ck0001650149-20230930
Unusual Whales Subversive
Democratic Trading ETF (NANC)
Listed
on Cboe BZX Exchange, Inc.
Unusual Whales Subversive
Republican Trading ETF (KRUZ)
Listed
on Cboe BZX Exchange, Inc.
Prospectus
January
31, 2024
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
of these securities or determined if this Prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
Unusual
Whales Subversive Democratic Trading ETF (NANC)
Unusual
Whales Subversive Republican Trading ETF (KRUZ)
Each
a series of Series Portfolios Trust (the “Trust”)
TABLE
OF CONTENTS
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Frequent
Purchases and Redemption of
Shares |
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28 |
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Investment
Objective
The
Unusual Whales Subversive Democratic Trading ETF (the “Fund” or the “Democratic
Trading Fund”) seeks to achieve long-term capital
appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
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Management
Fees |
0.75% |
Distribution
and Service (Rule 12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Acquired
Fund Fees and Expenses(1) |
0.01% |
Total
Annual Fund Operating Expenses |
0.76% |
(1)
Acquired Fund Fees
and Expenses are the indirect costs of investing in other investment companies.
Please note that Total Annual Operating Expenses in this fee table will not
correlate to the Ratio of Expenses to Average Net Assets in the Fund’s Financial
Highlights, which only reflect the direct operating expenses incurred by the
Fund.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and then hold or
sell all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund’s operating
expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would
be:
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One
Year |
Three
Years |
Five
Years |
Ten
Years |
$78 |
$243 |
$422 |
$942 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
the annual fund operating expenses or in the Example, affect the Fund’s
performance. During the Fund’s most recent fiscal period ended September 30,
2023, the Fund’s portfolio turnover rate was 44% of the average value of its portfolio.
Principal Investment
Strategies
The
Fund is an actively managed diversified exchange-traded fund (“ETF”) that seeks
to achieve its investment objective by investing primarily in equity securities
of publicly traded companies that sitting Democratic members of United States
Congress and/or their families also have reported to have invested in through
public disclosure filings made by such Congresspersons pursuant to the Stop
Trading on Congressional Knowledge Act (“STOCK Act”). Members of Congress are
permitted to actively trade stocks, options and other financial assets,
including securities of companies that may be affected by the outcomes of
legislative and executive meetings in which those members of Congress
participated. Congresspeople (Senators and members of the House of
Representatives) and/or their families are then required to report these
transactions on STOCK Act filings, known as Periodic Transaction Reports
(“PTRs”). PTRs are filed with either the Senate Office of Public Records or the
Clerk of the House of Representatives and made available online pursuant to the
Ethics
in Government Act (“EIGA”), as amended. PTRs are due within 30 days from when a
Congressperson or their spouse becomes aware of a transaction, but no later than
45 days from the date of the transaction. The Fund will focus on the equity
securities purchased or sold by members of Congress who are registered members
of the Democratic Party and their families. The Fund will not consider
investments by any U.S. Congressperson who is not registered as a member of the
Democratic Party (e.g., a U.S. Congressperson who is registered as an
Independent but who may caucus as member of the Democratic Party).
Subversive
Capital Advisor LLC (“Subversive” or the “Adviser”), the Fund’s investment
adviser, will obtain and use information derived by others from PTRs filed by
Democratic U.S. Congresspeople and their family members (hereinafter referred to
collectively as “Democratic U.S. Congresspeople”) to determine which equity
securities of publicly traded companies, and how much of each equity security,
to select for the Fund. After establishing an initial portfolio, the Fund will
typically buy or sell a security when a position is reported as being bought or
sold by Democratic U.S. Congresspeople. The Fund will base its purchases and
sales of equity securities of publicly traded companies on trades reported in
the PTRs by Democratic U.S. Congresspeople while in office. Because PTRs report
a range of transaction values, the Adviser will adjust the relative composition
of the Fund’s portfolio based on the midpoint of these ranges.
To
create the Fund’s initial portfolio, the Adviser will obtain and use information
derived by others from PTRs filed by Democratic U.S. Congresspeople for the past
3 years. Purchases made during that time will be netted against any sales of the
same security to create an initial portfolio of equity securities. As the
investment thesis of the Fund is to track the trading activity of Democratic
U.S. Congresspeople while in office, equity securities acquired by Democratic
U.S. Congresspeople prior to his or her swearing in (or the 3-year lookback
period) are not considered when creating the initial portfolio. To the extent a
Democratic U.S. Congressperson sells equity securities that were acquired prior
to his or her swearing in, the Adviser will not adjust the Fund’s portfolio.
Under
normal circumstances, the Fund will invest in a portfolio of between 500 and 600
equity securities. However, the number and size of positions held by the Fund
will vary based on the number of positions traded by Democratic U.S.
Congresspeople. When multiple PTRs are made available on the same day by
different Democratic U.S. Congresspeople, trades of the same equity securities
will be netted for purposes of adjusting the Fund’s portfolio. Trades reported
in an individual PTR as bought and sold are excluded. The Fund will also exclude
transactions in the securities underlying of any reported options contract
trades. In addition to equity securities, the Fund will also transact in sector
specific mutual funds and ETFs reported to have been traded on PTRs, but will
exclude broad-based mutual fund and ETF trades. The Adviser may also refrain
from making de minimis trades (trades representing 1% of the overall portfolio),
as such trades will have little to no economic impact on the Fund’s
performance.
In an effort to achieve its goals, the Fund may engage in active and
frequent trading.
Principal Risks
As
with any fund, there are risks to investing. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency.
In addition to possibly not achieving your investment
goals, you
could lose all or a portion of your investment in the Fund over short or even
long periods of time. The principal risks of investing in the Fund are
summarized below.
ETF
Risks.
The
Fund is an ETF, and, as a result of its structure, it is exposed to the
following risks:
•Authorized
Participants, Market Makers, and Liquidity Providers Concentration Risk.
The
Fund has only a limited number of institutional investors (known as “Authorized
Participants” or “APs”) that are authorized to purchase and redeem shares
directly from the Fund. In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, shares of the Fund may trade at a material discount
to the Fund’s net asset value (“NAV”) and possibly face delisting: (i) APs exit
the business or otherwise become unable to process creation and/or redemption
orders and no other APs step
forward
to perform these services, or (ii) market makers and/or liquidity providers exit
the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
•Costs
of Buying or Selling Shares. Due
to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
may significantly reduce investment results and an investment in shares may not
be advisable for investors who anticipate regularly making small
investments.
•Shares
May Trade at Prices Other Than NAV. As with all ETFs, shares of the Fund may be bought and sold in the
secondary market at market prices. Although it is expected that the market price
of shares of the Fund will approximate the Fund’s NAV, there may be times when
the market price of shares is more than the NAV intra-day (premium) or less than
the NAV intra-day (discount) due to supply and demand of shares or during
periods of market volatility. This risk is heightened in times of market
volatility, periods of steep market declines, and periods when there is limited
trading activity for shares in the secondary market, in which case such premiums
or discounts may be significant.
•Trading.
Although shares of the Fund are listed for trading on the Cboe BZX Exchange,
Inc. (the “Exchange”), there can be no assurance that an active trading market
for shares will develop or be maintained or that shares will trade with any
volume, or at all, on any stock exchange. In stressed market conditions, the
market for shares of the Fund may become less liquid in response to
deteriorating liquidity in the markets for the Fund’s underlying portfolio
holdings. This adverse effect on liquidity for the Fund’s shares, in turn, can
lead to differences between the market price of the Fund’s shares and the
underlying value of those shares. In addition, trading in Fund shares may be
halted due to market conditions or for reasons that, in the view of the
Exchange, make trading in shares of the Fund
inadvisable.
Government
Regulation Risk.
It is possible that legislation or regulation could be enacted that limits,
restricts or prevents United States Congresspeople and/or their spouses from
personal securities trading. Legal, tax and regulatory changes could occur that
may adversely affect the Fund and its ability to pursue its investment
strategies and/or increase the costs of implementing such strategies. Government
regulation may change the manner in which the Fund is able to implement it’s
principal investment strategy. Government regulation may change frequently and
may have significant adverse consequences for the Fund or its investments. It is
not possible to predict fully the effects of current or future
regulation.
Ethics
in Government Act Risk.
As described above, in implementing the Fund’s principal investment strategies,
the Adviser obtains and uses information derived by others from PTRs to create
an initial portfolio and to adjust the composition and weighting of securities
in the Fund’s portfolio. PTRs are made available online by the Ethics in
Government Act of 1978, as amended (the “EIGA”), which makes it unlawful for
“any person to obtain or use a [PTR] … for any commercial purpose, other than by
news and communications media for dissemination to the general public[.]” The
EIGA authorizes the U. S. Attorney General to bring a civil action against any
person who obtains or uses a PTR for a prohibited commercial purpose, and
provides that the court in which such action is brought may assess penalties.
Absent a definitive determination as to whether the Adviser’s review and
analysis of data for purposes of implementing the Fund’s investment strategies
constitutes “obtain[ing] or us[ing]” a PTR for a prohibited “commercial
purpose,” as those terms are used in the EIGA, the Fund is subject to the risk
that the Adviser and/or the Fund may face legal consequences if the Adviser’s
implementation of the Fund’s investment strategies is prohibited by the EIGA,
which could potentially include monetary penalties and other liabilities or
injunctions or similar orders, any or all of which could adversely impact the
Fund and its shareholders or limit the ability of the Adviser to implement the
Fund’s investment strategies. In addition, the Adviser and/or the Fund may face
the threat (or perceived threat) of legal proceedings or other actions that
could result in legal consequences. Such a threat (or perceived threat) could
lead the Fund to fundamentally change its investment strategies or liquidate.
The timing of any such liquidation may not be favorable and could have negative
tax consequences for shareholders.
Reporting
Delay Risk.
Members of Congress are required to report certain securities transactions
(purchases, sales or exchanges of assets covered by the STOCK Act) totaling over
$1,000 within 30 days of purchasing those securities or becoming aware of such a
transaction, but have up to 45 days to submit such reports. Accordingly, the
Fund will not
purchase
or sell securities at the same time as members of Congress. As a result, the
Fund may purchase a security at a higher price or sell a security at a lower
price than it would have if purchased or sold at the same time as the member of
Congress. The Fund would also hold a security for a period of time even though
the congressperson no longer holds the security, which may negatively affect the
Fund's performance.
Equity
Market Risk.
The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, sectors or companies in which the Fund invests.
Common stocks are generally exposed to greater risk than other types of
securities, such as preferred stocks and debt obligations, because common
stockholders generally have inferior rights to receive payment from
issuers.
Large-Capitalization
Companies Risk.
Larger, more established companies may be unable to respond quickly to new
competitive challenges such as changes in technology and consumer tastes. Larger
companies also may not be able to attain the high growth rates of successful
smaller companies.
Small-
and Mid-Capitalization Companies Risk. The
Fund may invest in the securities of small- and mid-capitalization companies. As
a result, the Fund may be more volatile than funds that invest in larger, more
established companies. The securities of small-and mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Small- and mid-capitalization companies may be particularly
sensitive to changes in interest rates, government regulation, borrowing costs
and earnings.
Newer
Adviser Risk. The
Adviser has limited experience managing a registered investment company. As a
result, there is no long-term track record against which an investor may judge
the Adviser and it is possible the Adviser may not achieve the Fund’s intended
investment objective. As a newer investment adviser, the Adviser may experience
resource and capacity constraints.
Newer
Fund Risk.
As of the date of this Prospectus, the Fund has a limited operating history and
may not attract sufficient assets to achieve or maximize investment and
operational efficiencies. Although the Shares in the Fund are approved for
listing on the Exchange, there can be no assurance that an active trading market
will develop and be maintained for the Shares of the Fund. Further, market
markers (other than lead market markers) have no obligation to make markets in
the Shares and may discontinue doing so at any time without
notice.
Active
Management Risk.
The Fund is actively managed and subject to the risk that the Adviser’s use of
investment techniques and risk analyses to make investment decisions fails to
perform as expected, which may cause the Fund to lose
value.
Democratic
Party Investing Risk.
The pattern of investing by members of the Democratic Party and their spouses
are often a reflection of committees on which a congressperson sits and the
types of companies or trade associations lobbying members of those
congresspeople. Accordingly, the Fund’s investments may emphasize the sectors
that are representative of the committees on which congresspersons who are
members of the Democratic Party may sit. To the extent the Fund invests more
heavily in particular sectors, its performance will be especially sensitive to
developments that significantly affect those sectors. Individual sectors may be
more volatile, and may perform differently, than the broader market. The
industries that constitute a sector may all react in the same way to economic,
political or regulatory events.
Cybersecurity
Risk. With
the increased use of technologies such as the Internet to conduct business, the
Fund is susceptible to operational, information security, and related risks.
Cyber incidents affecting the Fund or its service providers may cause
disruptions and impact business operations, potentially resulting in financial
losses, interference with the Fund’s ability to calculate its net asset value
(“NAV”), impediments to trading, the inability of shareholders to transact
business, violations of applicable privacy and other laws, regulatory fines,
penalties, reputational damage, reimbursement or other compensation costs, or
additional compliance costs.
Market
Events Risk. One
or more markets in which the Fund invests may go down in value, including the
possibility that the markets will go down sharply and unpredictably. This may be
due to numerous factors, including interest rates, the outlook for corporate
profits, the health of the national and world economies, national and world
social and political events, and the fluctuation of other stock markets around
the world. The global pandemic outbreak of an infectious
respiratory
illness caused by a novel coronavirus known as COVID-19 and subsequent efforts
to contain its spread have resulted and may continue to result in substantial
market volatility and global business disruption, affecting the global economy
and the financial health of individual companies in significant and unforeseen
ways. In addition, the Fund may face challenges with respect to its day-to-day
operations if key personnel of the Adviser or other service providers are
unavailable due to quarantines, restrictions on travel, or other restrictions
imposed by state or federal regulatory authorities. The duration and future
impact of COVID-19 are currently unknown, which may exacerbate the other risks
that apply to the Fund and could adversely affect the value and liquidity of the
Fund’s investments, impair the Fund’s ability to satisfy AP transaction
requests, and negatively affect the Fund’s
performance.
High
Portfolio Turnover Risk.
A high portfolio turnover rate has the potential to result in the realization
and distribution to shareholders of higher capital gains, which may subject you
to a higher tax liability. High portfolio turnover also necessarily results in
greater transaction costs which may reduce Fund
performance.
Performance
Performance
information will be available once the Fund has at least one calendar year of
performance. The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future and does not guarantee future results.
Updated performance information will be available on the Fund’s website at
https://www.subversiveetfs.com/
or by calling the Fund toll-free at 1-800-617-0004.
Management
Investment
Adviser
Subversive
Capital Advisor LLC is the Fund’s investment adviser.
Sub-Adviser
Tidal
Investments LLC (“Tidal” or the “Sub-Adviser”) is the Fund’s investment
sub-adviser.
Portfolio
Managers
Michael
Auerbach, Founder and Chief Executive Officer of Subversive Capital, and
Christian H. Cooper, CFA, FRM, Portfolio Manager of Subversive’s ETF portfolios,
are the portfolio managers responsible for the day-to-day management of the Fund
and have each managed the Fund since its inception in 2023.
Purchase
and Sale of Fund Shares
Shares
of the Fund are listed on the Exchange, and individual shares may only be bought
and sold in the secondary market through brokers at market prices, rather than
NAV. Because shares of the Fund trade at market prices rather than NAV, the
Fund’s shares may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund issues and redeems its shares at NAV only in large specified numbers of
shares known as “Creation Units,” which only APs (typically, broker-dealers) may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities and/or a designated amount of U.S.
cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase shares of the Fund (bid) and the lowest price a
seller is willing to accept for shares of the Fund (ask) when buying or selling
shares in the secondary market (the “bid-ask spread”). Recent information about
the Fund, including its NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at https://www.subversiveetfs.com/
.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
Investment
Objective
The
Unusual Whales Subversive Republican Trading ETF (the “Fund” or the “Republican
Trading Fund”) seeks to achieve long-term capital
appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
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Management
Fees |
0.75% |
Distribution
and Service (Rule 12b-1) Fees |
0.00% |
Other
Expenses |
0.00% |
Acquired
Fund Fees and Expenses(1) |
0.08% |
Total
Annual Fund Operating Expenses |
0.83% |
(1)
Acquired Fund Fees
and Expenses are the indirect costs of investing in other investment companies.
Please note that Total Annual Operating Expenses in this fee table will not
correlate to the Ratio of Expenses to Average Net Assets in the Fund’s Financial
Highlights, which only reflect the direct operating expenses incurred by the
Fund.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other funds. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and then hold or
sell all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund’s operating
expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would
be:
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One
Year |
Three
Years |
Five
Years |
Ten
Years |
$85 |
$265 |
$460 |
$1,025 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
the annual fund operating expenses or in the Example, affect the Fund’s
performance. During the Fund’s most recent fiscal period ended September 30,
2023, the Fund’s portfolio turnover rate was 46% of the average value of its portfolio.
Principal Investment
Strategies
The
Fund is an actively managed diversified exchange-traded fund (“ETF”) that seeks
to achieve its investment objective by investing primarily in equity securities
of publicly traded companies that sitting Republican members of United States
Congress and/or their families also have reported to have invested in through
public disclosure filings made by such Congresspersons pursuant to the Stop
Trading on Congressional Knowledge Act (“STOCK Act”). Members of Congress are
permitted to actively trade stocks, options and other financial assets,
including securities of companies that may be affected by the outcomes of
legislative and executive meetings in which those members of Congress
participated. Congresspeople (Senators and members of the House of
Representatives) and/or their families are then required to report these
transactions on STOCK Act filings, known as Periodic Transaction Reports
(“PTRs”). PTRs are filed with either the Senate Office of Public Records or the
Clerk of the House of Representatives and made available online pursuant to the
Ethics in Government Act (“EIGA”), as amended. PTRs are due within 30 days from
when a Congressperson or their spouse becomes aware of a transaction, but no
later than 45 days from the date of the transaction. The Fund will focus on the
equity securities purchased or sold by members of Congress who are registered
members of the Republican Party and
their
families. The Fund will not consider investments by any U.S. Congressperson who
is not registered as a member of the Republican Party (e.g., a U.S.
Congressperson who is registered as an Independent but who may caucus as member
of the Republican Party).
Subversive
Capital Advisor LLC (“Subversive” or the “Adviser”), the Fund’s investment
adviser, will obtain and use information derived by others from PTRs filed by
Republican U.S. Congresspeople and their family members (hereinafter referred to
collectively as “Republican U.S. Congresspeople”) to determine which equity
securities of publicly traded companies, and how much of each equity security,
to select for the Fund. After establishing an initial portfolio, the Fund will
typically buy or sell a security when a position is reported as being bought or
sold by Republican U.S. Congresspeople. The Fund will base its purchases and
sales of equity securities of publicly traded companies on trades reported in
the PTRs by Republican U.S. Congresspeople while in office. Because PTRs report
a range of transaction values, the Adviser will adjust the relative composition
of the Fund’s portfolio based on the midpoint of these ranges.
To
create the Fund’s initial portfolio, the Adviser will obtain and use information
derived by others from PTRs filed by Republican U.S. Congresspeople for the past
3 years. Purchases made during that time will be netted against any sales of the
same security to create an initial portfolio of equity securities. As the
investment thesis of the Fund is to track the trading activity of Republican
U.S. Congresspeople while in office, equity securities acquired by Republican
U.S. Congresspeople prior to his or her swearing in (or the 3-year lookback
period) are not considered when creating the initial portfolio. To the extent a
Republican U.S. Congressperson sells equity securities that were acquired prior
to his or her swearing in, the Adviser will not adjust the Fund’s portfolio.
Under
normal circumstances, the Fund will invest in a portfolio of between 500 and 600
equity securities. However, the number and size of positions held by the Fund
will vary based on the number of positions traded by Republican U.S.
Congresspeople. When multiple PTRs are made available on the same day by
different Republican U.S. Congresspeople, trades of the same equity securities
will be netted for purposes of adjusting the Fund’s portfolio. Trades reported
in an individual PTR as bought and sold are excluded. The Fund will also exclude
transactions in the securities underlying of any reported options contract
trades. In addition to equity securities, the Fund will also transact in sector
specific mutual funds and ETFs reported to have been traded on PTRs, but will
exclude broad-based mutual fund and ETF trades. The Adviser may also refrain
from making de minimis trades (trades representing 1% of the overall portfolio),
as such trades will have little to no economic impact on the Fund’s
performance.
In an effort to achieve its goals, the Fund may engage in active and
frequent trading.
Principal Risks
As
with any fund, there are risks to investing. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency.
In addition to possibly not achieving your investment
goals, you
could lose all or a portion of your investment in the Fund over short or even
long periods of time. The principal risks of investing in the Fund are
summarized below.
ETF
Risks.
The
Fund is an ETF, and, as a result of its structure, it is exposed to the
following risks:
•Authorized
Participants, Market Makers, and Liquidity Providers Concentration Risk.
The
Fund has only a limited number of institutional investors (known as “Authorized
Participants” or “APs”) that are authorized to purchase and redeem shares
directly from the Fund. In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, shares of the Fund may trade at a material discount
to the Fund’s net asset value (“NAV”) and possibly face delisting: (i) APs exit
the business or otherwise become unable to process creation and/or redemption
orders and no other APs step forward to perform these services, or (ii) market
makers and/or liquidity providers exit the business or significantly reduce
their business activities and no other entities step forward to perform their
functions.
•Costs
of Buying or Selling Shares. Due
to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
may significantly reduce
investment
results and an investment in shares may not be advisable for investors who
anticipate regularly making small investments.
•Shares
May Trade at Prices Other Than NAV. As with all ETFs, shares of the Fund may be bought and sold in the
secondary market at market prices. Although it is expected that the market price
of shares of the Fund will approximate the Fund’s NAV, there may be times when
the market price of shares is more than the NAV intra-day (premium) or less than
the NAV intra-day (discount) due to supply and demand of shares or during
periods of market volatility. This risk is heightened in times of market
volatility, periods of steep market declines, and periods when there is limited
trading activity for shares in the secondary market, in which case such premiums
or discounts may be significant.
•Trading.
Although shares of the Fund are listed for trading on the Cboe BZX Exchange,
Inc. (the “Exchange”), there can be no assurance that an active trading market
for shares will develop or be maintained or that shares will trade with any
volume, or at all, on any stock exchange. In stressed market conditions, the
market for shares of the Fund may become less liquid in response to
deteriorating liquidity in the markets for the Fund’s underlying portfolio
holdings. This adverse effect on liquidity for the Fund’s shares, in turn, can
lead to differences between the market price of the Fund’s shares and the
underlying value of those shares. In addition, trading in Fund shares may be
halted due to market conditions or for reasons that, in the view of the
Exchange, make trading in shares of the Fund
inadvisable.
Government
Regulation Risk.
It is possible that legislation or regulation could be enacted that limits,
restricts or prevents United States Congresspeople and/or their spouses from
personal securities trading. Legal, tax and regulatory changes could occur that
may adversely affect the Fund and its ability to pursue its investment
strategies and/or increase the costs of implementing such strategies. Government
regulation may change the manner in which the Fund is able to implement it’s
principal investment strategy. Government regulation may change frequently and
may have significant adverse consequences for the Fund or its investments. It is
not possible to predict fully the effects of current or future
regulation.
Ethics
in Government Act Risk.
As described above, in implementing the Fund’s principal investment strategies,
the Adviser obtains and uses information derived by others from PTRs to create
an initial portfolio and to adjust the composition and weighting of securities
in the Fund’s portfolio. PTRs are made available online by the Ethics in
Government Act of 1978, as amended (the “EIGA”), which makes it unlawful for
“any person to obtain or use a [PTR] … for any commercial purpose, other than by
news and communications media for dissemination to the general public[.]” The
EIGA authorizes the U. S. Attorney General to bring a civil action against any
person who obtains or uses a PTR for a prohibited commercial purpose, and
provides that the court in which such action is brought may assess penalties.
Absent a definitive determination as to whether the Adviser’s review and
analysis of data for purposes of implementing the Fund’s investment strategies
constitutes “obtain[ing] or us[ing]” a PTR for a prohibited “commercial
purpose,” as those terms are used in the EIGA, the Fund is subject to the risk
that the Adviser and/or the Fund may face legal consequences if the Adviser’s
implementation of the Fund’s investment strategies is prohibited by the EIGA,
which could potentially include monetary penalties and other liabilities or
injunctions or similar orders, any or all of which could adversely impact the
Fund and its shareholders or limit the ability of the Adviser to implement the
Fund’s investment strategies. In addition, the Adviser and/or the Fund may face
the threat (or perceived threat) of legal proceedings or other actions that
could result in legal consequences. Such a threat (or perceived threat) could
lead the Fund to fundamentally change its investment strategies or liquidate.
The timing of any such liquidation may not be favorable and could have negative
tax consequences for shareholders.
Reporting
Delay Risk.
Members of Congress are required to report certain securities transactions
(purchases, sales or exchanges of assets covered by the STOCK Act) totaling over
$1,000 within 30 days of purchasing those securities or becoming aware of such a
transaction, but have up to 45 days to submit such reports. Accordingly, the
Fund will not purchase or sell securities at the same time as members of
Congress. As a result, the Fund may purchase a security at a higher price or
sell a security at a lower price than it would have if purchased or sold at the
same time as the member of Congress. The Fund would also hold a security for a
period of time even though the congressperson no longer holds the security,
which may negatively affect the Fund's performance.
Equity
Market Risk.
The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific issuers, industries, sectors or companies in which the Fund invests.
Common stocks are generally exposed to greater risk than other types of
securities, such as preferred stocks and debt obligations, because common
stockholders generally have inferior rights to receive payment from
issuers.
Large-Capitalization
Companies Risk.
Larger, more established companies may be unable to respond quickly to new
competitive challenges such as changes in technology and consumer tastes. Larger
companies also may not be able to attain the high growth rates of successful
smaller companies.
Small-
and Mid-Capitalization Companies Risk. The
Fund may invest in the securities of small- and mid-capitalization companies. As
a result, the Fund may be more volatile than funds that invest in larger, more
established companies. The securities of small-and mid-capitalization companies
generally trade in lower volumes and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock
market as a whole. Small- and mid-capitalization companies may be particularly
sensitive to changes in interest rates, government regulation, borrowing costs
and earnings.
Newer
Adviser Risk. The
Adviser has limited experience managing a registered investment company. As a
result, there is no long-term track record against which an investor may judge
the Adviser and it is possible the Adviser may not achieve the Fund’s intended
investment objective. As a newer investment adviser, the Adviser may experience
resource and capacity constraints.
Newer
Fund Risk.
As of the date of this Prospectus, the Fund has a limited operating history and
may not attract sufficient assets to achieve or maximize investment and
operational efficiencies. Although the Shares in the Fund are approved for
listing on the Exchange, there can be no assurance that an active trading market
will develop and be maintained for the Shares of the Fund. Further, market
markers (other than lead market markers) have no obligation to make markets in
the Shares and may discontinue doing so at any time without
notice.
Active
Management Risk.
The Fund is actively managed and subject to the risk that the Adviser’s use of
investment techniques and risk analyses to make investment decisions fails to
perform as expected, which may cause the Fund to lose
value.
Republican
Party Investing Risk.
The pattern of investing by members of the Republican Party and their spouses
are often a reflection of committees on which a congressperson sits and the
types of companies or trade associations lobbying members of those
congresspeople. Accordingly, the Fund’s investments may emphasize the sectors
that are representative of the committees on which congresspersons who are
members of the Republican Party may sit. To the extent the Fund invests more
heavily in particular sectors, its performance will be especially sensitive to
developments that significantly affect those sectors. Individual sectors may be
more volatile, and may perform differently, than the broader market. The
industries that constitute a sector may all react in the same way to economic,
political or regulatory events.
Cybersecurity
Risk. With
the increased use of technologies such as the Internet to conduct business, the
Fund is susceptible to operational, information security, and related risks.
Cyber incidents affecting the Fund or its service providers may cause
disruptions and impact business operations, potentially resulting in financial
losses, interference with the Fund’s ability to calculate its net asset value
(“NAV”), impediments to trading, the inability of shareholders to transact
business, violations of applicable privacy and other laws, regulatory fines,
penalties, reputational damage, reimbursement or other compensation costs, or
additional compliance costs.
Market
Events Risk. One
or more markets in which the Fund invests may go down in value, including the
possibility that the markets will go down sharply and unpredictably. This may be
due to numerous factors, including interest rates, the outlook for corporate
profits, the health of the national and world economies, national and world
social and political events, and the fluctuation of other stock markets around
the world. The global pandemic outbreak of an infectious respiratory illness
caused by a novel coronavirus known as COVID-19 and subsequent efforts to
contain its spread have resulted and may continue to result in substantial
market volatility and global business disruption, affecting the global economy
and the financial health of individual companies in significant and unforeseen
ways. In addition, the Fund may face challenges with respect to its day-to-day
operations if key personnel of the Adviser or other service providers are
unavailable due to quarantines, restrictions on travel, or other restrictions
imposed by state or federal regulatory
authorities.
The duration and future impact of COVID-19 are currently unknown, which may
exacerbate the other risks that apply to the Fund and could adversely affect the
value and liquidity of the Fund’s investments, impair the Fund’s ability to
satisfy AP transaction requests, and negatively affect the Fund’s
performance.
High
Portfolio Turnover Risk.
A high portfolio turnover rate has the potential to result in the realization
and distribution to shareholders of higher capital gains, which may subject you
to a higher tax liability. High portfolio turnover also necessarily results in
greater transaction costs which may reduce Fund
performance.
Performance
Performance
information will be available once the Fund has at least one calendar year of
performance. The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future and does not guarantee future results.
Updated performance information will be available on the Fund’s website at
https://www.subversiveetfs.com/
or by calling the Fund toll-free at 1-800-617-0004.
Management
Subversive
Capital Advisor LLC is the Fund’s investment adviser.
Sub-Adviser
Tidal
Investments LLC (“Tidal” or the “Sub-Adviser”) is the Fund’s investment
sub-adviser.
Portfolio
Managers
Michael
Auerbach, Founder and Chief Executive Officer of Subversive Capital, and
Christian H. Cooper, CFA, FRM, Portfolio Manager of Subversive’s ETF portfolios,
are the portfolio managers responsible for the day-to-day management of the Fund
and have each managed the Fund since its inception in 2023.
Purchase
and Sale of Fund Shares
Shares
of the Fund are listed on the Exchange, and individual shares may only be bought
and sold in the secondary market through brokers at market prices, rather than
NAV. Because shares of the Fund trade at market prices rather than NAV, the
Fund’s shares may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund issues and redeems its shares at NAV only in large specified numbers of
shares known as “Creation Units,” which only APs (typically, broker-dealers) may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities and/or a designated amount of U.S.
cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase shares of the Fund (bid) and the lowest price a
seller is willing to accept for shares of the Fund (ask) when buying or selling
shares in the secondary market (the “bid-ask spread”). Recent information about
the Fund, including its NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at https://www.subversiveetfs.com/
.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in
activities
that are designed to make Intermediaries more knowledgeable about exchange
traded products, including the Fund, or for other activities, such as marketing,
educational training or other initiatives related to the sale or promotion of
Shares. These payments may create a conflict of interest by influencing the
Intermediary and your salesperson to recommend the Fund over another investment.
Any such arrangements do not result in increased Fund expenses. Ask your
salesperson or visit the Intermediary’s website for more
information.
Each
Fund’s investment objective is long-term capital appreciation. Each Fund’s
investment objective is not fundamental and may be changed by the Board of
Trustees of the Trust (the “Board”) without shareholder approval upon 60 days’
prior written notice to Fund shareholders.
Please
see the Funds’ SAI for additional information about the securities and
investment strategies described in this Prospectus and about additional
securities and investment strategies that may be used by the Funds.
The
Funds are actively managed diversified ETFs. The Democratic Trading Fund seeks
to achieve its investment objective by investing primarily in equity securities
of companies that sitting Democratic members of United States Congress and/or
their families also have reported to have invested in through public disclosures
made by such Congress person. The Republican Trading Fund seeks to achieve its
investment objective by investing primarily in equity securities of companies
that sitting Republican members of United States Congress and/or their families
also have reported to have invested in through public disclosures made by such
Congress person. Each Fund will only focus on the equity securities purchased by
members of Congress who are registered members of the Democratic Party (for the
Democratic Trading Fund) or Republican Party (for the Republican Trading Fund),
and their families.
Each
Fund will exclude investments by any U.S. Congressperson who is not registered
as a member of the Democratic Party or the Republican Party, as applicable
(e.g., a U.S. Congressperson who is registered as an Independent but who may
caucus with either the Democratic Party or Republican Party).
The
Adviser will obtain and use information derived by others from PTRs filed by
Democratic and Republican U.S. Congresspeople and their families pursuant to the
STOCK Act to determine which securities, and how much of each security, to
select for a Fund. PTRs are filed with either the Senate Office of Public
Records or the Clerk of the House of Representatives and made available online
pursuant to the EIGA, as amended.
Each
Fund will attempt to replicate the trades of equity securities of publicly
traded companies made by sitting Democratic or Republican U.S. Congresspeople
and/or their family members while in office. Because PTRs report a range of
securities, the Adviser will adjust the relative composition of each Fund’s
portfolio based on the midpoint of these ranges. To create each Fund’s initial
portfolio, the Adviser will obtain and use information derived by others from
PTRs filed by sitting members of Congress for the past 3 years. Purchases made
during that time will be netted against any sales of the same security to create
an assumed portfolio of equity securities. As the investment thesis of the Fund
is to track the trading of Democratic or Republican members of Congress while in
office, equity securities acquired by members of Congress prior to his or her
inauguration (or the 3-year look back period) are not considered when creating
the initial portfolio. Similarly, to the extent a member of Congress sells
equity securities acquired prior to his or her inauguration, the Adviser will
not adjust a Fund’s portfolio.
Under
normal circumstances, each Fund will invest in a portfolio of between 500 and
600 equity securities. However, the number of positions held by a Fund will vary
based on the number of positions traded by either Democratic or Republican U.S.
Congresspeople and/or their families. The Fund will sell a security when a
position is reported as being sold by a U.S. Congresspeople and/or their
families. Positions reported as bought and sold on the same day in a PTR are
excluded. The Fund will also exclude the underlying securities of any options
contracts reported. In addition to equity securities, each Fund may also invest
in sector specific mutual funds and ETFs reported on PTRs. The Adviser may also
exclude
from
the portfolio de minimis trades (trades representing 1% of the overall
portfolio), as such trades will have little to no economic impact on the Fund’s
performance.
Each
Fund is classified as a “diversified fund” under the Investment Company Act of
1940 (the "1940 Act"). To maintain its classification as a diversified fund
under applicable federal laws, a Fund may invest in securities in a manner that
is not reflected on publicly available PTRs. In such instances, a Fund may
invest in other mutual funds or ETFs that, in the Adviser’s opinion, may
replicate the return profile of the securities reported to have been traded to
maintain classification as a diversified fund.
In
an effort to achieve its goals, the Funds may engage in active and frequent
trading.
Temporary
Defensive Positions.
Each Fund may, from time to time, take temporary defensive positions that are
inconsistent with the Fund’s principal investment strategies in an attempt to
respond to adverse or unstable market, economic, political, or other conditions.
During such times, the Funds may trade in a manner that is not reflected on
publicly available PTRs and as a result may trade ahead of what is likely to be
reflected in subsequent PTRs. Accordingly, the Funds may hold up to 100% of its
portfolio in cash or cash equivalent positions. When a Fund takes a temporary
defensive position, the Fund may not be able to pursue its investment
objectives.
Before
investing in a Fund, you should carefully consider your own investment goals,
the amount of time you are willing to leave your money invested, and the amount
of risk you are willing to take. Remember that, in addition to possibly not
achieving your investment goals, you
could lose all or a portion of your investment in a Fund.
The principal risks of each Fund have been previously identified and are
described below.
Reporting
Delay Risk.
Members of Congress are required to report certain securities transactions
(purchases, sales or exchanges of assets covered by the STOCK Act) totaling over
$1,000 within 30 days of purchasing those securities. Accordingly, the Funds
will not purchase securities at the same time as members of Congress. As a
result, a Fund may purchase a security at a higher price or sell a security at a
lower price than it would have if purchased or sold at the same time as the
member of Congress, which may negatively affect each Fund’s performance.
Additionally, there are minimal financial penalties for reporting late and it is
not guaranteed that members of Congress will file PTRs on time, increasing the
delay between the time of purchase of a security by a member of Congress and the
time of purchase of that same security by the Fund.
Government
Regulation Risk.
It is possible that legislation or regulation could be enacted that limits,
restricts or prevents United States Congresspeople and/or their spouses from
personal securities trading. Legal, tax and regulatory changes could occur that
may adversely affect the Fund and its ability to pursue its investment
strategies and/or increase the costs of implementing such strategies. Government
regulation may change the manner in which the Fund is regulated or affect the
Fund’s expenses and/or the value of the Fund’s investments. Government
regulation may change frequently and may have significant adverse consequences
for the Fund or its investments. It is not possible to predict fully the effects
of current or future regulation.
Ethics
in Government Act Risk.
In implementing each Fund’s principal investment strategies, the Adviser obtains
and uses information derived by others from PTRs to create an initial portfolio
and to adjust the composition and weighting of securities in a Fund’s portfolio.
PTRs are made available online by the EIGA, which makes it unlawful for “any
person to obtain or use a [PTR] … for any commercial purpose, other than by news
and communications media for dissemination to the general public[.]” The EIGA
authorizes the U. S. Attorney General to bring a civil action against any person
who obtains or uses a PTR for a prohibited commercial purpose, and provides that
the court in which such action is brought may assess penalties. Absent a
definitive determination as to whether the Adviser’s review and analysis of data
for purposes of implementing the Fund’s investment strategies constitutes
“obtain[ing] or us[ing]” a PTR for a prohibited “commercial purpose,” as those
terms are used in the EIGA, a Fund is subject to the risk that the Adviser
and/or the Fund may face legal consequences if the Adviser’s implementation of
the Fund’s investment strategies is prohibited by the
EIGA,
which could potentially include monetary penalties and other liabilities or
injunctions or similar orders, any or all of which could adversely impact the
Fund and its shareholders or limit the ability of the Adviser to implement the
Fund’s investment strategies. In addition, the Adviser and/or a Fund may face
the threat (or perceived threat) of legal proceedings or other actions that
could result in legal consequences. Such a threat (or perceived threat) could
lead a Fund to fundamentally change its investment strategies or liquidate. The
timing of any such liquidation may not be favorable and could have negative tax
consequences for shareholders.
Cybersecurity
Risk.
Cybersecurity incidents may allow an unauthorized party to gain access to the
Funds’ assets, customer data (including private shareholder information), or
proprietary information, or cause the Funds, the Adviser (defined below), the
Sub-Adviser and/or other service providers (including custodians, transfer
agents and financial intermediaries) to suffer data breaches or data corruption.
Additionally, cybersecurity failures or breaches of the electronic systems of
the Funds, the Adviser, the Sub-Adviser or the Funds’ other service providers,
market makers, Authorized Participants or the issuers of securities in which the
Funds invest have the ability to cause disruptions and negatively impact the
Funds’ business operations, potentially resulting in financial losses to the
Funds and their shareholders. In an extreme case, a shareholder’s ability to
redeem a Funds’ shares may be affected.
Equity
Market Risk.
Common stocks are susceptible to general stock market fluctuations and to
volatile increases and decreases in value as market confidence in and
perceptions of their issuers change. These investor perceptions are based on
various and unpredictable factors including: expectations regarding government,
economic, monetary and fiscal policies; inflation and interest rates; economic
expansion or contraction; and global or regional political, economic and banking
crises. If you held common stock, or common stock equivalents, of any given
issuer, you would generally be exposed to greater risk than if you held
preferred stocks and debt obligations of the issuer because common stockholders,
or holders of equivalent interests, generally have inferior rights to receive
payments from issuers in comparison with the rights of preferred stockholders,
bondholders, and other creditors of such issuers.
ETF
Risks.
Each
Fund
is an ETF, and, as a result of its structure, it is exposed to the following
risks:
•Authorized
Participants, Market Makers, and Liquidity Providers Concentration Risk.
The
Funds have only a limited number of institutional investors that may act as APs.
In addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Funds may trade at a material discount to the Funds’ NAV
and possibly face delisting: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
•Costs
of Buying or Selling Shares. Investors
buying or selling shares of the Funds in the secondary market will pay brokerage
commissions or other charges imposed by brokers, as determined by that broker.
Brokerage commissions are often a fixed amount and may be a significant
proportional cost for investors seeking to buy or sell relatively small amounts
of shares of the Funds. In addition, secondary market investors will also incur
the cost of the difference between the price at which an investor is willing to
buy shares of the Funds (the “bid” price) and the price at which an investor is
willing to sell shares of the Funds (the “ask” price). This difference in bid
and ask prices is often referred to as the “spread” or “bid/ask spread.” The
bid/ask spread varies over time for shares of the Funds based on trading volume
and market liquidity, and is generally lower if the Funds’ shares have more
trading volume and market liquidity and higher if Fund’s shares have little
trading volume and market liquidity. Further, a relatively small investor base
in the Funds, asset swings in the Funds and/or increased market volatility may
cause increased bid/ask spreads. Due to the costs of buying or selling shares of
the Funds, including bid/ask spreads, frequent trading of the Funds’ shares may
significantly reduce investment results and an investment in Funds shares may
not be advisable for investors who anticipate regularly making small
investments.
•Shares
May Trade at Prices Other Than NAV. As
with all ETFs, shares of the Funds may be bought and sold in the secondary
market at market prices. Although it is expected that the market price of shares
of the Funds will approximate the Funds’ NAV, there may be times when the market
price of shares is more than the NAV intra-day (premium) or less than the NAV
intra-day (discount) due to supply and demand of shares or during periods of
market
volatility. This risk is heightened in times of market volatility, periods of
steep market declines and periods when there is limited trading activity for
shares in the secondary market, in which case such premiums or discounts may be
significant. The market price of shares of the Funds during the trading day,
like the price of any exchange-traded security, includes a “bid/ ask” spread
charged by the exchange specialist, market makers or other participants that
trade shares of the Funds. In times of severe market disruption, the bid/ask
spread can increase significantly. At those times, shares of the Funds will most
likely to be traded at a discount to NAV, and the discount is likely to be
greatest when the price of shares is falling fastest, which may be the time that
you most want to sell your shares. The Adviser believes that, under normal
market conditions, large market price discounts or premiums to NAV will not be
sustained because of arbitrage opportunities.
•Trading.
Although
shares of the Funds are listed for trading on the Exchange and may be listed or
traded on U.S. and non-U.S. stock exchanges other than the Exchange, there can
be no assurance that an active trading market for such shares will develop or be
maintained. Trading in Shares may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in shares of the Funds on the Exchange is subject to
trading halts caused by extraordinary market volatility pursuant to Exchange
“circuit breaker” rules, which temporarily halt trading on the Exchange when a
decline in the S&P 500 Index during a single day reaches certain thresholds
(e.g., 7%, 13%, and 20%). Additional rules applicable to the Exchange may halt
trading in shares of the Funds when extraordinary volatility causes sudden,
significant swings in the market price of shares of the Funds. There can be no
assurance that shares of the Funds will trade with any volume, or at all, on any
stock exchange. In stressed market conditions, the market for the Funds’ shares
may become less liquid in response to deteriorating liquidity in the markets for
the Funds’ underlying portfolio holdings. These factors, among others, may lead
to the Fund’s shares trading at a premium or discount to NAV.
•Early
Close/Trading Halt.
An exchange or market may close early or issue trading halts on specific
securities or financial instruments. The ability to trade certain securities or
financial instruments may be restricted, which may disrupt the Fund’s creation
and redemption process, potentially affect the price at which the Funds’ shares
trade in the secondary market, and/or result in the Funds being unable to trade
certain securities or financial instruments. In these circumstances, the Funds
may be unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Large
Capitalization Risk. Larger,
more established companies may be unable to respond quickly to new competitive
challenges such as changes in technology and consumer tastes. Larger companies
also may not be able to attain the high growth rates of successful smaller
companies. If valuations of large capitalization companies appear to be greatly
out of proportion to the valuations of small or medium capitalization companies,
investors may migrate to the stocks of small and medium-sized
companies.
Small-
and Mid-Cap Companies Risk.
Generally, small- and mid-cap companies may have more potential for growth than
companies with larger market capitalizations (“large-cap companies”). Investing
in small- and mid-cap companies, however, may involve greater risk than
investing in large-cap companies, and these risks are passed on to the Fund.
Small- and mid-cap companies may not have the management experience, financial
resources, product diversification and competitive strengths of large-cap
companies. Therefore, their securities may be more volatile than the securities
of larger, more established companies, making them less liquid than other
securities. Small- and mid-cap company stocks may also be bought and sold less
often and in smaller amounts than larger company stocks. Because of this, if the
Adviser wants to sell a large quantity of a mid-cap company’s stock, it may have
to sell at a lower price than it might prefer, or it may have to sell in smaller
than desired quantities over a period of time.
Market
Events Risk. One
or more markets in which the Funds invests may go down in value, including the
possibility that the markets will go down sharply and unpredictably. This may be
due to numerous factors, including interest rates, the outlook for corporate
profits, the health of the national and world economies, national and world
social and political events, and the fluctuation of other stock markets around
the world. The global pandemic outbreak of an infectious respiratory illness
caused by a novel coronavirus known as COVID-19 and subsequent efforts to
contain its spread have resulted and may continue to result in, among other
things, substantial market volatility and reduced liquidity in financial
markets; exchange trading suspensions and closures; higher default rates; travel
restrictions and disruptions; significant
global
disruptions to business operations and supply chains; lower consumer demand for
goods and services; significant job losses and increasing unemployment; event
and service cancellations and restrictions; significant challenges in healthcare
service preparation and delivery; prolonged quarantines; and general concern and
uncertainty. The impact of this pandemic and any other public health emergencies
(such as any other epidemics or pandemics) that may arise in the future could
adversely affect the economies of many nations or the entire global economy and
the financial performance of individual issuers, sectors, industries, asset
classes, and markets in significant and unforeseen ways. Extraordinary actions
taken by governments and central banks to support local and global economies and
the financial markets in response to the COVID-19 pandemic may not succeed or
have the intended effect, and in some cases, have resulted in a large expansion
of government deficits and debt, the long-term consequences of which are not
known. This crisis or other public health crises may also exacerbate other
pre-existing political, social, economic, market and financial risks. In
addition, the Funds may face challenges with respect to its day-to-day
operations if key personnel of the Adviser or other service providers are
unavailable due to quarantines, restrictions on travel, or other restrictions
imposed by state or federal regulatory authorities. The duration and future
impact of COVID-19 are currently unknown and cannot be determined with
certainty, which may exacerbate the other risks that apply to the Funds and
could adversely affect the value and liquidity of the Funds’ investments, impair
the Funds’ ability to satisfy AP transaction requests, and negatively affect the
Funds’ performance.
Newer
Adviser Risk. The
Adviser is a recently registered investment adviser and has limited experience
managing a mutual fund. As a result, there is no long-term track record against
which an investor may judge the Adviser and it is possible the Adviser may not
achieve the Fund’s intended investment objective. As a newer investment adviser,
the Adviser may experience resource and capacity constraints.
Newer
Fund Risk.
As of the date of this Prospectus, the Funds have a limited operating history
and may not attract sufficient assets to achieve or maximize investment and
operational efficiencies. Although the Shares in the Funds are approved for
listing on the Exchange, there can be no assurance that an active trading market
will develop and be maintained for the Shares of the Funds. Further, market
markers (other than lead market markers) have no obligation to make markets in
the Shares and may discontinue doing so at any time without notice.
High
Portfolio Turnover Risk.
The Fund’s principal investment strategies involve actively trading securities,
resulting in a high portfolio turnover rate, which can increase transaction
costs (thus lowering performance) and taxable distributions. A high portfolio
turnover rate generally involves correspondingly greater brokerage commission
expenses, which must be borne directly by the Fund, reducing Fund returns
accordingly. The portfolio turnover rate of the Fund may vary from year to
year.
Active
Management Risk.
Active management by the Adviser in selecting and maintaining a portfolio of
securities that will achieve the Fund’s investment objective could cause the
Fund to underperform compared to other funds having similar investment
objectives. For longer periods of time, the Fund may hold a substantial cash
position. If the market advances during periods when the fund is holding a large
cash position, the Fund may not participate to the extent it would have if the
Fund had been more fully invested.
Democratic
Party Investing Risk.
The pattern of investing by members of the Democratic Party and their spouses
are often a reflection of committees on which a congressperson sits and the
types of companies or trade associations lobbying members of those
congresspeople. Accordingly, the Fund’s investments may emphasize the sectors
that are representative of the committees on which congresspersons who are
members of the Democratic Party may sit.
Republican
Party Investing Risk.
The pattern of investing by members of the Republican Party and their spouses
are often a reflection of committees on which a congressperson sits and the
types of companies or trade associations lobbying members of those
congresspeople. Accordingly, the Fund’s investments may emphasize the sectors
that are representative of the committees on which congresspersons who are
members of the Republican Party may sit.
Information
about the Funds’ daily portfolio holdings is available at
https://www.subversiveetfs.com/ . A complete description of the Funds’ policies
and procedures with respect to the disclosure of the Funds’ portfolio holdings
is available in the Funds’ Statement of Additional Information
(“SAI”).
Investment
Adviser
The
Funds have entered into an investment advisory agreement (“Advisory Agreement”)
with Subversive Capital Advisor LLC (the “Adviser” or “Subversive”), located at
217 Centre Street, Suite 122, New York, NY, 10013. Since 2013, Subversive
Capital, an affiliate under common control with the Adviser, has been a
pioneering investor in emerging industries, specializing in both early and
late-stage investments as well as acquisitions by special purpose acquisition
companies (SPACs).
Subject to the oversight of the Board, the Adviser is responsible
for the day-to-day management of the Funds in accordance with the Funds’
investment objective and policies. For the services provided to the Funds by
the Adviser, each Fund pays the Adviser a unified management fee, which is
calculated daily and paid monthly, at an annual rate of 0.75% of a Fund’s
average daily net assets. Under the Advisory Agreement, the Adviser has agreed
to pay all expenses incurred by the Funds except for interest charges on any
borrowings, dividends and other expenses on securities sold short; taxes;
brokerage commissions and other expenses incurred in placing orders for the
purchase and sale of securities and other investment instruments; acquired fund
fees and expenses; accrued deferred tax liability; extraordinary expenses;
distribution fees and expenses paid by the Fund under any distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act, and the unified management
fee payable to the Adviser (collectively, the “Excluded Expenses”).
A
discussion regarding the basis for the Board’s initial approval of the Advisory
Agreement between the Adviser and the Trust will be available in the Funds’
semi-annual report dated March 31, 2023.
The
Funds, as series of the Trust, do not hold themselves out as related to any
other series of the Trust (except for the Subversive Decarbonization ETF, the
Subversive Food Security ETF and the Subversive Mental Health ETF) for purposes
of investment and investor services, nor do they share the same investment
adviser with any other series of the Trust (except for the Subversive
Decarbonization ETF, the Subversive Food Security ETF and the Subversive Mental
Health ETF).
Section
15(a) of the 1940 Act requires that all contracts pursuant to which persons
serve as investment advisers to investment companies be approved by
shareholders. This requirement also applies to the appointment of sub-advisers
to the Fund. In the future, the Trust, on behalf of the Funds, and the Adviser
may apply for exemptive relief from the SEC pursuant to which the Adviser would
operate the Funds under a “multi-manager” structure (the “Order”). If granted by
the SEC, the Order will permit the Adviser, subject to the approval of the
Board, to hire or replace sub-advisers for the Funds including sub-advisers that
are unaffiliated or affiliated with the Adviser, and modify any existing or
future agreement with such sub-advisers without obtaining shareholder approval.
The Funds would, however, inform shareholders of the hiring of any new
sub-adviser within 90 days after the hiring. Under the Order, the Adviser would
have the ultimate responsibility for overseeing the Funds’ sub-advisers and
would recommend to the Board the hiring, termination and replacement of
sub-advisers for the Funds. If the Order is granted, it will also provide relief
from certain disclosure obligations with regard to sub-advisory fees. The Funds
may also rely on any other current or future laws, rules or
regulatory
guidance from the SEC or its staff applicable to the “multi-manager” structure.
The sole initial shareholder of the Funds have approved the operation of the
Funds under a “multi-manager” structure with respect to any affiliated or
unaffiliated sub-adviser, including in the manner that is permitted by the
Order.
The
Order, if granted, will provide the Adviser with greater efficiency in managing
the Funds without incurring the expenses and delays associated with obtaining
shareholder approvals for matters relating to sub-advisers or sub-advisory
agreements. Operation of the Funds under the Order will not permit management
fees paid by the Funds to the Adviser to be increased without shareholder
approval. If the Trust, on behalf of the Funds, and the Adviser apply for the
Order in the future, there is no assurance the Order will be granted by the
SEC.
The
Adviser has retained Tidal Investments LLC to serve as sub-adviser. Tidal is a
Delaware limited liability company whose principal office is located at 898 N.
Broadway, Suite 2, Massapequa, New York 11758. Tidal is an SEC-registered
investment adviser formed and registered in 2012 and provides investment
research, trading, and portfolio construction services to ETF clients. Tidal is
responsible for trading portfolio securities for the Fund, including selecting
broker-dealers to execute purchase and sale transactions, subject to the
supervision of the Adviser and the Board. As of November 30, 2023, the
Sub-Adviser had over $8.5 billion of discretionary client assets.
For
its services, the Sub-Adviser is entitled to a fee by the Adviser, which fee is
calculated daily and paid monthly, at an annual rate based on the accumulative
average daily net assets of the Fund, and subject to a minimum annual fee as
follows:
|
|
|
|
|
|
|
| |
Fund
Name |
Sub-Advisory
Fee |
Minimum
Fee |
Unusual
Whales Subversive Democratic Trading ETF |
4.00
bps |
$20,000 |
Unusual
Whales Subversive Republican Trading ETF |
4.00
bps |
$20,000 |
A
discussion regarding the basis for the Board’s initial approval of the
Sub-Advisory Agreement will be available in the Funds’ first semi-annual report
to shareholders after the Funds’ commencement of operations.
Michael
Auerbach
Michael
Auerbach is the founder and Managing Member of the Adviser, which was formed in
2021. Mr. Auerbach is also General Partner of Subversive Capital Ventures, a
director of The Parent Company (a NEO listed company), director of Canaccord
Genuity (a TSX listed company), and lead independent director of Atai Holdings
(a Nasdaq listed company). He previously sat on the Board of Directors of
Tilray, Inc., the first Nasdaq listed global cannabis company, and holds several
directorships with companies that Subversive invests in.
Mr.
Auerbach serves as a partner with Albright Stonebridge Group (“ASG”), a part of
Dentons Global Advisers, the global consulting firm founded by the late U.S.
Secretary of State Madeleine Albright. Prior to joining ASG, Michael founded and
then sold a risk consulting firm to Control Risks, a leading global risk
consulting firm.
Mr.
Auerbach presently sits on the boards of the Theodore C. Sorensen Center for
International Peace and Justice, KiDS Board of NYU’s Hassenfeld Children’s
Hospital, Next for Autism (which produces Night of Too Many Stars), FACES
(Finding a Cure for Epilepsy), and Sophie Gerson Healthy Youth Foundation.
Mr.
Auerbach received a M.A. in International Relations from Columbia University and
a B.A. in Critical Theory from the New School for Social Research.
Christian
H. Cooper, CFA, FRM
Christian
H. Cooper is a portfolio manager for Subversive Capital and the former head of
interest rate derivatives trading at Jefferies in New York. Since 2013, Mr.
Cooper has also been a derivatives trader and risk manager for Resconte Capital,
where he authored a multi-volume series on quantitative risk management. Mr.
Cooper is responsible for trading and portfolio construction and has both the
Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM)
designations.
The
Funds’ SAI provides additional information about the portfolio managers’
compensation, other accounts managed by the portfolio manager and the portfolio
managers’ ownership of Funds shares.
Each
Fund issues and redeems its shares only in Creation Units at the NAV per share
next determined after receipt of an order from an AP. Only APs may acquire a
Fund’s shares directly from the Fund, and only APs may tender their shares for
redemption directly to a Fund, at NAV. APs must be a member or participant of a
clearing agency registered with the SEC and must execute an authorized
participant agreement (“Participant Agreement”) that has been agreed to by the
Distributor (defined below), and that has been accepted by the Funds’ transfer
agent, with respect to purchases and redemptions of Creation Units. Once
created, the Funds’ shares trade in the secondary market in quantities less than
a Creation Unit.
Most
investors buy and sell the Funds’ shares in secondary market transactions
through brokers. Individual shares of the Funds are listed for trading on the
secondary market on the Exchange and can be bought and sold throughout the
trading day like other publicly traded securities.
When
buying or selling the Funds’ shares through a broker, you will pay or receive
the market price. You may incur customary brokerage commissions and charges, and
you may pay some or all of the spread between the bid and the offered price in
the secondary market on each leg of a round trip (purchase and sale)
transaction. In addition, because secondary market transactions occur at market
prices, you may pay more than NAV when you buy the Funds’ shares and receive
less than NAV when you sell those shares.
Shares
are held in book-entry form, which means that no stock certificates are issued.
Depository Trust Company (“DTC”) or its nominee is the record owner of all
outstanding shares of the Funds.
Investors
owning Shares are beneficial owners as shown on the records of DTC or its
participants. DTC serves as the securities depository for all Shares. DTC’s
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and other institutions that directly or indirectly
maintain a custodial relationship with DTC. As a beneficial owner of Shares, you
are not entitled to receive physical delivery of stock certificates or to have
Shares registered in your name, and you are not considered a registered owner of
Shares. Therefore, to exercise any right as an owner of shares, you must rely
upon the procedures of DTC and its participants. These procedures are the same
as those that apply to any other securities that you hold in book-entry or
“street name” through your brokerage account.
Investing
in the Fund
For
more information on how to buy and sell shares of the Funds, visit the Funds’
website at https://www.subversiveetfs.com/ or by calling the Funds toll-free at
1-800-617-0004.
Frequent
Purchases and Redemptions of Shares
Shares
of the Funds are listed for trading on the Exchange, which allows retail
investors to purchase and sell individual shares at market prices throughout the
trading day similar to other publicly traded securities. Because these secondary
market trades do not involve the Funds directly, it is unlikely that secondary
market trading would cause any harmful effects of market timing, such as
dilution, disruption of portfolio management, increases in the Funds’ trading
costs or realization of capital gains. The Board has determined not to adopt
policies and procedures designed to prevent or monitor for frequent purchases
and redemptions of the Funds’ shares because the Funds sell and redeem their
shares at NAV only in Creation Units pursuant to the terms of a Participant
Agreement between the Distributor and an AP. The Funds may impose
transaction
fees on such Creation Unit transactions that are designed to offset the Funds’
transfer and other transaction costs associated with the issuance and redemption
of the Creation Unit shares. Direct trading by APs is critical to ensuring that
the Funds’ shares trade at or close to NAV. Although the Funds impose no
restrictions on the frequency of purchases and redemptions of Creation Units,
the Funds and the Adviser reserve the right to reject or limit purchases at any
time as described in the Funds’ SAI.
Each
Fund’s NAV is calculated as of the scheduled close of regular trading on the New
York Stock Exchange (“NYSE”), generally 4:00 p.m. Eastern time, each day the
NYSE is open for business. The NAV is calculated by dividing the Funds’ net
assets by its shares outstanding.
In
calculating its NAV, the Funds generally value their assets on the basis of
market quotations, last sale prices, or estimates of value furnished by a
pricing service or brokers who make markets in such instruments. In particular,
the Funds generally values equity securities traded on any recognized U.S. or
non-U.S. exchange at the last sale price or official closing price on the
exchange or system on which they are principally traded. If such information is
not available for a security held by the Funds or is determined to be
unreliable, the security will be valued at fair value estimates under guidelines
established by the Board (as described below).
The
Adviser has been designated by the Board as the valuation designee for the Funds
pursuant to Rule 2a-5 under the 1940 Act. In its capacity as valuation designee,
the Adviser has adopted procedures and methodologies to fair value each Fund’s
securities whose market prices are not “readily available” or are deemed to be
unreliable. For example, such circumstances may arise when: (i) a security has
been de-listed or has had its trading halted or suspended; (ii) a security’s
primary pricing source is unable or unwilling to provide a price; (iii) a
security’s primary trading market is closed during regular market hours; or (iv)
a security’s value is materially affected by events occurring after the close of
the security’s primary trading market. Generally, when fair valuing a security,
the Adviser will take into account all reasonably available information that may
be relevant to a particular valuation including, but not limited to, fundamental
analytical data regarding the issuer, information relating to the issuer’s
business, recent trades or offers of the security, general and/or specific
market conditions and the specific facts giving rise to the need to fair value
the security. Fair value determinations are made in good faith and in accordance
with the fair value methodologies included in the Adviser-adopted valuation
procedures. Due to the subjective and variable nature of fair value pricing,
there can be no assurance that the Adviser will be able to obtain the fair value
assigned to the security upon the sale of such security.
Section
12(d)(1) of the 1940 Act restricts investments by registered investment
companies in the securities of other investment companies, including shares of
the Funds. Registered investment companies are permitted to invest in the Funds
beyond the limits set forth in section 12(d)(1), subject to certain conditions
set forth in Rule 12d1-4 under the 1940 Act, including that such investment
companies enter into an agreement with the Funds.
Each
Fund intends to pay out dividends, if any, and distribute any net realized
capital gains to their shareholders at least annually. The Funds will declare
and pay capital gain distributions in cash. Your broker is responsible for
distributing the income and capital gain distributions to you.
No
dividend reinvestment service is provided by the Trust. Financial intermediaries
may make the DTC book-entry Dividend Reinvestment Service available for use by
beneficial owners of Funds shares for reinvestment of their dividend
distributions. Beneficial owners should contact their financial intermediary to
determine the availability and costs of the service and the details of
participation therein. Financial intermediaries may require beneficial owners to
adhere to specific procedures and timetables. If this service is available and
used, dividend distributions of both income and net realized capital gains will
be automatically reinvested in additional whole shares of the Funds purchased in
the secondary market.
Taxes
The
following discussion is a summary of some important U.S. federal income tax
considerations generally applicable to investments in the Funds. Your investment
in the Funds may have other tax implications. Please consult your tax advisor
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws.
Each
Fund intends to elect and qualify each year for treatment as a regulated
investment company (“RIC”) under the Code. If it meets certain minimum
distribution requirements, a RIC is not subject to tax at the fund level on
income and gains from investments that are timely distributed to shareholders.
However, the Funds’ failure to qualify as a RIC or to meet minimum distribution
requirements would result (if certain relief provisions were not available) in
fund-level taxation and, consequently, a reduction in income available for
distribution to shareholders.
Unless
your investment in Shares is made through a tax-exempt entity or tax-advantaged
account, such as an IRA plan, you need to be aware of the possible tax
consequences when the Funds make distributions, when you sell your Shares listed
on the Exchange; and when you purchase or redeem Creation Units (APs
only).
Taxes
on Distributions
Each
Fund intends to distribute, at least annually, substantially all of their net
investment income and net capital gains. For federal income tax purposes,
distributions of investment income are generally taxable as ordinary income or
qualified dividend income. Taxes on distributions of capital gains (if any) are
determined by how long the Funds owned the investments that generated them,
rather than how long a shareholder has owned his or her Shares. Sales of assets
held by the Funds for more than one year generally result in long-term capital
gains and losses, and sales of assets held by the Funds for one year or less
generally result in short-term capital gains and losses. Distributions of the
Funds’ net capital gain (the excess of net long-term capital gains over net
short-term capital losses) that are reported by the Funds as capital gain
dividends (“Capital Gain Dividends”) will be taxable as long-term capital gains,
which for non-corporate shareholders are subject to tax at reduced rates of up
to 20% (lower rates apply to individuals in lower tax brackets). Distributions
of short-term capital gain will generally be taxable as ordinary income.
Dividends and distributions are generally taxable to you whether you receive
them in cash or reinvest them in additional Shares.
Distributions
reported by the Funds as “qualified dividend income” are generally taxed to
non-corporate shareholders at rates applicable to long-term capital gains,
provided holding period and other requirements are met. “Qualified dividend
income” generally is income derived from dividends paid by U.S. corporations or
certain foreign corporations that are either incorporated in a U.S. possession
or eligible for tax benefits under certain U.S. income tax treaties. In
addition, dividends that the Funds received in respect of stock of certain
foreign corporations may be qualified dividend income if that stock is readily
tradable on an established U.S. securities market.
Shortly
after the close of each calendar year, you will be informed of the amount and
character of any distributions received from the Funds.
U.S.
individuals with income exceeding specified thresholds are subject to a 3.8% tax
on all or a portion of their “net investment income,” which includes interest,
dividends, and certain capital gains (generally including capital gains
distributions and capital gains realized on the sale of Shares). This 3.8% tax
also applies to all or a portion of the undistributed net investment income of
certain shareholders that are estates and trusts.
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year. Distributions are generally
taxable even if they are paid from income or gains earned by the Funds before
your investment (and thus were included in the Shares’ NAV when you purchased
your Shares).
You
may wish to avoid investing in the Funds shortly before a dividend or other
distribution, because such a distribution will generally be taxable even though
it may economically represent a return of a portion of your
investment.
If
the Funds’ distributions exceed its earnings and profits, all or a portion of
the distributions made for a taxable year may be recharacterized as a return of
capital to shareholders. A return of capital distribution will generally not be
taxable, but will reduce each shareholder’s cost basis in Shares and result in a
higher capital gain or lower capital loss when the Shares are sold. After a
shareholder’s basis in Shares has been reduced to zero, distributions in excess
of earnings and profits in respect of those Shares will be treated as gain from
the sale of the Shares.
If
you are neither a resident nor a citizen of the United States or if you are a
foreign entity, distributions (other than Capital Gain Dividends) paid to you by
the Funds will generally be subject to a U.S. withholding tax at the rate of
30%, unless a lower treaty rate applies. Gains from the sale or other
disposition of your Shares generally are not subject to U.S. taxation, unless
you are a nonresident alien individual who is physically present in the U.S. for
183 days or more per year. The Funds may, under certain circumstances, report
all or a portion of a dividend as an “interest-related dividend” or a
“short-term capital gain dividend,” which would generally be exempt from this
30% U.S. withholding tax, provided certain other requirements are met. Different
tax consequences may result if you are a foreign shareholder engaged in a trade
or business within the United States or if a tax treaty applies.
Under
legislation generally known as “FATCA” (the Foreign Account Tax Compliance Act),
the Funds are required to withhold 30% of certain ordinary dividends it pays to
shareholders that are foreign entities and that fail to meet prescribed
information reporting or certification requirements.
The
Funds (or a financial intermediary, such as a broker, through which a
shareholder owns Shares) generally are required to withhold and remit to the
U.S. Treasury a percentage of the taxable distributions and sale or redemption
proceeds paid to any shareholder who fails to properly furnish a correct
taxpayer identification number, who has underreported dividend or interest
income, or who fails to certify that he, she or it is not subject to such
withholding.
Taxes
When Shares are Sold on the Exchange
Any
capital gain or loss realized upon a sale of Shares generally is treated as a
long-term capital gain or loss if Shares have been held for more than one year
and as a short-term capital gain or loss if Shares have been held for one year
or
less.
However, any capital loss on a sale of Shares held for six months or less is
treated as long-term capital loss to the extent of Capital Gain Dividends paid
with respect to such Shares. Any loss realized on a sale will be disallowed to
the extent Shares of the Funds are acquired, including through reinvestment of
dividends, within a 61-day period beginning 30 days before and ending 30 days
after the disposition of Shares. The ability to deduct capital losses may be
limited.
The
cost basis of Shares of the Funds acquired by purchase will generally be based
on the amount paid for the Shares and then may be subsequently adjusted for
other applicable transactions as required by the Code. The difference between
the selling price and the cost basis of Shares generally determines the amount
of the capital gain or loss realized on the sale or exchange of Shares. Contact
the broker through whom you purchased your Shares to obtain information with
respect to the available cost basis reporting methods and elections for your
account.
Taxes
on Purchases and Redemptions of Creation Units
An
AP having the U.S. dollar as its functional currency for U.S. federal income tax
purposes who exchanges securities for Creation Units generally recognizes a gain
or a loss. The gain or loss will be equal to the difference between the value of
the Creation Units at the time of the exchange and the exchanging AP’s aggregate
basis in the securities delivered, plus the amount of any cash paid for the
Creation Units. An AP who exchanges Creation Units for securities will generally
recognize a gain or loss equal to the difference between the exchanging AP’s
basis in the Creation Units and the aggregate U.S. dollar market value of the
securities received, plus any cash received for such Creation Units. The
Internal Revenue Service may assert, however, that a loss that is realized upon
an exchange of securities for Creation Units may not be currently deducted under
the rules governing “wash sales” (for an AP who does not mark-to-market their
holdings), or on the basis that there has been no significant change in economic
position. APs exchanging securities should consult their own tax advisor with
respect to whether wash sale rules apply and when a loss might be
deductible.
Any
capital gain or loss realized upon redemption of Creation Units is generally
treated as long-term capital gain or loss if Shares have been held for more than
one year and as a short-term capital gain or loss if Shares have been held for
one year or less.
Each
Fund may include a payment of cash in addition to, or in place of, the delivery
of a basket of securities upon the redemption of Creation Units. The Funds may
sell portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause the Funds to recognize investment income and/or capital
gains or losses that it might not have recognized if it had completely satisfied
the redemption in-kind. As a result, the Funds may be less tax efficient if it
includes such a cash payment in the proceeds paid upon the redemption of
Creation Units.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in the Funds. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Funds
distributions and sales of Funds shares. Consult your personal tax adviser about
the potential tax consequences of an investment in Funds shares under all
applicable tax laws. For more information, please see the section entitled
“Federal Income Taxes” in the SAI.
The
Distributor, Quasar Distributors, LLC, is a broker-dealer registered with the
SEC. The Distributor distributes Creation Units for the Funds on an agency basis
and does not maintain a secondary market in the Funds’ shares. The Distributor
has no role in determining the policies of the Funds or the securities that are
purchased or sold by the Funds. The Distributor’s principal address is
111
East Kilbourn Avenue, Suite 2200, Milwaukee, Wisconsin 53202.
Each
business day, the following information will be available, free of charge, on
the Funds’ website at https://www.subversiveetfs.com/: (i) information for each
portfolio holding that will form the basis of the next calculation of the Funds’
NAV per share; (ii) the Funds’ NAV per share, market price, and premium or
discount, each as of the end of the prior business day; (iii) a table showing
the number of days the Funds’ shares traded at a premium or discount during the
most recently completed calendar year and the most recently completed calendar
quarter since that year; (iv) a line graph showing the Funds’ share premiums or
discounts for the most recently completed calendar year and the most recently
completed calendar quarter since that year; (v) the Funds’ median bid-ask spread
over the last thirty calendar days; and (vi) if during the past year the Funds’
premium or discount was greater than 2% for more than seven consecutive trading
days, a statement that the Funds’ premium or discount, as applicable, was
greater than 2% and a discussion of the factors that are reasonably believed to
have materially contributed to the premium or discount.
Shares
of the Funds are not sponsored, endorsed, or promoted by the Exchange. The
Exchange is not responsible for, nor has it participated in the determination
of, the timing, prices, or quantities of shares of the Funds to be issued, nor
in the determination or calculation of the equation by which shares of the Funds
are redeemable. The Exchange has no obligation or liability to owners of shares
of the Funds in connection with the administration, marketing, or trading of the
shares.
Without
limiting any of the foregoing, in no event shall the Exchange have any liability
for any lost profits or indirect, punitive, special, or consequential damages
even if notified of the possibility thereof.
The
Adviser and the Funds make no representation or warranty, express or implied, to
the owners of shares of the Funds or any member of the public regarding the
advisability of investing in securities generally or in the Funds
particularly.
The
Trust enters into contractual arrangements with various parties, including,
among others, the Funds’ investment adviser, administrator and distributor, who
provide services to the Funds. Shareholders of the Funds are not parties to, or
intended (or “third-party”) beneficiaries of, any of those contractual
arrangements, and those contractual arrangements are not intended to create in
any individual shareholder or group of shareholders any right to enforce such
contractual arrangements against the service providers or to seek any remedy
under such contractual arrangements against the service providers, either
directly or on behalf of the Trust.
This
prospectus provides information concerning the Trust and the Funds that you
should consider in determining whether to purchase shares of a Fund. None of
this prospectus, the SAI or any document filed as an exhibit to the Trust’s
registration statement, is intended to, nor does it, give rise to an agreement
or contract between the Trust or the Funds and any investor, or give rise to any
contract or other rights in any individual shareholder, group of shareholders or
other person other than any rights conferred explicitly by federal or state
securities laws that may not be waived.
Closing
the Fund.
The Board of Trustees retains the right to close the Funds (or partially close
the Funds) to new purchases if it is determined to be in the best interest of
shareholders. Based on market and each Fund’s condition, and in consultation
with the Adviser, the Board of Trustees may decide to close the Fund to new
investors, all investors or certain classes of investors (such as fund
supermarkets) at any time. If the Funds are closed to new purchases it will
continue to honor redemption requests, unless the right to redeem shares has
been temporarily suspended as permitted by federal law.
The
Funds reserve the right to cease operations and liquidate at any time. See
“Liquidation of the Fund” in the SAI for additional information.
The
financial highlights table below is intended to help you understand financial
performance for shares of each Fund since inception. Certain information
reflects financial results for a single Fund share. The total returns in the
tables represent the rate that an investor would have earned (or lost) on an
investment in a Fund (assuming reinvestment of all dividends and distributions).
This information has been audited by Cohen & Company, Ltd., the Funds’
independent registered public accounting firm, whose report, along with the
Funds’ financial statements, are included in the Annual
Reports,
which is available upon request.
|
|
|
|
|
|
|
| |
Unusual
Whales Subversive Democratic Trading ETF |
For
the
Period
Inception(1)
through
September
30, 2023 |
|
For
a Fund share outstanding throughout the period. |
| |
PER
SHARE DATA: |
| |
Net
asset value, beginning of period |
$25.00 |
|
|
| |
INVESTMENT
OPERATIONS: |
| |
Net
investment income(2) |
0.10 |
|
Net
realized and unrealized gain on investments |
1.83 |
|
Total
from investment operations |
1.93 |
|
|
| |
LESS
DISTRIBUTIONS FROM: |
| |
Net
investments income |
— |
|
Net
realized gains |
— |
|
Total
distributions paid |
— |
|
Net
Asset Value, end of period |
$26.93 |
|
|
| |
Total
Return, at NAV(3) |
7.72% |
|
Total
Return, at Market(3) |
7.80% |
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
| |
Net
assets, end of period (in thousands) |
$9,426 |
|
|
| |
Ratio
of expenses to average net assets(4)(5) |
0.75% |
|
Ratio
of net investment income to average net assets(4)(5) |
0.57% |
|
Portfolio
Turnover Rate(3)(6)(7) |
44% |
|
(1)Commencement
date of the Fund was February 6, 2023.
(2)Calculated
based on average shares outstanding during the period.
(3)Not
annualized for period less than one year.
(4)Annualized
for period less than one year
(5)These
ratios exclude the impact of expenses of the underlying exchange traded funds as
represented in the Schedule of Investments. Recognition of net investment income
by the Fund is affected by the timing of the declaration of dividends by the
underlying exchange traded funds in which the Fund invests.
(6)Excludes
impact of in-kind transactions.
(7)The
numerator for the portfolio turnover rate includes the lesser of purchases or
sales (excluding short-term investments and securities sold short). The
denominator includes the average fair value of long positions throughout the
period.
|
|
|
|
|
|
|
| |
Unusual
Whales Subversive Republican Trading ETF |
For
the
Period
Inception(1)
through
September
30, 2023 |
|
For
a Fund share outstanding throughout the period. |
| |
PER
SHARE DATA: |
| |
Net
asset value, beginning of period |
$25.00 |
|
|
| |
INVESTMENT
OPERATIONS: |
| |
Net
investment income(2) |
0.21 |
|
Net
realized and unrealized loss on investments |
(0.53) |
|
Total
from investment operations |
(0.32) |
|
|
| |
LESS
DISTRIBUTIONS FROM: |
| |
Net
investments income |
— |
|
Net
realized gains |
— |
|
Total
distributions paid |
— |
|
Net
Asset Value, end of period |
$24.68 |
|
|
| |
Total
Return, at NAV(3) |
-1.30% |
|
Total
Return, at Market(3) |
-1.20% |
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
| |
Net
assets, end of period (in thousands) |
$4,935 |
|
|
| |
Ratio
of expenses to average net assets(4)(5) |
0.75% |
|
Ratio
of net investment income to average net assets(4)(5) |
1.32% |
|
Portfolio
Turnover Rate(3)(6)(7) |
46% |
|
(1)Commencement
date of the Fund was February 6, 2023.
(2)Calculated
based on average shares outstanding during the period.
(3)Not
annualized for period less than one year.
(4)Annualized
for period less than one year
(5)These
ratios exclude the impact of expenses of the underlying exchange traded funds as
represented in the Schedule of Investments. Recognition of investment income by
the Fund is affected by the timing of the declaration of dividends by the
underlying exchange traded funds in which the Fund invests.
(6)Excludes
impact of in-kind transactions.
(7)The
numerator for the portfolio turnover rate includes the lesser of purchases or
sales (excluding short-term investments and securities sold short). The
denominator includes the average fair value of long positions throughout the
period.
INVESTMENT
ADVISER:
Subversive
Capital Advisor LLC
217
Centre Street, Suite 122
New
York, NY 10013
INVESTMENT
SUB-ADVISER:
Tidal
Investments, LLC
898
N. Broadway, Suite 2
Massapequa,
New York 11758
DISTRIBUTOR:
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202
CUSTODIAN:
U.S.
Bank N.A.
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212
ADMINISTRATOR,
FUND ACCOUNTANT
AND TRANSFER AGENT:
U.S.
Bancorp Fund Services, LLC
615
East Michigan Street
Milwaukee,
Wisconsin 53202
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM:
Cohen
& Company, Ltd.
342
North Water Street, Suite 830
Milwaukee,
WI 53202
LEGAL
COUNSEL:
Goodwin
Procter LLP
1900
N Street, NW
Washington,
DC 20036
The
Funds collect non-public information about you that the law allows or requires
them to have in order to conduct their business and properly service you. The
Funds collect financial and personal information about you (“Personal
Information”) directly (e.g., information on account applications and other
forms, such as your name, address, and social security number, and information
provided to access account information or conduct account transactions online,
such as password, account number, e-mail address, and alternate telephone
number), and indirectly (e.g., information about your transactions with us, such
as transaction amounts, account balance and account holdings).
The
Funds do not disclose any non-public personal information about their
shareholders or former shareholders other than for everyday business purposes
such as to process a transaction, service an account, respond to court orders
and legal investigations or as otherwise permitted by law. Third parties that
may receive this information include companies that provide transfer agency,
technology and administrative services to the Funds, as well as the Funds’
investment adviser who is an affiliate of the Funds. If you maintain a
retirement/educational custodial account directly with the Funds, we may also
disclose your Personal Information to the custodian for that account for
shareholder servicing purposes. The Funds limit access to your Personal
Information provided to unaffiliated third parties to information necessary to
carry out their assigned responsibilities to the Funds. All shareholder records
will be disposed of in accordance with applicable law. The Funds maintain
physical, electronic and procedural safeguards to protect your Personal
Information and requires their third party service providers with access to such
information to treat your Personal Information with the same high degree of
confidentiality.
In
the event that you hold shares of the Funds through a financial intermediary,
including, but not limited to, a broker-dealer, bank, or trust company, the
privacy policy of your financial intermediary would govern how your non-public
personal information would be shared with unaffiliated third
parties.
With
respect to the Funds, issues and redemptions of their shares at net asset value
(“NAV”) occur only in large aggregations of a specified number of shares (e.g.,
25,000) called “Creation Units.” Only Authorized Participants (“APs”) may
acquire shares directly from an ETF, and only APs may tender their ETF shares
for redemption directly to the ETF, at NAV. APs must be (i) a broker-dealer or
other participant in the clearing process through the Continuous Net Settlement
System of the NSCC, a clearing agency that is registered with the SEC; or (ii) a
DTC participant. In addition, each AP must execute a Participant Agreement that
has been agreed to by the Funds’ distributor, and that has been accepted by the
Funds’ transfer agent, with respect to purchases and redemptions of Creation
Units.
Because
of this structure, the Funds do not have any information regarding any
“consumers” as defined in Rule 3 of Regulation S-P with respect to any ETFs, and
consequently is not required by Regulation S-P to deliver a notice of the Funds’
privacy policy to any ETF shareholders.
Unusual
Whales Subversive Democratic Trading ETF
Unusual
Whales Subversive Republican Trading ETF
Each
a series of Series Portfolios Trust (the “Trust”)
FOR
MORE INFORMATION
You
can find more information about the Funds in the following
documents:
Statement
of Additional Information
The
SAI provides additional details about the investments and techniques of each
Fund and certain other additional information. A current SAI is on file with the
SEC and is incorporated into this Prospectus by reference. This means that the
SAI is legally considered a part of this Prospectus even though it is not
physically within this Prospectus.
Annual
and Semi-Annual Reports
Additional
information about the Funds' investments is available in the Funds' annual and
semiannual reports to shareholders. The annual
report
contains a discussion of the market conditions and investment strategies that
significantly affected each Fund’s performance during their most recently
completed fiscal year.
The
SAI and the Shareholder Reports are available free of charge on the Funds’
website at wwww.subversive.com/etfs. You can obtain a free copy of the SAI and
Shareholder Reports, request other information, or make general inquiries about
the Fund by calling the Fund (toll-free) at 1-800-617-0004 or by writing
to:
Subversive
Capital ETFS
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
https://www.subversiveetfs.com/
Reports
and other information about the Funds are also available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s Internet website at
https://www.sec.gov; or
•For
a fee, by electronic request at the following e-mail address:
[email protected].
(The
Trust’s SEC Investment Company Act of 1940 file number is
811-23084)