UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number:
811-23812
Elevation Series Trust
(Exact Name of Registrant as Specified in Charter)
1700 Broadway, Suite 1850
Denver, CO 80290
(Address of Principal Executive Offices) (Zip Code)
Chris Moore
Elevation Series Trust
1700 Broadway, Suite 1850
Denver, CO 80290
(Name and Address of Agent for Service)
Registrant’s Telephone Number, including Area Code:
303-226-4150
With a copy to:
JoAnn M. Strasser
Thompson Hine LLP
17th Floor
41 South High Street
Columbus, Ohio 43215
Date of Fiscal Year End: October 31st
Date of Reporting Period: November 1, 2022 – October 31, 2023
Item 1. Reports to Stockholders.
| (a) | The Report to Stockholders is attached herewith. |
(NYSE ARCA, Inc.: SRHQ)
Annual Report
October 31, 2023
TABLE OF CONTENTS
SRH U.S. Quality ETF
SHAREHOLDER LETTER
October 31, 2023 (Unaudited)
Management Discussion of Fund Performance
The SRH U.S. Quality ETF (the “Fund”) seeks to provide investment results (before fees and expenses) that correspond to the SRH U.S. Quality Index (the “Underlying Index”). The Fund employs a “passive management” – or indexing – investment approach, designed to track the performance of the Underlying Index, which means that the Fund does not attempt to outperform the Underlying Index or take defensive positions in declining markets. The Fund will generally use a “replication” strategy, meaning it will invest in all of the component securities of the Underlying Index.
The Underlying Index is intended to capture the performance of U.S. companies that exhibit consistent and moderate revenue growth but do not trade at excessive valuations. The Underlying Index has been designed by Rocky Mountain Advisers, LLC to provide exposure to a diversified portfolio of U.S. companies featuring value, growth, and quality characteristics while maintaining overall market exposure close to that of widely followed, broad-based U.S. equity benchmarks.
This report covers the period beginning September 1, 2023 through October 31, 2023 (the “Reporting Period”), aligning with the Fund's recent shift in fiscal year end from August 31 to October 31. During the Reporting Period, the Fund generated a total return of -7.00% on net assets, while the Underlying Index returned -6.95%. On a market price basis, the Fund returned -6.98% during the Reporting Period.
The largest positive contributors to performance during the Reporting Period were Dell Technologies and FTI Consulting, which contributed 0.44% and 0.22%, respectively, to the Fund’s total return on net assets. The largest detractors from the Fund’s performance during the same period were Owens Corning and Jones Lang LaSalle, which contributed -0.50% and -0.50%, respectively, to the Fund’s total return on net assets. The Fund’s investments in the Real Estate, Financials, and Technology sectors were the largest detractors from the Fund’s performance during the Reporting Period.
During the Reporting Period, U.S. equity markets declined as the U.S. Federal Reserve (the “Fed”) signaled that higher interest rates may persist to curb inflation. The Federal Open Market Committee voted to keep rates unchanged during its September meeting as U.S. economic indicators, on average, continued to show resiliency, posting stronger than expected results during the Reporting Period. Despite resilient U.S. economic activity, The Fed’s policy outlook of keeping interest rates higher for a longer period of time depressed U.S. market growth outlook as the U.S. equity market, as represented by the Morningstar US Core Index, returned -7.42% during the Reporting Period.
Effective September 1, 2023, the Board approved changing the fiscal year-end of the Fund from August 31 to October 31.
Thank you for your investment in the Fund.
| * | The Morningstar US Core Index is a market capitalization free-float weighted index designed to provide consistent representation of the core segment of the US equity market, with no overlapping constituents across styles. Aligned with the Morningstar Style Box™, the index is underpinned by a 10-factor model that paints a holistic picture of style. |
SRH U.S. Quality ETF
FUND PERFORMANCE
October 31, 2023 (Unaudited)
Growth of $10,000 Investment
| Fund Performance as of October 31, 2023 | | |
| | 2 Months | 1 Year | Since Inception(a) |
| SRH U.S. Quality ETF - NAV | -7.00% | 4.68% | 8.43% |
| SRH U.S. Quality ETF - MKT(b) | -6.98% | 4.66% | 8.49% |
| SRH U.S. Quality Index(c)(d) | -6.95% | 5.05% | 8.82% |
Performance data quoted represents past performance; past performance does not guarantee future results. The 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 of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.srhfunds. com/srhq.
| (a) | The Fund commenced operations on October 4, 2022, and first traded on the exchange on October 5, 2022. |
| (b) | Market Price means the official closing price of a share or, if it more accurately reflects the market value of a share at the time when the Fund calculates current net asset value per share, the price that is the midpoint of the bid-ask spread as of that time. It does not represent the returns an investor would receive if shares were traded at other times |
| (c) | Indexes are unmanaged statistical composites and their returns assume reinvestment of dividends and do not reflect fees or expenses. Such costs would lower performance. It is not possible to invest directly in an index. |
| (d) | The SRH U.S. Quality Index is designed to track the performance of the stocks of domestic (U.S.) companies that have moderate and consistent revenue growth but do not trade at excessive valuations. Stocks are screened through value, growth, and quality metrics to determine eligibility in the Index |
This chart assumes an initial gross investment of $10,000 made on October 4, 2022. Returns shown include the reinvestment of all dividends but do not reflect the deduction of taxes that you may pay on Fund distributions or redemption of Fund shares.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. Eastern time (when NAV is normally determined for most ETFs) and do not represent the returns you would receive if you traded shares at other times. Ordinary brokerage commissions may apply and will reduce returns.
Returns include reinvestment of dividends and capital gains.
Investing involves risk, including the possible loss of principal and fluctuation of value.
SRH U.S. Quality ETF
FUND PERFORMANCE
October 31, 2023 (Continued) (Unaudited)
| Sector Diversification | | % of Net Assets | | | Value (Note 2) | |
| COMMON STOCKS |
| Technology | | | 26.90 | % | | $ | 29,854,146 | |
| Industrials | | | 18.32 | | | | 20,334,813 | |
| Health Care | | | 14.62 | | | | 16,216,859 | |
| Consumer Discretionary | | | 10.01 | | | | 11,097,250 | |
| Materials | | | 7.17 | | | | 7,953,296 | |
| Communications | | | 6.50 | | | | 7,209,315 | |
| Consumer Staples | | | 6.05 | | | | 6,706,943 | |
| Financials | | | 5.92 | | | | 6,571,765 | |
| Real Estate | | | 4.36 | | | | 4,843,268 | |
| TOTAL COMMON STOCKS | | | 99.85 | % | | $ | 110,787,655 | |
| | | | | | | | | |
| TOTAL MONEY MARKET FUNDS | | | 0.14 | % | | $ | 157,371 | |
| | | | | | | | | |
| TOTAL INVESTMENTS | | | 99.99 | | | | 110,945,026 | |
| Other Assets In Excess of Liabilities | | | 0.01 | | | | 15,289 | |
| NET ASSETS | | | 100.00 | % | | $ | 110,960,315 | |
Percentages are stated as a percent of net assets.
SRH U.S. Quality ETF
EXPENSE EXAMPLE
October 31, 2023 (Unaudited)
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing costs, including management fees and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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 entire period as indicated below in the Expense Example Table.
Actual Expenses
The first line of the table provides information about actual account values based on actual returns 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 (for example, 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 within the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’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 Fund 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 mutual 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, 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.
| | | Net Expense
Ratio(a) | | | Beginning
Account Value
September 1, 2023 | | | Ending
Account Value
October 31, 2023 | | | Expenses Paid
During Period
September 1, 2023
to October 31, 2023(b) |
| SRH U.S. Quality ETF | | | | | | | | | | | | | | | | |
| Actual | | | 0.35 | % | | $ | 1,000.00 | | | $ | 999.91 | | | $ | 0.58 | |
| Hypothetical (5% return before expenses) | | | 0.35 | % | | $ | 1,000.00 | | | $ | 1,007.77 | | | $ | 0.59 | |
| (a) | Annualized, based on the Fund's most recent fiscal half year expenses. Such figures do not reflect acquired fund fees and expenses. |
| (b) | The Fund’s fiscal year changed from August 31st to October 31st. Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (61), divided by 365. |
SRH U.S. Quality ETF
SCHEDULE OF INVESTMENTS
October 31, 2023
| | | Shares | | | Value | |
| COMMON STOCKS - 99.85% | |
| Consumer Discretionary Products - 4.83% | |
| Masco Corp. | | | 38,464 | | | $ | 2,003,590 | |
| NVR, Inc.(a) | | | 343 | | | | 1,856,528 | |
| Polaris, Inc. | | | 17,307 | | | | 1,495,671 | |
| | | | | | | | 5,355,789 | |
| | |
| Consumer Discretionary Services - 1.55% | |
| TKO Group Holdings, Inc. | | | 20,956 | | | | 1,717,973 | |
| | | | | | | | | |
| Consumer Staple Products - 3.98% | |
| Coca-Cola Consolidated, Inc. | | | 3,575 | | | | 2,275,166 | |
| Molson Coors Beverage Co., Class B | | | 37,005 | | | | 2,137,779 | |
| | | | | | | | 4,412,945 | |
| | |
| Financial Services - 5.92% | |
| BlackRock, Inc. | | | 2,859 | | | | 1,750,508 | |
| Credit Acceptance Corp.(a) | | | 4,386 | | | | 1,765,058 | |
| Invesco Ltd. | | | 116,749 | | | | 1,514,235 | |
| Morgan Stanley | | | 21,773 | | | | 1,541,964 | |
| | | | | | | | 6,571,765 | |
| | |
| Health Care - 14.62% | |
| Amedisys, Inc.(a) | | | 26,002 | | | | 2,378,923 | |
| Cencora, Inc. | | | 11,945 | | | | 2,211,617 | |
| Elevance Health, Inc. | | | 4,160 | | | | 1,872,375 | |
| The Ensign Group, Inc. | | | 20,039 | | | | 1,935,767 | |
| Fortrea Holdings, Inc.(a) | | | 8,345 | | | | 236,998 | |
| Humana, Inc. | | | 3,944 | | | | 2,065,433 | |
| Laboratory Corp. of America Holdings | | | 8,345 | | | | 1,666,747 | |
| Select Medical Holdings Corp. | | | 73,981 | | | | 1,681,588 | |
| UnitedHealth Group, Inc. | | | 4,047 | | | | 2,167,411 | |
| | | | | | | | 16,216,859 | |
| | |
| Industrial Products - 4.74% | |
| Huntington Ingalls Industries, Inc. | | | 9,246 | | | | 2,032,456 | |
| Lockheed Martin Corp. | | | 4,046 | | | | 1,839,473 | |
| The Toro Co. | | | 17,225 | | | | 1,392,469 | |
| | | | | | | | 5,264,398 | |
Industrial Services - 13.58%
| ADT, Inc. | | | 264,825 | | | | 1,498,909 | |
| Applied Industrial Technologies, Inc. | | | 13,456 | | | | 2,065,631 | |
| EMCOR Group, Inc. | | | 11,763 | | | | 2,430,824 | |
| FTI Consulting, Inc.(a) | | | 9,702 | | | | 2,059,347 | |
| Insperity, Inc. | | | 15,754 | | | | 1,667,403 | |
| Resideo Technologies, Inc.(a) | | | 104,742 | | | | 1,516,664 | |
| TriNet Group, Inc.(a) | | | 23,724 | | | | 2,437,641 | |
| United Parcel Service, Inc., Class B | | | 9,869 | | | | 1,393,996 | |
| | | | | | | | 15,070,415 | |
| | | | Shares | | | | Value | |
| Materials - 7.17% | | | | | | | | |
| Eagle Materials, Inc. | | | 13,032 | | | $ | 2,005,755 | |
| Owens Corning | | | 19,963 | | | | 2,263,205 | |
| Silgan Holdings, Inc. | | | 35,678 | | | | 1,429,261 | |
| Westrock Co. | | | 62,763 | | | | 2,255,075 | |
| | | | | | | | 7,953,296 | |
| | | | | | | | | |
| Media - 6.50% | | | | | | | | |
| Altice USA, Inc., Class A(a) | | | 559,178 | | | | 1,616,025 | |
| Comcast Corp., Class A | | | 50,446 | | | | 2,082,915 | |
| Fox Corp., Class A | | | 56,216 | | | | 1,708,404 | |
| GoDaddy, Inc., Class A(a) | | | 24,607 | | | | 1,801,971 | |
| | | | | | | | 7,209,315 | |
| | | | | | | | | |
| Real Estate - 4.36% | | | | | | | | |
| CBRE Group, Inc., Class A(a) | | | 26,266 | | | | 1,821,285 | |
| Cushman & Wakefield PLC(a) | | | 181,657 | | | | 1,338,812 | |
| Jones Lang LaSalle, Inc.(a) | | | 13,158 | | | | 1,683,171 | |
| | | | | | | | 4,843,268 | |
| | | | | | | | | |
| Retail & Wholesale - Discretionary - 3.63% | | | | | | | | |
| AutoZone, Inc.(a) | | | 778 | | | | 1,927,207 | |
| O’Reilly Automotive, Inc.(a) | | | 2,253 | | | | 2,096,281 | |
| | | | | | | | 4,023,488 | |
| | | | | | | | | |
| Retail & Wholesale - Staples - 2.07% | | | | | | | | |
| Sprouts Farmers Market, Inc.(a) | | | 54,593 | | | | 2,293,998 | |
| | | | | | | | | |
| Software & Tech Services - 15.97% | | | | | | | | |
| Akamai Technologies, Inc.(a) | | | 24,424 | | | | 2,523,732 | |
| Box, Inc., Class A(a) | | | 71,468 | | | | 1,776,694 | |
| CACI International, Inc., Class A(a) | | | 6,455 | | | | 2,096,326 | |
| Euronet Worldwide, Inc.(a) | | | 17,113 | | | | 1,314,963 | |
| Gartner, Inc.(a) | | | 5,875 | | | | 1,950,735 | |
| Genpact Ltd. | | | 41,425 | | | | 1,389,394 | |
| Leidos Holdings, Inc. | | | 20,774 | | | | 2,059,119 | |
| PayPal Holdings, Inc.(a) | | | 25,213 | | | | 1,306,033 | |
| Qualys, Inc.(a) | | | 14,709 | | | | 2,249,742 | |
| TTEC Holdings, Inc. | | | 51,427 | | | | 1,058,368 | |
| | | | | | | | 17,725,106 | |
See Notes to Financial Statements
SRH U.S. Quality ETF
SCHEDULE OF INVESTMENTS
October 31, 2023 (Continued)
| | | | Shares | | | | Value | |
| Tech Hardware & Semiconductors - 10.93% | | | | | |
| Arrow Electronics, Inc.(a) | | | 15,332 | | | $ | 1,738,802 | |
| Broadcom, Inc. | | | 2,983 | | | | 2,509,807 | |
| Dell Technologies, Inc. | | | 47,560 | | | | 3,182,240 | |
| FormFactor, Inc.(a) | | | 60,044 | | | | 2,034,291 | |
| Jabil, Inc. | | | 21,693 | | | | 2,663,900 | |
| | | | | | | | 12,129,040 | |
| | | | | | | | | |
| TOTAL COMMON STOCKS | | | | | | | | |
| (Cost $106,623,727) | | | | | | | 110,787,655 | |
| | | | | | | | | |
| MONEY MARKET FUNDS - 0.14% | | | | | | | | |
| Invesco Government & Agency Portfolio, Institutional Class, 7-Day Yield - 5.27%(b) | | | 157,371 | | | | 157,371 | |
| | | | | | | | | |
| TOTAL MONEY MARKET FUNDS | | | | | | | | |
| (Cost $157,371) | | | | | | | 157,371 | |
| | | | | | | | | |
| TOTAL INVESTMENTS - 99.99% | | | | | | | | |
| (Cost $106,781,098) | | | | | | $ | 110,945,026 | |
| | | | | | | | | |
| Other Assets In Excess of Liabilities - 0.01% | | | | | | | 15,289 | |
| | | | | | | | | |
| NET ASSETS - 100.00% | | | | | | $ | 110,960,315 | |
| (a) | Non-income producing security. |
| (b) | Rate disclosed is 7-Day Yield as of October 31, 2023. |
Percentages are stated as a percent of net assets.
See Notes to Financial Statements
SRH U.S. Quality ETF
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2023
| ASSETS: | | | |
| Investments, at value | | $ | 110,945,026 | |
| Dividends receivable | | | 48,776 | |
| Total Assets | | | 110,993,802 | |
| LIABILITIES: | | | | |
| Payable to Investment Advisor | | | 33,487 | |
| Total Liabilities | | | 33,487 | |
| NET ASSETS | | $ | 110,960,315 | |
| | | | | |
| NET ASSETS CONSIST OF | | | | |
| Paid in capital | | $ | 107,764,522 | |
| Total distributable earnings | | | 3,195,793 | |
| NET ASSETS | | $ | 110,960,315 | |
| | | | | |
| Investments, At Cost | | $ | 106,781,098 | |
| | | | | |
| Net asset value: | | | | |
| Net assets | | $ | 110,960,315 | |
| Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | | | 4,004,000 | |
| Net asset value, price per share | | | 27.71 | |
See Notes to Financial Statements
SRH U.S. Quality ETF
STATEMENTS OF OPERATIONS
October 31, 2023
| | | For the Period Ended
October 31, 2023 (a) | | | For the Period
October 4, 2022
(Commencement of
Operations) through
August 31, 2023 | |
| INVESTMENT INCOME: | | | | | | | | |
| Dividends | | $ | 260,734 | | | $ | 1,277,577 | |
| Total Investment Income | | | 260,734 | | | | 1,277,577 | |
| EXPENSES: | | | | | | | | |
| Investment advisory fees (Note 3) | | | 67,034 | | | | 334,670 | |
| Total Expenses | | | 67,034 | | | | 334,670 | |
| NET INVESTMENT INCOME | | | 193,700 | | | | 942,907 | |
| Net realized gain/(loss) on: | | | | | | | | |
| Investments | | | (1,556 | ) | | | (1,031,267 | ) |
| Investments sold in-kind | | | — | | | | 4,431,052 | |
| Total Net Realized Gain/(Loss) | | | (1,556 | ) | | | 3,399,785 | |
| Net change in unrealized appreciation/depreciation on: | | | | | | | | |
| Investments | | | (8,538,980 | ) | | | 12,702,908 | |
| Total Net Change in Unrealized Appreciation/Depreciation | | | (8,538,980 | ) | | | 12,702,908 | |
| NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS | | | (8,540,536 | ) | | | 16,102,693 | |
| NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (8,346,836 | ) | | $ | 17,045,600 | |
| (a) | Effective September 1, 2023, the Board approved changing the fiscal year-end of the Fund from August 31 to October 31. |
See Notes to Financial Statements
SRH U.S. Quality ETF
STATEMENTS OF CHANGES IN NET ASSETS
October 31, 2023
| | | For the Period Ended
October 31, 2023 (a) | | | For the Period
October 4, 2022
(Commencement of
Operations) through
August 31, 2023 | |
| OPERATIONS | | | | | | | | |
| Net investment income | | $ | 193,700 | | | $ | 942,907 | |
| Net realized gain/(loss) | | | (1,556 | ) | | | 3,399,785 | |
| Net change in unrealized appreciation/depreciation | | | (8,538,980 | ) | | | 12,702,908 | |
| Net Increase/(Decrease) in net assets resulting from operations | | | (8,346,836 | ) | | | 17,045,600 | |
| DISTRIBUTIONS TO SHAREHOLDERS | | | | | | | | |
| From distributable earnings | | | (290,650 | ) | | | (781,269 | ) |
| Net decrease in net assets from distributions | | | (290,650 | ) | | | (781,269 | ) |
| BENEFICIAL INTEREST TRANSACTIONS (NOTE 5) | | | | | | | | |
| Shares sold | | | — | | | | 142,308,030 | |
| Shares redeemed | | | — | | | | (39,074,560 | ) |
| Net Increase in net assets derived from beneficial interest transactions | | | — | | | | 103,233,470 | |
| Net Increase/(Decrease) in net assets | | | (8,637,486 | ) | | | 119,497,801 | |
| NET ASSETS | | | | | | | | |
| Beginning of period | | | 119,597,801 | | | | 100,000 | |
| End of period | | $ | 110,960,315 | | | $ | 119,597,801 | |
| (a) | Effective September 1, 2023, the Board approved changing the fiscal year-end of the Fund from August 31 to October 31. |
See Notes to Financial Statements
SRH U.S. Quality ETF
FINANCIAL HIGHLIGHTS
October 31, 2023
| | | For the Period
Ended
October 31, 2023 (a) | | For the Period
October 4, 2022
(Commencement of
Operations)
through
August 31, 2023 (b) |
| Net Asset Value, Beginning of Period | | $ | 29.87 | | | $ | 25.66 | |
| | | | | | | | | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | |
| Net investment income(c) | | | 0.05 | | | | 0.25 | |
| Net realized and unrealized gain/(loss) | | | (2.14 | ) | | | 4.17 | |
| Total from Investment Operations | | | (2.09 | ) | | | 4.42 | |
| | | | | | | | | |
| DISTRIBUTIONS: | | | | | | | | |
| From distributable earnings | | | (0.07 | ) | | | (0.21 | ) |
| Total Distributions | | | (0.07 | ) | | | (0.21 | ) |
| | | | | | | | | |
| Net Increase/Decrease in net asset value | | | (2.16 | ) | | | 4.21 | |
| Net Asset Value, End of Period | | $ | 27.71 | | | $ | 29.87 | |
| TOTAL RETURN(d) | | | (7.00 | %) | | | 17.29 | % |
| | | | | | | | | |
| RATIOS/SUPPLEMENTAL DATA:(e) | | | | | | | | |
| Net Assets, End of Period (000s) | | $ | 110,960 | | | $ | 119,598 | |
| Ratio of net operating expenses to average net assets | | | 0.35 | %(f) | | | 0.35 | %(f) |
| Ratio of net investment income to average net assets | | | 1.01 | %(f) | | | 0.98 | %(f) |
| Portfolio turnover rate(g)(h) | | | 0 | % | | | 41 | % |
| (a) | Effective September 1, 2023, the Board approved changing the fiscal year-end of the Fund from August 31 to October 31. |
| (b) | The net asset value at the beginning of the period represents the initial shares outstanding on October 4, 2022 (Commencement of Operations). |
| (c) | Calculated based on the average number of common shares outstanding during each fiscal period. |
| (d) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period and redemption at the net asset value on the last day of the period and assuming all distributions are reinvested. Total return calculated for a period of less than one year is not annualized. |
| (e) | Ratios do not reflect the proportionate share of income and expenses of other investment companies which the Fund invests (i.e. those listed under Money Market Funds). |
| (g) | Excludes the impact of in-kind transactions. |
| (h) | Portfolio turnover rate for periods less than one full year have not been annualized. |
See Notes to Financial Statements.
SRH U.S. Quality ETF
NOTES TO FINANCIAL STATEMENTS
October 31, 2023
NOTE 1 - ORGANIZATION
Elevation Series Trust (the “Trust”) was organized on March 7, 2022, as a Delaware statutory trust, and is authorized to issue multiple investment series. The Trust is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. These financial statements relate to one series of the Trust, SRH U.S. Quality ETF (the “Fund”). The Fund’s investment objective is to provide investment results (before fees and expenses) that correspond to the SRH U.S. Quality Index (the “Index”). The Index is intended to capture the performance of U.S. companies that exhibit consistent and moderate revenue growth but do not trade at excessive valuations. The creator of the Index, Rocky Mountain Advisers, LLC, has designed the Index to provide exposure to a diversified portfolio of U.S. companies featuring value, growth, and quality characteristics while maintaining overall market exposure close to that of widely followed, broad-based U.S. equity benchmarks. The Fund commenced operations on October 4, 2022.
The Fund currently offers an unlimited number of shares of a single class, without par value, which are listed and traded on the NYSE Arca, Inc (the “Exchange”). The Fund issues and redeems shares only in creation units (“Creation Units”) which are offered on a continuous basis through Paralel Distributors LLC (the “Distributor”), without a sales load (but subject to transaction fees, if applicable), at the net asset value per share next determined after receipt of an order in proper form pursuant to the terms of the Authorized Participant Agreement, calculated as of the scheduled close of regular trading on the Exchange on any day on which the Exchange is open for business. The Fund does not issue fractional Creation Units. The offering of the Fund’s shares is registered under the Securities Act of 1933, as amended.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). This requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates. The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Topic 946 “Financial Services – Investment Companies.”
Portfolio Valuation: The net asset value per share (“NAV”) of the Fund is determined no less frequently than daily, on each day that the New York Stock Exchange (“NYSE”) is open for trading, as of the close of regular trading on the NYSE (normally 4:00 p.m. Eastern time). The NAV is determined by dividing the value of the Fund’s total assets less its liabilities by the number of shares outstanding.
Domestic equity securities traded on any exchange other than the NASDAQ Stock Market LLC (“NASDAQ”) are valued at the last sale price on the business day. If there has been no sale that business day, the securities are valued at the mean of the most recent bid and ask prices on the business day. Securities traded on NASDAQ are valued at the NASDAQ Official Closing Price as determined by NASDAQ. Portfolio securities traded on more than one securities exchange are valued at the last sale price on the business day. Portfolio securities traded in the over-the-counter market, but excluding NASDAQ, are valued at the last quoted sale price in such market. Debt obligations with maturities of 60 days or less are valued at amortized cost.
Securities for which market quotations are not readily available, including circumstances under which Paralel Advisors LLC (the “Adviser”) determines that prices received are unreliable, are valued at fair value according to procedures established and adopted by the Fund’s Board of Trustees (the “Board”). Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated the Adviser as the Fund’s valuation designee with respect to the fair valuation of the Fund’s portfolio securities, subject to oversight by and periodic reporting to the Board.
The Fund discloses the classification of its fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.
Various inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:
Level 1 – Unadjusted quoted prices in active markets for identical investments, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;
Level 2 – Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and
Level 3 – Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.
The following is a summary of the Fund’s investments in the fair value hierarchy as of October 31, 2023:
| Investments in Securities at Value(a) | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Common Stocks | | $ | 110,787,655 | | | $ | — | | | $ | — | | | $ | 110,787,655 | |
| Money Market Funds | | | 157,371 | | | | — | | | | — | | | | 157,371 | |
| Total | | $ | 110,945,026 | | | $ | — | | | $ | — | | | $ | 110,945,026 | |
| (a) | For detailed descriptions and other security classifications, see the accompanying Schedule of Investments. |
SRH U.S. Quality ETF
NOTES TO FINANCIAL STATEMENTS
October 31, 2023 (Continued)
Securities Transactions and Investment Income: Securities transactions are recorded as of the trade date. Realized gains and losses from securities sold are recorded on the identified cost basis. Dividend income is recorded as of the ex-dividend date or for certain foreign securities when the information becomes available to the Fund. Certain dividend income from foreign securities will be recorded, in the exercise of reasonable diligence, as soon as the Fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date and may be subject to withholding taxes in these jurisdictions. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. Non-cash dividends included in dividend income, if any, are recorded at the fair value of the securities received. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis using the effective yield method.
Distributions to Shareholders: Dividends from net investment income of the Fund, if any, are declared and paid quarterly or as the Board may determine from time to time. Distributions of net realized capital gains earned by the Fund, if any, are declared and distributed at least annually.
Federal Income Tax: For federal income tax purposes, the Fund currently intends to qualify, as a regulated investment company under the provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, by distributing substantially all of its earnings to its stockholders. Accordingly, no provision for federal income or excise taxes has been made.
Income and capital gain distributions are determined and characterized in accordance with income tax regulations, which may differ from GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities held by the Fund, timing differences and differing characterization of distributions made by the Fund as a whole.
As of and during the period ended October 31, 2023, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expenses, in the Statement of Operations. As of October 31, 2023, there were no interest or penalties incurred by The Fund. The Fund files U.S. federal, state, and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return for federal purposes and four years for most state returns. There are no uncertain tax positions that require a provision for income taxes.
NOTE 3 - ADVISORY FEES AND OTHER AFFILIATED TRANSACTIONS
The Adviser serves as the investment adviser to the Fund. Pursuant to the Investment Advisory Agreement, the Fund pays the Adviser a Unitary Management Fee, which is calculated daily and paid monthly, at an annual rate of 0.35% of the Fund’s average daily net assets. Out of the Unitary Management Fee, the Adviser has agreed to pay substantially all of the expenses of the Fund, including the cost of transfer agency, custody, fund administration, trustees and other non-distribution related services necessary for the Fund to operate, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, dividends and other expense on securities sold short, taxes and related services, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses.
Vident Advisory, LLC (“VA” or the “Sub-Adviser”) has served as the sub-adviser to the Fund since July 14, 2023. Pursuant to a Sub-Advisory Agreement between the Trust, the Adviser, and the Sub-Adviser (the “VA Sub-Advisory Agreement”), the Sub-Adviser is responsible for trading portfolio securities on behalf of the Fund, including selecting broker-dealers to execute purchase and sale transactions as instructed by the Adviser or in connection with any rebalancing or reconstitution of the Index. For the services it provides to the Fund, the Sub-Adviser is compensated by the Adviser out of its Unitary Management Fee. Vident Investment Advisory, LLC (“VIA”), an affiliate of VA, served as the Fund’s sub-adviser from the Fund’s commencement until July 14, 2023, when its sub-advisory agreement with the Adviser and the Trust was terminated due to a change of control of VIA’s parent company, at which point VA replaced VIA in the sub-advisory role. During the period it served as the Fund’s sub-adviser, VIA provided materially identical services as VIA and was compensated by the Adviser out of its Unitary Management Fee.
Paralel Technologies LLC (the “Administrator”), the parent company of the Adviser and the Distributor, serves as the Fund’s administrator and fund accountant pursuant to an Administration and Fund Accounting Agreement. The Administrator provides the Fund with certain administrative, tax and accounting services. Fees for these services are paid by the Adviser out of its Unitary Management Fee.
The Distributor, a wholly owned subsidiary of the Administrator and affiliate of the Adviser, acts as the principal underwriter for the Fund and distributes shares pursuant to a Distribution Agreement. Shares are continuously offered for sale by the Distributor only in Creation Units as described in Note 1. The Distributor is a broker-dealer registered under the Securities Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority.
State Street Bank and Trust Company (“State Street”) serves as the custodian of the Fund’s assets pursuant to a Custody Agreement and as the transfer agent pursuant to a Transfer Agent Agreement. Fees for these services are paid out of its Unitary Management Fee.
The officers and the Interested Trustee of the Trust are officers or employees of the Adviser, Administrator, and/or Distributor. No persons (other than the Independent Trustees) receive compensation for acting as a trustee or officer. For their services, Independent Trustees receive a quarterly retainer, meeting fees, as well as reimbursement for reasonable travel, lodging and other expenses in connection with attendance at meetings. Trustee fees and expenses are paid by the Adviser out of its Unitary Management Fee.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 2023, the cost of purchases and proceeds from sales of investment securities, excluding short-term investments and in-kind transactions, were as follows:
| Fund | | Purchases | | | Sales | |
| SRH U.S. Quality ETF | | $ | — | | | $ | 91,013 | |
SRH U.S. Quality ETF
NOTES TO FINANCIAL STATEMENTS
October 31, 2023 (Continued)
For the period September 1, 2023 through October 31, 2023, in-kind transactions associated with creations and redemptions were as follows:
| Fund | | In-Kind Purchases | | | In-Kind Sales | |
| SRH U.S. Quality ETF | | $ | — | | | $ | — | |
NOTE 5 - BENEFICIAL INTEREST TRANSACTIONS
Shares are purchased from or redeemed by the Fund only in Creation Unit size aggregations generally of 50,000 Shares with Authorized Participants. Authorized Participants must be either broker-dealers or other participants in the clearing process through the Continuous Net Settlement System of the NSCC, clearing agencies registered with the SEC, or DTC Participants and must execute a Participant Agreement with the Distributor and accepted by State Street. Transactions of Creation Units generally consist of an in-kind designated portfolio of securities (“Deposit Securities”), with a cash component equal to the difference between the Deposit Securities and the NAV per unit of the Fund on the transaction date. The Fund may require cash to replace Deposit Securities if such securities are not available in sufficient quantities for delivery, are not eligible to be transferred or traded, are restricted under securities laws, or as a result of other situations.
Beneficial Interest transactions were as follows:
| | | | | | | |
| | | For the Period Ended
October 31, 2023 | | | For the Period Ended
August 31, 2023 | |
| Shares sold | | | — | | | | 5,400,000 | |
| Shares redeemed | | | — | | | | (1,400,000 | ) |
| Net increase in shares outstanding | | | — | | | | 4,000,000 | |
NOTE 6 - TAX BASIS DISTRIBUTIONS AND TAX BASIS INFORMATION
There was no reclassification for permanent book and tax basis differences at October 31, 2023, among paid in capital and total distributable earnings for the Fund.
The character of distributions paid on a tax basis during the period ended October 31, 2023 was as follows:
| Fund | | Ordinary
Income | | | Long-Term
Capital
Gain | |
| SRH U.S. Quality ETF | | $ | 290,650 | | | $ | — | |
| | | | | | | | | |
The character of distributions paid on a tax basis during the period ended August 31, 2023 was as follows:
| Fund | | Ordinary
Income | | | Long-Term
Capital
Gain | |
| SRH U.S. Quality ETF | | $ | 781,269 | | | $ | — | |
| | | | | | | | | |
The amount of net unrealized appreciation/depreciation and the cost of investment securities for tax purposes at October 31, 2023 were as follows:
| | | Gross
Appreciation
(excess of value
over tax cost) | | | Gross
Depreciation
(excess of tax
cost over value) | | | Net
Appreciation/
(Depreciation)
of Foreign Currency | | | Net Unrealized
Appreciation/
(Depreciation) | | | Cost of
Investments for
Income Tax
Purposes | |
| SRH U.S. Quality ETF | | $ | 11,046,160 | | | $ | (6,882,232 | ) | | $ | — | | | $ | 4,163,928 | | | $ | 106,781,098 | |
As of October 31, 2023, the components of distributable earnings on a tax basis were as follows:
| | | Undistributed Net
Investment
Income/(Loss) | | | Accumulated Net
Realized
Gain/(Loss) | | | Unrealized
Appreciation/
(Depreciation) | | | Total | |
| SRH U.S. Quality ETF | | $ | 64,688 | | | $ | (1,032,823 | ) | | $ | 4,163,928 | | | $ | 3,195,793 | |
| | | | | | | | | | | | | | | | | |
As of October 31, 2023, the following amount is available as capital loss carry forwards to the next tax year:
| Fund | | No Expiration
Short-Term | |
| SRH U.S. Quality ETF | | $ | 1,032,823 | |
SRH U.S. Quality ETF
NOTES TO FINANCIAL STATEMENTS
October 31, 2023 (Continued)
NOTE 7 - INDEMNIFICATIONS
In the normal course of business, the Trust or Fund enters into contracts that contain a variety of representations which provide general indemnifications. Additionally, the Declaration of Trust provides that the Trust shall indemnify each person who is, or has been, a Trustee, officer, employee or agent of the Trust against certain liabilities arising out of the performance of their duties. The Fund’s maximum exposure under these arrangements is unknown, however, the Fund expects the risk of loss to be remote.
NOTE 8 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date these financial statements were issued and has determined that there were no subsequent events to report through the issuance of these financial statements.
SRH U.S. Quality ETF
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of SRH U.S. Quality ETF and Board of Trustees of Elevation Series Trust
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of SRH U.S. Quality ETF (the “Fund”), a series of Elevation Series Trust, as of October 31, 2023, the related statements of operations and changes in net assets, the related notes, and the financial highlights for the period from September 1, 2023 through October 31, 2023, and the period from October 4, 2022 (commencement of operations) through August 31, 2023 (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 October 31, 2023, the results of its operations, the changes in net assets, and the financial highlights for the period from September 1, 2023 through October 31, 2023, and the period from October 4, 2022 (commencement of operations) through August 31, 2023, 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 laws 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud.
Our audits included performing procedures to assess the risks 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 October 31, 2023, by correspondence with the custodian. 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.
We have served as the auditor of one or more investment companies advised by Paralel Advisors, LLC since 2021.
COHEN & COMPANY, LTD.
Cleveland, Ohio
December 21, 2023
SRH U.S. Quality ETF
ADDITIONAL INFORMATION
October 31, 2023 (Unaudited)
PORTFOLIO INFORMATION
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its report on Form N-PORT. The Fund’s N-PORT reports are available (i) on the Fund’s website at www.srhfunds.com/srhq; or (ii) on the SEC’s website at www.sec.gov.
PROXY VOTING
The policies and procedures used by the Fund to determine how to vote proxies relating to portfolio securities held by the Fund are available, without charge, (i) on the SEC’s website at www.sec.gov or (ii) by calling toll-free (877) 524-9155. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available at www.sec.gov.
TAX INFORMATION
The Fund designated the following as a percentage of taxable ordinary income distributions, or up to the maximum amount allowable, for the calendar year ended December 31, 2022:
| Qualified Dividend Income Percentage | 100.00% |
| | |
| Dividends Received Deduction | 100.00% |
In early 2023, if applicable, shareholders of record received this information for the distributions paid to them by the Fund during the calendar year 2022 via Form 1099. The Fund will notify shareholders in early 2024 of amounts paid to them by the Fund, if any, during the calendar year 2023.
SRH U.S. Quality ETF
TRUSTEES AND OFFICERS
(Unaudited)
INDEPENDENT TRUSTEES*
Name, Year of
Birth, and Address1 | Position(s) Held with Trust | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of
Portfolios in Fund
Complex Overseen
by Trustee2 | Other Directorships
Held by Trustee
During Past 5
Years |
Kimberly Storms Birth Year: 1972 | Trustee | Since 2022 | Ms. Storms served at various roles at ALPS Fund Services, Inc. from 1998 through 2020, including as Senior Vice President - Director of Fund Administration (2004-2020) and Senior Vice President - Director of Fund Management (2020). During her tenure, Ms. Storms served as an officer to certain ETF, closed-end and open-end investment companies (1998-2020) and, within the past 5 years, Principal Financial Officer of ALPS Series Trust (2012-2020), Financial Investors Trust (2013-2020), Liberty All-Star Funds (2013-2020), and Cambria ETF Trust (2020). | 3 | Sterling Capital Funds (20 Funds) (since 2022) |
Steven Norgaard Birth Year: 1964 | Trustee | Since 2022 | Mr. Norgaard has been an attorney with Steven K. Norgaard, P.C. since 1994. | 43 | Frontier Funds (6 Funds) (since 2013); SRH Total Return Fund, Inc. (since 2011) |
| | | | | | |
INTERESTED TRUSTEES*
Name, Year of
Birth and Address1 | Position(s) Held with Trust | Term of Office and Length of Time
Served* | Principal Occupation(s) During Past 5 Years | Number of
Portfolios in Fund
Complex Overseen
by Trustee2 | Other Directorships
Held by Trustee
During Past 5
Years |
| Bradley J. Swenson Birth Year: 1972 | Trustee, Chairman, and President | Since 2022 | Mr. Swenson is President of Paralel Distributors LLC (May 2022 to present) and President of TruePeak Consulting, LLC (August 2021 to present). Prior to this Mr. Swenson joined ALPS Fund Services, Inc. (“ALPS”) in 2004 and served as its President from June 2019 until June 2021. In this role, he served as an officer to certain other closed-end and open-end investment companies. He previously served as the Chief Operating Officer of ALPS (2015-2019). Mr. Swenson also previously served as Chief Compliance Officer to ALPS, its affiliated entities, and to certain ETF, closed-end and open-end investment companies (2004-2015). | 3 | None |
*Trustees who are not “interested persons” of the Trust (as that term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) are referred to as “Independent Trustees.” Trustees who are “interested persons” of the Trust under the 1940 Act are referred to as “Interested Trustees.”
| 1 | Unless otherwise specified, the Trustees’ respective addresses are 1700 Broadway, Suite 1850 Denver, CO 80290. |
| 2 | The term “Fund Complex” means two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment and investor services; or have a common investment adviser or that have an investment adviser that is an affiliated person of the investment adviser of any of the other registered investment companies. For the purposes of this table, all series of the Trust are included in the Fund Complex. |
| 3 | Mr. Norgaard also serves as a Director of the SRH Total Return Fund, Inc. whose investment adviser is the same as SRH U.S. Quality ETF’s. |
SRH U.S. Quality ETF
TRUSTEES AND OFFICERS
(Unaudited)
OFFICERS
Name, Year of
Birth and Address1 | Position(s) Held with Trust | Term of Office and Length of Time Served* | Principal Occupation(s) During Past 5 Years | Number of
Portfolios in Fund Complex Overseen
by Trustee | Other Directorships
Held by Trustee
During Past 5 Years |
Brenna Fudjack
Birth Year: 1986 | Chief Compliance Officer | Indefinite term;
since 2023 | Ms. Fudjack joined Paralel Technologies LLC as Deputy Chief Compliance officer in 2023. Prior to her current role, Ms. Fudjack served as Manager, Risk & Financial Advisory for Deloitte & Touche LLP from 2022-2023; Director of Compliance for Perella Weinberg Partners Capital Management LP / Agility from 2018-2022; Compliance Officer for Shelton Capital Management from 2017-2018; and Compliance Manager among other compliance roles for ALPS Fund Services, Inc. from 2010-2017. | N/A | N/A |
Nicholas Austin
Birth Year: 1981 | Treasurer | Indefinite term;
since 2023 | Mr. Austin joined Paralel Technologies, LLC as Senior Controller in 2022. Prior to his current role, Mr. Austin served as Vice President/Fund Controller for SS&C ALPS from 2018 until 2022, and as Chief Financial Officer of Champion Medical Center from 2016 until 2018. | N/A | N/A |
Christopher Moore
Birth Year: 1984 | Secretary | Indefinite term;
since 2022 | Mr. Moore is General Counsel of Paralel Technologies LLC and each of its subsidiaries (since 2021). He is also Chief Compliance Officer of Paralel Advisors LLC since 2021. Mr. Moore served as Deputy General Counsel and Legal Operations Manager of RiverNorth Capital Management, LLC from 2020-2021; VP and Senior Counsel of ALPS Fund Services, Inc. from 2016-2020; and associate at Thompson Hine LLP (2013-2016). Mr. Moore served as a CPA for Ernst & Young (2007-2009). | N/A | N/A |
| 1 | Unless otherwise specified, the Officers’ respective addresses are 1700 Broadway, Suite 1850 Denver, CO 80290. |
Additional information about members of the Board of Trustees and officers of the Trust is available in the Statement of Additional Information and is available, without charge, upon request, by calling the Fund (toll-free) at 877-524-9155 or on the Fund’s website, www.srhfunds.com.
SRH U.S. Quality ETF
BOARD APPROVALS OF ADVISORY AND SUB-ADVISORY AGREEMENTS
October 31, 2023 (Unaudited)
Summary of Board Meeting and Considerations
At a meeting held on April 19, 2023 (the “Meeting”), the Board of Trustees (the “Board”) of Elevation Series Trust (the “Trust”) considered the approval of an Investment Sub-Advisory Agreement (the “Sub-Advisory Agreement”) between the Trust, Paralel Advisors LLC (the “Adviser”), Vident Advisory, LLC (“VA”) on behalf of the SRH U.S. Quality ETF (the “Fund”). Vident Investment Advisory, LLC (“VIA”) had served as investment sub-adviser to the Fund since the Fund’s inception. VIA was responsible for trading portfolio securities on behalf of the Fund, including selecting broker-dealers to execute purchase and sale transactions as instructed by the Adviser or in connection with any rebalancing or reconstitution of the Fund’s index, subject to the supervision of the Adviser and the Board.
Under the Investment Company Act of 1940, as amended (the “1940 Act”), a transaction that results in a “change in control” of an investment adviser, or in this case, an investment sub-adviser, causes the sub-advisory agreement to be “assigned,” which results in the automatic termination of the sub-advisory agreement as required by the 1940 Act. On July 14, 2023 (the “Closing Date”) VIA was acquired by Casey Crawford through various holding entities. In anticipation of the change of control, the Board considered approval of the Sub-Advisory Agreement with VA, which would assume all of VIA’s operations as of the Closing Date. The Sub-Advisory Agreement would take effect on the Closing Date.
The Board’s determination to approve the Sub-Advisory Agreement followed the Board’s consideration of various factors and review of written materials provided by VA. The Board’s deliberations and the information on which their conclusions were based are summarized below.
In connection with their deliberations regarding approval of the Sub-Advisory Agreement, the Board reviewed VA’s responses to a series of questions regarding, among other things, investment performance, VA’s quality of services, comparative fee and expense information, and an estimate of VA’s profitability from managing the Fund. The Board was assisted by independent legal counsel throughout the Sub-Advisory Agreement review process. The Board relied upon the advice of independent legal counsel and its own business judgment in determining the material factors to be considered in evaluating the Sub-Advisory Agreement and the weight to be given to each factor considered. The Board’s conclusions were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor. Moreover, each Trustee might have afforded different weight to the various factors in reaching his or her conclusions with respect to the approval of the Sub-Advisory Agreement.
Nature, Extent, and Quality of Services Provided. The Board considered that VA would perform portfolio monitoring, research, in-depth analysis and trade execution on behalf of the Fund and supported the Fund’s operations in all areas including compliance, valuation, and research. The Board commented on the depth of VA’s network to identify trading opportunities and the longevity of its trading relationships. The Board acknowledged that the personnel servicing the Fund as employees of VIA would continue with VA as sub-adviser. The Board reviewed the background information of the key investment personnel, noting their satisfaction with the senior personnel dedicated to servicing the Fund, the individuals’ educations and wide range of experience. The Board noted that VA would routinely review the Fund’s portfolio in order to monitor and assess performance and risk. The Board commented on VA’s compliance program, which included documentation and review of daily portfolio transactions and monitoring of investment limitations. The Board reviewed VA’s best execution practices and noted that it evaluated broker-dealers annually to ensure best execution. After further discussion, the Board concluded that VA had the resources to provide high quality service to the Fund and its shareholders.
Performance. The Board noted that the Fund was recently launched and that it did not yet have a long enough track record to provide any meaningful analysis. They also noted that the Fund was an index based product and therefore VA’s services would not be the primary driver of the Fund’s performance. The Board noted that the Adviser was satisfied with the performance of VIA in the short time it had served as sub-adviser to the Fund.
Cost of Services Provided. The Board reviewed the sub-advisory fees to be paid by the Adviser to VA for its services to the Fund. The Board considered that the fees paid to VA would be paid by the Adviser, not the Fund, as part of its unitary fee arrangement and agreed that fund-to-fund comparisons were most appropriate at the advisory level. The Board agreed that the VA fees reflected a not-unreasonable allocation of the advisory fees paid to each firm given the work performed by each firm and noted that the fees were in line with those charged by VA for managing other funds. The Board further noted that no changes to the fees were proposed.
Economies of Scale and Profitability. The Board evaluated the compensation and benefits to be received by VA from its relationship with the Fund and reviewed an analysis of VA’s expected profitability with respect to the work to be completed for the Fund, noting that it was not anticipating to earn a profit during the first year of the relationship, and a modest profit in the second year. The Board further noted that given the unitary fee nature of the advisory agreement, economies of scale were more appropriately considered at the adviser-level and should be considered with respect to the overall advisory agreement for the Fund, taking into consideration the impact of the sub-advisory expense.
Conclusion. Having requested and received information from VA as it believed to be reasonably necessary to evaluate the terms of the Sub- Advisory Agreement, and as assisted by the advice and guidance of legal counsel, the Board concluded that approval of the Sub-Advisory Agreement was in the best interests of the Fund and its shareholders.
Liquidity Risk Management Program Review
Pursuant to Rule 22e-4 (the “Liquidity Rule”) under the Investment Company Act of 1940 (“1940 Act”), the Fund has adopted and implemented a Liquidity Risk Management Program (the “Program”). The Program addresses the Liquidity Rule’s requirements for the periodic assessment and management of Fund liquidity risk and compliance with the Liquidity Rule’s restrictions on investments in illiquid investments. The Adviser to the Fund has been designated to administer the Program. The Fund qualifies as an “In-Kind ETF” under the Liquidity Rule, which means that it meets redemptions through in-kind transfers of securities, positions and assets other than a de minimis amount of cash and publishes its portfolio holdings daily. In-Kind ETFs are exempt from certain Liquidity Rule requirements.
At its April 19, 2023, meeting, the Board of Trustees (“Board”) reviewed a written report prepared by the Adviser addressing the operation of the Program and assessing its adequacy and effectiveness of implementation, as required under the Liquidity Rule. Among other things, this report summarized the Adviser’s annual liquidity risk assessment, testing for In-Kind ETF status and monitoring for compliance with the Liquidity Rule’s restrictions. The report noted the Adviser’s conclusion that the implementation and ongoing operation of the Program and related procedures were adequate and effective in managing the Fund’s liquidity risk and that the Fund should continue to be considered an “In-Kind ETF”.
SRH U.S. Quality ETF
PRIVACY POLICY
October 31, 2023 (Unaudited)
Pursuant to SEC Regulation S-P (Privacy of Consumer Financial Information) the Trustees of the Elevation Series Trust (the “Trust”) has established the following policy regarding information about the Trust’s shareholders. We consider all shareholder data to be private and confidential, and we hold ourselves to the highest standards in its safekeeping and use.
General Statement
The Trust may collect nonpublic information (e.g., your name, address, e mail address, Social Security Number, Trust holdings (collectively, “Personal Information”)) about shareholders from transactions in Trust shares. The Trust will not release Personal Information about current or former shareholders (except as permitted by law) unless one of the following conditions is met: we receive your prior written consent; (ii) we believe the recipient to be you or your authorized representative; (iii) to service or support the business functions of the Trust (as explained in more detail below), or (iv) we are required by law to release Personal Information to the recipient. The Trust have not and will not in the future give or sell Personal Information about their current or former shareholders to any company, individual, or group (except as per mitted by law) and as otherwise provided in this policy.
The Trust may make certain electronic services available to their shareholders and may solicit your email address and contact you by email, telephone or US mail regarding the availability of such services. The Trust may also contact shareholders by email, telephone or US mail in connection with these services, such as to confirm enrollment in electronic shareholder communications or to update your Personal Information. In no event will the Trust transmit your Personal Information via email without your consent.
Use of Personal Information
The Trust will only use Personal Information (i) as necessary to service or maintain shareholder accounts in the ordinary course of business and (ii) to support business functions of the Trust and their affiliated businesses. This means that the Trust may share certain Personal Information, only as per mitted by law, with affiliated businesses of the Trust, and that such information may be used for non-Trust-related solicitation. When Personal Information is shared with the Trust’s business affiliates, the Trust may do so without providing you the option of preventing these types of disclosures as permitted by law.
Safeguards regarding Personal Information
Internally, we also restrict access to Personal Information to those who have a specific need for the records. We maintain physical, electronic, and procedural safeguards that comply with Federal standards to guard Personal Information. Any doubts about the confidentiality of Personal Information, as required by law, are resolved in favor of confidentiality.
Adopted: May 18, 2022
INVESTMENT ADVISER
Paralel Advisors LLC
1700 Broadway, Suite 1850
Denver, CO 80290
SUB-INVESTMENT ADVISER
Vident Advisory, LLC
1125 Sanctuary Parkway, Suite 515
Alpharetta, GA 30009
DISTRIBUTOR
Paralel Distributors LLC
1700 Broadway, Suite 1850
Denver, CO 80290
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen & Company, Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, OH 44115
INDEX PROVIDER
Rocky Mountain Advisers, LLC
2121 E. Crawford Place
Salina, Kansas 67401
LEGAL COUNSEL
Thompson Hine LLP
41 S. High Street, Suite 1700
Columbus, Ohio 43215
ADMINISTRATOR AND ACCOUNTANT
Paralel Technologies LLC
1700 Broadway, Suite 1850
Denver, CO 80290
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Congress Street, Suite 1
Boston, MA 02114-2016
Must be accompanied or preceded by a prospectus.
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, principal accounting officer or controller or any persons performing similar functions on behalf of the Registrant. |
| (c) | During the period covered by this report, no amendments were made to the provisions of the code of ethics adopted in Item 2(a) above were made. |
| (d) | During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in Item 2(a) above were granted. |
| (f) | The Registrant’s Code of Ethics is filed herewith as an Exhibit to this report. |
Item 3. Audit Committee Financial Expert.
The Board of Trustees of the Registrant has determined that the Registrant has at least one Audit Committee Financial Expert serving on its audit committee. The Board of Trustees of the Registrant has designated Kimberly Storms, as the Registrant’s “Audit Committee Financial Expert.” Ms. Storms is “independent” as defined in paragraph (a)(2) of Item 3 to Form N-CSR.
Item 4. Principal Accountant Fees and Services.
| (a) | Audit Fees: For the Registrant’s fiscal periods ended August 31, 2023 and October 31, 2023, the aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements were $14,000 and $9,000, respectively. |
| (b) | Audit-Related Fees: For the Registrant’s fiscal periods ended August 31, 2023 and October 31, 2023, the aggregate fees billed for professional services rendered by the principal accountant for assurance and related services that were reasonably related to the performance of the audit of the Registrant’s financial statements not otherwise included under “Audit Fees” above were $0 and $0, respectively. |
| (c) | Tax Fees: For the Registrant’s fiscal periods ended August 31, 2023 and October 31, 2023, aggregate fees of $3,500 and $3,500, respectively, were billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. |
| (d) | All Other Fees: For the Registrant’s fiscal periods ended August 31, 2023 and October 31, 2023, aggregate fees of $0 and $0, respectively, were billed to Registrant by the principal accountant for services other than the services reported in paragraphs (a) through (c) of this item. |
| (e) | (1) Audit Committee Pre-Approval Policies and Procedures: All services to be performed by the Registrant's principal auditors must be pre-approved by the Registrant's audit committee. |
| (e) | (2) No services described in paragraphs (b) through (d) were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
| (g) | The aggregate non-audit fees billed by the Registrant’s principal accountant for the fiscal periods ended August 31, 2023 and October 31, 2023 were $3,500 and $3,500, respectively. |
Item 5. Audit Committee of Listed Registrants.
The Registrant has an audit committee which was established by the Board of Trustees in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The members of the Registrant’s audit committee are Kimberly Storms and Steven K. Norgaard.
Item 6. Investments.
| (a) | The Registrant’s full schedule of investments is included as part of the report to stockholders 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.
No material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees have been implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) The Registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
| (a)(1) | Registrant’s Code of Ethics, which is the subject of the disclosure required by Item 2 of Form N-CSR, is attached hereto. |
| (a)(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibits 99.302(i) CERT and 99.302(ii) CERT. |
| (b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.906 CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (Registrant) | ELEVATION SERIES TRUST | |
| By (Signature and Title) | /s/ Bradley Swenson | |
| | Bradley Swenson, President | |
| | (Principal Executive Officer) | |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
| By (Signature and Title) | /s/ Bradley Swenson | |
| | Bradley Swenson, President | |
| | (Principal Executive Officer) | |
| By (Signature and Title) | /s/ Nicholas Austin | |
| | Nicholas Austin, Treasurer | |
| | (Principal Financial Officer) | |
