EntrepreneurShares
Series Trust™ ERShares
Entrepreneurs ETF (ENTR) ERShares
NextGen Entrepreneurs ETF (ERSX) The
Funds are exchange-traded funds. This means that shares of the Funds are
listed on NYSE Arca, Inc. (“NYSE Arca”) and trade at market prices. The
market price for each Fund’s shares may be different from its net asset
value per share (“NAV”). Annual
Report June
30, 2022 175
Federal Street Suite
#875 Boston,
MA 02110 Toll
Free: 877-271-8811
Management Discussion of Fund Performance – (Unaudited)
August 19, 2022
Dear Shareholders:
We are enclosing the report for results covering the fiscal period July 1, 2021 through June 30, 20221. We note that our performance is not symmetrical or consistent through the year with quarters in the past couple of years varying considerably from period to period. We note that the interpretation of results is best measured over an extended period, especially as measured against a consistent benchmark.
The objective of this letter is to provide our shareholders an informative review of our fund’s performance, present comparison of each fund’s performance vs. appropriate benchmarks, and discuss each fund’s top performing sector. This letter addresses our two Exchange Traded Funds (“ETFs”); ERShares Entrepreneurs ETF and ERShares NextGen Entrepreneurs ETF. The Trust also includes three mutual funds; these are separately covered in their own Annual Report. Overall, all funds have negative annual returns, mainly brought on by COVID-19 and the FED’s war against uncontrollable inflation which triggered downward market conditions because of rate hikes.
Several key factors need to be addressed. First, our models work best during periods of market appreciation and low volatility. Our historical above average Up-Capture suggests that when markets rise, our Entrepreneurial stocks tend to rise faster. The corollary also tends to hold true: our above average Down-Capture suggests that during periods of market decline our Entrepreneurial stocks tend to fall faster than peer benchmarks. The period July 1, 2021 through June 30, 2022 included periods with extreme movements in both directions. Our funds performed as expected during these periods, though with more volatility due to the pandemic and more volatile interest rates. If our funds were evaluated during a Calendar year, investors would have an entirely different interpretation of results.
An important distinguishing characteristic of our strategy is that many of our alpha-generating Entrepreneurial stocks tend to fall in the Growth and High Beta classification. This includes a handful of sectors with most stocks residing within the Information Technology, Consumer Discretionary, Communication Services and Health Care sectors. When equity markets favor these sectors or Growth and High Beta stocks, our Entrepreneur portfolios tend to out-perform the markets over that time period. The opposite also holds true.
ERShares Entrepreneurs ETF
ERShares Entrepreneurs ETF (“ENTR”) is one of the two exchange-traded funds. ENTR is benchmarked against the Russell 1000 Growth Index. During the last fiscal period, ENTR performed -43.04 % vs. -18.77 %, respectively.
1
Management Discussion of Fund Performance – (Unaudited) (continued)
The ERShares Entrepreneurs ETF top performing sectors for the period were Energy, Materials, and Consumer Staples. The Fund’s performance vs. the benchmark for the period was 27.39% vs. 41.18%, 9.11% vs. -19.89%, and -2.72% vs. -27.74%, respectively. The ERShares Entrepreneurs ETF worst performing sectors for the period were Utilities, Consumer Discretionary and Real Estate. The Fund’s performance vs. the benchmark for the period was -67.90% vs. -5.01%, -59.25% vs. -27.74%, and -56.11% vs. -12.05%, respectively.
ERShares NextGen Entrepreneurs ETF
ERShares NextGen Entrepreneurs ETF (“ERSX”) is one of the two exchange-traded funds. ERSX is benchmarked against the FTSE Global ex US Small Cap Net Tax (US RIC) Index. During the last fiscal period, ERSX performed -36.35% vs. -19.42%, respectively.
The ERShares NextGen Entrepreneurs ETF top performing sectors for the period were Energy, Consumer Staples, and Information Technology. The Fund’s performance vs. the benchmark for the period was -9.57% vs. 21.65%, -14.24% vs. -20.36%, -29.33% vs -25.88%, respectively. The ERShares NextGen Entrepreneurs ETF worst performing sectors for the period were Utilities, Health Care and Financials. The Fund’s performance vs. the benchmark for the period was -75.76% vs. -5.67%, -56.86% vs. -37.98%, and -52.67% vs. -20.36%, respectively.
In this past fiscal year, we note that our relative performance is consistent across strategies. We had underperformance as measured against our benchmark in the ERShares NextGen Entrepreneurs ETF and underperformance in the ERShares Entrepreneurs ETF. We note that when our Fund performance is viewed on a calendar year basis or over an extended time period, different interpretations would follow. We continue to provide evidence that our Entrepreneur Model works over an extended period and extend our gratitude to all of our shareholders for continued support. We look forward to sharing more updates with you in the future.
Sincerely,
Joel Shulman Ph.D., CFA
Founder and Chief Investment Officer
1 | Performance based off the period Wednesday June 30, 2021, through Thursday June 30, 2022. Performance Source: Bloomberg and Fund Administration records |
2
Management Discussion of Fund Performance – (Unaudited) (continued)
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Funds may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-877-271-8811 or visiting www.ershares.com.
Investors should consider carefully the investment objectives, risks, and charges and expenses before investing. For a full prospectus which contains this and other information about the Funds offered by EntrepreneurShares, call 1-877-271-8811. Please read the full prospectus carefully before investing. The Mutual Funds and ETFs are distributed by Foreside Fund Services, LLC.
The ERShares NextGen Entrepreneurs ETF invests in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. The ERShares NextGen Entrepreneurs ETF invests in smaller companies, which involve additional risks such as limited liquidity and greater volatility. The ETFs are exposed to common stock risk. Common stock prices fluctuate based on changes in a company’s financial condition and on overall market and economic conditions. Additional risks are detailed in the prospectus.
The Russell 1000 Growth Index is comprised of large and mid cap US equities that exhibit growth characteristics. The FTSE All World ex-US Small-Cap Index is a market-capitalization weighted index representing the performance of Small cap stocks in Developed and Emerging markets excluding the US. The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98% of the world’s investable market capitalization.
Index performance does not represent actual fund or portfolio performance and such performance does not reflect the actual investment experience of any investor. An investor cannot invest directly in an index.
Diversification does not guarantee a profit or assure against a loss.
Opinions expressed are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security.
3
Investment Results (Unaudited)
ERShares Entrepreneurs ETF
Comparison of the Growth of a $10,000 Investment in the ERShares Entrepreneurs ETF and the Russell 1000® Growth Index (Unaudited)
This chart assumes an initial gross investment of $10,000 made in the ERShares Entrepreneurs ETF on November 7, 2017 (commencement of operations of the Fund) and held to June 30, 2022. Returns shown include the reinvestment of all dividends but do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is not predictive of future performance. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than the original cost. The Fund’s total gross and net operational expenses were 0.49% per the October 28, 2021 prospectus.
Russell 1000 Growth Index – The Russell 1000 Growth Index is an unmanaged index that measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. An investor cannot invest directly in the index..
Average Annual Total Returns as of June 30, 2022
Since | |||
Inception | |||
One Year | Three Year | (11/7/2017) | |
ERShares Entrepreneurs ETF – At NAV | (43.04)% | (3.10)% | 2.08% |
ERShares Entrepreneurs ETF – At Market Value | (43.33)% | (3.23)% | 1.98% |
Russell 1000® Growth Index | (18.77)% | 12.58% | 12.94% |
4
Investment Results (Unaudited) (continued)
ERShares NextGen Entrepreneurs ETF
Comparison of the Growth of a $10,000 Investment in the ERShares NextGen Entrepreneurs ETF and the FTSE Global ex-US Small Cap Index (Unaudited)
This chart assumes an initial gross investment of $10,000 made in the ERShares NextGen Entrepreneurs ETF on December 27, 2018 (commencement of operations of the Fund) and held to June 30, 2022. Returns shown include the reinvestment of all dividends but do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is not predictive of future performance. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than the original cost. The Fund’s total gross and net operational expenses were 0.75% per the October 28, 2021 prospectus..
FTSE Global ex-US Small-Cap Index is a market-capitalization weighted index representing the performance of Small cap stocks in Developed and Emerging markets excluding the US. The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98% of the world’s investable market capitalization.
Average Annual Total Returns as of June 30, 2022
Since | |||
Inception | |||
One Year | Three Year | (12/27/2018) | |
ERShares NextGen Entrepreneurs ETF – At NAV | (36.35)% | (2.23)% | 1.36% |
ERShares NextGen Entrepreneurs ETF – At Market Value | (36.75)% | (2.47)% | 1.25% |
FSTE Global ex-US Small Cap Index | (19.42)% | 1.35% | 5.51% |
5
Fund Holdings (Unaudited)
ERShares Entrepreneurs ETF
Schedule of Investments Summary Table(1) |
as of June 30, 2022 (Unaudited) |
Sector | % of Net Assets | |||
Communications | 15.01 | % | ||
Consumer Discretionary | 9.06 | % | ||
Consumer Staples | 0.40 | % | ||
Energy | 1.49 | % | ||
Financials | 4.26 | % | ||
Health Care | 11.82 | % | ||
Industrials | 4.35 | % | ||
Materials | 2.40 | % | ||
Real Estate | 1.17 | % | ||
Technology | 43.96 | % | ||
Other Assets in Excess of Liabilities | 6.08 | % | ||
100.00 | % | |||
Top Ten Equity Holdings(1)(2) |
as of June 30, 2022 (Unaudited) |
Issuer | % of Net Assets | |||
Alphabet, Inc. - Class A | 4.01 | % | ||
Meta Platforms, Inc. - Class A | 3.62 | % | ||
NVIDIA Corp. | 3.46 | % | ||
Synopsys, Inc. | 2.95 | % | ||
Qualcomm, Inc. | 2.88 | % | ||
Cintas Corp. | 2.57 | % | ||
Veeva Systems, Inc. - Class A | 2.56 | % | ||
Oracle Corp. | 2.21 | % | ||
Seagen, Inc. | 2.16 | % | ||
Copart, Inc. | 1.90 | % |
(1) | Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. |
(2) | Short-term investments are not included. |
6
Fund Holdings (Unaudited)
ERShares NextGen Entrepreneurs ETF
Schedule of Investments Summary Table(1) |
as of June 30, 2022 (Unaudited) |
Sector | % of Net Assets | |||
Communications | 11.95 | % | ||
Consumer Discretionary | 14.90 | % | ||
Consumer Staples | 5.60 | % | ||
Energy | 5.56 | % | ||
Financials | 9.33 | % | ||
Health Care | 10.03 | % | ||
Industrials | 4.89 | % | ||
Materials | 5.96 | % | ||
Real Estate | 5.41 | % | ||
Technology | 17.93 | % | ||
Utilities | 0.99 | % | ||
Other Assets in Excess of Liabilities | 7.45 | % | ||
100.00 | % |
Top Ten Equity Holdings(1)(2) |
as of June 30, 2022 (Unaudited) |
Issuer | % of Net Assets | |||
Yadea Group Holdings Ltd. | 2.08 | % | ||
carsales.com, Ltd. | 1.65 | % | ||
FinVolution Group - ADR | 1.49 | % | ||
Allied Properties Real Estate Investment Trust | 1.47 | % | ||
Frasers Group PLC | 1.44 | % | ||
Wilmar International Ltd. | 1.41 | % | ||
Fortescue Metals Group Ltd. | 1.37 | % | ||
Telix Pharmaceuticals Ltd. | 1.35 | % | ||
Entain plc | 1.34 | % | ||
Check Point Software Technologies Ltd. | 1.31 | % |
(1) | Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. |
(2) | Short-term investments are not included. |
7
ERShares
Entrepreneurs ETF
Schedule of Investments
June 30,
2022
Common Stocks — 93.92% | Shares | Fair Value | ||||||
Communications — 15.01% | ||||||||
Airbnb, Inc., Class A(a) | 2,482 | $ | 221,097 | |||||
Alphabet, Inc., Class A(a) | 558 | 1,216,026 | ||||||
AppLovin Corporation(a) | 4,025 | 138,621 | ||||||
Bilibili, Inc. - ADR(a) | 2,140 | 54,784 | ||||||
DoorDash, Inc., Class A(a) | 3,492 | 224,082 | ||||||
Meta Platforms, Inc., Class A(a) | 6,804 | 1,097,145 | ||||||
Netflix, Inc.(a) | 638 | 111,567 | ||||||
Playtika Holding, Corp.(a) | 28,853 | 382,014 | ||||||
Roku, Inc.(a) | 1,458 | 119,760 | ||||||
Shutterstock, Inc. | 3,870 | 221,790 | ||||||
Snap, Inc., Class A(a) | 8,165 | 107,206 | ||||||
Spotify Technology SA(a) | 2,639 | 247,617 | ||||||
Trade Desk, Inc. (The), Class A(a) | 6,658 | 278,904 | ||||||
Twitter, Inc.(a) | 1,069 | 39,970 | ||||||
ZoomInfo Technologies, Inc., Class A(a) | 2,629 | 87,388 | ||||||
4,547,971 | ||||||||
Consumer Discretionary — 9.06% | ||||||||
Amazon.com, Inc.(a) | 2,392 | 254,054 | ||||||
Chewy, Inc.(a) | 4,187 | 145,373 | ||||||
Chipotle Mexican Grill, Inc.(a) | 257 | 335,966 | ||||||
Copart, Inc.(a) | 5,290 | 574,811 | ||||||
DraftKings, Inc.(a) | 24,246 | 282,951 | ||||||
Etsy, Inc.(a) | 3,037 | 222,339 | ||||||
MercadoLibre, Inc.(a) | 308 | 196,156 | ||||||
Niu Technologies - ADR(a) | 15,315 | 131,709 | ||||||
RH(a) | 477 | 101,248 | ||||||
Tesla, Inc.(a) | 602 | 405,399 | ||||||
Wayfair, Inc., Class A(a) | 2,163 | 94,220 | ||||||
2,744,226 | ||||||||
Consumer Staples — 0.40% | ||||||||
Five Below, Inc.(a) | 1,058 | 120,009 | ||||||
Energy — 1.49% | ||||||||
Continental Resources, Inc. | 2,607 | 170,367 | ||||||
Enphase Energy, Inc.(a) | 1,439 | 280,951 | ||||||
451,318 | ||||||||
Financials — 4.26% | ||||||||
Ares Management Corp., Class A | 4,869 | 276,852 | ||||||
Blackstone Group L.P. (The), Class A | 754 | 68,787 | ||||||
Capital One Financial Corp. | 2,427 | 252,869 | ||||||
First Republic Bank | 3,181 | 458,700 | ||||||
Icahn Enterprises, L.P. | 4,828 | 232,323 | ||||||
1,289,531 | ||||||||
Health Care — 11.82% | ||||||||
10X Genomics, Inc., Class A(a) | 2,061 | 93,260 | ||||||
BeiGene Ltd. - ADR(a) | 281 | 45,480 | ||||||
Danaher Corp. | 1,364 | 345,801 | ||||||
Exact Sciences Corp.(a) | 2,089 | 82,286 |
See accompanying notes which are an integral part of these financial statements.
8
ERShares
Entrepreneurs ETF
Schedule of Investments (continued)
June 30,
2022
Common Stocks — 93.92% (continued) | Shares | Fair Value | ||||||
Health Care — 11.82% (continued) | ||||||||
Exelixis, Inc.(a) | 24,681 | $ | 513,858 | |||||
Masimo Corp.(a) | 1,913 | 249,972 | ||||||
Regeneron Pharmaceuticals, Inc.(a) | 739 | 436,845 | ||||||
ResMed, Inc. | 1,956 | 410,036 | ||||||
Royalty Pharma PLC, Class A | 12,647 | 531,680 | ||||||
Seagen, Inc.(a) | 3,706 | 655,740 | ||||||
Teladoc Health, Inc.(a) | 6,529 | 216,828 | ||||||
3,581,786 | ||||||||
Industrials — 4.35% | ||||||||
Avalara, Inc.(a) | 637 | 44,972 | ||||||
Cintas Corp. | 2,086 | 779,184 | ||||||
Cognex Corp. | 11,621 | 494,125 | ||||||
1,318,281 | ||||||||
Materials — 2.40% | ||||||||
Franco-Nevada Corp. | 2,459 | 323,555 | ||||||
Steel Dynamics, Inc. | 6,115 | 404,507 | ||||||
728,062 | ||||||||
Real Estate — 1.17% | ||||||||
Public Storage | 1,136 | 355,193 | ||||||
Technology — 43.96% | ||||||||
Affirm Holdings, Inc.(a) | 8,320 | 150,259 | ||||||
Alteryx, Inc., Class A(a) | 945 | 45,757 | ||||||
Arista Networks, Inc.(a) | 2,688 | 251,973 | ||||||
Atlassian Corp. PLC, Class A(a) | 1,373 | 257,300 | ||||||
Bentley Systems, Inc. | 6,961 | 231,801 | ||||||
Bill.com Holdings, Inc.(a) | 1,203 | 132,258 | ||||||
Block, Inc., Class A(a) | 4,801 | 295,069 | ||||||
Cloudflare, Inc., Class A(a) | 5,930 | 259,438 | ||||||
CoStar Group, Inc.(a) | 5,807 | 350,801 | ||||||
Coupa Software, Inc.(a) | 841 | 48,021 | ||||||
Crowdstrike Holdings, Inc., Class A(a) | 1,777 | 299,531 | ||||||
Datadog, Inc.(a) | 2,635 | 250,957 | ||||||
Dropbox, Inc., Class A(a) | 2,301 | 48,298 | ||||||
EPAM Systems, Inc.(a) | 1,528 | 450,424 | ||||||
FleetCor Technologies, Inc.(a) | 2,276 | 478,210 | ||||||
Fortinet, Inc.(a) | 8,674 | 490,775 | ||||||
Gitlab, Inc.(a) | 2,764 | 146,879 | ||||||
HubSpot, Inc.(a) | 154 | 46,300 | ||||||
MongoDB, Inc.(a) | 756 | 196,182 | ||||||
Monolithic Power Systems, Inc. | 1,372 | 526,903 | ||||||
NVIDIA Corp. | 6,909 | 1,047,335 | ||||||
Okta, Inc.(a) | 3,404 | 307,722 | ||||||
Oracle Corp. | 9,605 | 671,101 | ||||||
Palo Alto Networks, Inc.(a) | 630 | 311,182 | ||||||
Paycom Software, Inc.(a) | 176 | 49,301 | ||||||
Pure Storage, Inc., Class A(a) | 9,612 | 247,125 | ||||||
Qualcomm, Inc. | 6,828 | 872,209 |
See accompanying notes which are an integral part of these financial statements.
9
ERShares
Entrepreneurs ETF
Schedule of Investments (continued)
June 30,
2022
Common Stocks — 93.92% (continued) | Shares | Fair Value | ||||||
Technology — 43.96% (continued) | ||||||||
RingCentral, Inc., Class A(a) | 896 | $ | 46,825 | |||||
salesforce.com, Inc.(a) | 1,784 | 294,431 | ||||||
Snowflake, Inc., Class A(a) | 1,520 | 211,371 | ||||||
Synopsys, Inc.(a) | 2,946 | 894,701 | ||||||
Toast, Inc., Class A(a) | 13,308 | 172,206 | ||||||
Twilio, Inc., Class A(a) | 2,646 | 221,761 | ||||||
Ubiquiti, Inc. | 2,306 | 572,372 | ||||||
UiPath, Inc., Class A(a) | 8,525 | 155,070 | ||||||
Unity Software, Inc.(a) | 6,542 | 240,876 | ||||||
Veeva Systems, Inc., Class A(a) | 3,917 | 775,724 | ||||||
VMware, Inc., Class A | 2,093 | 238,560 | ||||||
Wolfspeed, Inc.(a) | 4,404 | 279,434 | ||||||
Workday, Inc., Class A(a) | 1,125 | 157,028 | ||||||
Zoom Video Communications, Inc., Class A(a) | 2,378 | 256,753 | ||||||
Zscaler, Inc.(a) | 2,275 | 340,135 | ||||||
13,320,358 | ||||||||
Total Common Stocks | ||||||||
(Cost $30,326,302) | 28,456,735 | |||||||
Total Investments — 93.92% | ||||||||
(Cost $30,326,302) | 28,456,735 | |||||||
Other Assets in Excess of Liabilities — 6.08% | 1,842,411 | |||||||
Net Assets — 100.00% | $ | 30,299,146 |
(a) | Non-income producing security. |
ADR - American Depositary Receipt.
See accompanying notes which are an integral part of these financial statements.
10
ERShares
NextGen Entrepreneurs ETF
Schedule of Investments
June 30,
2022
Common Stocks — 92.65% | Shares | Fair Value | ||||||
Australia — 8.78% | ||||||||
Communications — 2.92% | ||||||||
carsales.com, Ltd. | 28,075 | $ | 356,916 | |||||
SEEK Ltd. | 19,162 | 278,030 | ||||||
634,946 | ||||||||
Consumer Discretionary — 1.62% | ||||||||
Flight Centre Travel Group Ltd.(a) | 16,707 | 200,971 | ||||||
Harvey Norman Holdings, Ltd. | 58,357 | 149,670 | ||||||
350,641 | ||||||||
Health Care — 1.35% | ||||||||
Telix Pharmaceuticals Ltd.(a) | 93,051 | 292,291 | ||||||
Materials — 1.37% | ||||||||
Fortescue Metals Group Ltd. | 24,721 | 297,336 | ||||||
Technology — 1.52% | ||||||||
HUB24 Ltd. | 15,011 | 210,362 | ||||||
WiseTech Global Ltd. | 4,511 | 118,317 | ||||||
328,679 | ||||||||
Total Australia | 1,903,893 | |||||||
Belgium — 0.47% | ||||||||
Technology — 0.47% | ||||||||
Materialise NV - ADR(a) | 7,529 | 102,545 | ||||||
Total Belgium | 102,545 | |||||||
Bermuda — 3.14% | ||||||||
Consumer Discretionary — 0.61% | ||||||||
Luk Fook Holdings International Ltd. | 51,510 | 132,940 | ||||||
Financials — 1.06% | ||||||||
Enstar Group, Ltd.(a) | 1,066 | 228,102 | ||||||
Materials — 0.68% | ||||||||
Nine Dragons Paper Holdings Ltd. | 174,116 | 147,618 | ||||||
Technology — 0.79% | ||||||||
Skyworth Group Ltd. | 346,000 | 171,716 | ||||||
Total Bermuda | 680,376 | |||||||
Canada — 15.27% | ||||||||
Consumer Discretionary — 3.42% | ||||||||
Aritzia, Inc.(a) | 6,142 | 166,280 | ||||||
Gildan Activewear, Inc. | 7,046 | 202,795 | ||||||
Linamar Corporation | 6,005 | 254,422 | ||||||
Spin Master Corp.(a) | 3,625 | 118,301 | ||||||
741,798 | ||||||||
Energy — 0.91% | ||||||||
Vermilion Energy, Inc. | 10,327 | 196,833 | ||||||
Financials — 2.76% | ||||||||
Fairfax Financial Holdings Ltd. | 485 | 256,990 | ||||||
First National Financial Corp. | 7,520 | 193,421 |
See accompanying notes which are an integral part of these financial statements.
11
ERShares
NextGen Entrepreneurs ETF
Schedule of Investments (continued)
June
30, 2022
Common Stocks — 92.65% (continued) | Shares | Fair Value | ||||||
Canada — 15.27% (continued) | ||||||||
Financials — 2.76% (continued) | ||||||||
Onex Corporation | 3,010 | $ | 149,883 | |||||
600,294 | ||||||||
Industrials — 0.50% | ||||||||
GFL Environmental, Inc. | 4,168 | 107,534 | ||||||
Materials — 3.37% | ||||||||
Cascades, Inc. | 7,293 | 57,391 | ||||||
First Majestic Silver Corp. | 14,687 | 105,308 | ||||||
First Quantum Minerals Ltd. | 7,747 | 146,962 | ||||||
Franco-Nevada Corp. | 675 | 88,817 | ||||||
Ivanhoe Mines Ltd.(a) | 13,733 | 79,052 | ||||||
Triple Flag Precious Metals Corp. | 2,106 | 27,485 | ||||||
West Fraser Timber Co. Ltd. | 2,960 | 227,121 | ||||||
732,136 | ||||||||
Real Estate — 4.31% | ||||||||
Allied Properties Real Estate Investment Trust | 12,378 | 319,143 | ||||||
Colliers International Group, Inc. | 1,588 | 174,219 | ||||||
FirstService Corp. | 135 | 16,362 | ||||||
FirstService Corp. | 2,140 | 259,571 | ||||||
Tricon Residential, Inc. | 16,275 | 164,990 | ||||||
934,285 | ||||||||
Total Canada | 3,312,880 | |||||||
Cayman Islands — 8.18% | ||||||||
Communications — 1.21% | ||||||||
Vnet Group, Inc. - ADR(a) | 43,410 | 262,196 | ||||||
Consumer Discretionary — 2.89% | ||||||||
NagaCorp Ltd.(a) | 218,065 | 178,667 | ||||||
Yadea Group Holdings Ltd. | 229,666 | 450,418 | ||||||
629,085 | ||||||||
Financials — 2.55% | ||||||||
FinVolution Group - ADR | 68,028 | 323,133 | ||||||
Noah Holdings Ltd. - ADR(a) | 6,621 | 133,943 | ||||||
Value Partners Group Ltd. | 250,755 | 94,653 | ||||||
551,729 | ||||||||
Materials — 0.54% | ||||||||
Lee & Man Paper Manufacturing Ltd. | 272,842 | 117,270 | ||||||
Utilities — 0.99% | ||||||||
Tian Lun Gas Holdings Ltd. | 339,195 | 213,780 | ||||||
Total Cayman Islands | 1,774,060 | |||||||
China — 7.16% | ||||||||
Communications — 1.73% | ||||||||
Bilibili, Inc. - ADR(a) | 4,726 | 120,986 | ||||||
Weimob, Inc.(a) | 369,145 | 254,557 | ||||||
375,543 |
See accompanying notes which are an integral part of these financial statements.
12
ERShares
NextGen Entrepreneurs ETF
Schedule of Investments (continued)
June
30, 2022
Common Stocks — 92.65% (continued) | Shares | Fair Value | ||||||
China — 7.16% (continued) | ||||||||
Consumer Discretionary — 1.61% | ||||||||
JD.com, Inc. - ADR | 1,829 | $ | 117,458 | |||||
Niu Technologies - ADR(a) | 16,650 | 143,190 | ||||||
XPeng, Inc. - ADR(a) | 2,804 | 88,999 | ||||||
349,647 | ||||||||
Energy — 1.52% | ||||||||
Daqo New Energy Corp. - ADR(a) | 1,915 | 136,693 | ||||||
JinkoSolar Holding Co., Ltd. - ADR(a) | 2,787 | 192,805 | ||||||
329,498 | ||||||||
Financials — 0.47% | ||||||||
Futu Holdings Ltd. - ADR(a) | 1,968 | 102,749 | ||||||
Health Care — 0.77% | ||||||||
BeiGene Ltd. - ADR(a) | 1,026 | 166,058 | ||||||
Technology — 1.06% | ||||||||
Kingdee International Software Group Co., Ltd.(a) | 97,190 | 228,978 | ||||||
Total China | 1,552,473 | |||||||
Denmark — 0.67% | ||||||||
Technology — 0.67% | ||||||||
Netcompany Group A/S(a) | 2,635 | 145,161 | ||||||
Total Denmark | 145,161 | |||||||
France — 0.26% | ||||||||
Communications — 0.26% | ||||||||
Ubisoft Entertainment S.A.(a) | 1,294 | 57,054 | ||||||
Total France | 57,054 | |||||||
Germany — 0.29% | ||||||||
Energy — 0.29% | ||||||||
VERBIO Vereinigte BioEnergie AG | 1,252 | 63,056 | ||||||
Total Germany | 63,056 | |||||||
Ireland — 0.72% | ||||||||
Health Care — 0.72% | ||||||||
Jazz Pharmaceuticals PLC(a) | 1,005 | 156,790 | ||||||
Total Ireland | 156,790 | |||||||
Isle Of Man — 1.34% | ||||||||
Consumer Discretionary — 1.34% | ||||||||
Entain plc(a) | 19,101 | 290,666 | ||||||
Total Isle Of Man | 290,666 | |||||||
Israel — 4.35% | ||||||||
Communications — 0.99% | ||||||||
Fiverr International Ltd.(a) | 2,512 | 86,388 | ||||||
Wix.com Ltd.(a) | 1,959 | 128,412 | ||||||
214,800 |
See accompanying notes which are an integral part of these financial statements.
13
ERShares
NextGen Entrepreneurs ETF
Schedule of Investments (continued)
June
30, 2022
Common Stocks — 92.65% (continued) | Shares | Fair Value | ||||||
Israel — 4.35% (continued) | ||||||||
Technology — 3.36% | ||||||||
Check Point Software Technologies Ltd.(a) | 2,330 | $ | 283,748 | |||||
ironSource Ltd.(a) | 51,410 | 122,356 | ||||||
JFrog Ltd(a) | 3,281 | 69,131 | ||||||
Radware Ltd.(a) | 11,738 | 254,362 | ||||||
729,597 | ||||||||
Total Israel | 944,397 | |||||||
Japan — 3.31% | ||||||||
Industrials — 1.65% | ||||||||
S-Pool, Inc. | 29,953 | 249,694 | ||||||
VisasQ, Inc.(a) | 7,014 | 108,293 | ||||||
357,987 | ||||||||
Technology — 1.66% | ||||||||
GMO Payment Gateway, Inc. | 1,323 | 94,232 | ||||||
Rorze Corp. | 1,692 | 106,139 | ||||||
SHIFT, Inc.(a) | 1,221 | 160,110 | ||||||
360,481 | ||||||||
Total Japan | 718,468 | |||||||
Jersey — 0.90% | ||||||||
Communications — 0.90% | ||||||||
Gambling.com Group Ltd.(a) | 24,791 | 195,105 | ||||||
Total Jersey | 195,105 | |||||||
Marshall Islands — 0.23% | ||||||||
Industrials — 0.23% | ||||||||
Star Bulk Carriers Corp. | 2,015 | 50,355 | ||||||
Total Marshall Islands | 50,355 | |||||||
Singapore — 3.26% | ||||||||
Consumer Discretionary — 0.58% | ||||||||
Best World International, Ltd.(a)(b) | 128,500 | 125,780 | ||||||
Consumer Staples — 2.16% | ||||||||
Olam Group Ltd. | 147,982 | 162,166 | ||||||
Wilmar International Ltd. | 105,083 | 305,829 | ||||||
467,995 | ||||||||
Technology — 0.52% | ||||||||
UMS Holdings Ltd. | 141,842 | 113,450 | ||||||
Total Singapore | 707,225 | |||||||
South Africa — 1.05% | ||||||||
Consumer Staples — 1.05% | ||||||||
Shoprite Holdings Ltd. | 18,725 | 228,136 | ||||||
Total South Africa | 228,136 |
See accompanying notes which are an integral part of these financial statements.
14
ERShares
NextGen Entrepreneurs ETF
Schedule of Investments (continued)
June
30, 2022
Common Stocks — 92.65% (continued) | Shares | Fair Value | ||||||
Spain — 0.35% | ||||||||
Industrials — 0.35% | ||||||||
Sacyr S.A. | 31,501 | $ | 75,915 | |||||
Total Spain | 75,915 | |||||||
Sweden — 6.28% | ||||||||
Communications — 0.75% | ||||||||
Embracer Group A.B.(a) | 21,244 | 163,166 | ||||||
Consumer Discretionary — 0.69% | ||||||||
Evolution Gaming Group A.B. | 1,644 | 150,385 | ||||||
Financials — 0.96% | ||||||||
Avanza Bank Holding A.B. | 2,946 | 49,674 | ||||||
Nordnet A.B. publ, Class A | 12,097 | 159,243 | ||||||
208,917 | ||||||||
Health Care — 1.69% | ||||||||
Cellavision A.B. | 8,123 | 269,682 | ||||||
Sectra A.B. | 7,283 | 97,917 | ||||||
367,599 | ||||||||
Industrials — 0.66% | ||||||||
HMS Networks A.B. | 1,751 | 74,848 | ||||||
Instalco A.B. | 16,051 | 66,773 | ||||||
141,621 | ||||||||
Real Estate — 1.10% | ||||||||
Fabege A.B. | 17,529 | 166,118 | ||||||
Samhallsbyggnadsbolaget i Norden A.B. | 42,575 | 71,158 | ||||||
237,276 | ||||||||
Technology — 0.43% | ||||||||
Sinch A.B.(a) | 28,697 | 93,731 | ||||||
Total Sweden | 1,362,695 | |||||||
Switzerland — 1.22% | ||||||||
Health Care — 0.73% | ||||||||
Medacta Group S.A. | 1,654 | 157,880 | ||||||
Technology — 0.49% | ||||||||
Sensirion Holding AG(a) | 1,048 | 106,456 | ||||||
Total Switzerland | 264,336 | |||||||
United Kingdom — 3.92% | ||||||||
Communications — 1.58% | ||||||||
Frontier Developments PLC(a) | 13,031 | 217,083 | ||||||
Future PLC | 4,213 | 89,152 | ||||||
S4 Capital PLC(a) | 12,959 | 36,359 | ||||||
342,594 | ||||||||
Consumer Discretionary — 1.45% | ||||||||
Frasers Group PLC(a) | 38,509 | 313,323 | ||||||
Health Care — 0.65% | ||||||||
Hikma Pharmaceuticals PLC | 7,188 | 141,820 |
See accompanying notes which are an integral part of these financial statements.
15
ERShares
NextGen Entrepreneurs ETF
Schedule of Investments (continued)
June
30, 2022
Common Stocks — 92.65% (continued) | Shares | Fair Value | ||||||
United Kingdom — 3.92% (continued) | ||||||||
Technology — 0.24% | ||||||||
Computacenter PLC | 1,837 | $ | 52,605 | |||||
Total United Kingdom | 850,342 | |||||||
United States — 20.53% | ||||||||
Communications — 1.61% | ||||||||
Cardlytics, Inc.(a) | 3,850 | 85,894 | ||||||
Playtika Holding, Corp.(a) | 19,818 | 262,390 | ||||||
348,284 | ||||||||
Consumer Discretionary — 0.69% | ||||||||
Skechers U.S.A., Inc., Class A(a) | 4,236 | 150,717 | ||||||
Consumer Staples — 1.42% | ||||||||
e.l.f. Beauty, Inc.(a) | 3,123 | 95,814 | ||||||
Inter Parfums, Inc. | 2,895 | 211,508 | ||||||
307,322 | ||||||||
Energy — 2.84% | ||||||||
Ameresco, Inc., Class A(a) | 3,327 | 151,578 | ||||||
Antero Resources Corp.(a) | 3,970 | 121,681 | ||||||
Matador Resources Co. | 3,627 | 168,981 | ||||||
SolarEdge Technologies, Inc.(a) | 634 | 173,513 | ||||||
615,753 | ||||||||
Financials — 1.53% | ||||||||
Palomar Holdings, Inc.(a) | 2,749 | 177,036 | ||||||
Signature Bank | 857 | 153,583 | ||||||
330,619 | ||||||||
Health Care — 4.12% | ||||||||
Allogene Therapeutics, Inc.(a) | 6,949 | 79,219 | ||||||
Arrowhead Pharmaceuticals, Inc.(a) | 3,458 | 121,756 | ||||||
Masimo Corp.(a) | 1,342 | 175,359 | ||||||
Merit Medical Systems, Inc.(a) | 2,965 | 160,911 | ||||||
Select Medical Holdings Corp. | 5,488 | 129,627 | ||||||
ShockWave Medical, Inc.(a) | 1,190 | 227,491 | ||||||
894,363 | ||||||||
Industrials — 1.50% | ||||||||
Cognex Corp. | 3,819 | 162,384 | ||||||
Titan Machinery, Inc.(a) | 7,248 | 162,428 | ||||||
324,812 | ||||||||
Technology — 6.82% | ||||||||
Altair Engineering, Inc., Class A(a) | 3,242 | 170,206 | ||||||
Dropbox, Inc., Class A(a) | 8,272 | 173,629 | ||||||
Fastly, Inc.(a) | 6,210 | 72,098 | ||||||
II-VI, Inc.(a) | 2,534 | 129,108 | ||||||
MaxLinear, Inc.(a) | 3,776 | 128,308 | ||||||
PagerDuty, Inc.(a) | 2,662 | 65,964 | ||||||
PubMatic, Inc.(a) | 6,569 | 104,381 | ||||||
Pure Storage, Inc., Class A(a) | 2,860 | 73,531 | ||||||
Repay Holdings Corporation(a) | 14,734 | 189,332 |
See accompanying notes which are an integral part of these financial statements.
16
ERShares
NextGen Entrepreneurs ETF
Schedule of Investments (continued)
June
30, 2022
Common Stocks — 92.65% (continued) | Shares | Fair Value | ||||||
United States — 20.53% (continued) | ||||||||
Technology — 6.82% (continued) | ||||||||
Simulations Plus, Inc. | 2,303 | $ | 113,607 | |||||
TaskUS, Inc.(a) | 5,361 | 90,386 | ||||||
TTEC Holdings, Inc. | 2,099 | 142,501 | ||||||
Upstart Holdings, Inc.(a) | 823 | 26,023 | ||||||
1,479,074 | ||||||||
Total United States | 4,450,944 | |||||||
Virgin Islands British — 0.97% | ||||||||
Consumer Staples — 0.97% | ||||||||
Nomad Foods Ltd.(a) | 10,484 | 209,575 | ||||||
Total Virgin Islands British | 209,575 | |||||||
Total Common Stocks | ||||||||
(Cost $22,645,155) | 20,096,447 | |||||||
Total Investments — 92.65% | ||||||||
(Cost $22,645,155) | 20,096,447 | |||||||
Other Assets in Excess of Liabilities — 7.35% | 1,594,292 | |||||||
Net Assets — 100.00% | $ | 21,690,739 |
(a) | Non-income producing security. |
(b) | Illiquid security. |
ADR - American Depositary Receipt.
See accompanying notes which are an integral part of these financial statements.
17
EntrepreneurShares
Series Trust
Statements of Assets and Liabilities
June 30,
2022
ERShares | ||||||||
ERShares | NextGen | |||||||
Entrepreneurs | Entrepreneurs | |||||||
ETF | ETF | |||||||
Assets | ||||||||
Investments, at cost | $ | 30,326,302 | $ | 22,645,155 | ||||
Investments, at fair value | 28,456,735 | 20,096,447 | ||||||
Cash | 1,746,802 | 1,022,584 | ||||||
Foreign currencies, at value (cost $- and $530,578) | — | 505,801 | ||||||
Receivable for investments sold | 102,341 | 76,287 | ||||||
Dividends and interest receivable | 6,016 | 17,097 | ||||||
Tax reclaims receivable | — | 8,626 | ||||||
Total Assets | 30,311,894 | 21,726,842 | ||||||
Liabilities | ||||||||
Payable for investments purchased | — | 22,331 | ||||||
Unified fee | 12,748 | 13,772 | ||||||
Total Liabilities | 12,748 | 36,103 | ||||||
Net Assets | $ | 30,299,146 | $ | 21,690,739 | ||||
Net Assets consist of: | ||||||||
Paid-in capital | $ | 58,472,086 | $ | 31,568,011 | ||||
Accumulated deficit | (28,172,940 | ) | (9,877,272 | ) | ||||
Net Assets | $ | 30,299,146 | $ | 21,690,739 | ||||
Net Assets | $ | 30,299,146 | $ | 21,690,739 | ||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 3,200,000 | 1,730,000 | ||||||
Net asset value (offering and redemption price per share) | $ | 9.47 | $ | 12.54 |
See accompanying notes which are an integral part of these financial statements.
18
EntrepreneurShares
Series Trust
Statements of Operations
For the year ended June 30,
2022
ERShares | ||||||||
ERShares | NextGen | |||||||
Entrepreneurs | Entrepreneurs | |||||||
ETF | ETF | |||||||
Investment Income | ||||||||
Dividend income (net of foreign taxes withheld of $351 and 43,829) | $ | 221,518 | $ | 326,179 | ||||
Interest income | 1,468 | 1,121 | ||||||
Total investment income | 222,986 | 327,300 | ||||||
Expenses | ||||||||
Unified fee | 437,877 | 250,582 | ||||||
Total expenses | 437,877 | 250,582 | ||||||
Net investment income (loss) | (214,891 | ) | 76,718 | |||||
Net Realized and Change in Unrealized Gain (Loss) on Investments | ||||||||
Net realized gain (loss) on: | ||||||||
Investments | (16,250,624 | ) | (5,425,838 | ) | ||||
Foreign currency transactions | — | (41,653 | ) | |||||
Net realized loss | (16,250,624 | ) | (5,467,491 | ) | ||||
Change in unrealized appreciation (depreciation) on: | ||||||||
Investments | (20,307,560 | ) | (8,120,522 | ) | ||||
Foreign currency translations | — | (30,720 | ) | |||||
Net change in unrealized appreciation (depreciation) | (20,307,560 | ) | (8,151,242 | ) | ||||
Net realized and change in unrealized loss on investments | (36,558,184 | ) | (13,618,733 | ) | ||||
Net decrease in net assets resulting from operations | $ | (36,773,075 | ) | $ | (13,542,015 | ) |
See accompanying notes which are an integral part of these financial statements.
19
EntrepreneurShares
Series Trust
Statements of Changes in Net Assets
ERShares Entrepreneurs ETF | ERShares NextGen Entrepreneurs ETF | |||||||||||||||
For the Year | For the Year | For the Year | For the Year | |||||||||||||
Ended June 30, | Ended June 30, | Ended June 30, | Ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Increase (Decrease) in Net Assets from: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income (loss) | $ | (214,891 | ) | $ | (593,073 | ) | $ | 76,718 | $ | (14,102 | ) | |||||
Net realized gain (loss) on investments, in-kind redemptions and foreign currency transactions | (16,250,624 | ) | 44,726,256 | (5,467,491 | ) | 8,779,061 | ||||||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | (20,307,560 | ) | (5,872,516 | ) | (8,151,242 | ) | 2,547,525 | |||||||||
Net increase (decrease) in net assets resulting from operations | (36,773,075 | ) | 38,260,667 | (13,542,015 | ) | 11,312,484 | ||||||||||
Distributions to Shareholders: | ||||||||||||||||
From earnings | (42,316,735 | ) | (9,414,439 | ) | (7,092,944 | ) | (183,374 | ) | ||||||||
Change in net assets from distributions | (42,316,735 | ) | (9,414,439 | ) | (7,092,944 | ) | (183,374 | ) | ||||||||
Capital Transactions: | ||||||||||||||||
Proceeds from shares issued | 6,049,089 | 14,151,903 | 693,417 | 10,575,696 | ||||||||||||
Cost of shares redeemed | (39,621,311 | ) | (16,378,069 | ) | (734,438 | ) | (6,264,482 | ) | ||||||||
Net increase (decrease) in net assets resulting from capital transactions | (33,572,222 | ) | (2,226,166 | ) | (41,021 | ) | 4,311,214 | |||||||||
Total Increase (Decrease) in Net Assets | (112,662,032 | ) | 26,620,062 | (20,675,980 | ) | 15,440,324 | ||||||||||
Net Assets | ||||||||||||||||
Beginning of year | 142,961,178 | 116,341,116 | 42,366,719 | 26,926,395 | ||||||||||||
End of year | $ | 30,299,146 | $ | 142,961,178 | $ | 21,690,739 | $ | 42,366,719 | ||||||||
Share Transactions | ||||||||||||||||
Issued | 250,000 | 550,000 | 30,000 | 450,000 | ||||||||||||
Redeemed | (2,475,000 | ) | (625,000 | ) | (50,000 | ) | (300,000 | ) | ||||||||
Net increase (decrease) in shares outstanding | (2,225,000 | ) | (75,000 | ) | (20,000 | ) | 150,000 |
See accompanying notes which are an integral part of these financial statements.
20
ERShares
Entrepreneur ETF
Financial Highlights
(For a share outstanding during each period)
For the | ||||||||||||||||||||
For the Year | For the Year | For the Year | For the Year | Period | ||||||||||||||||
Ended June | Ended June | Ended June | Ended June | Ended June | ||||||||||||||||
30, 2022 | 30, 2021 | 30, 2020 | 30, 2019 | 30, 2018(a) | ||||||||||||||||
Selected Per Share Data: | ||||||||||||||||||||
Net asset value, beginning of period | $ | 26.35 | $ | 21.15 | $ | 17.49 | $ | 17.57 | $ | 15.00 | ||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income (loss) | (0.13 | ) | (0.11 | ) | (0.01 | ) | 0.02 | 0.03 | ||||||||||||
Net realized and unrealized gain (loss) | (8.03 | ) | 6.96 | 3.68 | 0.42 | 2.55 | ||||||||||||||
Total from investment operations | (8.16 | ) | 6.85 | 3.67 | 0.44 | 2.58 | ||||||||||||||
Less distributions to shareholders from: | ||||||||||||||||||||
Net investment income | (0.09 | ) | — | (0.01 | ) | (0.03 | ) | (0.01 | ) | |||||||||||
Net realized gains | (8.63 | ) | (1.65 | ) | — | (0.49 | ) | — | ||||||||||||
Total distributions | (8.72 | ) | (1.65 | ) | (0.01 | ) | (0.52 | ) | (0.01 | ) | ||||||||||
Net asset value, end of period | $ | 9.47 | $ | 26.35 | $ | 21.15 | $ | 17.49 | $ | 17.57 | ||||||||||
Market price, end of period | $ | 9.44 | $ | 26.36 | $ | 21.15 | $ | 17.48 | $ | 17.63 | ||||||||||
Total Return(b) | (43.04 | )% | 32.01 | % | 21.03 | % | 3.14 | % | 17.43 | % (c) | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000 omitted) | $ | 30,299 | $ | 142,961 | $ | 116,341 | $ | 76,956 | $ | 73,814 | ||||||||||
Ratio of Net Expenses to Net Assets(d) | 0.49 | % | 0.49 | % | 0.49 | % | 0.49 | % | 0.49 | % (e) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.24 | )% | (0.41 | )% | (0.05 | )% | 0.12 | % | 0.25 | % (e) | ||||||||||
Portfolio turnover rate | 312 | % | 714 | % (f) | 130 | % (f) | 39 | % | 32 | % (c) |
(a) | For the period November 7, 2017 (commencement of operations) to June 30, 2018. |
(b) | Net asset value total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, if any, and redemption on the last day of the period at net asset value. This percentage is not an indication of the performance of a shareholder’s investment in the Fund based on market value due to differences between the market price of the shares and the net asset value per share of the Fund. |
(c) | Not annualized. |
(d) | The Fund operates under a “Unified Fee” structure under which the Advisor pays substantially all of the expenses for the Fund. The Fund pays the Advisor the Unified Fee, an amount based on its average net assets, computed daily and paid monthly. The Fund pays the Advisor 0.49% of its net assets. |
(e) | Annualized. |
(f) | The Fund has experienced an unusual interest rate environment combined with volatile markets resulting from inflationary concerns. These two factors posed potential adverse effects to the Fund. Thus, the portfolio manager engaged in temporary defensive positions as well as positioned the Fund to take the best advantage of the environment it was facing. These two actions, combined with a reversion of the defensive positions, resulted in an increased turnover for the Fund. |
See accompanying notes which are an integral part of these financial statements.
21
ERShares
NextGen Entrepreneurs ETF
Financial Highlights
(For a share outstanding during each period)
For the | ||||||||||||||||
For the Year | For the Year | For the Year | Period | |||||||||||||
Ended June | Ended June | Ended June | Ended June | |||||||||||||
30, 2022 | 30, 2021 | 30, 2020 | 30, 2019(a) | |||||||||||||
Selected Per Share Data: | ||||||||||||||||
Net asset value, beginning of period | $ | 24.21 | $ | 16.83 | $ | 16.83 | $ | 15.00 | ||||||||
Investment operations: | ||||||||||||||||
Net investment income (loss) | 0.02 | (0.01 | ) | 0.08 | 0.14 | |||||||||||
Net realized and unrealized gain (loss) | (7.71 | ) | 7.50 | 0.19 | 1.69 | (b) | ||||||||||
Total from investment operations | (7.69 | ) | 7.49 | 0.27 | 1.83 | |||||||||||
Less distributions to shareholders from: | ||||||||||||||||
Net investment income | (0.83 | ) | (0.11 | ) | (0.27 | ) | — | |||||||||
Net realized gains | (3.15 | ) | — | — | — | |||||||||||
Total distributions | (3.98 | ) | (0.11 | ) | (0.27 | ) | — | |||||||||
Net asset value, end of period | $ | 12.54 | $ | 24.21 | $ | 16.83 | $ | 16.83 | ||||||||
Market price, end of period | $ | 12.49 | $ | 24.27 | $ | 16.79 | $ | 16.89 | ||||||||
Total Return(c) | (36.35 | )% | 44.58 | % | 1.55 | % | 12.22 | % (d) | ||||||||
Ratios and Supplemental Data: | ||||||||||||||||
Net assets, end of period (000 omitted) | $ | 21,691 | $ | 42,367 | $ | 26,926 | $ | 22,723 | ||||||||
Ratio of Net Expenses to Net Assets(e) | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % (f) | ||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.23 | % | (0.04 | )% | 0.64 | % | 3.99 | % (f) | ||||||||
Portfolio turnover rate | 222 | % | 316 | % (g) | 139 | % | 138 | % (d) |
(a) | For the period December 27, 2018 (commencement of operations) to June 30, 2019. |
(b) | The amount shown for a share outstanding throughout the period does not accord with the change in aggregate gains and losses in the portfolio of securities during the period due to the timing of sales and purchases of fund shares in relation to fluctuating market values during the period. |
(c) | Net asset value total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, if any, and redemption on the last day of the period at net asset value. This percentage is not an indication of the performance of a shareholder’s investment in the Fund based on market value due to differences between the market price of the shares and the net asset value per share of the Fund. |
(d) | Not annualized. |
(e) | The Fund operates under a “Unified Fee” structure under which the Advisor pays substantially all of the expenses for the Fund. The Fund pays the Advisor the Unified Fee, an amount based on its average net assets, computed daily and paid monthly. The Fund pays the Advisor 0.75% of its net assets. |
(f) | Annualized. |
(g) | The Fund has experienced an unusual interest rate environment combined with volatile markets resulting from inflationary concerns. These two factors posed potential adverse effects to the Fund. Thus, the portfolio manager engaged in temporary defensive positions as well as positioned the Fund to take the best advantage of the environment it was facing. These two actions, combined with a reversion of the defensive positions, resulted in an increased turnover for the Fund. |
See accompanying notes which are an integral part of these financial statements.
22
EntrepreneurShares Series Trust |
Notes to the Financial Statements |
June 30, 2022 |
1. ORGANIZATION
EntrepreneurShares Series Trust™ (the “Trust”) was organized on July 1, 2010 as a Delaware statutory trust. The Trust is registered under the Investment Company Act of 1940 (the “1940 Act”) as an open-end management investment company and thus is determined to be an investment company for accounting purposes. The Trust is comprised of five funds and is authorized to issue an unlimited number of shares of beneficial interest for each fund (“Shares”). The accompanying financial statements are those of the ERShares Entrepreneurs ETF (previously known as ERShares Entrepreneur 30 ETF) and the ERShares NextGen Entrepreneurs ETF (previously known as ERShares Non-US Small Cap ETF) (individually referred to as a “Fund” or collectively as the “Funds”). The Funds are exchange-traded funds. The investment objective of the Funds is to seek long-term capital appreciation. The Funds’ prospectus provides a description of each Fund’s investment objectives, policies, and strategies. The Funds are non-diversified and therefore may invest a greater percentage of their assets in fewer issuers than a diversified Fund. The assets of the Funds are segregated and a shareholder’s interest is limited to the Fund in which shares are held.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their NAV. Each Fund issues and redeems Shares on a continuous basis at NAV only in large blocks of Shares, of at least 25,000 Shares for the Entrepreneurs ETF and 10,000 Shares for the NextGen ETF, (“Creation Units”). Creation Units are issued and redeemed principally in-kind for securities included in a specified universe. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in amounts less than a Creation Unit.
Under the Trust’s organizational documents, its officers and Board of Trustees (the “Board”) are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Trust may enter into contracts with vendors and others that provide for general indemnifications. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust. However, based on experience, the Trust expects that risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Each Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services – Investment
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EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
Companies including Accounting Standards Update (“ASU”) 2013-08. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets, 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.
A. Investment Valuations
The Funds hold their investments at fair value. Fair value is defined as the price that would be expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques used to determine fair value are further described below.
Security values are ordinarily obtained through the use of independent pricing services in accordance with procedures adopted by the Board. Pursuant to these procedures, the Funds may use a pricing service, bank, or broker-dealer experienced in such matters to value the Funds’ securities. When reliable market quotations are not readily available for any security, the fair value of that security will be determined by a committee established by the Board in accordance with procedures adopted by the Board. The fair valuation process is designed to value the subject security at the price the Funds would reasonably expect to receive upon its current sale. Additional consideration is given to securities that have experienced a decrease in the volume or level of activity or to circumstances that indicate that a transaction is not orderly.
Equity securities traded on a securities exchange are valued at the last reported sales price on the principal exchange. Equity securities quoted by NASDAQ are valued at the NASDAQ official closing price. If there is no reported sale on the principal exchange, and in the case of over-the-counter securities, equity securities are valued at a bid price estimated by the security pricing service. In each of these situations, securities are typically categorized as Level 1 and Level 2, respectively in the fair value hierarchy.
In accordance with procedures adopted by the Board, fair value pricing may be used if events materially affecting the value of foreign securities occur between the time the exchange on which they are traded closes and the time the Funds’ net asset values are calculated. The Funds use fair value adjustment factors provided daily by an independent pricing vendor to value certain foreign equity securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE Arca. These securities are considered as Level 2 in the fair value hierarchy.
Most securities listed on a foreign exchange are valued at the last sale price at the close of the exchange on which the security is primarily traded. In certain countries, market maker
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EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
prices are used since they are the most representative of the daily trading activity. In the case of certain foreign exchanges, the closing price reported by the exchange (which may sometimes be referred to by the exchange or one or more pricing agents as the “official close” or the “official closing price” or other similar term) will be considered the most recent sale price. Securities not traded on a particular day are valued at the mean between the last reported bid and asked quotes or the last sale price where appropriate; otherwise, fair value will be determined in accordance with fair value procedures approved by the Board.
The accounting records of the Funds are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities at the close of each business day. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Funds do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
The Funds may invest in American Depositary Receipts as well as other “hybrid” forms of depositary receipts, including Global Depositary Receipts. These depositary receipts are certificates evidencing ownership of shares of a foreign issuer, and serve as an alternative to directly purchasing the underlying foreign securities in their national markets and currencies. These certificates are issued by depository banks and generally trade on an established market in the United States or elsewhere. The underlying shares are held in trust by a custodian bank or similar financial institution in the issuer’s home country. Redeemable securities issued by open-end investment companies are valued at the last calculated net asset value, with the exception of securities issued by exchange-traded open-end investment companies, which are priced as equity securities as described above.
Income received by the Funds from sources within foreign countries may be subject to withholding and other income or similar taxes imposed by such countries, a portion of which may be reclaimable. The Funds may be subject to foreign taxes on capital gains on the sale of securities or foreign currency transactions. The Funds accrue foreign capital gains taxes, as applicable, based on their current interpretation of tax rules in the foreign markets in which they invest. Such tax accrual is based in part on actual and estimated realized gains. Estimated realized gains are subject to change and such change could be material. However, management’s conclusions may be subject to future review and change based on changes in, or the interpretation of, the accounting standards or tax laws and regulations.
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EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
The Trust has a three-tier fair value hierarchy that is dependent upon the various “inputs” used to determine the value of the Funds’ investments. The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. These inputs are summarized in the three broad levels listed below:
Level 1 – Quoted prices in active markets for identical assets.
Level 2 – Other observable pricing inputs at the measurement date (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3 – Significant unobservable pricing inputs at the measurement date (including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments.
The following table provides the fair value measurement as of June 30, 2022, while the breakdown, by category, of common stocks is disclosed in the Schedule of Investments for each Fund.
Valuation Inputs | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
ERShares Entrepreneurs ETF* | ||||||||||||||||
Common Stocks | $ | 28,456,735 | $ | — | $ | — | $ | 28,456,735 | ||||||||
Total | $ | 28,456,735 | $ | — | $ | — | $ | 28,456,735 | ||||||||
ERShares NextGen Entrepreneurs ETF* | ||||||||||||||||
Common Stocks | $ | 11,438,903 | $ | 8,657,544 | $ | — | $ | 20,096,447 | ||||||||
Total | $ | 11,438,903 | $ | 8,657,544 | $ | — | $ | 20,096,447 |
* | For further information regarding security characteristic, please see the Schedules of Investments. |
The Funds did not hold any investments at the end of the reporting year for which significant unobservable inputs (Level 3) were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting year.
B. Security Transactions and Related Income
Investment transactions are accounted for no later than the first calculation of the NAV on the business day following the trade date. For financial reporting purposes, however, security transactions are accounted for on the trade date on the last business day of the reporting year. Securities gains and losses are calculated on the identified cost basis. Interest income and expenses are accrued daily. Dividends, less foreign tax withholding, are recorded on the ex-dividend date. Investment income from non-U.S. sources received
26
EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
by a Fund is generally subject to non-U.S. withholding taxes at rates ranging up to 30%. Such withholding taxes may be reduced or eliminated under the terms of applicable U.S. income tax treaties. The Funds may be subject to foreign taxes on gains in investments or currency repatriation. The Funds accrue such taxes, as applicable, based on their current interpretation of tax rules in the foreign markets in which they invest.
C. Cash
Idle cash may be swept into various overnight demand deposits and is classified as cash or foreign currency on the Statements of Assets and Liabilities. The Funds maintain cash in bank deposit accounts which, at times, may exceed United States federally insured limits. Amounts swept overnight are available on the next business day.
D. Dividends and Distributions to Shareholders
The Funds intend to distribute to their shareholders net investment income and net realized long or short-term capital gains, if any, at least annually. Distributions are recorded on the ex-dividend date. The amount of dividends from net investment income and net realized gains is determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. These “book/tax” differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature (e.g., distributions and income received from pass-through investments), such amounts are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. Temporary differences are primarily due to return of capital from investments.
3. INVESTMENT ADVISORY AND OTHER CONTRACTUAL SERVICES A. Investment Advisory Fees
Capital Impact Advisors, LLC (the “Advisor”) a related party, serves as the Funds’ investment advisor pursuant to an Investment Advisory Agreement. Subject at all times to the supervision and approval of the Board, the Advisor is responsible for the overall management of the Trust. The Advisor has arranged for distribution, custody, fund administration, transfer agency and all other services necessary for the Funds to operate. The Advisor receives a fee for its services, a “Unified Fee”. The ERShares Entrepreneurs ETF pays 0.49% of the Fund’s average daily net assets, computed daily and paid monthly. The ERShares NextGen Entrepreneurs ETF pays 0.75% of the Fund’s average daily net assets, computed daily and paid monthly. Out of the Unified Fee, the Advisor is obligated to pay or arrange for the payment of substantially all expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit, independent trustees and other services, except for interest expenses, distribution fees or expenses, brokerage expenses, acquired fund fees and expenses, taxes and extraordinary expenses such as
27
EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
litigation and other expenses not incurred in the ordinary course of the Funds’ business. The Advisor’s Unified Fee is designed to cause substantially all of the Funds’ expenses to be paid and to compensate the Advisor for providing services for the Funds.
At June 30, 2022, certain officers of the Trust are officers, directors and/or trustees of the Advisor. Certain officers of the Trust were also employees of the Advisor. These officers were not compensated directly by the Funds.
Each non-interested Trustee of the Trust receives compensation of $3,500 for attending each Board meeting, including special meetings, as well as an additional $1,000 for each audit commit meeting. The Funds also reimburse the non-interested Trustees for their reasonable travel expenses incurred in attending meetings of the Board. Trustee fees are allocated to the five funds in the Trust based on each fund’s relative net assets. Trustee fees for the Funds are paid by the Advisor out of the Unified Fee with respect to ERShares Entrepreneurs ETF and ERShares NextGen Entrepreneurs ETF.
4. INVESTMENT TRANSACTIONS
For the fiscal year ended June 30, 2022, purchases and sales of investment securities, other than in-kind transactions and short-term investments, were as follows:
Purchases | Sales | |||||||
ERShares Entrepreneurs ETF | $ | 259,576,093 | $ | 302,886,471 | ||||
ERShares NextGen Entrepreneurs ETF | 68,297,131 | 75,432,042 |
For the fiscal year ended June 30, 2022, purchases and sales for in-kind transactions were as follows:
Purchases | Sales | |||||||
ERShares Entrepreneurs ETF | $ | 5,668,464 | $ | 36,487,714 | ||||
ERShares NextGen Entrepreneurs ETF | 648,737 | 640,936 |
For the fiscal year ended June 30, 2022, the ERShares Entrepreneurs ETF and ERShares NextGen Entrepreneurs ETF had in-kind net realized gains of $5,939,708 and $61,060, respectively.
There were no purchases or sales of long-term U.S. government obligations during the fiscal year ended June 30, 2022.
5. CAPITAL SHARE TRANSACTIONS
Shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in shares for each Fund are disclosed in detail on the Statements of Changes in Net Assets.
28
EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
The consideration for the purchase of Creation Units of a Fund generally consists of the in-kind deposit of a designated basket of securities, which constitutes an optimized representation of the securities of that Fund’s specified universe, and an amount of cash. Investors purchasing and redeeming Creation Units may be charged a transaction fee to cover the transfer and other transactional costs the Funds incur to issue or redeem Creation Units. The standard transaction fee charge is $250. For the fiscal year ended June 30, 2022, the ERShares Entrepreneurs ETF and ERShares NextGen Entrepreneurs ETF received $3,500 and $500 in transaction fees, respectively. Transaction fees received by each Fund are included in the capital transactions presented on the Statements of Changes in Net Assets.
From time to time, settlement of securities related to subscriptions-in-kind or redemptions-in-kind may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities payable related to in-kind transactions” on the Statements of Assets and Liabilities.
During the fiscal year ended June 30, 2022, the Funds received securities in exchange for subscriptions of capital shares (subscriptions-in-kind) as follows:
Shares | Fair Value | |||||||
ERShares Entrepreneurs ETF | 32,442 | $ | 5,668,464 | |||||
ERShares NextGen Entrepreneurs ETF | 60,294 | 648,737 |
6. FEDERAL TAX INFORMATION
It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code of 1986, as amended, and to make distributions of net investment income and net realized capital gains sufficient to relieve it from all, or substantially all, federal income taxes.
The Trust has evaluated tax positions taken or expected to be taken in the course of preparing each Fund’s tax returns to determine whether it is more-likely-than not (i.e., greater than 50-percent chance) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. Tax positions taken in tax years remain subject to examination by tax authorities (generally three years
29
EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
plus the interim tax period since then for federal income tax purposes). The determination has been made that there are not any uncertain tax positions that would require the Funds to record a tax liability and, therefore, there is no impact to the Funds’ financial statements.
At June 30, 2022, the net unrealized appreciation (depreciation) and tax cost of investments for tax purposes was as follows:
ERShares | ||||||||
ERShares | NextGen | |||||||
Entrepreneurs | Entrepreneurs | |||||||
ETF | ETF | |||||||
Gross unrealized appreciation | $ | 866,784 | $ | 930,450 | ||||
Gross unrealized depreciation | (9,400,446 | ) | (5,060,291 | ) | ||||
Net unrealized appreciation (depreciation) on investments | (8,533,662 | ) | (4,129,841 | ) | ||||
Tax cost of investments | $ | 36,990,397 | $ | 24,200,851 |
The tax character of distributions paid for the fiscal years ended June 30, 2022 and June 30, 2021 were as follows:
ERShares NextGen | ||||||||||||||||
ERShares Entrepreneurs ETF | Entrepreneurs ETF | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Distributions paid from: | ||||||||||||||||
Ordinary income(a) | $ | 19,781,233 | $ | 4,217,048 | $ | 3,813,825 | $ | 183,374 | ||||||||
Long-term capital gains | 22,534,281 | 5,197,391 | 3,278,831 | — | ||||||||||||
Tax return of capital | 1,221 | — | 288 | — | ||||||||||||
Total distributions paid | $ | 42,316,735 | $ | 9,414,439 | $ | 7,092,944 | $ | 183,374 |
(a) | Short-term capital gain distributions are treated as ordinary income for tax purposes. |
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EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
At June 30, 2022, the components of accumulated earnings (deficit) on a tax basis were as follows:
ERShares | ||||||||
ERShares | NextGen | |||||||
Entrepreneurs | Entrepreneurs | |||||||
ETF | ETF | |||||||
Accumulated capital and other losses | $ | (19,639,278 | ) | $ | (5,747,431 | ) | ||
Unrealized depreciation on investments and foreign currency translations | (8,533,662 | ) | (4,129,841 | ) | ||||
Total accumulated deficit | $ | (28,172,940 | ) | $ | (9,877,272 | ) |
As of June 30, 2022, the ERShares Entrepreneurs ETF had short-term and long-term capital loss carryforwards available to offset future gains, not subject to expiration, in the amount of $1,371,461 and $174,697, respectively, and ERShares NextGen Entrepreneurs ETF had short-term carryforwards available to offset future gains, not subject to expiration, in the amount of $5,747,431.
Certain capital and qualified late year losses incurred after October 31 and within the current taxable year are deemed to arise on the first business day of the Funds’ following taxable year. For the fiscal year ended June 30, 2022, the ERShares Entrepreneurs ETF deferred post October capital and late year ordinary losses in the amount of $18,093,119.
As of June 30, 2022,the following reclassifications relating primarily to redemptions in kind, net operating losses, distribution reclasses, and Passive Foreign Investment Companies have been made to increase (decrease) such accounts with offsetting adjustments as indicated:
Accumulated | ||||||||
Paid-In | Earnings | |||||||
Capital | (Deficit) | |||||||
ERShares Entrepreneurs ETF | $ | 2,410,466 | $ | (2,410,466 | ) | |||
ERShares NextGen Entrepreneurs ETF | (332,950 | ) | 332,950 |
7. INVESTMENT RISKS
ETF Risk
The NAV of a Fund can fluctuate up or down, and you could lose money investing in a Fund if the prices of the securities owned by the Fund decline. In addition, a Fund may be subject to the following risks: (1) the market price of a Fund’s shares may trade above or below its NAV; (2) an active trading market for a Fund’s shares may not develop or be maintained; or (3) trading of a Fund’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are delisted from the exchange, or the
31
EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
Sector Risk
If a Fund has significant investments in the securities of issuers within a particular sector, any development affecting that sector will have a greater impact on the value of the net assets of the Fund than would be the case if the Fund did not have significant investments in that sector. In addition, this may increase the risk of loss in the Fund and increase the volatility of the Fund’s NAV per share. For instance, economic or market factors, regulatory changes or other developments may negatively impact all companies in a particular sector, and therefore the value of the Fund’s portfolio will be adversely affected. As of June 30, 2022, the ERShares Entrepreneurs ETF had 43.96% of the value of its net assets invested in stocks within the Technology sector.
Market and Geopolitical Risk
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 Funds’ portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, pandemics, epidemics, terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects. Any such event(s) could have a significant adverse impact on the value and risk profile of the Funds’ portfolio. 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. Therefore, the Funds could lose money over short periods due to short-term market movements and over longer periods during more prolonged market downturns. During a general market downturn, multiple asset classes may be negatively affected. Changes in market conditions and interest rates can have
32
EntrepreneurShares Series Trust |
Notes to the Financial Statements (continued) |
June 30, 2022 |
the same impact on all types of securities and instruments. In times of severe market disruptions, you could lose your entire investment.
Foreign Securities Risk
Foreign securities, foreign currencies, and securities issued by U.S. entities with substantial foreign operations can involve additional risks relating to political, economic, or regulatory conditions in foreign countries. These risks include fluctuations in foreign currencies; imposition of additional taxes; trading, settlement, custodial and other operational risks; and risk arising from the less stringent investor protection and disclosure standards of some foreign markets. All of these factors can make foreign investments more volatile and potentially less liquid than U.S. investments. In addition, foreign markets can perform differently from the U.S. market.
NOTE 8. SUBSEQUENT EVENTS
Management of the Funds has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date at which these financial statements were issued. Based upon this evaluation, management has determined there were no items requiring adjustment of the financial statements or additional disclosure.
33
Report of Independent Registered Public Accounting Firm |
To the
Board of Trustees of EntrepreneurShares Series Trust
and the Shareholders of
ERShares Entrepreneurs ETF
and ERShares NextGen Entrepreneurs
ETF
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of ERShares Entrepreneurs ETF and ERShares NextGen Entrepreneurs ETF, each a series of shares of beneficial interest in EntrepreneurShares Series Trust (the “Funds”), including the schedules of investments, as of June 30, 2022, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and financial highlights for each of the years in the three-year period then ended, 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 Funds as of June 30, 2022, and the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended and their financial highlights for each of the years in the three-year period then ended, in conformity with accounting principles generally accepted in the United States of America. The financial highlights noted in the table below, were audited by other auditors, whose report dated August 29, 2019, expressed an unqualified opinion on such financial highlights.
Fund | Financial Highlights Presented |
ERShares Entrepreneurs ETF | For the year ended June 30, 2019 and the period from November 7, 2017 (commencement of operations) to June 30, 2018 |
ERShares NextGen Entrepreneurs ETF | For the period from December 27, 2018 (commencement of operations) to June 30, 2019 |
Basis for Opinion
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ 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 Funds 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 Funds are not required to have, nor were we engaged to perform, an audit of their 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 Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
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
34
Report of Independent Registered Public Accounting Firm |
as of June 30, 2022 by correspondence with the custodian, brokers, or by other appropriate auditing procedures where replies from brokers were not received. 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.
BBD, LLP
We have served as the auditor of one or more of the Funds in the EntrepreneurShares Series Trust since 2020.
Philadelphia, Pennsylvania
August 29, 2022
35
Summary of Fund Expenses (Unaudited) |
As a Fund shareholder, you may incur two types of costs: (1) transaction costs, including commissions on trading, as applicable; and (2) ongoing costs, including advisory fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds. The expense examples below are based on an investment of $1,000 invested on January 1, 2022 and held through the period ended June 30, 2022. Investors may pay brokerage commissions on their purchases and sales of exchange traded fund shares, which are not reflected in the example.
Actual Expenses
The first line of the table for each class provides information about actual account values and actual expenses. You may use the information in these lines, 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 = 8.60), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table for each class provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratios 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 the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table for each class is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if transaction costs were included, your costs would have been higher.
Beginning | |||||||||||||||
Account | Ending | Expenses | |||||||||||||
Value | Account | Paid | Annualized | ||||||||||||
January 1, | Value June | During | Expense | ||||||||||||
2022 | 30, 2022 | Period(a) | Ratio | ||||||||||||
ERShares Entrepreneurs ETF | |||||||||||||||
Actual | $ | 1,000.00 | $ | 631.30 | $ | 1.98 | 0.49% | ||||||||
Hypothetical(b) | $ | 1,000.00 | $ | 1,022.36 | $ | 2.46 | 0.49% | ||||||||
ERShares NextGen Entrepreneurs ETF | |||||||||||||||
Actual | $ | 1,000.00 | $ | 692.80 | $ | 3.15 | 0.75% | ||||||||
Hypothetical(b) | $ | 1,000.00 | $ | 1,021.08 | $ | 3.76 | 0.75% |
(a) | Expenses are equal to the Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
(b) | Hypothetical assumes 5% annual return before expenses. |
36
Additional Information (Unaudited) |
ADDITIONAL TAX INFORMATION
Long Term Capital Gains Designation
For the year ended June 30, 2022, the Entrepreneur ETF and the Entrepreneur NextGen ETF hereby designates $22,534,281 and $3,278,831, respectively, as 20% rate gain distributions for purposes of the dividends paid deduction.
Qualified Dividend Income
For the year ended June 30, 2022, 0.32% and 6.02% of the dividends paid from net investment income, including short-term capital gains (if any), is designated as qualified dividend income for the Entrepreneur ETF and Entrepreneur NextGen ETF, respectively.
Corporate Dividends Received Deduction
For the year ended June 30, 2022, 0.32% and 0.00% of the dividends paid from net investment income, including short-term capital gains (if any), qualifies for the dividends received deduction available to corporate shareholders for the Entrepreneur ETF and Entrepreneur NextGen ETF, respectively.
AVAILABILITY OF QUARTERLY PORTFOLIO HOLDINGS SCHEDULES
The Funds file complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT (or any predecessor form). These filings are available on the SEC’s website at www.sec.gov. In addition, the Funds’ Form N-PORT is available without charge, upon request, by calling 1-877-271-8811.
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
A description of the Funds’ proxy voting policies and procedures and information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12 month period ended June 30, is available without charge, upon request, by (1) calling 1-877-271-8811, or (2) on the SEC’s website at www.sec.gov.
HOUSEHOLDING
To reduce expenses, each Fund generally mails only one copy of its prospectus and each annual and semi-annual report to those addresses shared by two or more accounts and to shareholders that such Fund reasonably believes are from the same family and household. This is referred to as “householding.” If you wish to discontinue householding and would like to receive individual copies of these documents, please call us at 1-877-271-8811. Once a Fund receives notice to stop householding, the Fund will begin sending individual copies 30 days after receiving requests. This policy does not apply to account statements.
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Trustees and Officers (Unaudited) |
1. ADDITIONAL DISCLOSURE REGARDING FUND TRUSTEES AND OFFICERS
As a Delaware statutory trust, the business and affairs of the Trust are managed by its officers under the direction of its Board of Trustees. The Global Fund, the US Small Cap Fund, the US Large Cap Fund, the ERShares Entrepreneurs ETF and the ERShares NextGen Entrepreneurs ETF are the only funds in the “Fund Complex” as defined in the 1940 Act. The name, birth year and principal occupations during the past five years, and other information with respect to each of the Trustees and officers of the Trust is set forth below. Unless otherwise noted, each Trustee and officer has served in the indicated positions and directorships for at least the last five years. The address of each Trustee and officer is c/o the Trust at 175 Federal Street, Suite #875, Boston, MA 02110.
Name
(Birth Year) |
Position(s)
Held with Trust |
Term
of Office(1) and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
#
of Portfolios in Fund Complex Overseen by Trustee |
Other
Directorships Held by Trustee During Past 5 Years | |||||
Non-Interested Trustees | ||||||||||
Charles
Aggouras (1967) |
Trustee | Since 2018 | Real estate investment and development | 5 | None | |||||
George
R. Berbeco (1944) |
Trustee | Since 2010 | Former President – Devon Group and General Partner – Devon Capital Partners, LP. (commodity trading) (2005 to 2009). | 5 | Director – Bay Colony Development Corporation. | |||||
Interested Trustee | ||||||||||
Joel
M. Shulman, CFA(2) (1955) |
President and Trustee | Since 2010 | Member and principal of EntrepreneurShares, LLC and Seaport Global Advisors, LLC since 2010; Member and founding partner of Capital Impact Advisors, LLC since 2013; Tenured professor at Babson College. | 5 | None |
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Trustees and Officers (Unaudited) (continued) |
Name
(Birth Year) |
Position(s) Held with Trust |
Term
of Office(1) and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
#
of Portfolios in Fund Complex Overseen by Trustee |
Other
Directorships Held by Trustee During Past 5 Years | |||||
Officers | ||||||||||
Mihai
Prisacariu (1994) |
Chief Compliance Officer | Since 2019 | Began involvement with EntrepreneurShares in 2017. Pursued academic studies prior to 2017. | N/A | None | |||||
Eva
Adosoglou (1989) |
Chief Operations Officer | Since 2019 | Chief Operating Officer EntrepreneurShares Series Trust since 2019; Innovative Manager – Wirecard from 2018-2019; Portfolio Manager – Cox Automative, Inc. from 2016-2018; Financial Analyst – PWC from 2013-2016. | N/A | None |
(1) | Each Trustee serves an indefinite term until the election of a successor. Each officer serves an indefinite term, renewed annually, until the election of a successor. |
(2) | Dr. Shulman is considered an interested Trustee within the meaning of the 1940 Act because of his affiliation with the Advisors and Sub-Advisor. |
The Statement of Additional Information includes additional information about the Funds’ Trustees and is available free of charge, upon request by calling the Funds toll free at 1-877-271-8811 or by visiting the SEC’s website (http://www.sec.gov).
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PRIVACY POLICY (Unaudited) |
As part of the EntrepreneurShares fund family long tradition of trust, the confidentiality of personal information is paramount. We maintain high standards to safeguard your personal information. We will remain vigilant and professional in protecting that information and in using it in a fair and lawful manner. As part of this commitment to fulfilling your trust we have formulated this Privacy Policy.
Safeguarding Customer Information and Documents
To conduct regular business, we may collect nonpublic personal information from sources such as:
• | Account Applications and other forms, which may include a customer’s name, address, social security number, and information about a customer’s investment goals and risk tolerances; |
• | Account History, including information about the transactions and balances in a customer’s account; and |
• | Correspondence, written, telephonic, or electronic between a customer and Seaport Global Advisors, LLC; Capital Impact Advisors, LLC; EntrepreneurShares, LLC, and/or any EntrepreneurShares Mutual Fund or Exchange-Traded Fund product; such as, ERShares Global Fund, ERShares US Large Cap Fund, ERShares US Small Cap, ERShares Entrepreneurs ETF, ERShares NextGen Entrepreneurs ETF, or service providers to Seaport Global Advisors, Capital Impact, EntrepreneurShares, and/or EntrepreneurShares’ Funds. |
To conduct regular business, we collect non-public customer data in checklists, forms, in written notations, and in documentation provided to us by our customers for evaluation, registration, licensing or related consulting services. We also create internal lists of such data.
EntrepreneurShares will internally safeguard your nonpublic personal information by restricting access to only those employees who provide products or services to you or those who need access to your information to service your account. In addition, we will maintain physical, electronic and procedural safeguards that meet federal and/or state standards to guard your nonpublic personal information. Failure to observe EntrepreneurShares’ procedures regarding customer and consumer privacy will result in discipline and may lead to termination.
Sharing Nonpublic Personal and Financial Information
As the Firm shares nonpublic information solely to service our client accounts, we do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law or otherwise disclosed herein.
EntrepreneurShares is committed to the privacy and protection of our customers’ personal and financial information. We will not share any such information with any affiliated or nonaffiliated third party except:
• | When necessary to complete transactions in a customer account, such as clearing firm. |
• | When required to service and/or maintain your account. |
• | In order to resolve a customer dispute or inquiry. |
• | With persons acting in a fiduciary or representative capacity on behalf of the customer. |
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PRIVACY POLICY (Unaudited) (continued) |
• | With rating agencies, persons assessing compliance with industry standards, or to the attorneys, accountants and auditors of the firm. |
• | In connection with any sale and / or merger of EntrepreneurShares’ business. |
• | To prevent or protect against actual or potential fraud, identity theft, unauthorized transactions, claims or other liability. |
• | To comply with all federal, state or local laws, rules, statutes and other applicable legal requirements. |
• | In connection with a written agreement to provide advisory services or investment management when the information is released solely for the purpose of providing products or services covered by pursuant to the EntrepreneurShares’ Wrap Fee Program. |
• | Upon the customer’s specific instruction, consent or request. |
Note: When we share your nonpublic information with any third party for the reasons listed above, we make certain that there are written restrictions in place regarding the use and/or disclosure of said information.
Opt-Out Provisions
It is not a policy of EntrepreneurShares to share nonpublic personal and financial information with affiliated or unaffiliated third parties except under the circumstances noted above. Since sharing under the circumstances noted above
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Advisor
Capital Impact Advisors, LLC
175 Federal Street, Suite #875
Boston, MA 02110
Independent Registered Public Accounting Firm
BBD, LLP
1835 Market Street, 3rd Floor
Philadelphia, PA 19103
Custodian and Transfer Agent
Brown Brothers Harriman & Co.
50 Post Office Square
Boston, MA 02110
Distributor
Vigilant Distributors, LLC
223 Wilmington West Chester Pike, Suite 216
Chadds Ford, PA 19317
Administrator, Accountant and Dividend Disbursing Agent
Ultimus Fund Solutions, LLC
225 Pictoria Drive,
Cincinnati, OH 45246
Counsel
Thompson Hine LLP
41 South High Street, Suite 1700
Columbus, OH 43215
This report should be accompanied or preceded by a prospectus.
ERShares ETF-AR-22