ck0001683471-20230630
Spear Alpha
ETF
(SPRX)
Principal
U.S. Listing Exchange: The Nasdaq Stock Market, LLC
October
31, 2023
The
U.S. Securities and Exchange Commission (the “SEC”) has not approved or
disapproved of these securities or passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal
offense.
The
Spear Alpha ETF (the “Fund”) seeks long-term capital growth.
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
|
Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fee |
0.75% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.75% |
|
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and then redeem
all of your Shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The Example does not take into account brokerage commissions
that you may pay on your purchases and sales of Shares.
Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
1
Year: |
$77 |
3
Years: |
$240 |
5
Years: |
$417 |
10
Years: |
$930 |
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Shares are
held in a taxable account. These costs, which are not reflected in the Total
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
For the fiscal year ended June 30, 2023, the Fund’s portfolio turnover rate
was 209% of the average
value of its portfolio.
The
Fund is an actively managed exchange-traded fund (“ETF”) that invests primarily
in equity securities, including common stock or American depositary receipts
(“ADRs”), of companies that Spear Advisors LLC (the “Adviser”), the Fund’s
investment adviser, believes are poised to benefit from breakthrough innovation
in industrial technology. For purposes of the Fund’s investments, the Adviser
defines “innovation in industrial technology” as those technological
developments that are transforming or have the potential to transform the
industrial sector.
The
Adviser targets industrial technological
developments that can be categorized into one or more of the themes described
below. The Adviser seeks to invest in companies engaged at any stage of the
supply chain that is relevant to one of these themes. For example, the Adviser
may invest in companies engaged in the mining, processing and production of
materials or natural resources used in the development of services, products or
technologies; companies engaged in the manufacturing of instruments, components
or parts underlying the products, services, or technologies of one or more of
the themes; or companies that use or benefit from such products, services, or
technologies to generate operational efficiencies in their own business.
Enterprise
Digitalization.
New developments in scalable connectivity (such as 5G and cloud migration) are
enabling digitalization of manufacturing businesses, creating an ecosystem of
companies with the potential to benefit from this trend. In its application of
this theme, the Adviser seeks to identify and invest in companies engaged in one
or more of the following, or similar, activities: (i) developing advancements in
industrial software (e.g.,
design, simulation, digital twin technology, and augmented/virtual reality
(“AR/VR”)); (ii) providing software solutions targeted at optimizing operations
(e.g.,
procurement); (iii) providing associated hardware (e.g.,
sensors, probes); (iv) providing products or services that act as building
blocks for such technologies (e.g.,
semiconductors); (v) providing digital data related solutions, such as storage
(including cloud based solutions), cybersecurity and/or analysis; (vi) utilizing
any of these technologies, products, or services to develop new products or
technologies; and/or (vii) utilizing any of these technologies, products, or
services to generate meaningful operational efficiencies in their own business.
Artificial
Intelligence.
Deep learning is a form of artificial intelligence (“AI”) that is finding
significant industrial applications and uses, including autonomous driving,
cybersecurity, predictive maintenance, and machine vision. In its application of
this theme, the Adviser seeks to identify and invest in companies: (i) that
provide AI technologies that enable autonomous activity, such as autonomous
driving vehicles or drones (e.g.,
companies that provide software for image classification, voice recognition,
natural language processing); (ii) that provide AI-based algorithms and software
for the purposes of predictive maintenance; (iii) that provide AI-based
machine vision software and associated hardware; and/or (iv) whose products or
business processes are meaningful users of AI based technologies.
Robotics
and Industrial Automation.
Innovation in robotics and automation is driving increased adoption and new
applications. In its application of this theme, the Adviser seeks to identify
and invest in companies that engage in one or more of the following, or similar,
activities: (i) the design and/or manufacturing of robotics or industrial
automation in the form of products, software, or systems; (ii) the development
and/or manufacturing of associated components and materials; or (iii) the use of
robotics and automation to improve their operations.
Environmental
Focus and Decarbonization.
Decarbonization and broader environmental awareness is a powerful theme with the
potential for significant innovation in industrial technology. Companies within
this theme include those that engage in one or more of the following, or
similar, activities: (i) providing low carbon footprint solutions, such as
electric and hydrogen vehicles; (ii) providing products, components, services
and materials that go into the associated infrastructure (e.g.,
charging
stations, electronic components, materials); (iii) providing products and
services that improve the environmental operating efficiency (e.g.,
energy efficiency innovations) of physical structures; (iv) providing
technologies and services for carbon sequestration; and/or (v) providing
equipment, components, and services for other environmental initiatives such as
water filtration and environmental remediation.
Photonics
and Additive Manufacturing.
Photonics is the technology of generating and harnessing light and other forms
of radiant energy whose quantum (i.e.,
smallest possible) unit is the photon. Photonics applications extend from
additive manufacturing (also known as 3D printing) and laser cutting for
manufacturing processes for high powered lasers, to sensing and imaging for low
powered lasers. In applying this theme, the Adviser seeks to identify and invest
in companies engaged in the following, or similar, activities: (i) the
manufacturing of 3D printing equipment and materials; (ii) the manufacturing of
high-power fiber laser equipment and components; (iii) the use of
photonics-based technologies for manufacturing process optimization and cost
reduction; and/or (iv) the use of photonics-based technologies for imaging
applications, such as for medical imaging, life science, and optical data
communications.
Space
Exploration. Growth
in space exploration is expected to accelerate, driven by cost reductions from
reusable-rocket technology and smaller, cost-effective satellite technologies,
creating an ecosystem of companies that may benefit from this theme. The Adviser
seeks to identify and invest in such companies, including those that (i) enable
space exploration, through, for example, simulation, AI, or robotics related
software, products or systems; (ii) make, launch, and operate platforms in
orbital and sub-orbital space, such as rockets, satellites, drones and other
aircraft and equipment; or (iii) utilize any of these technologies, products, or
services to generate meaningful operational efficiencies in their
business.
In
constructing the Fund’s portfolio, the Adviser selects investments for the Fund
that represent its highest-conviction investment ideas within the themes
described above. The highest-conviction investment ideas are companies that have
the highest expected risk-adjusted return as determined through the Adviser’s
proprietary investment process.
The
Adviser’s Investment Process. The
Adviser’s alpha strategy seeks to identify investment opportunities in which the
performance of a company’s stock will exceed that of the market over time. In
implementing this strategy, the Adviser employs a fundamental research process,
combining deep industry knowledge with rigorous financial analysis. The Adviser
strives to achieve a portfolio profile that is balanced between growth companies
(i.e.,
companies the Adviser believes have high and underappreciated growth prospects)
and value companies (i.e.,
companies the Adviser believes to be undervalued based on its assessment of
their underlying fundamentals).
To
identify the Fund’s investable universe, the Adviser uses top-down analysis,
leveraging both internal and publicly available external resources, to identify
companies and associated supply chains that are beneficiaries of the themes
described above.
Once
a company is identified as relevant to one or more themes, the Adviser conducts
bottom-up research of the company, including: (i) assessment of the company’s
market potential and competitive positioning; (ii) analysis of the company’s
financial performance and history of generating returns on invested capital; and
(iii) assessment of the quality of its management team and its ability to
execute on its financial plan. The Adviser builds financial forecasts using
assumptions derived from its research process and constructs a valuation
framework using several valuation methodologies, including a Discounted Cash
Flow Model, which is a valuation method used to estimate the value of an
investment based on its expected future cash flows.
In
evaluating investments for the Fund, the Adviser applies an environment, social,
and governance (“ESG”) framework as part of its bottom-up assessment that
evaluates a company based on various ESG-related metrics, such as the extent of
the risk associated with the company’s impact on the environment. The ESG
framework focuses primarily on identifying and evaluating certain ESG-related
risks
to which a company may be subject. To the extent the Adviser concludes, based on
its evaluation of the outcome of the ESG framework analysis, that a company’s
ESG-related risks are significant (e.g.,
if such risks are realized, they would adversely affect the performance of the
company or its ability to operate) and it is ill-prepared to mitigate or
otherwise manage those risks, the Adviser may consider such conclusion as a
basis for limiting the Fund’s investment in the securities of such company or
excluding such securities from the Fund’s portfolio. The ESG framework is not
designed to serve as an exclusionary screen based solely on the fact that a
company may be engaged in activities commonly viewed as antithetical to ESG
considerations and as a result, the Fund may invest in such companies from time
to time if they are otherwise consistent with the Adviser’s investment criteria
as described in this section. For example, the ESG framework would consider a
company’s carbon emissions, whether the company has set or agreed to any targets
for carbon emissions reduction, its commitment to reducing energy consumption
and achieving its carbon emissions target, and the company’s history of
achieving any past emissions targets and/or potential to achieve current
emissions targets or more generally, to improve its industrial sector or
generate environmental benefits. Based on the ESG framework’s analysis of these
considerations, the Adviser will determine, among other things, if the company’s
carbon emissions targets pose a significant risk for the company. Similarly, the
ESG framework considers a company’s governance philosophy and practices, such as
the company’s management incentive structure, the composition of its board of
directors, and employee ownership, enabling the Adviser to evaluate the risks to
the company of its governance philosophy and practices. The Adviser’s ESG
framework considers only publicly available information about a company sourced
and evaluated by the Adviser. The Adviser also uses the outcomes of the ESG
framework analyses to determine a company’s weight within the Fund’s portfolio.
The implementation of the Fund’s ESG framework, including the evaluation of each
potential investment, as well as the identification of investment opportunities
that benefit from environmental focus, is a core part of the Adviser’s research
process and the Fund’s overall investment strategy, as evidenced by the Fund’s
Environmental Focus and Decarbonization theme described above.
The
Adviser continuously monitors, resizes, and exits positions based on changes in
the fundamental drivers of a company’s business (including structural changes,
such as increased competition, new entrants and disruptive technologies,
unfavorable supply/demand balance) and its valuation. Such activity could lead
to increased portfolio turnover of the Fund’s holdings and higher transaction
costs.
The
Fund may invest in companies of any market capitalization, but will typically
invest in large capitalization companies with market capitalizations between $10
billion and $100 billion.
The Fund is classified as a “non-diversified” investment company under
the Investment Company Act of 1940, as amended (the “1940
Act”).
The
principal risks of investing in the Fund are summarized below. The
principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears. As with any investment, there is a risk
that you could lose all or a portion of your investment in the
Fund. Some or all of these risks may adversely affect the Fund’s
net asset value (“NAV”), trading price, yield, total return and/or ability to
meet its investment objective. The following risks could affect the value
of your investment in the Fund:
•Artificial
Intelligence, Machine Learning and Deep Learning Investment Risk.
Companies across a wide variety of industries, primarily in the technology
sector, are exploring the possible applications of AI, machine learning and
other deep learning technologies. The extent of such technologies’ versatility
has not yet been fully explored. Consequently, the Fund’s holdings may include
equity securities of operating companies that focus on or have exposure to a
wide variety of activities in addition to their AI, machine learning and deep
learning activities, and the economic fortunes of such companies may be tied to
such other activities. Currently, there are few public companies for which AI,
machine learning and deep learning technologies represent an attributable and
significant revenue or profit stream, and such technologies may not ultimately
have a material effect on the economic returns of companies in which the Fund
invests. Companies that do have a focus on such technologies may rely on a
combination of patents, copyrights, trademarks and trade secret laws to
establish and protect their proprietary rights in their products and
technologies. These companies also tend to engage in significant amounts of
spending on research and development, and there is no guarantee that these
products or services will be successful. The securities of such companies,
especially smaller, start-up companies, also are typically more volatile than
those of companies that do not rely heavily on technology.
•Cybersecurity
Risk.
Cybersecurity incidents may allow an unauthorized party to gain access to Fund
assets or proprietary information, or cause the Fund, the Adviser and/or other
service providers (including custodians and financial intermediaries) to suffer
data breaches or data corruption. Additionally, cybersecurity failures or
breaches of the electronic systems of the Fund, the Adviser or the Fund’s other
service providers, market makers, Authorized Participants (“APs”), the Fund’s
primary listing exchange, or the issuers of securities in which the Fund invests
have the ability to disrupt and negatively affect the Fund’s business
operations, including the ability to purchase and sell Shares, potentially
resulting in financial losses to the Fund and its shareholders.
•Depositary
Receipt Risk.
Depositary receipts, including ADRs, involve risks similar to those associated
with investments in foreign securities, such as changes in political or economic
conditions of other countries and changes in the exchange rates of
foreign
currencies. Depositary receipts listed on U.S. exchanges are issued by banks or
trust companies, and entitle the holder to all dividends and capital gains that
are paid out on the underlying foreign shares (“Underlying Shares”). When the
Fund invests in depositary receipts as a substitute for an investment directly
in the Underlying Shares, the Fund is exposed to the risk that the depositary
receipts may not provide a return that corresponds precisely with that of the
Underlying Shares.
•Environmental,
Social, Governance Risk.
Applying ESG and sustainability criteria to the investment process may exclude
securities of certain issuers for non-investment reasons and, therefore, the
Fund may forgo some investment opportunities available to funds that do not
similarly consider ESG or sustainability criteria. The Fund’s incorporation of
ESG considerations may affect its exposure to certain sectors and/or types of
investments, and may adversely impact the Fund’s performance depending on
whether such sectors or investments are in or out of favor in the
market.
•Environmental,
Social Governance Data Risk.
Currently, there is not a universally accepted ESG standard or standardized
practices for generating ESG metrics and data. The lack of a uniform standard
means that the factors and criteria considered or processed to generate ESG
metrics and data and the results of ESG research processes generally will differ
from company to company. The evaluation of ESG factors is often subjective and
the Adviser may not identify or evaluate every relevant ESG factor with respect
to every theme or investment. As a result, the Fund may invest in companies that
do not reflect the beliefs or values of a particular investor and may not be
deemed to exhibit positive or favorable ESG characteristics if different metrics
were used to evaluate them. The Adviser’s ability to effectively evaluate a
company’s ESG characteristics and/or metrics is dependent on the availability of
timely, complete, and accurate ESG data for such company. The Adviser’s ability
to evaluate and assess ESG factors is limited and/or compromised to the extent
relevant data is unavailable or inaccurate. As a result of the foregoing, the
Fund may, from time to time, acquire and/or hold securities of companies that do
not have favorable ESG characteristics. The Adviser relies on publicly-available
and reported information to evaluate the ESG characteristics of the companies in
which the Fund may invest. Due to the specialized resources necessary to obtain
ESG-related information about individual companies, the Adviser does not
undertake to, and does not, independently test or verify publicly-available and
reported information regarding companies’ ESG characteristics and
metrics.
•Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, sectors or companies in which the Fund invests.
Common stocks are generally exposed to greater risk than other types of
securities, such as preferred stocks and debt obligations, because common
stockholders generally have inferior rights to receive payment from issuers.
•ETF
Risks.
The Fund is an ETF and, as a result of its structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. Shares may trade at a material discount to NAV and
possibly face delisting if either: (i) APs exit the business or otherwise
become unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares Risk.
Due to the costs of buying or selling Shares, including brokerage commissions
imposed by brokers and bid/ask spreads, frequent trading of Shares may
significantly reduce investment results and an investment in Shares may not be
advisable for investors who anticipate regularly making small
investments.
◦Shares
May Trade at Prices Other Than NAV Risk. As
with all ETFs, Shares may be bought and sold in the secondary market at market
prices. Although it is expected that the market price of Shares will approximate
the Fund’s NAV, there may be times when the market price of Shares is more than
the NAV intra-day (premium) or less than the NAV intra-day (discount) due to
supply and demand of Shares or during periods of market volatility. This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for Shares in the secondary
market, in which case such premiums or discounts may be significant. Because
securities held by the Fund may trade on foreign exchanges that are closed when
the Fund’s primary listing exchange is open, the Fund is likely to experience
premiums or discounts greater than those of ETFs that invest in and hold only
securities and other investments that are listed and trade in the U.S.
◦Trading
Risk. Although
Shares are listed for trading on The Nasdaq Stock Market, LLC (the “Exchange”)
and may be traded on U.S. exchanges other than the Exchange, there can be no
assurance that Shares will trade with any volume, or at all, on any stock
exchange. In stressed market conditions, the liquidity of Shares may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than the Shares.
•Growth
Investing Risk.
Growth stocks can be volatile for several reasons. Since those companies usually
invest a high portion of earnings in their businesses, they may lack the
dividends of value stocks that can cushion stock prices in a falling market. The
prices
of growth stocks are based largely on projections of the issuer’s future
earnings and revenues. If a company’s earnings or revenues fall short of
expectations, its stock price may fall dramatically.
•Limited
Operating History Risk. The
Fund is a recently organized investment company with a limited operating
history. As a result, prospective investors have a limited track record or
history on which to base their investment decision.
•Management
Risk. The
Fund is actively-managed and may not meet its investment objective based on the
Adviser’s success or failure to implement investment strategies for the Fund. In
addition, the Adviser’s evaluations and assumptions regarding investments,
interest rates, inflation, and other factors may not successfully achieve the
Fund’s investment objective given actual market conditions.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing Risk.
The securities of large-capitalization companies may be relatively mature
compared to smaller companies and, therefore, subject to slower growth during
times of economic expansion. Large-capitalization companies also may be unable
to respond quickly to new competitive challenges, such as changes in technology
and consumer tastes.
◦Mid-Capitalization
Investing Risk.
The securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large-capitalization stocks or the stock market
as a whole.
◦Small-Capitalization
Investing Risk.
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
large- or mid-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large- or mid-capitalization stocks or the
stock market as a whole. There is typically less publicly available information
concerning smaller-capitalization companies than for larger, more established
companies.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time. U.S. and international markets have
experienced significant periods of volatility in recent years due to a number of
these factors, including the impact of the COVID-19 pandemic and related public
health issues, growth concerns in the U.S. and overseas, uncertainties regarding
interest rates, trade tensions and the threat of tariffs imposed by the U.S. and
other countries. In addition, local, regional or global events such as war,
including Russia’s invasion of Ukraine, acts of terrorism, spread of infectious
diseases or other public health issues, recessions, rising inflation, or other
events could have a significant negative impact on the Fund and its investments.
These developments as well as other events could result in further market
volatility and negatively affect financial asset prices, the liquidity of
certain securities and the normal operations of securities exchanges and other
markets. It is unknown how long circumstances related to the COVID-19 pandemic
will persist, whether they will reoccur in the future, whether efforts to
support the economy and financial markets will be successful, and what
additional implications may follow from the pandemic. The impact of these events
and other epidemics or pandemics in the future could adversely affect Fund
performance.
•Non-Diversification
Risk.
Because the Fund is “non-diversified,” it may
invest a greater percentage of its assets in the securities of a single issuer
or a lesser number of issuers than if it was a diversified fund. As a result,
the Fund may be more exposed to the risks associated with and developments
affecting an individual issuer or a lesser number of issuers than a fund that
invests more widely. This may increase the Fund’s volatility and cause the
performance of a relatively small number of issuers to have a greater impact on
the Fund’s performance.
•Portfolio
Turnover Risk. Because
the Fund may “turn over” some or all of its portfolio frequently, the Fund may
incur high levels of transaction costs from commissions or mark-ups in the
bid/offer spread. Higher portfolio turnover (e.g.,
in excess of 100% per year) may result in the Fund paying higher levels of
transaction costs and generating greater tax liabilities for shareholders.
•Robotics
and Automation Companies Risk.
The Fund invests in equity securities of robotics and automation companies and,
as such, is particularly sensitive to the risks affecting robotics and
automation companies. These risks include, but are not limited to, small or
limited markets for such securities, changes in business cycles, world economic
growth, technological progress, rapid obsolescence of products and services, and
government regulation. Securities of robotics and automation companies,
especially smaller, start-up companies, tend to be more volatile than securities
of companies that do not rely heavily on technology. Rapid change to
technologies that affect a company’s products could have a material adverse
effect on such company’s operating results. Robotics and automation companies
may rely on a combination of patents, copyrights, trademarks and trade secret
laws to establish and protect their proprietary rights in their products and
technologies. There can be no assurance that the steps taken by
these
companies to protect their proprietary rights will be adequate to prevent the
misappropriation of their technology or that competitors will not independently
develop technologies that are substantially equivalent or superior to such
companies’ technology.
•Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors. The Fund may invest a significant portion of its assets in
the following sectors and, therefore, the performance of the Fund could be
negatively impacted by events affecting each of these sectors.
◦Industrial
Sector Risk. Issuers
in the industrial sector are affected by supply and demand, both for their
specific product or service and for industrial sector products in general. The
products of such issuers may face obsolescence due to rapid technological
developments and frequent new product introduction. Government regulations,
world events, economic conditions and exchange rates affect the performance of
companies in the industrial sector. Issuers in the industrial sector may be
adversely affected by liability for environmental damage, product liability
claims and exchange rates. The industrial sector may also be adversely affected
by changes or trends in commodity prices, which may be influenced by
unpredictable factors.
◦Technology
Sector Risk.
Market
or economic factors impacting technology companies and companies that rely
heavily on technological advances could have a major effect on the value of the
Fund's investments. The value of stocks of technology companies and companies
that rely heavily on technology is particularly vulnerable to rapid changes in
technology product cycles, rapid product obsolescence, government regulation and
competition, both domestically and internationally, including competition from
foreign competitors with lower production costs. Technology companies may have
limited product lines, markets, financial resources or personnel. Stocks of
technology companies and companies that rely heavily on technology, especially
those of smaller, less-seasoned companies, tend to be more volatile than the
overall market. Technology companies are heavily dependent on patent and
intellectual property rights, the loss or impairment of which may adversely
affect profitability. Additionally, companies in the technology sector may face
dramatic and often unpredictable changes in growth rates and competition for the
services of qualified personnel.
Many
Internet-related companies have incurred large losses since their inception and
may continue to incur large losses in the hope of capturing market share and
generating future revenues. Accordingly, many such companies expect to incur
significant operating losses for the foreseeable future, and may never be
profitable. The markets in which many Internet companies compete face rapidly
evolving industry standards, frequent new service and product announcements,
introductions and enhancements, and changing customer demands. The failure of an
Internet company to adapt to such changes could have a material adverse effect
on the company’s business. Additionally, the widespread adoption of new
Internet, networking, telecommunications technologies, or other technological
changes could require substantial expenditures by an Internet company to modify
or adapt its services or infrastructure, which could have a material adverse
effect on an Internet company’s business.
Competitive
pressures may have a significant effect on the financial condition of
semiconductor companies and, as product cycles shorten and manufacturing
capacity increases, these companies may become increasingly subject to
aggressive pricing, which hampers profitability. Reduced demand for end-user
products, under-utilization of manufacturing capacity, and other factors could
adversely impact the operating results of companies in the semiconductor sector.
Semiconductor companies typically face high capital costs and may be heavily
dependent on intellectual property rights. The semiconductor sector is highly
cyclical, which may cause the operating results of many semiconductor companies
to vary significantly. The stock prices of companies in the semiconductor sector
have been and likely will continue to be extremely volatile.
Software
companies can be significantly affected by intense competition, aggressive
pricing, technological innovations, and product obsolescence. Companies in the
application software industry, in particular, also may be negatively affected by
the decline or fluctuation of subscription renewal rates for their products and
services, which may have an adverse effect on profit margins. Companies in the
systems software industry may be adversely affected by, among other things,
actual or perceived security vulnerabilities in their products and services,
which may result in individual or class action lawsuits, state or federal
enforcement actions and other remediation costs.
•Space
Exploration Companies Risk.
The exploration of space by private industry and the harvesting of space assets
is a business based on anticipation of future developments and is witnessing new
entrants into the market. Technological and engineering advances may not be
sufficient, or occur quickly enough, to fulfill current expectations regarding
progress in space exploration and development. Therefore, the Fund’s investments
will be riskier than traditional investments in established industry sectors and
the growth of these companies may be slower and subject to setbacks as
technological advancements are made to expand into space.
•Temporary
Defensive Positions Risk. If
the Fund takes a temporary defensive position, it may invest all or a large
portion of its assets in cash and/or cash equivalents. If the Fund takes a
temporary defensive position, it may not achieve its investment
objective.
•Value
Investing Risk. Because the Fund may utilize a value style of investing, the Fund
could suffer losses or produce poor results relative to other funds, even in a
rising market, if the Adviser’s assessment of a company’s value or prospects for
exceeding earnings expectations or market conditions is
incorrect.
The performance
information presented below provides some indication of the risks of investing
in the Fund by showing the extent to which the Fund’s performance can change
from year to year and over time. The bar chart below shows the
Fund’s performance for the calendar year ended December 31. The table
illustrates how the Fund’s average annual returns for the 1 year and since
inception periods compare with those of the S&P 500® Total Return Index, which reflects a broad measure of market
performance. Performance is also shown for the NASDAQ Composite Total Return
Index, another comparative index that represents the asset classes in which the
Fund invests. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future. Updated performance information is available on the
Fund’s website at https://spear-funds.com.
Calendar Year Total
Return
The
calendar year-to-date total return of the
Fund as of September 30, 2023 was
46.58%. During the
period of time shown in the bar chart, the highest quarterly
return was -4.91% for the quarter ended September 30, 2022, and
the lowest quarterly return was
-31.61% for the quarter ended June 30,
2022.
Average
Annual Total Returns
(for
periods ended December 31, 2022)
|
|
|
|
|
|
|
|
| |
Spear
Alpha ETF |
1-Year |
|
Since
Inception
8/3/21 |
Return Before
Taxes |
-44.81% |
| -30.39% |
Return After
Taxes on Distributions |
-44.81% |
| -30.43% |
Return After
Taxes on Distributions and Sale of Shares |
-26.53% |
| -22.73% |
NASDAQ
Composite Total Return Index
(reflects
no deduction for fees, expenses, or taxes) |
-32.54% |
| -21.00% |
S&P
500 Total Return Index
(reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
| -8.10% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above and do not reflect the impact
of state and local taxes. Actual
after-tax returns depend on an investor’s tax situation and may differ from
those shown. After-tax returns shown are not relevant to investors who hold
their Shares through tax-deferred arrangements such as an individual retirement
account (“IRA”) or other tax-advantaged accounts. In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Shares” may be higher than the other return figures for the same period.
A higher after-tax return results when a capital loss occurs upon redemption and
provides an assumed tax deduction that benefits the
investor.
|
|
|
|
| |
Adviser |
Spear
Advisors LLC |
Portfolio
Manager |
Ivana
Delevska, Chief Executive Officer of the Adviser, has been the portfolio
manager of the Fund since its inception in 2021
|
The
Fund issues and redeems Shares at NAV only in large blocks known as “Creation
Units,” which only APs (typically, broker-dealers) may purchase or redeem. The
Fund generally issues and redeems Creation Units in exchange for a portfolio of
securities and/or a designated amount of U.S. cash.
Shares
are listed on the Exchange, and individual Shares may only be bought and sold in
the secondary market through a broker or dealer at market prices, rather than
NAV. Because Shares trade at market prices rather than NAV, Shares may trade at
a price greater than NAV (premium) or less than NAV (discount).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares (the “bid” price) and the
lowest price a seller is willing to accept for Shares (the “ask” price) when
buying or selling Shares in the secondary market. The difference in the bid and
ask prices is referred to as the “bid-ask spread.”
Recent
information regarding the Fund’s NAV, market price, how often Shares traded on
the Exchange at a premium or discount, and bid-ask spreads can be found on the
Fund’s website at https://spear-funds.com.
The
Fund’s distributions are generally taxable as ordinary income, qualified
dividend income, or capital gains (or a combination), unless your investment is
held in an individual retirement account (“IRA”) or other tax-advantaged
account. Distributions on investments made through tax-deferred arrangements may
be taxed later upon withdrawal of assets from those accounts.
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange-traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
The
Fund’s investment objective may be changed by the Board of Trustees (the
“Board”) of Listed Funds Trust (the “Trust”) without shareholder approval upon
written notice to shareholders.
Temporary
Defensive Positions
To
respond to adverse market, economic, political, or other conditions, the Fund
may invest up to 100% of its assets in a temporary defensive manner by holding
all or a substantial portion of its assets in cash, cash equivalents, or other
high quality short-term investments. Temporary defensive investments generally
may include short-term U.S. government securities, commercial paper, bank
obligations, repurchase agreements, money market fund shares, other money market
instruments, and ETFs that invest in the foregoing instruments. The Adviser also
may invest in these types of securities or hold cash while looking for suitable
investment opportunities or to maintain liquidity. In these circumstances, the
Fund may be unable to achieve its investment objective.
An
investment in the Fund entails risks. The Fund could lose money, or its
performance could trail that of other investment alternatives. The following
provides additional information about the Fund’s principal risks. It is
important that investors closely review and understand these risks before making
an investment in the Fund. Just as in the Fund’s summary section, the principal
risks are presented in alphabetical order to facilitate finding particular risks
and comparing them with those of other funds. Each risk summarized below is
considered a “principal risk” of investing in the Fund, regardless of the order
in which it appears.
•Artificial
Intelligence, Machine Learning and Deep Learning Risk.
Companies across a wide variety of industries, primarily in the technology
sector, are exploring the possible applications of AI, machine learning and
other deep learning technologies. The extent of such technologies’ versatility
has not yet been fully explored. Consequently, the Fund’s holdings may include
equity securities of operating companies that focus on or have exposure to a
wide variety of industries, and the economic fortunes of certain companies held
by the Fund may not be significantly tied to such technologies. Currently, there
are few public companies for which AI, machine learning and deep learning
technologies represent an attributable and significant revenue or profit stream,
and such technologies may not ultimately have a material effect on the economic
returns of companies in which the Fund invests. Companies that do have a focus
on such technologies may rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their proprietary
rights in their products and technologies. These companies also tend to engage
in significant amounts of spending on research and development, and there is no
guarantee that these products or services will be successful. The securities of
such companies, especially smaller, start-up companies, also typically more
volatile than those of companies that do not rely heavily on
technology.
•Cybersecurity
Risk.
With the increased use of technologies such as the Internet and the dependence
on computer systems to perform business and operational functions, funds (such
as the Fund) and their service providers may be prone to operational and
information security risks resulting from cyber-attacks and/or technological
malfunctions. In general, cyber-attacks are deliberate, but unintentional events
may have similar effects. Cyber-attacks include, among others, stealing or
corrupting data maintained online or digitally, preventing legitimate users from
accessing information or services on a website, releasing confidential
information without authorization, and causing operational disruption.
Cybersecurity incidents may allow an unauthorized party to gain access to Fund
assets or proprietary information, or cause the Fund, the Adviser and/or other
service providers (including custodians and financial intermediaries) to suffer
data breaches or data corruption. Additionally, cybersecurity failures or
breaches of the electronic systems of the Fund, the Adviser or the Fund’s other
service providers, market makers, APs, the Fund’s primary listing exchange, or
the issuers of securities in which the Fund invests have the ability to disrupt
and negatively affect the Fund’s business operations, including the ability to
purchase and sell Shares, potentially resulting in financial losses to the Fund
and its shareholders. For instance, cyber-attacks or technical malfunctions may
interfere with the processing of shareholder or other transactions, affect the
Fund’s ability to calculate its NAV, cause the release of private shareholder
information or confidential Fund information, impede trading, cause reputational
damage, and subject the Fund to regulatory fines, penalties or financial losses,
reimbursement or other compensation costs, and additional compliance costs.
Cyber-attacks or technical malfunctions may render records of Fund assets and
transactions, shareholder ownership of Shares, and other data integral to the
functioning of the Fund inaccessible or inaccurate or incomplete. The Fund also
may incur substantial costs for cybersecurity risk management in order to
prevent cyber incidents in the future. The Fund and its shareholders could be
negatively impacted as a result.
•Depositary
Receipt Risk.
The Fund may hold the securities of non-U.S. companies in the form of depository
receipts, including ADRs and global depositary receipts (“GDRs”). ADRs are
negotiable certificates issued by a U.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 “NYSE”). Sponsored
ADRs are issued with the support of the issuer of the foreign stock underlying
the ADRs and carry all of the rights of common shares, including voting rights.
GDRs are similar to ADRs, but may be issued in bearer form and are typically
offered for sale globally and held by a foreign branch of an international bank.
The underlying
issuers
of certain depositary receipts, particularly unsponsored or unregistered
depositary receipts, are under no obligation to distribute shareholder
communications to the holders of such receipts, or to pass through to them any
voting rights with respect to the deposited securities. Issuers of unsponsored
depositary receipts are not contractually obligated to disclose material
information in the U.S. and, therefore, such information may not correlate to
the market value of the unsponsored depositary receipt. The Underlying Shares in
the Fund’s portfolio are usually denominated or quoted in currencies other than
the U.S. Dollar. As a result, changes in foreign currency exchange rates may
affect the value of the Fund’s portfolio. In addition, because the Underlying
Shares trade on foreign exchanges at times when the U.S. markets are not open
for trading, the value of the Underlying Shares may change materially at times
when the U.S. markets are not open for trading, regardless of whether there is
an active U.S. market for Shares.
•Environmental,
Social, Governance Risk.
Applying ESG and sustainability criteria to the investment process may exclude
securities of certain issuers for non-investment reasons and, therefore, the
Fund may forgo some market opportunities available to funds that do not use ESG
or sustainability criteria. The Fund’s incorporation of ESG considerations may
affect its exposure to certain sectors and/or types of investments and may
adversely impact the Fund’s performance depending on whether such sectors or
investments are in or out of favor in the market. In addition, the Fund’s
investments in certain companies may be susceptible to various factors that may
impact their businesses or operations, including costs associated with
government budgetary constraints that impact publicly funded projects and clean
energy initiatives, the effects of general economic conditions throughout the
world, increased competition from other providers of services, unfavorable tax
laws or accounting policies and high leverage.
•Environmental,
Social, Governance Data Risk.
Currently, there is not a universally accepted ESG standard or standardized
practices for generating ESG metrics and data. The lack of a uniform standard
means that the factors and criteria considered or processed to generate ESG
metrics and data and the results of ESG research processes generally will differ
from company to company. The evaluation of ESG factors is often subjective and
the Adviser may not identify or evaluate every relevant ESG factor with respect
to every theme or investment. As a result, the Fund may invest in companies that
do not reflect the beliefs or values of a particular investor and may not be
deemed to exhibit positive or favorable ESG characteristics if different metrics
were used to evaluate them. ESG standards differ by region and industry, and a
company’s ESG practices may change over time. Moreover, because ESG
considerations are still an emerging area of investment focus, ESG information
and metrics can be difficult to obtain or not able to be obtained. The
evaluation of ESG factors and implementation of ESG-related investment criteria
or restrictions (e.g.,
screens) rely on the availability of timely, complete, and accurate ESG data
reported by companies. The Adviser’s ability to evaluate and assess ESG factors
is limited and/or compromised to the extent relevant data is unavailable or
inaccurate. As a result of the foregoing, the Fund may, from time to time,
acquire and/or hold securities of companies that do not have favorable ESG
characteristics. The successful implementation of the Fund’s strategy is
therefore dependent in large part on the ESG factors considered and timely and
accurately reported by the companies in which the Fund seeks to potentially
invest. The Adviser relies on publicly-available and reported information to
evaluate the ESG characteristics of the companies in which it may invest. Due to
the specialized resources necessary to obtain ESG-related information about
individual companies, the Adviser does not undertake to, and does not,
independently test or verify publicly-available and reported information
regarding companies’ ESG characteristics and metrics.
•Equity
Market Risk. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. These investor perceptions are based on various and
unpredictable factors including: expectations regarding government, economic,
monetary and fiscal policies; inflation and interest rates; economic expansion
or contraction; and global or regional political, economic and banking crises.
If you held common stock, or common stock equivalents, of any given issuer, you
would generally be exposed to greater risk than if you held preferred stocks and
debt obligations of the issuer because common stockholders, or holders of
equivalent interests, generally have inferior rights to receive payments from
issuers in comparison with the rights of preferred stockholders, bondholders,
and other creditors of such issuers.
•ETF
Risks.
The Fund is an ETF and, as a result of its structure, it is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk.
The Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. Shares may trade at a material discount to NAV and
possibly face delisting if either: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares Risk.
Investors buying or selling Shares in the secondary market will pay brokerage
commissions or other charges imposed by brokers, as determined by that broker.
Brokerage commissions are often a fixed amount and may be a significant
proportional cost for investors seeking to buy or sell relatively small amounts
of Shares. In addition, secondary market investors also will incur the cost of
the difference between the price at which an investor is willing to buy Shares
(the “bid” price) and the price at which an investor is willing to sell Shares
(the “ask” price). This difference in bid and ask prices is often referred to as
the “spread” or “bid/ask spread.” The bid/ask spread varies over time
for
Shares based on trading volume and market liquidity and is generally lower if
Shares have more trading volume and market liquidity and higher if Shares have
little trading volume and market liquidity. Further, a relatively small investor
base in the Fund, asset swings in the Fund and/or increased market volatility
may cause increased bid/ask spreads. Due to the costs of buying or selling
Shares, including bid/ask spreads, frequent trading of Shares may significantly
reduce investment results and an investment in Shares may not be advisable for
investors who anticipate regularly making small investments.
◦Shares
May Trade at Prices Other Than NAV Risk.
As with all ETFs, Shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of Shares will
approximate the Fund’s NAV, there may be times when the market price of Shares
is more than the NAV intra-day (premium) or less than the NAV intra-day
(discount) due to supply and demand of Shares or during periods of market
volatility. This risk is heightened in times of market volatility or periods of
steep market declines and periods when there is limited trading activity for
Shares in the secondary market, in which case such premiums or discounts may be
significant. The market price of Shares during the trading day, like the price
of any exchange-traded security, includes a “bid/ask” spread charged by the
exchange specialist, market makers or other participants that trade Shares. In
times of severe market disruption, the bid/ask spread can increase
significantly. At those times, Shares are most likely to be traded at a discount
to NAV, and the discount is likely to be greatest when the price of Shares is
falling fastest, which may be the time that you most want to sell your Shares.
The Adviser believes that, under normal market conditions, large market price
discounts or premiums to NAV will not be sustained because of arbitrage
opportunities.
◦Trading
Risk.
Although Shares are listed for trading on the Exchange and may be listed or
traded on U.S. and non-U.S. stock exchanges other than the Exchange, there can
be no assurance that an active trading market for such Shares will develop or be
maintained. Trading in Shares may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to Exchange “circuit breaker”
rules, which temporarily halt trading on the Exchange when a decline in the
S&P 500®
Index during a single day reaches certain thresholds (e.g.,
7%, 13%, and 20%). Additional rules applicable to the Exchange may halt trading
in Shares when extraordinary volatility causes sudden, significant swings in the
market price of Shares. There can be no assurance that Shares will trade with
any volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of Shares may begin to mirror the liquidity of the Fund’s underlying
portfolio holdings, which can be significantly less liquid than Shares.
•Growth
Investing Risk.
Growth stocks can be volatile for several reasons. Since those companies usually
invest a high portion of earnings in their businesses, they may lack the
dividends of value stocks that can cushion stock prices in a falling market. The
prices of growth stocks are based largely on projections of the issuer’s future
earnings and revenues. If a company’s earnings or revenues fall short of
expectations, its stock price may fall dramatically. Growth stocks may be more
expensive relative to their earnings or assets compared to value or other
stocks.
•Limited
Operating History Risk. The
Fund is a recently organized investment company with a limited operating
history. As a result, prospective investors have a limited track record or
history on which to base their investment decision.
•Management
Risk. The
Fund is actively managed and uses proprietary investment strategies and
processes. There can be no guarantee that the Adviser’s judgments about the
attractiveness, value and potential appreciation of particular investments and
strategies for the Fund will be correct or produce the desired results, and
there is no guarantee that the Fund will achieve its investment objective or
outperform other investment strategies over the short- or long-term market
cycles. If the Adviser fails to accurately evaluate market risk or appropriately
react to current and developing market conditions, the Fund’s share price may be
adversely affected. Securities selected by the Adviser may not perform as
expected. This could result in the Fund’s underperformance compared to other
funds with similar investment objectives.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing Risk.
The
securities of large-capitalization companies may be relatively mature compared
to smaller companies and, therefore, subject to slower growth during times of
economic expansion. Large-capitalization companies also may be unable to respond
quickly to new competitive challenges, such as changes in technology and
consumer tastes.
◦Mid-Capitalization
Investing Risk.
The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large-capitalization stocks or the stock market
as a whole. Some mid-capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization companies.
◦Small-Capitalization
Investing Risk.
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
larger-capitalization companies. The securities of
small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some small-capitalization companies have limited product
lines, markets, and financial and managerial resources and tend to concentrate
on fewer geographical markets relative to larger capitalization companies. There
is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and earnings.
•Market
Risk. The
trading prices of securities and other instruments fluctuate in response to a
variety of factors. These factors include events impacting the entire market or
specific market segments, such as political, market and economic developments,
as well as events that impact specific issuers. The Fund’s NAV and market price,
like security and commodity prices generally, may fluctuate significantly in
response to these and other factors. As a result, an investor could lose money
over short or long periods of time. U.S. and international markets have
experienced significant periods of volatility in recent years due to a number of
economic, political and global macro factors, including public health issues,
growth concerns in the U.S. and overseas, uncertainties regarding interest
rates, trade tensions and the threat of tariffs imposed by the U.S. and other
countries. In addition, local, regional or global events such as war, including
Russia’s invasion of Ukraine, acts of terrorism, spread of infectious diseases
or other public health issues, recessions, rising inflation, or other events
could have a significant negative impact on the performance of the Fund and its
investments. These developments as well as other events could result in further
market volatility and negatively affect financial asset prices, the liquidity of
certain securities and the normal operations of securities exchanges and other
markets, which could have an adverse effect on the Fund.
The
respiratory illness COVID-19 has spread globally for over three years, resulting
in a global pandemic and major disruption to economies and markets around the
world, including the United States. During this time, financial markets have
experienced extreme volatility and severe losses, and trading in many
instruments has been disrupted or suspended. Liquidity for many instruments has
been greatly reduced for periods of time. Some sectors of the economy and
individual issuers have experienced particularly large losses. Governments and
central banks, including the Federal Reserve in the U.S., have taken
extraordinary and unprecedented actions to support local and global economies
and the financial markets. The impact of these measures, and whether they will
be effective to mitigate the economic and market disruption, will not be known
for some time. However, the rapid COVID-19 vaccination rollout in the United
States and certain other developed countries, coupled with the passage of
stimulus programs in the U.S. and abroad, have resulted in the re-opening of
businesses, the elimination or reduction of quarantine and masking requirements,
increased consumer demand, and the resumption of in-person schooling, travel and
events. As a result, many global economies, including the U.S. economy, have
either re-opened fully or decreased significantly the number of public safety
measures in place that are designed to mitigate virus transmission. Despite
these positive trends, the prevalence of new COVID-19 variants or other
unforeseen circumstances may result in the continued spread of the virus
throughout unvaccinated populations or a resurgence in infections among
vaccinated individuals. As a result, it remains unclear if recent positive
trends will continue in developed markets and whether such trends will spread
world-wide to countries with limited access to effective vaccines that are still
experiencing rising COVID-19 hospitalizations and deaths.
•Non-Diversification
Risk.
Because the Fund is “non-diversified,” it may invest a greater percentage of its
assets in the securities of a single issuer or a lesser number of issuers than
if it was a diversified fund. As a result, the Fund may be more exposed to the
risks associated with and developments affecting an individual issuer or a
lesser number of issuers than a fund that invests more widely. This may increase
the Fund’s volatility and cause the performance of a relatively small number of
issuers to have a greater impact on the Fund’s performance.
•Portfolio
Turnover Risk.
Because
the Fund may “turn over” some or all of its portfolio frequently, the Fund may
incur high levels of transaction costs from commissions or mark-ups in the
bid/offer spread. Higher portfolio turnover (e.g.,
in excess of 100% per year) may result in the Fund paying higher levels of
transaction costs and generating greater tax liabilities for shareholders.
Portfolio turnover risk may cause the Fund’s performance to be less than you
expect.
•Robotics
and Automation Companies Risk.
The Fund invests in the equity securities of robotics and automation companies
and, as such, is particularly sensitive to risks affecting robotics and
automation companies. These risks include, but are not limited to, small or
limited markets for such securities, changes in business cycles, world economic
growth, technological progress, rapid obsolescence of products and services, and
government regulation. Securities of robotics and automation companies,
especially smaller, start-up companies, tend to be more volatile than securities
of companies that do not rely heavily on technology. Rapid change to
technologies that affect a company’s products could have a material adverse
effect on such company’s operating results. Robotics and automation companies
may rely on a combination of patents, copyrights, trademarks and trade secret
laws to establish and protect their proprietary rights in their products and
technologies. There can be no assurance that the steps taken by these companies
to protect their proprietary rights will be adequate to prevent the
misappropriation of their technology or that competitors will not independently
develop technologies that are substantially equivalent or superior to such
companies’ technology.
•Sector
Risk. The
Fund’s investing approach may result in an emphasis on certain sectors or
sub-sectors of the market at any given time. To the extent the Fund invests more
heavily in one sector or sub-sector of the market, it thereby presents a more
concentrated
risk and its performance will be especially sensitive to developments that
significantly affect those sectors or sub-sectors. In addition, the value of
Shares may change at different rates compared to the value of shares of a fund
with investments in a more diversified mix of sectors and industries. An
individual sector or sub-sector of the market may have above-average performance
during particular periods, but may also move up and down more than the broader
market. The several industries that constitute a sector may all react in the
same way to economic, political or regulatory events. The Fund’s performance
could also be affected if the sectors or sub-sectors do not perform as expected.
Alternatively, the lack of exposure to one or more sectors or sub-sectors may
adversely affect performance.
◦Industrial
Sector Risk. The
industrial sector includes companies engaged in the manufacture and distribution
of capital goods, such as those used in defense, construction and engineering,
companies that manufacture and distribute electrical equipment and industrial
machinery and those that provide commercial and transportation services and
supplies. Companies in the industrial sector may be adversely affected by
changes in government regulation, world events and economic conditions. In
addition, companies in the industrial sector may be adversely affected by
environmental damages, product liability claims and exchange rates. The success
of these companies is affected by supply and demand both for their specific
product or service and for industrial sector products in general. The products
of manufacturing companies may face product obsolescence due to rapid
technological developments and frequent new product introduction. In addition,
the industrial sector may also be adversely affected by changes or trends in
commodity prices, which may be unpredictable.
◦Technology
Sector Risk.
Market or economic factors impacting technology companies and companies that
rely heavily on technological advances could have a major effect on the value of
the Fund's investments. The value of stocks of technology companies and
companies that rely heavily on technology is particularly vulnerable to rapid
changes in technology product cycles, rapid product obsolescence, government
regulation and competition, both domestically and internationally, including
competition from foreign competitors with lower production costs. Technology
companies may have limited product lines, markets, financial resources or
personnel. Stocks of technology companies and companies that rely heavily on
technology, especially those of smaller, less-seasoned companies, tend to be
more volatile than the overall market. Technology companies are heavily
dependent on patent and intellectual property rights, the loss or impairment of
which may adversely affect profitability. Additionally, companies in the
technology sector may face dramatic and often unpredictable changes in growth
rates and competition for the services of qualified personnel.
Many
Internet-related companies have incurred large losses since their inception and
may continue to incur large losses in the hope of capturing market share and
generating future revenues. Accordingly, many such companies expect to incur
significant operating losses for the foreseeable future, and may never be
profitable. The markets in which many Internet companies compete face rapidly
evolving industry standards, frequent new service and product announcements,
introductions and enhancements, and changing customer demands. The failure of an
Internet company to adapt to such changes could have a material adverse effect
on the company’s business. Additionally, the widespread adoption of new
Internet, networking, telecommunications technologies, or other technological
changes could require substantial expenditures by an Internet company to modify
or adapt its services or infrastructure, which could have a material adverse
effect on an Internet company’s business.
Competitive
pressures may have a significant effect on the financial condition of
semiconductor companies and, as product cycles shorten and manufacturing
capacity increases, these companies may become increasingly subject to
aggressive pricing, which hampers profitability. Reduced demand for end-user
products, under-utilization of manufacturing capacity, and other factors could
adversely impact the operating results of companies in the semiconductor sector.
Semiconductor companies typically face high capital costs and may be heavily
dependent on intellectual property rights. The semiconductor sector is highly
cyclical, which may cause the operating results of many semiconductor companies
to vary significantly. The stock prices of companies in the semiconductor sector
have been and likely will continue to be extremely volatile.
Software
companies can be significantly affected by intense competition, aggressive
pricing, technological innovations, and product obsolescence. Companies in the
application software industry, in particular, also may be negatively affected by
the decline or fluctuation of subscription renewal rates for their products and
services, which may have an adverse effect on profit margins. Companies in the
systems software industry may be adversely affected by, among other things,
actual or perceived security vulnerabilities in their products and services,
which may result in individual or class action lawsuits, state or federal
enforcement actions and other remediation costs.
•Space
Exploration Companies Risk.
The exploration of space by private industry and the harvesting of space assets
is a business based on anticipation of future developments and is witnessing new
entrants into the market. Technological and engineering advances may not be
sufficient, or occur quickly enough, to fulfill current expectations regarding
progress in space exploration and development. Therefore, the Fund’s investments
will be riskier than traditional investments in established industry sectors and
the growth of these companies may be slower and subject to setbacks as new
technological advancements are made to expand into space.
•Temporary
Defensive Position Risk.
If the Fund takes a temporary defensive position, it may invest all or a large
portion of its assets in cash and/or cash equivalents. If the Fund takes a
temporary defensive position, it may not achieve its investment
objective.
•Value
Investing Risk.
Because the Fund may utilize a value style of investing, the Fund could suffer
losses or produce poor results relative to other funds, even in a rising market,
if the Adviser’s assessment of a company’s value or prospects for exceeding
earnings expectations or market conditions is incorrect.
Information
about the Fund’s daily portfolio holdings is available at
https://spear-funds.com. A complete description of the Fund’s policies and
procedures with respect to the disclosure of the Fund’s portfolio holdings is
available in the Fund’s Statement of Additional Information (the
“SAI”).
Spear
Advisors LLC, a New York limited liability company located at 64 Three Mile
Harbor HC Road, East Hampton, New York 11937, serves as the investment adviser
for the Fund. The Adviser, subject to the general supervision and oversight of
the Board, provides an investment program for the Fund and manages the
day-to-day investment of the Fund’s assets. The Adviser also arranges for
transfer agency, custody, fund administration, distribution and all other
services necessary for the Fund to operate. The Adviser is an SEC-registered
investment adviser. As of the date of this Prospectus, the assets managed by the
Adviser are only those of the Fund.
For
the services it provides to the Fund, the Adviser is entitled to a unified
management fee, which is calculated daily and paid monthly, at an annual rate of
0.75% of the Fund’s average daily net assets.
Pursuant
to an investment advisory agreement between the Trust, on behalf of the Fund,
and the Adviser (the “Advisory Agreement”), the Adviser has agreed to pay all
expenses of the Fund except the fee payable to the Adviser under the Advisory
Agreement, interest charges on any borrowings, dividends, and other expenses on
securities sold short, taxes, brokerage commissions and other expenses incurred
in placing orders for the purchase and sale of securities and other investment
instruments, acquired fund fees and expenses, accrued deferred tax liability,
extraordinary expenses, and distribution fees and expenses paid by the Trust
under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act.
A
discussion of the basis for the Board’s approval of the continuation of the
Advisory Agreement is available in the Fund’s Annual
Report to Shareholders
for the fiscal year ended June 30, 2023.
Ivana
Delevska is the Fund’s Portfolio Manager and is primarily responsible for the
day-to-day management of the Fund’s portfolio.
Ms.
Delevska founded the Adviser in March 2021 after spending 14 years evaluating
industrial and industrial technology investments. She spent four years covering
Multi-Industry companies at Deutsche Bank as a Vice President (2017-2018) and
Gordon Haskett as a Director (2018-2021). Prior to that time, Ms. Delevska spent
10 years as a Senior Analyst on the buy-side at several long/short hedge fund
platforms (Tiger Management, Millennium Management, Citadel Asset Management,
and Davidson Kempner). She started her career at JP Morgan in the Mergers and
Acquisitions Group. Ms. Delevska graduated from the University of Chicago in
2006 with a BA in Economics.
The
SAI provides additional information about the Portfolio Manager’s compensation
structure, other accounts managed by the Portfolio Manager, and the Portfolio
Manager’s ownership of Shares.
Foreside
Fund Services, LLC, a wholly-owned subsidiary of Foreside Financial Group, LLC
(doing business as ACA Group) (the “Distributor”), serves as the principal
underwriter and distributor of the Fund’s Shares. The Distributor’s principal
address is Three Canal Plaza, Suite 100, Portland, Maine 04101. The Distributor
will not distribute Shares in less than whole Creation Units, and it does not
maintain a secondary market in the Shares. The Distributor is a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the
Financial Industry Regulatory Authority, Inc. (“FINRA”). The Distributor has no
role in determining the policies of the Fund or the securities that are
purchased or sold by the Fund and is not affiliated with the Adviser or any of
its affiliates.
U.S.
Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services,
located at 615 East Michigan Street, Milwaukee, Wisconsin 53202, serves as the
administrator and transfer agent for the Fund.
U.S.
Bank National Association, located at 1555 North Rivercenter Drive, Suite 302,
Milwaukee, Wisconsin 53212, serves as the custodian for the Fund.
Morgan,
Lewis & Bockius LLP, located at 1111 Pennsylvania Avenue, N.W., Washington,
D.C. 20004, serves as legal counsel to the Trust.
Cohen
& Company, Ltd., located at 1350 Euclid Avenue, Suite 800, Cleveland, Ohio
44115, serves as the Fund’s independent registered public accounting firm. The
independent registered public accounting firm is responsible for auditing the
annual financial statements of the Fund.
The
Fund issues and redeems Shares only in Creation Units at the NAV per share next
determined after receipt of an order from an AP. Only APs may acquire Shares
directly from the Fund, and only APs may tender their Shares for redemption
directly to the Fund, at NAV. APs must be a member or participant of a clearing
agency registered with the SEC and must execute a Participant Agreement that has
been agreed to by the Distributor, and that has been accepted by the Fund’s
transfer agent, with respect to purchases and redemptions of Creation Units.
Once created, Shares trade in the secondary market in quantities less than a
Creation Unit.
Most
investors buy and sell Shares in secondary market transactions through brokers.
Individual Shares are listed for trading on the secondary market on the Exchange
and can be bought and sold throughout the trading day like other publicly traded
securities.
When
buying or selling Shares through a broker, you will incur customary brokerage
commissions and charges, and you may pay some or all of the spread between the
bid and the offer price in the secondary market on each leg of a round trip
(purchase and sale) transaction. In addition, because secondary market
transactions occur at market prices, you may pay more than NAV when you buy
Shares and receive less than NAV when you sell those Shares.
Shares
are held in book-entry form, which means that no stock certificates are issued.
The Depository Trust Company (the “DTC”) or its nominee is the record owner of
all outstanding Shares.
Investors
owning Shares are beneficial owners as shown on the records of DTC or its
participants. DTC serves as the securities depository for all Shares. DTC’s
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and other institutions that directly or indirectly
maintain a custodial relationship with DTC. As a beneficial owner of Shares, you
are not entitled to receive physical delivery of stock certificates or to have
Shares registered in your name, and you are not considered a registered owner of
Shares. Therefore, to exercise any right as an owner of Shares, you must rely
upon the procedures of DTC and its participants. These procedures are the same
as those that apply to any other securities that you hold in book entry or
“street name” through your brokerage account.
The
Fund imposes no restrictions on the frequency of purchases and redemptions of
Shares. In determining not to approve a written, established policy, the Board
evaluated the risks of market timing activities by Fund shareholders. Purchases
and redemptions by APs, who are the only parties that may purchase or redeem
Shares directly from the Fund, are an essential part of the ETF process and help
keep Share trading prices in line with NAV. As such, the Fund accommodates
frequent purchases and redemptions by APs. However, frequent purchases and
redemptions for cash may increase tracking error and portfolio transaction costs
and lead to the realization of capital gains. The Fund’s fair valuation of its
holdings consistent with the 1940 Act and Rule 2a-5 thereunder and its ability
to impose transaction fees on purchases and redemptions of Creation Units to
cover the custodial and other costs incurred by the Fund in effecting trades
help to minimize the potential adverse consequences of frequent purchases and
redemptions.
The
Fund’s NAV is calculated as of the scheduled close of regular trading on the New
York Stock Exchange (the “NYSE”), generally 4:00 p.m. Eastern time, each day the
NYSE is open for business. The NAV is calculated by dividing the Fund’s net
assets by its Shares outstanding.
In
calculating its NAV, the Fund generally values its assets on the basis of market
quotations, last sale prices, or estimates of value furnished by a pricing
service or brokers who make markets in such instruments. For example, the Fund
generally values equity securities at their readily available market quotations.
If such information is not available for an investment held by the Fund or is
determined to be unreliable, the investment will be valued by the Adviser at
fair value pursuant to procedures established by the Adviser and approved by the
Board (as described below).
The
Adviser has been designated by the Board as the valuation designee for the Fund
pursuant to Rule 2a-5 under the 1940 Act. In its capacity as valuation designee,
the Adviser has adopted procedures and methodologies to fair value Fund
investments whose market prices are not “readily available” or are deemed to be
unreliable. For example, such circumstances may arise when: (i) an investment
has been de-listed or has had its trading halted or suspended; (ii) an
investment’s primary pricing source is unable or unwilling to provide a price;
(iii) an investment’s primary trading market is closed during regular market
hours; or (iv) an investment’s value is
materially
affected by events occurring after the close of the investment’s primary trading
market. Generally, when fair valuing an investment held by the Fund, the Adviser
will take into account all reasonably available information that may be relevant
to a particular valuation including, but not limited to, fundamental analytical
data regarding the issuer, information relating to the issuer’s business, recent
trades or offers of the investment, general and/or specific market conditions
and the specific facts giving rise to the need to fair value the investment.
Fair value determinations are made in good faith and in accordance with the fair
value methodologies established by the Adviser. Due to the subjective and
variable nature of determining the fair value of a security or other investment,
there can be no assurance that the Adviser’s determined fair value will match or
closely correlate to any market quotation that subsequently becomes available or
the price quoted or published by other sources. In addition, the Fund may not be
able to obtain the fair value assigned to an investment if the Fund were to sell
such investment at or near the time its fair value is determined.
Section
12(d)(1) of the 1940 Act and the rules thereunder limit investments by
registered investment companies in the securities of other investment companies.
Registered investment companies are permitted to invest in the Fund beyond the
limits set forth in section 12(d)(1), subject to certain terms and conditions,
including that such investment companies enter into an agreement with the
Fund.
The
Fund intends to pay out dividends in cash, if any, and distribute any net
realized capital gains to its shareholders at least annually. The Fund will
declare and pay capital gain distributions in cash, if any. Distributions in
cash may be reinvested automatically in additional whole Shares only if the
broker through whom you purchased Shares makes such option available. Your
broker is responsible for distributing the income and capital gain distributions
to you.
The
following discussion is a summary of certain important U.S. federal income tax
considerations generally applicable to investments in the Fund. Your investment
in the Fund may have other tax implications. Please consult your tax adviser
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws. This summary does not apply
to Shares held in an IRA or other tax-qualified plans, which are generally not
subject to current tax. Transactions relating to Shares held in such accounts
may, however, be taxable at some time in the future. This summary is based on
current tax laws, which may change.
The
Fund intends to qualify each year for treatment as a regulated investment
company (“RIC”). If it meets certain minimum distribution requirements, a RIC is
not subject to tax at the fund level on income and gains from investments that
are timely distributed to shareholders. However, the Fund’s failure to qualify
as a RIC or to meet minimum distribution requirements would result (if certain
relief provisions were not available) in fund-level taxation and, consequently,
a reduction in income available for distribution to shareholders.
Unless
your investment in Shares is made through a tax-exempt entity or tax-advantaged
account, such as an IRA, you need to be aware of the possible tax consequences
when the Fund makes distributions, when you sell your Shares listed on the
Exchange, and when you purchase or redeem Creation Units (APs
only).
The
Fund intends to distribute, at least annually, substantially all of its net
investment income and net capital gains. For federal income tax purposes,
distributions of investment income are generally taxable as ordinary income or
qualified dividend income. Taxes on distributions of capital gains (if any) are
determined by how long the Fund owned the investments that generated them,
rather than how long a shareholder has owned his or her Shares. Sales of assets
held by the Fund for more than one year generally result in long-term capital
gains and losses, and sales of assets held by the Fund for one year or less
generally result in short-term capital gains and losses. Distributions of the
Fund’s net capital gain (the excess of net long-term capital gains over net
short-term capital losses) that are reported by the Fund as capital gain
dividends (“Capital Gain Dividends”) will be taxable as long-term capital gains,
which for non-corporate shareholders are subject to tax at reduced rates of up
to 20% (lower rates apply to individuals in lower tax brackets). Distributions
of short-term capital gain will generally be taxable as ordinary income.
Dividends and distributions are generally taxable to you whether you receive
them in cash or reinvest them in additional Shares.
Distributions
reported by the Fund as “qualified dividend income” are generally taxed to
non-corporate shareholders at rates applicable to long-term capital gains,
provided holding period and other requirements are met. “Qualified dividend
income” generally is income derived from dividends paid by U.S. corporations or
certain foreign corporations that are either incorporated in a U.S. possession
or eligible for tax benefits under certain U.S. income tax treaties. In
addition, dividends that the Fund receives in respect of stock of certain
foreign corporations may be qualified dividend income if that stock is readily
tradable on an established U.S. securities market. Corporate shareholders may be
entitled to a dividends received deduction for the portion of dividends they
receive from the Fund that are attributable to dividends received by the Fund
from U.S. corporations, subject to certain limitations. For such dividends to be
taxed as qualified dividend income to a non-corporate shareholder, the Fund must
satisfy certain holding period requirements
with
respect to the underlying stock and the non-corporate shareholder must satisfy
holding period requirements with respect to his or her ownership of the Fund’s
Shares. Holding periods may be suspended for these purposes for stock that is
hedged.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from the Fund.
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, 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 the Fund before
your investment (and thus were included in the Shares’ NAV when you purchased
your Shares).
You
may wish to avoid investing in the Fund shortly before a dividend or other
distribution, because such a distribution will generally be taxable even though
it may economically represent a return of a portion of your
investment.
If
you are neither a resident nor a citizen of the United States or if you are a
foreign entity, distributions (other than Capital Gain Dividends) paid to you by
the Fund will generally be subject to a U.S. withholding tax at the rate of 30%,
unless a lower treaty rate applies. Gains from the sale or other disposition of
your Shares from non-U.S. shareholders generally are not subject to U.S.
taxation, unless you are a nonresident alien individual who is physically
present in the U.S. for 183 days or more per year. The 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 you are a foreign shareholder
engaged in a trade or business within the United States or if a tax treaty
applies.
The
Fund (or a financial intermediary, such as a broker, through which a shareholder
owns Shares) generally is required to withhold and remit to the U.S. Treasury a
percentage of the taxable distributions and sale proceeds paid to any
shareholder who fails to properly furnish a correct taxpayer identification
number, who has underreported dividend or interest income, or who fails to
certify that the shareholder is not subject to such withholding.
Provided
that a shareholder holds Shares as capital assets, any gain or loss realized
upon a sale or exchange of Shares generally is treated as a long-term capital
gain or loss if Shares have been held for more than one year and as a short-term
capital gain or loss if Shares have been held for one year or less. However, any
capital loss on a sale of Shares held for six months or less is treated as
long-term capital loss to the extent of Capital Gain Dividends paid with respect
to such Shares. Any loss realized on a sale will be disallowed to the extent
Shares are acquired, including through reinvestment of dividends, within a
61-day period beginning 30 days before and ending 30 days after the disposition
of Shares. The ability to deduct capital losses may be limited.
The
cost basis of Shares acquired by purchase will generally be based on the amount
paid for the Shares and then may be subsequently adjusted for other applicable
transactions as required by the U.S. Internal Revenue Code of 1986, as amended
(the “Code”). The difference between the selling price and the cost basis of
Shares generally determines the amount of the capital gain or loss realized on
the sale or exchange of Shares. Contact the broker through whom you purchased
your Shares to obtain information with respect to the available cost basis
reporting methods and elections for your account.
An
AP having the U.S. dollar as its functional currency for U.S. federal income tax
purposes who exchanges securities for Creation Units generally recognizes a gain
or a loss. The gain or loss will be equal to the difference between the value of
the Creation Units at the time of the exchange and the exchanging AP’s aggregate
basis in the securities delivered, plus the amount of any cash paid for the
Creation Units. An AP who exchanges Creation Units for securities will generally
recognize a gain or loss equal to the difference between the exchanging AP’s
basis in the Creation Units and the aggregate U.S. dollar market value of the
securities received, plus any cash received for such Creation Units. The
Internal Revenue Service may assert, however, that a loss that is realized upon
an exchange of securities for Creation Units may not be currently deducted under
the rules governing “wash sales” (for an AP who does not mark-to-market its
holdings) or on the basis that there has been no significant change in economic
position. APs exchanging securities should consult their own tax adviser with
respect to whether wash sale rules apply and when a loss might be
deductible.
The
Fund may include a payment of cash in addition to, or in place of, the delivery
of a basket of securities upon the redemption of Creation Units. The Fund may
sell portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause the Fund to recognize investment income and/or capital
gains or losses that it might not have recognized if it had completely satisfied
the redemption in kind. As a result, the Fund may be less tax efficient if it
includes such a cash payment in the proceeds paid upon the redemption of
Creation Units.
U.S.
individuals with income exceeding specified thresholds are subject to a 3.8% tax
on all or a portion of their “net investment income,” which includes interest,
dividends, and certain capital gains (generally including capital gains
distributions and capital gains
realized
on the sale of Shares). This 3.8% tax also applies to all or a portion of the
undistributed net investment income of certain shareholders that are estates and
trusts.
The
Fund invests in foreign securities. Dividend, interest and other income received
by the Fund with respect to foreign securities may give rise to withholding and
other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. If as of the
close of a taxable year more than 50% of the value of the Fund’s assets consists
of certain foreign stock or securities, the Fund will be eligible to elect to
“pass through” to investors the amount of foreign income and similar taxes
(including withholding taxes) paid by the Fund during that taxable year. This
means that investors would be considered to have received as additional income
their respective shares of such foreign taxes, but may be entitled to either a
corresponding tax deduction in calculating taxable income, or, subject to
certain limitations, a credit in calculating federal income tax. If the Fund
does not so elect, it will be entitled to claim a deduction for certain foreign
taxes incurred by the Fund. The Fund (or a financial intermediary, such as a
broker, through which a shareholder owns Shares) will notify you if it makes
such an election and provide you with the information necessary to reflect
foreign taxes paid on your income tax return.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in the Fund. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Fund
distributions and sales of Shares. Consult your personal tax adviser about the
potential tax consequences of an investment in Shares under all applicable tax
laws. For more information, please see the section entitled “Federal Income
Taxes” in the SAI.
The
Board has adopted a Distribution and Service Plan (the “Plan”) pursuant to Rule
12b-1 under the 1940 Act. In accordance with the Plan, the Fund is authorized to
pay an amount up to 0.25% of its average daily net assets each year for certain
distribution-related activities and shareholder services.
No
Rule 12b-1 fees are currently paid by the Fund, and there are no plans to impose
these fees. However, in the event Rule 12b-1 fees are charged in the future,
because the fees are paid out of Fund assets, over time these fees will increase
the cost of your investment and may cost you more than certain other types of
sales charges.
Information
regarding how often Shares traded on the Exchange at a price above (i.e.,
at a premium) or below (i.e.,
at a discount) the NAV per share is available on the Fund’s website at
https://spear-funds.com.
The
Shares are not sponsored, endorsed, or promoted by the Exchange. The Exchange is
not responsible for, nor has it participated in the determination of the timing,
prices, or quantities of the Shares to be issued, nor in the determination or
calculation of the equation by which Shares are redeemable. The Exchange has no
obligation or liability to owners of the Fund’s Shares in connection with the
administration, marketing, or trading of the Shares.
Without
limiting any of the foregoing, in no event shall the Exchange have any liability
for any lost profits or indirect, punitive, special, or consequential damages
even if notified of the possibility thereof.
The
Adviser and the Fund make no representation or warranty, express or implied, to
the owners of Shares or any member of the public regarding the advisability of
investing in securities generally or in the Fund particularly.
The
following financial highlights table shows the financial performance information
for the Fund’s five most recent fiscal years (or the life of the Fund, if
shorter). Certain information reflects financial results for a single share of
the Fund. The total returns in the table represent the rate that you would have
earned or lost on an investment in the Fund (assuming you reinvested all
distributions). This information has been audited by Cohen & Company, Ltd.,
the independent registered public accounting firm of the Fund, whose report,
along with the Fund’s financial statements, is included in the Fund’s
Annual
Report,
which is available upon request.
For
a Share Outstanding Throughout each Period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, 2023 |
|
Period
Ended
June
30,
2022(1) |
|
Net
Asset Value, Beginning of Period |
$ |
13.86 |
|
| $ |
20.00 |
| |
|
|
|
| |
Income
(Loss) from Investment Operations: |
|
|
| |
Net
investment loss (2) |
(0.05) |
|
| (0.10) |
| |
Net
realized and unrealized gain (loss) on investments |
4.59 |
|
| (5.99) |
| |
Total
from investment operations |
4.54 |
|
| (6.09) |
| |
|
|
|
| |
Less
Distributions: |
|
|
| |
From
net realized gains |
— |
|
| (0.05) |
| |
Total
distributions |
— |
|
| (0.05) |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
18.40 |
|
| $ |
13.86 |
| |
|
|
|
| |
Total
Return, at NAV (3)(5) |
32.76 |
% |
| (30.53) |
% |
|
Total
Return, at Market (4)(5) |
32.62 |
% |
| (30.58) |
% |
|
|
|
|
| |
Supplemental
Data and Ratios: |
|
|
| |
Net
assets, end of period (000’s) |
$ |
8,740 |
|
| $ |
3,118 |
| |
|
|
|
| |
Ratio
of expenses to average net assets(6) |
0.75 |
% |
| 0.75 |
% |
|
Ratio
of net investment loss to average net assets(6) |
(0.34) |
% |
| (0.56) |
% |
|
Portfolio
turnover rate(5)(7) |
209 |
% |
| 262 |
% |
|
1The
Fund commenced investment operations on August 3, 2021.
2Per
share net investment income (loss) was calculated using average shares
outstanding.
3Net
asset value total return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, if any, and
redemption on the last day of the period at net asset value. This percentage is
not an indication of the performance of a shareholder’s investment in the Fund
based on market value due to the differences between the market price of the
shares and the net asset value per share of the Fund.
4Market
value total return is calculated assuming an initial investment made at market
value at the beginning of the period, reinvestment of all dividends and
distributions at market value during the period, if any, and redemption on the
last day of the period at market value. Market value is determined by the
composite closing price. Composite closing security price is defined as the last
reported sale price on the Nasdaq Stock Market. The composite closing price is
the last reported sale, regardless of volume, and not an average price, and may
have occurred on a date prior to the close of the reporting period. Market value
may be greater or less than net asset value, depending on the Fund’s closing
price on the Nasdaq Stock Market.
5Not
annualized for periods less than one year.
6Annualized
for periods less than one year.
7Excludes
in-kind transactions associated with creations and redemptions of the Fund.
Spear
Alpha ETF
|
|
|
|
|
|
|
|
|
|
| |
Adviser |
Spear
Advisors LLC
64
Three Mile Harbor HC Road
East
Hampton, New York 11937 |
Transfer
Agent and Administrator |
U.S.
Bancorp Fund Services, LLC
d/b/a
U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Custodian |
U.S.
Bank National Association
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212 |
Distributor |
Foreside
Fund Services, LLC
Three
Canal Plaza, Suite 100
Portland,
Maine 04101 |
Independent
Registered Public Accounting Firm |
Cohen
& Company, Ltd.
1350
Euclid Avenue, Suite 800
Cleveland,
Ohio 44115 |
Legal
Counsel |
Morgan,
Lewis & Bockius LLP
1111
Pennsylvania Avenue, NW
Washington,
DC 20004-2541 |
Investors
may find more information about the Fund in the following
documents:
Statement
of Additional Information: The
Fund’s SAI provides additional details about the investments of the Fund and
certain other additional information. The SAI is on file with the SEC and is
incorporated herein by reference into this Prospectus. It is legally considered
a part of this Prospectus.
Annual/Semi-Annual
Reports: Additional
information about the Fund’s investments is available in the Fund’s Annual and
Semi-Annual Reports to shareholders. In the Annual
Report,
you will find a discussion of the market conditions and investment strategies
that significantly affected the Fund’s performance.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Fund by contacting the Fund at c/o U.S. Bank Global
Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or by calling
1-800-617-0004.
Shareholder
reports and other information about the Fund also are available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s website at
http://www.sec.gov;
•Free
of charge from the Fund’s Internet web site at https://spear-funds.com;
or
(SEC
Investment Company Act File No. 811-23226)