UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22398
Spinnaker ETF Series
(Exact name of registrant as specified in charter)
(Exact name of registrant as specified in charter)
116 South Franklin Street, Rocky Mount, North Carolina 27804
(Address of principal executive offices) (Zip code)
Paracorp Inc.
2140 South Dupont Hwy, Camden, DE 19934
(Name and address of agent for service)
Registrant's telephone number, including area code: 252-972-9922
Date of fiscal year end: June 30
Date of reporting period: June 30, 2021
Item 1. REPORTS TO STOCKHOLDERS.
Annual Report 2021
As of June 30, 2021
UVA Unconstrained
Medium-Term Fixed Income ETF
This report and the financial statements contained herein are submitted for the general information of the shareholders of the UVA Unconstrained Medium-Term Fixed Income ETF (the “ETF”). The ETF’s shares are not deposits or obligations of, or guaranteed by, any depository institution. The ETF’s shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the UVA Unconstrained Medium-Term Fixed Income ETF (the “ETF”) and of the market in general and statements of the Fund’s plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include, without limitation, general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. An investor should consider the investment objectives, risks, charges and expenses of the ETF carefully before investing. The prospectus contains this and other information about the ETF. A copy of the prospectus is available at www.ncfunds.com/fundpages/426.htm or by calling The Nottingham Company at 800-773-3863. The prospectus should be read carefully before investing. |
For More Information on the UVA Unconstrained Medium-Term Fixed Income ETF:
See Our Web site @ universalvalueadvisors.com
or
Call Our Administrative Services Group at 800-773-3863.
(unaudited)
Shareholder Letter: 6/30/21
Dear Shareholder:
The UVA Unconstrained Medium-Term Fixed Income ETF (the “ETF,” “Fund,” or “FFIU”) will celebrate its fourth anniversary on August 18. The Fund has a 4-Star (****) rating from Morningstar.1
The Pandemic Economy
The pandemic has played havoc with the economy and interest rates. Huge fiscal interventions on the part of the U.S. federal government to businesses and households stabilized the economy and reopening is proceeding. Nevertheless, we live in unparalleled financial times with no historical precedent for lockdowns, stimulus checks, PPP, continuing QE, and interest rates pinned to 0%. There is no history of how economies behave during reopening, and the fixed income markets have become much more volatile, especially with the slightest change, or hint of change, in policy, or when unexpected consumer behavior occurs. Such issues may have been shrugged off in the past, but now cause significant market movement in the interest rate arena, a significant influence on the Fund’s performance.
The table shows FFIU’s Net Asset Value (NAV) returns over the latest year ended 6/30/21, six months, and quarter and that of its benchmark, the Barclay’s U.S. Aggregate Total Return Value Unhedged USD Index (the “Barclay U.S. Agg”).
The table below shows that the Fund consistently outperformed its benchmark, and by significant amounts, over the measured time horizons. It should be noted that the benchmark is more heavily weighted toward U.S. Treasury Securities than is the Fund, and the benchmark’s asset quality is Aa1/Aa2 per Moody’s and AA+/AA per Standard & Poor’s. The Fund’s asset quality was A2/A3 per Moody’s and A/A- per Standard & Poor’s as of 6/30/21.
Quarterly, Semi-Annual, Annual, and Since Inception Returns: FFIU vs Barclay US Agg
---FFIU---- | ----Barclay US Agg ---- | ||||
Period | Return | Annualized | Return | Annualized | |
7/1/20 to 6/30/21 | 4.30% | 4.30% | -0.33% | -0.33% | |
1/1/21 to 6/30/21 | 0.08% | 0.16% | -1.60% | -3.21% | |
4/1/21 to 6/30/21 | 3.21% | 13.50% | 1.83% | 7.54% | |
8/18/17 to 6/30/21 | 4.25% | 4.25% | 3.77% | 3.77% |
1 Morning’s 4-Star rating is as of the fiscal year ended June 30, 2021 and since inception August 18, 2017. The rating category is for the US Fund Intermediate Core Bond Funds. The 4-star rating is for funds whose risk-adjusted returns fall within the top 32.5% relative to category peers. There are 359 funds in the category. Morningstar’s 4 stars indicates that a fund is in the top 30% of all investment companies. The performance information quoted represents past performance, which is not a guarantee of future results.
The performance information quoted represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Total return measures net investment income and capital gain or loss from portfolio investments. All performance shown assumes reinvestment of dividends and capital gains distributions.
The Sub-Advisor has entered into an Expense Limitation Agreement with the Trust, on behalf of the ETF, under which it has agreed to waive or reduce its fees and to assume other expenses of the ETF, if necessary, in amounts that limit the ETF’s total operating expenses (exclusive of (i) any front-end or contingent deferred loads; (ii) brokerage fees and commissions; (iii) acquired fund fees and expenses; (iv) fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses); (v) borrowing costs (such as interest and dividend expense on securities sold short); (vi) taxes; (vii) extraordinary expenses, such as litigation expenses (which may include indemnification of ETF officers and Trustees and contractual indemnification of ETF service providers (other than the Advisor or Sub-Advisor)) to not more than 0.50% of the average daily net assets of the ETF for the current fiscal year. The current term of the Expense Limitation Agreement remains in effect through October 31, 2021. The Expense Limitation Agreement may be terminated by the Board of Trustees of the Trust at any time. The Sub-Advisor cannot recoup from the Fund any amounts paid by the Sub-Advisor under the Expense Limitation Agreement. Without the waiver, the expenses would be 0.76% per the ETF’s most recent prospectus dated November 1, 2020. An investor may obtain performance data, current to the most recent month-end, by visiting ncfunds.com.
Active Management
The Fund’s outperformance is attributable to the active management positioning of Fund assets by the Fund Managers. The Fund’s Managers change the Fund’s duration and/or asset quality depending on the Fund Managers’ view of the ensuing economic landscape. The benchmark is a passive index with fixed duration and asset quality targets. Passive funds, due to their size and the nature of the ETF creation/redemption process, gravitate to highly liquid assets that are always available, while FFIU can purchase smaller debt issues (but still liquid) which usually carry a yield premium. As a result, passive funds are often mediocre performers. For the past year, the Fund Managers correctly foresaw that interest rates would be kept at historically low levels and that longer-term duration assets would outperform. While there is no guarantee that the Fund managers will always have the correct interest rate forecast, the Fund’s Managers have several decades of market and management experience including the disruptive market conditions accompanying several recessions. Thus, they have a long-term perspective.
The Economic Environment
Inflation has become a dominant financial media topic, with some fearing a return of the 1970s “systemic” type of stagflation. The Federal Reserve’s (“Fed”) view is that much of the headline spike is due to base effects (the fall in prices in Spring 2020) and is confined to the leisure/hospitality and travel sectors. Despite the Fed’s view, markets have no historical pandemic precedent on which to interpret the meaning of incoming data, and often act in a somewhat confused and sometimes irrational manner.
The results of the pandemic on the economy include supply chain disruptions, backup at ports, spiking demand from on-line purchasing resulting in shipping container shortages, spiking commodity prices, and, in some areas, price gouging. Thus, it isn’t any wonder that interest rates have become volatile.
The Fund Managers have several decades of experience as economists and fixed income portfolio managers and believe their long-term economic views (a return to some semblance of pre-pandemic “normalcy”) and steady management hands will weather the pandemic and continue to benefit FFIU’s shareholders.
Robert Barone, Ph.D.
Joshua Barone
Universal Value Advisors
(RCFUU0721001)
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||||||||
Performance Update | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
For the period from August 18, 2017 (Commencement of Operations) through June 30, 2021 | ||||||||||||||||||
Comparison of the Change in Value of a $10,000 Investment |
![](https://capedge.com/proxy/N-CSRA/0001484018-21-000086/image00001.jpg)
This graph assumes an initial investment of $10,000 on August 18, 2017 (Commencement of Operations). All dividends and distributions, if any, are reinvested. This graph depicts the performance of the UVA Unconstrained Medium-Term Fixed Income ETF versus the Barclays US Aggregate Total Return Value Unhedged USD Index. It is important to note that the ETF is a professionally managed exchange-traded fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. | ||||||||||||||||||
Average Annual Total Returns | ||||||||||||||||||
As of | One | Three | Since | Inception | ||||||||||||||
June 30, 2021 | Year | Year | Inception | Date | ||||||||||||||
UVA Unconstrained Medium-Term Fixed Income ETF | 4.30% | 5.87% | 4.25% | 08/18/17 | ||||||||||||||
Barclays US Aggregate Total Return Value Unhedged USD Index | -0.33% | 5.34% | 3.77% | N/A | ||||||||||||||
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||||||||
Performance Update | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
For the period from August 18, 2017 (Commencement of Operations) through June 30, 2021 | ||||||||||||||||||
Performance quoted in the previous graph represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The Sub-Advisor has entered into an Expense Limitation Agreement with the Trust, on behalf of the ETF, under which it has agreed to waive or reduce its fees and to assume other expenses of the ETF, if necessary, in amounts that limit the ETF’s total operating expenses (exclusive of (i) any front-end or contingent deferred loads; (ii) brokerage fees and commissions; (iii) acquired fund fees and expenses; (iv) fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses); (v) borrowing costs (such as interest and dividend expense on securities sold short); (vi) taxes; (vii) extraordinary expenses, such as litigation expenses (which may include indemnification of ETF officers and Trustees and contractual indemnification of ETF service providers (other than the Advisor or Sub-Advisor)) to not more than 0.50% of the average daily net assets of the ETF for the current fiscal year. The current term of the Expense Limitation Agreement remains in effect through October 31, 2021. The Expense Limitation Agreement may be terminated by the Board of Trustees of the Trust at any time. The Sub-Advisor cannot recoup from the Fund any amounts paid by the Sub-Advisor under the Expense Limitation Agreement. Without the waiver, the expenses would be 0.76% per the ETF’s most recent prospectus dated November 1, 2020. An investor may obtain performance data, current to the most recent month-end, by visiting ncfunds.com. | ||||||||||||||||||
The graph and table do not reflect the deduction of taxes that an investor would pay on ETF distributions or the redemption of ETF shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of distributions, if any. | ||||||||||||||||||
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||
Schedule of Investments | ||||||||||||
As of June 30, 2021 | ||||||||||||
Principal | Interest Rate | Maturity Date | Value (Note 1) | |||||||||
ASSET-BACKED SECURITY - 0.02% | ||||||||||||
Southwest Airlines Co. 2007-1 Pass | ||||||||||||
Through Trust | $ 13,887 | 6.150% | 8/1/2022 | $ 14,351 | ||||||||
Total Asset-Backed Security (Cost $14,265) | 14,351 | |||||||||||
CORPORATE BONDS - 78.16% | ||||||||||||
Communication Services - 4.88% | ||||||||||||
Alphabet, Inc. | 750,000 | 2.050% | 8/15/2050 | 663,929 | ||||||||
Discovery Communications LLC | 250,000 | 3.800% | 3/13/2024 | 268,328 | ||||||||
Netflix, Inc. | 300,000 | 4.375% | 11/15/2026 | 341,541 | ||||||||
Netflix, Inc. | 750,000 | 4.875% | 4/15/2028 | 871,897 | ||||||||
Netflix, Inc. | 300,000 | 6.375% | 5/15/2029 | 383,588 | ||||||||
The Walt Disney Co. | 250,000 | 8.875% | 4/26/2023 | 287,601 | ||||||||
The Walt Disney Co. | 300,000 | 3.500% | 5/13/2040 | 335,346 | ||||||||
The Walt Disney Co. | 250,000 | 2.750% | 9/1/2049 | 247,544 | ||||||||
TWDC Enterprises 18 Corp. | 250,000 | 3.000% | 7/30/2046 | 259,092 | ||||||||
ViacomCBS, Inc. | 250,000 | 4.375% | 3/15/2043 | 289,436 | ||||||||
3,948,302 | ||||||||||||
Consumer Discretionary - 16.71% | ||||||||||||
Amazon.com, Inc. | 500,000 | 2.500% | 11/29/2022 | 513,921 | ||||||||
Amazon.com, Inc. | 500,000 | 3.150% | 8/22/2027 | 553,045 | ||||||||
Amazon.com, Inc. | 750,000 | 2.500% | 6/3/2050 | 710,954 | ||||||||
AutoNation, Inc. | 250,000 | 3.800% | 11/15/2027 | 275,403 | ||||||||
AutoNation, Inc. | 400,000 | 4.750% | 6/1/2030 | 474,073 | ||||||||
Bath & Body Works, Inc. | 250,000 | 5.250% | 2/1/2028 | 280,060 | ||||||||
Dana, Inc. | 180,000 | 5.375% | 11/15/2027 | 191,966 | ||||||||
Dollar Tree, Inc. | 200,000 | 4.000% | 5/15/2025 | 221,026 | ||||||||
eBay, Inc. | 500,000 | 3.600% | 6/5/2027 | 555,993 | ||||||||
eBay, Inc. | 190,000 | 2.700% | 3/11/2030 | 197,393 | ||||||||
eBay, Inc. | 1,068,000 | 4.000% | 7/15/2042 | 1,201,417 | ||||||||
Expedia Group, Inc. | 500,000 | 5.000% | 2/15/2026 | 570,707 | ||||||||
Expedia Group, Inc. | 150,000 | 4.625% | 8/1/2027 | 169,825 | ||||||||
Expedia Group, Inc. | 226,000 | 3.800% | 2/15/2028 | 246,131 | ||||||||
Expedia Group, Inc. | 250,000 | 3.250% | 2/15/2030 | 261,633 | ||||||||
Ford Motor Co. | 100,000 | 6.625% | 2/15/2028 | 116,975 | ||||||||
General Electric Co. | 250,000 | 5.000% | 10/1/2028 | 293,718 | ||||||||
Hyatt Hotels Corp. | 450,000 | 5.375% | 4/23/2025 | 508,592 | ||||||||
Hyatt Hotels Corp. | 250,000 | 4.375% | 9/15/2028 | 275,779 | ||||||||
Hyatt Hotels Corp. | 450,000 | 5.750% | 4/23/2030 | 547,362 | ||||||||
KB Home | 550,000 | 4.800% | 11/15/2029 | 597,391 | ||||||||
Kohl's Corp. | 250,000 | 6.875% | 12/15/2037 | 319,660 | ||||||||
Las Vegas Sands Corp. | 125,000 | 3.200% | 8/8/2024 | 131,266 | ||||||||
Las Vegas Sands Corp. | 200,000 | 2.900% | 6/25/2025 | 208,538 | ||||||||
Las Vegas Sands Corp. | 325,000 | 3.500% | 8/18/2026 | 346,192 | ||||||||
Las Vegas Sands Corp. | 100,000 | 3.900% | 8/8/2029 | 106,639 | ||||||||
Levi Strauss & Co. | 100,000 | 5.000% | 5/1/2025 | 102,301 | ||||||||
Mohawk Industries, Inc. | 500,000 | 3.625% | 5/15/2030 | 549,249 | ||||||||
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||
Schedule of Investments - Continued | ||||||||||||
As of June 30, 2021 | ||||||||||||
Principal | Interest Rate | Maturity Date | Value (Note 1) | |||||||||
CORPORATE BONDS - CONTINUED | ||||||||||||
Consumer Discretionary - Continued | ||||||||||||
NIKE, Inc. | $ 250,000 | 3.250% | 3/27/2040 | $ 275,142 | ||||||||
NIKE, Inc. | 343,000 | 3.625% | 5/1/2043 | 399,186 | ||||||||
Nordstrom, Inc. | 250,000 | 6.950% | 3/15/2028 | 296,753 | ||||||||
PulteGroup, Inc. | 250,000 | 6.375% | 5/15/2033 | 331,028 | ||||||||
Ralph Lauren Corp. | 100,000 | 2.950% | 6/15/2030 | 106,551 | ||||||||
Starbucks Corp. | 500,000 | 2.700% | 6/15/2022 | 509,686 | ||||||||
Starbucks Corp. | 250,000 | 2.450% | 6/15/2026 | 264,435 | ||||||||
Tapestry, Inc. | 250,000 | 4.125% | 7/15/2027 | 274,505 | ||||||||
Target Corp. | 500,000 | 2.500% | 4/15/2026 | 537,271 | ||||||||
13,521,766 | ||||||||||||
Consumer Staples - 1.94% | ||||||||||||
Altria Group, Inc. | 250,000 | 5.800% | 2/14/2039 | 309,502 | ||||||||
Altria Group, Inc. | 400,000 | 4.250% | 8/9/2042 | 419,303 | ||||||||
Altria Group, Inc. | 250,000 | 4.500% | 5/2/2043 | 269,550 | ||||||||
The Clorox Co. | 250,000 | 3.050% | 9/15/2022 | 256,442 | ||||||||
Walmart, Inc. | 300,000 | 2.950% | 9/24/2049 | 318,849 | ||||||||
1,573,646 | ||||||||||||
Financials - 15.58% | ||||||||||||
American Express Co. | 218,000 | 2.500% | 8/1/2022 | 222,716 | ||||||||
American International Group, Inc. | 200,000 | 8.175% | 5/15/2058 | 290,105 | ||||||||
Bank of America Corp. | 500,000 | 6.300% | 9/10/2169 | 581,563 | ||||||||
Berkshire Hathaway Finance Corp. | 300,000 | 2.850% | 10/15/2050 | 300,342 | ||||||||
Capital One Financial Corp. | 400,000 | 3.900% | 1/29/2024 | 431,864 | ||||||||
Cincinnati Financial Corp. | 59,000 | 6.920% | 5/15/2028 | 77,572 | ||||||||
Cincinnati Financial Corp. | 250,000 | 6.125% | 11/1/2034 | 342,285 | ||||||||
Citigroup Global Markets Holdings, Inc. | 250,000 | 4.000% | 3/17/2031 | 247,500 | ||||||||
Citigroup, Inc. | 400,000 | 5.950% | 7/30/2169 | 420,792 | ||||||||
Citigroup, Inc. | 178,000 | 5.950% | 11/15/2169 | 195,257 | ||||||||
Citigroup, Inc. | 500,000 | 3.875% | 5/18/2170 | 511,875 | ||||||||
Fidelity National Financial, Inc. | 250,000 | 4.500% | 8/15/2028 | 287,516 | ||||||||
Fidelity National Financial, Inc. | 250,000 | 3.400% | 6/15/2030 | 269,961 | ||||||||
Fidelity National Financial, Inc. | 500,000 | 2.450% | 3/15/2031 | 499,687 | ||||||||
GS Finance Corp. | 250,000 | 4.000% | 3/10/2031 | 250,000 | ||||||||
Janus Capital Group, Inc. | 500,000 | 4.875% | 8/1/2025 | 567,104 | ||||||||
MetLife, Inc. | 250,000 | 10.750% | 8/1/2069 | 433,248 | ||||||||
MetLife, Inc. | 250,000 | 5.875% | 9/15/2169 | 289,447 | ||||||||
Morgan Stanley | 500,000 | 6.250% | 8/9/2026 | 618,761 | ||||||||
Morgan Stanley | 250,000 | 4.350% | 9/8/2026 | 283,467 | ||||||||
Morgan Stanley | 280,000 | 5.875% | 3/15/2170 | 321,650 | ||||||||
Reinsurance Group of America, Inc. | 100,000 | 3.900% | 5/15/2029 | 112,028 | ||||||||
TD Ameritrade Holding Corp. | 150,000 | 3.300% | 4/1/2027 | 164,734 | ||||||||
The Charles Schwab Corp. | 1,500,000 | 5.375% | 6/1/2025 | 1,661,700 | ||||||||
The Charles Schwab Corp. | 1,000,000 | 4.000% | 3/1/2170 | 1,024,250 | ||||||||
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||
Schedule of Investments - Continued | ||||||||||||
As of June 30, 2021 | ||||||||||||
Principal | Interest Rate | Maturity Date | Value (Note 1) | |||||||||
CORPORATE BONDS - CONTINUED | ||||||||||||
Financials - Continued | ||||||||||||
The Goldman Sachs Group, Inc. | $ 250,000 | 4.600% | 10/15/2033 | $ 282,154 | ||||||||
The Goldman Sachs Group, Inc. | 1,100,000 | 4.950% | 2/10/2025 | 1,178,496 | ||||||||
The Progressive Corp. | 415,000 | 3.700% | 1/26/2045 | 477,210 | ||||||||
Wells Fargo & Co. | 250,000 | 3.900% | 3/15/2170 | 258,981 | ||||||||
12,602,265 | ||||||||||||
Health Care - 8.28% | ||||||||||||
AbbVie, Inc. | 450,000 | 2.800% | 3/15/2023 | 464,987 | ||||||||
AbbVie, Inc. | 250,000 | 4.300% | 5/14/2036 | 297,014 | ||||||||
AbbVie, Inc. | 500,000 | 4.400% | 11/6/2042 | 608,076 | ||||||||
Amgen, Inc. | 500,000 | 2.700% | 5/1/2022 | 506,891 | ||||||||
Amgen, Inc. | 400,000 | 2.650% | 5/11/2022 | 406,908 | ||||||||
Amgen, Inc. | 300,000 | 3.150% | 2/21/2040 | 313,412 | ||||||||
Biogen, Inc. | 650,000 | 3.625% | 9/15/2022 | 675,379 | ||||||||
Biogen, Inc. | 250,000 | 3.150% | 5/1/2050 | 246,995 | ||||||||
Bristol-Myers Squibb Co. | 900,000 | 3.250% | 8/15/2022 | 930,968 | ||||||||
Bristol-Myers Squibb Co. | 75,000 | 3.875% | 8/15/2025 | 83,559 | ||||||||
CVS Health Corp. | 311,000 | 5.300% | 12/5/2043 | 413,707 | ||||||||
CVS Health Corp. | 250,000 | 4.125% | 4/1/2040 | 290,970 | ||||||||
CVS Health Corp. | 250,000 | 2.700% | 8/21/2040 | 243,163 | ||||||||
Gilead Sciences, Inc. | 332,000 | 3.650% | 3/1/2026 | 366,336 | ||||||||
McKesson Corp. | 222,000 | 2.850% | 3/15/2023 | 229,346 | ||||||||
Stryker Corp. | 359,000 | 3.375% | 11/1/2025 | 392,571 | ||||||||
Stryker Corp. | 211,000 | 3.500% | 3/15/2026 | 232,834 | ||||||||
6,703,116 | ||||||||||||
Industrials - 10.63% | ||||||||||||
3M Co. | 350,000 | 2.250% | 9/19/2026 | 370,549 | ||||||||
Delta Air Lines, Inc. | 850,000 | 2.900% | 10/28/2024 | 865,452 | ||||||||
Delta Air Lines, Inc. | 255,000 | 4.375% | 4/19/2028 | 267,824 | ||||||||
FedEx Corp. | 250,000 | 3.875% | 8/1/2042 | 279,862 | ||||||||
FedEx Corp. | 879,000 | 4.100% | 4/15/2043 | 1,009,482 | ||||||||
FedEx Corp. | 375,000 | 4.100% | 2/1/2045 | 429,274 | ||||||||
FedEx Corp. | 250,000 | 4.400% | 1/15/2047 | 299,612 | ||||||||
Ford Motor Credit Co. LLC | 400,000 | 3.813% | 10/12/2021 | 403,500 | ||||||||
Ford Motor Credit Co. LLC | 300,000 | 3.000% | 11/20/2022 | 299,940 | ||||||||
Ford Motor Credit Co. LLC | 250,000 | 3.810% | 1/9/2024 | 261,929 | ||||||||
Ford Motor Credit Co. LLC | 200,000 | 4.389% | 1/8/2026 | 216,250 | ||||||||
General Electric Co. | 288,000 | 5.100% | 6/15/2032 | 332,592 | ||||||||
Lockheed Martin Corp. | 300,000 | 2.800% | 6/15/2050 | 302,376 | ||||||||
Southwest Airlines Co. | 250,000 | 7.375% | 3/1/2027 | 319,383 | ||||||||
Southwest Airlines Co. | 400,000 | 4.750% | 5/4/2023 | 429,414 | ||||||||
Southwest Airlines Co. | 500,000 | 5.125% | 6/15/2027 | 589,409 | ||||||||
Southwest Airlines Co. | 100,000 | 2.625% | 2/10/2030 | 102,535 | ||||||||
Spirit AeroSystems, Inc. | 250,000 | 4.600% | 6/15/2028 | 245,631 | ||||||||
The Boeing Co. | 300,000 | 3.250% | 3/1/2028 | 315,572 | ||||||||
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||
Schedule of Investments - Continued | ||||||||||||
As of June 30, 2021 | ||||||||||||
Principal | Interest Rate | Maturity Date | Value (Note 1) | |||||||||
CORPORATE BONDS - CONTINUED | ||||||||||||
Industrials - Continued | ||||||||||||
The Boeing Co. | $ 500,000 | 3.300% | 3/1/2035 | $ 508,796 | ||||||||
The Boeing Co. | 250,000 | 5.875% | 2/15/2040 | 323,140 | ||||||||
The Boeing Co. | 100,000 | 3.500% | 3/1/2045 | 98,150 | ||||||||
The Boeing Co. | 100,000 | 3.375% | 6/15/2046 | 96,638 | ||||||||
United Parcel Service, Inc. | 200,000 | 3.625% | 10/1/2042 | 231,801 | ||||||||
8,599,111 | ||||||||||||
Information Technology - 15.53% | ||||||||||||
Apple, Inc. | 500,000 | 2.900% | 9/12/2027 | 545,424 | ||||||||
Apple, Inc. | 500,000 | 2.375% | 2/8/2041 | 486,473 | ||||||||
Apple, Inc. | 450,000 | 3.850% | 5/4/2043 | 536,351 | ||||||||
Apple, Inc. | 500,000 | 3.450% | 2/9/2045 | 560,780 | ||||||||
Apple, Inc. | 100,000 | 4.650% | 2/23/2046 | 133,375 | ||||||||
Apple, Inc. | 400,000 | 4.250% | 2/9/2047 | 505,709 | ||||||||
Apple, Inc. | 350,000 | 3.750% | 9/12/2047 | 414,651 | ||||||||
Arrow Electronics, Inc. | 150,000 | 3.250% | 9/8/2024 | 159,754 | ||||||||
Avnet, Inc. | 250,000 | 4.625% | 4/15/2026 | 281,559 | ||||||||
Cisco Systems, Inc. | 500,000 | 2.500% | 9/20/2026 | 537,348 | ||||||||
Crowdstrike Holdings, Inc. | 1,000,000 | 3.000% | 2/15/2029 | 1,002,200 | ||||||||
Flex Ltd. | 250,000 | 5.000% | 2/15/2023 | 266,619 | ||||||||
Flex Ltd. | 200,000 | 4.875% | 5/12/2030 | 232,622 | ||||||||
Intel Corp. | 300,000 | 3.250% | 11/15/2049 | 320,233 | ||||||||
International Business Machines Corp. | 500,000 | 4.150% | 5/15/2039 | 596,167 | ||||||||
Jabil, Inc. | 210,000 | 4.700% | 9/15/2022 | 220,376 | ||||||||
Microsoft Corp. | 450,000 | 3.500% | 11/15/2042 | 521,386 | ||||||||
Microsoft Corp. | 500,000 | 2.525% | 6/1/2050 | 492,815 | ||||||||
NetApp, Inc. | 275,000 | 3.250% | 12/15/2022 | 282,620 | ||||||||
NetApp, Inc. | 100,000 | 3.300% | 9/29/2024 | 107,039 | ||||||||
NVIDIA Corp. | 350,000 | 2.200% | 9/16/2021 | 350,860 | ||||||||
Oracle Corp. | 400,000 | 3.800% | 11/15/2037 | 439,659 | ||||||||
Oracle Corp. | 650,000 | 4.125% | 5/15/2045 | 725,882 | ||||||||
Qorvo, Inc. | 250,000 | 4.375% | 10/15/2029 | 272,860 | ||||||||
QUALCOMM, Inc. | 200,000 | 3.250% | 5/20/2027 | 221,132 | ||||||||
Seagate HDD Cayman | 1,000,000 | 5.750% | 12/1/2034 | 1,152,145 | ||||||||
VeriSign, Inc. | 500,000 | 4.750% | 7/15/2027 | 531,250 | ||||||||
Vmware, Inc. | 650,000 | 2.950% | 8/21/2022 | 666,927 | ||||||||
12,564,216 | ||||||||||||
Materials - 4.61% | ||||||||||||
Freeport-McMoRan, Inc. | 300,000 | 5.000% | 9/1/2027 | 317,734 | ||||||||
Freeport-McMoRan, Inc. | 250,000 | 4.375% | 8/1/2028 | 264,375 | ||||||||
Freeport-McMoRan, Inc. | 100,000 | 4.250% | 3/1/2030 | 107,250 | ||||||||
Freeport-McMoRan, Inc. | 100,000 | 5.400% | 11/14/2034 | 120,915 | ||||||||
Olin Corp. | 150,000 | 5.625% | 8/1/2029 | 166,411 | ||||||||
RPM International, Inc. | 250,000 | 3.750% | 3/15/2027 | 274,400 | ||||||||
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||
Schedule of Investments - Continued | ||||||||||||
As of June 30, 2021 | ||||||||||||
Principal | Interest Rate | Maturity Date | Value (Note 1) | |||||||||
CORPORATE BONDS - CONTINUED | ||||||||||||
Materials - Continued | ||||||||||||
American Tower Corp. | $ 350,000 | 3.800% | 8/15/2029 | $ 390,704 | ||||||||
Boston Properties LP | 300,000 | 2.550% | 4/1/2032 | 302,550 | ||||||||
Hudson Pacific Properties LP | 600,000 | 4.650% | 4/1/2029 | 690,987 | ||||||||
Hudson Pacific Properties LP | 420,000 | 3.250% | 1/15/2030 | 444,176 | ||||||||
Kilroy Realty LP | 100,000 | 3.050% | 2/15/2030 | 104,336 | ||||||||
Kilroy Realty LP | 550,000 | 2.500% | 11/15/2032 | 544,523 | ||||||||
3,728,361 | ||||||||||||
Total Corporate Bonds (Cost $60,640,471) | 63,240,783 | |||||||||||
FOREIGN BONDS - 0.28% | ||||||||||||
Consumer Discretionary - 0.25% | ||||||||||||
MercadoLibre, Inc. | 200,000 | 3.125% | 1/14/2031 | 196,600 | ||||||||
Financials - 0.03% | ||||||||||||
HSBC Holdings PLC | 25,000 | 4.250% | 3/14/2024 | 27,089 | ||||||||
Total Foreign Bonds (Cost $228,955) | 223,689 | |||||||||||
MUNICIPAL BONDS - 9.84% | ||||||||||||
Alaska Municipal Bond Bank Authority | 350,000 | 3.028% | 12/1/2041 | 359,737 | ||||||||
Brea Redevelopment Agency | 60,000 | 2.500% | 8/1/2023 | 62,349 | ||||||||
Bristol Township School District | 255,000 | 3.650% | 6/1/2043 | 272,615 | ||||||||
California Housing Finance Authority | 80,000 | 3.650% | 8/1/2025 | 83,176 | ||||||||
City & County of San Francisco CA Community | ||||||||||||
Facilities District No 2014-1 | 300,000 | 3.108% | 9/1/2024 | 317,670 | ||||||||
City of New York NY | 170,000 | 3.450% | 3/1/2026 | 188,451 | ||||||||
City of San Francisco CA Public Utilities | ||||||||||||
Commission Water Revenue | 400,000 | 3.473% | 11/1/2043 | 430,252 | ||||||||
City of San Francisco CA Public Utilities | ||||||||||||
Commission Water Revenue | 250,000 | 2.900% | 11/1/2025 | 270,059 | ||||||||
Commonwealth of Pennsylvania | 300,000 | 5.450% | 2/15/2030 | 373,261 | ||||||||
New Jersey Educational Facilities Authority | 400,000 | 3.468% | 7/1/2035 | 424,463 | ||||||||
New York City Transitional Finance Authority | ||||||||||||
Future Tax Secured Revenue | 325,000 | 4.905% | 11/1/2024 | 367,827 | ||||||||
New York State Urban Development Corp. | 280,000 | 3.200% | 3/15/2022 | 285,760 | ||||||||
Pennsylvania Higher Educational Facilities | ||||||||||||
Authority | 250,000 | 4.300% | 6/15/2045 | 276,987 | ||||||||
Redevelopment Authority of the City of | ||||||||||||
Philadelphia | 225,000 | 3.713% | 11/1/2023 | 236,150 | ||||||||
Regents of the University of California Medical | ||||||||||||
Center Pooled Revenue | 70,000 | 2.459% | 5/15/2026 | 73,917 | ||||||||
Sacramento County Public Financing Authority | 265,000 | 3.793% | 4/1/2022 | 271,260 | ||||||||
San Antonio Water System | 185,000 | 3.206% | 5/15/2030 | 204,017 | ||||||||
San Marcos Unified School District | 350,000 | 3.377% | 8/1/2040 | 365,131 | ||||||||
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||
Schedule of Investments - Continued | ||||||||||||
As of June 30, 2021 | ||||||||||||
Principal | Interest Rate | Maturity Date | Value (Note 1) | |||||||||
MUNICIPAL BONDS - CONTINUED | ||||||||||||
State of Oregon | $ 250,000 | 3.577% | 8/1/2029 | $ 266,850 | ||||||||
Tampa-Hillsborough County Expressway | ||||||||||||
Authority | 505,000 | 2.692% | 7/1/2037 | 520,809 | ||||||||
The Pennsylvania State University | 200,000 | 2.790% | 9/1/2043 | 203,822 | ||||||||
The Trustees of Princeton University | 250,000 | 2.612% | 7/1/2026 | 266,937 | ||||||||
The University of Arizona | 350,000 | 3.900% | 6/1/2044 | 413,759 | ||||||||
Torrance Unified School District | 400,000 | 3.344% | 8/1/2039 | 422,287 | ||||||||
Tulare County Board of Education | 250,000 | 3.640% | 5/1/2043 | 262,981 | ||||||||
University of California | 25,000 | 3.039% | 5/15/2027 | 27,315 | ||||||||
University of Pittsburgh-of the Commonwealth | ||||||||||||
System of Higher Education | 140,000 | 3.127% | 9/15/2026 | 152,926 | ||||||||
Utah Transit Authority | 550,000 | 2.774% | 12/15/2038 | 560,517 | ||||||||
Total Municipal Bonds (Cost $7,715,746) | 7,961,285 | |||||||||||
UNITED STATES TREASURY NOTES - 1.18% | ||||||||||||
United States Treasury Note | 500,000 | 1.125% | 2/15/2031 | 485,937 | ||||||||
United States Treasury Note | 250,000 | 2.375% | 11/15/2049 | 266,436 | ||||||||
United States Treasury Note | 250,000 | 1.250% | 5/15/2050 | 204,346 | ||||||||
Total United State Treasury Notes (Cost $929,099) | 956,719 | |||||||||||
CLOSED-END FUNDS - 1.59% | Shares | |||||||||||
BlackRock Taxable Municipal Bond Trust | 26,824 | 691,523 | ||||||||||
Guggenheim Taxable Municipal Bond & | ||||||||||||
Investment Grade Debt Trust | 24,200 | 597,256 | ||||||||||
Total Closed-End Funds (Cost $1,256,651) | 1,288,779 | |||||||||||
EXCHANGE-TRADED FUNDS - 3.16% | ||||||||||||
Commodity Fund - 1.93% | Shares | |||||||||||
* | Aberdeen Standard Physical Gold Shares ETF | 92,000 | 1,563,080 | |||||||||
Financials - 1.23% | ||||||||||||
Invesco Financial Preferred ETF | 5,000 | 96,450 | ||||||||||
iShares Convertible Bond ETF | 1,445 | 147,347 | ||||||||||
VanEck Vectors Preferred Securities ex | 35,000 | 746,900 | ||||||||||
Financials ETF | 990,697 | |||||||||||
Total Exchange-Traded Funds (Cost $2,593,962) | 2,553,777 | |||||||||||
SHORT-TERM INVESTMENT - 6.19% | Shares | |||||||||||
Blackrock Treasury Trust, 0.01% § | 5,011,329 | 5,011,329 | ||||||||||
Total Short-Term Investment (Cost $5,011,329) | 5,011,329 | |||||||||||
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||||||
Schedule of Investments - Continued | ||||||||||||
As of June 30, 2021 | ||||||||||||
Value (Note 1) | ||||||||||||
Investments, at Value (Cost $78,390,478) - 100.42% | $ | 81,250,712 | ||||||||||
Liabilities in Excess of Other Assets - (0.42)% | (336,707) | |||||||||||
Net Assets - 100% | $ | 80,914,005 | ||||||||||
§ | Represents 7 day effective yield | |||||||||||
* | Non-income producing investment | |||||||||||
The following acronyms or abbreviations are used in this schedule of investments: | ||||||||||||
PLC - Public Limited Company | ||||||||||||
LLC - Limited Liability Company | ||||||||||||
LP - Limited Partnership | ||||||||||||
Summary of Investments | ||||||||||||
% of Net | ||||||||||||
Assets | Value | |||||||||||
Asset-Backed Security | 0.02% | $ | 14,351 | |||||||||
Corporate Bonds | 78.16% | 63,240,783 | ||||||||||
Foreign Bonds | 0.28% | 223,689 | ||||||||||
Municipal Bonds | 9.84% | 7,961,285 | ||||||||||
United States Treasury Notes | 1.18% | 956,719 | ||||||||||
Closed-End Funds | 1.59% | 1,288,779 | ||||||||||
Exchange-Traded Funds | 3.16% | 2,553,777 | ||||||||||
Short-Term Investment | 6.19% | 5,011,329 | ||||||||||
Liabilities in Excess of Other Assets | -0.42% | (336,707) | ||||||||||
Total Net Assets | 100.00% | $ | 80,914,005 | |||||||||
See Notes to Financial Statements |
UVA Unconstrained Medium-Term Fixed Income ETF | |||
Statement of Assets and Liabilities | |||
As of June 30, 2021 | |||
Assets: | |||
Investments, at value (cost $78,390,478) | $ | 81,250,712 | |
Receivables: | |||
Interest and dividends | 641,654 | ||
Total assets | 81,892,366 | ||
Liabilities: | |||
Payables: | |||
Distributions | 163,175 | ||
Investments purchased | 782,114 | ||
Accrued expenses: | |||
Operating expenses | 17,861 | ||
Related party fees | 8,593 | ||
Advisory fees | 6,618 | ||
Total liabilities | 978,361 | ||
Total Net Assets | $ | 80,914,005 | |
Net Assets Consist of: | |||
Paid in Capital | $ | 77,515,765 | |
Distributable Earnings | 3,398,240 | ||
Total Net Assets | $ | 80,914,005 | |
Shares Outstanding, no par value (unlimited authorized shares) | 3,050,000 | ||
Net Asset Value, Offering Price, and Redemption Price Per Share | $ | 26.53 | |
See Notes to Financial Statements |
UVA Unconstrained Medium-Term Fixed Income ETF | |||
Statement of Operations | |||
For the fiscal year ended June 30, 2021 | |||
Investment Income: | |||
Interest | $ | 2,074,182 | |
Dividends | 119,998 | ||
Total Investment Income | 2,194,180 | ||
Expenses: | |||
Advisory fees (note 2) | 186,221 | ||
Administration fees (note 2) | 74,489 | ||
Fund accounting fees (note 2) | 60,000 | ||
Professional fees | 35,841 | ||
Pricing fees | 34,400 | ||
Other operating expenses | 31,052 | ||
Transfer agent fees (note 2) | 19,450 | ||
Compliance fees (note 2) | 13,001 | ||
Trustee fees (note 3) | 9,000 | ||
Custody fees | 8,641 | ||
Distribution fees | 5,333 | ||
Insurance fees | 5,001 | ||
Total Expenses | 482,429 | ||
Expenses waived and/or reimbursed by the Sub-Advisor (note 2) | (110,421) | ||
Net Expenses | 372,008 | ||
Net Investment Income | 1,822,172 | ||
Realized and Unrealized Gain on Investments: | |||
Net realized gain from investment transactions | 536,833 | ||
Net change in unrealized appreciation on investments | 633,240 | ||
Net Realized and Unrealized Gain on Investments | 1,170,073 | ||
Net Increase in Net Assets Resulting from Operations | $ | 2,992,245 | |
See Notes to Financial Statements |
UVA Unconstrained Medium-Term Fixed Income ETF | ||||||||
Statements of Changes in Net Assets | ||||||||
For the fiscal year ended June 30, | 2021 | 2020 | ||||||
Operations: | ||||||||
Net investment income | $ | 1,822,172 | $ 1,389,273 | |||||
Net realized gain from investment transactions | 536,833 | 294,680 | ||||||
Net change in unrealized appreciation on investments | 633,240 | 1,502,797 | ||||||
Net Increase in Net Assets Resulting from Operations | 2,992,245 | 3,186,750 | ||||||
Distributions to Investors: | (2,059,605) | (1,404,900) | ||||||
Decrease from Distributions to Investors | (2,059,605) | (1,404,900) | ||||||
Beneficial Interest Transactions: | ||||||||
Shares sold | 18,555,515 | 14,142,465 | ||||||
Increase from Beneficial Interest Transactions | 18,555,515 | 14,142,465 | ||||||
Net Increase in Net Assets | 19,488,155 | 15,924,315 | ||||||
Net Assets: | ||||||||
Beginning of year | 61,425,850 | 45,501,535 | ||||||
End of year | $ | 80,914,005 | $ 61,425,850 | |||||
Share Information: | ||||||||
Shares Sold | 700,000 | 550,000 | ||||||
Net Increase in Shares of Beneficial Interest | 700,000 | 550,000 | ||||||
See Notes to Financial Statements |
UVA Unconstrained Medium-Term Fixed Income ETF | |||||||||||||
Financial Highlights | |||||||||||||
For a share outstanding during each | June 30, | ||||||||||||
of the fiscal years or period ended | 2021 | 2020 | 2019 | 2018 | (d) | ||||||||
Net Asset Value, Beginning of Period | $ 26.14 | $ 25.28 | $ 24.30 | $ 25.00 | |||||||||
Income (Loss) from Investment Operations: | |||||||||||||
Net investment income (f) | 0.64 | 0.71 | 0.70 | 0.46 | |||||||||
Net realized and unrealized gain (loss) on investments | 0.47 | 0.86 | 0.98 | (0.71) | |||||||||
Total from Investment Operations | 1.11 | 1.57 | 1.68 | (0.25) | |||||||||
Distributions to Investors: | |||||||||||||
From net investment income | (0.64) | (0.71) | (0.70) | (0.45) | |||||||||
From capital gains | (0.08) | - | - | - | |||||||||
Total from Distributions to Investors | (0.72) | (0.71) | (0.70) | (0.45) | |||||||||
Net Asset Value, End of Period | $ 26.53 | $ 26.14 | $ 25.28 | $ 24.30 | |||||||||
Total Return (e) | 4.30% | 6.29% | 7.05% | (1.00)% | (b) | ||||||||
Net Assets, End of Period (in thousands) | $80,914 | $ 61,426 | $45,502 | $47,385 | |||||||||
Ratios of: | |||||||||||||
Gross Expenses to Average Net Assets (c) | 0.65% | 0.73% | 0.76% | 0.77% | (a) | ||||||||
Net Expenses to Average Net Assets (c) | 0.50% | 0.50% | 0.45% | 0.45% | (a) | ||||||||
Net Investment Income to Average Net Assets | 2.47% | 2.75% | 2.88% | 2.36% | (a) | ||||||||
Portfolio turnover rate | 30.49% | 21.28% | 49.44% | 6.85% | (b) | ||||||||
(a) | Annualized. | ||||||||||||
(b) | Not annualized. | ||||||||||||
(c) | The expense ratios listed reflect total expenses prior to any waivers (gross expense ratio) and after any waivers (net expense ratio). | ||||||||||||
(d) | For a share outstanding during the period from August 18, 2017 (Commencement of Operations) through June 30, 2018. | ||||||||||||
(e) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and, consequently, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. | ||||||||||||
(f) | Calculated using the average shares method. | ||||||||||||
See Notes to Financial Statements |
UVA Unconstrained Medium-Term Fixed Income ETF |
Notes to Financial Statements |
As of June 30, 2021 |
1. Organization and Significant Accounting Policies
The UVA Unconstrained Medium-Term Fixed Income ETF, an exchange-traded fund (the “ETF”), is a diversified series of the Spinnaker ETF Series (the “Trust”). The Trust was established as a Delaware statutory trust under an Agreement and Declaration of Trust on December 21, 2016, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”).
The ETF commenced operations on August 18, 2017. The investment objective of the ETF is to seek current income with limited risk to principal. The ETF seeks to achieve its investment objective by investing principally in fixed income securities of any kind with dollar-weighted average effective duration between three and seven years, under normal circumstances. Under normal market conditions, the ETF intends to invest at least 80% of its net assets (plus the amount of borrowings for investment purposes) in such securities. Fixed income securities include bonds, debt securities, and income-producing instruments of any kind issued by governmental or private-sector entities.
The Trust will issue and redeem shares at Net Asset Value (“NAV”) only in a large specified number of shares called a “Creation Unit” or multiples thereof. A Creation Unit consists of 50,000 shares. Creation Unit transactions are typically conducted in exchange for the deposit or delivery of in-kind securities and/or cash. As a practical matter, only authorized participants may purchase or redeem these Creation Units. Except when aggregated in Creation Units, the shares are not redeemable securities of the ETF. The prices at which creations and redemptions occur are based on the next calculation of NAV after an order is received in proper form by Capital Investment Group, Inc. (the “Distributor”). Individual shares of the ETF may only be purchased and sold in secondary market transactions through brokers. Shares of the ETF are listed for trading on NYSE Arca under the trading symbol FFIU, and because shares will trade at market prices rather than NAV, shares of the ETF may trade at a price greater than or less than NAV.
The following is a summary of significant accounting policies consistently followed by the ETF. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The ETF follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 946 “Financial Services – Investment Companies.”
Investment Valuation
The ETF’s investments in securities are carried at market value. Securities listed on an exchange or quoted on a national market system are valued at the last sales price as of 4:00 p.m. Eastern Time. Securities traded in the NASDAQ over-the-counter market are generally valued at the NASDAQ Official Closing Price. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the mean of the most recent bid and ask prices. Securities and assets for which representative market quotations are not readily available (e.g., if the exchange on which the security is principally traded closes early or if trading of the particular security is halted during the day and does not resume prior to the ETF’s net asset value calculation) or which cannot be accurately valued using the ETF’s normal pricing procedures are valued at fair value as determined in good faith under policies approved by the Board of Trustees (the “Board” or the “Trustees”). A security’s “fair value” price may differ from the price next available for that security using the ETF’s normal pricing procedures. Instruments with maturities of 60 days or less are valued at amortized cost, which approximates market value.
With respect to any portion of a ETF's assets that may be invested in other mutual funds, the value of the ETF's shares is based on the NAV of the shares of the other mutual funds in which the ETF invests. The valuation methods used by mutual funds in pricing their shares, including the circumstances under which they will use fair value pricing and the effects of using fair value pricing, are included in the prospectuses of such funds. To the extent the ETF invests a portion of its assets in non-registered investment vehicles, the ETF's shares in the non-registered vehicles are fair valued at NAV.
With respect to a ETF's assets invested directly in securities, the ETF's investments are generally valued at current market prices. Equity securities, debt securities, options and futures are generally valued at the official closing price or, if none, the last reported sales price on the primary exchange or market on which they are listed (closing price). Equity securities and debt securities that are not traded primarily on an exchange are generally valued at the quoted bid price obtained from a broker-dealer.
UVA Unconstrained Medium-Term Fixed Income ETF |
Notes to Financial Statements |
As of June 30, 2021 |
Fair Value Measurement
Various inputs are used in determining the value of the ETF's investments. These inputs are summarized in the three broad levels listed below:
Level 1: unadjusted quoted prices in active markets for identical securities
Level 2: other significant observable inputs (including quoted prices for similar securities and identical securities in inactive markets, interest rates, credit risk, etc.)
Level 3: significant unobservable inputs (including the ETF’s own assumptions in determining fair value of investments)
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following table summarizes the inputs as of June 30, 2021 for the ETF’s assets measured at fair value:
Investments in Securities (a) | Total | Level 1 | Level 2 | Level 3 | ||||
Assets | ||||||||
Asset-Backed Security | $ | 14,351 | $ | - | $ | 14,351 | $ | - |
Corporate Bonds | 63,240,783 | - | 63,240,783 | - | ||||
Foreign Bonds | 223,689 | - | 223,689 | - | ||||
Municipal Bonds | 7,961,285 | - | 7,961,285 | - | ||||
United States Treasury Notes | 956,719 | - | 956,719 | - | ||||
Closed-End Funds | 1,288,779 | 1,288,779 | - | - | ||||
Exchange-Traded Funds | 2,553,777 | 2,553,777 | - | - | ||||
Short-Term Investment | 5,011,329 | 5,011,329 | - | - | ||||
Total Assets | $ | 81,250,712 | $ | 8,853,885 | $ | 72,396,827 | $ | - |
(a) The ETF did not hold any Level 3 securities during the year.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income and expense are recorded on the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion/amortization of discounts and premiums using the effective interest method. Gains and losses are determined on the identified cost basis, which is the same basis used for Federal income tax purposes.
Expenses
The ETF bears expenses incurred specifically on its behalf as well as a portion of general expenses, which are allocated according to methods reviewed annually by the Trustees.
UVA Unconstrained Medium-Term Fixed Income ETF |
Notes to Financial Statements |
As of June 30, 2021 |
Distributions
The ETF may declare and distribute dividends from net investment income, if any, monthly. The ETF generally declares and distributes capital gains, if any, annually. Dividends and distributions to shareholders are recorded on ex-date.
Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in the net assets from operations during the reporting period. Actual results could differ from those estimates.
Federal Income Taxes
No provision for income taxes is included in the accompanying financial statements, as the ETF intends to distribute to shareholders all taxable investment income and realized gains and otherwise comply with Subchapter M of the Internal Revenue Code applicable to regulated investment companies.
2. | Transactions with Related Parties and Service Providers |
Advisor
The ETF pays a monthly fee to OBP Capital, LLC (the “Advisor”) calculated at the annual rate of 0.25% of the ETF’s average daily net assets.
The Advisor has engaged Universal Value Advisors as the sub-advisor of the ETF (the “Sub-Advisor”) to provide day to day portfolio management of the ETF. The Advisor pays a monthly fee to the Sub-Advisor calculated at the annual rate of 0.20% of the ETF’s average daily net assets. The Sub-Advisor is paid directly by the Advisor out of the advisory fees disclosed above.
The ETF and the Sub-Advisor have entered into a contractual agreement (the “Expense Limitation Agreement”) with the Trust, on behalf of the ETF, under which the Sub-Advisor has agreed to waive or reduce its fees and to assume other expenses of the ETF, if necessary, in amounts that limit the ETF’s total operating expenses (exclusive of (i) any front-end or contingent deferred loads; (ii) brokerage fees and commissions, (iii) acquired fund fees and expenses; (iv) fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses); (v) borrowing costs (such as interest and dividend expense on securities sold short); (vi) taxes; and (vii) extraordinary expenses, such as litigation expenses (which may include indemnification of ETF officers and Trustees and contractual indemnification of ETF service providers (other than the Adviser or Sub-Adviser)) to not more than 0.50% of the average daily net assets of the ETF. The current term of the Expense Limitation Agreement is through October 31, 2021. While there can be no assurance that the Expense Limitation Agreement will continue after that date, it is expected to continue from year-to-year thereafter.
For the fiscal year ended June 30, 2021, the Advisor earned $37,244 in net advisory fees after payment of the sub-advisor fee.
For the fiscal year ended June 30, 2021, the Sub-Advisor earned $148,977 in sub-advisory fees, of which $110,421 were waived pursuant to the Expense Limitation Agreement.
Administrator
The ETF pays a monthly fee to the ETF’s administrator, The Nottingham Company (the “Administrator”), based upon the average daily net assets of the ETF and calculated at the annual rates as shown in the schedule below, which is subject to a minimum of $3,750 per month.
UVA Unconstrained Medium-Term Fixed Income ETF |
Notes to Financial Statements |
As of June 30, 2021 |
A breakdown of these fees is provided in the following table:
Net Assets | Annual Fee |
On the first $100 million | 0.100% |
$100 million to $200 million | 0.080% |
On all assets over $200 million | 0.060% |
The ETF incurred $74,489 in administration fees for the fiscal year ended June 30, 2021. The Administrator is responsible for collecting expense amounts from the ETF, as well as expense reimbursement payments and waived fees from the Sub-Advisor and remitting these amounts to the companies that furnish services to the ETF.
Compliance Services
The Nottingham Company, Inc. serves as the Trust’s compliance services provider including services as the Trust’s Chief Compliance Officer. The Nottingham Company, Inc. is entitled to receive customary fees from the ETF for its services pursuant to the Compliance Services Agreement with the ETF.
Transfer Agent
The Bank of New York Mellon (“Transfer Agent”) serves as transfer, dividend paying, and shareholder servicing agent for the ETF. For its services, the Transfer Agent is entitled to receive compensation from the ETF pursuant to the Transfer Agent’s fee arrangements with the ETF.
Fund Accounting
The Bank of New York Mellon (“Fund Accountant”) serves as the Fund Accountant for the ETF. For its services, the Fund Accountant is entitled to receive compensation from the ETF pursuant to the Fund Accounting fee arrangements with the ETF.
3. | Trustees and Officers |
The Board is responsible for the management and supervision of the ETF. The Trustees approve all significant agreements between the Trust, on behalf of the ETF, and those companies that furnish services to the ETF; review performance of the Advisor and the ETF; and oversee activities of the ETF. Officers of the Trust and Trustees who are interested persons of the Trust or the Advisor will receive no salary or fees from the Trust. Trustees who are not “interested persons” of the Trust or the Advisor within the meaning of the 1940 Act (the “Independent Trustees”) receive $5,000 per year payable quarterly and $2,000 per series in the Trust. The Trust will reimburse each Trustee and officer of the Trust for his or her travel and other expenses relating to attendance of Board meetings. Additional fees may also be incurred during the year as special meetings are necessary in addition to the regularly scheduled meetings of the Board.
Certain officers of the Trust may also be officers of the Advisor or the Administrator.
4. | Purchases and Sales of Investment Securities |
For the fiscal year ended June 30, 2021, the aggregate cost of purchases and proceeds from sales of investment securities (excluding short-term securities and securities sold short) were as follows:
Purchases of Securities (Excluding U.S. Government Securities) | Proceeds from Sales of Securities (excluding U.S. Government Securities) | Purchase of U.S. Government Securities | Proceeds from Sales of U.S. Government Securities |
$35,287,302 | $21,344,423 | $928,671 | $4,731,972 |
UVA Unconstrained Medium-Term Fixed Income ETF |
Notes to Financial Statements |
As of June 30, 2021 |
Cost from Purchases In-Kind | Proceeds from Redemptions In-Kind |
$2,850,124 | $ - |
5. Federal Income Tax
Distributions are determined in accordance with Federal income tax regulations, which differ from GAAP, and, therefore, may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. The general ledger is adjusted for permanent book/tax differences to reflect tax character but is not adjusted for temporary differences.
Management has reviewed the ETF’s tax positions to be taken on the federal income tax returns for the fiscal year/periods ended June 30, 2018 through June 30, 2021 and determined that the ETF does not have a liability for uncertain tax positions. The ETF recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the fiscal year ended June 30, 2021, the ETF did not incur any interest or penalties.
Distributions during the years ended were characterized for tax purposes as follows:
June 30, 2021 | June 30, 2020 | |
Ordinary Income | $1,838,625 | $1,404,900 |
Capital Gains | 220,980 | - |
Total Distributions | $2,059,605 | $1,404,900 |
At June 30, 2021, the tax-basis cost of investments and components of distributable earnings were as follows:
Cost of Investments | $78,390,478 | |
Gross Unrealized Appreciation | $ 3,177,726 | |
Gross Unrealized Depreciation | (317,492) | |
Net Unrealized Appreciation | $ 2,860,234 | |
Undistributed Net Investment Income | 3,583 | |
Long-Term Capital Gain Spillback | 534,423 | |
Distributable Earnings | $ 3,398,240 | |
6. Concentration of Risk
At various times, the ETF may have cash, cash collateral, and due from broker balances that exceed federally insured limits. It is the opinion of management that the solvency of the financial institutions is not of a particular concern at this time.
7. Commitments and Contingencies
Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the ETF. In addition, in the normal course of business, the Trust enters into contracts with its service providers, on behalf of the ETF, and others that provide for general indemnifications. The ETF’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the ETF. The ETF expects risk of loss to be remote.
UVA Unconstrained Medium-Term Fixed Income ETF |
Notes to Financial Statements |
As of June 30, 2021 |
8. Subsequent Events
In accordance with GAAP, management has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date of issuance of the financial statements. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments, other than the following items:
Distributions
Per share distributions for the ETF during the subsequent period were as follows:
Record Date | Ex-Date | Payable Date | Ordinary Income |
7/30/2021 | 7/29/2021 | 8/2/2021 | $0.05400 |
![](https://capedge.com/proxy/N-CSRA/0001484018-21-000086/image0.jpg)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Spinnaker ETF Series
and the Shareholders of UVA Unconstrained Medium-Term Fixed Income ETF
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of UVA Unconstrained Medium-Term Fixed Income ETF, a series of shares of beneficial interest in Spinnaker ETF Series (the “Fund”), including the schedule of investments, as of June 30, 2021, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the three-year period then ended and for the period from August 18, 2017 (commencement of operations) to June 30, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and its financial highlights for each of the years in the three-year period then ended and for the period from August 18, 2017 to June 30, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities law and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2021 by correspondence with the custodian and broker. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
![](https://capedge.com/proxy/N-CSRA/0001484018-21-000086/image1.jpg)
BBD, LLP
We have served as the auditor of one or more of the Funds in the Spinnaker ETF Series since 2017.
Philadelphia, Pennsylvania
August 25, 2021
UVA Unconstrained Medium-Term Fixed Income ETF |
Additional Information (Unaudited) |
As of June 30, 2021 |
1. | Proxy Voting Policies and Voting Record |
Copies of the Advisor’s and Sub-Advisor’s Proxy Voting Policies and Procedures are included as Appendix A to the ETF’s Statement of Additional Information and are available, without charge, upon request, by calling 800-773-3863, and on the website of the Securities and Exchange Commission (“SEC”) at http://www.sec.gov. Information regarding how the ETF voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, is available (1) without charge, upon request, by calling the ETF at the number above and (2) on the SEC’s website at http://www.sec.gov.
2. | Quarterly Portfolio Holdings |
The ETF files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The ETF’s Form N-PORT is available on the SEC’s website at http://www.sec.gov. You may also obtain copies without charge, upon request, by calling the ETF at 800-773-3863.
3. | Tax Information |
We are required to advise you within 60 days of the ETF’s fiscal year-end regarding federal tax status of certain distributions received by shareholders during each fiscal year. The following information is provided for the ETF’s fiscal year ended June 30, 2021.
During the fiscal year, the ETF paid $1,838,625 in income distributions and $220,980 in long-term capital gain distributions.
Dividend and distributions received by retirement plans such as IRAs, Keogh-type plans, and 403(b) plans need not be reported as taxable income. However, many retirement plans may need this information for their annual information meeting.
4. | Schedule of Shareholder Expenses |
As a shareholder of the ETF, you incur ongoing costs, including management fees and other ETF expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the ETF and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the fiscal period from January 1, 2021 through June 30, 2021.
Actual Expenses – The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (e.g., an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes – The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the ETF’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the ETF’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the ETF and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF |
Additional Information (Unaudited) |
As of June 30, 2021 |
Beginning Account Value January 1, 2021 | Ending Account Value June 30, 2021 | Expenses Paid During Period* | |
Actual Hypothetical (5% annual return before expenses) | |||
$1,000.00 | $1,000.80 | $2.48 | |
$1,000.00 | $1,022.32 | $2.51 |
*Expenses are equal to the average account value over the period multiplied by the ETF’s annualized expense ratio of 0.50%, multiplied by the number of days in the most recent period divided by the number of days in the fiscal year (to reflect the six month period).
5. | Approval of Investment Advisory Agreement |
In connection with the quarterly Board meeting held on December 16, 2020, the Board, including a majority of the Independent Trustees, discussed the approval of the renewal of the management agreement, between the Trust and the Advisor, with respect to the ETF (the "Investment Advisory Agreement").
The Trustees were assisted by legal counsel throughout the review process. The Trustees relied upon the advice of legal counsel and their own business judgment in determining the material factors to be considered in evaluating the Investment Advisory Agreement and the weight to be given to each factor considered. The conclusions reached by the Trustees were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor. Moreover, each Trustee may have afforded different weight to the various factors in reaching his conclusions with respect to the approval of the Investment Advisory Agreement. In connection with their deliberations regarding approval of the Investment Advisory Agreement, the Trustees reviewed materials prepared by the Advisor.
In deciding on whether to approve the renewal of the Investment Advisory Agreement, the Trustees considered numerous factors, including:
(i) | Nature, Extent, and Quality of Services. The Trustees considered the responsibilities of the Advisor under the Investment Advisory Agreement. The Trustees reviewed the services being provided by the Advisor to the ETF including, without limitation, the quality of its investment advisory services since inception; assuring compliance with the investment objectives, policies and limitations; and, its coordination of services among the service providers. The Trustees evaluated: the Advisor’s staffing, personnel, and methods of operating; the education and experience of the Advisor’s personnel; the Advisor’s compliance program; and the Advisor’s financial condition. |
After reviewing the foregoing information and further information in the memorandum from the Advisor (e.g., descriptions of the Advisor’s business, compliance program, and ADV), the Board concluded that the nature, extent, and quality of the services provided by the Advisor were satisfactory and adequate.
(ii) | Performance. The Trustees compared the performance of the ETF with the performance of its comparable funds with similar strategies managed by other investment advisers, and applicable peer group data (e.g., Lipper peer group average). The Trustees noted that the ETF had underperformed its peer group and the category for all periods. It was noted that the underperformance was primarily due to the shorter average duration of the ETF’s portfolio and the greater risk mitigating parameters of the ETF’s strategy compared to its peers and category. The Trustees also considered the consistency of the Advisor’s management of the ETF with its investment objective, policies and limitations. After reviewing the investment performance of the ETF, the Advisor’s experience managing the ETF, and other factors, the Board concluded that the investment performance of the ETF and the Advisor were satisfactory. |
(iii) | Fees and Expenses. The Trustees compared the advisory fee of the ETF to other comparable funds and noted it was below that of both the peer group and category. Following this comparison, and upon further consideration and discussion of the foregoing, the Board concluded that the fees to be paid to the Advisor were not unreasonable in relation to the nature and quality of the services provided by the Advisor and that they reflected charges that were within a range of what could have been negotiated at arm’s length. |
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF |
Additional Information (Unaudited) |
As of June 30, 2021 |
(iv) | Profitability. The Board reviewed the Advisor’s profitability analysis in connection with its management of the ETF over the past twelve months. The Board noted that the Advisor had realized a very small profit for the prior twelve months of operations. The Board considered the profit realized and concluded that Advisor’s level of profitability was not excessive. |
(v) | Economies of Scale. In this regard, the Trustees reviewed the ETF’s operational history and noted that it had not provided an opportunity to realize economies of scale. The Trustees then reviewed the fee arrangements for breakpoints or other provisions that would allow shareholders to benefit from economies of scale in the future as the ETF grows. The Trustees determined that the maximum management fee would stay the same regardless of the asset levels. The Trustees noted that the ETF was a relatively small size and economies of scale were unlikely to be achievable in the near future. It was pointed out that breakpoints in the advisory fee could be reconsidered in the future as the ETF grows. |
Conclusion. Having reviewed and discussed in depth such information from the Advisor as the Trustees believed to be reasonably necessary to evaluate the terms of the Investment Advisory Agreement and as assisted by the advice of legal counsel, the Trustees concluded that approval of the Investment Advisory Agreement was in the best interest of the shareholders of the ETF.
6. Approval of Investment Sub-Advisory Agreement
In connection with the quarterly meeting of the Board held on June 17, 2020, the Board, including a majority of the Independent Trustees, discussed the approval of a management agreement between the Advisor and the Sub-Advisor, with respect to the ETF (the “Investment Sub-Advisory Agreement”).
The Trustees were assisted by legal counsel throughout the review process. The Trustees relied upon the advice of legal counsel and their own business judgment in determining the material factors to be considered in evaluating the Investment Sub-Advisory Agreement and the weight to be given to each factor considered. The conclusions reached by the Trustees were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor. Moreover, each Trustee may have afforded different weight to the various factors in reaching his conclusions with respect to the approval of the Investment Sub-Advisory Agreement. In connection with their deliberations regarding approval of the Investment Sub-Advisory Agreement, the Trustees reviewed materials prepared by the Sub-Advisor.
In deciding on whether to approve the renewal of the Investment Sub-Advisory Agreement, the Trustees considered numerous factors, including:
(i) | Nature, Extent, and Quality of Services. The Trustees considered the responsibilities of the Sub-Advisor under the proposed Investment Sub-Advisory Agreement. The Trustees reviewed the services being provided by the Sub-Advisor to the ETF, including, without limitation, the quality of its investment sub-advisory services since the Sub-Advisor began managing the ETF (including research and recommendations with respect to portfolio securities); its procedures for formulating investment recommendations and assuring compliance with the ETF’s investment objectives, policies and limitations; its coordination of services for the ETF among the service providers; and its efforts to promote the ETF, grow the assets, and assist in the distribution of shares (although no portion of the investment sub-advisory fee was targeted to pay distribution expenses). The Trustees evaluated: the Sub-Advisor’s staffing, personnel, and methods of operating; the education and experience of the Sub-Advisor’s personnel; compliance program; and the Sub-Advisor’s financial condition. |
After reviewing the foregoing information and further information in the memorandum provided by the Sub-Advisor (e.g., descriptions of the Sub-Advisor’s business, compliance program, and Form ADV), the Board concluded that the nature, extent, and quality of the services provided by the Sub-Advisor were satisfactory and adequate for the ETF.
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF |
Additional Information (Unaudited) |
As of June 30, 2021 |
(ii) | Performance. The Trustees compared the performance of the ETF with the performance of comparable funds with similar strategies managed by other investment advisers, and applicable peer group data (e.g., Morningstar/Lipper peer group average). The Trustees also considered the consistency of the Sub-Advisor’s management of the ETF with its investment objective, policies and limitations. The Trustees noted that the ETF had underperformed the peer group for all periods and the category average for the 1-year and since inception periods. The Trustees noted that the Sub-Advisor stated the peer group and category consists of funds that have a much greater concentration in U.S. Treasury and government securities, which performed better during the period. |
After reviewing the investment performance of the ETF, the Sub-Advisor’s experience managing the ETF, the Sub-Advisor’s historical investment performance, and other factors, the Board concluded that the overall investment performance of the ETF and the Sub-Advisor were satisfactory.
(iii) | Fees and Expenses. The Trustees first noted the management fee for the ETF under the Investment Sub-Advisory Agreement. The Trustees noted that there were no other accounts managed by the Sub-Advisor to which to compare fees but that the Trustees had previously determined as part of its consideration of the advisory agreement with OBP Capital, LLC that the overall advisory fee paid by the ETF was not unreasonable in relation to the services provided. |
Upon further consideration and discussion of the foregoing, the Board concluded that the fees to be paid to the Sub-Advisor were not unreasonable in relation to the nature and quality of the services to be provided by the Sub-Advisor and that they reflected charges that were within a range of what could have been negotiated at arm’s length.
(iv) | Profitability. The Board reviewed the Sub-Advisor’s profitability analysis in connection with its management of the ETF over the past twelve months. The Board noted that the Sub-Advisor did not realize a profit for the prior twelve months of operations. The Trustees discussed the level of profitability of the Sub-Advisor, noting, among other factors and circumstances, that the level of profitability was not excessive. |
(v) | Economies of Scale. In this regard, the Trustees reviewed the ETF’s operational history and noted that the size of the ETF had not provided an opportunity to realize economies of scale. The Trustees then reviewed the ETF’s fee arrangements for breakpoints or other provisions that would allow the ETF’s shareholders to benefit from economies of scale in the future as the ETF grows. It was pointed out that breakpoints in the advisory fee could be reconsidered in the future as the ETF grows. |
Conclusion. Having reviewed and discussed in depth such information from the Sub-Advisor as the Trustees believed to be reasonably necessary to evaluate the terms of the Investment Sub-Advisory Agreement and as assisted by the advice of legal counsel, the Trustees concluded that approval of the Investment Sub-Advisory Agreement was in the best interest of the shareholders of the ETF.
7. Liquidity Risk Management Program
In October 2016, the Securities and Exchange Commission (“SEC”) adopted Rule 22e-4, or the “Liquidity Rule,” under the Investment Company Act of 1940. The Liquidity Rule requires a mutual fund to adopt a liquidity risk management program (“Program”). In June 2018, the SEC adopted a requirement that a mutual fund disclose information about the operation and effectiveness of its Program in its reports to shareholders.
The ETF has adopted and implemented a Program pursuant to the Liquidity Rule, effective December 1, 2019. The Program is intended to provide a framework for: (1) assessing and managing the ETF’s liquidity risk (i.e., the risk that the ETF could not meet requests to redeem shares without significantly diluting remaining investors’ interests) based on a variety of factors, including the ETF’s investment strategy and liquidity of its portfolio investments, (2) classifying the liquidity of the ETF’s investments, (3) determining the ETF’s highly liquid investment minimum (“HLIM”), if applicable, (4) complying with the ETF’s illiquid investment limit, and (5) reporting to the ETF’s Board of Trustees. The Board of Trustees designated the individuals serving as the Advisor’s liquidity program administrator to serve as the Trust’s program administrator (the “Trust Program Administrator”) to administer the Program. The Trust Program Administrator established a governance committee to assist the Trust Program Administrator in administering the Program.
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF |
Additional Information (Unaudited) |
As of June 30, 2021 |
Under the Program, the ETF’s portfolio investments is classified into one of four liquidity categories defined by the SEC: highly liquid, moderately liquid, less liquid, and illiquid. Liquidity classifications take into account a variety of market, trading, and investment factors, including the ETF’s reasonably anticipated trade size, and the Program Administrator has engaged a third-party vendor to assist with the classification of portfolio investments.
The Liquidity Rule prohibits mutual funds and ETFs from acquiring investments that would cause their illiquid investments to exceed 15% of net assets. The Liquidity Rule also requires funds that do not primarily hold assets that are highly liquid investments to determine a minimum percentage of net assets to be invested in highly liquid investments (the HLIM). The Program includes provisions designed to comply with the 15% limit on illiquid investments and for determining and complying with the HLIM requirement, as applicable.
In accordance with the Liquidity Rule, the Program Administrator prepared, and the ETF’s Board of Trustees reviewed, a report regarding the operation and effectiveness of the Program for the period from December 1, 2019 through November 30, 2020. During the period, there were no liquidity events that materially impacted the ETF’s ability to timely meet redemptions without significantly diluting remaining investors’ interests. The report concluded that the Program remains reasonably designed to assess and manage the ETF’s liquidity risk, and that during the period the Program was implemented effectively.
8. Information about Trustees and Officers
The business and affairs of the ETF and the Trust are managed under the direction of the Board of Trustees of the Trust. Information concerning the Trustees and officers of the Trust and ETF is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust’s organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust’s organizational documents. The Statement of Additional Information of the ETF includes additional information about the Trustees and officers and is available, without charge, upon request by calling the ETF toll-free at 800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27804. The Independent Trustees received aggregate compensation of $9,001 during the fiscal year ended June 30, 2021 from the ETF for their services to the ETF and Trust.
Name and Date of Birth | Position held with Funds or Trust | Length of Time Served | Principal Occupation During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During Past 5 Years |
Independent Trustees | |||||
Thomas R. Galloway (10/1963) | Independent Trustee, Chairman | Since 12/16 | Independent Investor since 2012. | 5 | Independent Trustee of the Leeward Investment Trust for all of its series since 2016; Prophecy Alpha Fund I, a closed-end interval fund since 2015 (all registered investment companies). |
Jesse S. Eberdt, III (10/1959) | Independent Trustee | Since 12/16 | Managing Director at Tempus Durham, LLC (advisory firm) since 2010. | 5 | Independent Trustee of the Prophecy Alpha Fund I, a closed-end interval fund since 2015 (a registered investment company). |
(Continued) |
UVA Unconstrained Medium-Term Fixed Income ETF |
Additional Information (Unaudited) |
As of June 30, 2021 |
Name and Date of Birth | Position held with Funds or Trust | Length of Time Served | Principal Occupation During Past 5 Years |
Officers | |||
Katherine M. Honey (09/1973) | President and Principal Executive Officer | Since 12/16 | President of The Nottingham Company since 2018. EVP of The Nottingham Company from 2008 to 2018. |
Ashley H. Lanham (03/1984) | Treasurer, Principal Financial Officer, and Principal Accounting Officer | Since 12/16 | Director of Fund Administration. The Nottingham Company since 2008. |
Tracie A. Coop (12/1976) | Secretary | Since 12/19 | General Counsel, The Nottingham Company since 2019. Formerly, Vice President and Managing Counsel, State Street Bank and Trust Company from 2015 to 2019. Formerly, General Counsel for Santander Asset Management USA, LLC from 2013 to 2015. |
Matthew Baskir (07/1979) | Chief Compliance Officer | Since 06/20 | Compliance Director, The Nottingham Company, Inc., since 2020. Formerly, Consultant at National Regulatory Services from 2019 to 2020. Formerly, Counsel at Financial Industry Regulatory Authority (FINRA), Member Supervision from 2016-2019. Formerly Counsel at FINRA, Market Regulation Enforcement from 2014 – 2016. |
UVA Unconstrained Medium-Term Fixed Income ETF
is a series of
Spinnaker ETF Series
For Shareholder Service Inquiries: | For Investment Advisor Inquiries: |
The Bank of New York Mellon | Universal Value Advisors |
225 Liberty Street | 1 E. Liberty Street #406 |
New York, New York 10286 | Reno, Nevada 89501 |
Telephone: 800-205-7699 | Telephone: 775-284-7778 |
World Wide Web @: | World Wide Web @: |
bnymellon.com | universalvalueadvisors.com |
Item 2. | CODE OF ETHICS. |
(a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party (the “Code of Ethics”). |
(c) | During the period covered by this report, there have been no substantive amendments to the provisions of the Code of Ethics. |
(d) | During the period covered by this report, the registrant did not grant any waivers, to the provisions of the Code of Ethics. |
(f)(1) | A copy of the Code of Ethics is filed with this Form N-CSR as Exhibit 13(a)(1). |
Item 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
At this time, the registrant believes that the collective knowledge and experience provided by the members of the audit committee together offer the registrant adequate oversight for the registrant’s level of financial complexity.
Item 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
(a) | Audit Fees – Audit fees billed for the UVA Unconstrained Medium-Term Fixed Income ETF for the last two fiscal years are reflected in the table below. These amounts represent aggregate fees billed for each of the last two fiscal years for professional services rendered by the registrant’s independent accountant, BBD, LLP (“Accountant”), for the annual audit of the Fund’s financial statements or services that are normally provided by the Accountant in connection with the registrant’s statutory and regulatory filings or engagements for those fiscal years. |
Fund | June 30, 2020 | June 30, 2021 |
UVA Unconstrained Medium-Term Fixed Income ETF | $14,200 | $14,200 |
(b) | Audit-Related Fees – There were no additional fees billed in the fiscal years ended June 30, 2020 and June 30, 2021 for assurance and related services by the Accountant that were reasonably related to the performance of the audit of the Fund’s financial statements and that were not reported under paragraph (a) of this Item. |
(c) | Tax Fees – The tax fees billed in each of the last two fiscal years for professional services rendered by the Accountant for tax compliance, tax advice, and tax planning are reflected in the table below. These services were for the completion of the Fund’s federal and state income tax returns, excise tax returns, and assistance with distribution calculations. |
Fund | June 30, 2020 | June 30, 2021 |
UVA Unconstrained Medium-Term Fixed Income ETF | $3,000 | $3,000 |
(d) | All Other Fees – There were no other fees billed in each of the fiscal years ended June 30, 2020 and June 30, 2021 for products and services by the Accountant, other than the services reported in paragraphs (a) through (c) of this item. |
(e)(1) | The registrant’s Board of Trustees pre-approved the engagement of the Accountant for the last two fiscal years at an audit committee meeting of the Board of Trustees called for such purpose; and will pre-approve the Accountant for each fiscal year thereafter at an audit committee meeting called for such purpose. The charter of the audit committee states that the audit committee should pre-approve any audit services and, when appropriate, evaluate and pre-approve any non-audit services provided by the Accountant to the registrant and to pre-approve, when appropriate, any non-audit services provided by the Accountant to the registrant’s investment adviser, or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant if the engagement relates directly to the operations and financial reporting of the registrant. |
(2) | There were no services as described in each of paragraph (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(f) | Not applicable. |
(g) | Aggregate non-audit fees billed by the Accountant to the Fund for services rendered for the fiscal years ended June 30, 2020 and June 30, 2021 were $3,000 and $3,000, respectively. There were no fees billed by the Accountant for non-audit services rendered to the Fund’s investment adviser, or any other entity controlling, controlled by, or under common control with the Fund’s investment adviser. |
(h) | Not applicable. |
Item 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
(a) | The Fund is a listed issuer as defined in Rule 10A-3 under the Exchange Act of 1934 and has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act of 1934. The Fund’s audit committee members are Thomas R. Galloway and Jesse S. Eberdt, III. |
(b) | Not Applicable. |
Item 6. | SCHEDULE OF INVESTMENTS. |
A copy of the schedule of investments of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
Item 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
Item 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
Item 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None.
Item 11. | CONTROLS AND PROCEDURES. |
(a) | The President and Principal Executive Officer and the Treasurer and Principal Financial Officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the Investment Company Act of 1940 and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as of a date within 90 days of the filing of this report. |
(b) | There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END FUND MANAGEMENT INVESTMENT COMPANIES |
Not applicable.
Item 13. | EXHIBITS. |
(a)(1) | Code of Ethics required by Item 2 of Form N-CSR is filed herewith. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 are filed herewith. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Spinnaker ETF Series | |
/s/ Katherine M. Honey | |
Date: October 22, 2021 | Katherine M. Honey President and Principal Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Katherine M. Honey | |
Date: October 22, 2021 | Katherine M. Honey President and Principal Executive Officer |
/s/ Ashley H. Lanham | |
Date: October 22, 2021 | Ashley H. Lanham Treasurer, Principal Accounting Officer, and Principal Financial Officer |