ck0001742912-20210831
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LBAR |
Leatherback Long/Short Absolute Return
ETF |
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(not
currently available for purchase) |
LBAY |
Leatherback Long/Short Alternative Yield
ETF |
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listed
on NYSE Arca, Inc. |
PROSPECTUS
December 29,
2021
The
U.S. Securities and Exchange Commission (“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
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Leatherback
Long/Short Absolute Return ETF
Summary |
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Leatherback
Long/Short Alternative Yield ETF Summary |
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Additional
Information About the Funds |
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Portfolio
Holdings Information |
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Management |
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How
to Buy and Sell Shares |
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Dividends,
Distributions, and Taxes |
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Distribution |
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Premium/Discount
Information |
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Additional
Notices |
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Financial
Highlights |
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Leatherback
Long/Short Absolute Return ETF – FUND SUMMARY
Investment Objective
The
Leatherback Long/Short Absolute Return ETF
(the
“Fund” or the “Absolute Return ETF”) seeks absolute return. The Fund has not yet
commenced operations.
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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Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
Management
Fee |
0.95% |
Distribution
and/or Service (12b-1) Fees |
0.00% |
Other
Expenses |
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Dividends
and Interest Expense on Short Positions1 |
0.18% |
Total
Annual Fund Operating Expenses |
1.13% |
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1
Estimated for the current
fiscal year
Expense 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:
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 total annual fund operating expenses or
in the expense example above, affect the Fund’s performance. Because the Fund
has not commenced operations as of the date of this Prospectus, portfolio
turnover information is not yet available.
Principal Investment
Strategies
The
Fund is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by purchasing long positions in securities believed to
be undervalued and taking short positions in securities expected to decline in
price. The Fund will generally have net exposure of 0-80% long.
Investment
decisions for the Fund are made by Leatherback Asset Management, LLC
(“Leatherback” or the “Sub-Adviser”), the Fund’s sub-adviser. Leatherback
identifies securities to purchase long for the Fund primarily through
quantitative and fundamental analyses of U.S.-listed large-, mid-, or
small-capitalization companies. Leatherback typically looks to purchase
securities of companies with high margins and a high return on invested capital
that operate in industries Leatherback expects to outperform the broader market
over a several year period. As part of its analysis, Leatherback considers
whether a security is expected to pay a dividend and the ability of the issuer
to grow that dividend over time, although the Fund may own securities that do
not pay any dividend. The Fund may also invest in companies with unique
opportunities such as having been spun-off from a larger company or having
emerged from bankruptcy, or in securities that Leatherback believes are
mispriced based on the security’s place in a company’s capital
structure.
The
Fund’s long positions are generally expected to be comprised of equity
securities or depositary receipts, although long positions may also include
investment-grade corporate bonds and convertible bonds. The Fund’s equity
securities may include common stocks, preferred stocks, real estate investment
trusts (“REITs”), and closed-end funds.
Leatherback
seeks to identify short positions for the Fund based on identifying
idiosyncratic ideas that suggest a security’s price will decline. For example,
Leatherback may look for financial or accounting anomalies in a company’s
financial statements, may seek to identify short-term fads leading to overvalued
securities, or look for companies with a poor governance record. Securities that
the Fund sells short are generally expected to have lower margins and be in
industries facing significant challenges for growth. The Fund
may
also sell short equity securities or other ETFs that are sector-, market
capitalization-, or geography-focused, or those that target specific drivers of
return or risk, such as momentum, low volatility or value (sometimes referred to
as “factor-based ETFs”), to take advantage of headwinds perceived by Leatherback
for those investments.
A
short sale is a transaction in which the Fund sells a security it does not own,
typically in anticipation of a decline in the market price of that security. To
effect a short sale, the Fund arranges through a broker to borrow the security
it does not own to be delivered to a buyer of such security. In borrowing the
security to be delivered to the buyer, the Fund will become obligated to replace
the security borrowed at the time of replacement, regardless of the market price
at that time. A short sale results in a gain when the price of the securities
sold short declines between the date of the short sale and the date on which a
security is purchased to replace the borrowed security. Conversely, a short sale
will result in a loss if the price of the security sold short increases. When
the Fund makes a short sale, the broker effecting the short sale typically holds
the proceeds as part of the collateral securing the Fund’s obligation to cover
the short position.
In
addition to the strategies described above, the Fund may also purchase put
options on equity securities or ETFs.
The Fund is considered to be
non-diversified under the Investment Company Act of 1940, as amended (the “1940
Act”), which means that it may invest more of its assets in the securities of a
single issuer or a smaller number of issuers than if it were a diversified
fund.
Principal Risks of Investing in the
Fund
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 the risks appear.
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 per share
(“NAV”), trading price, yield, total return and/or ability to meet its
investment objective. For more information about the risks of investing in the
Fund, see the section in the Fund’s Prospectus titled “Additional Information
About the Funds—Principal Risks of Investing in Each Fund.”
Associated
Risks of Short Selling. The
Fund may make short sales of securities, which involves selling a security it
does not own in anticipation that the price of the security will decline. Short
sales may involve substantial risk and leverage. Short sales expose the Fund to
the risk that it will be required to buy (“cover”) the security sold short when
the security has appreciated in value or is unavailable, thus resulting in a
loss to the Fund. Short sales also involve the risk that losses may exceed the
amount invested and may be unlimited.
Closed-End
Fund Risk. Shares
of closed-end funds frequently trade at a price per share that is less than the
net asset value per share. There can be no assurance that the market discount on
shares of any closed-end fund purchased by the Fund will ever decrease or that
when the Fund seeks to sell shares of a closed-end fund it can receive the net
asset value of those shares.
Convertible
Securities Risk. Convertible
securities rank senior to the issuer's common stock, but may be subordinate to
senior debt obligations. In part, the total return for a convertible security
may depend upon the performance of the underlying stock into which it can be
converted. Synthetic convertibles may respond differently to market fluctuations
than traditional convertible securities. They are also subject to counterparty
risk.
Depositary
Receipt Risk.
Depositary receipts involve risks similar to those associated with investments
in foreign securities and give rise to certain additional risks. Depositary
receipts listed on U.S. or foreign 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.
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, or sectors in which the Fund invests. The Fund
will invest in common stocks. Common stocks, such as those held by the Fund, are
generally exposed to greater risk than other types of securities, such as
preferred stock and debt obligations, because common stockholders generally have
inferior rights to receive payment from issuers.
ETF
Risk.
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that are authorized to
purchase and redeem Shares directly from the Fund (known as “Authorized
Participants” or “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.
◦Cash
Redemption Risk. The
Fund’s investment strategy may require it to redeem Shares for cash or to
otherwise include cash as part of its redemption proceeds. For example, the Fund
may not be able to redeem in-kind certain securities held by the Fund (e.g., TBA
transactions, short positions, derivative instruments, and bonds that cannot be
broken up beyond certain minimum sizes needed for transfer and settlement). In
such a case, the Fund may be required to sell or unwind portfolio investments to
obtain the cash needed to distribute redemption proceeds. This may cause the
Fund to recognize a capital gain that it might not have recognized if it had
made a redemption in-kind. As a result, the Fund may pay out higher annual
capital gain distributions than if the in-kind redemption process was
used.
◦Costs
of Buying or Selling Shares.
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. 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. Although
Shares are listed on a national securities exchange, such as NYSE Arca, Inc.
(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.
Fixed
Income Risk.
The value of the Fund’s investments in fixed income securities will fluctuate
with changes in interest rates. Typically, a rise in interest rates causes a
decline in the value of fixed income securities owned indirectly by the Fund. On
the other hand, if rates fall, the value of the fixed income securities
generally increases. The Fund may be subject to a greater risk of rising
interest rates due to the current period of historically low rates and the
effect of potential government fiscal policy initiatives and resulting market
reaction to those initiatives. In general, the market price of fixed income
securities with longer maturities will increase or decrease more in response to
changes in interest rates than shorter-term securities.
General
Market Risk.
Economies and financial markets throughout the world are becoming increasingly
interconnected, which increases the likelihood that events or conditions in one
country or region will adversely impact markets or issuers in other countries or
regions. Securities in the Fund’s portfolio may underperform in comparison to
securities in the general financial markets, a particular financial market, or
other asset classes, due to a number of factors, including inflation (or
expectations for inflation), interest rates, global demand for particular
products or resources, natural disasters or events, pandemic diseases,
terrorism, regulatory events, and government controls.
Management
Risk. The
Fund is actively-managed and may not meet its investment objective based on the
Sub-Adviser’s success or failure to implement investment strategies for the
Fund.
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 may also 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.
New
Adviser Risk.
Leatherback is a newly registered investment adviser and has not previously
served as an adviser or sub-adviser to an investment company. As a result, there
is no long-term track record against which an investor may judge Leatherback and
it is possible Leatherback may not achieve the Fund’s intended investment
objective.
New
Fund Risk. The
Fund is a recently organized management investment company with no operating
history. As a result, prospective investors do not have a track record or
history on which to base their investment
decision.
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 smaller number of issuers than if it was a diversified fund. As a result, a
decline in the value of an investment in a single issuer or a smaller number of
issuers could cause the Fund’s overall value to decline to a greater degree than
if the Fund held a more diversified portfolio.
Options
Risk.
Options enable the Fund to purchase exposure that is significantly greater than
the premium paid. Consequently, the value of such options can be volatile, and a
small investment in options can have a large impact on the performance of the
Fund. The Fund risks losing all or part of the cash paid (premium) for
purchasing options. Even a small decline in the value of a reference asset
underlying call options or a small increase in the value of a reference asset
underlying put options can result in the entire investment in such options being
lost. Additionally, the value of the option may be lost if the Sub-Adviser fails
to exercise such option at or prior to its expiration.
Other
Investment Companies Risk.
The Fund will incur higher and duplicative expenses when it invests in other
investment companies, such as ETFs and closed-end funds. By investing in another
investment company, the Fund becomes a shareholder of that investment company
and bears its proportionate share of the fees and expenses of the other
investment company. There is also the risk that the Fund may suffer losses due
to the investment practices of the underlying funds as the Fund will be subject
to substantially the same risks as those associated with the direct ownership of
securities held by such investment companies. ETFs may be less liquid than other
investments, and thus their share values more volatile than the values of the
investments they hold. Investments in ETFs are also subject to the “ETF Risks”
described above.
Preferred
Securities Risk.
Preferred stocks are subject to the risks of equity securities generally and
also risks associated with fixed-income securities, such as interest rate risk.
A company’s preferred stock, which may pay fixed or variable rates of return,
generally pays dividends only after the company makes required payments to
creditors, including vendors, depositors, counterparties, holders of its bonds
and other fixed-income securities. As a result, the value of a company’s
preferred stock will react more strongly than bonds and other debt to actual or
perceived changes in the company’s financial condition or prospects. Preferred
stock may be less liquid than many other types of securities, such as common
stock, and generally has limited or no voting rights. In addition, preferred
stock is subject to the risks that a company may defer or not pay dividends,
and, in certain situations, may call or redeem its preferred stock or convert it
to common stock. To the extent that the Fund invests a substantial portion of
its assets in convertible preferred stocks, declining common stock values may
also cause the value of the Fund’s investments to decline.
Recent
Market Events Risk.
U.S. and international markets have experienced significant periods of
volatility in recent years and months due to a number of economic, political and
global macro factors including the impact of COVID-19, which has resulted in
public health issues, growth concerns in the U.S. and overseas, layoffs, rising
unemployment claims, changed travel and social behaviors, and reduced consumer
spending. The lasting effects of COVID-19 on the global economy and the recovery
from COVID-19 are uncertain and may last for an extended period of time. 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.
REIT
Risk.
A REIT is a company that owns or finances income-producing real estate. Through
its investments in REITs, the Fund is subject to the risks of investing in the
real estate market, including decreases in property revenues, increases in
interest rates, increases in property taxes and operating expenses, legal and
regulatory changes, a lack of credit or capital, defaults by borrowers or
tenants, environmental problems and natural disasters.
REITs
are subject to additional risks, including those related to adverse governmental
actions; declines in property value and the real estate market; the potential
failure to qualify for tax-free pass through of income; and exemption from
registration as an investment company. REITs are dependent upon specialized
management skills and may invest in relatively few properties, a small
geographic area, or a small number of property types. As a result, investments
in REITs may be volatile. To the extent the Fund invests in REITs concentrated
in specific geographic areas or property types, the Fund may be subject to a
greater loss as a result of adverse developments affecting such area or property
types. REITs are pooled investment vehicles with their own fees and expenses and
the Fund will indirectly bear a proportionate share of those fees and
expenses.
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.
Performance
Performance information for the Fund is not
included because the Fund has not commenced operations as of the date of this
Prospectus. When such information is included, this section will
provide some indication of the risks of investing in the Fund by showing changes
in the Fund’s performance history from year to year and showing how the Fund’s
average annual total returns compare with those of a broad measure of market
performance. Although past performance of the
Fund is no guarantee of how it will perform in the future, historical
performance may give you some indication of the risks of investing in the
Fund. Updated performance information will be available on the
Fund’s website at www.leatherbackam.com/etfs.
Management
Investment
Adviser
Toroso
Investments, LLC (“Toroso” or the “Adviser”) serves
as investment adviser to the Fund.
Investment
Sub-Adviser
Leatherback
Asset Management, LLC serves
as investment sub-adviser to the Fund.
Portfolio
Managers
Michael
Venuto, Chief Investment Officer for the Adviser, will be responsible for the
day-to-day management of the Fund and will be a portfolio manager of the Fund at
its inception.
Charles
A. Ragauss, CFA, Portfolio Manager for the Adviser, will be responsible for the
day-to-day management of the Fund and will be a portfolio manager of the Fund at
its inception.
Michael
J. Winter, CFA, Chief Executive Officer and Chief Investment Officer for
Leatherback, will be responsible for the day-to-day management of the Fund and
will be a portfolio manager of the Fund at its inception.
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 (the “Deposit Securities”) and/or a designated amount of U.S.
cash.
Shares
are listed on a national securities exchange, such as 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 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. This difference in bid and ask
prices is often referred to as the “bid-ask spread.”
When
available, 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 www.leatherbackam.com/etfs.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless an 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, the Sub-Adviser, or their
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.
Leatherback
Long/Short Alternative Yield ETF – FUND SUMMARY
Investment Objective
The Leatherback Long/Short
Alternative Yield ETF (the “Fund” or the “Alternative Yield ETF”) seeks capital
appreciation and income.
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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Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
Management
Fee |
0.95% |
Distribution
and/or Service (12b-1) Fee |
0.00% |
Other
Expenses |
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Dividends
and Interest Expense on Short Positions |
0.28% |
Acquired
Fund Fees and Expenses1 |
0.20% |
Total
Annual Fund Operating Expenses |
1.43% |
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1
Acquired Fund Fees and
Expenses (“AFFE”) are the indirect costs of investing in other investment
companies. Total Annual Fund Operating Expenses do not correlate to the expense
ratio in the Fund’s Financial Highlights because the Financial Highlights
include only the direct operating expenses of the Fund and dividends and
interest on securities sold short and exclude
AFFE.
Expense 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 |
3
Years |
5
Years |
10
Years |
$146 |
$452 |
$782 |
$1,713 |
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 total annual fund operating expenses or
in the expense example above, affect the Fund’s performance. For the fiscal
period from November 16, 2020 (commencement of operations) to August 31, 2021,
the Fund’s portfolio turnover rate was 47% 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 purchasing long positions in securities believed to
provide sustainable shareholder yield (defined as dividends plus buybacks plus
debt paydowns) and taking short positions in securities expected to decline in
price. The Fund will generally have net exposure of 75% - 110%
long.
Investment
decisions for the Fund are made by Leatherback Asset Management, LLC
(“Leatherback” or the “Sub-Adviser”), the Fund’s sub-adviser. Leatherback
identifies securities to purchase long for the Fund through quantitative and
fundamental analyses of U.S.-listed large-, mid-, or small-capitalization
companies. Leatherback typically looks to purchase securities of companies with
high shareholder yield. As part of its analysis, Leatherback considers whether a
security is expected to pay a dividend and the ability of the issuer to grow
that dividend over time, although the Fund may own securities that do not pay
any dividend. Leatherback considers alternative yield to include interest and
dividend income received from a security that is not a debt
instrument.
The
Fund’s long positions are generally expected to be comprised of equity
securities or depositary receipts, although long positions may also include
investment-grade corporate bonds and convertible bonds. The Fund’s equity
securities may include common stocks, preferred stocks, other ETFs, closed-end
funds, business development companies (“BDCs”), master limited partnerships
(“MLPs”), real estate investment trusts (“REITs”), and publicly-traded companies
that are formed to own operating assets that produce defined cash flows
(“YieldCos”).
The
Fund may write (sell) covered calls up to 100% of the value of the Fund’s
individual equity security or an index when Leatherback believes call premiums
are attractive relative to the price of the underlying security or index.
Leatherback
seeks to identify short positions for the Fund based on identifying
idiosyncratic ideas that suggest a security’s price will decline. For example,
Leatherback may look for financial or accounting anomalies in a company’s
financial statements, may seek to identify short-term fads leading to overvalued
securities, or look for companies with a poor governance record. Securities that
the Fund sells short are generally expected to have lower margins and be in
industries facing significant challenges for growth. The Fund may also sell
short equity securities or other ETFs that are sector-, market capitalization-,
or geography-focused or factor-based to take advantage of headwinds perceived by
Leatherback for those investments.
A
short sale is a transaction in which the Fund sells a security it does not own,
typically in anticipation of a decline in the market price of that security. To
effect a short sale, the Fund arranges through a broker to borrow the security
it does not own to be delivered to a buyer of such security. In borrowing the
security to be delivered to the buyer, the Fund will become obligated to replace
the security borrowed at the time of replacement, regardless of the market price
at that time. A short sale results in a gain when the price of the securities
sold short declines between the date of the short sale and the date on which a
security is purchased to replace the borrowed security. Conversely, a short sale
will result in a loss if the price of the security sold short increases. When
the Fund makes a short sale, the broker effecting the short sale typically holds
the proceeds as part of the collateral securing the Fund’s obligation to cover
the short position.
In
addition to the strategies described above, the Fund may also purchase put
options on equity securities or ETFs.
The Fund is considered to be
non-diversified under the Investment Company Act of 1940, as amended (the “1940
Act”), which means that it may invest more of its assets in the securities of a
single issuer or a smaller number of issuers than if it were a diversified
fund.
Principal Risks of Investing in the
Fund
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 the risks appear.
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 per share
(“NAV”), trading price, yield, total return and/or ability to meet its
investment objectives. For more information about the risks of investing in the
Fund, see the section in the Fund’s Prospectus titled “Additional Information
About the Funds—Principal Risks of Investing in Each Fund.”
Associated
Risks of Short Selling. The
Fund may make short sales of securities, which involves selling a security it
does not own in anticipation that the price of the security will decline. Short
sales may involve substantial risk and leverage. Short sales expose the Fund to
the risk that it will be required to buy (“cover”) the security sold short when
the security has appreciated in value or is unavailable, thus resulting in a
loss to the Fund. Short sales also involve the risk that losses may exceed the
amount invested and may be unlimited.
BDC
Risk.
BDCs
generally invest in debt securities that are not rated by a credit rating agency
and are considered below investment grade quality (“junk bonds”). Little public
information generally exists for the type of companies in which a BDC may invest
and, therefore, there is a risk that the Fund may not be able to make a fully
informed evaluation of the BDC and its portfolio of investments. In addition,
investments made by BDCs are typically illiquid and are difficult to value for
purposes of determining a BDC’s net asset value.
Closed-End
Fund Risk. Shares
of closed-end funds frequently trade at a price per share that is less than the
net asset value per share. There can be no assurance that the market discount on
shares of any closed-end fund purchased by the Fund will ever decrease or that
when the Fund seeks to sell shares of a closed-end fund it can receive the net
asset value of those shares.
Convertible
Securities Risk. Convertible
securities rank senior to the issuer's common stock, but may be subordinate to
senior debt obligations. In part, the total return for a convertible security
may depend upon the performance of the underlying stock into which it can be
converted. Synthetic convertibles may respond differently to market fluctuations
than traditional convertible securities. They are also subject to counterparty
risk.
Depositary
Receipt Risk.
Depositary receipts involve risks similar to those associated with investments
in foreign securities and give rise to certain additional risks. Depositary
receipts listed on U.S. or foreign 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.
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, or sectors in which the Fund invests. Common
stocks, such as those held by the Fund, are generally exposed to greater risk
than other types of securities, such as preferred stock and debt obligations,
because common stockholders generally have inferior rights to receive payment
from issuers.
ETF
Risk.
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration
Risk. The
Fund has a limited number of financial institutions that are authorized to
purchase and redeem Shares directly from the Fund (known as “Authorized
Participants” or “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.
◦Cash
Redemption Risk. The
Fund’s investment strategy may require it to redeem Shares for cash or to
otherwise include cash as part of its redemption proceeds. For example, the Fund
may not be able to redeem in-kind certain securities held by the Fund (e.g., TBA
transactions, short positions, derivative instruments, and bonds that cannot be
broken up beyond certain minimum sizes needed for transfer and settlement). In
such a case, the Fund may be required to sell or unwind portfolio investments to
obtain the cash needed to distribute redemption proceeds. This may cause the
Fund to recognize a capital gain that it might not have recognized if it had
made a redemption in-kind. As a result, the Fund may pay out higher annual
capital gain distributions than if the in-kind redemption process was
used.
◦Costs
of Buying or Selling Shares.
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. 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. Although
Shares are listed on a national securities exchange, such as NYSE Arca, Inc.(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.
Fixed
Income Risk.
The value of the Fund’s investments in fixed income securities will fluctuate
with changes in interest rates. Typically, a rise in interest rates causes a
decline in the value of fixed income securities owned indirectly by the Fund. On
the other hand, if rates fall, the value of the fixed income securities
generally increases. The Fund may be subject to a greater risk of rising
interest rates due to the current period of historically low rates and the
effect of potential government fiscal policy initiatives and resulting market
reaction to those initiatives. In general, the market price of fixed income
securities with longer maturities will increase or decrease more in response to
changes in interest rates than shorter-term securities.
General
Market Risk.
Economies and financial markets throughout the world are becoming increasingly
interconnected, which increases the likelihood that events or conditions in one
country or region will adversely impact markets or issuers in other countries or
regions. Securities in the Fund’s portfolio may underperform in comparison to
securities in the general financial markets, a particular financial market, or
other asset classes, due to a number of factors, including inflation (or
expectations for inflation), interest rates, global demand for particular
products or resources, natural disasters or events, pandemic diseases,
terrorism, regulatory events, and government controls.
Management
Risk. The
Fund is actively-managed and may not meet its investment objective based on the
Sub-Adviser’s success or failure to implement investment strategies for the
Fund.
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 may also 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.
MLP
Risk.
The Fund’s exposure to MLPs may subject the Fund to greater volatility than
investments in traditional securities. The value of MLPs and MLP-based ETFs and
notes may be affected by changes in overall market movements, commodity index
volatility, changes in interest rates, or sectors affecting a particular
industry or commodity, such as drought, floods, weather, livestock disease,
embargoes, tariffs, and international economic, political and regulatory
developments. To the extent the Fund’s investments in MLPs expose its portfolio
to the energy sector, such as the oil and gas industries, the Fund may
experience additional risks related to these industries.
MLP
Tax Risk.
If
an MLP in which the Fund invests is taxed as a partnership for federal income
tax purposes, the Fund will include in its taxable income its allocable share of
the MLP’s income regardless of whether the Fund receives any distribution from
the MLP. Thus, the Fund may be required to sell other securities to satisfy the
distribution requirements to qualify as a regulated investment company (“RIC”)
and to avoid Fund-level federal income and excise taxes. In addition, if an MLP
in which the Fund invests does not qualify as a qualified publicly-traded
partnership (and is otherwise not taxed as a corporation), income derived by the
Fund from the MLP may be treated as non-qualifying income and could jeopardize
the Fund’s status as a RIC. Distributions to the Fund from an MLP that is taxed
as a partnership for federal income tax purposes will constitute a return of
capital to the extent of the Fund’s basis in its interest in the MLP. If the
Fund retains an investment until its basis is reduced to zero, distributions in
excess of basis will generally constitute capital gain for federal income tax
purposes.
New
Adviser Risk.
Leatherback is a newly registered investment adviser and has not previously
served as an adviser or sub-adviser to an investment company. As a result, there
is no long-term track record against which an investor may judge Leatherback and
it is possible Leatherback may not achieve the Fund’s intended investment
objective.
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 smaller number of issuers than if it was a diversified fund. As a result, a
decline in the value of an investment in a single issuer or a smaller number of
issuers could cause the Fund’s overall value to decline to a greater degree than
if the Fund held a more diversified portfolio.
Options
Risk.
Options enable the Fund to purchase exposure that is significantly greater than
the premium paid. Consequently, the value of such options can be volatile, and a
small investment in options can have a large impact on the performance of the
Fund. The Fund risks losing all or part of the cash paid (premium) for
purchasing options. Even a small decline in the value of a reference asset
underlying call options or a small increase in the value of a reference asset
underlying put options can result in the entire investment in such options being
lost. Additionally, the value of the option may be lost if the Sub-Adviser fails
to exercise such option at or prior to its expiration.
Other
Investment Companies Risk.
The Fund will incur higher and duplicative expenses when it invests in other
investment companies, such as ETFs, BDCs and closed-end funds. By investing in
another investment company, the Fund becomes a shareholder of that investment
company and bears its proportionate share of the fees and expenses of the other
investment company. There is also the risk that the Fund may suffer losses due
to the investment practices of the underlying funds as the Fund will be subject
to substantially the same risks as those associated with the direct ownership of
securities held by such investment companies. ETFs may be less liquid than other
investments, and thus their share values more volatile than the values of the
investments they hold. Investments in ETFs are also subject to the “ETF Risks”
described above.
Preferred
Securities Risk.
Preferred stocks are subject to the risks of equity securities generally and
also risks associated with fixed-income securities, such as interest rate risk.
A company’s preferred stock, which may pay fixed or variable rates of return,
generally pays dividends only after the company makes required payments to
creditors, including vendors, depositors, counterparties, holders of its bonds
and other fixed-income securities. As a result, the value of a company’s
preferred stock will react more strongly than bonds and other debt to actual or
perceived changes in the company’s financial condition or prospects. Preferred
stock may be less liquid than many other types of securities, such as common
stock, and generally has limited or no voting rights. In addition, preferred
stock is subject to the risks that a company may defer or not pay dividends,
and, in certain situations, may call or redeem its preferred stock or convert it
to common stock. To the extent that the Fund invests a substantial portion of
its assets in convertible preferred stocks, declining common stock values may
also cause the value of the Fund’s investments to decline.
Recent
Market Events Risk.
U.S. and international markets have experienced significant periods of
volatility in recent years and months due to a number of economic, political and
global macro factors including the impact of COVID-19, which has resulted in
public health issues, growth concerns in the U.S. and overseas, layoffs, rising
unemployment claims, changed travel and social behaviors, and reduced consumer
spending. The lasting effects of COVID-19 on the global economy and the recovery
from COVID-19 are uncertain and may last for an extended period of time. 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.
Recently
Organized Fund Risk.
The Fund is newer, with limited operating history. As a result, prospective
investors do not have a long-term track record or history on which to base their
investment decision. There can be no assurance that the Fund will grow to or
maintain an economically viable size.
REIT
Risk.
A REIT is a company that owns or finances income-producing real estate. Through
its investments in REITs, the Fund is subject to the risks of investing in the
real estate market, including decreases in property revenues, increases in
interest rates, increases in property taxes and operating expenses, legal and
regulatory changes, a lack of credit or capital, defaults by borrowers or
tenants, environmental problems and natural disasters.
REITs
are subject to additional risks, including those related to adverse governmental
actions; declines in property value and the real estate market; the potential
failure to qualify for tax-free pass through of income; and exemption from
registration as an investment company. REITs are dependent upon specialized
management skills and may invest in relatively few properties, a small
geographic area, or a small number of property types. As a result, investments
in REITs may be volatile. To the extent the Fund invests in REITs concentrated
in specific geographic areas or property types, the Fund may be subject to a
greater loss as a result of adverse developments affecting such area or property
types. REITs are pooled investment vehicles with their own fees and expenses and
the Fund will indirectly bear a proportionate share of those fees and
expenses.
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.
◦Financial
Services Sector Risk.
The Fund may invest in companies in the financial services sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector. This sector can be significantly affected by changes in interest
rates, government regulation, the rate of defaults on corporate, consumer and
government debt and the availability and cost of capital, among other factors.
Insurance companies, in particular, may be significantly affected by changes in
interest rates, catastrophic events, price and market competition, the
imposition of premium rate caps, or other changes in government regulation or
tax law and/or rate regulation, which may have an adverse impact on their
profitability. This sector has experienced significant losses in the recent
past, and the impact of more stringent capital requirements and of recent or
future regulation on any individual financial company or on the sector as a
whole cannot be predicted. In recent years, cyber attacks and technology
malfunctions and failures have become increasingly frequent in this sector and
have caused significant losses. As of August 31, 2021, 36.8% of the Fund’s total
investments were invested in the financial services sector.
YieldCo
Risk. Investments
in securities of YieldCos involve risks that differ from investments in
traditional operating companies, including risks related to the relationship
between the YieldCo and the company responsible for the formation of the YieldCo
(the “YieldCo Sponsor”). YieldCos typically remain dependent on the management
and administration services provided by or under the direction of the YieldCo
Sponsor and on the ability of the YieldCo Sponsor to identify and present the
YieldCo with acquisition opportunities, which may often be assets of the YieldCo
Sponsor itself. YieldCo Sponsors may have interests that conflict with the
interests of the YieldCo, and may retain control of the YieldCo via classes of
stock held by the YieldCo Sponsor. YieldCo securities can be affected by
macro-economic and other factors affecting the stock market in general,
expectations of interest rates, investor sentiment towards YieldCos or the
energy sector, changes in a particular issuer’s financial condition, or
unfavorable or unanticipated poor performance of a particular issuer (in the
case of YieldCos, generally measured in terms of distributable cash flow). Any
event that limits the YieldCo’s ability to maintain or grow its distributable
cash flow would likely have a negative impact on the YieldCo’s share price.
YieldCos may finance their growth strategy with debt, which may increase a
YieldCo’s leverage and the risks associated with the YieldCo. The ability of a
YieldCo to maintain or grow its dividend distributions may depend on the
entity’s ability to minimize its tax liabilities through the use of accelerated
depreciation schedules, tax loss carryforwards, and tax incentives. Changes to
the current tax code could result in greater tax liabilities, which would reduce
the YieldCo’s distributable cash flow.
Performance
Performance information for the Fund is not
included because the Fund has not completed a full calendar year of operations
as of the date of this Prospectus. When such information is
included, this section will provide some indication of the risks of investing in
the Fund by showing changes in the Fund’s performance history from year to year
and showing how the Fund’s average annual total returns compare with those of a
broad measure of market performance. Although past performance of the
Fund is no guarantee of how it will perform in the future, historical
performance may give you some indication of the risks of investing in the
Fund. Updated performance information is available on the Fund’s
website at www.leatherbackam.com/etfs.
Management
Investment
Adviser
Toroso
Investments, LLC (“Toroso” or the “Adviser”) serves
as investment adviser to the Fund.
Investment
Sub-Adviser
Leatherback
Asset Management, LLC serves
as investment sub-adviser to the Fund.
Portfolio
Managers
Michael
Venuto, Chief Investment Officer for the Adviser, is responsible for the
day-to-day management of the Fund and has been a portfolio manager of the Fund
since its inception in 2020.
Charles
A. Ragauss, CFA, Portfolio Manager for the Adviser, is responsible for the
day-to-day management of the Fund and has been a portfolio manager of the Fund
since its inception in 2020.
Michael
J. Winter, CFA, Chief Executive Officer and Chief Investment Officer for
Leatherback, is responsible for the day-to-day management of the Fund and has
been a portfolio manager of the Fund since its inception in 2020.
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 (the “Deposit Securities”) and/or a designated amount of U.S.
cash.
Shares
are listed on a national securities exchange, such as 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 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. This difference in bid and ask
prices is often 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 www.leatherbackam.com/etfs.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless an 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, the Sub-Adviser, or their
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 FUNDS
Investment
Objective
The
Leatherback Long/Short Absolute Return ETF (a “Fund” or the “Absolute Return
ETF”) seeks absolute return. The Leatherback Long/Short Alternative Yield ETF (a
“Fund” or the “Alternative Yield ETF”) seeks capital appreciation and income.
The Absolute Return ETF and Alternative Yield ETF are collectively referred to
as the “Funds”.
An
investment objective is fundamental if it cannot be changed without the consent
of the holders of a majority of the outstanding Shares. Each Fund’s investment
objective has not been adopted as a fundamental investment policy and therefore
may be changed without the consent of a Fund’s shareholders upon approval by the
Board of Trustees (the “Board”) of Tidal ETF Trust (the “Trust”) and 60 days’
written notice to shareholders.
Principal
Investment Strategies
The
following information is in addition to, and should be read along with, the
description of each Fund’s principal investment strategies in the sections
titled “Fund Summary—Principal Investment Strategies” above.
Temporary
Defensive Strategies
For
temporary defensive purposes during adverse market, economic, political, or
other conditions, a Fund may invest up to 100% of its assets in cash or cash
equivalents, such as U.S. Government obligations, investment grade debt
securities and other money market instruments. Taking a temporary defensive
position may result in a Fund not achieving its investment
objective.
Manager
of Managers Structure
The
Funds and the Adviser have received exemptive relief from the SEC permitting the
Adviser (subject to certain conditions and the approval of the Board) to change
or select new unaffiliated sub-advisers without obtaining shareholder approval.
The relief also permits the Adviser to materially amend the terms of agreements
with an unaffiliated sub-adviser (including an increase in the fee paid by the
Adviser to the unaffiliated sub-adviser (and not paid by a Fund)) or to continue
the employment of an unaffiliated sub-adviser after an event that would
otherwise cause the automatic termination of services with Board approval, but
without shareholder approval. Shareholders will be notified of any unaffiliated
sub-adviser changes. The Adviser has the ultimate responsibility, subject to
oversight by the Board, to oversee a sub-adviser(s) and recommend their hiring,
termination and replacement.
Principal
Risks of Investing in each Fund
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 Funds,
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 a Fund. Some or
all of these risks may adversely affect a Fund’s NAV per share, trading price,
yield, total return and/or ability to meet its investment objective. The
following risks could affect the value of your performance in the Fund:
Associated
Risk of Short Selling.
Each Fund may make short sales of securities, which involves selling a security
the Fund does not own in anticipation that the price of the security will
decline. Short sales may involve substantial risk and leverage. Short sales
expose a Fund to the risk that it will be required to buy (“cover”) the security
sold short when the security has appreciated in value or is unavailable, thus
resulting in a loss to the Fund. Short sales also involve the risk that losses
may exceed the amount invested and may be unlimited.
BDC
Risk
(Alternative
Yield ETF only). BDCs
generally invest in debt securities that are not rated by a credit rating agency
and are considered below investment grade quality (“junk bonds”). Little public
information generally exists for the type of companies in which a BDC may invest
and, therefore, there is a risk that the Fund may not be able to make a fully
informed evaluation of the BDC and its portfolio of investments. In addition,
investments made by BDCs are typically illiquid and are difficult to value for
purposes of determining a BDC’s net asset value. The markets for securities such
as those held by BDCs, typically fixed income securities, may experience periods
of illiquidity and volatility.
Closed-End
Fund Risk. Shares
of closed-end funds frequently trade at a price per share that is less than the
net asset value per share. There can be no assurance that the market discount on
shares of any closed-end fund purchased by the Fund will ever decrease or that
when the Fund seeks to sell shares of a closed-end fund it can receive the net
asset value of those shares.
Convertible
Securities Risk. Convertible
securities rank senior to the issuer's common stock, but may be subordinate to
senior debt obligations. In part, the total return for a convertible security
may depend upon the performance of the underlying stock into which it can be
converted. Synthetic convertibles may respond differently to market fluctuations
than traditional convertible securities. They are also subject to counterparty
risk.
Depositary
Receipt Risk.
Depositary receipts involve risks similar to those associated with investments
in foreign securities and give rise to certain additional risks. Depositary
receipts listed on U.S. or foreign 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 a
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.
Equity
Market Risk. The
equity securities held in a 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, or sectors in which each Fund invests. Common
stocks, such as those held by the Funds, are generally exposed to greater risk
than other types of securities, such as preferred stock and debt obligations,
because common stockholders generally have inferior rights to receive payment
from issuers.
ETF
Risk.
◦Authorized
Participants, Market Makers, and Liquidity Providers Concentration Risk.
Each
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.
◦Cash
Redemption Risk. A
Fund’s investment strategy may require it to redeem Shares for cash or to
otherwise include cash as part of its redemption proceeds. For example, a Fund
may not be able to redeem in-kind certain securities held by the Fund (e.g., TBA
transactions, short positions, derivative instruments, and bonds that cannot be
broken up beyond certain minimum sizes needed for transfer and settlement). In
such a case, a Fund may be required to sell or unwind portfolio investments to
obtain the cash needed to distribute redemption proceeds. This may cause the
Fund to recognize a capital gain that it might not have recognized if it had
made a redemption in-kind. As a result, a Fund may pay out higher annual capital
gain distributions than if the in-kind redemption process was used.
◦Costs
of Buying or Selling Shares. 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 will also incur the cost of the 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. 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 the 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 the Shares or during periods of market volatility.
This risk is heightened in times of market volatility or periods of steep market
declines. 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 the Shares.
In times of severe market disruption, the bid-ask spread can increase
significantly. At those times, Shares are most likely to be traded at a discount
to NAV, and the discount is likely to be greatest when the price of Shares is
falling fastest, which may be the time that you most want to sell your Shares.
The Adviser believes that, under normal market conditions, large market price
discounts or premiums to NAV will not be sustained because of arbitrage
opportunities.
◦Trading.
Although
Shares are listed for trading on the Exchange and may be listed or traded on
U.S. and non-U.S. stock exchanges other than the Exchange, there can be no
assurance that an active trading market for such Shares will develop or be
maintained. Trading in Shares may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to Exchange “circuit breaker”
rules, which temporarily halt trading on the Exchange when a decline in the
S&P 500 Index during a single day reaches certain thresholds (e.g., 7%, 13%,
and 20%). Additional rules applicable to the Exchange may halt trading in Shares
when extraordinary volatility causes sudden, significant swings in the market
price of Shares. There can be no assurance that Shares will trade with any
volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of Shares may begin to mirror the liquidity of the Funds’ underlying
portfolio holdings, which can be significantly less liquid than
Shares.
Fixed
Income Risk.
The value of the Funds’ investments in fixed income securities will fluctuate
with changes in interest rates. Typically, a rise in interest rates causes a
decline in the value of fixed income securities owned indirectly by a Fund. On
the other hand, if rates fall, the value of the fixed income securities
generally increases. The Funds may be subject to a greater risk of rising
interest rates due to the current period of historically low rates and the
effect of potential government fiscal policy initiatives and resulting market
reaction to those initiatives. In general, the market price of fixed income
securities with longer maturities will increase or decrease more in response to
changes in interest rates than shorter-term securities.
General
Market Risk.
Economies and financial markets throughout the world are becoming increasingly
interconnected, which increases the likelihood that events or conditions in one
country or region will adversely impact markets or issuers in other countries or
regions. Securities in a Fund’s portfolio may underperform in comparison to
securities in the general financial markets, a particular financial market or
other asset classes, due to a number of factors, including inflation (or
expectations for inflation), interest rates, global demand for particular
products or resources, natural disasters or events, pandemic diseases,
terrorism, regulatory events, and government controls.
Management
Risk. The
Funds are actively-managed and a Fund may not meet its investment objective
based on the Sub-Adviser’s success or failure to implement investment strategies
for such Fund.
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 may also 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.
MLP
Risk (Alternative
Yield ETF only).
The Fund’s exposure to MLPs may subject the Fund to greater volatility than
investments in traditional securities. The value of MLPs and MLP-based ETFs and
notes may be affected by changes in overall market movements, commodity index
volatility, changes in interest rates, or sectors affecting a particular
industry or commodity, such as drought, floods, weather, livestock disease,
embargoes, tariffs, and international economic, political and regulatory
developments. To the extent the Fund’s investments in MLPs expose its portfolio
to the energy sector, such as the oil and gas industries, the Fund may
experience additional risks related to these industries.
MLP
Tax Risk (Alternative
Yield ETF only). The
Fund may invest in MLPs that are treated as qualified publicly-traded
partnerships for federal income tax purposes. Net income derived from an
interest in a qualified publicly traded partnership is treated as qualifying
income for purposes of satisfying the source of income requirements to be
treated as a RIC. However, no more than 25% of the value of a RIC’s total assets
at the end of each fiscal quarter may be invested in securities of qualified
publicly-traded partnerships. If an MLP in which the Fund invests is taxed as a
partnership for federal income tax purposes, the Fund will include in its
taxable income its allocable share of the MLP’s income regardless of whether the
Fund receives any distribution from the MLP. Thus, the Fund may be required to
sell other securities to satisfy the distribution requirements to qualify as a
RIC and to avoid Fund-level federal income and excise taxes. In addition, if an
MLP in which the Fund invests does not qualify as a qualified publicly traded
partnership (and is otherwise not taxed as a corporation), income derived by the
Fund from the MLP will be treated as qualifying income only to the extent such
income is attributable to items of income of the MLP that would be qualifying
income if realized directly by the Fund. The receipt of non-qualifying income
from such investments could jeopardize the Fund’s status as a RIC. Distributions
to the Fund from an MLP that is taxed as a partnership for federal income tax
purposes will constitute a return of capital to the extent of the Fund’s basis
in its interest in the MLP. If the Fund retains an investment until its basis is
reduced to zero, distributions in excess of basis will generally constitute
capital gain for federal income tax purposes.
New
Adviser Risk.
Leatherback is a newly registered investment adviser and has not previously
served as an adviser or sub-adviser to an investment company. As a result, there
is no long-term track record against which an investor may judge Leatherback and
it is possible Leatherback may not achieve a Fund’s intended investment
objective.
New
Fund Risk (Absolute
Return ETF only).
The Fund is a recently organized management investment company with no operating
history. As a result, prospective investors do not have a track record or
history on which to base their investment decision.
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 smaller number of issuers
than if it was a diversified fund. As a result, a decline in the value of an
investment in a single issuer or a smaller number of issuers could cause a
Fund’s overall value to decline to a greater degree than if the Fund held a more
diversified portfolio. This may increase a Fund’s volatility and have a greater
impact on the Fund’s performance.
Other
Investment Companies Risk.
The Funds will incur higher and duplicative expenses when they invest in other
investment companies, such as ETFs, BDCs and closed-end funds, as applicable. By
investing in another investment company, a Fund becomes a shareholder of that
investment company and bears its proportionate share of the fees and expenses of
the other investment company. There is also the risk that a Fund may suffer
losses due to the investment practices of the underlying funds as the Fund will
be subject
to
substantially the same risks as those associated with the direct ownership of
securities held by such investment companies. ETFs may be less liquid than other
investments, and thus their share values more volatile than the values of the
investments they hold. Investments in ETFs are also subject to the “ETF Risks”
described above.
Options
Risk.
Options enable a Fund to purchase exposure that is significantly greater than
the premium paid. Consequently, the value of such options can be volatile, and a
small investment in options can have a large impact on the performance of the
Fund. The Funds risk losing all or part of the cash paid (premium) for
purchasing options. Even a small decline in the value of a reference asset
underlying call options or a small increase in the value of a reference asset
underlying put options can result in the entire investment in such options being
lost. Additionally, the value of the option may be lost if the Sub-Adviser fails
to exercise such option at or prior to its expiration.
Preferred
Securities Risk.
Preferred stocks are subject to the risks of equity securities generally and
also risks associated with fixed-income securities, such as interest rate risk.
A company’s preferred stock, which may pay fixed or variable rates of return,
generally pays dividends only after the company makes required payments to
creditors, including vendors, depositors, counterparties, holders of its bonds
and other fixed-income securities. As a result, the value of a company’s
preferred stock will react more strongly than bonds and other debt to actual or
perceived changes in the company’s financial condition or prospects. Preferred
stock may be less liquid than many other types of securities, such as common
stock, and generally has limited or no voting rights. In addition, preferred
stock is subject to the risks that a company may defer or not pay dividends,
and, in certain situations, may call or redeem its preferred stock or convert it
to common stock. To the extent that a Fund invests a substantial portion of its
assets in convertible preferred stocks, declining common stock values may also
cause the value of the Funds’ investments to decline.
Recent
Market Events Risk.
U.S. and international markets have experienced significant periods of
volatility in recent years and months due to a number of economic, political and
global macro factors including the impact of COVID-19 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 particular, the spread of COVID-19 worldwide has
resulted in disruptions to supply chains and customer activity, stress on the
global healthcare system, temporary and permanent layoffs in the private sector,
and rising unemployment claims, reduced consumer spending, quarantines,
cancellations, market declines, the closing of borders, restrictions on travel,
changed travel and social behaviors, and widespread concern and uncertainty. The
recovery from the lasting effects of COVID-19 is uncertain and may last for an
extended period of time. Health crises and related political, social and
economic disruptions caused by the spread of COVID-19 may also exacerbate other
pre-existing political, social and economic risks in certain countries. 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,
despite government efforts to address market disruptions. As a result, the risk
environment remains elevated. The Adviser and the Sub-Adviser will monitor
developments and seek to manage the Fund in a manner consistent with achieving
the Fund’s investment objective, but there can be no assurance that they will be
successful in doing so.
Recently
Organized Fund Risk
(Alternative
Yield Fund only).
The Fund is newer, with limited operating history. As a result, prospective
investors do not have a long-term track record or history on which to base their
investment decision. There can be no assurance that the Fund will grow to or
maintain an economically viable size.
REIT
Risk.
A REIT is a company that owns or finances income-producing real estate. Through
its investments in REITs, the Funds are subject to the risks of investing in the
real estate market, including decreases in property revenues, increases in
interest rates, increases in property taxes and operating expenses, legal and
regulatory changes, a lack of credit or capital, defaults by borrowers or
tenants, environmental problems and natural disasters.
REITs
are subject to additional risks, including those related to adverse governmental
actions; declines in property value and the real estate market; the potential
failure to qualify for tax-free pass through of income; and exemption from
registration as an investment company. REITs are dependent upon specialized
management skills and may invest in relatively few properties, a small
geographic area, or a small number of property types. As a result, investments
in REITs may be volatile. To the extent the Funds invest in REITs concentrated
in specific geographic areas or property types, the Funds may be subject to a
greater loss as a result of adverse developments affecting such area or property
types. REITs are pooled investment vehicles with their own fees and expenses and
the Funds will indirectly bear a proportionate share of those fees and
expenses.
Sector
Risk. To
the extent a Fund invests more heavily in particular sectors of the economy, its
performance will be especially sensitive to developments that significantly
affect those sectors.
◦Financial
Services Sector Risk (Alternative
Yield Fund only).
The
Fund may invest in companies in the financial services sector, and therefore the
performance of the Fund could be negatively impacted by events affecting this
sector. This sector can be significantly affected by changes in interest rates,
government regulation, the rate of defaults on corporate, consumer and
government debt and the availability and cost of capital, among other factors.
Insurance companies, in particular, may be significantly affected by changes in
interest rates, catastrophic events, price and market competition, the
imposition of premium rate caps, or other changes in government regulation or
tax law and/or rate regulation, which may have an adverse impact on their
profitability. This sector has experienced significant losses in the recent
past, and the impact of more stringent capital requirements and of recent or
future regulation on any individual financial company or on the sector as a
whole cannot
be
predicted. In recent years, cyber attacks and technology malfunctions and
failures have become increasingly frequent in this sector and have caused
significant losses. As of August 31, 2021, 36.8% of the Fund’s total investments
were invested in the financial services sector.
YieldCo
Risk (Alternative
Yield ETF only).
Investments
in securities of YieldCos involve risks that differ from investments in
traditional operating companies, including risks related to the relationship
between the YieldCo and the YieldCo Sponsor. YieldCos typically remain dependent
on the management and administration services provided by or under the direction
of the YieldCo Sponsor and on the ability of the YieldCo Sponsor to identify and
present the YieldCo with acquisition opportunities, which may often be assets of
the YieldCo Sponsor itself. To the extent that the YieldCo relies on the YieldCo
Sponsor for developing new assets for potential future acquisitions, the YieldCo
may be dependent on the development capabilities and financial health of the
YieldCo Sponsor. YieldCo Sponsors may have interests that conflict with the
interests of the YieldCo, and may retain control of the YieldCo via classes of
stock held by the YieldCo Sponsor. Congress could alter the availability of
accelerated depreciation schedules and tax credits, meaning new YieldCo assets
could be subject to slower depreciation schedules and there could be less
ability to minimize tax liabilities. Additionally, such action by Congress could
reduce the profitability of YieldCos. YieldCo securities can be affected by
macro-economic and other factors affecting the stock market in general,
expectations of interest rates, investor sentiment towards YieldCos or the
energy sector, changes in a particular issuer’s financial condition, or
unfavorable or unanticipated poor performance of a particular issuer (in the
case of YieldCos, generally measured in terms of distributable cash flow). A
YieldCo’s share price is typically a multiple of its distributable cash
flow. Therefore any event that limits the YieldCo’s ability to maintain or
grow its distributable cash flow would likely have a negative impact on the
YieldCo’s share price. Prices of YieldCo securities also can be affected by
fundamentals unique to the company, including the robustness and consistency of
its earnings and its ability to meet debt obligations including the payment of
interest and principle to creditors. YieldCos may distribute all or
substantially all of the cash available for distribution, which may limit new
acquisitions and future growth. A YieldCo may finance its growth strategy with
debt, which may increase the YieldCo’s leverage and the risks associated with
the YieldCo. The ability of a YieldCo to maintain or grow its dividend
distributions may depend on the entity’s ability to minimize its tax liabilities
through the use of accelerated depreciation schedules, tax loss carryforwards,
and tax incentives. Changes to the current tax code could result in greater tax
liabilities, which would reduce the YieldCo’s distributable cash
flow.
PORTFOLIO
HOLDINGS INFORMATION
Information
about the Alternative Yield ETF’s daily portfolio holdings is available on the
Funds’ website at www.leatherbackam.com/etfs. 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 (“SAI”).
MANAGEMENT
Investment
Adviser
Toroso
Investments, LLC, located at 898 N. Broadway, Suite 2, Massapequa, New York
11758, is an SEC-registered investment adviser and a Delaware limited liability
company. Toroso was founded in and has been managing investment companies since
March 2012. Toroso is dedicated to understanding, researching and managing
assets within the expanding ETF universe. As of November 30, 2021, Toroso had
assets under management of approximately $8.2 billion and served as the
investment adviser or sub-adviser for 43 registered funds.
Toroso
serves as investment adviser to the Funds, and has overall responsibility for
the general management and administration of the Funds pursuant to an investment
advisory agreement with the Trust, on behalf of the Funds (the “Advisory
Agreement”). The Adviser is responsible for determining the securities purchased
and sold by the Funds. The Adviser also arranges for sub-advisory, transfer
agency, custody, fund administration, and all other related services necessary
for the Funds to operate.
The
Adviser provides oversight of the Sub-Adviser, monitoring of the Sub-Adviser’s
buying and selling of securities for the Alternative Yield ETF, and review of
the Sub-Adviser’s performance. The Adviser is responsible for trading portfolio
securities for the Funds, including selecting broker-dealers to execute purchase
and sale transactions, or directing such trading to be effected by the
Sub-Adviser. For the services it provides to the Funds, each Fund (currently,
only the Alternative Yield ETF) pays the Adviser a unified management fee, which
is calculated daily and paid monthly, at an annual rate based on the applicable
Fund’s average daily net assets as set forth in the table
below.
|
|
|
|
|
|
Name
of Fund |
Management
Fee |
Leatherback
Long/Short Absolute Return ETF |
0.95% |
Leatherback
Long/Short Alternative Yield ETF |
0.95% |
Under
the Advisory Agreement the Adviser has agreed to pay all expenses incurred by
each 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 Funds 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”).
Sub-Adviser
Leatherback
Asset Management, LLC, located at 2000 PGA Boulevard, Suite 4440, Palm Beach
Gardens, Florida 33408, serves as investment sub-adviser to the Funds pursuant
to a sub-advisory agreement between the Adviser and the Sub-Adviser (the
“Sub-Advisory Agreement”). Leatherback is responsible for the day-to-day
management of each Fund’s portfolio, including determining the securities
purchased and sold by the Funds, subject to the supervision of the Adviser and
the Board. Leatherback is also responsible for trading portfolio securities for
the Funds, including selecting broker-dealers to execute purchase and sale
transactions, or directing such trading to be effected by the Adviser. For its
services, Leatherback is paid a fee by the Adviser, which fee is calculated
daily and paid monthly, at an annual rate of 0.75% of each Fund’s average daily
net assets.
The
Sub-Adviser has agreed to assume the Adviser’s obligation to pay all expenses
incurred by each Fund, except for the sub-advisory fee payable to the
Sub-Adviser and Excluded Expenses. Such expenses incurred by the Funds and paid
by the Sub-Adviser include fees charged by Tidal ETF Services, LLC, the Funds’
administrator and an affiliate of the Adviser. See the section of the SAI titled
“Administrator” for additional information about the Funds’ administrator.
A
discussion regarding the basis for the Board’s approval of the Alternative Yield
ETF’s Advisory Agreement and Sub-Advisory Agreement is available in the
Alternative Yield ETF’s semi-annual report to shareholders for the period ended
February 28, 2021. A discussion regarding the basis for the Board’s approval of
the Absolute Return ETF’s Advisory Agreement and Sub-Advisory Agreement will be
available in the Absolute Return ETF’s first annual or semi-annual request to
shareholders after commencement of operations.
Portfolio
Managers
The
following individuals are jointly and primarily responsible for the day-to-day
management of the Funds (each, a “Portfolio Manager”) and, with respect to the
Alternative Yield ETF, have acted in this capacity since the Fund’s inception in
2020:
Michael
Venuto, Chief Investment Officer for the Adviser
Mr.
Venuto is a co-founder and has been the Chief Investment Officer of the Adviser
since 2012. Mr. Venuto is an ETF industry veteran with over a decade of
experience in the design and implementation of ETF-based investment strategies.
Previously, he was Head of Investments at Global X Funds where he provided
portfolio optimization services to institutional clients. Before that, he was
Senior Vice President at Horizon Kinetics where his responsibilities included
new business development, investment strategy and client and strategic
initiatives.
Charles
A. Ragauss, CFA, Portfolio Manager for the Adviser
Mr.
Ragauss serves as Portfolio Manager of the Adviser, having joined the Adviser in
September 2020. Mr. Ragauss previously served as Chief Operating Officer and in
other roles at Csat Investment Advisory, L.P., doing business as Exponential
ETFs, from April 2016 to September 2020. Previously, Mr. Ragauss was Assistant
Vice President at Huntington National Bank (“Huntington”), where he was Product
Manager for the Huntington Funds and Huntington Strategy Shares ETFs, a combined
fund complex of almost $4 billion in assets under management. At Huntington, he
led ETF development bringing to market some of the first actively managed ETFs.
Mr. Ragauss joined Huntington in 2010. Mr. Ragauss attended Grand Valley State
University where he received his Bachelor of Business Administration in Finance
and International Business, as well as a minor in French. He is a member of both
the National and West Michigan CFA societies and holds the CFA
designation.
Michael
J. Winter, CFA, Chief Executive Officer and Chief Investment Officer of
Leatherback
Mr.
Winter serves as Chief Executive Officer and Chief Investment Officer of
Leatherback. Prior to founding Leatherback, Mr. Winter served as Co-Founder
and Principal of Otter Creek Advisors, LLC, and Portfolio Manager of its
predecessor firm, Otter Creek Management, Inc., from 2007 through 2019 as well
as MBA intern in 2004. Mr. Winter served as Portfolio Manager of the Otter Creek
Long/Short Opportunity Fund, a series of Professionally Managed Portfolios, from
its inception in 2013 through 2019. Prior to Otter Creek, Mr. Winter was a
Portfolio Manager and Analyst at long/short hedge fund Staghorn Capital
Management, LLC from 2005 to 2006. From 2000 to 2003, Mr. Winter served as
an Investment Associate and Analyst at Putnam Investment Management working in
both the international and domestic equities divisions on multiple mutual fund
strategies. Mr. Winter received an MBA from the University of Chicago Booth
School of Business with concentrations in Accounting, Economics,
Entrepreneurship and Finance in 2005. Mr. Winter graduated from Boston
College with a BS in 2000. Mr. Winter is a CFA charterholder and a member
of the CFA Society South Florida.
CFA®
is a registered trademark owned by the CFA Institute.
The
Funds’ SAI provides additional information about each Portfolio Manager’s
compensation structure, other accounts that each Portfolio Manager manages, and
each Portfolio Manager’s ownership of Shares.
HOW
TO BUY AND SELL SHARES
Please
note, currently only the Alternative Yield ETF is available for purchase. 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 (defined below), 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.
Depository Trust Company (“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 the NAV. As such, the Funds
accommodate frequent purchases and redemptions by APs. However, the Board has
also determined that frequent purchases and redemptions for cash may increase
tracking error and portfolio transaction costs and may lead to the realization
of capital gains. To minimize these potential consequences of frequent purchases
and redemptions, the Funds employ fair value pricing and may impose transaction
fees on purchases and redemptions of Creation Units to cover the custodial and
other costs incurred by the Funds in effecting trades. In addition, the Funds
and the Adviser reserve the right to reject any purchase order at any
time.
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 (“NYSE”), generally 4:00 p.m. Eastern Time, each day
the NYSE is open for business. The NAV for each 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. 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 procedures and methodologies to fair value Fund 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 delisted
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 Funds 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 Board-adopted valuation procedures. Due to
the subjective and variable nature of fair value pricing, there can be no
assurance that the Adviser or Sub-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 in the Funds
Section 12(d)(1)
of the 1940 Act restricts investments by registered investment companies in the
securities of other investment companies, including Shares. Registered
investment companies are permitted to invest in the Funds beyond the limits set
forth in
Section
12(d)(1), subject to certain terms and conditions set forth in an SEC exemptive
order issued to the Trust or rule under the 1940 Act, including that such
investment companies enter into an agreement with the Funds.
Delivery
of Shareholder Documents – Householding
Householding
is an option available to certain investors of the Funds. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for the Funds is available through certain broker-dealers.
If you are interested in enrolling in householding and receiving a single copy
of prospectuses and other shareholder documents, please contact your
broker-dealer. If you are currently enrolled in householding and wish to change
your householding status, please contact your broker-dealer.
DIVIDENDS,
DISTRIBUTIONS, AND TAXES
Dividends
and Distributions
The
Absolute Return ETF intends to pay out dividends and interest income, if any,
annually, and distribute any net realized capital gains to its shareholders at
least annually. The Alternative Yield ETF intends to pay out dividends and
interest income, if any, monthly, and distribute any net realized capital gains
to its shareholders at least annually.
Each
Fund will declare and pay income and capital gain distributions, if any, in
cash. 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.
Each
Fund intends to qualify each year for treatment as a regulated investment
company (a “RIC”) under the Internal Revenue Code of 1986, as amended. 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 plan, 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 (institutional
investors only).
The
tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax
Act”) made significant changes to the U.S. federal income tax rules for taxation
of individuals and corporations, generally effective for taxable years beginning
after December 31, 2017. Many of the changes applicable to individuals are
temporary and would apply only to taxable years before January 1, 2026. There
were only minor changes with respect to the specific rules only applicable to
RICs, such as the Funds. The Tax Act, however, also made numerous other changes
to the tax rules that may affect shareholders and the Funds. Subsequent
legislation has modified certain changes to the U.S. federal income tax rules
made by the Tax Act which may, in addition, affect shareholders and the Funds.
You are urged to consult with your own tax advisor regarding how this
legislation affects your investment in a Fund.
Taxes
on Distributions
The
Absolute Return ETF intends to pay out dividends and interest income, if any,
annually, and distribute any net realized capital gains to its shareholders at
least annually. The Alternative Yield ETF intends to pay out dividends and
interest income, if any, monthly, and distribute any net realized capital gains
to its shareholders at least annually. For federal income tax purposes,
distributions of net investment income are generally taxable to shareholders as
ordinary income or qualified dividend income. Taxes on distributions of net
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 their 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 to
shareholders as long-term capital gains. Distributions of short-term capital
gain will generally be taxable to shareholders 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 certain 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.
Dividends received by a Fund from a REIT may be treated as qualified dividend
income generally only to the extent so reported by such REIT.
Shortly
after the close of each calendar year, you will be informed of the character of
any distributions received from a Fund.
In
addition to the federal income tax, certain individuals, trusts and estates may
be subject to a Net Investment Income (“NII”) tax of 3.8%. The NII tax is
imposed on the lesser of: (i) a taxpayer’s investment income, net of deductions
properly allocable to such income; or (ii) the amount by which such taxpayer’s
modified adjusted gross income exceeds certain thresholds ($250,000 for married
individuals filing jointly, $200,000 for unmarried individuals and $125,000 for
married individuals filing separately). A Fund’s distributions are
includable in a shareholder’s investment income for purposes of this NII
tax. In addition, any capital gain realized by a shareholder upon a sale or
redemption of Fund shares is includable in such shareholder’s investment income
for purposes of this NII tax.
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 to you 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 to you 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. 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.
Under
the Foreign Account Tax Compliance Act (“FATCA”), a Fund may be required to
withhold a generally nonrefundable 30% tax on (i) distributions of investment
company taxable income and (ii) distributions of net capital gain and the gross
proceeds of a sale or redemption of Fund shares paid to (A) certain “foreign
financial institutions” unless such foreign financial institution agrees to
verify, monitor, and report to the Internal Revenue Service (“IRS”) the identity
of certain of its account holders, among other items (or unless such entity is
otherwise deemed compliant under the terms of an intergovernmental agreement
between the United States and the foreign financial institution’s country of
residence), and (B) certain “non-financial foreign entities” unless such entity
certifies to the Fund that it does not have any substantial U.S. owners or
provides the name, address, and taxpayer identification number of each
substantial U.S. owner, among other items. In December 2018, the IRS and
Treasury Department released proposed Treasury Regulations that would eliminate
FATCA withholding on Fund distributions of net capital gain and the gross
proceeds from a sale or redemption of Fund shares. Although taxpayers are
entitled to rely on these proposed Treasury Regulations until final Treasury
Regulations are issued, these proposed Treasury Regulations have not been
finalized, may not be finalized in their proposed form, and are potentially
subject to change. This FATCA withholding tax could also affect a Fund’s return
on its investments in foreign securities or affect a shareholder’s return if the
shareholder holds its Fund shares through a foreign intermediary. You are urged
to consult your tax adviser regarding the application of this FATCA withholding
tax to your investment in a Fund and the potential certification, compliance,
due diligence, reporting, and withholding obligations to which you may become
subject in order to avoid this withholding tax.
Each
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 they are 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 are acquired, including through reinvestment of
dividends, within a 61-day period beginning 30 days before and ending 30 days
after the sale of substantially identical Shares.
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 IRS 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. Persons 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 comprising the Creation
Units have been held for more than one year and as a short-term capital gain or
loss if such Shares have been held for one year or less.
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.
Taxation
of REIT Investments
The
Funds may invest in REITs. The Tax Act treats “qualified REIT dividends” (i.e.,
ordinary REIT dividends other than capital gain dividends and portions of REIT
dividends designated as qualified dividend income eligible for capital gain tax
rates) as eligible for a 20% deduction by non-corporate taxpayers. In general,
qualified REIT dividends that an investor receives directly from a REIT are
automatically eligible for the 20% qualified business income deduction. The IRS
has issued final Treasury Regulations that permit a dividend or part of a
dividend paid by a RIC and reported as a “section 199A dividend” to be treated
by the recipient as a qualified REIT dividend for purposes of the 20% qualified
business income deduction, if certain holding period and other requirements have
been satisfied by the recipient with respect to its Shares. The final Treasury
Regulations do not extend such conduit treatment to qualified publicly traded
partnership income, as defined under Section 199A of the Code, earned by a RIC.
Therefore, non-corporate shareholders may not include any qualified publicly
traded partnership income earned through a Fund in their qualified business
income deduction. The IRS and Treasury Department are continuing to evaluate
whether it is appropriate to provide such conduit treatment.
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 foreign, 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
Foreside
Fund Services, LLC (the “Distributor”), the Funds’ distributor, is a
broker-dealer registered with the SEC. The Distributor distributes Creation
Units for the Funds on an agency basis and does not maintain a secondary market
in Shares. The Distributor has no role in determining the policies of the Funds
or the securities that are purchased or sold by the Funds. The Distributor’s
principal address is Three
Canal Plaza, Suite 100, Portland, Maine 04101.
The
Board has adopted a Distribution (Rule 12b-1) 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 to pay
distribution fees for the sale and distribution of its Shares.
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 on an ongoing basis, 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 of a Fund traded on the Exchange at a price above
(i.e., at a premium) or below (i.e., at a discount) the NAV of the applicable
Fund can be found on the Funds’ website at www.leatherbackam.com/etfs (currently
only applicable to the Alternative Yield ETF).
ADDITIONAL
NOTICES
Shares
are not sponsored, endorsed, or promoted by the Exchange. The Exchange is not
responsible for, nor has it participated in the determination of, the timing,
prices, or quantities of Shares to be issued, nor in the determination or
calculation of the equation by which Shares are redeemable. The Exchange has no
obligation or liability to owners of Shares in connection with the
administration, marketing, or trading of 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, the Sub-Adviser, and each Fund make no representation or warranty,
express or implied, to the owners of Shares or any member of the public
regarding the advisability of investing in securities generally or in the Funds
particularly.
FINANCIAL
HIGHLIGHTS
The
Financial Highlights table is intended to help you understand the Alternative
Yield ETF’s financial performance for the fiscal period from commencement of
operations (November 16, 2020) to August 31, 2021. 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 Alternative Yield ETF (assuming reinvestment of all dividends and
distributions). This information has been audited by Tait, Weller & Baker
LLP, the Alternative Yield ETF’s independent registered public accounting firm,
whose report, along with the Fund’s financial statements, is included in the
Fund’s annual report, which is available upon request. As of the date of this
Prospectus, the Absolute Return ETF had not commenced operations, therefore,
Financial Highlights are not shown.
|
|
|
|
|
|
|
Period
Ended
August
31, 2021
(1) |
Net
asset value, beginning of period |
$ |
20.00 |
|
|
|
Income
(Loss) from Investment Operations: |
|
Net
investment income (loss)(2) |
0.52 |
|
Net
realized and unrealized gain (loss) on investments |
3.94 |
|
Total
from investment operations |
4.46 |
|
|
|
Less
Distributions: |
|
From
net investment income |
(0.54) |
|
Total
distributions |
(0.54) |
|
|
|
Net
asset value, end of period |
$ |
23.92 |
|
Total
return(3)(4) |
22.46 |
% |
|
|
Ratios
/ Supplemental Data: |
|
Net
assets, end of period (millions) |
$ |
6.0 |
|
Portfolio
turnover rate(3) |
47 |
% |
Ratio
of expenses to average net assets(5)(6) |
1.23 |
% |
Ratio
of net investment income (loss) to average net assets(5)(7) |
2.88 |
% |
(1)The
Fund commenced operations on November 16, 2020. The information presented is
from November 16, 2020 to August 31, 2021.
(2)Calculated
using average shares outstanding method.
(3)Not
annualized.
(4)The
total return is based on the Fund’s net asset value.
(5)Annualized.
(6)The
ratio of expenses to average net assets includes dividends and interest on
securities sold short. The expense ratio excluding dividends and interest on
securities sold short is 0.95% for the period ended August 31,
2021.
(7)The
net investment income (loss) ratios include dividends and interest on securities
sold short.
Leatherback
Long/Short Absolute Return ETF
Leatherback
Long/Short Alternative Yield ETF
|
|
|
|
|
|
|
|
|
|
|
|
Adviser |
Toroso
Investments, LLC
898
N. Broadway, Suite 2
Massapequa,
New York 11758 |
Administrator |
Tidal
ETF Services LLC
898
N. Broadway, Suite 2
Massapequa,
New York 11758 |
Sub-Adviser |
Leatherback
Asset Management, LLC
2000
PGA Boulevard, Suite 4440
Palm
Beach Gardens, Florida 33408
|
Sub-Administrator,
Fund Accountant, and Transfer Agent |
U.S.
Bancorp Fund Services, LLC,
doing
business as U.S. Bank Global Fund Services
615
East Michigan Street
Milwaukee,
Wisconsin 53202 |
Distributor
|
Foreside
Fund Services, LLC
Three
Canal Plaza, Suite 100
Portland,
Maine 04101 |
Custodian
|
U.S.
Bank National Association
1555
N. Rivercenter Dr.
Milwaukee,
Wisconsin 53212 |
Legal
Counsel
|
Godfrey
& Kahn, S.C.
833
East Michigan Street, Suite 1800
Milwaukee,
Wisconsin 53202 |
Independent
Registered Public Accounting Firm
|
Tait,
Weller & Baker LLP
Two
Liberty Place
50
S. 16th Street, 29th Floor
Philadelphia,
Pennsylvania 19102 |
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 and techniques of
the Funds and certain other additional information. A current SAI dated
December 29, 2021, as supplemented from time to time, is on file with the
SEC and is herein incorporated by reference into this Prospectus. It is legally
considered a part of this Prospectus.
Annual/Semi-Annual
Reports: Additional
information about the Alternative Yield ETF’s investments is available in the
Fund’s annual and semi-annual reports to shareholders. In the annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Alternative Yield ETF’s performance during the Fund’s
prior fiscal period.
You
can obtain free copies of these documents, request other information or make
general inquiries about the Funds by contacting the Funds at Leatherback ETFs,
c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, Wisconsin
53201-0701 or calling 833-417-0090.
Shareholder
reports, the Funds’ current Prospectus and SAI 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; or
•Free
of charge from the Funds’ Internet website at www.leatherbackam.com/etfs;
or
(SEC
Investment Company Act File No. 811-23377)