ck0001650149-20220930
Subversive Decarbonization ETF
(DKRB)
Listed
on Cboe BZX Exchange, Inc.
Subversive Food Security ETF
(KCAL)
Listed
on Cboe BZX Exchange, Inc.
Subversive Mental Health ETF
(SANE)
Listed
on Cboe BZX Exchange, Inc.
Prospectus
December 19,
2022
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
of these securities or determined if this Prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
Subversive
Decarbonization ETF
Subversive
Food Security ETF
Subversive
Mental Health ETF
Each
a series of Series Portfolios Trust (the
“Trust”)
Investment Objective
The Subversive Decarbonization
ETF (the “Fund” or the “Decarbonization Fund”) seeks to achieve long-term
capital appreciation.
Fees and Expenses of the Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.75% |
Distribution
and Service (Rule 12b-1) Fees |
0.00% |
Other
Expenses(1) |
0.00% |
Total
Annual Fund Operating Expenses |
0.75% |
(1)
“Other Expenses” are estimated
for the Fund’s current fiscal year.
Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 in the
Fund for the time periods indicated and then hold or sell all of your shares at
the end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund’s operating expenses remain the
same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
|
|
|
|
| |
One
Year |
Three
Years |
$77 |
$240 |
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. No portfolio turnover
rate is provided for the Fund because the Fund had not commenced operations
prior to the date of this Prospectus.
Principal Investment Strategies
The Fund is an actively managed
exchange-traded fund (“ETF”) that seeks to achieve its investment objective by
investing, under normal market conditions, at least 80% of its net assets (plus
any borrowings for investment purposes) in securities of Decarbonization
Companies, as defined below. Decarbonization Companies are companies that each
has at least 50% of its assets in the tools, technology, infrastructure, or raw
materials that support decarbonization efforts (and companies whose announced
future capital expenditures are anticipated to result in that company’s assets
meeting that same test), or companies that each invests at least 50% of capital
expenditures (either currently or announced future capital expenditures) in
tools, technology, infrastructure or raw materials that support the
decarbonization of the current global energy supply chain. Applying the
foregoing definition, Decarbonization Companies are generally expected to
consist of companies dedicated to battery technology, companies involved in the
production, distribution, and delivery of water and carbon, and companies
involved in the infrastructure that supports decarbonization efforts (for
example, nuclear
technology),
as well as the infrastructure that supports wind and solar networks.
Decarbonization Companies are also rare earth mineral companies and the
companies supporting them. The Fund does not consider “decarbonization” to mean
“no carbon”. Rather, the Fund will invest in Decarbonization Companies that are
expected to benefit from the global economic trend toward decarbonization, and
companies that own the tools, technology, infrastructure or raw materials
urgently needed to power the modern world with much less reliance on carbon
fuels. As a result, some anticipated portfolio companies will have exposure to
natural gas as a transitory fuel, but the Fund will generally avoid crude
oil.
Securities
eligible for inclusion in the Fund’s investable universe include publicly listed
equity securities of U.S. and foreign (including emerging markets) issuers. The
Fund’s investments in foreign securities may include American Depositary
Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), International Depositary
Receipts (“IDRs”), U.S. dollar denominated foreign securities, direct foreign
securities purchased on a foreign exchange, and securities of companies
incorporated outside the United States. The Fund may also invest in derivative
instruments, primarily exchange traded futures contracts linked to the near-term
price fluctuations of water and carbon credits and futures contracts linked to
longer-term appreciation of Decarbonization Companies.
In
selecting investments for the Fund, the Adviser will apply a top-down approach,
utilizing primarily quantitative factors, but also considering qualitative
factors with a view toward growth and earning potential. In the selection
process, the Adviser will give greater weight to Decarbonization Companies whose
primary business models and growth prospects are dedicated to building the
tools, technology, infrastructure, and raw materials that support
decarbonization. The Adviser believes that global and secular trends are
accelerating the urgency around decarbonization, including that dramatic
increases in atmospheric carbon are directly responsible for observable
temperature increases and relatively minor temperature changes have the
potential to severely dislocate weather patterns. Accordingly, the Adviser
includes in its investment selection process water and carbon pricing. In the
absence of large-scale decarbonization, water, carbon and carbon offsets are
likely to increase in price. Accordingly, changes in water and carbon prices are
likely to reflect policies and trends with respect to
decarbonization.
The Fund will concentrate its
investments in the securities of issuers in the energy group of industries.
Therefore, the Fund will invest more than 25% of its total assets in securities
issued by companies in the energy group of industries. The Fund is classified as
“non-diversified” for purposes of the Investment Company Act of 1940 (the “1940
Act”), which means a relatively high percentage of the Fund’s assets may be
invested in the securities of a limited number of
companies.
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.
Decarbonization
Investing Risk.
The Fund’s investment strategy may limits the types and number of investment
opportunities available to the Fund, and, as a result, the Fund’s returns may be
lower than other funds that do not seek to invest in companies that support the
decarbonization of our energy supply chain. In addition, decarbonization
investing may affect the Fund’s exposure to certain companies or industries and
the Fund will forgo certain investment opportunities that are screened out by
the Adviser’s investment selection process. The types of companies in which the
Fund may invest may be more volatile than more established companies, and may be
dependent on government regulation and subsidies related to the reducing our
carbon footprint.
ETF
Risks.
The
Fund is an ETF, and, as a result of its structure, it is exposed to the
following risks:
•Authorized
Participants, Market Makers, and Liquidity Providers Concentration Risk.
The
Fund has only a limited number of institutional investors (known as “Authorized
Participants” or “APs”) that are authorized to purchase and redeem shares
directly from the Fund. In addition, there may be a limited number of market
makers and/or liquidity providers in the marketplace. To the extent either of
the following events occur, shares of the Fund may trade at a material discount
to the Fund’s net asset value (“NAV”) and possibly face delisting: (i) APs
exit
the business or otherwise become unable to process creation and/or redemption
orders and no other APs step forward to perform these services, or (ii) market
makers and/or liquidity providers exit the business or significantly reduce
their business activities and no other entities step forward to perform their
functions. This may lead to the widening of bid/ask spreads quoted throughout
the day.
•Costs
of Buying or Selling Shares. Due
to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
may significantly reduce investment results and an investment in shares may not
be advisable for investors who anticipate regularly making small
investments.
•Shares
May Trade at Prices Other Than NAV. As
with all ETFs, shares of the Fund may be bought and sold in the secondary market
at market prices. Although it is expected that the market price of shares of the
Fund will approximate the Fund’s NAV, there may be times when the market price
of shares is more than the NAV intra-day (premium) or less than the NAV
intra-day (discount) due to supply and demand of shares or during periods of
market volatility. This risk is heightened in times of market volatility,
periods of steep market declines, and periods when there is limited trading
activity for shares in the secondary market, in which case such premiums or
discounts may be significant. This may lead to the widening of bid/ask spreads
quoted throughout the day.
•Trading.
Although shares of the Fund are listed for trading on the Cboe BZX Exchange,
Inc. (the “Exchange”), there can be no assurance that an active trading market
for shares will develop or be maintained or that shares will trade with any
volume, or at all, on any stock exchange. In stressed market conditions, the
market for shares of the Fund may become less liquid in response to
deteriorating liquidity in the markets for the Fund’s underlying portfolio
holdings. This adverse effect on liquidity for the Fund’s shares, in turn, can
lead to differences between the market price of the Fund’s shares and the
underlying value of those shares. In addition, trading in Fund shares may be
halted due to market conditions or for reasons that, in the view of the
Exchange, make trading in shares of the Fund inadvisable. This may lead to the
widening of bid/ask spreads quoted throughout the day.
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.
Foreign
Investments and Emerging Markets Risk. Securities
of non-U.S. issuers, including those located in foreign countries, may involve
special risks caused by foreign political, social and economic factors,
including exposure to currency fluctuations, less liquidity, less developed and
less efficient trading markets, political instability and less developed legal
and auditing standards. These risks are heightened for investments in issuers
organized or operating in emerging market countries.
Energy
Industry Risk. Companies
in the energy industry are subject to many business, economic, environmental,
and regulatory risks that can adversely affect the costs, revenues, profits, and
viability of companies in the industry. These risks include, but are not limited
to, the following: volatility in commodity prices and changes in supply and
demand, which may affect the volume of energy commodities transported,
processed, stored and or distributed; specific risks associated with companies
owning and/or operating pipelines, gathering and processing energy assets;
operating risks including outages, structural and maintenance, impairment and
safety problems; changes in the regulatory environment at federal, state and
local levels, and in foreign markets; environmental regulation and liability
risk; terrorism risk; extreme weather and other natural disasters; and capital
markets risk, resulting in a higher capital costs or impacting growth and access
to capital.
Depositary
Receipt Risk. ADRs,
GDRs, and IDRs are certificates evidencing ownership of shares of a foreign
issuer and are alternatives to directly purchasing the underlying foreign
securities in their national markets and currencies. However, they continue to
be subject to many of the risks associated with investing directly in foreign
securities. These risks include the social, political and economic risks of the
underlying issuer’s country, as well as in the case of depositary receipts
traded on non-U.S. markets, exchange risk.
Derivatives
risk. The
use of derivatives involves a variety of risks in addition to and greater than
those associated with investing directly in securities. Derivatives instruments
in which the Fund invests may not perform as anticipated by the Adviser, may not
be closed out at a favorable time or price, or could increase the Fund’s
volatility. Investment in derivatives may create investment leverage. When a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that correlates precisely
with that of the cash investment; or, when used for hedging purposes,
derivatives may not provide the anticipated protection, causing the Fund to lose
money on both the derivatives transaction and the exposure the Fund sought to
hedge.
•Counterparty
risk.
The risk that the Fund will be subject to credit risk with respect to the
counterparties to derivative contracts and other instruments entered into
directly by the Fund. Other than to maintain its status as a regulated
investment company for U.S. federal income tax purposes (described in the
Statement of Additional Information under “Certain U.S. Federal Income Tax
Information”), the Fund is not subject to any limit with respect to the number
of transactions it can enter into with a single counterparty. To the extent that
the Fund enters into multiple transactions with a single or a small set of
counterparties, it will be subject to increased counterparty risk.
•Futures
contracts risk.
The Fund may invest in futures contracts linked to the near-term price
fluctuations of water and carbon credits and futures contracts linked to
longer-term appreciation of Decarbonization Companies. The Fund’s use of futures
contracts involves risks different from, or possibly greater than, the risks
associated with investing directly in securities and other traditional
investments. In addition, while futures contracts are generally classified as
liquid, under certain market conditions they may be classified as illiquid. As a
result, the Fund may be unable to close out its futures contracts at a time
which is advantageous. The successful use of futures depends upon a variety of
factors, particularly the ability of the Adviser to predict movements of the
underlying securities markets, which requires different skills than predicting
changes in the prices of individual securities. There can be no assurance that
any particular futures strategy adopted will succeed.
Industry
Concentration Risk.
The Fund’s investments will be concentrated in the securities of issuers in the
energy group of industries. The focus of the Fund’s portfolio on this specific
industry may present more risks than if the portfolio were broadly diversified
over numerous groups of industries.
Newer
Adviser Risk. The
Adviser is a recently registered investment adviser and has limited experience
managing a registered investment company. As a result, there is no long-term
track record against which an investor may judge the Adviser and it is possible
the Adviser may not achieve the Fund’s intended investment objective. As a newer
investment adviser, the Adviser may experience resource and capacity
constraints.
New
Fund Risk.
The Fund is a recently organized investment company with no operating history.
As a result, prospective investors have no track record or history on which to
base their investment decision.
Non-Diversification
Risk.
Because the Fund is “non-diversified,” it may
invest a greater percentage of its assets in the securities of a single issuer
or a lesser number of issuers than if it was a diversified fund. As a result,
the Fund may be more exposed to the risks associated with and developments
affecting an individual issuer or a lesser number of issuers than a fund that
invests more widely. This may increase the Fund’s volatility and cause the
performance of a relatively small number of issuers to have a greater impact on
the Fund’s performance.
Growth
Investing Style Risk.
Growth companies are companies whose earnings and stock prices are expected to
grow at a faster rate than the overall market. If the Portfolio Managers
incorrectly assesses a company’s prospects for growth or how other investors
will value the company’s growth, then the price of the company’s stock may
decrease, or may not increase to the level anticipated by the sub-adviser. In
addition, growth stocks may be more volatile than other stocks because they are
more sensitive to investors’ perceptions of the issuing company’s growth
potential. Also, the growth investing style may over time go in and out of
favor. At times when the investing style used by the Fund is out of favor, the
Fund may underperform other equity funds that use different investing
styles.
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.
High
Portfolio Turnover Risk.
A high portfolio turnover rate (100% or more) 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.
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.
Performance
Performance information for the Fund is not
included because the Fund had not commenced operations prior to the date of this
Prospectus. Performance information will be available once the
Fund has at least one calendar year of performance. The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future and does not guarantee future results.
Updated performance information will be available on the Fund’s website at
www.subversive.com/etfs
or by calling the Fund toll-free at 1-800-617-0004.
Management
Investment
Adviser
Subversive
Capital Advisor LLC is the Fund’s investment adviser.
Sub-Adviser
Toroso
Investments, LLC (“Toroso” 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 Capital’s ETF
portfolios, are the portfolio managers responsible for the day-to-day management
of the Fund and have managed the Fund since its inception in December,
2022.
Purchase
and Sale of Fund Shares
Shares
of the Fund are listed on the Exchange, and individual shares may only be bought
and sold in the secondary market through brokers at market prices, rather than
NAV. Because shares of the Fund trade at market prices rather than NAV, the
Fund’s shares may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund issues and redeems its shares at NAV only in large specified numbers of
shares known as “Creation Units,” which only APs (typically, broker-dealers) may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities and/or a designated amount of U.S.
cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase shares of the Fund (bid) and the lowest price a
seller is willing to accept for shares of the Fund (ask) when buying or selling
shares in the secondary market (the “bid-ask spread”). Recent information about
the Fund, including its NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at
www.subversive.com/etfs.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
Investment Objective
The Subversive Food Security
ETF (the “Fund” or the “Food Security Fund”) seeks to achieve long-term capital
appreciation.
Fees and Expenses of the Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.75% |
Distribution
and Service (Rule 12b-1) Fees |
0.00% |
Other
Expenses(1) |
0.00% |
Total
Annual Fund Operating Expenses |
0.75% |
(1)
“Other Expenses” are estimated
for the Fund’s current fiscal year.
Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 in the
Fund for the time periods indicated and then hold or sell all of your shares at
the end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund’s operating expenses remain the
same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
|
|
|
|
| |
One
Year |
Three
Years |
$77 |
$240 |
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. No portfolio turnover
rate is provided for the Fund because the Fund had not commenced operations
prior to the date of this Prospectus.
Principal Investment Strategies
The Fund is an actively managed
exchange-traded fund (“ETF”) that seeks to achieve its investment objective by
investing, under normal market conditions, at least 80% of its net assets (plus
any borrowings for investment purposes) in securities of Food Security
Companies, as defined below. Food Security Companies are companies that each
have 50% of its assets invested in or 50% of its revenues derived from the
production, distribution, or delivery of food, or companies that each invest at
least 50% of its capital expenditures (either currently or announced future
capital expenditures) in technology and tools necessary to support the global
food security. Applying the foregoing definition, Food Security Companies
include companies involved in the support, maintenance, irrigation and
processing of plant and animal foods (for example, fertilizer/potash companies).
The Fund considers food security to be a global food supply chain that can
reliably and predictably produce, distribute, and deliver food. Accordingly, the
Fund will invest in companies in the fertilizer/potash and meat and food
production industries, as well as companies in the industrials sector that
provide the machinery and equipment necessary to support such industries.
The
Fund may also invest in derivative instruments, primarily futures contracts on
food and fertilizer. To the extent the Fund invests in derivatives, the Fund
will consider a derivative’s reference asset for purposes of meeting its policy
of investing at least 80% of its net assets in Food Security
Companies.
Securities
eligible for inclusion in the Fund’s investable universe include publicly listed
equity securities of U.S. and foreign (including emerging markets) issuers. The
Fund’s investments in foreign securities may include American Depositary
Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), International Depositary
Receipts (“IDRs”), U.S. dollar denominated foreign securities, direct foreign
securities purchased on a foreign exchange, and securities of companies
incorporated outside the United States.
In
selecting investments for the Fund, the Adviser will apply a top-down approach,
utilizing primarily quantitative factors, but also considering qualitative
factors with a view toward growth and earning potential. In the selection
process, the Adviser will give greater weight to Food Security Companies whose
primary business models and growth prospects are dedicated to the actual
production of food or the infrastructure or the applications that support global
food security. In its selection process, the Adviser will also factor in global
macroeconomic events that affect the global food supply chain, such as the
invasion of Ukraine, as well as the long-term effects of climate change on food
production and prices. In doing so, the Adviser will seek to identify companies
that are positioned to help the global economy manage the inflationary shocks
resulting from the global pandemic response and the truly supply-driven food
chain shocks that the Adviser believes will result in generally higher prices on
food inputs and higher interest rates/weaker currency among those countries
where, in the view of the Adviser, the risk of interruptions in the global food
supply chain are highest.
As
water security is food security, the Fund will invest in companies in and
related to the water industry. The Fund’s investments in the water industry will
typically be in the form of investments in publicly traded desalination
plants.
The Fund will concentrate its
investments in the securities of issuers in the food and agriculture group of
industries. Therefore, the Fund will invest more than 25% of its total assets in
securities issued by companies in the food and agriculture group of industries.
The Fund is classified as “non-diversified” for purposes of the Investment
Company Act of 1940 (the “1940 Act”), which means a relatively high percentage
of the Fund’s assets may be invested in the securities of a limited number of
companies.
Principal Risks
Agriculture
and Food Industries Risk.
The Fund is expected to concentrate its investments in the securities of issuers
in the food and agriculture group of industries. As a result, the Fund may be
susceptible to loss due to adverse occurrences affecting that group of
industries. The food industry is highly competitive and can be significantly
affected by demographic and product trends, competitive pricing, food fads,
marketing campaigns, environmental factors, government regulation, adverse
changes in general economic conditions, agricultural commodity prices, evolving
consumer preferences, nutritional and health-related concerns, federal, state
and local food inspection and processing controls, consumer product liability
claims, consumer boycotts, risks of product tampering and the availability and
expense of liability insurance. Investments in agriculture-related companies are
subject to adverse weather conditions, embargoes, tariffs, and adverse
international economic, political, and regulatory developments. Product recalls
are sometimes required in the food industry to withdraw contaminated or
mislabeled products from the market. Additionally, the failure to identify and
react appropriately to changes in consumer trends, demands and preferences could
lead to, among other things, reduced demand and price reduction for a company’s
products. Investments in agriculture-related companies are subject to the same
risks as investments in agricultural commodities, such as adverse weather
conditions, embargoes, tariffs, and adverse international economic, political
and regulatory developments. Additionally, the invasion of Ukraine has altered
the food supply chain for the entire globe with impacts that will potentially
last for years.
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.
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.
Foreign
Investments Risk. Securities
of non-U.S. issuers, including those located in foreign countries, may involve
special risks caused by foreign political, social and economic factors,
including exposure to currency fluctuations, less liquidity, less developed and
less efficient trading markets, political instability and less developed legal
and auditing standards.
Water
Industry Risk. The
water industry can be significantly affected by economic trends or other
conditions or developments, such as the availability of water, the level of
rainfall and occurrence of other climatic events, changes in water consumption,
new technologies relating to the supply of water, and water conservation. The
industry can also be significantly affected by environmental considerations,
taxation, government regulation (including the increased cost of compliance),
inflation, increases in interest rates, price and supply fluctuations, increases
in the cost of raw materials and other operating costs, technological advances,
and competition from new market entrants.
Depositary
Receipt Risk. ADRs,
GDRs, and IDRs are certificates evidencing ownership of shares of a foreign
issuer and are alternatives to directly purchasing the underlying foreign
securities in their national markets and currencies. However, they continue to
be subject to many of the risks associated with investing directly in foreign
securities. These risks include the social, political and economic risks of the
underlying issuer’s country, as well as in the case of depositary receipts
traded on non-U.S. markets, exchange risk.
Derivatives
risk. The
use of derivatives involves a variety of risks in addition to and greater than
those associated with investing directly in securities. Derivatives instruments
in which the Fund invests may not perform as anticipated by the Adviser, may not
be closed out at a favorable time or price, or could increase the Fund’s
volatility. Investment in derivatives may create investment leverage. When a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that correlates precisely
with that of the cash investment; or, when used for hedging purposes,
derivatives may not provide the anticipated protection, causing the Fund to lose
money on both the derivatives transaction and the exposure the Fund sought to
hedge.
•Counterparty
risk.
The risk that the Fund will be subject to credit risk with respect to the
counterparties to derivative contracts and other instruments entered into
directly by the Fund. Other than to maintain its status as a regulated
investment company for U.S. federal income tax purposes (described in the
Statement of Additional Information under “Certain U.S. Federal Income Tax
Information”), the Fund is not subject to any limit with respect to the number
of transactions it can enter into with a single counterparty. To the extent that
the Fund enters into multiple transactions with a single or a small set of
counterparties, it will be subject to increased counterparty risk.
•Futures
contracts risk.
The Fund’s use of futures contracts involves risks different from, or possibly
greater than, the risks associated with investing directly in securities and
other traditional investments. In addition, while futures contracts are
generally classified as liquid, under certain market conditions they may be
classified as illiquid. As a result, the Fund may be unable to close out its
futures contracts at a time which is advantageous. The successful use of futures
depends upon a variety of factors, particularly the ability of the Adviser to
predict movements of the underlying securities markets, which requires different
skills than predicting changes in the prices of individual securities. There can
be no assurance that any particular futures strategy adopted will
succeed.
Industry
Concentration Risk.
The Fund’s investments will be concentrated in the securities of issuers in the
food and agriculture group of industries. The focus of the Fund’s portfolio on
this specific industry may present more risks than if the portfolio were broadly
diversified over numerous groups of industries.
Newer
Adviser Risk. The
Adviser is a recently registered investment adviser and has limited experience
managing a registered investment company. As a result, there is no long-term
track record against which an investor may judge the Adviser and it is possible
the Adviser may not achieve the Fund’s intended investment
objective.
New
Fund Risk.
The Fund is a recently organized investment company with no operating history.
As a result, prospective investors have no track record or history on which to
base their investment decision.
Non-Diversification
Risk.
Because the Fund is “non-diversified,” it may
invest a greater percentage of its assets in the securities of a single issuer
or a lesser number of issuers than if it was a diversified fund. As a result,
the Fund may be more exposed to the risks associated with and developments
affecting an individual issuer or a lesser number of issuers than a fund that
invests more widely. This may increase the Fund’s volatility and cause the
performance of a relatively small number of issuers to have a greater impact on
the Fund’s performance.
Growth
Investing Style Risk.
If the Portfolio Managers incorrectly assesses a company’s prospects for growth
or how other investors will value the company’s growth, then the price of the
company’s stock may decrease, or may not increase to the level anticipated by
the sub-adviser. In addition, growth stocks may be more volatile than other
stocks because they are more sensitive to investors’ perceptions of the issuing
company’s growth potential. Also, the growth investing style may over time go in
and out of favor. At times when the investing style used by the Fund is out of
favor, the Fund may underperform other equity funds that use different investing
styles.
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.
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.
Performance
Performance information for the Fund is not
included because the Fund had not commenced operations prior to the date of this
Prospectus. Performance information will be available once the
Fund has at least one calendar year of performance. The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future and does not guarantee future results.
Updated performance information will be available on the Fund’s website at
www.subversive.com/etfs
or by calling the Fund toll-free at 1-800-617-0004.
Management
Investment
Adviser
Subversive
Capital Advisor LLC is the Fund’s investment adviser.
Sub-Adviser
Toroso
Investments, LLC (“Toroso” 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 Capital’s ETF
portfolios, are the portfolio managers responsible for the day-to-day management
of the Fund and have managed the Fund since its inception in December,
2022.
Purchase
and Sale of Fund Shares
Shares
of the Fund are listed on the Exchange, and individual shares may only be bought
and sold in the secondary market through brokers at market prices, rather than
NAV. Because shares of the Fund trade at market prices rather than NAV, the
Fund’s shares may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund issues and redeems its shares at NAV only in large specified numbers of
shares known as “Creation Units,” which only APs (typically, broker-dealers) may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities and/or a designated amount of U.S.
cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase shares of the Fund (bid) and the lowest price a
seller is willing to accept for shares of the Fund (ask) when buying or selling
shares in the secondary market (the “bid-ask spread”). Recent information about
the Fund, including its NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at
www.subversive.com/etfs.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the
Fund,
or for other activities, such as marketing, educational training or other
initiatives related to the sale or promotion of Shares. These payments may
create a conflict of interest by influencing the Intermediary and your
salesperson to recommend the Fund over another investment. Any such arrangements
do not result in increased Fund expenses. Ask your salesperson or visit the
Intermediary’s website for more information.
Investment Objective
The Subversive Mental Health
ETF (the “Fund” or the “Mental Health Fund”) seeks to achieve long-term capital
appreciation.
Fees and Expenses of the Fund
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.75% |
Distribution
and Service (Rule 12b-1) Fees |
0.00% |
Other
Expenses(1) |
0.00% |
Total
Annual Fund Operating Expenses |
0.75% |
(1)
“Other Expenses” are estimated
for the Fund’s current fiscal year.
Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. The Example assumes that you invest $10,000 in the
Fund for the time periods indicated and then hold or sell all of your shares at
the end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund’s operating expenses remain the
same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
|
|
|
|
| |
One
Year |
Three
Years |
$77 |
$240 |
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. No portfolio turnover
rate is provided for the Fund because the Fund had not commenced operations
prior to the date of this Prospectus.
Principal Investment Strategies
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by investing under normal market conditions, at least
80% of its net assets (plus any borrowings for investment purposes) in
securities of Mental Health Companies (as defined below). Mental Health
Companies are companies that have at least 50% of assets or revenues tied to
products and services used in the treatment, prevention, or diagnosis of
long-term mental health disorders, including depression and Alzheimer’s. As
mental health starts with metabolic health, assets or revenues “tied to” such
disorders include assets in or revenues tied to the fitness, sleep, and
nutrition products and services. The Adviser will also seek to identify Mental
Health Companies working on new tools, treatments, and medications designed to
help address the global toll of long-term mental health disorders, including
major and minor depressive disorder, Alzheimer’s, Parkinson’s and metabolic
Epilepsy.
Securities
eligible for inclusion in the Fund’s investable universe include publicly listed
equity securities of U.S. and foreign (including emerging markets) issuers. The
Fund’s investments in foreign securities may include American Depositary
Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), International Depositary
Receipts (“IDRs”), U.S.
dollar
denominated foreign securities, direct foreign securities purchased on a foreign
exchange, and securities of companies incorporated outside the United States.
In
selecting investments for the Fund, the Adviser will apply a top-down approach,
utilizing primarily quantitative factors, focusing on Mental Health Companies
that are cash flow positive. However, the Adviser may also considering
qualitative factors with a view toward growth and earning potential. In the
selection process, the Adviser will give greater weight to Mental Health
Companies whose primary business models and growth prospects are dedicated to
mental health and fitness.
When
determining the companies eligible to be considered Mental Health Companies, the
Fund will also invest in Mental Health Companies with assets in or revenues from
fitness, sleep, and nutrition products or services, as metabolic health is
widely considered as a core component in the prevention of mental health
disorders. Metabolic disorders are estimated to impact as much as 40% of the
American population, with similar trends appearing globally. Accordingly, the
Fund will invest in companies involved in the testing, diagnosis, and promotion
of metabolic health.
In
addition, the Adviser will include in the universe of Mental Health Companies
those companies that provide mental health solutions, from devices to
pharmaceuticals. The Adviser will consider for inclusion in the Fund’s portfolio
companies that provide lower cost or small-scale solutions from medical devices
to software applications, as well as large-scale pharmaceutical interventions
aimed at addressing depression and pain management, and long-term solutions to
both.
The
Fund is classified as “non-diversified” for purposes of the Investment Company
Act of 1940 (the “1940 Act”), which means a relatively high percentage of the
Fund’s assets may be invested in the securities of a limited number of
companies.
Principal Risks
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.
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.
Foreign
Investments Risk. Securities
of non-U.S. issuers, including those located in foreign countries, may involve
special risks caused by foreign political, social and economic factors,
including exposure to currency fluctuations, less liquidity, less developed and
less efficient trading markets, political instability and less developed legal
and auditing standards.
Depositary
Receipt Risk. ADRs,
GDRs, and IDRs are certificates evidencing ownership of shares of a foreign
issuer and are alternatives to directly purchasing the underlying foreign
securities in their national markets and currencies. However, they continue to
be subject to many of the risks associated with investing directly in foreign
securities. These risks include the social, political and economic risks of the
underlying issuer’s country, as well as in the case of depositary receipts
traded on non-U.S. markets, exchange risk.
Derivatives
risk. The
use of derivatives involves a variety of risks in addition to and greater than
those associated with investing directly in securities. Derivatives instruments
in which the Fund invests may not perform as anticipated by the Adviser, may not
be closed out at a favorable time or price, or could increase the Fund’s
volatility. Investment in derivatives may create investment leverage. When a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that correlates precisely
with that of the cash investment; or, when used for hedging purposes,
derivatives may not provide the anticipated protection, causing the Fund to lose
money on both the derivatives transaction and the exposure the Fund sought to
hedge.
•Counterparty
risk.
The risk that the Fund will be subject to credit risk with respect to the
counterparties to derivative contracts and other instruments entered into
directly by the Fund. Other than to maintain its status as a regulated
investment company for U.S. federal income tax purposes (described in the
Statement of Additional Information under “Certain U.S. Federal Income Tax
Information”), the Fund is not subject to any limit with respect to the number
of transactions it can enter into with a single counterparty. To the extent that
the Fund enters into multiple transactions with a single or a small set of
counterparties, it will be subject to increased counterparty risk.
•Futures
contracts risk.
The Fund’s use of futures contracts involves risks different from, or possibly
greater than, the risks associated with investing directly in securities and
other traditional investments. In addition, while futures contracts are
generally classified as liquid, under certain market conditions they may be
classified as illiquid. As a result, the Fund may be unable to close out its
futures contracts at a time which is advantageous. The successful use of futures
depends upon a variety of factors, particularly the ability of the Adviser to
predict movements of the underlying securities markets, which requires different
skills than predicting changes in the prices of individual securities. There can
be no assurance that any particular futures strategy adopted will
succeed.
Newer
Adviser Risk. The
Adviser is a recently registered investment adviser and has limited experience
managing a registered investment company. As a result, there is no long-term
track record against which an investor may judge the Adviser and it is possible
the Adviser may not achieve the Fund’s intended investment
objective.
New
Fund Risk.
The Fund is a recently organized investment company with no operating history.
As a result, prospective investors have no track record or history on which to
base their investment decision.
Non-Diversification
Risk.
Because the Fund is “non-diversified,” it may
invest a greater percentage of its assets in the securities of a single issuer
or a lesser number of issuers than if it was a diversified fund. As a result,
the Fund may be more exposed to the risks associated with and developments
affecting an individual issuer or a lesser number of issuers than a fund that
invests more widely. This may increase the Fund’s volatility and cause the
performance of a relatively small number of issuers to have a greater impact on
the Fund’s performance.
Growth
Investing Style Risk.
If the Portfolio Managers incorrectly assesses a company’s prospects for growth
or how other investors will value the company’s growth, then the price of the
company’s stock may decrease, or may not increase to the level anticipated by
the sub-adviser. In addition, growth stocks may be more volatile than other
stocks because they are more sensitive to investors’ perceptions of the issuing
company’s growth potential. Also, the growth investing style may over time go in
and out of favor. At times when the investing style used by the Fund is out of
favor, the Fund may underperform other equity funds that use different investing
styles.
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.
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.
Performance
Performance information for the Fund is not
included because the Fund had not commenced operations prior to the date of this
Prospectus. Performance information will be available once the
Fund has at least one calendar year of performance. The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future and does not guarantee future results.
Updated performance information will be available on the Fund’s website at
www.subversive.com/etfs
or by calling the Fund toll-free at 1-800-617-0004.
Management
Investment
Adviser
Subversive
Capital Advisor LLC is the Fund’s investment adviser.
Sub-Adviser
Toroso
Investments, LLC (“Toroso” 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 Capital’s ETF
portfolios, are the portfolio managers responsible for the day-to-day management
of the Fund and have managed the Fund since its inception in December,
2022.
Purchase
and Sale of Fund Shares
Shares
of the Fund are listed on the Exchange, and individual shares may only be bought
and sold in the secondary market through brokers at market prices, rather than
NAV. Because shares of the Fund trade at market prices rather than NAV, the
Fund’s shares may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund issues and redeems its shares at NAV only in large specified numbers of
shares known as “Creation Units,” which only APs (typically, broker-dealers) may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities and/or a designated amount of U.S.
cash.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase shares of the Fund (bid) and the lowest price a
seller is willing to accept for shares of the Fund (ask) when buying or selling
shares in the secondary market (the “bid-ask spread”). Recent information about
the Fund, including its NAV, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at
www.subversive.com/etfs.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged account. Distributions on investments made through
tax-deferred arrangements may be taxed later upon withdrawal of assets from
those accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Shares through a broker-dealer or other financial intermediary
(such as a bank) (an “Intermediary”), the Adviser or its affiliates may pay
Intermediaries for certain activities related to the Fund, including
participation in activities that are designed to make Intermediaries more
knowledgeable about exchange traded products, including the Fund, or for other
activities, such as marketing, educational training or other initiatives related
to the sale or promotion of Shares. These payments may create a conflict of
interest by influencing the Intermediary and your salesperson to recommend the
Fund over another investment. Any such arrangements do not result in increased
Fund expenses. Ask your salesperson or visit the Intermediary’s website for more
information.
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.
General
Investment Policies of the Funds.
A Fund may not make any change to its investment policy of investing at least
80% of net assets in investments suggested by the Fund’s name without first
providing shareholders with at least 60 days’ prior written notice.
Subversive
Decarbonization ETF.
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by investing, under normal market conditions, at least
80% of its net assets (plus any borrowings for investment purposes) in
securities of Decarbonization Companies, as defined below. Decarbonization
Companies are companies that each has at least 50% of its assets in the tools,
technology, infrastructure, or raw materials that support decarbonization
efforts (and companies whose announced future capital expenditures are
anticipated to result in that company’s assets meeting that same test), or
companies that each invests at least 50% of capital expenditures (either
currently or announced future capital expenditures) in tools, technology,
infrastructure or raw materials that support the decarbonization of the current
global energy supply chain. Applying the foregoing definition, Decarbonization
Companies are generally expected to consist of companies dedicated to battery
technology, companies involved in the production, distribution, and delivery of
water and carbon, and companies involved in the infrastructure that supports
decarbonization efforts (for example, nuclear technology), as well as the
infrastructure that supports wind and solar networks. Decarbonization Companies
are also rare earth mineral companies and the companies supporting them. The
Fund does not consider “decarbonization” to mean “no carbon”. Rather, the Fund
will invest in Decarbonization Companies that are expected to benefit from the
global economic trend toward decarbonization, and companies that own the tools,
technology, infrastructure or raw materials urgently needed to power the modern
world with much less reliance on carbon fuels. As a result, some anticipated
portfolio companies will have exposure to natural gas as a transitory fuel, but
the Fund will generally avoid crude oil. With respect to decarbonization of the
current global energy supply chain, environmental and geopolitical shifts are
fundamentally altering how energy is procured, transmitted, and stored and that
shift will be toward fuels that are less carbon intensive. These Decarbonization
Companies will include nuclear reactor manufacturers, traditional utilities that
allocate a portion of their energy grid to renewable energy sources, and
companies supporting battery production and storage (such as lithium
manufacturers).
Securities
eligible for inclusion in the Fund’s investable universe include publicly listed
equity securities of U.S. and foreign (including emerging markets) issuers. The
Fund’s investments in foreign securities may include American Depositary
Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), International Depositary
Receipts (“IDRs”), U.S. dollar denominated foreign securities, direct foreign
securities purchased on a foreign exchange, and securities of companies
incorporated outside the United States. The Fund may also invest in derivative
instruments, primarily exchange traded futures contracts linked to the near-term
price fluctuations of water and carbon credits and futures contracts linked to
longer-term appreciation of Decarbonization Companies.
In
selecting investments for the Fund, the Adviser will apply a top-down approach,
utilizing primarily quantitative factors, but also considering qualitative
factors with a view toward growth and earning potential. In the selection
process, the Adviser will give greater weight to Decarbonization Companies whose
primary business models and growth prospects are dedicated to building the
tools, technology, infrastructure, and raw materials that support
decarbonization. The Adviser
believes
that global and secular trends are accelerating the urgency around
decarbonization, including that dramatic increases in atmospheric carbon are
directly responsible for observable temperature increases and relatively minor
temperature changes have the potential to severely dislocate weather patterns.
Accordingly, the Adviser includes in its investment selection process water and
carbon pricing. In the absence of large-scale decarbonization, water, carbon and
carbon offsets are likely to increase in price. Accordingly, changes in water
and carbon prices are likely to reflect policies and trends with respect to
decarbonization.
The
Adviser’s selection process will further be guided by an understanding that the
energy composition of the future will have a greater allocation to
next-generation nuclear power. The Adviser believes the COVID-19 pandemic has
highlighted that behavioral changes (e.g. “reduce, reuse, recycle”) will not
have a meaningful impact on the climate without significant technological leaps.
The Adviser believes the fragility of existing energy networks and immense
future energy demands underscores the need for new technology, which may include
new nuclear reactors, to meet those challenges. The Adviser believes lifestyle
changes (degrowth, decarbonization) required to keep the earth within the last
stages of a liveable climate are underway. In addition, the Adviser believes the
future of energy is electric. Accordingly, electric utilities, battery
technology, rare earth minerals, and the network of supporting industries are
likely to be the primary industries that will build and maintain those future
networks.
With
respect to the Fund’s investments in futures contracts linked to the near-term
price fluctuations of water and carbon credits, the Adviser intends to construct
the Fund’s portfolio by taking into consideration that the world is behind the
curve, resulting in near-term price appreciation in both the cost of water and
cost of carbon. The Fund anticipates expressing this view that both water and
carbon are underpriced by trading futures contracts on the NASDAQ Velez
California Water Index and futures contracts on carbon credits issued under the
California Carbon Allowance or similar European Union Markets
While
renewable energy sources are likely not the sole, ultimate solution, the Adviser
believes there is currently both economic and social value in renewable
businesses. The Fund may, from time to time, invest in both wind and solar
networks, but will consider whether such investments are appropriate for
inclusion in the Fund’s portfolio on a cash flow valuation basis rather than the
future valuation often given to green energy projects. Notably, the Fund does
not consider “decarbonization” to mean “no carbon”. Rather, the Fund will invest
in companies that will benefit from the global economic trend toward
decarbonization. As a result, some anticipated portfolio companies will have
exposure to natural gas as a transitory fuel, but will generally avoid crude
oil.
The
Fund will concentrate its investments in the securities of issuers in the energy
group of industries. Therefore, the Fund will invest more than 25% of its total
assets in securities issued by companies in the energy group of industries. The
Fund is classified as “non-diversified” for purposes of the Investment Company
Act of 1940 (the “1940 Act”), which means a relatively high percentage of the
Fund’s assets may be invested in the securities of a limited number of
companies.
Subversive
Food Security ETF.
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by investing, under normal market conditions, at least
80% of its net assets (plus any borrowings for investment purposes) in
securities of Food Security Companies, as defined below. Food Security Companies
are companies that each have 50% of its assets invested in or 50% of its
revenues derived from the production, distribution, or delivery of food, or
companies that each invest at least 50% of its capital expenditures (either
currently or announced future capital expenditures) in technology and tools
necessary to support the global food security. Applying the foregoing
definition, Food Security Companies include companies involved in the support,
maintenance, irrigation and processing of plant and animal foods (for example,
fertilizer/potash companies). The Fund considers food security to be a global
food supply chain that can reliably and predictably produce, distribute, and
deliver food. Accordingly, the Fund will invest in companies in the
fertilizer/potash and meat and food production industries, as well as companies
in the industrials sector that provide the machinery and equipment necessary to
support such industries.
The
Fund may also invest in derivative instruments, primarily futures contracts on
food and fertilizer. To the extent the Fund invests in derivatives, the Fund
will consider a derivative’s reference asset for purposes of meeting its policy
of investing at least 80% of its net assets in Food Security
Companies.
Securities
eligible for inclusion in the Fund’s investable universe include publicly listed
equity securities of U.S. and foreign (including emerging markets) issuers. The
Fund’s investments in foreign securities may include American Depositary
Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), International Depositary
Receipts (“IDRs”), U.S. dollar denominated foreign securities, direct foreign
securities purchased on a foreign exchange, and securities of companies
incorporated outside the United States.
In
selecting investments for the Fund, the Adviser will apply a top-down approach,
utilizing primarily quantitative factors, but also considering qualitative
factors with a view toward growth and earning potential. In the selection
process, the Adviser will give greater weight to Food Security Companies whose
primary business models and growth prospects are dedicated to the actual
production of food or the infrastructure or the applications that support global
food security. In its selection process, the Adviser will also factor in global
macroeconomic events that affect the global food supply chain, such as the
invasion of Ukraine, as well as the long-term effects of climate change on food
production and prices. In doing so, the Adviser will seek to identify companies
that are positioned to help the global economy manage the inflationary shocks
resulting from the global pandemic response and the truly supply-driven food
chain shocks that the Adviser believes will result in generally higher prices on
food inputs and higher interest rates/weaker currency among those countries
where, in the view of the Adviser, the risk of interruptions in the global food
supply chain are highest.
The
Adviser anticipates that market volatility and prices of securities of Food
Security Companies will continue to be affected by, among other commodities, oil
prices,as well as water and carbon prices. The Adviser believes the market will
continue to see “mini” supply shocks that all pose challenges to the stability
of the food chain and ultimately will lead to more significant commodity costs,
in general, including food commodities. The Adviser believes this unique set of
challenges will continue to strain supply lines, and costs, potentially for
years.
In
making investment decisions for the Fund, the Adviser also considers the impact
of energy input costs on Food Security Companies. While the Fund has no current
intention to invest in securities in the energy sector, much of the world’s
fertilizer comes from ammonia partly derived from natural gas. Accordingly, the
cost of natural gas, among other energy sources, will be an important factor in
the Adviser’s security selection process
As
water security is food security, the Fund will invest in companies in and
related to the water industry. The Fund’s investments in the water industry will
typically be in the form of investments in publicly traded desalination
plants.
The
Fund will concentrate its investments in the securities of issuers in the food
and agriculture group of industries. Therefore, the Fund will invest more than
25% of its total assets in securities issued by companies in the food and
agriculture group of industries. The Fund is classified as “non-diversified” for
purposes of the Investment Company Act of 1940 (the “1940 Act”), which means a
relatively high percentage of the Fund’s assets may be invested in the
securities of a limited number of companies.
Subversive
Mental Health ETF.
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by investing under normal market conditions, at least
80% of its net assets (plus any borrowings for investment purposes) in
securities of Mental Health Companies (as defined below). Mental Health
Companies are companies that have at least 50% of assets or revenues tied to
products and services used in the treatment, prevention, or diagnosis of
long-term mental health disorders, including depression and Alzheimer’s. As
mental health starts with metabolic health, assets or revenues “tied to” such
disorders include assets in or revenues tied to the fitness, sleep, and
nutrition products and services. The Adviser will also seek to identify Mental
Health Companies working on new tools, treatments, and medications designed
to
help address the global toll of long-term mental health disorders, including
major and minor depressive disorder, Alzheimer’s, Parkinson’s and metabolic
Epilepsy.
Securities
eligible for inclusion in the Fund’s investable universe include publicly listed
equity securities of U.S. and foreign (including emerging markets) issuers. The
Fund’s investments in foreign securities may include American Depositary
Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), International Depositary
Receipts (“IDRs”), U.S. dollar denominated foreign securities, direct foreign
securities purchased on a foreign exchange, and securities of companies
incorporated outside the United States.
In
selecting investments for the Fund, the Adviser will apply a top-down approach,
utilizing primarily quantitative factors, focusing on Mental Health Companies
that are cash flow positive. However, the Adviser may also considering
qualitative factors with a view toward growth and earning potential. In the
selection process, the Adviser will give greater weight to Mental Health
Companies whose primary business models and growth prospects are dedicated to
mental health and fitness.
When
determining the companies eligible to be considered Mental Health Companies, the
Adviser also takes into consideration that metabolic health is mental health.
Metabolic disorders are estimated to impact as much as 40% of the American
population, with similar trends appearing globally. Accordingly, the Fund
intends to invest in companies that promote and intersect metabolic health.
When
determining the companies eligible to be considered Mental Health Companies, the
Fund will also invest in Mental Health Companies with assets in or revenues from
fitness, sleep, and nutrition products or services, as metabolic health is
widely considered as a core component in the prevention of mental health
disorders. Metabolic disorders are estimated to impact as much as 40% of the
American population, with similar trends appearing globally. Accordingly, the
Fund will invest in companies involved in the testing, diagnosis, and promotion
of metabolic health.
In
addition, the Adviser will include in the universe of Mental Health Companies
those companies that provide mental health solutions, from devices to
pharmaceuticals. The Adviser will consider for inclusion in the Fund’s portfolio
companies that provide lower cost or small-scale solutions from medical devices
to software applications, as well as large-scale pharmaceutical interventions
aimed at addressing depression and pain management, and long-term solutions to
both.
The
Fund is classified as “non-diversified” for purposes of the Investment Company
Act of 1940 (the “1940 Act”), which means a relatively high percentage of the
Fund’s assets may be invested in the securities of a limited number of
companies.
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, a Fund may hold up to 100% of its portfolio in cash or cash
equivalent positions. When a Fund take a temporary defensive position, the Fund
may not be able to pursue its investment objectives.
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.
Agriculture
and Food Industries Risk (Food
Security Fund).
The Food Security Fund is expected to be concentrated in the food and
agriculture group of industries. As a result, the Fund may be susceptible to
loss due to adverse occurrences affecting that group of industries. The food
industry is highly competitive and can be significantly affected by
demographic
and product trends, competitive pricing, food fads, marketing campaigns,
environmental factors, government regulation, adverse changes in general
economic conditions, agricultural commodity prices, evolving consumer
preferences, nutritional and health-related concerns, federal, state and local
food inspection and processing controls, consumer product liability claims,
consumer boycotts, risks of product tampering and the availability and expense
of liability insurance. Investments in agriculture-related companies are subject
to adverse weather conditions, embargoes, tariffs, and adverse international
economic, political, and regulatory developments. Product recalls are sometimes
required in the food industry to withdraw contaminated or mislabeled products
from the market. Additionally, the failure to identify and react appropriately
to changes in consumer trends, demands and preferences could lead to, among
other things, reduced demand and price reduction for a company’s products.
Investments in agriculture-related companies are subject to the same risks as
investments in agricultural commodities, such as adverse weather conditions,
embargoes, tariffs, and adverse international economic, political and regulatory
developments. Additionally, the invasion of Ukraine has altered the food supply
chain for the entire globe with impacts that will potentially last for
years.
Cybersecurity
Risk.
Cybersecurity incidents may allow an unauthorized party to gain access to Funds
assets, customer data (including private shareholder information), or
proprietary information, or cause the Fund, the Adviser (defined below), the
Sub-Adviser and/or other service providers (including custodians, transfer
agents and financial intermediaries) to suffer data breaches or data corruption.
Additionally, cybersecurity failures or breaches of the electronic systems of
the 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’ invests have the ability to cause disruptions and negatively impact the
Funds’ business operations, potentially resulting in financial losses to the
Funds and its shareholders. In an extreme case, a shareholder’s ability to
redeem Funds shares may be affected.
Decarbonization
Investing Risk
(Decarbonization Fund).
The Fund’s investment strategy may limits the types and number of investment
opportunities available to the Fund, and, as a result, the Fund’s returns may be
lower than other funds that do not seek to invest in companies that support the
decarbonization of our energy supply chain. In addition, decarbonization
investing may affect the Fund’s exposure to certain companies or industries and
the Fund will forgo certain investment opportunities that are screened out by
the Adviser’s investment selection process. The types of companies in which the
Fund may invest may be more volatile than more established companies, and may be
dependent on government regulation and subsidies related to the reducing our
carbon footprint.
Depositary
Receipt Risk. Depositary
receipts, including ADRs, GDRs and IDRs, involve risks similar to those
associated with investments in foreign securities, such as changes in political
or economic conditions of other countries and changes in the exchange rates of
foreign currencies. Depositary receipts listed on U.S. exchanges are issued by
banks or trust companies, and entitle the holder to all dividends and capital
gains that are paid out on the underlying foreign shares (“Underlying Shares”).
When a Fund invests in depositary receipts as a substitute for an investment
directly in the Underlying Shares, the Fund is exposed to the risk that the
depositary receipts may not provide a return that corresponds precisely with
that of the Underlying Shares. Because the Underlying Shares trade on foreign
exchanges that may be closed when a Fund’s primary listing exchange is open, the
Fund may experience premiums and discounts greater than those of funds without
exposure to such Underlying Shares.
Derivatives
risk. The
use of derivatives involves a variety of risks in addition to and greater than
those associated with investing directly in securities. Derivatives instruments
in which the Fund invests may not perform as anticipated by the Adviser, may not
be closed out at a favorable time or price, or could increase the Fund’s
volatility. Investment in derivatives may create investment leverage. When a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that correlates precisely
with that of the cash investment; or, when used for hedging purposes,
derivatives may not provide the anticipated protection, causing the Fund to lose
money on both the derivatives transaction and the exposure the Fund sought to
hedge.
•Counterparty
risk.
The risk that the Fund will be subject to credit risk with respect to the
counterparties to derivative contracts and other instruments entered into
directly by the Fund. Other than to maintain its status as a regulated
investment company for U.S. federal income tax purposes (described in the
Statement of Additional Information under “Certain U.S. Federal Income Tax
Information”), the Fund is not subject to any limit with respect to the number
of transactions it can enter into with a single counterparty. To the extent that
the Fund
enters
into multiple transactions with a single or a small set of counterparties, it
will be subject to increased counterparty risk.
•Futures
contracts risk.
The Fund’s use of futures contracts involves risks different from, or possibly
greater than, the risks associated with investing directly in securities and
other traditional investments. In addition, while futures contracts are
generally classified as liquid, under certain market conditions they may be
classified as illiquid. As a result, the Fund may be unable to close out its
futures contracts at a time which is advantageous. The successful use of futures
depends upon a variety of factors, particularly the ability of the Adviser to
predict movements of the underlying securities markets, which requires different
skills than predicting changes in the prices of individual securities. There can
be no assurance that any particular futures strategy adopted will
succeed.
Energy
Industry Risk (Decarbonization
Fund).
Companies
in the energy industry are subject to many business, economic, environmental,
and regulatory risks that can adversely affect the costs, revenues, profits, and
viability of companies in the industry. These risks include, but are not limited
to, the following: volatility in commodity prices and changes in supply and
demand, which may affect the volume of energy commodities transported,
processed, stored and or distributed; specific risks associated with companies
owning and/or operating pipelines, gathering and processing energy assets;
operating risks including outages, structural and maintenance, impairment and
safety problems; changes in the regulatory environment at federal, state and
local levels, and in foreign markets; environmental regulation and liability
risk; terrorism risk; extreme weather and other natural
disasters; and capital markets risk, resulting in a higher capital costs or
impacting growth and access to capital.
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. This may lead to
the widening of bid/ask spreads quoted throughout the day.
•Costs
of Buying or Selling Shares. Investors
buying or selling shares of the 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. This
may lead to the widening of bid/ask spreads quoted throughout the
day.
•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. This may lead to
the widening of bid/ask spreads quoted throughout the day.
•Early
Close/Trading Halt.
An exchange or market may close early or issue trading halts on specific
securities or financial instruments. The ability to trade certain securities or
financial instruments may be restricted, which may disrupt the Fund’s creation
and redemption process, potentially affect the price at which the 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.
Foreign
Investments and Emerging Markets Risk. Each
Fund may invest in securities of non-U.S. issuers, including those located in
foreign and developing countries. These securities involve special risks.
Non-U.S. securities involve certain factors not typically associated with
investing in U.S. securities including risks relating to: (i) currency exchange
matters, including fluctuations in the rate of exchange between the U.S. dollar
and the various non-U.S. currencies in which a Fund’s portfolio securities will
be denominated, and costs associated with conversion of investment principal and
income from one currency into another; (ii) differences between the U.S. and
non-U.S. securities markets, including potential price volatility in and
relative illiquidity of some non-U.S. securities markets, the absence of uniform
accounting, auditing and financial reporting standards, practices and disclosure
requirements and less government supervision and regulation; (iii) certain
economic and political risks, including potential exchange control regulations
and potential restrictions on non-U.S. investment and repatriation of capital;
and (iv) with respect to certain countries, the possibility of expropriation,
confiscatory taxation, imposition of withholding or other taxes on dividends,
interest, capital gains, other income or gross sale or disposition proceeds,
limitations on the removal of funds or other assets of a Fund, political or
social instability or diplomatic developments that could affect investments in
those countries.
The
non-U.S. securities in which a Fund invests may include securities of companies
based in emerging countries or issued by the governments of such countries.
Investing in securities of certain of such countries and companies involves
considerations
not usually associated with investing in securities of developed countries or of
companies located in developed countries, including political and economic
considerations, such as greater risks of expropriation, confiscatory taxation,
imposition of withholding or other taxes on dividends, interest, capital gains,
other income or gross sale or disposition proceeds, limitations on the removal
of funds, nationalization and general social, political and economic
instability; the small size of the securities markets in such countries and the
low volume of trading, resulting in potential lack of liquidity and in price
volatility; fluctuations in the rate of exchange between currencies and costs
associated with currency conversion; certain government policies that may
restrict a Fund’s investment opportunities; and problems that may arise in
connection with the clearance and settlement of trades. In addition, accounting
and financial reporting standards that prevail in certain of such countries
generally are not equivalent to standards in more developed countries and,
consequently, less information is available to investors in companies located in
these countries than is available to investors in companies located in more
developed countries. There is also less regulation, generally, of the securities
markets in emerging countries than there is in more developed countries. Placing
securities with a custodian in an emerging country may also present considerable
risks.
A
number of countries have experienced severe economic and financial difficulties.
Many non-governmental issuers, and even certain governments, have defaulted on,
or been forced to restructure, their debts; many other issuers have faced
difficulties obtaining credit or refinancing existing obligations; financial
institutions have in many cases required government or central bank support,
have needed to raise capital, and/or have been impaired in their ability to
extend credit; and financial markets have experienced extreme volatility and
declines in asset values and liquidity. These difficulties may continue, worsen
or spread. Responses to the financial problems by governments, central banks and
others, including austerity measures and reforms, may not work, may result in
social unrest and may limit future growth and economic recovery or have other
unintended consequences. Further defaults or restructurings by governments and
others of their debt could have additional adverse effects on economies,
financial markets and asset valuations around the world. The impact of these
actions, especially if they occur in a disorderly fashion, is not clear but
could be significant and far-reaching. These events could negatively affect the
value and liquidity of a Fund’s investments.
Growth
Investing Style Risk.
Growth companies are companies whose earnings and stock prices are expected to
grow at a faster rate than the overall market. If the portfolio manager
incorrectly assesses a company’s prospects for growth or how other investors
will value the company’s growth, then the price of the company’s stock may
decrease, or may not increase to the level anticipated by the portfolio manager.
Growth companies are often newer or smaller companies, or established companies
that may be entering a growth cycle in their business. Growth stocks may be more
volatile than other stocks because they are more sensitive to investors’
perceptions of the issuing company’s growth potential. Also, the growth
investing style may over time go in and out of favor. At times when the growth
investing style is out of favor, a Fund may underperform other equity funds that
use different investing styles.
High
Portfolio Turnover Risk.
A high portfolio turnover rate (100% or more) 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.
Industry
Concentration Risk (Decarbonization
Fund and Food Security Fund).
The Decarbonization
Fund’s
investments will be concentrated in the securities of issuers in the energy
group of industries and the Food Security Fund’s investments will be
concentrated in the securities of issuers in the food and agriculture group of
industries. The focus of a Fund’s portfolio on a specific industry or group of
industries may present more risks than if a portfolio were broadly diversified
over numerous groups of industries.
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.
New
Fund Risk.
As of the date of this Prospectus, the Funds have no operating history and there
can be no assurance that the Funds will grow to or maintain an economically
viable size, in which case the Board may determine to liquidate the Funds.
Liquidation of the Funds can be initiated without shareholder approval by the
Trust’s Board of Trustees if it determines it is in the best interest of
shareholders. As a result, the timing of the Funds liquidation may not be
favorable to certain individual shareholders.
Non-Diversification
Risk.
Because each Fund is “non-diversified,” it may invest a greater percentage of
its assets in the securities of a single issuer or a lesser number of issuers
than if it was a diversified fund. As a result, a Fund may be more exposed to
the risks associated with and developments affecting an individual issuer or a
lesser number of issuers than a fund that invests more widely. This may increase
a Fund’s volatility and cause the performance of a relatively small number of
issuers to have a greater impact on that Fund’s performance.
Water
Industry Risk
(Decarbonization Fund and Food Security Fund).
The
water industry can be significantly affected by economic trends or other
conditions or developments, such as the availability of water, the level of
rainfall and occurrence of other climatic events, changes in water consumption,
new technologies relating to the supply of water, and water conservation. The
industry can also be significantly affected by environmental considerations,
taxation, government regulation (including the increased cost of compliance),
inflation, increases in interest rates, price and supply fluctuations, increases
in the cost of raw materials and other operating costs, technological advances,
and competition from new market entrants.
Information
about the Funds’ daily portfolio holdings is available at
www.subversive.com/etfs. A complete description of the Funds’ policies and
procedures with respect to the disclosure of the Funds’ portfolio holdings is
available in the Funds’ Statement of Additional Information
(“SAI”).
The
Funds have entered into an investment advisory agreement (“Advisory Agreement”)
with Subversive Capital Advisor LLC (the “Adviser” or “Subversive Capital”),
located at 217 Centre Street, Suite 122, New York, NY, 10013. Since 2013,
Subversive, 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’
first semi-annual report to shareholders after the Funds’ commencement of
operations.
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 Metaverse ETF) for purposes
of investment and investor services, nor does it share the same investment
adviser with any other series of the Trust (except for the Subversive Metaverse
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 Fund 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 a Fund 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 Fund 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 each Fund has 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 Toroso Investments, LLC to serve as sub-adviser. Toroso is
a Delaware limited liability company whose principal office is located at 898 N.
Broadway, Suite 2, Massapequa, New York 11758. Toroso was formed in 2012 and is
dedicated to understanding, researching and managing assets within the expanding
ETF universe. Toroso 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, 2022, the Sub-Adviser had approximately $5.4 billion in assets
under management.
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 each Fund, and subject to a minimum annual fee as
follows:
|
|
|
|
|
|
|
| |
Fund
Name |
Sub-Advisory
Fee |
Minimum
Fee |
Subversive
Decarbonization ETF |
4.50
bps |
$25,000 |
Subversive
Food Security ETF |
4.50
bps |
$25,000 |
Subversive
Mental Health 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.
Each
Fund issue and redeem their shares only in Creation Units at the NAV per share
next determined after receipt of an order from an AP. Only APs may acquire the
Funds’ shares directly from the Funds, and only APs may tender their shares for
redemption directly to the Funds, 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 www.subversive.com/etfs 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 sells and redeems its
shares at NAV only in Creation Units pursuant to the terms of a Participant
Agreement between the Distributor and an AP. The 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.
Determination
of Net Asset Value
Each
Fund’s NAV is calculated as of the scheduled close of regular trading on the New
York Stock Exchange (“NYSE”), generally 4:00 p.m. Eastern time, each day the
NYSE is open for business. The NAV 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
Board 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 Funds will take into account all reasonably available information that may
be relevant to a particular valuation including, but not limited to, fundamental
analytical data regarding the issuer, information relating to the issuer’s
business, recent trades or offers of the security, general and/or specific
market conditions and the specific facts giving rise to the need to fair value
the security. Fair value determinations are made in good faith and in accordance
with the fair value methodologies included in the Board-adopted valuation
procedures. Due to the subjective and variable nature of fair value pricing,
there can be no assurance that the Adviser will be able to obtain the fair value
assigned to the security upon the sale of such security.
Investments
by Other Registered Investment Companies
Dividends
and Distributions
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 Fund
distributions and sales of Fund shares. Consult your personal tax adviser about
the potential tax consequences of an investment in Fund shares under all
applicable tax laws. For more information, please see the section titled “Tax
Information” in the SAI.
The
Distributor, Quasar Distributors, LLC, is a broker-dealer registered with the
SEC. The Distributor distributes Creation Units for the 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 www.subversive.com/etfs: (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 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 Funds reserve the right to cease operations and liquidate at any time. See
“Liquidation of the Fund” in the SAI for additional information.
Because
the Funds have recently commenced operations, there are no financial highlights
available at this time.
INVESTMENT
ADVISER:
Subversive
Capital Advisor LLC
217
Centre Street, Suite 122
New
York, NY 10013
INVESTMENT
SUB-ADVISER:
Toroso
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
it to have in order to conduct its 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 its shareholders
or former shareholders other than for everyday business purposes such as to
process a transaction, service an account, respond to court orders and legal
investigations or as otherwise permitted by law. Third parties that may receive
this information include companies that provide transfer agency, technology and
administrative services to the 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 maintains physical, electronic and
procedural safeguards to protect your Personal Information and requires its
third party service providers with access to such information to treat your
Personal Information with the same high degree of confidentiality.
In
the event that you hold shares of the 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.
Subversive
Decarbonization ETF
Subversive
Food Security ETF
Subversive
Mental Health 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, when available, 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 ETF
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
www.subversive.com/etfs
Reports
and other information about the Funds are also available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s Internet website at
http://www.sec.gov; or
•For
a fee, by electronic request at the following e-mail address:
[email protected].
(The
Trust’s SEC Investment Company Act of 1940 file number is
811-23084)