The Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective by investing primarily in the U.S.-listed equity securities of Innovative Companies (defined below). The Fund categorizes an “Innovative Company” as a company determined by the Fund’s sub-adviser, Plato’s Philosophy LLC (the “Sub-Adviser”), to be involved in the development of new products or services, technological advancements, consumer engagement, and/or disruptive approaches with respect to business growth that the Sub-Adviser expects to have a significant impact on the market or industry in which the company operates. Further, the Fund will invest in Innovative Companies that, in the Sub-Adviser’s view, also have more “pricing power” than their peers. The Sub-Adviser generally analyzes pricing power based on “price elasticity,” which is the ability to potentially increase prices for products and services without a corresponding drop in demand. In addition, the Fund may hold the securities of other ETFs, which could be passively-managed or actively-managed (“Targeted ETFs”) to seek to hedge (provide protection for the Fund’s portfolio) against particular market risks anticipated by the Sub-Adviser.

Fund Portfolio Overview:  

Innovative Companies with Pricing Power Selection

The Sub-Adviser begins its analysis by screening an extremely large initial universe of U.S.-listed companies with a minimum market capitalization of $100 million.

Utilizing a proprietary screening methodology, the Sub-Adviser analyzes the initial universe of companies to identify Innovative Companies that the Sub-Adviser perceives as having greater pricing power versus their peers. The Sub-Adviser, using its own internal research and analysis, analyzes company self-reported data (e.g., press releases and regulatory filings) as well as third-party data, such as news articles and social media posts, to identify companies that are capitalizing on:

In particular, the Sub-Adviser considers each candidate company’s track record of disrupting mature industries (e.g., electric vehicles) or operating within disruptive industries (e.g., social media, blockchain), and/or a company’s historical patterns of launching hardware or software products that are first-to-market. The Sub-Adviser favors companies that remain founder led, report spending more on research and development than their peers, and have a strong history of customer satisfaction.

Once the Sub-Adviser has identified a set of Innovative Companies with pricing power, the Sub-Adviser performs a bottoms-up analysis of each candidate. That is, the Sub-Adviser performs a company-by-company analysis of various financial factors such as price over earnings-to-growth ratio (PEG), revenue, and margin growth. The Sub-Adviser selects those Innovative Companies with, in the Sub-Adviser’s view, above average growth potential across the metrics considered for inclusion in the Fund’s portfolio. While the metrics considered are largely consistent, there may be industry-specific variability (e.g., margin and growth metrics typically vary by industry).

Targeted ETF Selection (Macro-Hedging)

During periods when the Sub-Adviser believes there is significant risk to the market as a whole or a particular section of the market, the Fund’s portfolio may hold up to 30% of its net assets in the securities of Targeted ETFs to provide a “macro-economic” hedge against the anticipated market risk. In those cases, the Fund will hold ETFs that the Sub-Adviser believes will most likely benefit from the anticipated market risk. The following types of market risks will generally trigger macro hedging:

If the Sub-Adviser determines that a macro-economic event is occurring or is likely to occur, the Fund will invest in ETFs that, in the Sub-Adviser’s view, appear poised to benefit from the event. For example, a war may trigger high oil prices and, in turn, ETFs that are focused on the oil-production industry would likely benefit.

Additional Portfolio Attributes

The Fund’s investments may include small-, medium- and large-capitalization companies. The Fund’s portfolio will generally consist of between 25 and 60 securities.

The Fund is classified as a “non-diversified” investment company under the 1940 Act, which means that the Fund may invest a high percentage of its assets in a fewer number of issuers.