April 7, 2014

The number of S&P 500 dividend payers reached its highest point since Sep. 1998. As of March 2014, 421 S&P 500 companies are now paying dividends, compared to 423 in Sep. 1998*.

Big names increased dividends in the first quarter such as Exxon Mobile, Wal-Mart, JPMorgan, Procter & Gamble, Bank of America, Coca-Cola, and Qualcomm. A striking 146 companies (35% of payers) announced dividend increases compared to 94 in the Q4 of 2013, a quarter over quarter increase of 55%. In Q1, S&P 500 dividend growth (4.0%) doubled that of price (1.3%). Since 2000, dividend growth has consistently outperformed price growth with a staggering 124% ($16.29 to $36.53) cumulative return compared to 33% ($1394.46 to $1852.39) for price.

Dividend Growth and Price Growth indexed to 100 from January 3, 2000, through April 7, 2014. Past performance does not guarantee future results. Source: S&P Capital IQ, Reality Shares Research

What does this mean for dividend investors? While risk-averse investors seek the performance and stability of dividends, they are instead exposed to price changes based on market speculations. Investors trying to capture the fundamental performance of proven companies may see their returns diminish because of this disconnect between dividends and price. At Reality Shares, we design indices to isolate corporate performance and mute market noise. We believe returns should be based on the real metric of corporate performance, the dividend, not market speculation.

*According to data compiled by Howard Silverblatt in his S&P 500 MarketAttributes: March 2014.

Reality Shares does not make any representations, endorsements or promotions to any company, security, or trading strategy as may be held or represented in Reality Shares Funds. For a complete list of all portfolio holdings held by Funds advised by Reality Shares, please click here.

S&P 500: A broad stock market index based on the market capitalization of 500 large companies having common stock listed on the NYSE or NASDAQ. The S&P 500 was developed and continues to be maintained by Standard & Poor’s Financial Services LLC, and is considered to be a bellwether for the US economy.

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Investing involves risks, including possible loss of principal. Past performance does not guarantee future results. There is no assurance the stated objective(s) will be met. Not FDIC insured. See the section “Principal Risks” in the prospectus for important risk disclosures.

Investments in options, swaps, forward contracts and futures contracts are subject to a number of risks, including correlation risk, interest rate risk, market risk, leverage risk, and liquidity risk. Each of these risks could cause the Fund to vary from its stated objective, could cause the Fund to lose money and may have a negative impact on the value of your investment. Please refer to the Fund Risks for further explanation of individual risks.

This material contains the opinions of the author, which are subject to change, and should not to be considered or interpreted as a recommendation to participate in any particular trading strategy, or deemed to be an offer or sale of any investment product and it should not be relied on as such.

Dividends are not guaranteed, and a company’s future ability to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time.

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Reality Shares Advisors, LLC is the Investment Advisor. ALPS Distributors, Inc. is the Distributor for the Fund. Reality Shares Advisors, LLC and ALPS Distributors, Inc. are not affiliated.

The Fund is newly organized and the Adviser has not previously managed an ETF registered under the 1940 Act.

Shares of the Fund are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Market Price is based on the midpoint of the bid/ask spread at 4:15pm ET on business days and does not represent the returns an investor would receive if shares were traded at other times.