Spear Alpha Annual Letter: A Top Performing ETF in 2023

Despite the strong performance, many of our holdings, specifically ones levered to enterprise spending, are still down 50+% from their peak levels, highlighting the severity of the tech pull-back and the runway ahead. While investors have started pricing in the AI hardware opportunity, we believe we are in the early innings of a meaningful Data Center upgrade cycle. Moreover, we believe that the potential opportunity for data/compute management and cybersecurity created by AI remains significantly underappreciated.

We continue to manage risk actively and asses the potential risk/reward of each individual holding, incorporating the trajectory of earnings and valuation. During market pull-backs, we generally do not decrease risk, but manage it by increasing our idea velocity and asset turnover.

We aspire to perform in line with diversified indices on the downside, and generate differentiated performance on the upside, given our concentrated portfolio of investments.

Few points on liquidity and market pricing related to ETFs that may be helpful based on frequently asked questions:

Liquidity. The liquidity of an ETF is determined by the underlying holdings, not by the size (AUM) or volume traded of the ETF itself. The ETF is backed by the assets it holds and market makers constantly create/redeem shares.

Market Makers. When investors buy/and sell shares they often (but not always) buy/sell directly from the market maker who has created the shares and holds them in inventory. This ensures that there is always a market to buy/sell ETFs, rather than having to match a buyer with a seller (as it is for equities).

Market pricing. The price of the ETF changes constantly and moves with the underlying securities. To get the most accurate pricing when buying/selling an ETF investors should look at the actual bid/ask quote and spread. The ETF shares are backed by the fund's holdings which in our case are custodied at US Bank.

DISCLOSURE:

The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. For performance current to the most recent month-end please call 1-833-340-7222. The total expense ratio is 0.75%.

For a prospectus or summary prospectus with this and other information about the Fund, please call (888) 123-4589 or visit our website at www.spear-funds.com. Read the prospectus or summary prospectus carefully before investing.

• “Alpha” strategy seeks to identify investment opportunities in which the performance of a company’s stock will exceed that of the market over time.
• B2B stands for business-to-business.
• Free Cash Flow (FCF) is the cash a company generates after taking into considerations the cash outflows that support its operations and its capital expenditures.
• CAPEX stands for capital expenditures or funds used by a company to acquire, upgrade, and maintain physical assets.
• EV/EBITDA is a commonly used valuation metric and is the ratio between the value of the enterprise to earnings that the company generates. EBITDA stands for earnings before interest, tax, depreciation and amortization.
• S&P 500 is a stock index that tracks the share prices of the 500 largest companies in the United States by market capitalization.
• Nasdaq Composite is a market capitalization-weighted index of more than 2,500 stocks that are listed on the Nasdaq stock exchange.

Investing involves risk, including possible loss of principal. The fund is subject to both growth and value equity risk. Investing in growth companies that are based on an issuer’s future earnings may be more volatile if revenues fall short of expectations. Investing in value companies that remain unfavored or are undervalued for long periods of time could have a negative on the fund’s performance. Companies in the industrials sector may be adversely affected by changes in government regulation, world events, economic conditions, environmental damages, product liability claims and exchange rates.

Technology, Space, Robotics and Automation companies are particularly vulnerable to rapid changes in product cycles, obsolescence, government regulation and competition, both domestically and internationally, which may have an adverse effect on growth and profit margins. Market or economic factors impacting these companies that rely heavily on technological advances could have a major effect on the value of the Fund’s investments. SPRX is non-diversified and may invest in a greater percentage of its assets in securities of an issuer in the industrial or technology sectors. An adverse event to an issuer in the industry may negatively impact the fund’s performance.

Applying ESG (Environmental, Social, Governance) sustainability criteria to the investment process may exclude securities of certain issuers for non-investment reasons, and therefore, the Fund may forgo available market opportunities.

Foreside Fund Services, LLC, distributor.

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