on the availability and cost of capital funds, and can fluctuate significantlywhen interest rates change or due to increased competition. In addition, the recent deterioration of the creditmarkets generally has caused an adverse impact in a broad range of markets, including U.S. and international


credit and interbank money markets generally, thereby affecting a wide range of financial institutions andmarkets. Recent events in the Financials Sector have resulted, and may continue to result, in an unusuallyhigh degree of volatility in the financial markets, both domestic and foreign, and caused certain FinancialsCompanies to incur large losses. Numerous Financials Companies have experienced substantial declines inthe valuations of their assets, taken action to raise capital (such as the issuance of debt or equity securities),or even ceased operations. These actions have caused the securities of many Financials Companies toexperience a dramatic decline in value. Credit losses resulting from financial difficulties of borrowers andfinancial losses associated with investment activities can negatively impact the sector. Insurance companiesmay be subject to severe price competition.

Health Care Sector Risk (Reality Shares DIVCON Leaders Dividend ETF, Reality Shares DIVCON DividendDefender ETF and Reality Shares DIVCON Dividend Guard ETF only). The risk that the securities of, orfinancial instruments tied to the performance of, issuers in the Health Care Sector that the Fund purchaseswill underperform the market as a whole. To the extent that the Fund’s investments are exposed to issuersconducting business in the Health Care Sector (“Health Care Companies”), the Fund is subject to legislativeor regulatory changes, adverse market conditions and/or increased competition affecting the Health CareSector. The prices of the securities of Health Care Companies may fluctuate widely due to governmentregulation and approval of products and services, which can have a significant effect on price and availability.Furthermore, the types of products or services produced or provided by Health Care Companies mayquickly become obsolete. Moreover, liability for products that are later alleged to be harmful or unsafe maybe substantial, and may have a significant impact on a Health Care Company’s market value and/or shareprice.

Industrials Sector Risk (Reality Shares DIVCON Leaders Dividend ETF, Reality Shares DIVCON DividendDefender ETF, and Reality Shares DIVCON Dividend Guard ETF only). The risk that the securities of, orfinancial instruments tied to the performance of, issuers in the Industrials Sector that the Fund purchases willunderperform the market as a whole. To the extent that the Fund’s investments are exposed to issuersconducting business in the Industrials Sector (“Industrials Companies”), the Fund is subject to legislative orregulatory changes, adverse market conditions and/or increased competition affecting the Industrials Sector.The prices of the securities of Industrials Companies may fluctuate widely due to the level and volatility ofcommodity prices, the exchange value of the dollar, import controls, worldwide competition, liability forenvironmental damage, depletion of resources, and mandated expenditures for safety and pollution controldevices. Further, the prices of securities of Industrials Companies, specifically transportation companies,may fluctuate widely due to their cyclical nature, occasional sharp price movements that may result fromchanges in the economy, fuel prices, labor agreement, and insurance costs, the recent trend of governmentderegulation, and increased competition from foreign companies, many of which are partially funded byforeign governments and which may be less sensitive to short-term economic pressures.

Information Technology Sector Risk (All Funds, except Reality Shares DIVS ETF). The risk that thesecurities of, or financial instruments tied to the performance of, issuers in the Information Technology Sectorthat the Fund purchases will underperform the market as a whole. To the extent that the Fund’s investmentsare exposed to issuers conducting business in the Information Technology Sector (“Information TechnologyCompanies”), the Fund is subject to legislative or regulatory changes, adverse market conditions and/orincreased competition affecting the Information Technology Sector. The prices of the securities of InformationTechnology Companies may fluctuate widely due to competitive pressures, increased sensitivity to shortproduct cycles and aggressive pricing, problems relating to bringing their products to market, very highprice/earnings ratios, and high personnel turnover due to severe labor shortages for skilled technologyprofessionals.

Telecommunication Services Sector Risk is the risk that the securities of, or financial instruments tied to theperformance of, issuers in the Telecommunication Services Sector that the Fund purchases will underperformthe market as a whole. To the extent that the Fund’s investments are exposed to issuers conducting businessin the Telecommunication Services Sector (“Telecommunication Services Companies”), the Fund is subjectto legislative or regulatory changes, adverse market conditions and/or increased competition affecting theTelecommunication Services Sector. The prices of the securities of Telecommunication Services Companiesmay fluctuate widely due to both federal and state regulations governing rates of return and services that


may be offered, fierce competition for market share, and competitive challenges in the U.S. from foreigncompetitors engaged in strategic joint ventures with U.S. companies, and in foreign markets from both U.S.and foreign competitors. In addition, recent industry consolidation trends may lead to increased regulation ofTelecommunication Services Companies in their primary markets.

Shares of the Fund May Trade at Prices Other Than NAV (All Funds) — As with all ETFs, each Fund’s sharesmay be bought and sold in the secondary market at market prices. Although market prices for Fund sharesgenerally are expected to closely correspond to a Fund’s NAV, it is expected that, as with all ETFs, there will betimes when the market price of a Fund’s shares are higher or lower than the NAV of such shares. Thesedifferences may be more pronounced at or near the opening of trading on a Fund’s Exchange, for newer orsmaller ETFs, for ETFs that own less liquid securities or in certain market conditions. For example, supply anddemand for shares of an ETF or market disruptions may cause the market price of the ETF to deviate from thevalue of the ETF’s investments. The risk that shares of the Fund may trade at prices other than NAV isheightened in times of market stress or volatility. Secondary market trading in ETF shares may be disrupted orhalted because of market conditions or other reasons. In such instances the price of a Fund’s shares couldchange dramatically and without warning.

Information regarding a Fund’s IIV is disseminated every 15 seconds throughout the trading day by the Fund’sExchange or by other market data providers. The IIV is based on the current value of the assets held by a Fundthat will form the basis for the Fund’s calculation of its NAV at the end of the applicable business day. The IIVdoes not necessarily reflect the precise composition or the most accurate valuation of the current portfolioof instruments held by a Fund at a particular point in time. A Fund’s IIV may deviate, at times substantially, fromits NAV, which is computed only once a day. Therefore, you should not view the IIV as a “realtime” update of aFund’s NAV.

Short Sales Risk (Reality Shares DIVCON Dividend Defender ETF and Reality Shares DIVCON Dividend GuardETF only) — Short sales are transactions in which a Fund sells a security it does not own. To complete a shortsale, a Fund must borrow the security to deliver to the buyer. A Fund is then obligated to replace the borrowedsecurity by purchasing the security at the market price at the time of replacement. This price may be more or lessthan the price at which the security was sold by the Fund and the Fund will incur a loss if the price of thesecurity sold short increases between the time of the short sale and the time the Fund replaces the borrowedsecurity. Because a borrowed security could theoretically increase in price without limitation, the loss associatedwith short selling is potentially unlimited. In addition, a Fund may be subject to the costs of borrowing and marginaccount maintenance costs associated with the Fund’s open short positions. A Fund also is obligated to pay thedividends and interest accruing on a short position, which is an expense to the Fund that could cause the Fund tolose money on the short sale and may negatively impact its performance.

Small-Capitalization Securities Risk (Reality Shares Nasdaq NexGen Economy ETF only) — The Fund is subjectto the risk that small capitalization stocks may underperform other segments of the equity market or the equitymarket as a whole. Small-capitalization companies may be more vulnerable than larger, more establishedorganizations to adverse business or economic developments. Securities of small-capitalization companies mayexperience much more price volatility, greater spreads between their bid and ask prices, significantly lowertrading volumes, and cyclical or static growth prospects. Small-capitalization companies often have limitedproduct lines, markets or financial resources, and may therefore be more vulnerable to adverse developmentsthan larger capitalization companies.

Swap Agreements Risk (All Funds, except Reality Shares NexGen Economy ETF) — The Fund may engage inswap transactions and is therefore subject to swap agreements risk. Swaps are agreements in which two partiesagree to exchange future payments based on a rate, index, instrument or other asset at a predeterminedamount. The risks of swaps include: (i) an imperfect correlation between the movement in prices of the dividendswap and the dividends paid by stocks underlying them; (ii) lack of liquidity; (iii) difficulty in obtaining an accuratevalue for the swaps; (iv) the risk that the counterparty to the swap will default or otherwise fail to honor orbecome delayed in its ability to honor its obligation; and (v) the risk that the Fund may not be able to enter into anew swap agreement at a favorable price after a swap agreement to which it is currently a party expires or isterminated. Dividend swaps are also subject to Dividend Payout Risk, which is described in the “Principal Risks”section of this prospectus. For example, issuers of the stocks underlying the dividend swap could choose to


return capital to their shareholders through means other than dividends, such as return of capital or sharebuybacks. Further, an issuer of a stock underlying the dividend swap could purchase or be purchased by anothercompany, which could affect their decisions on whether to issue dividends to shareholders.

Tracking Error Risk (All Funds except, Reality Shares DIVS ETF) — As with all index funds, the performance ofthe Fund may vary from the performance of the Index as a result of expenses and other factors. This variationtypically results from Fund expenses, imperfect correlation and other differences between the Fund’s investmentsand the Index constituents, the timing of cash flows in and out of the Fund, and other factors. These and otherfactors may cause the Fund’s performance to vary substantially from the performance of the Index.

Information about Portfolio HoldingsInformation about the Funds’ daily portfolio holdings is available at www.realityshares.com. In addition, adescription of the Funds’ policy and procedures with respect to the circumstances under which the Fundsdiscloses their portfolio holdings is available in the SAI.

Investment Adviser and Portfolio Manager

Investment AdviserReality Shares Advisors, LLC (the “Adviser”) serves as the investment adviser to the Funds. The Adviser’sprincipal place of business is located at 402 West Broadway, Suite 2800, San Diego, California 92101. TheAdviser has served as the investment adviser of the Funds since their inception.

Subject to the oversight of the Board, the Adviser is responsible for managing the investment activities of eachFund and each Fund’s business affairs and other administrative matters. For its services to the Funds, theAdviser is entitled to a fee, which is calculated daily and paid monthly, at an annual rate of the average daily netassets of each Fund, as set forth below:

Fund Advisory Fee

Reality Shares DIVS ETF 0.85%

Reality Shares DIVCON Leaders Dividend ETF 0.43%

Reality Shares DIVCON Dividend Defender ETF 0.85%

Reality Shares DIVCON Dividend Guard ETF 0.85%

Reality Shares Nasdaq NexGen Economy ETF 0.68%

Under the Investment Advisory Agreement for the Funds, the Adviser is responsible for substantially all expensesof the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services.With respect to the Reality Shares DIVS ETF, Reality Shares DIVCON Leaders Dividend ETF, Reality SharesDIVCON Dividend Defender ETF, Reality Shares DIVCON Dividend Guard ETF, and Reality Shares NasdaqNexGen Economy ETF, the Adviser is not responsible for, and the Funds will bear the cost of interest, taxes,brokerage and other expenses incurred in placing orders for the purchase and sale of securities and otherinvestment instruments, dividend expense, borrowing costs, and interest expense relating to securities sold short(subject to any expense limitation agreements), extraordinary expenses, and distribution fees and expensespaid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act.

With respect to the Reality Shares DIVCON Dividend Defender ETF and Reality Shares DIVCON DividendGuard ETF, the Adviser has contractually agreed to reduce fees and reimburse expenses to the extent necessaryto keep aggregate interest expenses on securities sold short (“Expenses Associated with Short SalesTransactions”) from exceeding 0.10% of the average daily net assets of the Reality Shares DIVCON DividendDefender ETF and Reality Shares DIVCON Dividend Guard ETF until February 28, 2021 (the “ExpenseLimitation”). The Adviser may recover all or a portion of its fee reductions or expense reimbursements within athree-year period from the year in which it reduced its fee or reimbursed expenses if the Fund’s ExpensesAssociated with Short Sales Transactions are below the Expense Limitation. This agreement may be terminated:(i) by the Board for any reason at any time, or (ii) by the Adviser, upon ninety (90) days’ prior written notice tothe Trust, effective as of the close of business on February 28, 2021. As of October 31, 2019, there were no feeswaived and no outstanding waivers of expenses on securities sold short.


A discussion regarding the basis for the Board’s approval of Reality Shares Nasdaq NexGen Economy ETF,Reality Shares DIVS ETF, Reality Shares DIVCON Leaders Dividend ETF, Reality Shares DIVCON DividendDefender ETF and Reality Shares DIVCON Dividend Guard ETF investment advisory agreement is available inthe Funds’ semi-annual report to shareholders dated April 30, 2019, which covers the period November 1, 2018to April 30, 2019.

The Adviser has registered with the National Futures Association as a “commodity pool operator” under theCommodities Exchange Act with respect to Reality Shares DIVS ETF.

Portfolio ManagerEric Ervin, President of the Adviser, serves as portfolio manager to the Funds. Prior to founding the Adviser in2013, he spent 15 years building the Ervin Miller Group wealth management franchise at Morgan Stanley SmithBarney. Mr. Ervin is a Certified Financial Planner practitioner, and a Chartered Financial Consultant.

The SAI provides additional information about the portfolio manager’s compensation, other accounts managedby the portfolio manager and his ownership, if any, of Fund shares.

Purchasing and Selling Fund SharesMost investors will buy and sell shares in secondary market transactions through brokers and, therefore, musthave a brokerage account to buy and sell shares. Shares can be bought or sold through your broker throughoutthe trading day like shares of any publicly traded security. When buying or selling shares through a broker, youwill incur customary brokerage commissions and other charges. The price at which you buy or sell the Fund’sshares (i.e., the market price) may be more or less than the NAV of the shares. Unless imposed by your broker,there is no minimum dollar amount you must invest in the Fund and no minimum number of shares you must buywhen buying or selling shares in secondary market transactions. Shares of the Fund may be purchased orredeemed directly from the Fund only in Creation Units or multiples thereof, as discussed in the SAI.

Shares of a Fund are listed on its Exchange under the following symbol:

Fund Exchange Symbol

Reality Shares DIVS ETF NYSE Arca, Inc. DIVY

Reality Shares DIVCON Leaders Dividend ETF Cboe BZX Exchange, Inc. LEAD

Reality Shares DIVCON Dividend Defender ETF Cboe BZX Exchange, Inc. DFND

Reality Shares DIVCON Dividend Guard ETF Cboe BZX Exchange, Inc. GARD

Reality Shares Nasdaq NexGen Economy ETF The NASDAQ Stock Market LLC BLCN

Each Exchange is generally open Monday through Friday and is closed for weekends and the following holidays:New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day,Labor Day, Thanksgiving Day, and Christmas Day.

For information about buying and selling shares, please contact your broker or dealer.

Share Trading Prices. The trading prices of a Fund’s shares may differ from the Fund’s daily NAV and areexpected to vary based on a number of factors. These factors include supply and demand for the Fund’s shares,the level of dividends paid on the Fund’s portfolio securities, the prices of the Fund’s portfolio securities,economic conditions, the existence of market disruptions and other factors. The Exchange or another marketinformation provider will disseminate the approximate value of a Fund’s portfolio every fifteen seconds. Thisapproximate value should not be viewed as a “real-time” update of the NAV of the Fund because the approximatevalue may not be calculated in the same manner, or at the same time, as the NAV, which is computed once aday. Each Fund is not involved in, or responsible for, the calculation or dissemination of the approximate valuesand makes no warranty as to the accuracy of these values.

Frequent Purchases and Redemptions of Fund SharesThe Board has determined not to adopt policies and procedures designed to prevent or monitor for frequentpurchases and redemptions of each Fund’s shares. As an ETF, a Fund sells and redeems its shares at NAV onlyin Creation Units to authorized participants that have entered into an agreement with the Fund’s distributor(“Authorized Participants”). Purchases and redemptions of Creation Units by Authorized Participants are essential


to keeping the market price of a Fund’s shares at or close to their NAV and therefore frequent purchases andredemptions of Creation Units are not discouraged. Frequent purchases and redemptions of Creation Units forcash may increase portfolio transaction costs and may lead to realization of capital gains. To minimize theseconsequences, each Fund may impose a transaction fee on such Creation Unit transactions that is designed tooffset the transfer and other transaction costs the Fund incurs. The Fund may elect to not impose a transactionfee in cases where no transaction costs will be borne by the Fund, such as when the Fund’s custodiandetermines to not assess transaction costs or when an affiliate of the Fund pays any such transaction costs.

Pricing of Fund SharesEach Fund will calculate its NAV by (i) taking the current market value of its total assets, (ii) subtracting anyliabilities, and (iii) dividing that amount by the total number of shares outstanding. Each Fund will calculate NAVonce each day that the NYSE is open as of the regularly scheduled close of trading on the NYSE (normally, 4:00p.m. Eastern Time). Each Fund’s daily NAV can be found at www.realityshares.com.

Equity securities listed on a securities exchange, market or automated quotation system for which quotations arereadily available are valued at the last quoted sale price on the primary exchange on which they are traded, or,if there is no such reported sale on the valuation date, at the calculated mean between the most recent bid andasked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation.

For foreign securities and other assets that are priced in a currency other than U.S. dollars, the Fund will convertthe security or asset from the local currency into U.S. dollars using the relevant current exchange rate. Foreignsecurities may trade in their primary markets on weekends or other days when the Fund does not price itsshares.

The Trust will generally value listed futures and options on futures at the settlement price determined by theapplicable exchange. Non-exchange-traded derivatives, such as swap transactions, will normally be valued onthe basis of quotations or equivalent indication of value supplied by a pricing service or major market makers ordealers. Fixed income securities generally are valued based on prices provided by independent pricing services,which may use valuation models or matrix pricing to determine current value. The Trust may use (a) amortizedcost to value fixed income or money market securities that have a remaining maturity of 60 days or less, if it canreasonably conclude at the time of each such valuation that the amortized cost value is approximately the sameas the securities value determined in accordance with market-based factors, or (b) the price provided by anindependent third party pricing agent.

In the event that current market valuations are not readily available or the Trust or Adviser believes suchvaluations do not reflect current market value, the Trust’s procedures require that a security’s fair value bedetermined. In determining such value, the Trust or the Adviser may consider, among other things, (i) pricecomparisons among multiple sources, (ii) a review of corporate actions and news events, and (iii) a review ofrelevant financial indicators. In these cases, the Fund’s NAV may reflect certain portfolio securities’ fair valuesrather than their market prices. The Trust’s procedures also provide that dividend swaps will be fair valued on adaily basis pursuant to procedures approved by the Board. The use of fair valuation in pricing a security involvesthe consideration of a number of subjective factors and, therefore, is susceptible to the unavoidable risk thatthe valuation may be higher or lower than the price at which the security might actually trade if a reliable marketprice were readily available.

More information about the valuation of each Fund’s holdings can be found in the SAI.

Dividends and DistributionsThe Reality Shares DIVS ETF intends to distribute its net investment income, if any, at least annually and makedistributions of its net realized capital gains, if any, annually. Each of the Reality Shares DIVCON LeadersDividend ETF, Reality Shares DIVCON Dividend Defender ETF, and Reality Shares DIVCON Dividend GuardETF intends to distribute its net investment income, if any, at least semi-annually and make distributions of its netrealized capital gains, if any, annually. The Reality Shares Nasdaq NexGen Economy ETF intends to distributeits net investment income, if any, at least quarterly and make distributions of its net realized capital gains, if any,annually, Brokers may make available to their customers who are also Fund shareholders the DTC book-entrydividend reinvestment service. You should contact your broker to determine the availability and costs of this


service. Brokers may require you to adhere to specific procedures and timetables. If this service is available andused, dividend distributions of both income (which may include a return of capital) and net realized gains will beautomatically reinvested in additional whole shares of the distributing Fund purchased in the secondary market.Without this service, you would receive your distributions in cash.

TaxesPlease consult your tax advisor regarding your specific questions about U.S. federal, state and localincome taxes. Below is a summary of some important tax issues that affect the Fund and its shareholders. Thissummary is based on current tax laws, which may change.

You should not consider this summary to be a comprehensive explanation of the tax treatment of the Funds, orthe tax consequences of an investment in the Funds. This summary does not apply to Fund shares held in anindividual retirement account or other tax-qualified plans, which are generally not subject to current tax.Transactions relating to Fund shares held in such accounts may, however, be taxable at some time in the future.

The Tax Cuts and Jobs Act (the “Tax Act”) made significant changes to the U.S. federal income tax rules fortaxation of individuals and corporations, generally effective for taxable years beginning after December 31, 2017.Many of the changes applicable to individuals are temporary and apply only to taxable years beginning afterDecember 31, 2017 and before January 1, 2026. There are only minor changes with respect to the specific rulesapplicable to regulated investment companies, such as the Funds. The Tax Act, however, made numerousother changes to the tax rules that may affect shareholders and the Funds. You are urged to consult your owntax advisor regarding how the Tax Act affects your investment in the Funds.

Each Fund intends to qualify for the special tax treatment afforded to regulated investment companies under theCode. As long as each Fund qualifies for treatment as a regulated investment company, it generally pays nofederal income tax on the earnings it timely distributes to shareholders. However, a Fund’s failure to qualify as aregulated investment company or to meet minimum distribution requirements would result (if certain reliefprovisions were not available) in fund-level taxation and, consequently, a reduction in income available fordistribution to shareholders.

Unless you are a tax-exempt entity or your investment in Fund shares is made through a tax-deferred retirementaccount, such as an individual retirement account, you need to be aware of the possible tax consequences when:

◾ A Fund makes distributions;

◾ You sell Fund shares; and

◾ You purchase or redeem Creation Units (institutional investors only).

Taxes on DistributionsEach Fund intends to distribute each year substantially all of its net investment income and net realized capitalgains, if any. The dividends and distributions you receive may be subject to U.S. federal, state and local taxation,depending upon your tax situation. Distributions you receive from the Funds may be taxable whether youreceive them in cash or reinvest them in additional Fund shares. For federal income tax purposes, distributions ofinvestment income are generally taxable as ordinary income or qualified dividend income. Taxes on distributionsof capital gains (if any) are determined by how long a Fund owned the assets that generated them, rather thanhow long a shareholder has owned his or her Fund shares. Sales of assets held by a Fund for more thanone year generally result in long-term capital gains and losses, and sales of assets held by the Fund for one yearor less generally result in short-term capital gains and losses. Distributions of a Fund’s net capital gain (theexcess of net long-term capital gains over net short-term capital losses) that are properly reported by such Fundas capital gain dividends (“Capital Gain Dividends”) will be taxable as long-term capital gains regardless of howlong you have owned your Fund shares. For non-corporate shareholders, long-term capital gains are generallysubject to tax at reduced rates. Distributions of short-term capital gain will generally be taxable as ordinaryincome. Distributions reported by a Fund as “qualified dividend income” are generally taxed to non-corporateshareholders at rates applicable to long-term capital gains, provided holding period and other requirements aremet. “Qualified dividend income” generally is income derived from dividends paid by U.S. corporations or certainforeign corporations that are either incorporated in a U.S. possession or eligible for tax benefits under certainU.S. income tax treaties. In addition, dividends that a Fund received in respect of stock of certain foreign


corporations may be qualified dividend income if that stock is readily tradable on an established U.S. securitiesmarket. Distributions that a Fund receives from an ETF or an underlying fund taxable as a regulated investmentcompany will be treated as qualified dividend income only to the extent so reported by such ETF or underlyingfund.

Corporate shareholders may be entitled to a dividends-received deduction for the portion of dividends theyreceive from a Fund that are attributable to dividends received by the Fund from U.S. corporations, subject tocertain limitations.

The DIVS ETF’s investments in derivative instruments, such as option contracts, futures or swaps tied todividend returns, will generally not generate income eligible to be treated as qualified dividend income whenreceived by individual shareholders or eligible for the dividends-received deduction when received by corporateshareholders. Therefore, even though the Fund is designed to isolate the level of expected dividends on equitysecurities, the Fund’s use of derivative instruments means that the Fund is unlikely to generate income eligible tobe treated as qualified dividend income or eligible for the dividend-received deduction. To the extent the Fundreceives dividend income from direct investments in equity securities of issuers of certain equity indexesand from ETFs designed to track the performance of such equity indexes, the Fund may be eligible to report aportion of its distributions as qualified dividend income. In addition, certain of the other Funds’ investmentstrategies including the use of derivatives, may limit such Funds’ ability to distribute dividends eligible to betreated as qualified dividend income or as eligible for the dividends-received deduction.

In general, your distributions are subject to federal income tax for the year in which they are paid. However,distributions paid in January, but declared by the Fund in October, November or December of the previous yearpayable to shareholders of record in such a month, 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 yourinvestment (and thus were included in the price you paid for your shares).

Dividends and distributions from a Fund and capital gain on the sale of Fund shares are generally taken intoaccount in determining a shareholder’s “net investment income” for purposes of the Medicare contribution taxapplicable to certain individuals, estates and trusts.

Each Fund (or financial intermediaries, such as brokers, through which shareholders own Fund shares) generallyis required to withhold and to remit to the U.S. Treasury a percentage of the taxable distributions and the saleor redemption proceeds paid to any shareholder who fails to properly furnish a correct taxpayer identificationnumber, who has under-reported dividend or interest income, or who fails to certify that he, she or it is not subjectto such withholding.

Non-U.S. Investors. If you are a nonresident alien individual or a foreign corporation, trust or estate, (i) aFund’s ordinary income dividends will generally be subject to a U.S. withholding tax at the rate of 30%, unless alower treaty rate applies, but (ii) gains from the sale or other disposition of Fund shares generally are not subjectto U.S. taxation, unless you are a nonresident alien individual who is physically present in the U.S. for 183 daysor more per year. A Fund may, under certain circumstances, report all or a portion of a dividend as an“interest-related dividend” or a “short-term capital gain dividend,” which would generally be exempt from this 30%U.S. withholding tax, provided certain other requirements are met. Different tax consequences may result if youare a foreign shareholder engaged in a trade or business within the United States or if you are a foreignshareholder entitled to claim the benefits of a tax treaty.

Each Fund (or your broker) will inform you of the amount of your ordinary income dividends, qualified dividendincome, and Capital Gain Dividend distributions shortly after the close of each calendar year.

Taxes When You Sell Fund SharesAny capital gain or loss realized upon a sale of Fund shares is generally treated as a long-term gain or loss if youheld the shares you sold for more than one year. Any capital gain or loss realized upon a sale of Fund sharesheld for one year or less is generally treated as a short-term gain or loss, except that any capital loss on a sale ofshares held for six months or less is treated as a long-term capital loss to the extent of Capital Gain Dividendspaid (or treated as paid) with respect to such shares. The ability to deduct capital losses may be limiteddepending on your circumstances.


Taxation of Fund InvestmentsThe Funds may invest in derivative instruments that are subject to numerous special and complex rules. Theserules could affect a Fund’s ability to qualify as a regulated investment company, affect whether gains and lossesrecognized by the Funds are treated as ordinary income or capital gain, accelerate the recognition of income tothe Funds and/or defer the Funds’ ability to recognize losses. In turn, these rules may affect the amount, timingor character of distributions you receive from the Fund. In addition, there is uncertainty regarding characterizationof such complex securities with respect to the income and asset diversification tests applicable to each Fund’squalification as a regulated investment company. If the IRS were to issue public guidance that results in anadverse determination relating to the treatment of certain of the Funds’ derivative investments, the Funds mayneed to modify their investment strategies, which could adversely affect the performance of the Funds. If a Fundfails to qualify as a regulated investment company, it would be subject to tax at the regular corporate rate (whichthe Tax Act reduced to 21%) without any deduction for distributions to shareholders, and its distributions wouldgenerally be taxable as ordinary dividends, although corporate shareholders could be eligible for the dividendsreceived deduction (subject to certain limitations) and individuals may be able to benefit from the lower tax ratesavailable to qualified dividend income. Please see the SAI for a more detailed discussion, including theavailability of relief for certain de minimis failures by the Funds to qualify as a regulated investment company.

To the extent a Fund writes (sells) and purchases options and futures contracts, such activity will involve complexrules that will determine for federal income tax purposes the amount, character and timing of recognition of thegains and losses a Fund realizes in connection with such transactions. Each Fund intends to distribute toshareholders at least annually any net capital gains which have been recognized for federal income tax purposes,including unrealized gains at the end of a Fund’s fiscal year on futures or certain options transactions. Suchdistributions are combined with distributions of capital gains realized on a Fund’s investments and shareholdersare advised on the nature of the distributions.

To the extent a Fund writes options that are not subject to the rules of section 1256 of the Code, the amount ofthe premium received by the Fund for writing such options will be entirely short-term capital gain to the Fund. Inaddition, if such an option is closed by the Fund, any gain or loss realized by the Fund as a result of the closingthe transaction will also be short-term capital gain or loss. If the holder of a put option exercises the holder’sright under the option, any gain or loss realized by the Fund upon the sale of the underlying security pursuant tosuch exercise will be short-term or long-term capital gain or loss to the Fund depending on the Fund’s holdingperiod for the underlying security.

The Funds may invest in certain futures and forward contracts and intend to enter into certain types of listedoptions on broad based securities indexes (“Section 1256 contracts”), which will be required to be“marked-to-market” for federal income tax purposes, that is, treated as having been sold at their market value onthe last day of the Fund’s taxable year. These provisions may require a Fund to recognize income or gainswithout a concurrent receipt of cash. Any gain or loss recognized on actual or deemed sales of Section 1256contracts will be treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss.Transactions that qualify as designated hedges are exempt from this mark-to-market rule, but may require aFund to defer the recognition of losses on these options to the extent of any unrecognized gains on relatedpositions held by it.

The tax provisions described above applicable to options, futures and forward contracts may affect the amount,timing, and character of a Fund’s distributions to its shareholders. For example, the Section 1256 rules describedabove may operate to increase the amount the Fund must distribute to satisfy the minimum distributionrequirement for the portion treated as short-term capital gain which will be taxable to its shareholders as ordinaryincome, and to increase the net capital gain it recognizes, without, in either case, increasing the cash availableto it. A Fund may elect to exclude certain transactions from the operation of Section 1256, although doing so mayhave the effect of increasing the relative proportion of net short-term capital gain (taxable as ordinary income)and thus increasing the amount of dividends it must distribute.

Accordingly, in order to avoid certain income and excise taxes, a Fund may be required to liquidate its investmentsat a time when the investment adviser might not otherwise have chosen to do so. Section 1256 contracts alsomay be marked-to-market for purposes of the excise tax.


Foreign Investments by a FundDividends, interest and other income received by a Fund with respect to foreign securities may give rise towithholding and other taxes imposed by foreign countries. Tax conventions between certain countries and theUnited States may reduce or eliminate such taxes. The Funds may need to file special claims for refunds tosecure the benefits of a reduced rate. If as of the close of a taxable year more than 50% of the total assets of aFund consist of stock or securities of foreign corporations, the Fund intends to elect to “pass through” to investorsthe amount of foreign income and similar taxes (including withholding taxes) paid by the Fund during thattaxable year. If a Fund elects to “pass through” such foreign taxes, then investors will be considered to havereceived as additional income their respective shares of such foreign taxes, but may be entitled to either acorresponding tax deduction in calculating taxable income, or, subject to certain limitations, a credit in calculatingfederal income tax. Foreign tax credits, if any, received by a Fund as a result of an investment in anotherregulated investment company (including an ETF which is taxable as a regulated investment company) will notbe passed through to you unless the Fund qualifies as a “qualified fund-of-funds” under the Code. If the Fund is a“qualified fund-of-funds” it will be eligible to file an election with the IRS that will enable the Fund to pass alongthese foreign tax credits to its shareholders. A Fund will be treated as a “qualified fund-of-funds” under the Codeif at least 50% of the value of the Fund’s total assets (at the close of each quarter of the Fund’s taxable year) isrepresented by interests in other regulated investment companies.

Taxes on Creation and Redemption of Creation UnitsAn Authorized Participant that exchanges securities for Creation Units generally will recognize a gain or lossequal to the difference between (i) the sum of the market value of the Creation Units at the time of the exchangeand any amount of cash received by the Authorized Participant in the exchange and (ii) the sum of theexchanger’s aggregate basis in the securities surrendered and any amount of cash paid for such Creation Units.A person who redeems Creation Units will generally recognize a gain or loss equal to the difference between theexchanger’s basis in the Creation Units and the sum of the aggregate U.S. dollar market value of the securitiesplus the amount of any cash received for such Creation Units. The IRS, however, may assert that a loss that isrealized upon an exchange of securities for Creation Units cannot be currently deducted under the rulesgoverning “wash sales” (for an Authorized Participant which does not mark-to-market its holdings), or on thebasis that there has been no significant change in economic position.

Gain or loss recognized by an Authorized Participant upon an issuance of Creation Units in exchange fornon-U.S. currency will generally be treated as ordinary income or loss. Gain or loss recognized by an AuthorizedParticipant upon an issuance of Creation Units in exchange for securities, or upon a redemption of Creation Units,may be capital or ordinary gain or loss depending on the circumstances. Any capital gain or loss realized uponan issuance of Creation Units in exchange for securities will generally be treated as long-term capital gain or lossif the securities have been held for more than one year. Any capital gain or loss realized upon the redemptionof a Creation Unit will generally be treated as long-term capital gain or loss if the Fund shares comprisingthe Creation Unit have been held for more than one year. Otherwise, such capital gains or losses are treated asshort-term capital gains or losses. An Authorized Participant purchasing or redeeming Creation Units shouldconsult their own tax advisors with respect to the tax treatment of any creation or redemption transaction andwhether the wash sales rules apply and when a loss might be deductible.

Each Fund may include cash when paying the redemption price for Creation Units in addition to, or in place of,the delivery of a basket of securities. A Fund may be required to sell portfolio securities in order to obtain thecash needed to distribute redemption proceeds. This may cause such Fund to recognize investment incomeand/or capital gains or losses that it might not have recognized if it had completely satisfied the redemptionin-kind. As a result, the Fund may be less tax efficient if it includes such a cash payment than if the in-kindredemption process was used.

Additional important information about taxes is in the SAI.

Premium/Discount InformationInformation showing the number of days that the end of day market price of each Fund’s shares was greater thanthe Fund’s NAV (i.e., a “premium”) and the number of days that the end of day market price of each Fund’sshares was less than the Fund’s NAV (i.e., a “discount”) for various time periods is available by visiting theFund’s website at www.realityshares.com.


Investments by Registered Investment CompaniesSection 12(d)(1) of the 1940 Act restricts investments by registered investment companies in the securities ofother investment companies, including shares of each Fund. Registered investment companies are permitted toinvest in the Fund beyond the limits set forth in section 12(d)(1) subject to certain terms and conditions set forthin an SEC exemptive order issued to the Trust, including that such investment companies enter into anagreement with the Funds.


Financial HighlightsEach Fund’s financial highlights table is intended to help you understand the Fund’s financial performance for theperiod of its operations. Certain information in the table reflects financial results for a single Fund share. Thetotal return at net asset value in the tables below represents the rate that an investor would have earned (or lost)on an investment in each of the Funds (assuming reinvestment of all dividends and distributions). The informationfor the fiscal period ended October 31, 2015 was audited by the Funds’ previous independent registered publicaccounting firm. The information for the fiscal periods ended October 31, 2016, October 31, 2017, October 31,2018 and October 31, 2019 have been audited by Cohen & Company, Ltd., the Funds’ independent registeredpublic accounting firm, whose reports and financial statements are included in the Funds’ 2019 Annual Report,which is available upon request.

Reality Shares DIVS ETFFor one share outstanding throughout each year/period presented.

Year EndedOctober 31,

2019


2018


2017


2016

For the PeriodDecember 18, 20141to October 31, 2015

Per Share Operational Performance:

Net asset value, beginning ofyear/period $ 26.64 $ 26.05 $ 24.17 $ 23.96 $ 23.00

Investment operations:

Net investment income (loss)2 0.36 0.20 (0.02) (0.12) (0.17)

Net realized and unrealized gain 0.02 0.61 1.90 0.79 1.13

Total from investment operations 0.38 0.81 1.88 0.67 0.96

Distributions to Shareholders from:

Net investment income (0.24) — — — —

Realized gains (0.16) (0.22) — (0.46) —

Total Distributions (0.40) (0.22) — (0.46) —

Net asset value, end of year/period $ 26.62 $ 26.64 $ 26.05 $ 24.17 $ 23.96

Total Return at Net Asset Value 1.53% 3.12% 7.77% 2.88% 4.17%3

Net assets, end of year/period (000’s)omitted $65,341 $74,041 $53,516 $32,132 $ 30,053

Ratios/Supplemental Data:

Ratio to average net assets of:

Expenses 0.85% 0.85% 0.85% 0.85% 0.85%4

Net investment income (loss) 1.36% 0.75% (0.09)% (0.51)% (0.82)%4

Portfolio turnover rate5 0.00%6 0.00%6 0.00%6 0.00%6 1,475.00%3

1 Commencement of operations.

2 Based on average daily shares outstanding.

3 Not annualized.

4 Annualized.

5 Portfolio turnover rate excludes securities received or delivered in-kind.

6 The Fund did not purchase or hold any long-term securities in the current year. Dividend Swaps are not included in the calculation ofthe portfolio turnover rate.


Financial Highlights

Reality Shares DIVCON Leaders Dividend ETFFor a share outstanding throughout the period presented.


2019


2018


2017

For the PeriodJanuary 6, 20161

to October 31, 2016

Per Share Operational Performance:Net asset value, beginning ofyear/period

$ 31.76 $ 29.98 $ 24.36 $24.06


Net investment income2 0.50 0.39 0.33 0.24

Net realized and unrealized gain 4.51 1.77 5.57 0.33

Total from investment operations 5.01 2.16 5.90 0.57


Net investment income (0.50) (0.36) (0.28) (0.27)

Realized gains (0.00)3 (0.02) — —

Total distributions (0.50) (0.38) (0.28) (0.27)

Net asset value, end of year/period $ 36.27 $ 31.76 $ 29.98 $24.36Total Return at Net Asset Value 15.95% 7.19% 24.29% 2.38%4

Net assets, end of year/period (000’s)omitted

$31,735 $45,257 $29,229 $4,264

Ratios/Supplemental Data:Ratio to average net assets of:Expenses 0.43% 0.43% 0.43% 0.43%5

Net investment income 1.50% 1.18% 1.18% 1.19%5

Portfolio turnover rate6 65.52%7 0.26% 3.35% 3.38%4



3 Less than 0.001.

4 Not annualized.

5 Annualized.


7 During the year, the Fund underwent a portfolio re-balancing. As a result, investment transactions were increased during the period,which caused a higher than normal turnover rate.



Reality Shares DIVCON Dividend Defender ETFFor a share outstanding throughout the period presented.


2019


2018


2017

For the PeriodJanuary 14, 20161to October 31, 2016

Per Share Operational Performance:Net asset value, beginning ofyear/period

$27.54 $26.08 $22.44 $23.55


Net investment income (loss)2 0.26 0.12 0.03 (0.04)

Net realized and unrealized gain(loss)

3.09 1.41 3.61 (1.07)

Total from investment operations 3.35 1.53 3.64 (1.11)


Net investment income (0.26) (0.07) — —

Net asset value, end of year/period $30.63 $27.54 $26.08 $22.44Total Return at Net Asset Value 12.22% 5.89% 16.23% (4.72)%3


$6,126 $5,509 $3,912 $2,805

Ratios/Supplemental Data:Ratio to average net assets of:Expenses 1.44%4 1.21%5 1.38%6 1.54%7,8

Net investment income (loss) 0.89% 0.42% 0.11% (0.19)%7

Portfolio turnover rate9 57.30%10 36.94% 69.11% 4.18%3



3 Not annualized.

4 Includes dividend expense on short sales of 0.59%.

5 Includes expenses and rebates associated with short sale transactions of (0.30)% and dividend expense of 0.66%.


7 Annualized.

8 Includes expenses associated with short sale transactions of 0.06% and dividend expense of 0.63%.


10 During the year, the Fund underwent a portfolio re-balancing. As a result, investment transactions were increased during the period,which caused a higher than normal turnover rate.



Reality Shares DIVCON Dividend Guard ETFFor a share outstanding throughout the period presented.


2019


2018


2017


Per Share Operational Performance:Net asset value, beginning of year/period

$ 23.92 $ 23.36 $ 20.23 $ 23.71


Net investment income2 0.21 0.09 0.01 (0.00)3

Net realized and unrealized gain(loss)

1.16 0.624 3.12 (3.47)

Total from investment operations 1.37 0.71 3.13 (3.47)


Net investment income (0.21) (0.15) — (0.01)

Net asset value, end of year/period $ 25.08 $ 23.92 $ 23.36 $ 20.23Total Return at Net Asset Value 5.76% 3.03% 15.47% (14.66)%5


$13,793 $11,362 $ 2,336 $ 2,528

Ratios/Supplemental Data:Ratio to average net assets of:Expenses 1.58%6 1.29%7 1.41%8 1.43%9,10

Net investment income (loss) 0.88% 0.38% 0.06% (0.01)%9

Portfolio turnover rate11 64.70% 309.32% 267.04% 64.92%5



3 Amount represents less than $0.005.

4 The amount shown for a share outstanding throughout the year may not correlate with the Statement of Operations for the year due tothe timing of sales and purchases of the Fund’s shares.

5 Not annualized.


7 Includes expenses and rebates associated with short sale transactions of (0.27)% and dividend expense of 0.71%.


9 Annualized.

10 Includes expenses associated with short sale transactions of 0.07% and dividend expense of 0.51%.




Reality Shares Nasdaq NexGen Economy ETFFor a share outstanding throughout the period presented.


2019


Per Share Operational Performance:Net asset value, beginning of year/period $ 21.19 $ 24.00


Net investment income2 0.34 0.21

Net realized and unrealized gain (loss) 2.86 (2.86)

Total from investment operations 3.20 (2.65)


Net investment income (0.36) (0.16)

Net asset value, end of year/period $ 24.03 $ 21.19Total Return at Net Asset Value 15.24% (11.09)%3

Net assets, end of year/period (000’s) omitted $67,277 $86,348

Ratios/Supplemental Data:Ratio to average net assets of:Expenses 0.68% 0.68%4

Net investment income (loss) 1.51% 1.14%4

Portfolio turnover rate5 20.72% 31.18%3



3 Not annualized.

4 Annualized.



Additional Information

Reality Shares DIVCON Leaders Dividend ETF, Reality Shares DIVCON Dividend Defender ETF, and Reality Shares DIVCON Dividend Guard ETFThe Trust has entered into a licensing agreement with the Index Provider to use each Index. Each Index is atrademark of the Index Provider and has been licensed for use for certain purposes by the Trust. The IndexProvider does not sponsor, endorse, sell or promote any Fund or its shares, and the Index Provider makes norepresentation regarding the advisability of investing in shares of a Fund. The Index Provider makes norepresentation or warranty, express or implied, to the shareholders of a Fund or any member of the publicregarding the advisability of investing in securities generally or in a Fund particularly or the ability of any datasupplied by the Index Provider to track general market performance. The Index Provider is an affiliate of theAdviser and its relationship to the Trust includes the licensing of certain trademarks and trade names of the IndexProvider and of the data supplied by the Index Provider, which is determined, composed and calculated by theIndex Provider. The Index Provider has no obligation to take the needs of the Adviser or the shareholders of aFund into consideration in determining, composing or calculating the data supplied by the Index Provider. TheIndex Provider is not responsible for and has not participated in the determination of the prices of the shares ofthe Fund or the timing of the issuance or sale of such shares. The Index Provider has no obligation or liability inconnection with the administration, marketing or trading of the Fund or its Shares.

THE INDEX PROVIDER SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONSRELATED TO A FUND OR INDEX. THE INDEX PROVIDER MAKES NOWARRANTY, EXPRESS OR IMPLIED,AS TO RESULTS TO BE OBTAINED BY THE ADVISER, DISTRIBUTOR OR OWNERS OF A FUND, OR ANYOTHER PERSON OR ENTITY, FROM THE USE OF AN INDEX OR ANY DATA INCLUDED THEREIN. THEINDEX PROVIDER MAKES NO WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMSALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, WITHRESPECT TO EACH FUND OR TO EACH INDEX OR TO ANY DATA INCLUDED THEREIN. WITHOUTLIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITYFOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS)IN CONNECTION WITH A FUND OR AN INDEX, EVEN IF THE INDEX PROVIDER IS NOTIFIED OF THEPOSSIBILITY OF SUCH DAMAGES.

The Adviser does not guarantee the quality, accuracy and/or the completeness of any Index or any data includedtherein and the Adviser shall have no liability for any errors, omissions or interruptions therein.

Reality Shares DIVCON Leaders Dividend ETF, Reality Shares DIVCON Dividend Defender ETF, and Reality Shares DIVCON Dividend Guard ETFEach of the Reality Shares DIVCON Leaders Dividend Index, Reality Shares DIVCON Dividend Defender Index,and Reality Shares DIVCON Dividend Guard Index (each, an “Index”) is calculated by ICE Data Indices, LLCor its affiliates (“ICE Data Indices, LLC”). Each of the Reality Shares DIVCON Leaders Dividend ETF, RealityShares DIVCON Dividend Defender ETF, and Reality Shares DIVCON Dividend Guard ETF which is based onan Index, is not issued, sponsored, endorsed, sold or promoted by ICE Data Indices, LLC, and ICE Data Indices,LLC makes no representation regarding the advisability of investing in such product.

ICE DATA INDICES, LLC MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLYDISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITHRESPECT TO ANY INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL ICE DATA INDICES,LLC HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

With respect to Reality Shares Nasdaq NexGen Economy ETF, Reality Shares and Nasdaq have entered into aCo-Developed Index Agreement that provides for the use by Reality Shares and Nasdaq of the Index and relatedtrademarks and intellectual property. The Trust, on behalf of the Fund, has entered into a licensing agreementwith Reality Shares to use the Index. The Fund is entitled to use the Index at no charge under the licensingagreement.

Reality Shares is an affiliate of the Adviser. Reality Shares, the Adviser and the Fund make no representation orwarranty, express or implied, to the owners of shares of the Fund or any member of the public regarding theadvisability of investing in securities generally or in the Fund particularly or the ability of the Index to achieve itsgoals. Reality Shares has no obligation to take the needs of the Fund or the owners of shares of the Fund


into consideration in determining, composing, or calculating the Index. Reality Shares is not responsible for andhas not participated in the determination of the timing of, prices of, or quantities of shares of the Fund to beissued or in the determination or calculation of the equation by which the shares of the Fund are redeemable.The Fund, the Adviser and Reality Shares do not guarantee the accuracy, completeness, or performance of theIndex or the data included therein and shall have no liability in connection with the Index or Index calculation.

The Fund is not sponsored, endorsed, sold or promoted by Nasdaq or its affiliates (Nasdaq, with its affiliates, arereferred to as the “Corporations”). The Corporations have not passed on the legality or suitability of, or theaccuracy or adequacy of descriptions and disclosures relating to, the Fund. The Corporations make norepresentation or warranty, express or implied to the owners of the Fund or any member of the public regardingthe advisability of investing in securities generally or in the Fund particularly. The Corporations’ only relationshipto Reality Shares (“Licensee”) is in the licensing of the Nasdaq® trade names and trademarks, and certaintrade names of the Corporations. The Corporations are not responsible for and have not participated in thedetermination of the timing of, prices at, or quantities of the Fund to be issued or in the determination orcalculation of the equation by which the Fund is to be converted into cash. The Corporations have no liability inconnection with the administration, marketing or trading of the Fund.


Investment AdviserReality Shares Advisors, LLC402 West Broadway, Suite 2800San Diego, California 92101

DistributorALPS Distributors, Inc.1290 Broadway, Suite 1000Denver, Colorado 80203

Legal CounselMorgan, Lewis & Bockius LLP1111 Pennsylvania Avenue, NWWashington, DC 20004-2541

More information about each Fund is available, without charge, through thefollowing:

Statement of Additional Information (“SAI”): The SAI, dated February 28, 2020,includes detailed information about each Fund. The SAI is on file with the SECand is incorporated by reference into this prospectus. This means that the SAI, forlegal purposes, is a part of this prospectus.

Annual and Semi-Annual Reports: These reports list each Fund’s holdings andcontain information from the Adviser about investment strategies, and recentmarket conditions and trends and their impact on Fund performance. The reportsalso contain detailed financial information about each Fund.

To Obtain an SAI, Annual or Semi-Annual Report, or More Information:

By Telephone: 855-595-0240 By Mail: 402 W Broadway, 28th Fl,San Diego, CA 92101

By Internet: www.realityshares.com

From the SEC: Reports and other information about Reality Shares ETF Trust areavailable on the EDGAR Database on the SEC’s website at: http://www.sec.gov.You may also obtain this information, upon payment of a duplicating fee, bye-mailing the SEC at the following address: [email protected].

THE TRUST’S INVESTMENT COMPANY ACTREGISTRATION NUMBER IS 811-22911

Documents

RealitySharesETFTrust · The prices of forwards on a Large Cap Securities Index are influenced by the aggregate trading prices of the Large Cap Securities, exposure to interest rate