ck0001683471-20230531
PROSPECTUS
Wahed FTSE USA Shariah
ETF (HLAL)
Wahed Dow Jones Islamic
World ETF (UMMA)
Listed
on The NASDAQ Stock Market LLC
September 30,
2023
The
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
Wahed FTSE USA Shariah ETF (“FTSE USA ETF” or the “Fund”) seeks to track the
total return performance, before fees and expenses, of the FTSE Shariah USA
Index (the “Index”).
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.
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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) |
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Management
Fee |
0.50% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.50% |
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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:
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1
Year: |
$51 |
3
Years: |
$160 |
5
Years: |
$280 |
10
Years: |
$628 |
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 May 31, 2023, the Fund’s portfolio turnover rate
was 29% of the average
value of its portfolio.
The
Fund seeks to track the total return performance, before fees and expenses, of
the Index. The Index is composed of common stocks of large- and
mid-capitalization U.S. companies the characteristics of which meet the
requirements of Shariah and are consistent with Islamic principles as
interpreted by subject-matter experts (each, a “Shariah-compliant company”).
FTSE
Shariah USA Index
The
Index is constructed using an objective, rules-based methodology and is
comprised of those companies included in the FTSE USA Index that are determined
to be Shariah-compliant companies based on their business activities and certain
financial ratios, as described below. The Shariah-compliant companies are then
weighted in the Index according to their market capitalization.
Companies
that receive income in excess of 5% of their total revenue from
Shariah-prohibited activities are removed from the list of companies eligible
for inclusion in the Index. Examples of such activities include:
•Conventional
finance (non-Islamic banking, finance and insurance, etc.);
•Alcohol
production or sale;
•Pork-related
products and non-halal food production, packaging, and processing or any other
activity related to pork and non-halal food;
•Casino
management, gambling, or adult entertainment;
•Tobacco
manufacturing or sale; and
•Weapons,
arms, and other defense manufacturing.
Only
those companies that pass the following financial ratios will be considered
Shariah-compliant:
•Debt
is less than 33.333% of total assets;
•Cash
and interest-bearing items are less than 33.333% of total assets;
•Accounts
receivable and cash are less than 50% of total assets; and
•Total
interest and non-compliant activities income should not exceed 5% of total
revenue.
The
Index constituents are reviewed on an ongoing and annual basis to ensure that
they continue to be Shariah-compliant companies. The Index is reconstituted
quarterly. If it is discovered during an ongoing review that a non-compliant
security has been included in the Index in error, the security is removed from
the Index and the Fund within two business days following the discovery of the
error. The Index’s constituent securities are also reviewed on both an ongoing
basis and annual basis by a Shariah consultant, Yasaar Limited, to determine if
any of the constituents should be considered for potential income remediation or
“Purification.” Purification is the process by which an investor donates certain
income earned from his or her investment in the Fund because certain of the
Fund’s investments unintentionally earned small amounts of income deemed to be
prohibited by Shariah principles, such as interest income. As discussed
under “Dividend Purification,” the Fund publishes on its website the per share
amount to be purified on a quarterly basis.
The
Fund’s Investment Strategy
The
Fund attempts to invest all, or substantially all, of its assets in the
component securities that make up the Index. Under normal circumstances, at
least 80% of the Fund’s total assets will be invested in the component
securities of the Index. Wahed Invest LLC (the “Adviser”), the Fund’s investment
adviser, expects that, over time, the correlation between the Fund’s performance
and that of the Index, before fees and expenses, will be 95% or better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning the Fund generally will invest in all of the component
securities of the Index in approximately the same proportions as in the Index.
However, the Fund may use a “representative sampling” strategy, meaning it may
invest in a sample of the securities in the Index whose risk, return and other
characteristics closely resemble the risk, return and other characteristics of
the Index as a whole, when the Adviser believes it is in the best interests of
the Fund (e.g.,
when replicating the Index involves practical difficulties or substantial costs,
an Index constituent becomes temporarily illiquid, unavailable or less liquid,
or as a result of legal restrictions or limitations such as tax diversification
requirements that apply to the Fund but not to the Index).
The
Fund generally may invest up to 20% of its total assets in securities or other
investments not included in the Index, but which comply with Shariah principles
and which the Adviser believes will help the Fund track the Index. For example,
the Fund may invest in securities that are not components of the Index to
reflect various corporate actions and other changes to the Index (such as
reconstitutions, additions, and deletions). The Fund may also invest up to 20%
of its total assets in cash and other investments, such as cash equivalents and
shares of other investment companies, each of which will be compatible with
Shariah principles. Uninvested monies will be held in non-interest-bearing
accounts.
To
the extent the Index concentrates (i.e., holds more than 25% of its total assets) in the securities of a
particular industry or group of related industries, the Fund will concentrate
its investments to approximately the same extent as the Index.
The Fund is deemed to be “non-diversified,” which means that it may invest a
greater percentage of its assets in the securities of a single issuer or a small
number of issuers than if it was a diversified fund.
As of August 31, 2023, the Index had 219 constituents, and the four
largest stocks and their weightings in the Index were Apple Inc. (14.46%),
Microsoft Corp. (12.61%), Tesla Inc. (3.61%), and Johnson & Johnson
(2.16%).
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:
•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.
•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 exchange traded fund (“ETF”), and, as a result of an ETF’s
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.
◦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.
•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.
•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.
•Passive
Investment Risk.
The Fund is not actively managed and its Adviser would not sell shares of an
equity security due to current or projected underperformance of a security
industry or sector unless that security is removed from the Index or the selling
of shares of that security is otherwise required upon a rebalancing of the Index
as addressed in the Index methodology.
•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.
◦Information
Technology Sector Risk. The
Information Technology Sector includes companies that offer software and
information technology services, manufacturers and distributors of technology
hardware and equipment such as communications equipment, cellular phones,
computers and peripherals, electronic equipment and related instruments and
semiconductors. The Fund is subject to the risk that the securities of such
issuers will underperform the market as a whole due to legislative or regulatory
changes, adverse market conditions and/or increased competition affecting the
Information Technology Sector. The prices of the securities of companies
operating in the Information Technology Sector are closely tied to market
competition, increased sensitivity to short product cycles and aggressive
pricing, and problems with bringing products to market.
◦Health
Care Sector Risk.
Companies in the Health Care Sector are subject to extensive government
regulation and their profitability can be significantly affected by restrictions
on government reimbursement for medical expenses, rising costs of medical
products and services, pricing pressure (including price discounting), limited
product lines and an increased emphasis on the delivery of healthcare through
outpatient services. Companies in the Health Care Sector are heavily dependent
on obtaining and defending patents, which may be time consuming and costly, and
the expiration of patents may also adversely affect the profitability of these
companies. Health care companies are also subject to extensive litigation based
on product liability and similar claims. In addition, their products can become
obsolete due to industry innovation, changes in technologies or other market
developments. Many new products in the Health Care Sector require significant
research and development and may be subject to regulatory approvals, all of
which may be time consuming and costly with no guarantee that any product will
come to market.
•Shariah-Compliant
Investing Risk.
The consideration of Islamic principles restricts the Fund’s ability to invest
in certain types of issuers and securities, such as financial companies and
conventional fixed income securities (bonds and other structured securities that
give a fixed return based on an obligation or promise), and reduces the size of
the universe of eligible securities in which the Fund can invest. As a result,
the successful implementation of the Fund’s investment strategy may limit its
investment opportunities and adversely affect its performance, especially in
comparison to a more diversified fund. Because Islamic principles preclude
investment in interest-paying instruments, any cash or cash equivalents the Fund
holds will not earn interest income.
•Tracking
Error Risk. As
with all index funds, the performance of the Fund and its Index may differ from
each other for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by the Index. In addition,
the Fund may not be fully invested in the securities of the Index at all times
or may hold securities not included in the Index.
•Underlying
Index Risk. Neither the Adviser nor FTSE International Limited (the “FTSE Index
Provider”), the index provider and calculation agent for the Index, is able to
guarantee the continuous availability or timeliness of the production of the
Index. The calculation and dissemination of the Index values may be delayed if
the information technology or other facilities of the FTSE Index Provider, data
providers and/or relevant stock exchange malfunction for any reason. A
significant delay may cause trading in shares of the Fund to be suspended.
Errors in Index data, computation and/or the construction in accordance with its
methodology may occur from time to time and may not be identified and corrected
by the FTSE Index Provider or other applicable party for a period of time or at
all, which may have an adverse impact on the Fund and its
shareholders.
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® Index, which reflects a broad measure of market performance. The
table also shows how the Fund’s performance compares to the FTSE Shariah USA
Index, the Fund’s Index. 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://www.wahed.com/hlal.
Calendar Year Total
Returns
The
calendar year-to-date total return of the
Fund as of June 30, 2023 was
22.16%. During the
period of time shown in the bar chart, the highest quarterly
return was 23.83% for the quarter ended June 30, 2020, and the
lowest quarterly return was
-21.02% for the quarter ended March 31,
2020.
Average
Annual Total Returns
(for
periods ended December 31, 2022)
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Wahed
FTSE USA Shariah ETF |
1-Year |
Since
Inception
(7/15/2019) |
Return Before
Taxes |
-17.61% |
11.62% |
Return After
Taxes on Distributions |
-17.83% |
11.32% |
Return After
Taxes on Distributions and Sale of Shares |
-10.26% |
9.10% |
S&P
500®
Index
(reflects
no deduction for fees, expenses, or taxes) |
-18.13% |
34.90% |
FTSE
Shariah USA Index
(reflects no deduction for
fees, expenses, or taxes) |
-17.24% |
12.27% |
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.
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Adviser |
Wahed
Invest LLC |
Portfolio
Manager |
Samim
Abedi, Chief Investment Officer for the Adviser, has been the portfolio
manager of the Fund since its inception in
2019 |
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://www.wahed.com/hlal.
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
Wahed Dow Jones Islamic World ETF (“Dow Jones World ETF” or the “Fund”) seeks
long-term capital appreciation.
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.
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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) |
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Management
Fee |
0.65% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.65% |
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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:
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1
Year: |
$66 |
3
Years: |
$208 |
5
Years: |
$362 |
10
Years: |
$810 |
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 May 31, 2023, the Fund’s portfolio turnover rate
was 11% of the average
value of its portfolio.
The
Fund is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by investing in equity securities, including common
stock and American Depositary Receipts (“ADRs”), of global companies (excluding
U.S. domiciled companies) the characteristics of which meet the requirements of
Shariah and are consistent with Islamic principles as interpreted by
subject-matter experts (each, a “Shariah Compliant Company”). Wahed Invest LLC
(the “Adviser”), the Fund’s investment adviser, seeks to invest the Fund’s
assets in securities similar to the components of, and to achieve returns
similar to those of, the Dow Jones Islamic Market International Titans 100 Index
(the “Index”). The Index, a data-driven index owned and maintained by S&P
Dow Jones Indices, is designed to measure the stock performance of the largest
ex-U.S. companies that have passed rules-based screens for adherence to Shariah
investment guidelines.
In
addition, in selecting the investments for the Fund, the Adviser may determine
to apply an environment, social, and governance (“ESG”) framework that evaluates
companies based on various metrics, such as the company’s impact on the
environment, community relations, employee relations, and corporate governance
(“ESG Screen”). If it determines to apply the ESG Screen, the Adviser uses
RepRisk, a provider of business intelligence on ESG risks, for daily filtering,
screening, and analysis of controversies related to companies within the Fund.
Such analysis includes a range of issues such as economic crime and corruption,
fraud, illegal commercial practices, human rights issues, labor disputes,
workplace safety, catastrophic accidents, and environmental disasters.
While
the Adviser expects to invest in securities included in the Index, it may
determine to invest in different securities or in the same securities but at
different times or in different weights than included in the Index when it
believes doing so is more consistent with requirements of Shariah, based on the
ESG Screen, or otherwise in the best interests of the Fund.
The
Fund may invest without limit in issuers in both developed and emerging markets,
including frontier markets. Frontier market and emerging market countries are
those countries with low- and middle-income economies, respectively, as
classified by the World Bank, or included in any of the Morgan Stanley Capital
International (MSCI) frontier markets or emerging markets indices.
Because
Islamic principles preclude the use of interest-paying instruments, the Fund’s
cash reserves do not earn income.
The
Fund is “non-diversified,” which means that it may invest a greater percentage
of its assets in the securities of a single issuer or a small number of issuers
than if it was a diversified fund.
Dow
Jones Islamic Market International Titans 100 Index
The
Index is constructed using an objective, rules-based methodology and is
comprised of securities issued by companies domiciled in countries classified as
developed (excluding U.S. domiciled companies), emerging market, or frontier
market that are determined to be Shariah Compliant Companies based on their
business activities and certain accounting-based screens, as described below.
The Shariah Compliant Companies are then weighted in the Index according to
their float-adjusted market capitalization.
A
company that receives income in excess of 5% of its total revenue from
Shariah-prohibited activities is removed from the list of companies eligible for
inclusion in the Index (the “Index Universe”). Examples of such activities
include:
•Conventional
finance (non-Islamic banking, finance and insurance);
•Alcohol
production or sale;
•Pork-related
products;
•Entertainment
(hotels, casinos/gambling, cinema, pornography, music);
•Tobacco
manufacturing or sale; and
•Weapons,
arms, and other defense manufacturing.
Only
those companies in the Index Universe that pass the following accounting-based
screens will be considered Shariah-compliant:
•Total
debt divided by trailing 24-month average market capitalization is less than 33%
of total assets;
•The
sum of a company’s cash and interest-bearing securities divided by trailing
24-month average market capitalization is less than 33% of total assets;
and
•Accounts
receivables divided by trailing 24-month average market capitalization is less
than 33% of total assets.
The
top 100 Shariah Compliant Companies based on float-adjusted market
capitalization are selected for inclusion in the Index. The weight of each
company is capped at 10% of the Index.
Any
changes to the composition of the Index will be implemented in connection with
its reconstitution, which will occur annually in September. The Index will be
rebalanced quarterly, in March, June, September and December. Constituents’
index weightings are calculated using closing prices on the Wednesday prior to
the second Friday of the rebalancing month as the reference price. Index share
amounts are calculated and assigned to each stock to arrive at the weights
determined on the reference date. Changes are announced on the second Friday of
the review month and are implemented at the opening of trading on the Monday
following the third Friday of the review month. In addition, the S&P Dow
Jones Indices LLC (the “Dow Jones Index Provider”), the index provider and
calculation agent for the Index, engaged Shariah consultant, Ratings
Intelligence Partners (“RIP”), to conduct ongoing monitoring of Index
constituents. RIP may provide information to the Dow Jones Index Provider
between quarterly rebalancings. A company deemed compliant for the prior
evaluation period that exceeds the maximum ratio for any accounting-based screen
for the current evaluation period will continue to be considered compliant if
the ratio is within two percentage points of the maximum allowed. However, if
the maximum is breached for three consecutive evaluation periods, the company
will be deemed non-compliant. If any of a company’s ratios are above the two
percentage point buffer limit, the company will immediately be deemed
non-compliant and will be removed from the Index. A company deemed non-compliant
for the prior evaluation period that passes all accounting-based screens for the
current evaluation period will remain non-compliant if any ratio is within two
percentage points of the maximum allowed. However, if the company satisfies all
three ratios for three consecutive evaluation periods the company will be deemed
compliant. If all three ratios are below the two percentage point buffer limit,
the company will immediately be deemed compliant and will be eligible for
inclusion in the Index.
The
Index’s constituent securities also are reviewed on both an ongoing basis and
annual basis by RIP to determine if any of the constituents should be considered
for potential income remediation, or “Purification.” Purification is the process
by which an investor donates certain income earned from his or her investment in
the Fund because certain of the Fund’s investments unintentionally earned small
amounts of income deemed to be prohibited by Shariah principles, such as
interest income. As discussed under “Dividend Purification,” the Fund publishes
on its website the per share amount to be purified on an annual basis.
As of August 31, 2023, the Index was composed of 103 constituents,
representing investments in companies domiciled in 19
countries.
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:
•Currency
Exchange Rate Risk. The
Fund may invest in investments denominated in non-U.S. currencies or in
securities that provide exposure to such currencies. Changes in currency
exchange rates and the relative value of non-U.S. currencies will affect the
value of the Fund’s investment and the value of your Shares. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the value of an investment in the Fund may change quickly and without
warning and you may lose money.
•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. Because the Underlying Shares trade on foreign exchanges that
may be closed when the Fund’s primary listing exchange is open, the Fund may
experience premiums and discounts greater than those of funds without exposure
to such Underlying Shares.
•Emerging
Markets Risk.
Emerging markets are subject to greater market volatility, lower trading volume,
political and economic instability, uncertainty regarding the existence of
trading markets and more governmental limitations on foreign investment than
more developed markets. In addition, securities in emerging markets may be
subject to greater price fluctuations than securities in more developed markets.
Differences in regulatory, accounting, auditing, and financial reporting and
recordkeeping standards could impede the Adviser’s ability to evaluate local
companies and impact the Fund’s performance.
•Environmental,
Social, and Governance Risk.
Applying ESG criteria to the investment process may exclude securities of
certain issuers for non-investment-related reasons. As a result, the Fund may
forgo some market opportunities available to funds that do not use ESG or
sustainability criteria, which may adversely affect the Fund’s
performance.
•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.
•Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. There may be less information publicly
available about a non-U.S. issuer than a U.S. issuer. Non-U.S. issuers may be
subject to different accounting, auditing, financial reporting and investor
protection standards than U.S. issuers. Investments in non-U.S. securities also
may be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. With respect to certain
countries, there is the possibility of government intervention and expropriation
or nationalization of assets. Because legal systems differ, there also is the
possibility that it will be difficult to obtain or enforce legal judgments in
certain countries. Since foreign exchanges may be open on days when the Fund
does not price its shares, the value of the securities in the Fund’s portfolio
may change on days when shareholders will not be able to purchase or sell the
Fund’s shares. Conversely, Shares may trade on days when foreign exchanges are
closed. Each of these factors can make investments in the Fund more volatile and
potentially less liquid than other types of investments.
•Frontier
Markets Risk. Certain
foreign markets are only in the earliest stages of development and may be
considered “frontier markets.” Frontier financial markets generally are less
liquid and more volatile than other markets, including markets in developing and
emerging economies. Securities may have limited marketability and be subject to
erratic price movements. Frontier markets may be impacted by political
instability, war, terrorist activities and religious, ethnic and/or
socioeconomic unrest. These and other factors make investing in frontier market
countries significantly riskier than investing in developed market or emerging
market countries.
•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 its ability to achieve its investment objective is
dependent on the Adviser’s successful implementation of the Fund’s investment
strategies.
•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.
•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.
•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.
◦Information
Technology Sector Risk. The
Information Technology Sector includes companies that offer software and
information technology services, manufacturers and distributors of technology
hardware and equipment such as communications equipment, cellular phones,
computers and peripherals, electronic equipment and related instruments and
semiconductors. The Fund is subject to the risk that the securities of such
issuers will underperform the market as a whole due to legislative or regulatory
changes, adverse market conditions and/or increased competition affecting the
Information Technology Sector. The prices of the securities of companies
operating in the Information Technology Sector are closely tied to market
competition, increased sensitivity to short product cycles and aggressive
pricing, and problems with bringing products to market.
◦Health
Care Sector Risk.
Companies in the Health Care Sector are subject to extensive government
regulation and their profitability can be significantly affected by restrictions
on government reimbursement for medical expenses, rising costs of medical
products and services, pricing pressure (including price discounting), limited
product lines and an increased emphasis on the delivery of healthcare through
outpatient services. Companies in the Health Care Sector are heavily dependent
on obtaining and defending patents, which may be time consuming and costly, and
the expiration of patents may also adversely affect the profitability of these
companies. Health care companies are also subject to extensive litigation based
on product liability and similar claims. In addition, their products can become
obsolete due to industry innovation, changes in technologies or other market
developments. Many new products in the Health Care Sector require significant
research and development and may be subject to regulatory approvals, all of
which may be time consuming and costly with no guarantee that any product will
come to market.
•Shariah-Compliant
Investing Risk. The consideration of Islamic principles restricts the Fund’s ability
to invest in certain types of issuers and securities, such as financial
companies and conventional fixed income securities (bonds and other structured
securities that give a fixed return based on an obligation or promise), and
reduces the size of the universe of eligible securities in which the Fund can
invest. As a result, the successful implementation of the Fund’s investment
strategy may limit its investment opportunities and adversely affect its
performance, especially in comparison to a more diversified fund. Because
Islamic principles preclude investment in interest-paying instruments, any cash
or cash equivalents the Fund holds will not earn interest
income.
Performance information for the Fund is not
included because the Fund did not have a full calendar year of performance prior
to the date of this Prospectus. In the future, performance
information for the Fund will be presented in this section. Updated performance
information is available on the Fund’s website at https://www.wahed.com/umma.
|
|
|
|
| |
Adviser |
Wahed
Invest LLC |
Portfolio
Manager |
Samim
Abedi, Chief Investment Officer for the Adviser, has been the portfolio
manager of the Fund since its inception in
2022 |
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://www.wahed.com/umma.
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.
FTSE
Shariah USA Index
FTSE
International Limited is the index provider and calculation agent for the FTSE
Shariah USA Index. The FTSE Index Provider is not affiliated with the FTSE USA
ETF, the Adviser, the Fund’s administrator, custodian, transfer agent, or
distributor, or any of their respective affiliates. The FTSE Index Provider
provides information to the Fund about the constituents of the Index and does
not provide investment advice with respect to the desirability of investing in,
purchasing, or selling securities.
Shariah
screening of the components in the Index is undertaken by Shariah consultants,
Yasaar Limited (“Yasaar”). Yasaar scholars represent all of the major Shariah
schools of thought, creating a best practices approach that has credibility
across the Islamic world. The Index has been fully certified as
Shariah-compliant through the issue of a Fatwa (Islamic legal opinion) by
Yasaar’s principals.
The
Index is calculated as a gross total return index.
Dow
Jones Islamic Market International Titans 100 Index
S&P
Dow Jones Indices LLC is the index provider and calculation agent for the Dow
Jones Islamic Market International Titans 100 Index. S&P Dow Jones Indices
LLC is not affiliated with the Dow Jones World ETF, the Adviser, the Fund’s
administrator, custodian, transfer agent, or distributor, or any of their
respective affiliates. The Dow Jones Index Provider provides information to the
Fund about the constituents of the Index and does not provide investment advice
with respect to the desirability of investing in, purchasing, or selling
securities.
Shariah
screening of the components in the Index is undertaken by the Dow Jones Index
Provider’s Shariah consultants, RIP. RIP is a London/Kuwait-based consulting
company specializing in solutions for the global Islamic investment market. Its
team consists of qualified Islamic researchers who work directly with a Shariah
Supervisory Board (as appointed by the Dow Jones Index Provider), which is a
board of Islamic scholars serving to interpret business issues and recommend
actions related to business decisions for the indices. RIP advises the Dow Jones
Index Provider on the methodology for screening securities for inclusion in the
Dow Jones Islamic Market Indices and matters relating to the Shariah compliance
of the Index constituents, and issues the Shariah certification for the Index.
The Index has been fully certified as Shariah-compliant through the issue of a
Fatwa (Islamic legal opinion) by RIP. The Shariah certification is a written
explanation from the Shariah Supervisory Board specifying the sector- and
accounting-based screens for the Index, which is the basis of the Index’s
screening methodology.
The
Index is calculated to reflect gross total returns.
Dividend
Purification
FTSE
USA ETF
For
investors seeking to purify investment income received from the Fund, the Fund
will publish on its website, https://www.wahed.com/hlal, the per share amount to
be purified on a quarterly basis. Such information will generally be posted
prior to the Fund’s quarterly distribution of any dividend income to
shareholders. For additional information about the Fund’s distribution policies,
see “Dividends, Distributions and Taxes” below in this Prospectus. The
purification calculation will be performed by Yasaar Limited.
Dow
Jones World ETF
For
investors seeking to purify investment income received from the Fund, the Fund
will publish on its website, https://www.wahed.com/umma, the per share amount to
be purified on an annual basis. Such information will generally be posted prior
to the Fund’s fourth quarter distribution of any dividend income to
shareholders. For additional information about the Fund’s distribution policies,
see “Dividends, Distributions and Taxes” below in this Prospectus. The
purification calculation will be performed by RIP.
Each
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.
The
FTSE USA ETF has adopted the following policy to comply with Rule 35d-1 under
the Investment Company Act of 1940. Such policy has been adopted as a
non-fundamental investment policy and may be changed without shareholder
approval upon 60 days’ written notice to shareholders. Under normal
circumstances, at least 80% of the Fund’s net assets, plus borrowings for
investment purposes, will be invested in securities that are traded principally
on a United States stock exchange.
Temporary
Defensive Strategies - Dow Jones World ETF
For
temporary defensive purposes during adverse market, economic, political, or
other conditions, the Dow Jones World ETF may invest in non-interest-bearing
short-term instruments such as cash or cash equivalents. Taking a temporary
defensive position may result in the Dow Jones World ETF not achieving its
investment objective.
An
investment in a Fund entails risks. A Fund could lose money, or its performance
could trail that of other investment alternatives. The following provides
additional information about each Fund’s principal risks. It is important that
investors closely review and understand these risks before making an investment
in a Fund. Each risk applies to each Fund unless otherwise specified. Just as in
each Fund’s summary section, the principal risks below 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 applicable Fund, regardless of the order in which it
appears.
•Currency
Exchange Rate Risk
(Dow
Jones World ETF only).
Changes in currency exchange rates and the relative value of non-U.S. currencies
will affect the value of the Fund’s investments and the value of your Shares.
Because the Fund’s NAV is determined on the basis of U.S. dollars, the U.S.
dollar value of your investment in the Fund may go down if the value of the
local currency of the non-U.S. markets in which the Fund invests depreciates
against the U.S. dollar. This is true even if the local currency value of
securities in the Fund’s holdings goes up. Conversely, the dollar value of your
investment in the Fund may go up if the value of the local currency appreciates
against the U.S. dollar. The value of the U.S. dollar measured against other
currencies is influenced by a variety of factors. These factors include:
national debt levels and trade deficits, changes in balances of payments and
trade, domestic and foreign interest and inflation rates, global or regional
political, economic or financial events, monetary policies of governments,
actual or potential government intervention, and global energy prices. Political
instability, the possibility of government intervention and restrictive or
opaque business and investment policies also may reduce the value of a country’s
currency. Government monetary policies and the buying or selling of currency by
a country’s government also may influence exchange rates. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the value of an investment in the Fund may change quickly and without
warning, and you may lose money.
•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 a 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 a 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 a Fund, the Adviser, or the Fund’s other
service providers, market makers, APs, a Fund’s primary listing exchange, or the
issuers of securities in which a 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 a
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 a Fund inaccessible or inaccurate or incomplete. A Fund also may
incur substantial costs for cybersecurity risk management to prevent cyber
incidents in the future. A Fund and its respective shareholders could be
negatively impacted as a result.
•Depositary
Receipt Risk
(Dow
Jones World ETF only).
The Fund may hold the securities of non-U.S. companies in the form of depository
receipts, including ADRs and 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 (“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.
•Emerging
Markets Risk
(Dow
Jones World ETF only).
Emerging markets are subject to greater market volatility, lower trading volume,
political and economic instability, uncertainty regarding the existence of
trading markets and more governmental limitations on foreign investment than
more developed markets. In addition, securities in emerging markets may be
subject to greater price fluctuations than securities in more developed markets.
Differences in regulatory, accounting, auditing, and financial reporting and
recordkeeping standards could impede the Adviser’s ability to evaluate local
companies and impact the Fund’s performance. There also may be limitations on
the rights and remedies available to investors in emerging market companies
compared to those associated with U.S. companies. In addition, brokerage and
other transaction costs on foreign securities exchanges are often higher than in
the U.S. and there is generally less government supervision and regulation of
exchanges, brokers and issuers in foreign countries.
•Environmental,
Social, and Governance Risk
(Dow
Jones World ETF only).
Applying ESG criteria to the investment process may exclude securities of
certain issuers for non-investment-related reasons. As a result, the Fund may
forgo some market opportunities available to funds that do not use ESG or
sustainability criteria, which may adversely affect the Fund’s performance. In
addition, the Fund’s investments in certain companies that meet the Fund’s ESG
criteria may be susceptible to various factors that may adversely affect 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.
•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.
Each Fund is an ETF and, as a result of its structure, is exposed to the
following risks:
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk.
A 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 a Fund, asset swings in a 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 a 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.
Because securities held by the Dow Jones World ETF 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
domestic ETFs.
◦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 a Fund’s underlying
portfolio holdings, which can be significantly less liquid than Shares.
•Foreign
Securities Risk
(Dow
Jones World ETF only).
Investments in non-U.S. securities involve certain risks that may not be present
with investments in U.S. securities. For example, investments in non-U.S.
securities may be subject to risk of loss due to foreign currency fluctuations
or to political or economic instability. There may be less information publicly
available about a non-U.S. issuer than a U.S. issuer. Non-U.S. issuers may be
subject to different accounting, auditing, financial reporting and investor
protection standards than U.S. issuers. Investments in non-U.S. securities may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. With respect to certain
countries, there is the possibility of government intervention and expropriation
or nationalization of assets. Because legal systems differ, there also is the
possibility that it will be difficult to obtain or enforce legal judgments in
certain countries. Since foreign exchanges may be open on days when the Fund
does not price its shares, the value of the securities in the Fund’s portfolio
may change on days when shareholders will not be able to purchase or sell the
Fund’s shares. Conversely, Shares may trade on days when foreign exchanges are
closed. Each of these factors can make investments in the Fund more volatile and
potentially less liquid than other types of investments.
•Frontier
Markets Risk
(Dow
Jones World ETF only).
Certain
foreign markets are only in the earliest stages of development and may be
considered “frontier markets.” Frontier financial markets generally are less
liquid and more volatile than other markets, including markets in developing and
emerging economies. Frontier markets have a high concentration of market
capitalization and trading volume in a small number of issuers representing a
limited number of industries. Securities may have limited marketability and be
subject to erratic price movements. Frontier market governments typically
exercise substantial influence over many aspects of the private sector. In
certain cases, the government owns or controls many companies, including the
largest company in the country. Accordingly, governmental actions in the future
could have a significant effect on economic conditions in frontier market
countries. This could affect private sector companies and the Fund, as well as
the value of securities in the Fund’s portfolio. Further, substantial
limitations may exist in certain frontier market countries with respect to the
Fund’s ability to protect its legal interests and ability to repatriate its
investment, investment income or capital gains. The Fund could be adversely
affected by delays in, or a refusal to grant, any required governmental approval
for repatriation of capital, as well as by the application to the Fund of any
restrictions on investment. Procedures concerning transaction settlement and
dividend collection may be less reliable than in developed markets and larger
emerging markets. Frontier markets have been, and may continue to be, impacted
by political instability, war, terrorist activities and religious, ethnic and/or
socioeconomic unrest. These and other factors make investing in frontier market
countries significantly riskier than investing in developed market or emerging
market countries.
•Limited
Operating History Risk
(Dow
Jones World ETF only).
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
(Dow
Jones World ETF only).
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. The Adviser’s evaluations and assumptions regarding issuers, securities,
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. 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.
•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 each 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, a 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
a Fund’s volatility and cause the performance of a relatively small number of
issuers to have a greater impact on such Fund’s performance.
•Passive
Investment Risk
(FTSE
USA ETF only).
The Fund invests in the securities included in, or representative of, its Index
regardless of its investment merit. The Fund does not attempt to outperform its
respective Index or take defensive positions in declining markets. As a result,
the Fund’s performance may be adversely affected by a general decline in the
market segments relating to its Index. The returns from the types of securities
in which the Fund invests may underperform returns from the various general
securities markets or different asset classes. This may cause the Fund to
underperform other investment vehicles that invest in different asset classes.
Different types of securities (for example, large-, mid- and
small-capitalization stocks) tend to go through cycles of doing better – or
worse – than the general securities markets. In the past, these periods have
lasted for as long as several years.
•Sector
Risk.
Each Fund’s investing approach may dictate an emphasis on certain sectors,
industries, or sub-sectors of the market at any given time. To the extent a Fund
invests more heavily in one sector, industry, 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, industries,
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, industry, 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. A Fund’s performance could also be affected if the sectors,
industries, or sub-sectors do not perform as expected. Alternatively, the lack
of exposure to one or more sectors or industries may adversely affect
performance. If such sectors underperform relative to the broader equity market,
or if the sectors to which a Fund has less exposure relative to the broader
equity market outperform relative to the broader equity market, the Fund’s
performance may lag that of the broader equity market. Each Fund may have
significant exposure to the following sectors:
◦Information
Technology Sector Risk. To
the extent that the Fund’s investments are exposed to issuers conducting
business in the Information Technology Sector, the Fund is subject to
legislative or regulatory changes, adverse market conditions and/or increased
competition affecting the Information Technology Sector. The prices of the
securities of Information Technology companies may fluctuate widely due to
competitive pressures, increased sensitivity to short product cycles and
aggressive
pricing,
problems relating to bringing their products to market, very high price/earnings
ratios, and high personnel turnover due to severe labor shortages for skilled
technology professionals.
◦Health
Care Sector Risk.
Companies in the Health Care Sector are subject to extensive government
regulation and their profitability can be significantly affected by restrictions
on government reimbursement for medical expenses, rising costs of medical
products and services, pricing pressure (including price discounting), limited
product lines and an increased emphasis on the delivery of healthcare through
outpatient services. Companies in the Health Care Sector are heavily dependent
on obtaining and defending patents, which may be time consuming and costly, and
the expiration of patents may also adversely affect the profitability of these
companies. Health Care companies are also subject to extensive litigation based
on product liability and similar claims. In addition, their products can become
obsolete due to industry innovation, changes in technologies or other market
developments. Many new products in the Health Care Sector require significant
research and development and may be subject to regulatory approvals, all of
which may be time consuming and costly with no guarantee that any product will
come to market.
•Shariah-Compliant
Investing Risk.
The consideration of Islamic principles restricts a Fund’s ability to invest in
certain types of issuers and securities, such as financial companies and
conventional fixed income securities. The Adviser believes that Islamic and
sustainable investing may mitigate security-specific risks, but the screens used
in connection with these strategies reduce the size of the universe of eligible
securities in which a Fund can invest, which may limit its investment
opportunities and adversely affect performance. Because Islamic principles
preclude investment in interest-paying instruments, any cash or cash equivalents
a Fund holds will not earn interest income.
•Tracking
Error Risk
(FTSE
USA ETF only).
As with all index funds, the performance of the Fund and the Index may differ
from each other for a variety of reasons. For example, the Fund incurs operating
expenses and portfolio transaction costs not incurred by the Index. In addition,
the Fund may not be fully invested in the securities of the Index at all times
or may hold securities not included in the Index. The use of sampling techniques
may affect the Fund’s ability to achieve close correlation with the Index. The
Fund may use a representative sampling strategy to achieve its investment
objective, if the Adviser believes it is in the best interest of the Fund, which
generally can be expected to produce a greater non-correlation
risk.
•Underlying
Index Risk
(FTSE
USA ETF only).
Neither the Adviser nor FTSE International Limited is able to guarantee the
continuous availability or timeliness of the production of the Index. The
calculation and dissemination of the Index values may be delayed if the
information technology or other facilities of FTSE International Limited, data
providers and/or relevant stock exchange malfunction for any reason. A
significant delay may cause trading in shares of the Fund to be suspended.
Errors in Index data, computation and/or the construction in accordance with its
methodology may occur from time to time and may not be identified and corrected
by the FTSE International Limited other applicable party for a period of time or
at all, which may have an adverse impact on the Fund and its
shareholders.
Information
about the FTSE USA ETF’s daily portfolio holdings is available at
https://www.wahed.com/hlal. Information about the Dow Jones World ETF’s daily
portfolio holdings is available at https://www.wahed.com/umma. A complete
description of the Funds’ policies and procedures with respect to the disclosure
of the Funds’ portfolio holdings is available in the Funds’ Statement of
Additional Information (the “SAI”).
Wahed
Invest LLC, located at 12 East 49th
Street, 11th
Floor, New York, New York 10017, serves as the investment adviser for the Funds.
The Adviser, subject to the oversight of the Board, provides an investment
management program for the Funds and manages the day-to-day investment of the
Funds’ assets. The Adviser also arranges for transfer agency, custody, fund
administration, distribution and all other services necessary for the Funds to
operate. The Adviser is an SEC-registered investment adviser that offers digital
advisory services based on a halal investment platform to assist individuals
with creating ethically responsible investment portfolios, in addition to
providing investment advisory services to the Funds.
For
the services it provides to the Funds, the Adviser is entitled to a unified
management fee, which is calculated daily and paid monthly, at an annual rate
based on each Fund’s average daily net assets as set forth in the table
below.
|
|
|
|
| |
Fund
|
Management
Fee |
Wahed
FTSE USA Shariah ETF |
0.50% |
Wahed
Dow Jones Islamic World ETF |
0.65% |
Pursuant
to an investment advisory agreement between the Trust, on behalf of each Fund,
and the Adviser (the “Advisory Agreement”), the Adviser has agreed to pay all
expenses of the Funds 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 the distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act (if any).
A
discussion of the basis for the Board’s approval of the continuation of the
Advisory Agreement for the FTSE USA ETF is available in the Funds’ Annual
Report to Shareholders
dated May 31, 2023. A discussion of the basis for the Board’s approval of
the initial Advisory Agreement for the Dow Jones World ETF is available in the
Funds’ Annual
Report to Shareholders
dated May 31, 2022.
Each
Fund is managed by Samim Abedi, Chief Investment Officer of the Adviser.
Mr.
Abedi has over a decade of industry experience across institutional and retail
asset management. Mr. Abedi began his career at J.P. Morgan in New York, New
York, where he gained experience across asset management and investment banking
businesses. His roles and responsibilities included investment strategy and
research, portfolio construction and manager due diligence, as well as portfolio
management for non-profits (endowments and foundations), and sales and trading.
Prior to joining the Adviser, Mr. Abedi was part of the Trading & Investment
team at Google LLC, where he helped manage the company’s public investment
portfolio. He earned a Bachelors (B.A.) with honors from Williams College,
majoring in Economics and Anthropology, with a concentration in Middle Eastern
Studies.
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.
Shariyah
Review Bureau LLC (“SRB”) has been appointed as the Shariah adviser to advise
the Funds with regard to their interpretation of and compliance with Shariah
principles. SRB is one of the corporate world’s leading advisors on Islamic
financial ethics and practices with scholarly presence in more than 21 countries
across the United States, Europe, Africa, the Gulf Corporation Counsel, and
Asia. SRB provides professional Shariah advisory and audit services to public
and private businesses, including commercial and corporate debt, Sukuks and
Islamic equity markets, initial public offerings screening, investment banking
practices, energy firms and information providers.
SRB
does not make investment decisions, provide investment advice, or otherwise act
in the capacity of an investment adviser to the Funds. Additionally, SRB is not
involved in the maintenance of the Indexes and does not otherwise act in the
capacity of an index provider.
Quasar
Distributors, 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 each Fund’s Shares. The Distributor’s principal
address is 111 East Kilbourn Avenue, Suite 2200, Milwaukee, Wisconsin 53202. 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 Funds or the securities that are
purchased or sold by a 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 Funds, and index receipt agent for the
FTSE USA ETF.
U.S.
Bank National Association, located at 1555 North Rivercenter Drive, Suite 302,
Milwaukee, Wisconsin 53212, serves as the custodian for the Funds.
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 Funds’ independent registered public accounting firm. The
independent registered public accounting firm is responsible for auditing the
annual financial statements of the Funds.
Each
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 a Fund, and only APs may tender their Shares for redemption
directly to a 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 Funds’
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
Funds impose 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 Funds, are an essential part of the ETF process and
help keep Share trading prices in line with NAV. As such, the Funds accommodate
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 Funds’ fair valuation of their
holdings consistent with the 1940 Act and Rule 2a-5 thereunder and their ability
to impose transaction fees on purchases and redemptions of Creation Units to
cover the custodial and other costs incurred by the Funds in effecting trades
help to minimize the potential adverse consequences of frequent purchases and
redemptions.
Each
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 for a Fund is calculated by dividing the
applicable Fund’s net assets by its Shares outstanding.
In
calculating its NAV, each 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, a
Fund generally values equity securities at their readily available market
quotations. If such information is not available for an investment held by a
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 Funds
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 a 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, a 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 a 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 such
Fund.
Householding
is an option available to certain investors of the Funds. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for the Funds is available through certain broker-dealers.
If you are interested in enrolling in householding and receiving a single copy
of prospectuses and other shareholder documents, please contact your
broker-dealer. If you are currently enrolled in householding and wish to change
your householding status, please contact your broker-dealer.
Each
Fund intends to pay out dividends in cash, if any, and distribute any net
realized capital gains to its shareholders at least annually. Each 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 Funds. Your investment
in a Fund may have other tax implications. Please consult your tax advisor 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.
Each
Fund intends to qualify each year for treatment as a regulated investment
company (a “RIC”) within the meaning of Subchapter M of the Internal Revenue
Code of 1986, as amended (the “Code”). 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, a 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 a Fund makes distributions, when you sell your Shares listed on the
Exchange, and when you purchase or redeem Creation Units (APs only).
Each
Fund intends to distribute, at least annually, substantially all of its net
investment income and net capital gains income. 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 a Fund owned the investments that generated them, rather
than how long a shareholder has owned his or her Shares. Sales of assets held by
a Fund for more than one year generally result in long-term capital gains and
losses, and sales of assets held by a Fund for one year or less generally result
in short-term capital gains and losses. Distributions of a Fund’s net capital
gain (the excess of net long-term capital gains over net short-term capital
losses) that are reported by such 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 a 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 a 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
a 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, a 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 such Fund’s Shares. Holding periods may be suspended
for these purposes for stock that is hedged. The Dow Jones World ETF’s
investment strategies may limit its ability to make distributions eligible to be
treated as qualified dividend income.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from a 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 a Fund before your investment (and thus were included
in the Shares’ NAV when you purchased your Shares).
You
may wish to avoid investing in a 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
a 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. A 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.
A
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 capital gain or loss
realized upon a sale 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 of the Fund 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 of the Fund 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 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 their
holdings) or on the basis that there has been no significant change in economic
position. APs exchanging securities should consult their own tax advisor with
respect to whether the wash sales rule applies and when a loss might be
deductible.
A
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. A Fund may sell
portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause a 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, a 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. 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.
Foreign
tax credits, if any, received by the Fund as a result of an investment in
another RIC (including an ETF which is taxable as a RIC) will not be passed
through to you unless the Fund qualifies as a “qualified fund-of-funds” under
the Code. If the Fund is a “qualified fund-of-funds” it will be eligible to file
an election with the Internal Revenue Service that will enable the Fund to pass
along these foreign tax credits to its shareholders. The Fund will be treated as
a “qualified fund-of-funds” under the Code if at least 50% of the value of the
Fund’s total assets (at the close of each quarter of the Fund’s taxable year) is
represented by interests in other RICs.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in each 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 advisor 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, each 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 Funds, 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 FTSE USA ETF’s website at
https://www.wahed.com/hlal and on the Dow Jones World ETF’s website at
https://www.wahed.com/umma.
Each
Fund has been developed solely by the Adviser. The FTSE USA ETF is not in any
way connected to or sponsored, endorsed, sold or promoted by the London Stock
Exchange Group plc and its group undertakings (collectively, the “LSE Group”).
FTSE Russell is a trading name of certain of the LSE Group
companies.
All
rights in the FTSE Shariah USA Index vest in the relevant LSE Group company
which owns the FTSE Shariah USA Index. “FTSE®”
is a trade mark of the relevant LSE Group company and is used by any other LSE
Group company under license.
The
FTSE Shariah USA Index is calculated by or on behalf of FTSE International
Limited or its affiliate, agent or partner. The LSE Group does not accept any
liability whatsoever to any person arising out of (a) the use of, reliance on or
any error in the FTSE Shariah USA Index or (b) investment in or operation of the
FTSE USA ETF. The LSE Group makes no claim, prediction, warranty or
representation either as to the results to be obtained from the FTSE USA ETF or
the suitability of the FTSE Shariah USA Index for the purpose to which it is
being used by the Adviser.
The
Dow Jones Islamic Market International Titans 100 Index is a product of the
S&P Dow Jones Indices LLC and has been licensed for use by the Adviser.
Standard & Poor’s®
and S&P®
are registered trademarks of Standard & Poor’s Financial Services LLC
(“S&P”); Dow Jones®
is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and
these trademarks have been licensed for use by SPDJI and sublicensed for certain
purposes by the Adviser. The Dow Jones World ETF is not sponsored, endorsed,
sold or promoted by SPDJI, Dow Jones, S&P or their respective affiliates,
and none of such parties make any representation regarding the advisability of
investing in such product(s) nor do they have any liability for any errors,
omissions, or interruptions of the Dow Jones Islamic Market International Titans
100 Index.
Shares
are not sponsored, endorsed, or promoted by the Exchange. The Exchange makes no
representation or warranty, express or implied, to the owners of Shares or any
member of the public regarding the ability of a Fund to track the total return
performance of its respective Index or the ability of each Index identified
herein to track the performance of its constituent securities. The Exchange is
not responsible for, nor has it participated in, the determination of the
compilation or the calculation of the Indexes, nor in the determination of the
timing, prices, or quantities of Shares to be issued, nor in the determination
or calculation of the equation by which the Shares are redeemable. The Exchange
has no obligation or liability to owners of Shares in connection with the
administration, marketing, or trading of Shares.
The
Exchange does not guarantee the accuracy and/or the completeness of the Indexes
or the data included therein. The Exchange makes no warranty, express or
implied, as to results to be obtained by the Funds, owners of Shares, or any
other person or entity from the use of the Indexes or the data included therein.
The Exchange makes no express or implied warranties, and hereby expressly
disclaims all warranties of merchantability or fitness for a particular purpose
with respect to the Indexes or the data included therein. 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, the Exchange, and the Funds 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 a Fund particularly or
the ability of an Index to track general stock market performance. Each Fund and
the Adviser do not guarantee the accuracy, completeness, or performance of an
Index or the data included therein and shall have no liability in connection
with the Index or Index calculation. Each Index calculation agent maintains and
calculates the Index used by the respective Fund and shall have no liability for
any errors or omissions in calculating such Index.
The
following financial highlights table shows the financial performance for a
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 a Fund. The
total returns in the table represent the rate you would have earned or lost on
an investment in a Fund (assuming you reinvested all distributions). This
information has been audited by Cohen & Company, Ltd., the independent
registered public accounting firm of each Fund, whose report, along with each
Fund’s financial statements, is included in the Funds’ Annual
Report,
which is available upon request.
Wahed
FTSE USA Shariah ETF
For
a Share Outstanding Throughout Each Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended May 31, 2023 |
| Year
Ended May 31, 2022 |
| Year
Ended May 31, 2021 |
|
Period
Ended
May
31, 2020(1) |
|
Net
Asset Value, Beginning of Period |
$ |
38.50 |
|
| $ |
36.50 |
|
| $ |
26.00 |
|
| $ |
25.00 |
| |
|
|
|
|
|
|
|
| |
Income
(Loss) from investment operations: |
|
|
|
|
|
|
| |
Net
investment income(2) |
0.40 |
|
| 0.40 |
|
| 0.36 |
|
| 0.40 |
| |
Net
realized and unrealized gain on investments |
1.74 |
|
| 1.96 |
|
| 10.44 |
|
| 0.90 |
| |
Total
from investment operations |
2.14 |
|
| 2.36 |
|
| 10.80 |
|
| 1.30 |
| |
|
|
|
|
|
|
|
| |
Less
distributions paid: |
|
|
|
|
|
|
| |
From
net investment income |
(0.40) |
|
| (0.36) |
|
| (0.30) |
|
| (0.28) |
| |
From
net realized gains |
— |
|
| — |
|
| — |
|
| (0.02) |
| |
Total
distributions paid |
(0.40) |
|
| (0.36) |
|
| (0.30) |
|
| (0.30) |
| |
|
|
|
|
|
|
|
| |
Net
Asset Value, End of Period |
$ |
40.24 |
|
| $ |
38.50 |
|
| $ |
36.50 |
|
| $ |
26.00 |
| |
|
|
|
|
|
|
|
| |
Total
return, at NAV(3)(5) |
5.70 |
% |
| 6.43 |
% |
| 41.70 |
% |
| 5.30 |
% |
|
Total
return, at Market(4)(5) |
5.70 |
% |
| 6.50 |
% |
| 41.81 |
% |
| 5.39 |
% |
|
|
|
|
|
|
|
|
| |
Supplemental
Data and Ratios: |
|
|
|
|
|
|
| |
Net
assets, end of period (000’s) |
$ |
242,453 |
|
| $ |
167,486 |
|
| $ |
109,505 |
|
| $ |
32,506 |
| |
|
|
|
|
|
|
|
| |
Ratio
of expenses to average net assets(6) |
0.50 |
% |
| 0.50 |
% |
| 0.50 |
% |
| 0.50 |
% |
|
|
|
|
|
|
|
|
| |
Ratio
of net investment income to average net assets(6) |
1.10 |
% |
| 1.01 |
% |
| 1.08 |
% |
| 1.81 |
% |
|
|
|
|
|
|
|
|
| |
Portfolio
turnover rate
(5)(7) |
29 |
% |
| 16 |
% |
| 19 |
% |
| 15 |
% |
|
(1)The
Fund commenced operations on July 15, 2019.
(2)Per
share net investment income was calculated using average shares
outstanding.
(3)Net
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.
(4)Market
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.
(5)Not
annualized for periods less than one year.
(6)Annualized
for periods less than one year.
(7)Excludes
in-kind transactions associated with creations and redemptions of the Fund.
Wahed
Dow Jones Islamic World ETF
For
a Share Outstanding Throughout Each Period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended May 31, 2023 |
|
Period
Ended
May
31, 2022(1) |
|
Net
Asset Value, Beginning of Period |
$ |
20.70 |
|
| $ |
25.00 |
| |
|
|
|
| |
Income
(Loss) from investment operations: |
|
|
| |
Net
investment income(2) |
0.31 |
|
| 0.25 |
| |
Net
realized and unrealized gain (loss) on investments and foreign
currency |
0.30 |
|
| (4.44) |
| |
Total
from investment operations |
0.61 |
|
| (4.19) |
| |
|
|
|
| |
Less
distributions paid: |
|
|
| |
From
net investment income |
(0.34) |
|
| (0.13) |
| |
|
|
|
| |
Total
distributions paid |
(0.34) |
|
| (0.13) |
| |
|
|
|
| |
Capital
Share Transactions: |
|
|
| |
Transaction
fees |
0.00 |
(8) |
$ |
0.02 |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
20.97 |
|
| $ |
20.70 |
| |
|
|
|
| |
Total
return, at NAV(3)(5) |
3.20 |
% |
| -16.76 |
% |
|
Total
return, at Market(4)(5) |
4.02 |
% |
| -16.62 |
% |
|
|
|
|
| |
Supplemental
Data and Ratios: |
|
|
| |
Net
assets, end of period (000’s) |
$ |
42,981 |
|
| $ |
32,077 |
| |
|
|
|
| |
Ratio
of expenses to average net assets(6) |
0.65 |
% |
| 0.65 |
% |
|
|
|
|
| |
Ratio
of net investment income to average net assets(6) |
1.56 |
% |
| 2.91 |
% |
|
|
|
|
| |
Portfolio
turnover rate
(5)(7) |
11 |
% |
| 8 |
% |
|
(1)The
Fund commenced operations on January 7, 2022.
(2)Per
share net investment income was calculated using average shares
outstanding.
(3)Net
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.
(4)Market
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.
(5)Not
annualized for periods less than one year.
(6)Annualized
for periods less than one year.
(7)Excludes
in-kind transactions associated with creations of the Fund.
(8)Less
than $0.005.
Wahed
FTSE USA Shariah ETF
Wahed
Dow Jones Islamic World ETF
|
|
|
|
|
|
|
|
|
|
| |
Adviser |
Wahed
Invest LLC
12
East 49th
Street, 11th
Floor
New
York, New York 10017 |
Transfer
Agent, Index Receipt Agent, and Administrator |
U.S.
Bancorp Fund Services, LLC
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Index
Provider and Calculation Agent |
FTSE
International Limited
10
Paternoster Square
London
EC4M 7LS
United
Kingdom |
Index
Provider and Calculation Agent |
S&P
Dow Jones Indices LLC
55
Water Street
New
York, New York 10041 |
Custodian |
U.S.
Bank National Association
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212 |
Distributor |
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202 |
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 Funds in the following
documents:
Statement
of Additional Information:
The SAI provides additional details about the investments of each Fund and
certain other additional information. The SAI is on file with the SEC and is
incorporated by reference into this Prospectus. It is legally considered a part
of this Prospectus.
Annual/Semi-Annual
Reports:
Additional information about each Fund’s investments is available in the Funds’
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 a Fund’s performance.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Funds by contacting the Funds at c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or by
calling 1-855-967-4747.
Shareholder
reports and other information about the Funds are also available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s website at
http://www.sec.gov;
•Free
of charge from each Fund’s Internet web site at https://www.wahed.com/hlal or
https://www.wahed.com/umma; or
(SEC
Investment Company Act File No. 811-23226)