The Fund

The Fund will seek investment results that correspond (before fees and expenses) generally to the performance of the Underlying Index. The Underlying Index is a rules-based index intended to provide investors with exposure to water-related businesses globally, which may include emerging markets.The Underlying Index generally consists of 30-50 stocks that are selected by Zacks Index Services (the Index Provider) from a universe of domestic and international companies involved in water-related businesses (the Index Universe) pursuant to the criteria and methodology.

The Fund generally will invest in all of the stocks that comprise the Underlying Index in proportion to their weightings in the Underlying Index. However, under various circumstances, it may not be possible or practicable to purchase all of the stocks in the Underlying Index in those weightings. In those circumstances, the Fund may purchase a sample of the stocks in the Underlying Index in proportions expected to correspond as closely as possible to the performance of the Underlying Index.

There may also be instances in which the Adviser may choose to overweight a stock in the Underlying Index, purchase (or sell) stocks not in the Underlying Index which the Adviser believes are appropriate to substitute for one or more Underlying Index constituents, or utilize various combinations of other available investment techniques, in seeking to correspond, before fees and expenses, generally to the performance of the Underlying Index. In addition, from time to time, stocks are added to or removed from the Underlying Index. The Fund may sell stocks that are represented in the Underlying Index or purchase stocks that are not yet represented in the Underlying Index in anticipation of their removal from or addition to the Underlying Index.

Why invest in the global water industry?

  • Demand for clean water has exploded as the strains of population increase, emerging economies, pollution, and drought have created crisis-level shortages in some regions for this most basic life-sustaining resource and most critical input to the world’s economy.
  • Developed countries are struggling to maintain their aging infrastructure at a sustainable rate, while developing countries still need to complete the basic framework for water and wastewater systems. Industry surveys indicate that global water infrastructure spending requirements could reach a cumulative total of almost $12 trillion by 2030. 1
  • Based on Summit Water’s long experience it believes that water utilities have a very compelling business model in terms of persistent demand and consistent earnings. This business model creates potential for the water utility business to realize regular dividend increases.
  • Recent trends suggest that the large capital expenditures required to maintain water systems could encourage a transition from municipal ownership to privatization and consolidation, creating more investible opportunities.

1McKinsey Global Institute, Infrastructure Productivity, January 2013, Exhibit 5, p. 14.

Correlation: a statistical measure of how two securities move in relation to each other. In this case it is Summit Zacks Global Water Index vs. S&P 500.

Dividend Yield: a financial ratio that indicates how much a company pays out in dividends each year relative to its share price. Dividend yield is represented as a percentage and can be calculated by dividing the dollar value of dividends paid in a given year per share of stock held by the dollar value of one share of stock.

Intrinsic Value: the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value.