ck0001683471-20220531
PROSPECTUS
Wahed FTSE USA Shariah ETF
(HLAL)
Wahed Dow Jones Islamic World ETF
(UMMA)
Listed
on The NASDAQ Stock Market LLC
September 30,
2022
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.
TABLE
OF CONTENTS
WAHED
FTSE USA SHARIAH ETF – FUND SUMMARY
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, 2022, the Fund’s portfolio turnover rate was
16% of the average value of its
portfolio.
The
Fund uses a “passive management” (or indexing) approach to seek 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, 2022, the Index had 233
constituents, and the four largest stocks and their weightings in the Index were
Apple Inc. (15.61%), Microsoft Corp. (12.70%), Tesla Inc. (4.55%), and Johnson
& Johnson (2.76%).
Principal Investment Risks
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 Fund 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. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (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 Shares.
•Market
Capitalization Risk
◦Large-Capitalization
Investing.
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.
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 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.
Performance
The following
performance information indicates some of the risks of investing in the
Fund. The bar chart shows the Fund’s performance for the most
recent 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 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 hlal.wahedinvest.com.
Calendar Year Total
Returns
The calendar year-to-date total return of the
Fund as of June 30, 2022 was
-18.53%. 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, 2021)
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Wahed
FTSE USA Shariah ETF |
1-Year |
Since
Inception
(7/15/2019) |
Return Before
Taxes |
28.59% |
26.27% |
Return After Taxes on
Distributions |
28.33% |
25.92% |
Return After Taxes on Distributions and
Sale of Shares |
17.08% |
20.67% |
FTSE
Shariah USA Index
(reflects no deduction for
fees, expenses, or taxes) |
29.37% |
27.07% |
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.
Portfolio
Management
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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 |
Purchase
and Sale of Shares
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 hlal.wahedinvest.com.
Tax
Information
The
Fund’s distributions are generally taxable as ordinary income, qualified
dividend income, or capital gains (or a combination), unless your investment is
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.
Financial
Intermediary Compensation
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.
WAHED
DOW JONES ISLAMIC WORLD ETF
–
FUND SUMMARY
Investment Objective
The Wahed Dow Jones Islamic
World ETF (“Dow Jones World ETF” or the “Fund”) seeks long-term capital
appreciation.
Fees and Expenses of the
Fund
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 |
Portfolio Turnover
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 period January
7, 2022 (commencement of operations) through May 31, 2022, the Fund’s
portfolio turnover rate was 8% of the average value of its
portfolio.
Principal Investment Strategies
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, 2022, the Index was
composed of 102 constituents, representing investments in companies domiciled in
20 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 Fund 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. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (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 domestic ETFs.
◦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 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 is also 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
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 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.
•Market
Capitalization Risk.
◦Large-Capitalization
Investing.
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.
The securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large capitalization stocks or the stock market
as a whole.
◦Small-Capitalization
Investing.
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
large- or mid-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large- or mid-capitalization stocks or the
stock market as a whole. There is typically less publicly available information
concerning smaller-capitalization companies than for larger, more established
companies.
•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 umma.wahedinvest.com.
|
|
|
|
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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 January
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 umma.wahedinvest.com.
The
Fund’s distributions are generally taxable as ordinary income, qualified
dividend income, or capital gains (or a combination), unless your investment is
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.
ADDITIONAL
INFORMATION ABOUT THE INDEXES
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, hlal.wahedinvest.com, 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, umma.wahedinvest.com, 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.
ADDITIONAL
INFORMATION ABOUT THE FUNDS
Investment
Objectives
Each
Fund’s investment objective has been adopted as a non-fundamental investment
policy and may be changed by the Fund’s 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.
Principal
Investment Risks
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 above, 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 a 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 may also reduce the value of a country’s
currency. Government monetary policies and the buying or selling of currency by
a country’s government may also 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 a Fund’s other
service providers, market makers, APs, a Fund’s primary listing exchange, or the
issuers of securities in which such Fund invests have the ability to disrupt and
negatively affect the Fund’s business operations, including the ability to
purchase and sell Fund 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 a 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 Fund Shares, and other data integral to
the functioning of a Fund inaccessible or inaccurate or incomplete. A Fund may
also incur substantial costs for cybersecurity risk management in order 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.
The
respiratory illness COVID-19 has spread globally for over two 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, a reduction in 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, a failure to achieve
herd immunity, 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.
•ETF
Risks.
Each Fund is an ETF, and, as a result of the 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. To the extent either of the following events
occur, Shares may trade at a material discount to NAV and possibly face
delisting: (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 is also 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
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 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
COVID-19 pandemic has significantly impacted economies and markets around the
world, including the United States. The pandemic has resulted in a wide range of
social and economic disruptions, including closed borders, voluntary or
compelled quarantines of large populations, stressed healthcare systems, reduced
or prohibited domestic or international travel, supply chain disruptions, and
so-called “stay-at-home” orders throughout much of the United States and many
other countries. Financial markets have experienced extreme volatility and
severe losses, and trading in many instruments has been disrupted. Some sectors
of the economy and individual issuers have experienced particularly large
losses. Such disruptions may continue for an extended period of time or reoccur
in the future to a similar or greater extent. Liquidity for many instruments has
been greatly reduced for periods of time. In response to these disruptions, the
U.S. government and the Federal Reserve have taken extraordinary actions to
support the domestic economy and financial 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.
•Market
Capitalization Risk
◦Large-Capitalization
Investing.
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.
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 medium capitalization companies have limited product lines,
markets, financial resources, and management personnel and tend to concentrate
on fewer geographical markets relative to large-capitalization companies.
◦Small-Capitalization
Investing (Dow Jones World ETF only).
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
larger-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Some small capitalization companies have limited product
lines, markets, and financial and managerial resources and tend to concentrate
on fewer geographical markets relative to larger capitalization companies. There
is typically less publicly available information concerning
smaller-capitalization companies than for larger, more established companies.
Small-capitalization companies also may be particularly sensitive to changes in
interest rates, government regulation, borrowing costs and
earnings.
• 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.
PORTFOLIO
HOLDINGS INFORMATION
Information
about the FTSE USA ETF’s daily portfolio holdings is available at
hlal.wahedinvest.com. Information about the Dow Jones World ETF’s daily
portfolio holdings is available at umma.wahedinvest.com. 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”).
MANAGEMENT
Investment
Adviser
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 each Fund except the fee payable to the Adviser under the Advisory
Agreement, interest charges on any borrowings, dividends, and other expenses on
securities sold short, taxes, brokerage commissions and other expenses incurred
in placing orders for the purchase and sale of securities and other investment
instruments, acquired fund fees and expenses, accrued deferred tax liability,
extraordinary expenses, and distribution fees and expenses paid by the Trust
under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act.
The
basis for the Board’s approval of the continuation of the Advisory Agreement for
the FTSE USA ETF and the 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.
Portfolio
Manager
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
Funds’ 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.
Shariah
Adviser
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 (the “Distributor”) is 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 N. 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.
HOW
TO BUY AND SELL SHARES
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.
Book
Entry
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.
Frequent
Purchases and Redemptions of Shares
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 with 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. In addition, the Funds and the Adviser reserve the right to reject
any purchase order at their discretion.
Determination
of Net Asset Value
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. In particular,
a Fund generally values equity securities traded on any recognized U.S. or
non-U.S. exchange at the last sale price or official closing price on the
exchange or system on which they are principally traded. If such information is
not available for a security held by a Fund or is determined to be unreliable,
the security will be valued at fair value estimates under guidelines established
by the Board (as described below).
Fair
Value Pricing
The
Board has adopted valuation policies and procedures pursuant to which it has
designated the Adviser to determine the fair value of a Fund’s investments,
subject to the Board’s oversight, when market prices for those investments are
not “readily available,” including when they are determined by the Adviser to be
unreliable. Such circumstances may arise when: (i) a security has been de-listed
or its trading is halted or suspended; (ii) a security’s primary pricing source
is unable or unwilling to provide a price; (iii) a security’s primary trading
market is closed during regular market hours; or (iv) a security’s value has
been materially affected by events occurring after the close of the security’s
primary trading market and before a Fund calculates its NAV. Generally, when
determining the fair value of a Fund investment, 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 security, general and/or specific market conditions and
the specific facts giving rise to the need to fair value the security. 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.
Investments
by Registered Investment Companies
Section
12(d)(1) of the 1940 Act restricts 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 the Funds.
DIVIDENDS,
DISTRIBUTIONS, AND TAXES
Dividends
and Distributions
Each
Fund intends to pay out dividends, 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.
Taxes
The
following discussion is a summary of some 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”). 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).
Taxes
on Distributions
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.
Taxes
When Shares Are Sold on the Exchange
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 Internal Revenue Code of 1986, as
amended (the “Code”). The difference between the selling price and the cost
basis of Shares generally determines the amount of the capital gain or loss
realized on the sale or exchange of Shares. Contact the broker through whom you
purchased your Shares to obtain information with respect to the available cost
basis reporting methods and elections for your account.
Taxes
on Purchases and Redemptions of Creation Units
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.
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.
DISTRIBUTION
PLAN
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.
PREMIUM/DISCOUNT
INFORMATION
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
hlal.wahedinvest.com and on the Dow Jones World ETF’s website at
umma.wahedinvest.com.
ADDITIONAL
NOTICES
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.
FINANCIAL
HIGHLIGHTS
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, 2022 |
| Year
Ended May 31, 2021 |
|
Period
Ended
May
31, 2020(1) |
|
Net
Asset Value, Beginning of Period |
$ |
36.50 |
|
| $ |
26.00 |
|
| $ |
25.00 |
| |
|
|
|
|
|
| |
Income
(Loss) from Investment operations: |
|
|
|
|
| |
Net
investment income(2) |
0.40 |
|
| 0.36 |
|
| 0.40 |
| |
Net
realized and unrealized gain on investments |
1.96 |
|
| 10.44 |
|
| 0.90 |
| |
Total
from investment operations |
2.36 |
|
| 10.80 |
|
| 1.30 |
| |
|
|
|
|
|
| |
Less
distributions paid: |
|
|
|
|
| |
From
net investment income |
(0.36) |
|
| (0.30) |
|
| (0.28) |
| |
From
net realized gains |
— |
|
| — |
|
| (0.02) |
| |
Total
distributions paid |
(0.36) |
|
| (0.30) |
|
| (0.30) |
| |
|
|
|
|
|
| |
Net
Asset Value, End of Period |
$ |
38.50 |
|
| $ |
36.50 |
|
| $ |
26.00 |
| |
|
|
|
|
|
| |
Total
return, at NAV(3)(4) |
6.43 |
% |
| 41.70 |
% |
| 5.30 |
% |
|
Total
return, at Market(3)(4) |
6.50 |
% |
| 41.81 |
% |
| 5.39 |
% |
|
|
|
|
|
|
| |
Supplemental
Data and Ratios: |
|
|
|
|
| |
Net
assets, end of period (000’s) |
$ |
167,486 |
|
| $ |
109,505 |
|
| $ |
32,506 |
| |
|
|
|
|
|
| |
Ratio
of expenses to average net assets(5) |
0.50 |
% |
| 0.50 |
% |
| 0.50 |
% |
|
|
|
|
|
|
| |
Ratio
of net investment income to average net assets(5) |
1.01 |
% |
| 1.08 |
% |
| 1.81 |
% |
|
|
|
|
|
|
| |
Portfolio
turnover rate
(4)(6) |
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)Total
return in the table represents the rate that the investor would have earned or
lost on an investment in the Fund, assuming reinvestment of
distributions.
(4)Not
annualized for periods less than one year.
(5)Annualized
for periods less than one year.
(6)Excludes
in-kind transactions associated with creations and redemptions of the Fund.
Wahed
Dow Jones Islamic World ETF
For
a Share Outstanding Throughout the Period
|
|
|
|
|
|
|
|
|
| |
|
|
|
Period
Ended
May
31, 2022(1) |
|
Net
Asset Value, Beginning of Period |
|
| $ |
25.00 |
| |
|
|
|
| |
Income
(Loss) from Investment operations: |
|
|
| |
Net
investment income(2) |
|
| 0.25 |
| |
Net
realized and unrealized loss on investments and foreign currency |
|
| (4.44) |
| |
Total
from investment operations |
|
| (4.19) |
| |
|
|
|
| |
Less
distributions paid: |
|
|
| |
From
net investment income |
|
| (0.13) |
| |
|
|
|
| |
Total
distributions paid |
|
| (0.13) |
| |
|
|
|
| |
Capital
Share Transactions: |
|
|
| |
Transaction
fees |
|
| $ |
0.02 |
| |
|
|
|
| |
Net
Asset Value, End of Period |
|
| $ |
20.70 |
| |
|
|
|
| |
Total
return, at NAV(3)(4) |
|
| -16.76 |
% |
|
Total
return, at Market(3)(4) |
|
| -16.62 |
% |
|
|
|
|
| |
Supplemental
Data and Ratios: |
|
|
| |
Net
assets, end of period (000’s) |
|
| $ |
32,077 |
| |
|
|
|
| |
Ratio
of expenses to average net assets(5) |
|
| 0.65 |
% |
|
|
|
|
| |
Ratio
of net investment income to average net assets(5) |
|
| 2.91 |
% |
|
|
|
|
| |
Portfolio
turnover rate
(4)(6) |
|
| 8 |
% |
|
(1)The
Fund commenced operations on January 7, 2022.
(2)Per
share net investment income was calculated using average shares
outstanding.
(3)Total
return in the table represents the rate that the investor would have earned or
lost on an investment in the Fund, assuming reinvestment of
distributions.
(4)Not
annualized for periods less than one year.
(5)Annualized
for periods less than one year.
(6)Excludes
in-kind transactions associated with creations of the Fund.
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 Funds’ 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 hlal.wahedinvest.com or
umma.wahedinvest.com; or
(SEC
Investment Company Act File No. 811-23226)