Correspondence 0001999371-24-013247 from Tidal Trust III (CIK 0001722388)
Tidal Trust III (CIK 0001722388)
Date: Oct. 11, 2024 · CIK: 0001722388 · Accession: 0001999371-24-013247
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-221764, 811-23312
Letter
VIA EDGAR TRANSMISSION Division of Investment Management Washington, DC 20549 Re: Tidal Trust III (the “Trust”) Post-Effective Amendment No. 53 to the Trust’s Registration Statement on Form N-1A (the “Amendment”) File Nos. 333-221764 and 811-23312
Dear Ms. Marquigny:
This correspondence responds to comments the Trust received from the staff of the U.S. Securities and Exchange Commission (the “Staff” or the “Commission”) on October 2, 2024, with respect to the Amendment and the Trust’s proposed two new series, the FIRE Funds™ Wealth Builder ETF and FIRE Funds™ Income ETF (each, a “Fund,” and together, the “Funds”). For your convenience, the comments have been reproduced with responses following each comment. Capitalized terms not otherwise defined have the same meaning as in the Registration Statement.
PROSPECTUS
Fees and Expenses
1. Please provide us with updated Fee table expense examples. We may have additional comments.
Response: Each Fund’s completed Fees and Expenses table and Expense Example are included in the attached Exhibit A. The Trust notes that shorting is no part of either Fund’s strategy, so there is no need to separately disclose “dividends and other expenses on securities sold short” as a sub-line item.
2. In correspondence, please tell us supplementally how you estimated current expenses related to (i) Underlying ETFs managed using futures-based and options-based strategies, and (ii) Underlying ETFs with exposure to digital assets. And tell us how you conclude that Other Expenses would reasonably be 0.00%.
Response: The Trust respectfully notes that each Fund is structured as a fund-of-funds and invests solely in Underlying ETFs. The Funds do not directly invest in digital assets or options. Any fees related to options or digital assets in which an Underlying ETF may have exposure are reflected in the Acquired Fund Fees and Expenses (AFFE). To calculate the AFFE, we multiplied the expense ratios of the Underlying ETFs in each Fund’s initial portfolio by their respective weightings in the strategy, and then summed the resulting weighted expenses.
Additionally, following the Adviser’s contractual waiver of the unitary management fee (see response to Comment 3 below), the Trust expects that the only expenses for each Fund will be AFFE. The Trust does not foresee any other expenses, as neither Fund plans to use leverage or incur extraordinary costs.
3. Will the Adviser waive the management fee when investing in affiliated funds? If not, please disclose the conflicts the Adviser has relating to investments in, and choices between, affiliated funds.
Response: The Adviser has determined to contractually waive the entire unitary management fee for each Fund. In addition, the Trust notes that the Prospectus includes disclosure regarding potential conflicts of interest the Adviser may have when making investment decisions between affiliated funds (see “Affiliated Fund of Funds Structure Risks”).
Principal Investment Strategies - FIRE Funds™ Wealth Builder ETF
4. The Fund’s investment thesis assumes that assets will be allocated equally across the four baskets of Underlying ETFs. The remainder of the strategy explains how the Adviser selects the ETFs in each basket. It further notes that the Adviser adjusts holdings on a daily basis. For context and clarity, please describe how the Adviser maintains the 25% allocation per basket, and note the significant matters that would require adjustments (rebalancing, income distributions, etc.).
Response: The Trust notes that the Fund’s portfolio will be rebalanced to the 25% target allocations whenever the Fund adds a new Underlying ETF, removes an existing Underlying ETF, or substitutes Underlying ETFs within the portfolio. Additionally, the Fund’s portfolio managers will adjust the allocations to restore the 25% target allocations if any basket exceeds 30% of the Fund’s total value. The Trust further confirms that explanatory language regarding these procedures has been added to the Prospectus.
5. In formulating the strategy, how did the Adviser consider the likelihood that these economic regimes would cancel one another out from a returns perspective? For example, if the inflation theme investments do well, will the deflation investments do poorly and undercut total performance in an equal weighted portfolio? Please advise and revise as necessary.
Response: The Underlying ETFs selected to represent each economic regime are not structured as direct opposites or inversely correlated. Rather, the Adviser aims to allocate to Underlying ETFs that have the potential to perform well across a range of market environments, with the expectation that certain Underlying ETFs may outperform when a specific economic condition becomes dominant. While there is recognition that some themes may experience varying performance under different conditions, the Fund’s overall strategy is designed to provide a balanced exposure to multiple economic regimes without relying on a simple inverse relationship. This approach seeks to mitigate the risk of one regime fully negating the returns of another, and instead aims to capture value from each regime over time.
The Trust confirms that the Item 9 Prospectus disclosures have been revised to reflect the foregoing.
6. For the “Prosperity” basket, we note the phrase this “basket will invest in underlying ETFs that are managed using option-based strategies.” Are the underlying ETFs limited to only those that use options? How are they “primarily invested in equity securities” if managed using options? Please clarify.
Response: The Trust notes that the intent behind the “Prosperity” basket is to include Underlying ETFs that primarily hold equity securities, while also utilizing derivative strategies, with a primary focus on options-based strategies. The selected Underlying ETFs may employ options—such as covered calls or volatility overlays—to enhance income, manage risk, or hedge against downside exposure. While options are the primary derivative used, other instruments may be employed as well. These ETFs maintain substantial exposure to equities, aligning with the basket’s focus on equity markets, while the use of derivatives provides an additional layer of strategy to potentially enhance returns or reduce volatility. Therefore, the “Prosperity” basket is not limited solely to options-based funds.
The Trust has revised the Prospectus language to clarify the foregoing.
7. For the Inflation/Deflation baskets, the terms “inflation beneficiaries” and “deflation beneficiaries” are highly subjective - please explain how the Adviser determines that an Underlying ETF invests in “assets that tend to increase/decrease in inflationary/deflationary periods.” Also, consider providing examples to illustrate the range of underlying ETFs that would qualify for the inflation basket based on their use of managed futures.
Response: The Fund’s Adviser identifies “inflation beneficiaries” and “deflation beneficiaries” by selecting asset classes with a history of performing well during inflationary or deflationary periods, based on historical data and macroeconomic analysis.
For the Inflation Basket, the Adviser selects ETFs that invest in asset classes traditionally associated with strong performance in inflationary environments, such as real estate, gold, and commodities. These asset classes tend to appreciate during periods of rising prices and inflationary pressures. Additionally, the Fund may include ETFs that utilize managed futures strategies, which provide exposure to a variety of commodity and inflation-sensitive sectors. For example, a managed futures ETF that tracks commodity futures or invests in inflation-sensitive sectors like energy or agriculture would be considered for this basket.
For the Deflation Basket, the Adviser selects ETFs that invest in long-duration bonds and alternative strategies that benefit from falling interest rates and interest rate volatility, which tend to perform well in deflationary conditions.
The Trust confirms that the Item 9 Prospectus disclosures have been revised to reflect the foregoing.
8. With respect to the list of Asset Class Benchmarks, the bullet points indicate the type of benchmark the Adviser can use to analyze Underlying ETFs. Please name the particular asset class benchmark that the Adviser will use to evaluate the Underlying ETFs under consideration for the corresponding baskets.
Response: The Trust confirms that the Prospectus has been revised to name the particular asset class benchmarks.
9. In the sentence immediately above the Portfolio Construction, please clarify how the Adviser “adjusts the Fund’s portfolio in an effort to seek to produce optimal results for the Fund.” How do the Fund’s portfolio managers decide when to purchase/sell a basket component, as opposed to reallocating assets withing the basket’s existing portfolio? In plain English, tell investors about basic adjustments the Adviser will make to respond to common market changes. For example, buy more X when the market does Y, or substitute A ETFs when tech sector volatility does B? Use concrete practical examples investors can follow easily.
Response: The Trust confirms that the Prospectus has been revised to clarify the foregoing.
10. Please describe what non-diversified means in practical terms, and explain how it impacts Fund performance.
Response: The Trust confirms that the Prospectus has been revised to add the foregoing description and explanation.
11. Under the Underlying ETFs Exposures - Commodity ETFs disclosure, please provide a more detailed description of the Underlying ETFs that will offer digital asset exposure. Instead of using general phrases like “such as Bitcoin,” identify each specific digital asset (e.g., Bitcoin, Ethereum, etc.) to which an Underlying ETF may provide the Fund with investment exposure. Clarify or delete the phrase “investment in other exchange traded products.” Disclose the maximum percentage of assets that may be allocated to ETFs with digital exposure. We may have further comments.
Response: The Trust respectfully informs the Staff that, as noted in the Prospectus, the Fund will not directly invest in digital assets. Instead, it will gain exposure to digital assets solely through investments in Underlying ETFs. These ETFs include those registered under the Investment Company Act, such as BLOK and BTGD (once it commences operations). For example, while ETFs like BLOK primarily invest in companies involved in blockchain technology, they may provide indirect exposure to a range of digital assets through their investments in companies involved in cryptocurrency mining or blockchain-related services. Due to the nature of these ETFs, it is not feasible to identify each specific digital asset to which they may have indirect exposure, as this could include a broad array of assets beyond just Bitcoin or Ethereum.
The phrase “investment in other exchange traded products” has been clarified to specify that the Fund’s digital asset exposure will be limited to exposure via investments in 1940 Act-registered ETFs. Additionally, the Prospectus has been revised to note that the Fund will allocate no more than ten percent of its total assets to Underlying ETFs that provide digital asset exposure.
Principal Investment Risks - FIRE Funds™ Wealth Builder ETF
12. For the Asset Allocation Fund of Funds risk, we note the statement: “As a fund of funds, the Fund is exposed to the same risks as the Underlying ETFs in proportion to the Fund’s allocation to those Underlying ETFs.” However, it isn’t clear which Underlying ETF risks are principal risks of the top tier Fund as a result of this proportional aggregation. Please highlight the particular risks that become principal to this Fund based on the combination of underlying funds chosen to implement the four bucket economic regime strategy. Provide corresponding principal risk summaries for each (e.g., derivatives, sector risk, counterparty risk) and present them in equivalent detail and format to the risks you show on page 5.
Response: The Trust confirms that the Prospectus has been updated to reflect the principal risks of the Underlying ETFs that, when aggregated, are expected to become the principal risks of the Fund.
13. For Affiliated Fund of Funds Structure Risks, please rewrite the third sentence in plain English.
Response: The Trust confirms that the foregoing sentence has been rewritten using plain English principals.
14. For Underlying ETF Risks, please substitute the word “will” for “is likely to.” Or, if incorrect, please supplementally explain why the change is not appropriate.
Response: The Trust confirms the Prospectus has been revised to reflect the foregoing comment.
15. For Equity ETF Risks, if sector risks will be a principal risk at the top tier, the principal investment strategy description should specify the sectors the Fund is expected to focus on, and the relevant risks unique to those sectors should be disclosed.
Response: The Trust confirms that the Fund is not expected to focus on specific sectors.
16. For Management Risk, please directly address and discuss the role of human error by individual PMs.
Response: The Trust confirms that additional disclosure has been added.
17. For Recent Market Event Risk, consider whether there is a need to reference the current middle East conflict.
Response: The Trust confirms that the foregoing risk, renamed Market Event Risk, has been updated to address current market events.
Principal Investment Strategies - FIRE Funds™ Income ETF
18. We note the disclosure that the Fund seeks a minimum of 4% target annual income level – please clarify what this statement means.
Additionally, explain supplementally why including a numeric target in your disclosure (a) is appropriate under the securities laws and (b) does not anchor investors inappropriately in a manner similar to a projected return?
Please ensure your response explains what “annual income level” means, and how it will be achieved. If the Fund anticipates having to return capital to achieve that level of payout, then state so clearly.
Please bxt your filing so that we may consider this issue.
Response: The Trust confirms that the Prospectus has been revised to clarify the 4% target annual income level statement.
The Trust supplementally informs the Staff that the foregoing target refers to the distribution of current income, which includes dividends, interest income, and other earnings from sources such as real estate or derivatives. It does not include capital gains from the sale of assets. Instead, it represents the recurring income generated by the Fund’s underlying assets.
The Trust respectfully notes that including a numeric target, such as a 4% annual income target, is appropriate under securities laws because it transparently reflects the Fund’s income objective and strategy. The target is clearly disclosed as a goal, not a guarantee, and is accompanied by disclosures clarifying that the target may not be achieved.
A numeric target like the “4% Annual Target” refers to the Fund’s income generation goal, which is fundamentally different from projecting a return. It does not imply capital appreciation or a guaranteed total return, but instead focuses on a specific aspect of the Fund’s income strategy. The Trust respectfully notes that the Prospectus discloses that the target may not be met and is subject to market conditions. As a result, the inclusion of the target avoids inappropriately anchoring investors to an expected return and helps manage expectations within a defined context.
Lastly, the Trust confirms that the Fund does not anticipate having to r
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CORRESP 1 filename1.htm Tidal Trust III 234 West Florida Street, Suite 203 Milwaukee, Wisconsin 53204 October 11, 2024 VIA EDGAR TRANSMISSION Ms. Rebecca Marquigny U.S. Securities and Exchange Commission Division of Investment Management 100 F Street NE Washington, DC 20549 Re: Tidal Trust III (the “Trust”) Post-Effective Amendment No. 53 to the Trust’s Registration Statement on Form N-1A (the “Amendment”) File Nos. 333-221764 and 811-23312 Dear Ms. Marquigny: This correspondence responds to comments the Trust received from the staff of the U.S. Securities and Exchange Commission (the “Staff” or the “Commission”) on October 2, 2024, with respect to the Amendment and the Trust’s proposed two new series, the FIRE Funds™ Wealth Builder ETF and FIRE Funds™ Income ETF (each, a “Fund,” and together, the “Funds”). For your convenience, the comments have been reproduced with responses following each comment. Capitalized terms not otherwise defined have the same meaning as in the Registration Statement. PROSPECTUS Fees and Expenses 1. Please provide us with updated Fee table expense examples. We may have additional comments. Response: Each Fund’s completed Fees and Expenses table and Expense Example are included in the attached Exhibit A. The Trust notes that shorting is no part of either Fund’s strategy, so there is no need to separately disclose “dividends and other expenses on securities sold short” as a sub-line item. 2. In correspondence, please tell us supplementally how you estimated current expenses related to (i) Underlying ETFs managed using futures-based and options-based strategies, and (ii) Underlying ETFs with exposure to digital assets. And tell us how you conclude that Other Expenses would reasonably be 0.00%. Response: The Trust respectfully notes that each Fund is structured as a fund-of-funds and invests solely in Underlying ETFs. The Funds do not directly invest in digital assets or options. Any fees related to options or digital assets in which an Underlying ETF may have exposure are reflected in the Acquired Fund Fees and Expenses (AFFE). To calculate the AFFE, we multiplied the expense ratios of the Underlying ETFs in each Fund’s initial portfolio by their respective weightings in the strategy, and then summed the resulting weighted expenses. Additionally, following the Adviser’s contractual waiver of the unitary management fee (see response to Comment 3 below), the Trust expects that the only expenses for each Fund will be AFFE. The Trust does not foresee any other expenses, as neither Fund plans to use leverage or incur extraordinary costs. 3. Will the Adviser waive the management fee when investing in affiliated funds? If not, please disclose the conflicts the Adviser has relating to investments in, and choices between, affiliated funds. Response: The Adviser has determined to contractually waive the entire unitary management fee for each Fund. In addition, the Trust notes that the Prospectus includes disclosure regarding potential conflicts of interest the Adviser may have when making investment decisions between affiliated funds (see “Affiliated Fund of Funds Structure Risks”). Principal Investment Strategies - FIRE Funds™ Wealth Builder ETF 4. The Fund’s investment thesis assumes that assets will be allocated equally across the four baskets of Underlying ETFs. The remainder of the strategy explains how the Adviser selects the ETFs in each basket. It further notes that the Adviser adjusts holdings on a daily basis. For context and clarity, please describe how the Adviser maintains the 25% allocation per basket, and note the significant matters that would require adjustments (rebalancing, income distributions, etc.). Response: The Trust notes that the Fund’s portfolio will be rebalanced to the 25% target allocations whenever the Fund adds a new Underlying ETF, removes an existing Underlying ETF, or substitutes Underlying ETFs within the portfolio. Additionally, the Fund’s portfolio managers will adjust the allocations to restore the 25% target allocations if any basket exceeds 30% of the Fund’s total value. The Trust further confirms that explanatory language regarding these procedures has been added to the Prospectus. 5. In formulating the strategy, how did the Adviser consider the likelihood that these economic regimes would cancel one another out from a returns perspective? For example, if the inflation theme investments do well, will the deflation investments do poorly and undercut total performance in an equal weighted portfolio? Please advise and revise as necessary. Response: The Underlying ETFs selected to represent each economic regime are not structured as direct opposites or inversely correlated. Rather, the Adviser aims to allocate to Underlying ETFs that have the potential to perform well across a range of market environments, with the expectation that certain Underlying ETFs may outperform when a specific economic condition becomes dominant. While there is recognition that some themes may experience varying performance under different conditions, the Fund’s overall strategy is designed to provide a balanced exposure to multiple economic regimes without relying on a simple inverse relationship. This approach seeks to mitigate the risk of one regime fully negating the returns of another, and instead aims to capture value from each regime over time. The Trust confirms that the Item 9 Prospectus disclosures have been revised to reflect the foregoing. 6. For the “Prosperity” basket, we note the phrase this “basket will invest in underlying ETFs that are managed using option-based strategies.” Are the underlying ETFs limited to only those that use options? How are they “primarily invested in equity securities” if managed using options? Please clarify. Response: The Trust notes that the intent behind the “Prosperity” basket is to include Underlying ETFs that primarily hold equity securities, while also utilizing derivative strategies, with a primary focus on options-based strategies. The selected Underlying ETFs may employ options—such as covered calls or volatility overlays—to enhance income, manage risk, or hedge against downside exposure. While options are the primary derivative used, other instruments may be employed as well. These ETFs maintain substantial exposure to equities, aligning with the basket’s focus on equity markets, while the use of derivatives provides an additional layer of strategy to potentially enhance returns or reduce volatility. Therefore, the “Prosperity” basket is not limited solely to options-based funds. The Trust has revised the Prospectus language to clarify the foregoing. 7. For the Inflation/Deflation baskets, the terms “inflation beneficiaries” and “deflation beneficiaries” are highly subjective - please explain how the Adviser determines that an Underlying ETF invests in “assets that tend to increase/decrease in inflationary/deflationary periods.” Also, consider providing examples to illustrate the range of underlying ETFs that would qualify for the inflation basket based on their use of managed futures. Response: The Fund’s Adviser identifies “inflation beneficiaries” and “deflation beneficiaries” by selecting asset classes with a history of performing well during inflationary or deflationary periods, based on historical data and macroeconomic analysis. For the Inflation Basket, the Adviser selects ETFs that invest in asset classes traditionally associated with strong performance in inflationary environments, such as real estate, gold, and commodities. These asset classes tend to appreciate during periods of rising prices and inflationary pressures. Additionally, the Fund may include ETFs that utilize managed futures strategies, which provide exposure to a variety of commodity and inflation-sensitive sectors. For example, a managed futures ETF that tracks commodity futures or invests in inflation-sensitive sectors like energy or agriculture would be considered for this basket. For the Deflation Basket, the Adviser selects ETFs that invest in long-duration bonds and alternative strategies that benefit from falling interest rates and interest rate volatility, which tend to perform well in deflationary conditions. The Trust confirms that the Item 9 Prospectus disclosures have been revised to reflect the foregoing. 8. With respect to the list of Asset Class Benchmarks, the bullet points indicate the type of benchmark the Adviser can use to analyze Underlying ETFs. Please name the particular asset class benchmark that the Adviser will use to evaluate the Underlying ETFs under consideration for the corresponding baskets. Response: The Trust confirms that the Prospectus has been revised to name the particular asset class benchmarks. 9. In the sentence immediately above the Portfolio Construction, please clarify how the Adviser “adjusts the Fund’s portfolio in an effort to seek to produce optimal results for the Fund.” How do the Fund’s portfolio managers decide when to purchase/sell a basket component, as opposed to reallocating assets withing the basket’s existing portfolio? In plain English, tell investors about basic adjustments the Adviser will make to respond to common market changes. For example, buy more X when the market does Y, or substitute A ETFs when tech sector volatility does B? Use concrete practical examples investors can follow easily. Response: The Trust confirms that the Prospectus has been revised to clarify the foregoing. 10. Please describe what non-diversified means in practical terms, and explain how it impacts Fund performance. Response: The Trust confirms that the Prospectus has been revised to add the foregoing description and explanation. 11. Under the Underlying ETFs Exposures - Commodity ETFs disclosure, please provide a more detailed description of the Underlying ETFs that will offer digital asset exposure. Instead of using general phrases like “such as Bitcoin,” identify each specific digital asset (e.g., Bitcoin, Ethereum, etc.) to which an Underlying ETF may provide the Fund with investment exposure. Clarify or delete the phrase “investment in other exchange traded products.” Disclose the maximum percentage of assets that may be allocated to ETFs with digital exposure. We may have further comments. Response: The Trust respectfully informs the Staff that, as noted in the Prospectus, the Fund will not directly invest in digital assets. Instead, it will gain exposure to digital assets solely through investments in Underlying ETFs. These ETFs include those registered under the Investment Company Act, such as BLOK and BTGD (once it commences operations). For example, while ETFs like BLOK primarily invest in companies involved in blockchain technology, they may provide indirect exposure to a range of digital assets through their investments in companies involved in cryptocurrency mining or blockchain-related services. Due to the nature of these ETFs, it is not feasible to identify each specific digital asset to which they may have indirect exposure, as this could include a broad array of assets beyond just Bitcoin or Ethereum. The phrase “investment in other exchange traded products” has been clarified to specify that the Fund’s digital asset exposure will be limited to exposure via investments in 1940 Act-registered ETFs. Additionally, the Prospectus has been revised to note that the Fund will allocate no more than ten percent of its total assets to Underlying ETFs that provide digital asset exposure. Principal Investment Risks - FIRE Funds™ Wealth Builder ETF 12. For the Asset Allocation Fund of Funds risk, we note the statement: “As a fund of funds, the Fund is exposed to the same risks as the Underlying ETFs in proportion to the Fund’s allocation to those Underlying ETFs.” However, it isn’t clear which Underlying ETF risks are principal risks of the top tier Fund as a result of this proportional aggregation. Please highlight the particular risks that become principal to this Fund based on the combination of underlying funds chosen to implement the four bucket economic regime strategy. Provide corresponding principal risk summaries for each (e.g., derivatives, sector risk, counterparty risk) and present them in equivalent detail and format to the risks you show on page 5. Response: The Trust confirms that the Prospectus has been updated to reflect the principal risks of the Underlying ETFs that, when aggregated, are expected to become the principal risks of the Fund. 13. For Affiliated Fund of Funds Structure Risks, please rewrite the third sentence in plain English. Response: The Trust confirms that the foregoing sentence has been rewritten using plain English principals. 14. For Underlying ETF Risks, please substitute the word “will” for “is likely to.” Or, if incorrect, please supplementally explain why the change is not appropriate. Response: The Trust confirms the Prospectus has been revised to reflect the foregoing comment. 15. For Equity ETF Risks, if sector risks will be a principal risk at the top tier, the principal investment strategy description should specify the sectors the Fund is expected to focus on, and the relevant risks unique to those sectors should be disclosed. Response: The Trust confirms that the Fund is not expected to focus on specific sectors. 16. For Management Risk, please directly address and discuss the role of human error by individual PMs. Response: The Trust confirms that additional disclosure has been added. 17. For Recent Market Event Risk, consider whether there is a need to reference the current middle East conflict. Response: The Trust confirms that the foregoing risk, renamed Market Event Risk, has been updated to address current market events. Principal Investment Strategies - FIRE Funds™ Income ETF 18. We note the disclosure that the Fund seeks a minimum of 4% target annual income level – please clarify what this statement means. Additionally, explain supplementally why including a numeric target in your disclosure (a) is appropriate under the securities laws and (b) does not anchor investors inappropriately in a manner similar to a projected return? Please ensure your response explains what “annual income level” means, and how it will be achieved. If the Fund anticipates having to return capital to achieve that level of payout, then state so clearly. Please bxt your filing so that we may consider this issue. Response: The Trust confirms that the Prospectus has been revised to clarify the 4% target annual income level statement. The Trust supplementally informs the Staff that the foregoing target refers to the distribution of current income, which includes dividends, interest income, and other earnings from sources such as real estate or derivatives. It does not include capital gains from the sale of assets. Instead, it represents the recurring income generated by the Fund’s underlying assets. The Trust respectfully notes that including a numeric target, such as a 4% annual income target, is appropriate under securities laws because it transparently reflects the Fund’s income objective and strategy. The target is clearly disclosed as a goal, not a guarantee, and is accompanied by disclosures clarifying that the target may not be achieved. A numeric target like the “4% Annual Target” refers to the Fund’s income generation goal, which is fundamentally different from projecting a return. It does not imply capital appreciation or a guaranteed total return, but instead focuses on a specific aspect of the Fund’s income strategy. The Trust respectfully notes that the Prospectus discloses that the target may not be met and is subject to market conditions. As a result, the inclusion of the target avoids inappropriately anchoring investors to an expected return and helps manage expectations within a defined context. Lastly, the Trust confirms that the Fund does not anticipate having to r