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Arrow Reverse Cap 500 ETF

 

YPS

 

 

 

 

Annual Report 

July 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

1-877-277-6933

1-877-ARROW-FD

www.ArrowFunds.com

 

 

Dear Shareholder:

 

We are pleased to present this annual report for the Arrow Reverse Cap 500 ETF (“YPS” or the “Fund”) for the one-year period ended July 31, 2022.

 

YPS seeks to track the performance, before fees and expenses, of the Reverse Cap Weighted U.S. Large Cap Index (“the “Index”). The Index is a rules-based, reverse capitalization weighted index comprised of constituents of the S&P 500 Index, which consists of approximately 500 leading U.S.-listed companies representing approximately 80% of the U.S. equity market capitalization. The Index seeks to provide exposure to the U.S. large-cap market but with greater emphasis on the smaller- end of the large-cap market, unlike many traditional market capitalization weighted indexes that place a greater emphasis on the largest companies in the large-cap market. The Index includes common stocks and equity interests in real estate investment trusts (“REITS”).

 

Arrow Investment Advisors began managing the Fund in May 2021 and changed the ticker from RVRS to YPS. Net assets were over $17.3 million at the end of July 2022.

 

Management’s Discussion of Fund Performance

 

All performance is based on net asset value (“NAV”) and assumes the reinvestment of distributions, without regard to individual taxes or withholdings. Index returns assume reinvestment of distributions, but do not include fees. Individual performance will vary due to a number of factors, including, but not limited to, trading commissions, bid/ask spreads, premium/discounts relative to the NAV, time of trading and other potential market factors—please refer to the Fund’s prospectus for more information.

 

Since its inception in October 2017 through July 2022, the Fund had a total return of 9.49% versus the broad domestic stock market’s gain of 12.45% (S&P 500). For the one -year period ended July 31, 2022, the Fund had a return of -5.31%, underperforming the S&P 500 Index return of -4.64%. Over the last year, value outperformed growth and large cap companies outperformed small and mid-cap companies. Accordingly, the Fund’s performance was similar to the S&P 500 due to its value and small/mid-cap orientation.

 

The Fund generally pays distributions annually at the end of each calendar year, or as needed if special distributions are required. As of the last distribution made during the reporting period, with a record date of December 27, 2021, the Fund paid a $0.2436 per share distribution.

 

For more information about current performance, holdings or historical premiums/discounts, please visit our website at www.arrowfunds.com. We are grateful for your continued investment and for your confidence in our company.

 

Sincerely,

 

(SIGNATURE) 

 

Joseph J. Barrato

Chief Executive Officer

Arrow Investment Advisors, LLC

September 2022

 

AD-092222

1

 

Arrow Reverse Cap 500 ETF 

PORTFOLIO REVIEW (Unaudited) 

July 31, 2022

 

The Fund’s performance figures* for the year ended July 31, 2022, as compared to its benchmarks:

 

        Annualized
      Annualized Since Inception** -
    One Year Three Year July 31, 2022
Arrow Reverse Cap 500 ETF - NAV (5.31)% 10.34% 9.49%
Arrow Reverse Cap 500 ETF - Market Price (5.36)% 10.26% 9.47%
Reverse Cap Weighted U.S. Large Cap Index (4.98)% 10.51% 9.69%
S&P 500 Index   (4.64)% 13.36% 12.45%

 

* Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the sale of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.ArrowFunds.com or by calling 1-877-277-6933. The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the market price or bid/ask as of close of market on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively. Information detailing the number of days the Market Price of the Fund was greater than the Fund’s NAV and the number of days it was less than the Fund’s NAV can be obtained at www.arrowfunds.com. The Fund’s total annual operating expenses are 0.29% per the December 1, 2021 and the April 27, 2022 prospectus. Please see the Financial Highlights for a more recent expense ratio.

 

** As of the close of business on the day of commencement of trading on October 31, 2017.

 

The Reverse Cap Weighted U.S. Large Cap Index is a rule-based, reverse capitalization weighted index comprised of constituents of the S&P 500® Index, which consists of approximately 500 leading U.S.-listed companies representing approximately 80% of the U.S. equity market capitalization. The Index seeks to provide exposure to the U.S. large-cap market but with greater emphasis on the smaller-end of the large-cap market, unlike many traditional market capitalization weighted indexes that place a greater emphasis on the largest companies in the large-cap market. The Index includes common stocks and equity interests in real estate investment trusts (“REITs”). Investors cannot invest directly in an index.

 

The S&P 500 Index is a widely accepted, unmanaged index of U.S. stock market performance which does not take into account charges, fees and other expenses. Investors cannot invest directly in an index.

 

Comparison of the Change in Value of a $10,000 Investment

 

(LINE GRAPH)

  

The Fund’s Holdings by Sector as of July 31, 2022 are as follows:

 

Sector      % of Net Assets  
Common Stocks:        
Consumer Discretionary     17.4 %
Industrials     14.8 %
Technology     13.6 %
Financials     11.0 %
Health Care     10.9 %
Real Estate     7.0 %
Utilities     5.7 %
Materials     5.4 %
Communications     5.3 %
Consumer Staples     5.0 %
Energy     2.6 %
Other Assets in Excess of Liabilities     1.3 %
      100.0 %

 

Please refer to the Schedule of Investments in this Annual Report for a detailed listing of the Fund’s Holdings.

2

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7%        
        ADVERTISING & MARKETING - 0.7%        
  2,263     Interpublic Group of Companies, Inc. (The)   $ 67,595  
  790     Omnicom Group, Inc.     55,174  
              122,769  
        AEROSPACE & DEFENSE - 1.9%        
  68     Boeing Company(a)     10,833  
  54     General Dynamics Corporation     12,240  
  1,568     Howmet Aerospace, Inc.     58,220  
  402     Huntington Ingalls Industries, Inc.     87,170  
  67     L3Harris Technologies, Inc.     16,078  
  15     Lockheed Martin Corporation     6,207  
  27     Northrop Grumman Corporation     12,930  
  58     Raytheon Technologies Corporation     5,406  
  109     Teledyne Technologies, Inc.(a)     42,663  
  875     Textron, Inc.     57,435  
  38     TransDigm Group, Inc.(a)     23,649  
              332,831  
        APPAREL & TEXTILE PRODUCTS - 2.7%        
  43     NIKE, Inc., Class B     4,942  
  2,632     PVH Corporation     162,973  
  1,704     Ralph Lauren Corporation     168,065  
  2,631     Tapestry, Inc.     88,481  
  838     VF Corporation     37,442  
              461,903  
        ASSET MANAGEMENT - 1.6%        
  100     Ameriprise Financial, Inc.     26,992  
  12     BlackRock, Inc.     8,030  
  76     Charles Schwab Corporation (The)     5,248  
  2,413     Franklin Resources, Inc.     66,237  
  5,462     Invesco Ltd.     96,895  
  427     Raymond James Financial, Inc.     42,047  
  248     T Rowe Price Group, Inc.     30,621  
              276,070  
        AUTOMOTIVE - 0.9%        
  268     Aptiv plc(a)     28,111  

 

See accompanying notes to financial statements.

3

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
             
        COMMON STOCKS — 98.7% (Continued)        
                 
        AUTOMOTIVE - 0.9% (Continued)        
  2,317     BorgWarner, Inc.   $ 89,111  
  1,211     Ford Motor Company     17,790  
  428     General Motors Company(a)     15,519  
  2     Tesla, Inc.(a)     1,783  
              152,314  
        BANKING - 3.2%        
  75     Bank of America Corporation     2,536  
  142     Citigroup, Inc.     7,370  
  1,080     Citizens Financial Group, Inc.     41,008  
  945     Comerica, Inc.     73,492  
  843     Fifth Third Bancorp     28,763  
  201     First Republic Bank     32,705  
  3,233     Huntington Bancshares, Inc.     42,967  
  11     JPMorgan Chase & Company     1,269  
  2,423     Key Corporation     44,341  
  143     M&T Bank Corporation     25,375  
  59     PNC Financial Services Group, Inc. (The)     9,790  
  1,815     Regions Financial Corporation     38,442  
  323     Signature Bank     59,939  
  68     SVB Financial Group(a)     27,441  
  187     Truist Financial Corporation     9,438  
  204     US Bancorp     9,629  
  100     Wells Fargo & Company     4,387  
  1,661     Zions Bancorp NA     90,607  
              549,499  
        BEVERAGES - 1.0%        
  490     Brown-Forman Corporation, Class B     36,368  
  66     Coca-Cola Company (The)     4,235  
  78     Constellation Brands, Inc., Class A     19,212  
  396     Keurig Dr Pepper, Inc.     15,341  
  1,227     Molson Coors Beverage Company, Class B     73,313  
  169     Monster Beverage Corporation(a)     16,836  
  27     PepsiCo, Inc.     4,724  
              170,029  

 

See accompanying notes to financial statements.

4

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        BIOTECH & PHARMA - 1.7%        
  20     AbbVie, Inc.   $ 2,870  
  30     Amgen, Inc.     7,424  
  124     Biogen, Inc.(a)     26,667  
  73     Bristol-Myers Squibb Company     5,386  
  12     Eli Lilly and Company     3,956  
  195     Gilead Sciences, Inc.     11,651  
  678     Incyte Corporation(a)     52,667  
  6     Johnson & Johnson     1,047  
  52     Merck & Company, Inc.     4,646  
  106     Moderna, Inc.(a)     17,394  
  2,324     Organon & Company     73,718  
  71     Pfizer, Inc.     3,586  
  18     Regeneron Pharmaceuticals, Inc.(a)     10,470  
  42     Vertex Pharmaceuticals, Inc.(a)     11,777  
  4,914     Viatris, Inc.     47,617  
  51     Zoetis, Inc.     9,310  
              290,186  
        CABLE & SATELLITE - 0.8%        
  15     Charter Communications, Inc., Class A(a)     6,482  
  90     Comcast Corporation, Class A     3,377  
  7,002     DISH Network Corporation, Class A(a)     121,624  
              131,483  
        CHEMICALS - 3.0%        
  53     Air Products and Chemicals, Inc.     13,156  
  122     Albemarle Corporation     29,806  
  324     Avery Dennison Corporation     61,709  
  353     Celanese Corporation - Series A     41,481  
  415     CF Industries Holdings, Inc.     39,628  
  302     Corteva, Inc.     17,380  
  301     Dow, Inc.     16,016  
  374     DuPont de Nemours, Inc.     22,900  
  572     Eastman Chemical Company     54,872  
  114     Ecolab, Inc.     18,829  
  465     FMC Corporation     51,662  

 

See accompanying notes to financial statements.

5

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        CHEMICALS - 3.0% (Continued)        
  197     International Flavors & Fragrances, Inc.   $ 24,438  
  17     Linde plc     5,134  
  231     LyondellBasell Industries N.V., Class A     20,587  
  697     Mosaic Company (The)     36,704  
  238     PPG Industries, Inc.     30,771  
  57     Sherwin-Williams Company (The)     13,791  
              498,864  
        COMMERCIAL SUPPORT SERVICES - 1.1%        
  58     Cintas Corporation     24,678  
  161     Republic Services, Inc.     22,324  
  937     Robert Half International, Inc.     74,154  
  1,282     Rollins, Inc.     49,447  
  85     Waste Management, Inc.     13,988  
              184,591  
        CONSTRUCTION MATERIALS - 0.4%        
  113     Martin Marietta Materials, Inc.     39,785  
  228     Vulcan Materials Company     37,695  
              77,480  
        CONTAINERS & PACKAGING - 1.8%        
  3,054     Amcor PLC     39,549  
  495     Ball Corporation     36,343  
  963     International Paper Company     41,188  
  342     Packaging Corp of America     48,089  
  1,383     Sealed Air Corporation     84,528  
  1,445     Westrock Company     61,210  
              310,907  
        DATA CENTER REIT - 0.2%        
  156     Digital Realty Trust, Inc.     20,662  
  19     Equinix, Inc.     13,371  
              34,033  
        DIVERSIFIED INDUSTRIALS - 1.2%        
  72     3M Company     10,313  
  309     Dover Corporation     41,307  
  95     Eaton Corp plc     14,097  

 

See accompanying notes to financial statements.

6

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        DIVERSIFIED INDUSTRIALS - 1.2% (Continued)        
  159     Emerson Electric Company   $ 14,321  
  134     General Electric Company     9,904  
  36     Honeywell International, Inc.     6,929  
  63     Illinois Tool Works, Inc.     13,089  
  1,968     Pentair PLC     96,215  
              206,175  
        E-COMMERCE DISCRETIONARY - 0.8%        
  673     eBay, Inc.     32,728  
  1,031     Etsy, Inc.(a)     106,935  
              139,663  
        ELECTRIC UTILITIES - 4.9%        
  2,492     AES Corporation (The)     55,372  
  839     Alliant Energy Corporation     51,120  
  363     Ameren Corporation     33,803  
  178     American Electric Power Company, Inc.     17,544  
  1,318     CenterPoint Energy, Inc.     41,767  
  568     CMS Energy Corporation     39,039  
  232     Consolidated Edison, Inc.     23,031  
  603     Constellation Energy Corporation     39,858  
  149     Dominion Energy, Inc.     12,215  
  262     DTE Energy Company     34,139  
  98     Duke Energy Corporation     10,773  
  445     Edison International     30,158  
  275     Entergy Corporation     31,661  
  737     Evergy, Inc.     50,308  
  287     Eversource Energy     25,319  
  440     Exelon Corporation     20,456  
  744     FirstEnergy Corporation     30,578  
  60     NextEra Energy, Inc.     5,069  
  1,782     NRG Energy, Inc.     67,271  
  1,220     Pinnacle West Capital Corporation     89,634  
  1,278     PPL Corporation     37,164  
  375     Public Service Enterprise Group, Inc.     24,626  
  108     Sempra Energy     17,906  

 

See accompanying notes to financial statements.

7

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        ELECTRIC UTILITIES - 4.9% (Continued)        
  163     Southern Company (The)   $ 12,533  
  240     WEC Energy Group, Inc.     24,914  
  307     Xcel Energy, Inc.     22,466  
              848,724  
        ELECTRICAL EQUIPMENT - 3.4%        
  1,695     A O Smith Corporation     107,243  
  738     Allegion plc     78,007  
  223     AMETEK, Inc.     27,541  
  252     Amphenol Corporation, Class A     19,437  
  626     Carrier Global Corporation     25,372  
  602     Fortive Corporation     38,799  
  183     Generac Holdings, Inc.(a)     49,099  
  401     Johnson Controls International plc     21,618  
  210     Keysight Technologies, Inc.(a)     34,146  
  367     Otis Worldwide Corporation     28,688  
  143     Rockwell Automation, Inc.     36,505  
  41     Roper Technologies, Inc.     17,903  
  156     TE Connectivity Ltd.     20,862  
  185     Trane Technologies PLC     27,193  
  762     Trimble, Inc.(a)     52,906  
              585,319  
        ENGINEERING & CONSTRUCTION - 0.5%        
  347     Jacobs Engineering Group, Inc.     47,643  
  329     Quanta Services, Inc.     45,642  
              93,285  
        ENTERTAINMENT CONTENT - 1.6%        
  163     Activision Blizzard, Inc.     13,032  
  143     Electronic Arts, Inc.     18,766  
  2,105     Fox Corporation, Class A     69,697  
  3,127     Fox Corporation - Class B, CLASS B     96,623  
  1,655     Paramount Global, Class B     39,141  
  266     Take-Two Interactive Software, Inc.(a)     35,306  
  26     Walt Disney Company (The)(a)     2,759  

 

See accompanying notes to financial statements.

8

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        ENTERTAINMENT CONTENT - 1.6% (Continued)        
  1,393     Warner Bros Discovery, Inc.(a)   $ 20,895  
              296,219  
        FOOD - 2.5%        
  1,072     Campbell Soup Company     52,902  
  1,382     Conagra Brands, Inc.     47,278  
  250     General Mills, Inc.     18,698  
  109     Hershey Company (The)     24,848  
  594     Hormel Foods Corporation     29,308  
  399     J M Smucker Company (The)     52,796  
  431     Kellogg Company     31,860  
  482     Kraft Heinz Company (The)     17,752  
  1,119     Lamb Weston Holdings, Inc.     89,139  
  352     McCormick & Company, Inc.     30,747  
  170     Mondelez International, Inc., Class A     10,887  
  366     Tyson Foods, Inc., Class A     32,212  
              438,427  
        GAMING REITS - 0.2%        
  827     VICI Properties, Inc.     28,275  
                 
        GAS & WATER UTILITIES - 0.8%        
  195     American Water Works Company, Inc.     30,311  
  421     Atmos Energy Corporation     51,105  
  2,070     NiSource, Inc.     62,928  
              144,344  
        HEALTH CARE FACILITIES & SERVICES - 4.0%        
  161     AmerisourceBergen Corporation     23,495  
  15     Anthem, Inc.     7,157  
  933     Cardinal Health, Inc.     55,569  
  356     Catalent, Inc.(a)     40,264  
  202     Centene Corporation(a)     18,780  
  300     Charles River Laboratories International, Inc.(a)     75,162  
  34     Cigna Corporation     9,362  
  58     CVS Health Corporation     5,549  
  885     DaVita, Inc.(a)     74,482  

 

See accompanying notes to financial statements.

9

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        HEALTH CARE FACILITIES & SERVICES - 4.0% (Continued)        
  69     HCA Healthcare, Inc.   $ 14,657  
  834     Henry Schein, Inc.(a)     65,744  
  35     Humana, Inc.     16,870  
  94     IQVIA Holdings, Inc.(a)     22,585  
  151     Laboratory Corp of America Holdings     39,591  
  50     McKesson Corporation     17,079  
  166     Molina Healthcare, Inc.(a)     54,402  
  371     Quest Diagnostics, Inc.     50,667  
  4     UnitedHealth Group, Inc.     2,169  
  877     Universal Health Services, Inc., Class B     98,636  
              692,220  
        HEALTH CARE REIT - 0.6%        
  2,057     Healthpeak Properties, Inc.     56,835  
  667     Ventas, Inc.     35,871  
  226     Welltower, Inc.     19,513  
              112,219  
        HOME & OFFICE PRODUCTS - 1.1%        
  4,852     Newell Brands, Inc.     98,059  
  504     Whirlpool Corporation     87,126  
              185,185  
        HOME CONSTRUCTION - 2.7%        
  452     DR Horton, Inc.     35,270  
  1,379     Fortune Brands Home & Security, Inc.     96,089  
  552     Lennar Corporation, Class A     46,920  
  1,113     Masco Corporation     61,638  
  703     Mohawk Industries, Inc.(a)     90,321  
  14     NVR, Inc.(a)     61,503  
  1,895     PulteGroup, Inc.     82,660  
              474,401  
        HOTEL REITS - 0.3%        
  3,090     Host Hotels & Resorts, Inc.     55,033  
                 
        HOUSEHOLD PRODUCTS - 0.7%        
  374     Church & Dwight Company, Inc.     32,902  

 

See accompanying notes to financial statements.

10

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        HOUSEHOLD PRODUCTS - 0.7% (Continued)        
  347     Clorox Company (The)   $ 49,219  
  168     Colgate-Palmolive Company     13,228  
  51     Estee Lauder Companies, Inc. (The), Class A     13,928  
  131     Kimberly-Clark Corporation     17,264  
  17     Procter & Gamble Company (The)     2,361  
              128,902  
        INDUSTRIAL REIT - 0.2%        
  687     Duke Realty Corporation     42,979  
  51     Prologis, Inc.     6,761  
              49,740  
        INDUSTRIAL SUPPORT SERVICES - 0.6%        
  487     Fastenal Company     25,012  
  139     United Rentals, Inc.(a)     44,851  
  60     WW Grainger, Inc.     32,612  
              102,475  
        INFRASTRUCTURE REIT - 0.2%        
  32     American Tower Corporation     8,667  
  63     Crown Castle International Corporation     11,382  
  73     SBA Communications Corporation     24,513  
              44,562  
        INSTITUTIONAL FINANCIAL SERVICES - 1.3%        
  481     Bank of New York Mellon Corporation (The)     20,904  
  540     Cboe Global Markets, Inc.     66,625  
  45     CME Group, Inc.     8,977  
  23     Goldman Sachs Group, Inc. (The)     7,668  
  132     Intercontinental Exchange, Inc.     13,463  
  65     Morgan Stanley     5,480  
  181     Nasdaq, Inc.     32,743  
  357     Northern Trust Corporation     35,621  
  459     State Street Corporation     32,607  
              224,088  
        INSURANCE - 4.3%        
  349     Aflac, Inc.     19,998  
  192     Allstate Corporation (The)     22,458  

 

See accompanying notes to financial statements.

11

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        INSURANCE - 4.3% (Continued)        
  305     American International Group, Inc.   $ 15,790  
  45     Aon plc, CLASS A     13,097  
  143     Arthur J Gallagher & Company     25,596  
  431     Assurant, Inc.     75,761  
  3     Berkshire Hathaway, Inc., Class B(a)     902  
  818     Brown & Brown, Inc.     53,252  
  47     Chubb Ltd.     8,866  
  317     Cincinnati Financial Corporation     30,857  
  236     Everest Re Group Ltd.     61,679  
  866     Globe Life, Inc.     87,231  
  474     Hartford Financial Services Group, Inc. (The)     30,559  
  1,671     Lincoln National Corporation     85,789  
  812     Loews Corporation     47,299  
  68     Marsh & McLennan Companies, Inc.     11,149  
  242     MetLife, Inc.     15,307  
  651     Principal Financial Group, Inc.     43,578  
  94     Progressive Corporation (The)     10,816  
  197     Prudential Financial, Inc.     19,698  
  113     Travelers Companies, Inc. (The)     17,933  
  571     W R Berkley Corporation     35,705  
  162     Willis Towers Watson plc     33,524  
              766,844  
        INTERNET MEDIA & SERVICES - 1.0%        
  5     Booking Holdings, Inc.(a)     9,678  
  408     Expedia Group, Inc.(a)     43,269  
  430     Match Group, Inc.(a)     31,523  
  10     Meta Platforms, Inc., Class A(a)     1,591  
  49     Netflix, Inc.(a)     11,020  
  617     Twitter, Inc.(a)     25,673  
  237     VeriSign, Inc.(a)     44,832  
              167,586  
        LEISURE FACILITIES & SERVICES - 5.6%        
  1,867     Caesars Entertainment, Inc.(a)     85,303  
  7,167     Carnival Corporation(a)     64,933  

 

See accompanying notes to financial statements.

12

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        LEISURE FACILITIES & SERVICES - 5.6% (Continued)        
  13     Chipotle Mexican Grill, Inc.(a)   $ 20,335  
  386     Darden Restaurants, Inc.     48,053  
  132     Domino’s Pizza, Inc.     51,759  
  147     Hilton Worldwide Holdings, Inc.     18,826  
  811     Las Vegas Sands Corporation(a)     30,567  
  405     Live Nation Entertainment, Inc.(a)     38,066  
  96     Marriott International, Inc., Class A     15,247  
  21     McDonald’s Corporation     5,531  
  1,849     MGM Resorts International     60,518  
  11,980     Norwegian Cruise Line Holdings Ltd.(a)     145,557  
  4,748     Penn National Gaming, Inc.(a)     164,043  
  1,672     Royal Caribbean Cruises Ltd.(a)     64,723  
  104     Starbucks Corporation     8,817  
  1,742     Wynn Resorts Ltd.(a)     110,582  
  210     Yum! Brands, Inc.     25,733  
              958,593  
        LEISURE PRODUCTS - 0.3%        
  733     Hasbro, Inc.     57,702  
                 
        MACHINERY - 2.2%        
  32     Caterpillar, Inc.     6,344  
  18     Deere & Company     6,177  
  281     IDEX Corporation     58,659  
  887     Ingersoll Rand, Inc.     44,173  
  304     Nordson Corporation     70,221  
  87     Parker-Hannifin Corporation     25,151  
  320     Snap-on, Inc.     71,696  
  406     Stanley Black & Decker, Inc.     39,516  
  649     Xylem, Inc.     59,727  
              381,664  
        MEDICAL EQUIPMENT & DEVICES - 5.2%        
  35     Abbott Laboratories     3,809  
  267     ABIOMED, Inc.(a)     78,234  
  161     Agilent Technologies, Inc.     21,590  

 

See accompanying notes to financial statements.

13

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        MEDICAL EQUIPMENT & DEVICES - 5.2% (Continued)        
  147     Align Technology, Inc.(a)   $ 41,303  
  277     Baxter International, Inc.     16,249  
  45     Becton Dickinson and Company     10,994  
  118     Bio-Rad Laboratories, Inc., Class A(a)     66,465  
  162     Bio-Techne Corporation     62,415  
  330     Boston Scientific Corporation(a)     13,547  
  137     Cooper Companies, Inc. (The)     44,799  
  17     Danaher Corporation     4,955  
  2,397     DENTSPLY SIRONA, Inc.     86,675  
  220     DexCom, Inc.(a)     18,058  
  123     Edwards Lifesciences Corporation(a)     12,366  
  571     Hologic, Inc.(a)     40,758  
  72     IDEXX Laboratories, Inc.(a)     28,741  
  114     Illumina, Inc.(a)     24,702  
  49     Intuitive Surgical, Inc.(a)     11,278  
  57     Medtronic plc     5,274  
  21     Mettler-Toledo International, Inc.(a)     28,344  
  279     PerkinElmer, Inc.     42,734  
  115     ResMed, Inc.     27,660  
  171     STERIS plc     38,586  
  35     Stryker Corporation     7,516  
  219     Teleflex, Inc.     52,661  
  7     Thermo Fisher Scientific, Inc.     4,189  
  109     Waters Corporation(a)     39,679  
  112     West Pharmaceutical Services, Inc.     38,479  
  277     Zimmer Biomet Holdings, Inc.     30,578  
              902,638  
        METALS & MINING - 0.1%        
  253     Freeport-McMoRan, Inc.     7,983  
  173     Newmont Corporation     7,833  
              15,816  
        MULTI ASSET CLASS REIT - 0.8%        
  4,104     Vornado Realty Trust     124,720  

 

See accompanying notes to financial statements.

14

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        OFFICE REIT - 0.5%        
  220     Alexandria Real Estate Equities, Inc.   $ 36,472  
  510     Boston Properties, Inc.     46,492  
              82,964  
        OIL & GAS PRODUCERS - 1.7%        
  1,479     APA Corporation     54,973  
  14     Chevron Corporation     2,293  
  65     ConocoPhillips     6,333  
  866     Coterra Energy, Inc.     26,491  
  222     Devon Energy Corporation     13,953  
  186     Diamondback Energy, Inc.     23,812  
  68     EOG Resources, Inc.     7,563  
  26     Exxon Mobil Corporation     2,520  
  159     Hess Corporation     17,883  
  1,100     Kinder Morgan, Inc.     19,789  
  1,247     Marathon Oil Corporation     30,925  
  127     Marathon Petroleum Corporation     11,641  
  202     Occidental Petroleum Corporation     13,282  
  422     ONEOK, Inc.     25,210  
  139     Phillips 66     12,371  
  43     Pioneer Natural Resources Company     10,189  
  101     Valero Energy Corporation     11,188  
  530     Williams Companies, Inc. (The)     18,068  
              308,484  
        OIL & GAS SERVICES & EQUIPMENT - 0.3%        
  606     Baker Hughes Company     15,568  
  561     Halliburton Company     16,438  
  316     Schlumberger N.V.     11,701  
              43,707  
        PUBLISHING & BROADCASTING - 0.7%        
  6,910     News Corporation, CLASS A - NON-VOTING     118,437  
                 
        REAL ESTATE SERVICES - 0.2%        
  420     CBRE Group, Inc., Class A(a)     35,960  

 

See accompanying notes to financial statements.

15

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        RENEWABLE ENERGY - 0.6%        
  153     Enphase Energy, Inc.(a)   $ 43,480  
  171     SolarEdge Technologies, Inc.(a)     61,582  
              105,062  
        RESIDENTIAL REIT - 1.5%        
  135     AvalonBay Communities, Inc.     28,882  
  379     Camden Property Trust     53,477  
  367     Equity Residential     28,769  
  153     Essex Property Trust, Inc.     43,839  
  219     Mid-America Apartment Communities, Inc.     40,675  
  1,125     UDR, Inc.     54,450  
              250,092  
        RETAIL - CONSUMER STAPLES - 0.5%        
  7     Costco Wholesale Corporation     3,789  
  55     Dollar General Corporation     13,664  
  129     Dollar Tree, Inc.(a)     21,331  
  357     Kroger Company (The)     16,579  
  69     Target Corporation     11,273  
  423     Walgreens Boots Alliance, Inc.     16,759  
  14     Walmart, Inc.     1,849  
              85,244  
        RETAIL - DISCRETIONARY - 2.6%        
  378     Advance Auto Parts, Inc.     73,188  
  8     AutoZone, Inc.(a)     17,099  
  2,644     Bath & Body Works, Inc.     93,967  
  613     Best Buy Company, Inc.     47,195  
  516     CarMax, Inc.(a)     51,363  
  278     Genuine Parts Company     42,498  
  8     Home Depot, Inc. (The)     2,408  
  21     Lowe’s Companies, Inc.     4,022  
  27     O’Reilly Automotive, Inc.(a)     18,997  
  343     Ross Stores, Inc.     27,872  
  183     TJX Companies, Inc. (The)     11,192  
  165     Tractor Supply Company     31,594  

 

See accompanying notes to financial statements.

16

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        RETAIL - DISCRETIONARY - 2.6% (Continued)        
  82     Ulta Beauty, Inc.(a)   $ 31,891  
              453,286  
        RETAIL REIT - 1.6%        
  903     Federal Realty Investment Trust     95,366  
  2,866     Kimco Realty Corporation     63,367  
  269     Realty Income Corporation     19,903  
  1,143     Regency Centers Corporation     73,643  
  218     Simon Property Group, Inc.     23,684  
              275,963  
        SELF-STORAGE REIT - 0.3%        
  191     Extra Space Storage, Inc.     36,198  
  35     Public Storage     11,424  
              47,622  
        SEMICONDUCTORS - 2.1%        
  46     Advanced Micro Devices, Inc.(a)     4,346  
  71     Analog Devices, Inc.     12,209  
  59     Applied Materials, Inc.     6,253  
  6     Broadcom, Inc.     3,213  
  96     Intel Corporation     3,486  
  52     KLA Corporation     19,944  
  25     Lam Research Corporation     12,513  
  309     Microchip Technology, Inc.     21,278  
  139     Micron Technology, Inc.     8,599  
  90     Monolithic Power Systems, Inc.     41,825  
  8     NVIDIA Corporation     1,453  
  97     NXP Semiconductors N.V.     17,836  
  491     ON Semiconductor Corporation(a)     32,789  
  671     Qorvo, Inc.(a)     69,830  
  26     QUALCOMM, Inc.     3,772  
  474     Skyworks Solutions, Inc.     51,608  
  508     Teradyne, Inc.     51,252  
  31     Texas Instruments, Inc.     5,546  
              367,752  

 

See accompanying notes to financial statements.

17

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        SOFTWARE - 3.4%        
  10     Adobe, Inc.(a)   $ 4,101  
  502     Akamai Technologies, Inc.(a)     48,302  
  109     ANSYS, Inc.(a)     30,410  
  101     Autodesk, Inc.(a)     21,848  
  118     Cadence Design Systems, Inc.(a)     21,957  
  1,948     Ceridian HCM Holding, Inc.(a)     106,693  
  644     Citrix Systems, Inc.     65,308  
  320     Fortinet, Inc.(a)     19,088  
  13     Intuit, Inc.     5,930  
  3     Microsoft Corporation     842  
  2,355     NortonLifeLock, Inc.     57,768  
  52     Oracle Corporation     4,048  
  153     Paycom Software, Inc.(a)     50,565  
  536     PTC, Inc.(a)     66,132  
  22     Salesforce, Inc.(a)     4,048  
  16     ServiceNow, Inc.(a)     7,147  
  51     Synopsys, Inc.(a)     18,743  
  161     Tyler Technologies, Inc.(a)     64,239  
              597,169  
        SPECIALTY FINANCE - 0.6%        
  38     American Express Company     5,853  
  152     Capital One Financial Corporation     16,694  
  260     Discover Financial Services     26,260  
  1,501     Synchrony Financial     50,253  
              99,060  
        SPECIALTY REITS - 0.3%        
  1,003     Iron Mountain, Inc.     48,635  
                 
        STEEL - 0.1%        
  191     Nucor Corporation     25,938  
                 
        TECHNOLOGY HARDWARE - 3.0%        
  7     Apple, Inc.     1,138  
  259     Arista Networks, Inc.(a)     30,207  

 

See accompanying notes to financial statements.

18

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        TECHNOLOGY HARDWARE - 3.0% (Continued)        
  58     Cisco Systems, Inc.   $ 2,631  
  743     Corning, Inc.     27,313  
  485     F5, Inc.(a)     81,169  
  353     Garmin Ltd.     34,460  
  2,777     Hewlett Packard Enterprise Company     39,544  
  577     HP, Inc.     19,266  
  2,665     Juniper Networks, Inc.     74,699  
  98     Motorola Solutions, Inc.     23,382  
  729     NetApp, Inc.     52,000  
  559     Seagate Technology Holdings plc     44,709  
  875     Western Digital Corporation(a)     42,963  
  146     Zebra Technologies Corporation, Class A(a)     52,223  
              525,704  
        TECHNOLOGY SERVICES - 5.1%        
  11     Accenture plc, Class A     3,369  
  45     Automatic Data Processing, Inc.     10,850  
  311     Broadridge Financial Solutions, Inc.     49,931  
  209     CDW Corporation/DE     37,940  
  286     Cognizant Technology Solutions Corporation, Class A     19,437  
  2,880     DXC Technology Company(a)     91,009  
  138     EPAM Systems, Inc.(a)     48,197  
  179     Equifax, Inc.     37,395  
  143     FactSet Research Systems, Inc.     61,444  
  127     Fidelity National Information Services, Inc.     12,974  
  140     Fiserv, Inc.(a)     14,795  
  176     FleetCor Technologies, Inc.(a)     38,736  
  153     Gartner, Inc.(a)     40,618  
  179     Global Payments, Inc.     21,895  
  59     International Business Machines Corporation     7,717  
  304     Jack Henry & Associates, Inc.     63,162  
  523     Leidos Holdings, Inc.     55,961  
  247     MarketAxess Holdings, Inc.     66,883  
  8     Mastercard, Inc., Class A     2,830  
  48     Moody’s Corporation     14,892  

 

See accompanying notes to financial statements.

19

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
        COMMON STOCKS — 98.7% (Continued)        
        TECHNOLOGY SERVICES - 5.1% (Continued)        
  48     MSCI, Inc.   $ 23,104  
  3,598     Nielsen Holdings plc     86,172  
  157     Paychex, Inc.     20,140  
  76     PayPal Holdings, Inc.(a)     6,576  
  16     S&P Global, Inc.     6,031  
  153     Verisk Analytics, Inc.     29,108  
  9     Visa, Inc., Class A     1,909  
              873,075  
        TELECOMMUNICATIONS - 0.4%        
  212     AT&T, Inc.     3,981  
  5,787     Lumen Technologies, Inc.     63,021  
  43     T-Mobile US, Inc.(a)     6,152  
  59     Verizon Communications, Inc.     2,725  
              75,879  
        TIMBER REIT - 0.1%        
  700     Weyerhaeuser Company     25,424  
                 
        TOBACCO & CANNABIS - 0.1%        
  176     Altria Group, Inc.     7,719  
  67     Philip Morris International, Inc.     6,509  
              14,228  
        TRANSPORTATION & LOGISTICS - 3.3%        
  3,196     Alaska Air Group, Inc.(a)     141,678  
  5,903     American Airlines Group, Inc.(a)     80,929  
  524     CH Robinson Worldwide, Inc.     58,007  
  308     CSX Corporation     9,958  
  1,030     Delta Air Lines, Inc.(a)     32,754  
  431     Expeditors International of Washington, Inc.     45,794  
  68     FedEx Corporation     15,850  
  255     JB Hunt Transport Services, Inc.     46,734  
  46     Norfolk Southern Corporation     11,554  
  104     Old Dominion Freight Line, Inc.     31,565  
  854     Southwest Airlines Company(a)     32,554  
  19     Union Pacific Corporation     4,319  

 

See accompanying notes to financial statements.

20

 

ARROW REVERSE CAP 500 ETF
SCHEDULE OF INVESTMENTS (Continued)
July 31, 2022

 

Shares         Fair Value  
             
        COMMON STOCKS — 98.7% (Continued)        
                 
        TRANSPORTATION & LOGISTICS - 3.3% (Continued)        
  1,466     United Airlines Holdings, Inc.(a)   $ 53,876  
  31     United Parcel Service, Inc., Class B     6,042  
              571,614  
                 
        TRANSPORTATION EQUIPMENT - 0.6%        
  125     Cummins, Inc.     27,664  
  284     PACCAR, Inc.     25,992  
  495     Westinghouse Air Brake Technologies Corporation     46,267  
              99,923  
                 
        WHOLESALE - CONSUMER STAPLES - 0.2%        
  210     Archer-Daniels-Midland Company     17,382  
  210     Sysco Corporation     17,829  
              35,211  
                 
        WHOLESALE - DISCRETIONARY - 0.8%        
  258     Copart, Inc.(a)     33,050  
  1,054     LKQ Corporation     57,801  
  134     Pool Corporation     47,932  
              138,783  
                 
        TOTAL COMMON STOCKS (Cost $18,668,303)     17,122,994  
                 
        TOTAL INVESTMENTS - 98.7% (Cost $18,668,303)   $ 17,122,994  
        OTHER ASSETS IN EXCESS OF LIABILITIES - 1.3%     229,069  
        NET ASSETS - 100.0%   $ 17,352,063  

 

ETF - Exchange-Traded Fund

 

LTD - Limited Company

 

MSCI - Morgan Stanley Capital International

 

NV - Naamioze Vennootschap

 

PLC - Public Limited Company

 

REIT - Real Estate Investment Trust

 

(a) - Non-income producing security.

 

See accompanying notes to financial statements.

21

 

Arrow Reverse Cap 500 ETF
STATEMENT OF ASSETS AND LIABILITIES
July 31, 2022

 

ASSETS        
Investment securities:        
At cost   $ 18,668,303  
At value   $ 17,122,994  
Cash     219,772  
Dividends and interest receivable     11,846  
TOTAL ASSETS     17,354,612  
         
LIABILITIES        
Investment advisory fees payable     2,549  
TOTAL LIABILITIES     2,549  
NET ASSETS     17,352,063  
         
Net Assets Consist Of:        
Paid in capital   $ 20,774,193  
Accumulated deficit     (3,422,130 )
NET ASSETS   $ 17,352,063  
         
Net Asset Value Per Share:        
Net Assets   $ 17,352,063  
Shares of beneficial interest outstanding ($0 par value, unlimited shares authorized)     800,000  
Net asset value (Net Assets ÷ Shares Outstanding)   $ 21.69  

 

See accompanying notes to financial statements.

22

 

Arrow Reverse Cap 500 ETF
STATEMENT OF OPERATIONS
For the Year Ended July 31, 2022

 

INVESTMENT INCOME        
Dividends (net of foreign tax withholding of $88)   $ 341,710  
TOTAL INVESTMENT INCOME     341,710  
         
EXPENSES        
Investment advisory fees     59,906  
TOTAL EXPENSES     59,906  
NET INVESTMENT INCOME     281,804  
         
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS        
Net realized gain (loss) on:        
In-kind redemptions     788,587  
Security transactions     (844,719 )
      (56,132 )
         
Net change in unrealized depreciation on investments     (1,460,976 )
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS     (1,517,108 )
         
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS   $ (1,235,304 )

 

See accompanying notes to financial statements.

23

 

Arrow Reverse Cap 500 ETF
STATEMENTS OF CHANGES IN NET ASSETS

 

    Year Ended     Period Ended     Year Ended  
      July 31, 2022       July 31, 2021 *       September 30, 2020  
FROM OPERATIONS                        
Net investment income   $ 281,804     $ 243,671     $ 211,185  
Net realized gain (loss) on investments and In-kind redemptions     (56,132 )     4,978,990       (456,757 )
Net change in unrealized appreciation (depreciation) on investments     (1,460,976 )     1,232,690       (516,362 )
Net increase (decrease) in net assets resulting from operations     (1,235,304 )     6,455,351       (761,934 )
                         
DISTRIBUTIONS TO SHAREHOLDERS                        
Total distributions paid     (231,420 )     (299,597 )     (177,756 )
Net decrease in net assets resulting from distributions to shareholders     (231,420 )     (299,597 )     (177,756 )
                         
FROM SHARES OF BENEFICIAL INTEREST                        
Proceeds from shares sold     13,021,901       31,969,008       14,509,230  
Cost of shares redeemed     (16,184,669 )     (29,954,471 )     (8,970,335 )
Net increase (decrease) in net assets resulting from shares of beneficial interest     (3,162,768 )     2,014,537       5,538,895  
                         
TOTAL INCREASE (DECREASE) IN NET ASSETS     (4,629,492 )     8,170,291       4,599,205  
                         
NET ASSETS                        
Beginning of Period     21,981,555       13,811,264       9,212,059  
End of Period   $ 17,352,063     $ 21,981,555     $ 13,811,264  
                         
SHARE ACTIVITY                        
Shares Sold     550,000       1,450,000       950,000  
Shares Redeemed     (700,000 )     (1,400,000 )     (600,000 )
Net increase (decrease) in shares of beneficial interest outstanding     (150,000 )     50,000       350,000  

 

* For the period October 1, 2020 to July 31, 2021.

 

See accompanying notes to financial statements.

24

 

Arrow Reverse Cap 500 ETF
FINANCIAL HIGHLIGHTS

 

Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Period

 

    Year Ended     Period Ended     Year Ended     Year Ended     Period Ended  
      July 31, 2022     July 31, 2021 *     September 30, 2020     September 30, 2019     September 30, 2018 (1)  
Net asset value, beginning of period   $ 23.14     $ 15.35     $ 16.75     $ 16.86     $ 15.00  
Activity from investment operations:                                        
Net investment income (2)     0.32       0.22       0.32       0.29       0.25  
Net realized and unrealized gain (loss) on investments     (1.53 )     7.92       (1.40 )     (0.24 ) (5)      1.66  
Total from investment operations     (1.21 )     8.14       (1.08 )     0.05       1.91  
Less distributions from:                                        
Net investment income     (0.24 )     (0.35 )     (0.32 )     (0.16 )     (0.05 )
Total distributions     (0.24 )     (0.35 )     (0.32 )     (0.16 )     (0.05 )
Net asset value, end of period   $ 21.69     $ 23.14     $ 15.35     $ 16.75     $ 16.86  
Total return (4)     -5.31 %     53.66 % (7)     -6.70 %     0.46 %     12.78 % (7)
Net assets, at end of period (000s)   $ 17,352     $ 21,982     $ 13,811     $ 9,212     $ 5,902  
Ratio of net expenses to average net assets     0.29 %     0.29 % (6)     0.29 %     0.29 %     0.29 % (6)
Ratio of net investment income to average net assets     1.38 %     1.59 % (6)     2.04 %     1.80 %     1.66 % (6)
Portfolio Turnover Rate (3)     50 %     33 % (7)     42 %     24 %     36 % (7)

 

 
(1) The Arrow Reverse Cap 500 ETF commencement of operations on October 31, 2017.

 

(2) Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(3) Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

 

(4) Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of the period. Distributions are assumed, for the purpose of this calculation, to be reinvested at the ex-dividend date net asset value per share on their respective payment dates.

 

(5) Net realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Statement of Operations due to share transactions during the period.

 

(6) Annualized for periods less than one year.

 

(7) Not annualized for periods less than one year.

 

* For the period October 1, 2020 to July 31, 2021.

 

See accompanying notes to financial statements.

25

 

ARROW REVERSE CAP 500 ETF
NOTES TO FINANCIAL STATEMENTS
July 31, 2022

 

1. ORGANIZATION

 

The Arrow Reverse Cap 500 ETF (the “Fund”) is a diversified series of Arrow Investments Trust (the “Trust”), a statutory trust organized under the laws of the State of Delaware on August 2, 2011, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund’s investment objective is to track the performance, before fees and expenses, of the Reverse Cap Weighted U.S. Large Cap Index (the “Index”). The Fund commenced operations on October 31, 2017.

 

The Trust acquired the Reverse Cap Weighted U.S. Large Cap ETF (the “Predecessor Fund”), a series of ETF Series Solutions, in a tax-free reorganization on May 24, 2021 (the “Reorganization”). As a series of the Trust, the Fund is a continuation of the Predecessor fund.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies followed by the Fund in preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 “Financial Services-Investment Companies” including FASB Accounting Standards Update (“ASU”) 2013-08.

 

Securities valuation – Securities listed on an exchange (including exchange-traded funds (“ETFs”)) are valued at the last reported sale price at the close of the regular trading session of the exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ at the NASDAQ Official Closing Price (“NOCP”). In the absence of a sale, such securities shall be valued at the last bid price on the day of valuation. Investments valued in currencies other than the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services. If market quotations are not readily available or if Arrow Investment Advisors, LLC (the “Advisor”) believes the market quotations are not reflective of market value, securities will be valued at their fair value as determined in good faith by the Advisor and in accordance with the Trust’s Portfolio Securities Valuation Procedures (the “Procedures”), subject to review by the Board. The Board will review the fair value method in use for securities requiring a fair market value determination and supporting documentation from the Advisor at least quarterly for consistency with the Procedures. The Procedures consider, among others, the following factors to determine a security’s fair value: the nature and pricing history (if any) of the security; whether any dealer quotations for the security are available; and possible valuation methodologies that could be used to determine the fair value of the security. Fair value may also be used by the Board if extraordinary events occur after the close of the relevant world market but prior to the NYSE close. Short-term debt obligations having 60 days or less remaining until maturity, at time of purchase, may be valued at amortized cost.

26

 

ARROW REVERSE CAP 500 ETF
NOTES TO FINANCIAL STATEMENTS (Continued)
July 31, 2022

 

The Fund utilizes various methods to measure the fair value of all of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Fund has the ability to access.

 

Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

 

Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

 

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

 

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following table summarizes the inputs used as of July 31, 2022 for the Fund’s assets measured at fair value:

 

Assets *   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 17,122,994     $     $     $ 17,122,994  
Total   $ 17,122,994     $     $     $ 17,122,994  

 

The Fund did not hold any Level 3 securities during the year ended July 31, 2022.

 

* See Schedule of Investments for classification.

 

In accordance with the Fund’s investment objectives, the Fund may have increased or decreased exposure to one or more of the following risk factors defined below:

27

 

ARROW REVERSE CAP 500 ETF
NOTES TO FINANCIAL STATEMENTS (Continued)
July 31, 2022

 

Real Estate Investment Trust Risk (REIT) – Investments in securities of real estate companies involve risks including, among others, adverse changes in national, state or local real estate conditions; obsolescence of properties; changes in the availability, cost and terms of mortgage funds; and the impact of changes in environmental laws. The value of a REIT can depend on the structure of and cash flow generated by the REIT. In addition, like mutual funds, externally managed REITs have expenses, including advisory and administration fees, which are paid by their shareholders. Further, the failure of a company to qualify as a REIT or comply with applicable federal tax requirements could have adverse consequences for the Fund, including significantly reducing return to the Fund on its investment. REITs determine the characterization of their income annually and may characterize a portion of their distributions as a return of capital or capital gain.

 

Market Risk – The net asset value of the Fund will fluctuate based on changes in the value of the individual securities in which the Fund invests. The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Fund’s portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, climate change or climate related events, pandemics, epidemics, terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years may result in market volatility and may have long term effects on both the U.S. and global financial markets. The current novel coronavirus (COVID-19) global pandemic and the aggressive responses taken by many governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions, as well as the forced or voluntary closure of, or operational changes to, many retail and other businesses, has had negative impacts, and in many cases severe negative impacts, on markets worldwide. It is not known how long such impacts, or any future impacts of other significant events described above, will or would last, but there could be a prolonged period of global economic slowdown, which may impact your Fund investment.

 

Security transactions and related income – Security transactions are accounted for on the trade date. Interest income is recognized on an accrual basis. Dividend income is recorded on the ex-dividend date. Realized gains or losses from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.

 

Dividends and distributions to shareholders – Dividends from net investment income, if any, are generally declared and paid annually. Distributable net realized capital gains, if any, are declared and distributed annually. Dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either temporary (e.g., deferred losses) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions to shareholders are recorded on the ex-dividend date.

28

 

ARROW REVERSE CAP 500 ETF
NOTES TO FINANCIAL STATEMENTS (Continued)
July 31, 2022

 

Federal Income Taxes – The Fund intends to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no provision for federal income tax is required. The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years September 30, 2019 – July 31, 2021 or expected to be taken in the Fund’s July 31, 2022 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal and foreign jurisdictions where the Fund makes significant investments. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

 

Indemnification – The Trust indemnifies its officers and Trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the risk of loss due to these warranties and indemnities appears to be remote.

 

3. INVESTMENT TRANSACTIONS

 

For the year ended July 31, 2022, cost of purchases and proceeds from sales of portfolio securities (excluding in-kind transactions and short-term investments), amounted to $10,420,836 and $10,268,079, respectively.

 

For the year ended July 31, 2022, cost of purchases and proceeds from sales of portfolio securities for in-kind transactions amounted to $12,691,497 and $16,066,361, respectively.

 

4. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES

 

The business activities of the Fund are overseen by the Board, which is responsible for the overall management of the Fund. Arrow Investment Advisors, LLC serves as the Fund’s investment advisor pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). The Trust has entered into a Global Custody Agreement with Brown Brothers Harriman & Co. (the “Custodian”) to serve as custodian and to act as transfer and shareholder services agent. The Trust has also entered into an ETF Distribution Agreement (the “Distribution Agreement”) with Northern Lights Distributors, LLC (the “Distributor”) to serve as the distributor for the Fund. Archer Distributors, LLC, an affiliate of the Advisor, is also a party to the Distribution Agreement and provides marketing services to the Fund, including responsibility for all the Fund’s marketing and advertising materials.

 

Pursuant to the Advisory Agreement, the Advisor, under the oversight of the Board, directs the daily operations of the Fund and supervises the performance of administrative and professional services provided by others. As compensation for its services and the related expenses borne by the Advisor,

29

 

ARROW REVERSE CAP 500 ETF
NOTES TO FINANCIAL STATEMENTS (Continued)
July 31, 2022

 

the Fund pays the Advisor a fee, computed and accrued daily and paid monthly, at an annual rate of 0.294% of the Fund’s average daily net assets. Prior to the Reorganization, CSat Investment Advisory, L.P., d/b/a Exponential ETFs, served as investment advisor to the Predecessor Fund.

 

The Advisor’s unitary management fee is designed to pay the Fund’s expenses and to compensate the Advisor for providing services for the Fund. Out of the unitary management fee, the Advisor pays substantially all expenses of the Fund, including the costs of transfer agency, custody, fund administration, legal, audit and other services and Independent Trustees’ fees, except for the advisory fee, acquired fund fees and expenses, payments under the Fund’s 12b-1 plan, brokerage expenses, taxes, interest (including borrowing costs and dividend expenses on securities sold short), litigation expense and other extraordinary expenses (including litigation to which the Fund may be a party and indemnification of the Trustees and officers with respect thereto). The Advisor, and not the Fund’s shareholders, would benefit from any reduction in fees paid for third-party services, including reductions based on increases in net assets.

 

The Trust, with respect to the Fund, has adopted a distribution and service plan (“Plan”) pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is authorized to pay distribution fees to the Distributor and other firms that provide distribution and shareholder services (“Service Providers”). If a Service Provider provides these services, the Fund may pay fees at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1 under the 1940 Act.

 

No distribution or service fees are currently paid by the Fund and there are no current plans to impose these fees. In the event Rule 12b-1 fees were charged, over time they would increase the cost of an investment in the Fund.

 

Ultimus Fund Solutions, LLC (“UFS”) – UFS, an affiliate of the Distributor, provides administration and fund accounting services to the Trust. Pursuant to separate servicing agreements with UFS, the Fund pays UFS customary fees for providing administration and fund accounting services to the Fund. Certain officers of the Trust are also officers of UFS, and are not paid any fees directly by the Fund for serving in such capacities. Prior to the Reorganization, U.S. Bank and Foreside, served as administrator and distributor, respectively, to the Predecessor Fund.

 

Blu Giant, LLC (“Blu Giant”) Blu Giant, an affiliate of UFS and the Distributor, provides EDGAR conversion and filing services as well as print management services for the Fund on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Fund.

 

5. CAPITAL SHARE TRANSACTIONS

 

Shares are not individually redeemable and may be redeemed by the Fund at NAV only in large blocks known as “Creation Units.” Shares are created and redeemed by the Fund only in Creation Unit size aggregations of 50,000 shares. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Fund. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a

30

 

ARROW REVERSE CAP 500 ETF
NOTES TO FINANCIAL STATEMENTS (Continued)
July 31, 2022

 

Participant Agreement with the Distributor. Such transactions are generally permitted on an in-kind basis, with a balancing cash component to equate the transaction to the NAV per share of the Fund on the transaction date. Cash may be substituted equivalent to the value of certain securities generally when they are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances. In addition, the Fund may impose transaction fees on purchases and redemptions of Fund shares to cover the custodial and other costs incurred by the Fund in effecting trades. A fixed fee payable to the custodian may be imposed on each creation and redemption transaction regardless of the number of Creation Units involved in the transaction (“Fixed Fee”). Purchases and redemptions of Creation Units for cash or involving cash-in-lieu are required to pay an additional variable charge to compensate the Fund and its ongoing shareholders for brokerage and market impact expenses relating to Creation Unit transactions (“Variable Charge,” and together with the Fixed Fee, the “Transaction Fees”). Transaction Fees may be used to cover the custodial and other costs incurred by the Fund.

 

The Transaction Fees for the Fund are listed in the table below:

 

Fixed Fee Variable Charge
$500 2.00%*

 

* The maximum Transaction Fee may be up to 2.00% of the amount invested.

 

6. DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL

 

The tax character of fund distributions paid for the periods ending July 31, 2022, July 31, 2021, and September 30, 2020 were as follows:

 

    Fiscal Year Ended     Fiscal Period Ended     Fiscal Year Ended  
    July 31, 2022     July 31, 2021     September 30, 2020  
Ordinary Income   $ 231,420     $ 299,597     $ 177,756  
Long-Term Capital Gain                    
Return of Capital                  
    $ 231,420     $ 299,597     $ 177,756  

 

As of July 31, 2022, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Undistributed     Undistributed     Post October Loss     Capital Loss     Other     Unrealized     Total  
Ordinary     Long-Term     and     Carry     Book/Tax     Appreciation/     Distributable Earnings/  
Income     Gains     Late Year Loss     Forwards     Differences     (Depreciation)     (Accumulated Deficit)  
$ 135,070     $     $ (788,828 )   $ (1,199,197 )   $     $ (1,569,175 )   $ (3,422,130 )

 

The difference between book basis and tax basis undistributed net investment income, accumulated net realized losses, and unrealized depreciation from investments is primarily attributable to the tax deferral of losses on wash sales and adjustments for C-Corporation return of capital distributions.

 

Capital losses incurred after October 31 within the fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. The Fund incurred and elected to defer such capital losses of $788,828.

31

 

ARROW REVERSE CAP 500 ETF
NOTES TO FINANCIAL STATEMENTS (Continued)
July 31, 2022

 

At July 31, 2022, the Fund had capital loss carry forwards for federal income tax purposes available to offset future capital gains as follows:

 

Short-Term     Long-Term     Total     CLCF Utilized  
$ 663,870     $ 535,327     $ 1,199,197     $  

 

Permanent book and tax differences, primarily attributable to tax adjustments for realized gain (loss) on in-kind redemptions resulted in reclassification for the year ended July 31, 2022 as follows:

 

Paid        
In     Accumulated  
Capital     Loss  
$ 751,879     $ (751,879 )

 

7. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS

 

      Gross     Gross        
      Unrealized     Unrealized     Net Unrealized  
Tax Cost     Appreciation     Depreciation     Appreciation/ (Depreciation)  
$ 18,692,169     $ 677,082     $ (2,246,257 )   $ (1,569,175 )

 

8. SUBSEQUENT EVENTS

 

Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued.

 

Management has determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements.

32

 

(BBD LOGO)

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Trustees of Arrow Investments Trust

and the Shareholders of Arrow Reverse Cap 500 ETF

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets and liabilities of Arrow Reverse Cap 500 ETF, a series of shares of beneficial interest in Arrow Investments Trust (the “Fund”), including the schedule of investments, as of July 31, 2022, and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for the year then ended and for the period October 1, 2020 through July 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2022, and the results of its operations for the year then ended, the changes in its net assets and its financial highlights for the year then ended and for the period October 1 2020 through July 31, 2021, in conformity with accounting principles generally accepted in the United States of America. The statement of changes in net assets for the year ended September 30, 2020, and the financial highlights from October 31, 2017 (commencement of operations) through September 30, 2020 were audited by other auditors, whose report dated November 25, 2020, expressed an unqualified option on such financial statements and financial highlights.

 

Basis for Opinion

 

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities law and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

33

 

Our audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2022 by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

(-s- BBD, LLP)

 

BBD, LLP

 

We have served as the auditor of one or more of the Funds in the Arrow Investments Trust since 2012. We also served as the auditor of one or more of the Funds in the Funds’ former trust from 2006 through 2012

 

Philadelphia, Pennsylvania

September 29, 2022

34

 

Arrow Reverse Cap 500 ETF
EXPENSE EXAMPLE
July 31, 2022

 

As a shareholder of the Fund, you incur ongoing costs, including management fees. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other exchange traded funds. This example does not take into account transaction costs, such as brokerage commissions that you may pay on your purchases and sales of shares of the Fund.

 

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2022 through July 31, 2022.

 

Actual Expenses

 

The “Actual” line in the table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $ 1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

 

The “Hypothetical” line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

    Beginning   Ending   Expenses Paid   Expenses Paid
    Account Value   Account Value   During Period*   During Period**
    2/1/2022   7/31/2022   2/1/22 - 7/31/22   2/1/22 - 7/31/22
Actual   $1,000.00   $922.60   $1.38   0.29%
Hypothetical   $1,000.00   $1,023.36   $1.45   0.29%
(5% return before expenses)                

 

* Actual expense information for the Fund is for the period from February 1, 2022 to July 31, 2022. Actual expenses are equal to the Fund’s annualized net expense ratio multiplied by 181/365 (to reflect the period from February 1, 2022 to July 31, 2022). “Hypothetical” expense information for the Fund is presented on the basis of the full one-half year period to enable comparison to other funds. It is based on assuming the same net expense ratio and average account value over the period, but it is multiplied by 181/365 (to reflect the full half-year period).

 

** Annualized.

35

 

Arrow Reverse Cap 500 ETF
Additional Information (Unaudited)
July 31, 2022

 

LIQUIDITY RISK MANAGEMENT PROGRAM

 

The Fund has adopted and implemented a written liquidity risk management program as required by Rule 22e-4 (the “Liquidity Rule”) under the Investment Company Act. The program is reasonably designed to assess and manage the Fund’s liquidity risk, taking into consideration, among other factors, the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its short and long-term cash flow projections; and its cash holdings and access to other funding sources.

 

During the year ended July 31, 2022, the Trust’s Liquidity Risk Management Program Committee (the “Committee”) reviewed the Fund’s investments and determined that the Fund held adequate levels of cash and highly liquid investments to meet shareholder redemption activities in accordance with applicable requirements. Accordingly, the Committee concluded that (i) the Fund’s liquidity risk management program is reasonably designed to prevent violations of the Liquidity Rule and (ii) the Fund’s liquidity risk management program has been effectively implemented.

36

 

Arrow Reverse Cap 500 ETF

SUPPLEMENTAL INFORMATION (Unaudited)

July 31, 2022

 

Unless otherwise noted, the address of each Trustee and Officer is 6100 Chevy Chase Drive, Suite 100, Laurel, MD 20707. The following individuals serve as Trustees and officers of the Arrow Trust:

 

Independent Trustees:

 

Name, Address,
and Year of
Birth
Position(s)/Term
of Office(1)
Principal Occupation(s) During
the Past 5 Years
Number of
Portfolios in
Fund
Complex
Overseen by
Trustee(2)
Other Directorships
Held by Trustee

Robert Andrialis
Born in 1944

 

Trustee since 2014

Independent Consultant (2016– present).

 

8 Arrow ETF Trust
Paul Montgomery
Born in 1953
Trustee since 2011 Director of Research, Scotia Partners, LLC (2012–present). 8 Arrow ETF Trust
Thomas Sarkany
Born in 1946
Trustee since 2014 Founder and President, TTS Consultants, LLC (2010– present). 8 Arrow ETF Trust; Northern Lights Fund Trust II; Northern Lights Fund Trust IV; Aquila Distributors, LLC

 

(1) The term of office for each Trustee will continue indefinitely until the individual resigns or is removed.

 

(2) The “Fund Complex” includes Arrow ETF Trust, a registered management investment company, in addition to the Trust.

37

 

Arrow Reverse Cap 500 ETF
SUPPLEMENTAL INFORMATION (Unaudited)(Continued)

July 31, 2022

 

Interested Trustees and Officers:

 

Name, Address,
and
Year of Birth
Position(s)/Term
of Office(1)
Principal Occupation(s) During
the
Past 5 Years
Number of
Funds in the
Fund
Complex
Overseen by
Trustee(2)
Other Directorships
Held
by Trustee
Joseph Barrato*
Born in 1965
Chairman of the Board, Trustee, President, and Principal Executive Officer since 2011 Founder and Chief Executive Officer, Arrow Investment Advisors, LLC (2006–present). 8 Arrow ETF Trust
Chris Lewis
Born in 1970
Chief Compliance Officer since 2021; Previously from 2016–2018 Chief Compliance Officer of Fund Complex(2) (2016–2018; 2021–present); Chief Compliance Officer, Arrow Investment Advisors, LLC (2017–2018; 2021–present); Founder, The Law Offices of Christopher H. Lewis (2019–present); General Counsel, Finitive LLC (2018). N/A N/A
Timothy Burdick(3)
Born in 1986
Secretary since 2020 Assistant Vice President, Ultimus Fund Solutions, LLC (2019 – present); Senior Program Compliance Manager, CJ Affiliate (2016-2019) N/A N/A
Sam Singh(3)
Born in 1976
Principal Financial Officer and Treasurer since 2013 Vice President, Ultimus Fund Solutions, LLC (2015–present). N/A N/A

 

* Joseph Barrato is considered to be an “interested person” of the Trust, as that term is defined in the 1940 Act, because he is a controlling interest holder of the investment advisor to the Fund, Arrow Investment Advisors, LLC.

 

(1) The term of office for each Trustee will continue indefinitely until the individual resigns or is removed. Officers of the Trust are elected annually.

 

(2) The “Fund Complex” includes Arrow ETF Trust, a registered management investment company, in addition to the Trust.

 

(3) The business address of this officer is 4221 North 203rd Street, Suite 100, Elkhorn, Nebraska 68022-3474.

 

The Fund’s Statement of Additional Information includes additional information about the Trustees and is available free of charge, upon request, by calling toll-free at 1-877-277-6933.

38

 

PRIVACY NOTICE

 

Arrow Investments Trust

 

Rev. November 2011

 

FACTS WHAT DOES ARROW INVESTMENTS TRUST DO WITH YOUR PERSONAL INFORMATION?
   
Why? Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some, but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
   
What?

The types of personal information we collect and share depends on the product or service that you have with us. This information can include:

 

●     Social Security number and wire transfer instructions

 

●    account transactions and transaction history

 

●     investment experience and purchase history

 

When you are no longer our customer, we continue to share your information as described in this notice.

   
How? All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Arrow Investments Trust chooses to share; and whether you can limit this sharing.

 

Reasons we can share your
personal information:
Does Arrow Investments
Trust share information?
Can you limit this
sharing?
For our everyday business purposes - such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus. YES NO
For our marketing purposes - to offer our products and services to you. NO We don’t share
For joint marketing with other financial companies. NO We don’t share
For our affiliates’ everyday business purposes - information about your transactions and records. NO We don’t share
For our affiliates’ everyday business purposes - information about your credit worthiness. NO We don’t share
For nonaffiliates to market to you NO We don’t share

 

QUESTIONS? Call 1-877-277-6933

39

 

PRIVACY NOTICE

 

Arrow Investments Trust

 

Page 2  

 

What we do:  

How does Arrow Investments Trust protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

 

Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.

 

How does Arrow Investments Trust collect my personal information?

 

We collect your personal information, for example, when you

 

●     open an account or deposit money

 

●     direct us to buy securities or direct us to sell your securities

 

●     seek advice about your investments

 

We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.

Why can’t I limit all sharing?

Federal law gives you the right to limit only:

 

●     sharing for affiliates’ everyday business purposes – information about your creditworthiness.

 

●     affiliates from using your information to market to you.

 

●     sharing for nonaffiliates to market to you.

 

State laws and individual companies may give you additional rights to limit sharing.

   
Definitions  
Affiliates

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

●     Arrow Investments Trust does not share with our affiliates.

Nonaffiliates

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

●     Arrow Investments Trust does not share with nonaffiliates so they can market to you.

Joint marketing

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

●     Arrow Investments Trust does not jointly market.

40

 

PROXY VOTING POLICY

 

Information regarding how the Fund voted proxies relating to portfolio securities for the most recent twelve-month period ended June 30 as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies is available without charge, upon request, by calling 1-877 -277-6933 or by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

PORTFOLIO HOLDINGS

 

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, within sixty days after the end of the period. Form N-PORT reports are available at the SEC’s website at www.sec.gov.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT ADVISOR
Arrow Investment Advisors, LLC
6100 Chevy Chase Drive
Suite 100
Laurel, MD 20707
 
ADMINISTRATOR
Ultimus Fund Solutions, LLC
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
 
 
 
 
 
 
 
 
 
YPS-AR22