Subversive Metaverse ETF
(PUNK)
Listed
on Cboe BZX Exchange, Inc.
Prospectus
January
27, 2023
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
of these securities or determined if this Prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
Subversive
Metaverse ETF
A
series of Series Portfolios Trust (the
“Trust”)
Subversive
Metaverse ETF
Investment Objective
The Subversive Metaverse ETF
(the “Fund” or the “Metaverse Fund”) seeks to achieve 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. 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.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.75% |
Distribution
and Service (Rule 12b-1) Fees |
0.00% |
Other
Expenses(1) |
0.00% |
Total
Annual Fund Operating Expenses |
0.75% |
(1)“Other Expenses” are estimated
for the Fund’s current fiscal year.
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 hold or sell 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. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
| |
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$77 |
$240 |
$417 |
$930 |
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 Fund shares are held in a taxable
account. These costs, which are not reflected in the annual fund operating
expenses or in the Example, affect the Fund’s performance. During the Fund’s
most recent fiscal period ended September 30, 2022, the Fund’s portfolio
turnover rate was 32% 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 globally-listed equity securities of
companies that provide services and products that support the infrastructure and
applications of the Metaverse (“Metaverse Companies”). “Metaverse” is a term
used to describe the next generation of the Internet, which has the potential to
allow creators to build the next chapter of human interaction through immersive
experiences in three-dimensional virtual spaces. Under normal market conditions,
the Fund invests at least 80% of its net assets (plus any borrowings for
investment purposes) in securities of Metaverse Companies. The Fund invests in
securities of globally-listed companies with a market capitalization, at the
time of investment, of at least $250 million and less than $1 trillion.
Securities
eligible for inclusion in the Fund’s investable universe include publicly listed
equity securities of U.S. and foreign (including emerging markets) issuers. The
Fund’s investments in foreign securities may include American
Depositary
Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), International Depositary
Receipts (“IDRs”), U.S. dollar denominated foreign securities, direct foreign
securities purchased on a foreign exchange, and securities of companies
incorporated outside the United States.
A
committee of Metaverse experts (the “Metaverse Committee”) composed of external
subject matter experts will analyze the Metaverse, the adoption by the public of
technologies enabling access to the Metaverse and the creation of products to be
used in the Metaverse. Metaverse Companies selected for inclusion in the Fund’s
portfolio will be engaged in activities that fall into one or more of the
following seven layers of the Metaverse identified by the Metaverse Committee,
each of which are described further below: experience, discovery, creator
economy, spatial computing, decentralization, human interface and
infrastructure.
•Layer
1: Experience
– The Metaverse is about the incorporation of physical artifacts, space,
distance and objects into the digital world. Games are expected to evolve to
incorporate more forms of entertainment, such as live music performances and
esports (electronic sports), and will drive online and social engagement.
Companies in this layer will focus on the creation of games, social networks,
esports, media and shopping.
•Layer
2: Discovery
– This layer is about the introduction of potential users to new experiences.
Communities and social interaction have the potential to drive users to the
Metaverse. Companies in this space will focus on ad networks, social networks
and curation (where an expert or review process selects what is included in a
directory of software that may be used).
•Layer
3: Creator Economy
– Given advances in technology, we are in a creator era where now designers and
creators do not necessarily need to know how to code. Companies are building the
tools, templates and marketplaces that allow anyone to launch a website,
business, and software applications. Companies in this layer will focus on
design tools, asset markets, workflow and commerce.
•Layer
4: Spatial Computing
– The goal of companies in this layer is to dissolve the layer between the
physical world and virtual world. This includes computing accurate maps and
details of physical space, and also adding computation into everyday objects
(such as home electronics or vehicles). The key technologies that will build the
Spatial Computing layer of the Metaverse are: 3D engines, mapping and
interpretation, voice and gesture recognition, data integration and next
generation user interfaces.
•Layer
5: Decentralization
– Blockchain technology will free financial assets from centralized control and
custody, for example, through decentralized finance and non-fungible tokens,
which all rely on blockchains. A wave of innovation around decentralized markets
could drive adoption and application for game assets (for example, characters,
objects, sound effects, maps, and environments found within a video game and
that are often purchased withing the game itself).
•Layer
6: Human Interface
– The vast majority of the workforce relies on some level of technology to
provide output, goods and services. Companies in this layer will focus on the
hardware and technologies, such as virtual reality and augmented reality
headsets, that connect the human body and mind to the Metaverse.
•Layer
7: Infrastructure
– The Infrastructure layer includes the technology that enables our devices and
connects them to each other and the network. The companies in this layer will
focus on 5G, wifi, cloud, and semiconductors.
Once
Metaverse Companies are identified across these layers, Subversive Capital
Advisor LLC (the “Adviser”), the Fund’s investment adviser, will apply a
Subversive Metaverse Ranking (“SMR”) to each company based on the level of focus
and commitment to developing the Metaverse. Applying an SMR can be highly
subjective; however, the Adviser and the Metaverse Committee rely on publicly
available information where available, including shareholder reports of issuers
or the Bloomberg Terminal. Key drivers of applying an SMR may include the
percentage of a company’s revenue, workforce, and future capital commitments
associated with the Metaverse.
In
selecting investments for the Fund, the Adviser applies a top-down approach,
utilizing primarily quantitative factors, but also considering qualitative
factors. The Adviser gives greater weightings to companies whose primary
business
models and growth prospects are
dedicated to building the infrastructure and/or the applications of the
Metaverse and less weightings to companies with limited exposure and business
segments focused on the Metaverse. In addition, the Adviser may also include
companies that may not have made any public announcements yet regarding the
Metaverse, but has a portfolio of assets and services that would be highly
attractive in terms of building one or more of the seven layers of the
Metaverse.
The Fund may also engage in short sales of
securities that the Adviser expects to underperform the market. In a short sale
transaction, the Fund will borrow a security and sell it at the current market
price in the anticipation of buying the security at a lower price prior to the
time the Fund is obligated to return the security to the
owner.
Principal Risks
As
with any fund, there are risks to investing. An investment in the Fund is not a
deposit of a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental agency.
In
addition to possibly not achieving your investment goals,
you could lose all or a portion
of your investment in the Fund over short or even long periods of
time. The principal risks of
investing in the Fund are summarized below.
Metaverse
Companies Risk.
The Fund invests primarily in the equity securities of Metaverse Companies and,
as such, is particularly sensitive to risks to those types of companies. These
risks include, but are not limited to, small or limited markets for such
securities, changes in business cycles, world economic growth, technological
progress, rapid obsolescence, and government regulation. Securities of Metaverse
Companies, especially smaller, start-up companies, tend to be more volatile than
securities of companies that do not rely heavily on technology. Rapid change to
technologies that affect a company’s products could have a material adverse
effect on such company’s operating results. Metaverse Companies may rely on a
combination of patents, copyrights, trademarks and trade secret laws to
establish and protect their proprietary rights in their products and
technologies. There can be no assurance that the steps taken by these companies
to protect their proprietary rights will be adequate to prevent the
misappropriation of their technology or that competitors will not independently
develop technologies that are substantially equivalent or superior to such
companies’ technology.
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 only a limited number of institutional investors (known as “Authorized
Participants” or “APs”) that are authorized to purchase and redeem shares
directly from the Fund. 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 of the Fund may trade at a material discount
to the Fund’s net asset value (“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. This may lead to the widening of bid/ask spreads quoted throughout
the day.
•Costs
of Buying or Selling Shares. Due
to the costs of buying or selling shares of the Fund, 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. As
with all ETFs, shares of the Fund may be bought and sold in the secondary market
at market prices. Although it is expected that the market price of shares of the
Fund 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. This may lead to the widening of bid/ask spreads
quoted throughout the day.
•Trading.
Although shares of the Fund are listed for trading on the Cboe BZX Exchange,
Inc., (the “Exchange”), there can be no assurance that an active trading market
for shares will develop or be maintained or that shares will trade with any
volume, or at all, on any stock exchange. In stressed market conditions, the
market for shares of the Fund may become less liquid in response to
deteriorating liquidity in the markets for the Fund’s underlying portfolio
holdings. This adverse effect on liquidity for the Fund’s shares, in turn, can
lead to differences between the market price of the Fund’s shares and the
underlying value of those shares. In addition, trading in Fund shares may be
halted due to market conditions or for reasons that, in the view of the
Exchange, make trading in shares of the Fund inadvisable. This may lead to the
widening of bid/ask spreads quoted throughout the day.
New
Adviser Risk. The
Adviser is a recently registered investment adviser and has limited experience
managing a registered investment company. As a result, there is no long-term
track record against which an investor may judge the Adviser and it is possible
the Adviser may not achieve the Fund’s intended investment objective. As a newer
investment adviser, the Adviser may experience resource and capacity
constraints.
Newer
Fund Risk.
As of the date of this Prospectus, the Fund has a limited operating history and
may not attract sufficient assets to achieve or maximize investment and
operational efficiencies.
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.
Growth
Investing Style Risk. Growth
companies are companies whose earnings and stock prices are expected to grow at
a faster rate than the overall market. If the Portfolio Managers incorrectly
assesses a company’s prospects for growth or how other investors will value the
company’s growth, then the price of the company’s stock may decrease, or may not
increase to the level anticipated by the sub-adviser. In addition, growth stocks
may be more volatile than other stocks because they are more sensitive to
investors’ perceptions of the issuing company’s growth potential. Also, the
growth investing style may over time go in and out of favor. At times when the
investing style used by the Fund is out of favor, the Fund may underperform
other equity funds that use different investing styles.
Consumer
Discretionary Sector Risk.
Consumer discretionary companies are companies that provide non-essential goods
and services, such as retailers, media companies and consumer services. These
companies manufacture products and provide discretionary services directly to
the consumer, and the success of these companies tied closely to the performance
of the overall domestic and international economy, interest rates, competition
and consumer confidence.
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.
Large-Capitalization
Companies Risk.
Larger, more established companies may be unable to respond quickly to new
competitive challenges such as changes in technology and consumer tastes. Larger
companies also may not be able to attain the high growth rates of successful
smaller companies.
Small-
and Mid-Capitalization Companies Risk. The
Fund may invest in the securities of small- and mid-capitalization companies. As
a result, the Fund may be more volatile than funds that invest in larger, more
established companies. The securities of small-and mid-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. Small- and mid-capitalization companies may be particularly
sensitive to changes in interest rates, government regulation, borrowing costs
and earnings.
Foreign
Investments and Emerging Markets Risk. Securities
of non-U.S. issuers, including those located in foreign countries, may involve
special risks caused by foreign political, social and economic factors,
including exposure to currency fluctuations, less liquidity, less developed and
less efficient trading markets, political instability and less
developed
legal and auditing standards. These risks are heightened for investments in
issuers organized or operating in emerging market countries.
Depositary
Receipt Risk.
ADRs, GDRs, and IDRs are certificates evidencing ownership of shares of a
foreign issuer and are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. However, they
continue to be subject to many of the risks associated with investing directly
in foreign securities. These risks include the social, political and economic
risks of the underlying issuer’s country, as well as in the case of depositary
receipts traded on non-U.S. markets, exchange risk.
Management
Risk.
The
Fund is actively-managed and may not meet its investment objective based on the
Adviser’s success or failure to implement investment strategies for the Fund.
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
Events Risk. One
or more markets in which the Fund invests may go down in value, including the
possibility that the markets will go down sharply and unpredictably. This may be
due to numerous factors, including interest rates, the outlook for corporate
profits, the health of the national and world economies, national and world
social and political events, and the fluctuation of other stock markets around
the world. The global pandemic outbreak of an infectious respiratory illness
caused by a novel coronavirus known as COVID-19 and subsequent efforts to
contain its spread have resulted and may continue to result in substantial
market volatility and global business disruption, affecting the global economy
and the financial health of individual companies in significant and unforeseen
ways. In addition, the Fund may face challenges with respect to its day-to-day
operations if key personnel of the Adviser or other service providers are
unavailable due to quarantines, restrictions on travel, or other restrictions
imposed by state or federal regulatory authorities. The duration and future
impact of COVID-19 are currently unknown, which may exacerbate the other risks
that apply to the Fund and could adversely affect the value and liquidity of the
Fund’s investments, impair the Fund’s ability to satisfy AP transaction
requests, and negatively affect the Fund’s performance.
Short
Sales Risk. Selling
securities short creates the risk of losing an amount greater than the amount
invested. Short selling is subject to the theoretically unlimited risk of loss
because there is no limit on how much the price of a stock may appreciate before
the short position is closed out. A short sale may result in a sudden and
substantial loss if, for example, an acquisition proposal is made for the
subject company at a substantial premium over the market
price.
Performance
Performance information will be available
once the Fund has at least one calendar year of performance.
The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future and does not guarantee future results.
Updated performance information will be available on the Fund’s website at
www.subversive.com/etfs
or by calling the Fund toll-free at 1-800-617-0004.
Management
Investment
Adviser
Subversive
Capital Advisor LLC is the Fund’s investment adviser.
Portfolio
Managers
Michael
Auerbach, Founder and Chief Executive Officer of Subversive Capital and
Christian Cooper, CFA, FRM, Portfolio Manager of Subversive Capital’s ETF
portfolios, are the portfolio managers responsible for the day-to-day management
of the Fund and have managed the Fund since its inception in January
2022.
Purchase
and Sale of Fund Shares
Shares
of the Fund are listed on the Exchange, and individual shares may only be bought
and sold in the secondary market through brokers at market prices, rather than
NAV. Because shares of the Fund trade at market prices rather than NAV, the
Fund’s shares may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund issues and redeems its shares at NAV only in large specified numbers of
shares 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.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase shares of the Fund (bid) and the lowest price a
seller is willing to accept for shares of the Fund (ask) when buying or selling
shares in the secondary market (the “bid-ask spread”). Recent information about
the Fund, including its NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at
www.subversive.com/etfs.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an 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.
Payments
to Broker-Dealers and Other Financial Intermediaries
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 Fund |
Investment
Objective
The
Fund’s investment objective is long-term capital appreciation. The Fund’s
investment objective is not fundamental and may be changed by the Board of
Trustees of the Trust (the “Board”) without shareholder approval upon 60 days’
prior written notice to Fund shareholders.
Principal
Investment Strategies
Please
see the Fund’s SAI for additional information about the securities and
investment strategies described in this Prospectus and about additional
securities and investment strategies that may be used by the Fund.
Temporary
Defensive Positions. The
Fund may, from time to time, take temporary defensive positions that are
inconsistent with the Fund’s principal investment strategies in an attempt to
respond to adverse or unstable market, economic, political, or other conditions.
During such times, a Fund may hold up to 100% of its portfolio in cash or cash
equivalent positions. When a Fund take a temporary defensive position, the Fund
may not be able to pursue its investment objectives.
Principal
Risks
Before
investing in a Fund, you should carefully consider your own investment goals,
the amount of time you are willing to leave your money invested, and the amount
of risk you are willing to take. Remember that, in addition to possibly not
achieving your investment goals, you
could lose all or a portion of your investment in a Fund.
The principal risks of the Fund have been previously identified and are
described below.
Cash
Transactions Risk.
Unlike
many ETFs, the Fund may issue and redeem entirely in cash or partially in cash.
As a result, an investment in the Fund may be less tax-efficient than an
investment in an ETF that distributes portfolio securities in-kind. If a Fund
effects a portion of redemptions for cash, such Fund may be required to sell
portfolio securities to obtain the cash needed to distribute the redemption
proceeds. Such sales may cause the applicable Fund to incur transaction costs.
The applicable Fund may recognize gains on these sales it might not otherwise
have recognized if it were to distribute portfolio securities in-kind, or to
recognize the gain sooner than would otherwise be required.
Consumer
Discretionary Sector Risk.
Consumer discretionary companies are companies that provide non-essential goods
and services, such as retailers, media companies and consumer services. These
companies manufacture products and provide discretionary services directly to
the consumer, and the success of these companies tied closely to the performance
of the overall domestic and international economy, interest rates, competition
and consumer confidence.
Cybersecurity
Risk.
Cybersecurity incidents may allow an unauthorized party to gain access to the
Fund assets, customer data (including private shareholder information), or
proprietary information, or cause the Fund, the Adviser (defined below), the
Sub-Adviser and/or other service providers (including custodians, transfer
agents and financial intermediaries) to suffer data breaches or data corruption.
Additionally, cybersecurity failures or breaches of the electronic systems of
the Fund, the Adviser, the Sub-Adviser or the Fund’s other service providers,
market makers, Authorized Participants or the issuers of securities in which the
Fund’s invest have the ability to cause disruptions and negatively impact the
Fund’s business operations, potentially resulting in financial losses to the
Fund and its shareholders. In an extreme case, a shareholder’s ability to redeem
Fund shares may be affected.
Depositary
Receipt Risk.
The Fund’s investments
in foreign securities may include ADRs, GDRs and IDRs.
Depositary receipts, including ADRs, GDRs
and IDRs,
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.
Equity
Market Risk.
Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. These investor perceptions are based on various and
unpredictable factors including: expectations regarding government, economic,
monetary and fiscal policies; inflation and interest rates; economic expansion
or contraction; and global or regional political, economic and banking crises.
If you held common stock, or common stock equivalents, of any given issuer, you
would generally be exposed to greater risk than if you held preferred stocks and
debt obligations of the issuer because common stockholders, or holders of
equivalent interests, generally have inferior rights to receive payments from
issuers in comparison with the rights of preferred stockholders, bondholders,
and other creditors of such issuers.
ETF
Risks.
The
Fund
is an ETF, and, as a result of its structure, it is exposed to the following
risks:
•Authorized
Participants, Market Makers, and Liquidity Providers Concentration Risk.
The
Fund has only a limited number of institutional investors 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 of the Fund may trade at a material discount to the Fund’s 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. This may lead to the widening
of bid/ask spreads quoted throughout the day.
•Costs
of Buying or Selling Shares. Investors
buying or selling shares of the Fund 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 of the Fund. In addition, secondary market investors will also incur
the cost of the difference between the price at which an investor is willing to
buy shares of the Fund (the “bid” price) and the price at which an investor is
willing to sell shares of the Fund (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 of the Fund based on trading volume and
market liquidity, and is generally lower if the Fund’s shares have more trading
volume and market liquidity and higher if Fund’s shares have little trading
volume and market liquidity. Further, a relatively small investor base in the
Fund, asset swings in the Fund and/or increased market volatility may cause
increased bid/ask spreads. Due to the costs of buying or selling shares of the
Fund, including bid/ask spreads, frequent trading of the Fund’s shares may
significantly reduce investment results and an investment in Fund shares may not
be advisable for investors who anticipate regularly making small
investments.
•Shares
May Trade at Prices Other Than NAV. As
with all ETFs, shares of the Fund may be bought and sold in the secondary market
at market prices. Although it is expected that the market price of shares of the
Fund 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. The market price of shares of the Fund 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 of the Fund. In times of severe market
disruption, the bid/ask spread can increase significantly. At those times,
shares of the Fund will 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. This
may lead to the widening of bid/ask spreads quoted throughout the
day.
•Trading.
Although
shares of the Fund 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 of the Fund 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 of the Fund when extraordinary volatility causes sudden, significant
swings in the market price of shares of the Fund. There can be no assurance that
shares of the Fund will trade with any volume, or at all, on any stock exchange.
In stressed market conditions, the market for the Fund’s shares may become less
liquid in response to deteriorating liquidity in the markets for the Fund’s
underlying portfolio holdings. These factors, among others, may lead to the
Fund’s shares trading at a premium or discount to NAV. This may lead to the
widening of bid/ask spreads quoted throughout the day.
•Early
Close/Trading Halt.
An exchange or market may close early or issue trading halts on specific
securities or financial instruments. The ability to trade certain securities or
financial instruments may be restricted, which may disrupt the Fund’s creation
and redemption process, potentially affect the price at which the Fund’s shares
trade in the secondary market, and/or result in the Fund being unable to trade
certain securities or financial instruments. In these circumstances, the Fund
may be unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Foreign
Investments and Emerging Markets Risk. Securities
of non-U.S. issuers, including those located in foreign countries, may involve
special risks caused by foreign political, social and economic factors,
including exposure to currency fluctuations, less liquidity, less developed and
less efficient trading markets, political instability and less developed legal
and auditing standards. These risks are heightened for investments in issuers
organized or operating in emerging market countries.
Growth
Investing Style Risk. Growth
companies are companies whose earnings and stock prices are expected to grow at
a faster rate than the overall market. If the portfolio managers incorrectly
assesses a company’s prospects for growth or how other investors will value the
company’s growth, then the price of the company’s stock may decrease, or may not
increase to the level anticipated by the portfolio manager. Growth companies are
often newer or smaller companies, or established companies that may be entering
a growth cycle in their business. Growth stocks may be more volatile than other
stocks because they are more sensitive to investors’ perceptions of the issuing
company’s growth potential. Also, the growth investing style may over time go in
and out of favor. At times when the growth investing style is out of favor, the
Fund may underperform other equity funds that use different investing
styles.
Large
Capitalization Companies Risk.
Larger, more established companies may be unable to respond quickly to new
competitive challenges such as changes in technology and consumer tastes. Larger
companies also may not be able to attain the high growth rates of successful
smaller companies.
Management
Risk.
The
Fund is actively-managed and may not meet its investment objective based on the
Adviser’s success or failure to implement investment strategies for the Fund.
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
Events Risk. One
or more markets in which the Fund invests may go down in value, including the
possibility that the markets will go down sharply and unpredictably. This may be
due to numerous factors, including interest rates, the outlook for corporate
profits, the health of the national and world economies, national and world
social and political events, and the fluctuation of other stock markets around
the world. The global pandemic outbreak of an infectious respiratory illness
caused by a novel coronavirus known as COVID-19 and subsequent efforts to
contain its spread have resulted and may continue to result in, among other
things, substantial market volatility and reduced liquidity in financial
markets;
exchange trading suspensions and closures; higher default rates; travel
restrictions and disruptions; significant global disruptions to business
operations and supply chains; lower consumer demand for goods and services;
significant job losses and increasing unemployment; event and service
cancellations and restrictions; significant challenges in healthcare service
preparation and delivery; prolonged quarantines; and general concern and
uncertainty. The impact of this pandemic and any other public health emergencies
(such as any other epidemics or pandemics) that may arise in the future could
adversely affect the economies of many nations or the entire global economy and
the financial performance of individual issuers, sectors, industries, asset
classes, and markets in significant and unforeseen ways. Extraordinary actions
taken by governments and central banks to support local and global economies and
the financial markets in response to the COVID-19 pandemic may not succeed or
have the intended effect, and in some cases, have resulted in a large expansion
of government deficits and debt, the long-term consequences of which are not
known. This crisis or other public health crises may also exacerbate other
pre-existing political, social, economic, market and financial risks. In
addition, the Fund may face challenges with respect to its day-to-day operations
if key personnel of the Adviser or other service providers are unavailable due
to quarantines, restrictions on travel, or other restrictions imposed by state
or federal regulatory authorities. The duration and future impact of COVID-19
are currently unknown and cannot be determined with certainty, which may
exacerbate the other risks that apply to the Fund and could adversely affect the
value and liquidity of the Fund’s investments, impair the Fund’s ability to
satisfy AP transaction requests, and negatively affect the Fund’s performance.
Metaverse
Companies Risk.
The Fund invests primarily in the equity securities of Metaverse Companies and,
as such, is particularly sensitive to risks to those types of companies. These
risks include, but are not limited to, small or limited markets for such
securities, changes in business cycles, world economic growth, technological
progress, rapid obsolescence, and government regulation. Securities of Metaverse
Companies, especially smaller, start-up companies, tend to be more volatile than
securities of companies that do not rely heavily on technology. Rapid change to
technologies that affect a company’s products could have a material adverse
effect on such company’s operating results. Metaverse Companies may rely on a
combination of patents, copyrights, trademarks and trade secret laws to
establish and protect their proprietary rights in their products and
technologies. There can be no assurance that the steps taken by these companies
to protect their proprietary rights will be adequate to prevent the
misappropriation of their technology or that competitors will not independently
develop technologies that are substantially equivalent or superior to such
companies’ technology.
Mid-Capitalization
Companies Risk.
The
securities of mid-capitalization companies may be more vulnerable to adverse
issuer, market, political, or economic developments than securities of
large-capitalization companies. The securities of mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than large capitalization stocks or the stock market
as a whole. Some 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.
New
Adviser Risk. The
Adviser is a recently registered investment adviser and has limited experience
managing a registered investment company. As a result, there is no long-term
track record against which an investor may judge the Adviser and it is possible
the Adviser may not achieve the Fund’s intended investment objective. As a newer
investment adviser, the Adviser may experience resource and capacity
constraints.
Newer
Fund Risk.
As of the date of this Prospectus, the Fund has a limited operating history and
may not attract sufficient assets to achieve or maximize investment and
operational efficiencies.
Non-Diversification
Risk.
Because the Fund is “non-diversified,” they 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 funds. 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.
Small-Capitalization
Companies Risk.
The securities of small-capitalization companies may be more vulnerable to
adverse issuer, market, political, or economic developments than securities of
larger-capitalization companies. The securities of small-capitalization
companies generally trade in lower volumes and are subject to greater and more
unpredictable
price changes than larger capitalization stocks or the stock market as a whole.
Some small capitalization companies have limited product lines, markets, and
financial and managerial resources and tend to concentrate on fewer geographical
markets relative to larger capitalization companies. There is typically less
publicly available information concerning smaller-capitalization companies than
for larger, more established companies. Small-capitalization companies also may
be particularly sensitive to changes in interest rates, government regulation,
borrowing costs and earnings.
Short
Sales Risk.
The Metaverse Fund may engage in short sales. Selling securities short creates
the risk of losing an amount greater than the amount invested. Short selling is
subject to the theoretically unlimited risk of loss because there is no limit on
how much the price of a stock may appreciate before the short position is closed
out. A short sale may result in a sudden and substantial loss if, for example,
an acquisition proposal is made for the subject company at a substantial premium
over the market price. An increasing number of jurisdictions are limiting the
ability of market participants to engage in short selling in respect of certain
securities. In some cases, these rules may also limit the ability of market
participants to enter into a short position through a credit default swap or
other similar derivatives contract. These rules may limit or preclude the Fund
from entering into short sales or otherwise taking short positions that the
Advisor believes could be advantageous to the Fund. The Fund may also incur
expenses relating to short sales, such as dividend expense (paying the value of
dividends to the person that loaned the security to the Fund so that the Fund
could sell it short; this expense is typically, but not necessarily,
substantially offset by market value gains after the dividends are announced)
and interest expense (the Fund may owe interest on its use of short sale
proceeds to purchase other investments; a portion of this expense may, but is
not necessarily, offset by stock lending rebates). When the Fund enters into a
short sale, it also must maintain a segregated account of cash or cash
equivalents equal to its margin requirements. As a result, the Fund may be
required to maintain high levels of cash or other highly liquid instruments at
times when the Fund engages in short sales, which could limit the Fund’s ability
to pursue other investment opportunities with respect to those
assets.
Portfolio
Holdings
Information
about the Fund’s daily portfolio holdings is available at
www.subversive.com/etfs. A complete description of the Fund’s policies and
procedures with respect to the disclosure of the Fund’s portfolio holdings is
available in the Fund’s Statement of Additional Information
(“SAI”).
Investment
Adviser
The
Fund has entered into an investment advisory agreement (“Advisory Agreement”)
with Subversive Capital Advisor LLC (the “Adviser” or “Subversive”), located at
217 Centre Street, Suite 122, New York, NY, 10013. Since 2013, Subversive
Capital, an affiliate under common control with the Adviser, has been a
pioneering investor in emerging industries, specializing in both early and
late-stage investments as well as acquisitions by special purpose acquisition
companies (SPACs).
Subject
to the oversight of the Board, the Adviser is responsible for the day-to-day
management of the Fund in accordance with the Fund’s investment objective and
policies. For the services it provides to the Fund, the Fund pays the Adviser a
unified management fee, which is calculated daily and paid monthly, at an annual
rate of 0.75% of the Fund’s average daily net assets. Under the Advisory
Agreement, the Adviser has agreed to pay all expenses incurred by the Fund
except for 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; distribution fees and expenses paid by the Fund under
any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act, and the
unified management fee payable to the Adviser (collectively, the “Excluded
Expenses”).
A
discussion regarding the basis for the Board’s initial approval of the Advisory
Agreement between the Adviser and the Trust will be available in the Fund’s
first semi-annual report to shareholders after the Fund’s commencement of
operations.
The
Fund, as a series of the Trust, does not hold itself out as related to any other
series of the Trust for purposes of investment and investor services, nor does
it share the same investment adviser with any other series of the Trust (except
for the Subversive Decarbonization ETF, the Subversive Food Security ETF and the
Subversive Mental Health ETF).
Portfolio
Managers
Michael
Auerbach
Michael
Auerbach is the founder and Managing Member of the Adviser, which was formed in
2021. Mr. Auerbach is also General Partner of Subversive Capital Ventures, a
director of The Parent Company (a NEO listed company), director of Canaccord
Genuity (a TSX listed company), and lead independent director of Atai Holdings
(a Nasdaq listed company). He previously sat on the Board of Directors of
Tilray, Inc., the first Nasdaq listed global cannabis company, and holds several
directorships with companies that Subversive invests in.
Mr.
Auerbach serves as a partner with Albright Stonebridge Group (“ASG”), a part of
Dentons Global Advisers, the global consulting firm founded by the late U.S.
Secretary of State Madeleine Albright. Prior to joining ASG, Michael founded and
then sold a risk consulting firm to Control Risks, a leading global risk
consulting firm.
Mr.
Auerbach presently sits on the boards of the Theodore C. Sorensen Center for
International Peace and Justice, KiDS Board of NYU’s Hassenfeld Children’s
Hospital, Next for Autism (which produces Night of Too Many Stars), FACES
(Finding a Cure for Epilepsy), and Sophie Gerson Healthy Youth Foundation.
Mr.
Auerbach received a M.A. in International Relations from Columbia University and
a B.A. in Critical Theory from the New School for Social Research.
Christian
H Cooper, CFA, FRM
Christian
H. Cooper is a portfolio manager for Subversive Capital and the former head of
interest rate derivatives trading at Jefferies in New York. Since 2013, Mr.
Cooper has also been a derivatives trader and risk manager for Resconte Capital,
where he authored a multi-volume series on quantitative risk management. Mr.
Cooper is responsible for trading and portfolio construction and has both the
Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM)
designations.
The
Fund’s SAI provides additional information about the portfolio managers’
compensation, other accounts managed by the portfolio manager and the portfolio
managers’ ownership of the Fund shares.
|
| |
How
to Buy and Sell Shares |
The
Fund issue and redeem their shares only in Creation Units at the NAV per share
next determined after receipt of an order from an AP. Only APs may acquire the
Fund’s shares directly from the Fund, and only APs may tender their shares for
redemption directly to the Fund, at NAV. APs must be a member or participant of
a clearing agency registered with the SEC and must execute an authorized
participant agreement (“Participant Agreement”) that has been agreed to by the
Distributor (defined below), and that has been accepted by the Fund’s transfer
agent, with respect to purchases and redemptions of Creation Units. Once
created, the Fund’s shares trade in the secondary market in quantities less than
a Creation Unit.
Most
investors buy and sell the Fund’s shares in secondary market transactions
through brokers. Individual shares of the Fund is 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 the Fund’s shares through a broker, you will pay or receive
the market price. You may incur customary brokerage commissions and charges, and
you may pay some or all of the spread between the bid and the offered 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 the Fund’s 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.
Depository Trust Company (“DTC”) or its nominee is the record owner of all
outstanding shares of the Fund.
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.
Investing
in the Fund
For
more information on how to buy and sell shares of the Fund, visit the Fund’s
website at www.subversive.com/etfs or by calling the Fund toll-free at
1-800-617-0004.
Frequent
Purchases and Redemptions of Shares
Shares
of the Fund is listed for trading on the Exchange, which allows retail investors
to purchase and sell individual shares at market prices throughout the trading
day similar to other publicly traded securities. Because these secondary market
trades do not involve the Fund directly, it is unlikely that secondary market
trading would cause any harmful effects of market timing, such as dilution,
disruption of portfolio management, increases in the Fund’s trading costs or
realization of capital gains. The Board has determined not to adopt policies and
procedures designed to prevent or monitor for frequent purchases and redemptions
of the Fund’s shares because the Fund sells and redeems its shares at NAV only
in Creation Units pursuant to the terms of a Participant Agreement between the
Distributor and an AP. The Fund may impose
transaction
fees on such Creation Unit transactions that are designed to offset the Fund’s
transfer and other transaction costs associated with the issuance and redemption
of the Creation Unit shares. Direct trading by APs is critical to ensuring that
the Fund’s shares trade at or close to NAV. Although the Fund imposes no
restrictions on the frequency of purchases and redemptions of Creation Units,
the Fund and the Adviser reserve the right to reject or limit purchases at any
time as described in the Fund’s SAI.
Determination
of Net Asset Value
The
Fund’s NAV is calculated as of the scheduled close of regular trading on the New
York Stock Exchange (“NYSE”), generally 4:00 p.m. Eastern time, each day the
NYSE is open for business. The NAV is calculated by dividing the Fund’s net
assets by its shares outstanding.
In
calculating its NAV, the Fund generally values their 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,
the 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 the 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
Adviser has been designated by the Board as the valuation designee for the Fund
pursuant to Rule 2a-5 under the 1940 Act. In its capacity as valuation designee,
the Adviser has adopted procedures and methodologies to fair value the Fund’s
securities whose market prices are not “readily available” or are deemed to be
unreliable. For example, such circumstances may arise when: (i) a security has
been de-listed or has had its trading 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 is materially affected by events occurring after the close of
the security’s primary trading market. Generally, when fair valuing a security,
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 included in the Adviser-adopted valuation
procedures. Due to the subjective and variable nature of fair value pricing,
there can be no assurance that the Adviser will be able to obtain the fair value
assigned to the security upon the sale of such security.
Investments
by Other Registered Investment Companies
Section
12(d)(1) of the 1940 Act restricts investments by registered investment
companies in the securities of other investment companies, including shares of
the Fund. Registered investment companies are permitted to invest in the Fund
beyond the limits set forth in section 12(d)(1), subject to certain conditions
set forth in Rule 12d1-4 under the 1940 Act, including that such investment
companies enter into an agreement with the Fund.
|
| |
Distribution
of Fund Shares |
Dividends,
Distributions and their Taxation
Dividends
and Distributions
The
Fund intends to pay out dividends, if any, and distribute any net realized
capital gains to their shareholders at least annually. The Fund will declare and
pay capital gain distributions in cash. Your broker is responsible for
distributing the income and capital gain distributions to you.
No
dividend reinvestment service is provided by the Trust. Financial intermediaries
may make the DTC book-entry Dividend Reinvestment Service available for use by
beneficial owners of Fund shares for reinvestment of their dividend
distributions. Beneficial owners should contact their financial intermediary to
determine the availability and costs of the service and the details of
participation therein. Financial intermediaries may require beneficial owners to
adhere to specific procedures and timetables. If this service is available and
used, dividend distributions of both income and net realized capital gains will
be automatically reinvested in additional whole shares of the Fund purchased in
the secondary market.
Taxes
The
following discussion is a summary of some important U.S. federal income tax
considerations generally applicable to investments in the Fund. Your investment
in the Fund may have other tax implications. Please consult your tax advisor
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws.
The
Fund intends to elect and qualify each year for treatment as a regulated
investment company (“RIC”) under the Code. If it meets certain minimum
distribution requirements, a RIC is not subject to tax at the fund level on
income and gains from investments that are timely distributed to shareholders.
However, the Fund’s failure to qualify as a RIC or to meet minimum distribution
requirements would result (if certain relief provisions were not available) in
fund-level taxation and, consequently, a reduction in income available for
distribution to shareholders.
Unless
your investment in Shares is made through a tax-exempt entity or tax-advantaged
account, such as an IRA plan, you need to be aware of the possible tax
consequences when the Fund makes distributions, when you sell your Shares listed
on the Exchange; and when you purchase or redeem Creation Units (APs
only).
Taxes
on Distributions
The
Fund intends to distribute, at least annually, substantially all of their net
investment income and net capital gains. For federal income tax purposes,
distributions of investment income are generally taxable as ordinary income or
qualified dividend income. Taxes on distributions of capital gains (if any) are
determined by how long the Fund owned the investments that generated them,
rather than how long a shareholder has owned his or her Shares. Sales of assets
held by the Fund for more than one year generally result in long-term capital
gains and losses, and sales of assets held by the Fund for one year or less
generally result in short-term capital gains and losses. Distributions of the
Fund’s net capital gain (the excess of net long-term capital gains over net
short-term capital losses) that are reported by the Fund as capital gain
dividends (“Capital Gain Dividends”) will be taxable as long-term capital gains,
which for non-corporate shareholders are subject to tax at reduced rates of up
to 20% (lower rates apply to individuals in lower tax brackets). Distributions
of short-term capital gain will generally be taxable as ordinary income.
Dividends and distributions are generally taxable to you whether you receive
them in cash or reinvest them in additional Shares.
Distributions
reported by the Fund as “qualified dividend income” are generally taxed to
non-corporate shareholders at rates applicable to long-term capital gains,
provided holding period and other requirements are met. “Qualified dividend
income” generally is income derived from dividends paid by U.S. corporations or
certain foreign corporations that are either incorporated in a U.S. possession
or eligible for tax benefits under certain U.S. income tax treaties. In
addition, dividends that the Fund received 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.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from the Fund.
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.
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year. Distributions are generally
taxable even if they are paid from income or gains earned by the Fund before
your investment (and thus were included in the Shares’ NAV when you purchased
your Shares).
You
may wish to avoid investing in the Fund shortly before a dividend or other
distribution, because such a distribution will generally be taxable even though
it may economically represent a return of a portion of your investment. If the
Fund’s distribution exceed its earnings and profits, all or a portion of the
distributions made for a taxable year may be recharacterized as a return of
capital to shareholders. A return of capital distribution will generally not be
taxable, but will reduce each shareholder’s cost basis in Shares and result in a
higher capital gain or lower capital loss when the Shares are sold. After a
shareholder’s basis in Shares has been reduced to zero, distributions in excess
of earnings and profits in respect of those Shares will be treated as gain from
the sale of the Shares.
If
you are neither a resident nor a citizen of the United States or if you are a
foreign entity, distributions (other than Capital Gain Dividends) paid to you by
the Fund will generally be subject to a U.S. withholding tax at the rate of 30%,
unless a lower treaty rate applies. Gains from the sale or other disposition of
your Shares generally are not subject to U.S. taxation, unless you are a
nonresident alien individual who is physically present in the U.S. for 183 days
or more per year. The Fund may, under certain circumstances, report all or a
portion of a dividend as an “interest-related dividend” or a “short-term capital
gain dividend,” which would generally be exempt from this 30% U.S. withholding
tax, provided certain other requirements are met. Different tax consequences may
result if you are a foreign shareholder engaged in a trade or business within
the United States or if a tax treaty applies.
Under
legislation generally known as “FATCA” (the Foreign Account Tax Compliance Act),
the Fund is required to withhold 30% of certain ordinary dividends it pays to
shareholders that are foreign entities and that fail to meet prescribed
information reporting or certification requirements.
The
Fund (or a financial intermediary, such as a broker, through which a shareholder
owns Shares) generally is required to withhold and remit to the U.S. Treasury a
percentage of the taxable distributions and sale or redemption 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 he, she or it is not subject to such withholding.
Taxes
When Shares are Sold on the Exchange
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 is acquired, including through
reinvestment of dividends, within a 61-day period beginning 30 days before and
ending 30 days after the disposition of Shares. The ability to deduct capital
losses may be limited.
The
cost basis of Shares of the Fund acquired by purchase will generally be based on
the amount paid for the Shares and then may be subsequently adjusted for other
applicable transactions as required by the Code. The difference between the
selling price and the cost basis of Shares generally determines the amount of
the capital gain or loss realized on the sale or exchange of Shares. Contact the
broker through whom you purchased your Shares to obtain information with respect
to the available cost basis reporting methods and elections for your
account.
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 wash sale rules apply and when a loss might be deductible.
Any
capital gain or loss realized upon redemption of Creation Units is generally
treated as 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.
The
Fund may include a payment of cash in addition to, or in place of, the delivery
of a basket of securities upon the redemption of Creation Units. The Fund may
sell portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause the Fund to recognize investment income and/or capital
gains or losses that it might not have recognized if it had completely satisfied
the redemption in-kind. As a result, the Fund may be less tax efficient if it
includes such a cash payment in the proceeds paid upon the redemption of
Creation Units.
Foreign
Taxes
To
the extent the Fund invests in foreign securities, it may be subject to foreign
withholding taxes with respect to dividends or interest the Fund receives from
sources in foreign countries.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in the Fund. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Fund
distributions and sales of Fund shares. Consult your personal tax adviser about
the potential tax consequences of an investment in Fund shares under all
applicable tax laws. For more information, please see the section titled “Tax
Information” in the SAI.
The
Distributor, Quasar Distributors, LLC, is a broker-dealer registered with the
SEC. The Distributor distributes Creation Units for the Fund on an agency basis
and does not maintain a secondary market in the Fund’s shares. The Distributor
has no role in determining the policies of the Fund or the securities that are
purchased or sold by the Fund. The Distributor’s principal address is
111
East Kilbourn Avenue, Suite 2200, Milwaukee, Wisconsin 53202.
|
| |
Premium/Discount
Information |
Each
business day, the following information will be available, free of charge, on
the Fund’s website at www.subversive.com/etfs: (i) information for each
portfolio holding that will form the basis of the next calculation of the Fund’s
NAV per share; (ii) the Fund’s NAV per share, market price, and premium or
discount, each as of the end of the prior business day; (iii) a table showing
the number of days the Fund’s shares traded at a premium or discount during the
most recently completed calendar year and the most recently completed calendar
quarter since that year; (iv) a line graph showing Fund share premiums or
discounts for the most recently completed calendar year and the most recently
completed calendar quarter since that year; (v) the Fund’s median bid-ask spread
over the last thirty calendar days; and (vi) if during the past year the Fund’s
premium or discount was greater than 2% for more than seven consecutive trading
days, a statement that the Fund’s premium or discount, as applicable, was
greater than 2% and a discussion of the factors that are reasonably believed to
have materially contributed to the premium or discount.
Shares
of the Fund is not sponsored, endorsed, or promoted by the Exchange. The
Exchange is not responsible for, nor has it participated in the determination
of, the timing, prices, or quantities of shares of the Fund to be issued, nor in
the determination or calculation of the equation by which shares of the Fund are
redeemable. The Exchange has no obligation or liability to owners of shares of
the Fund in connection with the administration, marketing, or trading of the
shares.
Without
limiting any of the foregoing, in no event shall the Exchange have any liability
for any lost profits or indirect, punitive, special, or consequential damages
even if notified of the possibility thereof.
The
Adviser and the Fund make no representation or warranty, express or implied, to
the owners of shares of the Fund or any member of the public regarding the
advisability of investing in securities generally or in the Fund
particularly.
The
Trust enters into contractual arrangements with various parties, including,
among others, the Fund’s investment adviser, administrator and distributor, who
provide services to the Fund. Shareholders of the Fund are not parties to, or
intended (or “third-party”) beneficiaries of, any of those contractual
arrangements, and those contractual arrangements are not intended to create in
any individual shareholder or group of shareholders any right to enforce such
contractual arrangements against the service providers or to seek any remedy
under such contractual arrangements against the service providers, either
directly or on behalf of the Trust.
This
prospectus provides information concerning the Trust and the Fund that you
should consider in determining whether to purchase shares of a Fund. None of
this prospectus, the SAI or any document filed as an exhibit to the Trust’s
registration statement, is intended to, nor does it, give rise to an agreement
or contract between the Trust or the Fund and any investor, or give rise to any
contract or other rights in any individual shareholder, group of shareholders or
other person other than any rights conferred explicitly by federal or state
securities laws that may not be waived.
The
Fund reserves the right to cease operations and liquidate at any time. See
“Liquidation of the Fund” in the SAI for additional information.
The
financial highlights table is intended to help you understand the Fund’s
financial performance since inception. Certain information reflects financial
results for a single Fund share. The total return in the table represents the
rate that an investor would have earned or lost on an investment in the Fund
(assuming reinvestment of all dividends and distributions). This information has
been derived from the financial statements audited by Cohen & Company, Ltd.,
the Fund’s independent registered public accounting firm, whose report, along
with the Fund’s financial statements, is included in the Fund’s September 30,
2022 Annual
Report,
which is available upon request.
|
|
|
|
|
|
|
| |
Subversive
Metaverse ETF |
Period
Ended
September
30, 2022(1) |
|
PER
SHARE DATA(2): |
| |
Net
asset value, beginning of period |
$25.00 |
| |
|
| |
INVESTMENT
OPERATIONS: |
| |
Net
investment income (loss)(3) |
(0.03) |
| |
Net
realized and unrealized gain on investments |
(7.67) |
| |
Total
from investment operations |
(7.70) |
| |
|
| |
LESS
DISTRIBUTIONS: |
| |
From
Net investment income |
— |
| |
From
Net realized gains |
— |
| |
Total
distributions paid |
— |
| |
Net
asset value, end of period |
$17.30 |
| |
|
| |
TOTAL
RETURN, at NAV(4) |
(30.81 |
%) |
(5) |
TOTAL
RETURN, at MARKET(4) |
(30.59 |
%) |
(5) |
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
| |
Net
assets, end of period (in thousands) |
$865 |
| |
|
| |
Ratio
of expenses to average net assets |
0.75 |
% |
(6) |
Ratio
of net investment loss to average net assets |
(0.24 |
%) |
(6) |
Portfolio
turnover rate(7)(8) |
32 |
% |
(5) |
(1)
The Fund commenced investment operations on January 26, 2022.
(2)
For a Fund share outstanding for the entire period.
(3)
Calculated based on average shares outstanding during the period.
(4)
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.
(5)
Not annualized for periods less than one year.
(6)
Annualized for periods less that one year.
(7)
Excludes in-kind transactions associated with creations of the
Fund.
(8)
The numerator for the portfolio turnover rate includes the lesser of purchases
or sales (excluding short-term investments and securities sold
short).
The denominator includes the average fair value of long positions throughout the
period.
INVESTMENT
ADVISER:
Subversive
Capital Advisor LLC
217
Centre Street, Suite 122
New
York, NY 10013
DISTRIBUTOR:
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202
CUSTODIAN:
U.S.
Bank N.A.
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212
ADMINISTRATOR,
FUND ACCOUNTANT AND TRANSFER AGENT:
U.S.
Bancorp Fund Services, LLC
615
East Michigan Street
Milwaukee,
Wisconsin 53202
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM:
Cohen
& Company, Ltd.
342
North Water Street, Suite 830
Milwaukee,
Wisconsin 53202
LEGAL
COUNSEL:
Goodwin
Procter LLP
1900
N Street, NW
Washington,
DC 20036
The
Fund collects non-public information about you that the law allows or requires
it to have in order to conduct its business and properly service you. The Fund
collects financial and personal information about you (“Personal Information”)
directly (e.g., information on account applications and other forms, such as
your name, address, and social security number, and information provided to
access account information or conduct account transactions online, such as
password, account number, e-mail address, and alternate telephone number), and
indirectly (e.g., information about your transactions with us, such as
transaction amounts, account balance and account holdings).
The
Fund does not disclose any non-public personal information about its
shareholders or former shareholders other than for everyday business purposes
such as to process a transaction, service an account, respond to court orders
and legal investigations or as otherwise permitted by law. Third parties that
may receive this information include companies that provide transfer agency,
technology and administrative services to the Fund, as well as the Fund’s
investment adviser who is an affiliate of the Fund. If you maintain a
retirement/educational custodial account directly with the Fund, we may also
disclose your Personal Information to the custodian for that account for
shareholder servicing purposes. The Fund limits access to your Personal
Information provided to unaffiliated third parties to information necessary to
carry out their assigned responsibilities to the Fund. All shareholder records
will be disposed of in accordance with applicable law. The Fund maintains
physical, electronic and procedural safeguards to protect your Personal
Information and requires its third party service providers with access to such
information to treat your Personal Information with the same high degree of
confidentiality.
In
the event that you hold shares of the Fund through a financial intermediary,
including, but not limited to, a broker-dealer, bank, or trust company, the
privacy policy of your financial intermediary would govern how your non-public
personal information would be shared with unaffiliated third
parties.
Subversive
Metaverse ETF
A
series of Series Portfolios Trust
FOR
MORE INFORMATION
You
can find more information about the Fund in the following
documents:
Statement
of Additional Information
The
SAI provides additional details about the investments and techniques of the Fund
and certain other additional information. A current SAI is on file with the SEC
and is incorporated into this Prospectus by reference. This means that the SAI
is legally considered a part of this Prospectus even though it is not physically
within this Prospectus.
Annual
and Semi-Annual Reports
Additional
information about the Fund’s investments is available in the Fund’s annual and
semi-annual reports to shareholders. The annual
report
contains a discussion of the market conditions and investment strategies that
significantly affected the Fund’s performance during their most recently
completed fiscal year.
The
SAI and the Shareholder Reports, when available, are available free of charge on
the Fund’s website at www.subversive.com/etfs. You can obtain a free copy of the
SAI and Shareholder Reports, request other information, or make general
inquiries about the Fund by calling the Fund (toll-free) at 1-800-617-0004 or by
writing to:
Subversive
Metaverse ETF
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
www.subversive.com/etfs
Reports
and other information about the Fund is also available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s Internet website at
http://www.sec.gov; or
•For
a fee, by electronic request at the following e-mail address:
[email protected].
(The
Trust’s SEC Investment Company Act of 1940 file number is
811-23084)