Ticker: DMCY
Exchange: NYSE Arca
Expense ratio: 0.50%
Original filing date: January 14, 2021
Effective date: March 30, 2021
Listing Date: April 1, 2021
CUSIP: 00774Q148
Active: No
Index: Democracy Investments International Index
Investment Objective: The Democracy International Fund seeks to track the total return performance, before fees and expenses, of the Democracy Investments International Index.
Investment Strategy: Based on the Economist's (the international news group) Intelligence Unit's Democracy Index.
- 2,400 companies: Across 52 countries where each country is assigned an Economist Democracy Score, on a scale of 1-10.
- Market cap of each company is multiplied times their country Democracy Score to get a "Democracy market cap".
- "All Democracy market caps" are added together.
- Each company's Democracy market cap is divided by the sum of the Democracy market caps to derive each company's percentage of the total.
- This percentage is their weight in the Democracy International Index.
Constituents: Universe: Solactive GBS Global Markets ex United States Large & Mid Cap USD Index
Adviser: Democracy Investment Management, LLC
Prospectus is here.
Principal Investment Strategies
The Fund uses a “passive management” (or indexing) approach in seeking to achieve its investment objective. The Index construction process begins with the universe of companies that are current members of the Solactive GBS Global Markets ex United States Large & Mid Cap USD Index (market cap weighted, international equities) (the “Solactive Index”).
The Solactive Index consists of over 2,400 individual companies representing 52 countries. Democracy Investments Index Provider LLC (the “Index Provider”) assigns a “country of risk” to each company in the Solactive Index universe based on the country of risk assigned to each such company by Bloomberg L.P. A company’s country of risk designation is based on a number of criteria, including the country in which the company is domiciled, the primary stock exchange on which the company’s shares trade, the location from which the majority of the company’s revenues are generated, and the company’s reporting currency.
The Index Provider then matches each company’s country of risk against that country’s “Democracy Score” assigned by The Economist Intelligence Unit Ltd.’s Democracy Index. A country’s Democracy Score can range from 0-10 and is a composite of sixty indicators, which are grouped into the following five categories:
| 1. | Electoral process and pluralism |
| 2. | Civil liberties |
| 3. | The functioning of government |
| 4. | Political participation |
| 5. | Political culture |
The Index Provider then multiplies each company’s market capitalization weighting in the Solactive Index by the Democracy Score of its country of risk and normalizes the products to sum to 100%. In other words, the weight of a specific company in the Index is the product of the company’s Democracy Score and its market capitalization weighting in the Solactive Index (the “Market Capitalization Product”) divided by the sum of all the Market Capitalization Products of all companies in the Index. As a result, the Index has greater weightings in companies in countries with higher Democracy Scores and lesser weightings in companies in countries with lower Democracy Scores as compared to the Solactive Index. The Index is rebalanced and reconstituted on a quarterly basis.
In constructing the Fund’s portfolio, Democracy Investment Management, LLC (the “Adviser”), the Fund’s investment adviser and an affiliate of the Index Provider, generally will use a representative sampling investment approach designed to achieve the Fund’s investment objective. In doing so, the Fund generally will hold (i) the securities of index constituents, consisting of common stocks and American Depositary Receipts (“ADRs”) of large- and medium-capitalization companies, and (ii) shares of exchange traded funds (“ETFs”), in combination such that the Fund’s returns are expected to correspond generally to the Index’s returns, country and sector weightings, and other characteristics such as market capitalization. The Adviser’s use of ETFs as part of its representative sampling strategy will result in the Fund (i) having exposure to companies that have the same country of risk designation as companies in the Index but that are not themselves Index constituents, and (ii) not owning or otherwise not having exposure to companies that are included in the Index. At times, ETFs may represent a significant portion of the Fund’s portfolio.
In addition to investing in ETFs as discussed above, the Fund also may invest in securities or other investments not included in the Index, but which the Adviser believes will help the Fund to track the Index. For example, the Fund may invest in securities that are not components of the Index so as to reflect various corporate actions and other changes to the Index (such as Index reconstitutions, additions, and deletions).
[The Fund may from time to time invest a significant portion of its assets in the securities of companies in one or more countries, geographic regions or economic sectors. As of the date of this Prospectus, the Fund has significant exposure to the [____] sector, as defined by [____].]
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