N-CSRS 1 fp0082251-3_ncsrs.htm

As filed with the U.S. Securities and Exchange Commission on April 10, 2023

 

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 811-22668

 

ETF Series Solutions
(Exact name of registrant as specified in charter)

 

615 East Michigan Street

Milwaukee, WI 53202
(Address of principal executive offices) (Zip code)

 

Kristina R. Nelson

ETF Series Solutions

615 East Michigan Street

Milwaukee, WI 53202

(Name and address of agent for service)

 

(414) 516-1645

Registrant's telephone number, including area code

 

Date of fiscal year end: July 31

 

Date of reporting period: January 31, 2023

 

 

 

Item 1. Reports to Stockholders.

 

(a)

 

 

Semi-Annual Report

January 31, 2023

 

US Vegan Climate ETF

Ticker: VEGN

 

 

 

US Vegan Climate ETF

 

TABLE OF CONTENTS

 

 

Page

Letter to Shareholders

1

Portfolio Allocation

4

Schedule of Investments

5

Statement of Assets and Liabilities

14

Statement of Operations

15

Statements of Changes in Net Assets

16

Financial Highlights

17

Notes to Financial Statements

18

Expense Example

27

Review of Liquidity Risk Management Program

29

Federal Tax Information

30

Information About Portfolio Holdings

30

Information About Proxy Voting

30

Information About the Fund’s Trustees

31

Frequency Distribution of Premiums and Discounts

31

 

 

US Vegan Climate ETF

 

Letter to Shareholders

(Unaudited)

 

 

Dear Shareholders,

 

As CEO of Beyond Investing, I would like to express our sincere gratitude for the confidence you have placed in us by investing in the US Vegan Climate ETF (“VEGN” or the “Fund”). The following information pertains to the period from August 1, 2022 through January 31, 2023 (the “current fiscal period”).

 

The Fund seeks to track the total return performance, before fees and expenses, of the Beyond Investing US Vegan Climate Index (“VEGAN” or the “Index”). The Index, developed by Beyond Investing, is a passive, rules- based index of U.S. mainly large cap stocks, screened according to vegan and climate- conscious principles.

 

Taking the largest 500 stocks in the U.S. market, VEGAN excludes companies engaged in animal exploitation, defense, human rights abuses, fossil fuels extraction and energy production, and other environmentally damaging activities. VEGAN includes mid-cap stocks that replace companies in sectors that become underweight through these exclusions.

 

The Fund experienced a slight negative performance during the current fiscal period. The market price for VEGN fell by -2.27% while the NAV reduced by -1.41%, whereas the S&P 500® Index, a broad market index, fell by -0.44% over the same period. The Fund’s Index fell -1.11% over the same period. Meanwhile, outstanding shares ended the period at 1,925,000.

 

For the period, the top five contributors to Fund performance contributed the following amounts:

 

NVIDIA Corporation

+0.66%

Oracle Corporation

+0.19%

Visa, Inc. – Class A

+0.40%

Mastercard, Inc. – Class A

+0.28%

Broadcom, Inc.

+0.37%

 

For the period, the bottom five contributors to Fund performance detracted by the following amounts:

 

Tesla, Inc.

-1.87%

Alphabet, Inc. – Class A

-0.31%

UnitedHealth Group, Inc.

-0.30%

Alphabet, Inc. – Class C

-0.29%

Adobe, Inc.

-0.29%

 

Over the course of this half year, both the Fund and the S&P 500® Index hit two-year lows, the Fund at 29.23 on October 10th 2022 and the S&P 500® Index at 3,583.07 on October 9th 2022.

 

1

 

 

US Vegan Climate ETF

 

Letter to Shareholders

(Unaudited) (Continued)

 

 

Factors impacting market performance in late 2022 into early 2023, using the S&P 500® Index as a market benchmark, were the Fed’s repeated hikes to interest rates, to combat inflation, and fears of a recession caused by higher oil and raw materials prices, as well as higher interest rates.

 

A sharp rebound in July 2022, thanks to solid earnings reports by mega cap tech stocks and major oil companies, was followed by a weak August, the worst in seven years, and a nosedive in September 2022, the worst September since 2002. After hitting a nadir early in the month, the market rose in October, rallying further in November on better than expected inflation data, but facing another setback in December to close the year broadly flat. In January 2023, the U.S. market has rallied strongly in its strongest first-month start to a year since 2019. Amid a flurry of mixed 4Q earnings reports and the Jobs Report revealing employment costs growing at their slowest pace in a year, investor confidence is returning amid hopes that the Fed has put the brakes on inflation. The Fund broadly followed the same sequence of rallies and dips as the market, with net underperformance of -0.97% on NAV arising because of sector tilts caused by its exclusions.

 

Among the weakest sectors were technology and communications, to which the Fund is overweight. The energy sector advanced more than 60% in 2022, significantly outperforming every other S&P 500® sector. Evidently this puts the Fund at a disadvantage since it eschews investing in fossil fuel. Other strong performers were drug manufacturers and aerospace and defense, industries which conflict with the Fund’s position on animal testing and weapons manufacture. Growth stocks were hit hard since the present value of future expected profits falls at higher interest rates and the Fund has a growth bias thanks to its underweight to defensive sectors like energy, tobacco and consumer staples.

 

A particular hit for the Fund was its exposure to Tesla, Inc., formerly its largest holding and one of the worst performers in the market in 2022. Reasons for its decline were primarily concerns over the focus of its CEO following his Twitter purchase, funded partly by selling Tesla, Inc. stock, together with a negative impact on the brand. Furthermore, there were production issues in China and delays in the launch of new models.

 

A dramatic reversal of the Fund’s underperformance was seen in January 2023 as corporate earnings came in mostly better, supporting growth stocks, and technology and communication sectors were the strongest, with energy and pharmaceuticals retracing, and aerospace and defense flat. In January 2023 the Fund was up 9.95% on NAV against the gain in the S&P 500® Index of 6.28%.

 

2

 

 

US Vegan Climate ETF

 

Letter to Shareholders

(Unaudited) (Continued)

 

 

By category of exclusion, the main contributors to Fund underperformance were the exclusion of stocks associated with fossil fuel production and energy production from fossil fuel, human rights violations and animals in sports and entertainment. Counteracting this, the Fund’s avoidance of other stocks that have high carbon emissions, that test on animals and which are investors in excluded industries was a benefit to the Fund.

 

Thanking you once again for your trust,

 

Sincerely,

 

Claire Smith, Chief Executive Officer
Beyond Investing LLC, Adviser to the Fund

 

Must be preceded or accompanied by a prospectus.

 

Fund holdings and allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security. Please see the Schedule of Investments in this report for complete Fund holdings.

 

Investing involves risk, including the possible loss of principal. Shares of an ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. The Fund is not actively managed and may be affected by a general decline in market segments related to the Index. The Fund invests in securities included in, or representative of securities included in, the Index, regardless of their investment merits. The performance of the Fund may diverge from that of the Index and may experience tracking error to a greater extent than a fund that seeks to replicate an index.

 

Standard & Poor’s 500 Index (S&P 500® Index) – An index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500® Index is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe. Quotes for the Index can be found under the symbol “SPX” on the Bloomberg Professional service and other financial data providers.

 

The Beyond Investing US Vegan Climate® Index is a passive rules-based index of primarily U.S. large cap stocks that seeks to avoid investments in companies whose activities directly contribute to animal suffering, destruction of the natural environment and climate change. Quotes for the Index can be found under the symbol “VEGAN” on the Bloomberg Professional service and other financial data providers.

 

One may not directly invest in an index.

 

Past performance does not guarantee future results.

 

The US Vegan Climate ETF is distributed by Quasar Distributors, LLC.

 

3

 

 

US Vegan Climate ETF

 

Portfolio Allocation

As of January 31, 2023 (Unaudited)

 

 

Sector

Percentage of
Net Assets

Technology (a)

31.8%

Financial (a)

25.2

Communications

14.7

Consumer, Non-cyclical

12.7

Industrial

7.5

Consumer, Cyclical

7.0

Energy

0.5

Utilities

0.4

Short-Term Investments

0.2

Other Assets in Excess of Liabilities (b)

0.0
 

100.0%

 

(a)

To the extent that the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors. See Note 7 in the Notes to Financial Statements.

 

(b)

Represents less than 0.05% of net assets.

 

4

 

 

US Vegan Climate ETF

 

Schedule of Investments

January 31, 2023 (Unaudited)

 

 

 

Shares

  

Security Description

  

Value

  
       

COMMON STOCKS — 99.8%

        
       

Communications — 14.7%

       
    1,792  

Airbnb, Inc. - Class A (a)

  $ 199,109  
    14,721  

Alphabet, Inc. - Class A (a)

    1,455,024  
    14,679  

Alphabet, Inc. - Class C (a)

    1,465,992  
    1,233  

Arista Networks, Inc. (a)

    155,383  
    36,922  

AT&T, Inc.

    752,101  
    210  

Booking Holdings, Inc. (a)

    511,161  
    697  

CDW Corporation

    136,633  
    518  

Charter Communications, Inc. - Class A (a)

    199,072  
    19,616  

Cisco Systems, Inc.

    954,711  
    23,006  

Comcast Corporation - Class A

    905,286  
    1,241  

DoorDash, Inc. - Class A (a)

    71,879  
    2,893  

eBay, Inc.

    143,203  
    781  

Expedia Group, Inc. (a)

    89,268  
    195  

FactSet Research Systems, Inc.

    82,473  
    2,812  

Gen Digital, Inc.

    64,704  
    833  

GoDaddy, Inc. - Class A (a)

    68,414  
    666  

Liberty Broadband Corporation - Class C (a)

    59,793  
    1,473  

Match Group, Inc. (a)

    79,719  
    1,052  

Omnicom Group, Inc.

    90,461  
    1,514  

Palo Alto Networks, Inc. (a)

    240,181  
    2,954  

Pinterest, Inc. - Class A (a)

    77,661  
    5,287  

Snap, Inc. - Class A (a)

    61,118  
    3,260  

T-Mobile US, Inc. (a)

    486,751  
    2,264  

Trade Desk, Inc. - Class A (a)

    114,785  
    9,385  

Uber Technologies, Inc. (a)

    290,278  
    494  

VeriSign, Inc. (a)

    107,717  
    21,755  

Verizon Communications, Inc.

    904,355  
              9,767,232  
       

Consumer, Cyclical — 7.0%

       
    312  

Advance Auto Parts, Inc.

    47,511  
    245  

AutoNation, Inc. (a)

    31,046  
    821  

CarMax, Inc. (a)

    57,840  
    2,219  

Copart, Inc. (a)

    147,808  
    728  

Cummins, Inc.

    181,665  

 

The accompanying notes are an integral part of these financial statements.

 

5

 

 

US Vegan Climate ETF

 

Schedule of Investments
January 31, 2023 (Unaudited) (Continued)

 

 

 

Shares

  

Security Description

  

Value

  
       

COMMON STOCKS — 99.8% (Continued)
       

Consumer, Cyclical — 7.0% (Continued)
    1,685  

D.R. Horton, Inc.

  $ 166,293  
    1,879  

DraftKings, Inc. - Class A (a)

    28,166  
    2,972  

Fastenal Company

    150,235  
    718  

Genuine Parts Company

    120,495  
    1,274  

LKQ Corporation

    75,115  
    1,296  

Lennar Corporation - Class A

    132,710  
    147  

Lithia Motors, Inc.

    38,690  
    796  

Live Nation Entertainment, Inc. (a)

    64,070  
    3,441  

National Vision Holdings, Inc. (a)

    141,425  
    16  

NVR, Inc. (a)

    84,320  
    337  

O’Reilly Automotive, Inc. (a)

    267,022  
    1,644  

PACCAR, Inc.

    179,706  
    439  

Planet Fitness, Inc. - Class A (a)

    37,161  
    201  

Pool Corporation

    77,508  
    2,527  

Rivian Automotive, Inc. - Class A (a)

    49,024  
    13,973  

Tesla, Inc. (a)

    2,420,403  
    236  

W.W. Grainger, Inc.

    139,117  
              4,637,330  
       

Consumer, Non-cyclical — 12.7%

       
    2,161  

Automatic Data Processing, Inc.

    487,975  
    148  

Avis Budget Group, Inc. (a)

    29,606  
    2,718  

Beyond Meat, Inc. (a)

    44,657  
    2,660  

Block, Inc. (a)

    217,375  
    222  

Celsius Holdings, Inc. (a)

    22,271  
    2,967  

Centene Corporation (a)

    226,204  
    1,637  

Cigna Corporation

    518,389  
    2,030  

CoStar Group, Inc. (a)

    158,137  
    1,247  

Elevance Health, Inc.

    623,488  
    631  

Equifax, Inc.

    140,208  
    389  

FleetCor Technologies, Inc. (a)

    81,227  
    405  

Gartner, Inc. (a)

    136,947  
    67,984  

Ginkgo Bioworks Holdings, Inc. (a)

    132,569  
    1,446  

Global Payments, Inc.

    162,993  
    1,157  

HCA Healthcare, Inc.

    295,116  

 

The accompanying notes are an integral part of these financial statements.

 

6

 

 

US Vegan Climate ETF

 

Schedule of Investments
January 31, 2023 (Unaudited) (Continued)

 

 

 

Shares

  

Security Description

  

Value

  
       

COMMON STOCKS — 99.8% (Continued)
       

Consumer, Non-cyclical — 12.7% (Continued)
    1,174  

Hertz Global Holdings, Inc. (a)

  $ 21,155  
    647  

Humana, Inc.

    331,070  
    331  

Ingredion, Inc.

    34,027  
    961  

IQVIA Holdings, Inc. (a)

    220,463  
    728  

McKesson Corporation

    275,679  
    301  

Molina Healthcare, Inc. (a)

    93,861  
    822  

Moody’s Corporation

    265,300  
    458  

Natera, Inc. (a)

    19,662  
    224  

Omnicell, Inc. (a)

    12,425  
    5,971  

PayPal Holdings, Inc. (a)

    486,577  
    1,757  

S&P Global, Inc.

    658,770  
    993  

TransUnion

    71,248  
    369  

United Rentals, Inc.

    162,711  
    4,591  

UnitedHealth Group, Inc.

    2,291,781  
    810  

Verisk Analytics, Inc.

    147,250  
    311  

Waters Corporation (a)

    102,188  
              8,471,329  
       

Energy — 0.5%

       
    684  

Enphase Energy, Inc. (a)

    151,424  
    493  

First Solar, Inc. (a)

    87,557  
    2,965  

Plug Power, Inc. (a)

    50,464  
    1,055  

Sunrun, Inc. (a)

    27,725  
              317,170  
       

Financial — 25.2% (b)

        
    3,041  

Aflac, Inc.

    223,513  
    1,396  

Allstate Corporation

    179,344  
    2,864  

American Express Company

    500,999  
    4,096  

American International Group, Inc.

    258,949  
    2,405  

American Tower Corporation

    537,253  
    567  

Ameriprise Financial, Inc.

    198,518  
    1,048  

Aon plc - Class A

    333,977  
    1,879  

Arch Capital Group, Ltd. (a)

    120,914  
    1,076  

Arthur J. Gallagher & Company

    210,595  
    710  

AvalonBay Communities, Inc.

    125,982  

 

The accompanying notes are an integral part of these financial statements.

 

7

 

 

US Vegan Climate ETF

 

Schedule of Investments
January 31, 2023 (Unaudited) (Continued)

 

 

 

Shares

  

Security Description

  

Value

  
       

COMMON STOCKS — 99.8% (Continued)
       

Financial — 25.2% (b) (Continued)
    3,774  

Bank of New York Mellon Corporation

  $ 190,851  
    739  

Boston Properties, Inc.

    55,085  
    1,204  

Brown & Brown, Inc.

    70,506  
    546  

Camden Property Trust

    67,273  
    2,009  

Capital One Financial Corporation

    239,071  
    547  

Cboe Global Markets, Inc.

    67,215  
    1,627  

CBRE Group, Inc. - Class A (a)

    139,125  
    2,041  

Chubb, Ltd.

    464,307  
    797  

Cincinnati Financial Corporation

    90,181  
    2,549  

Citizens Financial Group, Inc.

    110,423  
    1,850  

CME Group, Inc.

    326,821  
    2,232  

Crown Castle, Inc.

    330,581  
    1,437  

Discover Financial Services

    167,741  
    470  

Equinix, Inc.

    346,921  
    1,887  

Equity Residential

    120,108  
    336  

Essex Property Trust, Inc.

    75,960  
    685  

Extra Space Storage, Inc.

    108,114  
    3,530  

Fifth Third Bancorp

    128,104  
    2,723  

First Horizon Corporation

    67,340  
    924  

First Republic Bank

    130,173  
    1,697  

Hartford Financial Services Group, Inc.

    131,704  
    7,330  

Huntington Bancshares, Inc.

    111,196  
    2,863  

Intercontinental Exchange, Inc.

    307,916  
    3,153  

Invitation Homes, Inc.

    102,472  
    1,492  

Iron Mountain, Inc.

    81,433  
    4,811  

KeyCorp

    92,323  
    3,131  

Kimco Realty Corporation

    70,322  
    398  

LPL Financial Holdings, Inc.

    94,374  
    920  

M&T Bank Corporation

    143,520  
    66  

Markel Corporation (a)

    92,993  
    2,596  

Marsh & McLennan Companies, Inc.

    454,066  
    6,308  

Mastercard, Inc. - Class A

    2,337,745  
    3,175  

MetLife, Inc.

    231,838  
    594  

Mid-America Apartment Communities, Inc.

    99,032  

 

The accompanying notes are an integral part of these financial statements.

 

8

 

 

US Vegan Climate ETF

 

Schedule of Investments
January 31, 2023 (Unaudited) (Continued)

 

 

 

Shares

  

Security Description

  

Value

  
       

COMMON STOCKS — 99.8% (Continued)
       

Financial — 25.2% (b) (Continued)
    1,773  

Nasdaq, Inc.

  $ 106,717  
    3,021  

Progressive Corporation

    411,913  
    4,765  

Prologis, Inc.

    616,019  
    1,939  

Prudential Financial, Inc.

    203,479  
    786  

Public Storage

    239,211  
    1,014  

Raymond James Financial, Inc.

    114,349  
    3,113  

Realty Income Corporation

    211,155  
    4,815  

Regions Financial Corporation

    113,345  
    552  

SBA Communications Corporation

    164,237  
    1,690  

Simon Property Group, Inc.

    217,097  
    619  

Sun Communities, Inc.

    97,096  
    302  

SVB Financial Group (a)

    91,337  
    2,584  

Synchrony Financial

    94,910  
    1,238  

Travelers Companies, Inc.

    236,607  
    6,854  

Truist Financial Corporation

    338,519  
    1,639  

UDR, Inc.

    69,805  
    2,060  

Ventas, Inc.

    106,729  
    10,873  

Visa, Inc. - Class A

    2,503,073  
    2,350  

Welltower, Inc.

    176,344  
    573  

Willis Towers Watson plc

    145,651  
    983  

W.P. Carey, Inc.

    84,076  
    1,036  

W.R. Berkley Corporation

    72,665  
              16,751,212  
       

Industrial — 7.5%

       
    378  

Advanced Drainage Systems, Inc.

    38,117  
    880  

Builders FirstSource, Inc. (a)

    70,136  
    4,377  

Carrier Global Corporation

    199,285  
    647  

C.H. Robinson Worldwide, Inc.

    64,810  
    625  

Crown Holdings, Inc.

    55,100  
    1,444  

Deere & Company

    610,581  
    743  

Dover Corporation

    112,810  
    2,058  

Eaton Corporation plc

    333,828  
    13,861  

Energizer Holdings, Inc.

    514,243  
    864  

Expeditors International of Washington, Inc.

    93,442  

 

The accompanying notes are an integral part of these financial statements.

 

9

 

 

US Vegan Climate ETF

 

Schedule of Investments
January 31, 2023 (Unaudited) (Continued)

 

 

 

Shares

  

Security Description

  

Value

  
       

COMMON STOCKS — 99.8% (Continued)
       

Industrial — 7.5% (Continued)
    1,238  

FedEx Corporation

  $ 239,999  
    673  

Fortune Brands Innovations, Inc.

    43,415  
    1,580  

Graphic Packaging Holding Company

    38,062  
    277  

Hubbell, Inc.

    63,408  
    393  

IDEX Corporation

    94,194  
    3,591  

Johnson Controls International plc

    249,826  
    925  

Keysight Technologies, Inc. (a)

    165,899  
    673  

Masterbrand, Inc. (a)

    6,192  
    116  

Mettler-Toledo International, Inc. (a)

    177,819  
    2,190  

Otis Worldwide Corporation

    180,084  
    494  

Owens Corning

    47,745  
    661  

Parker-Hannifin Corporation

    215,486  
    601  

Rockwell Automation, Inc.

    169,500  
    434  

Silgan Holdings, Inc.

    23,388  
    222  

Simpson Manufacturing Company, Inc.

    23,778  
    779  

Stanley Black & Decker, Inc.

    69,572  
    1,205  

Trane Technologies plc

    215,840  
    583  

Trex Company, Inc. (a)

    30,736  
    1,289  

Trimble, Inc. (a)

    74,839  
    3,803  

United Parcel Service, Inc. - Class B

    704,430  
    894  

Westinghouse Air Brake Technologies Corporation

    92,806  
              5,019,370  
       

Technology — 31.8% (b)

        
    5,909  

Accenture plc - Class A

    1,648,906  
    3,683  

Activision Blizzard, Inc.

    282,007  
    2,418  

Adobe, Inc. (a)

    895,482  
    8,360  

Advanced Micro Devices, Inc. (a)

    628,254  
    816  

Akamai Technologies, Inc. (a)

    72,583  
    448  

ANSYS, Inc. (a)

    119,329  
    4,490  

Applied Materials, Inc.

    500,590  
    737  

Atlassian Corporation - Class A (a)

    119,114  
    1,123  

Autodesk, Inc. (a)

    241,625  
    507  

Bill.com Holdings, Inc. (a)

    58,619  
    3,283  

Broadcom, Inc.

    1,920,588  

 

The accompanying notes are an integral part of these financial statements.

 

10

 

 

US Vegan Climate ETF

 

Schedule of Investments
January 31, 2023 (Unaudited) (Continued)

 

 

 

Shares

  

Security Description

  

Value

  
       

COMMON STOCKS — 99.8% (Continued)
       

Technology — 31.8% (b) (Continued)
    602  

Broadridge Financial Solutions, Inc.

  $ 90,517  
    1,411  

Cadence Design Systems, Inc. (a)

    257,973  
    1,293  

Cloudflare, Inc. - Class A (a)

    68,413  
    2,697  

Cognizant Technology Solutions Corporation - Class A

    180,025  
    1,077  

Crowdstrike Holdings, Inc. - Class A (a)

    114,054  
    1,323  

Datadog, Inc. - Class A (a)

    98,974  
    1,439  

Electronic Arts, Inc.

    185,171  
    699  

Entegris, Inc.

    56,416  
    287  

EPAM Systems, Inc. (a)

    95,471  
    3,135  

Fidelity National Information Services, Inc.

    235,250  
    3,094  

Fiserv, Inc. (a)

    330,068  
    3,533  

Fortinet, Inc. (a)

    184,917  
    235  

HubSpot, Inc. (a)

    81,547  
    21,176  

Intel Corporation

    598,434  
    4,654  

International Business Machines Corporation

    627,033  
    1,421  

Intuit, Inc.

    600,614  
    375  

Jack Henry & Associates, Inc.

    67,534  
    770  

KLA Corporation

    302,210  
    716  

Lam Research Corporation

    358,072  
    4,383  

Marvell Technology, Inc.

    189,126  
    2,816  

Microchip Technology, Inc.

    218,578  
    5,702  

Micron Technology, Inc.

    343,831  
    339  

MongoDB, Inc. (a)

    72,617  
    227  

Monolithic Power Systems, Inc.

    96,829  
    408  

MSCI, Inc.

    216,876  
    1,142  

NetApp, Inc.

    75,635  
    14,489  

NVIDIA Corporation

    2,830,716  
    2,234  

ON Semiconductor Corporation (a)

    164,087  
    7,837  

Oracle Corporation

    693,261  
    1,665  

Paychex, Inc.

    192,907  
    265  

Paycom Software, Inc. (a)

    85,844  
    547  

PTC, Inc. (a)

    73,779  
    5,794  

QUALCOMM, Inc.

    771,819  
    1,540  

ROBLOX Corporation - Class A (a)

    57,303  

 

The accompanying notes are an integral part of these financial statements.

 

11

 

 

US Vegan Climate ETF

 

Schedule of Investments
January 31, 2023 (Unaudited) (Continued)

 

 

 

Shares

  

Security Description

  

Value

  
       

COMMON STOCKS — 99.8% (Continued)
       

Technology — 31.8% (b) (Continued)
    4,993  

Salesforce, Inc. (a)

  $ 838,674  
    1,038  

Seagate Technology Holdings plc

    70,356  
    1,036  

ServiceNow, Inc. (a)

    471,515  
    831  

Skyworks Solutions, Inc.

    91,136  
    1,388  

Snowflake, Inc. - Class A (a)

    217,139  
    828  

Splunk, Inc. (a)

    79,298  
    1,153  

SS&C Technologies Holdings, Inc.

    69,584  
    788  

Synopsys, Inc. (a)

    278,755  
    826  

Take-Two Interactive Software, Inc. (a)

    93,528  
    826  

Teradyne, Inc.

    84,004  
    4,772  

Texas Instruments, Inc.

    845,646  
    881  

Twilio, Inc. - Class A (a)

    52,719  
    212  

Tyler Technologies, Inc. (a)

    68,427  
    721  

Veeva Systems, Inc. - Class A (a)

    122,967  
    1,152  

VMware, Inc. - Class A (a)

    141,085  
    1,594  

Western Digital Corporation (a)

    70,056  
    636  

Wolfspeed, Inc. (a)

    48,979  
    1,017  

Workday, Inc. - Class A (a)

    184,514  
    270  

Zebra Technologies Corporation - Class A (a)

    85,369  
    1,123  

Zoom Video Communications, Inc. - Class A (a)

    84,225  
    1,431  

ZoomInfo Technologies, Inc. (a)

    40,397  
    434  

Zscaler, Inc. (a)

    53,885  
              21,195,256  
       

Utilities — 0.4%

       
    939  

American Water Works Company, Inc.

    146,944  
    1,692  

Constellation Energy Corporation

    144,429  
              291,373  
       

TOTAL COMMON STOCKS (Cost $63,074,396)

    66,450,272  

 

The accompanying notes are an integral part of these financial statements.

 

12

 

 

US Vegan Climate ETF

 

Schedule of Investments
January 31, 2023 (Unaudited) (Continued)

 

 

 

Shares

  

Security Description

  

Value

  
       

SHORT-TERM INVESTMENTS — 0.2%

        
    129,214  

First American Government Obligations Fund - Class X, 4.14% (c)

  $ 129,214  
       

TOTAL SHORT-TERM INVESTMENTS (Cost $129,214)

    129,214  
       

Total Investments (Cost $63,203,610) — 100.0%

    66,579,486  
       

Other Assets in Excess of Liabilities — 0.0% (d)

    22,727  
       

NET ASSETS — 100.0%

  $ 66,602,213  

 

Percentages are stated as a percent of net assets.

(a)

Non-income producing security.

(b)

To the extent that the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors. See Note 7 in the Notes to Financial Statements.

(c)

Rate shown is the annualized seven-day yield as of January 31, 2023.

(d)

Represents less than 0.05% of net assets.

 

The accompanying notes are an integral part of these financial statements.

 

13

 

 

US Vegan Climate ETF

 

Statement of Assets and Liabilities

January 31, 2023 (Unaudited)

 

 

ASSETS

        

Investments in securities, at value (Cost $63,203,610)

  $ 66,579,486  

Dividends and interest receivable

    54,898  

Total assets

    66,634,384  
         

LIABILITIES

        

Management fees payable

    32,171  

Total liabilities

    32,171  
         

NET ASSETS

  $ 66,602,213  
         

Net Assets Consist of:

        

Paid-in capital

  $ 66,640,314  

Total distributable earnings (accumulated deficit)

    (38,101 )

Net assets

  $ 66,602,213  
         

Net Asset Value:

        

Net assets

  $ 66,602,213  

Shares outstanding ^

    1,925,000  

Net asset value, offering and redemption price per share

  $ 34.60  

 

^

No par value, unlimited number of shares authorized.

 

The accompanying notes are an integral part of these financial statements.

 

14

 

 

US Vegan Climate ETF

 

Statement of Operations

For the Six-Months Ended January 31, 2023 (Unaudited)

 

 

INCOME

        

Dividends

  $ 463,301  

Interest

    3,026  

Total investment income

    466,327  
         

EXPENSES

        

Management fees

    190,993  

Total expenses

    190,993  
         

Net investment income (loss)

    275,334  
         

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

        

Net realized gain (loss) on investments

    (1,216,075 )

Change in unrealized appreciation (depreciation) on investments

    (29,925 )

Net realized and unrealized gain (loss) on investments

    (1,246,000 )

Net increase (decrease) in net assets resulting from operations

  $ (970,666 )

 

The accompanying notes are an integral part of these financial statements.

 

15

 

 

US Vegan Climate ETF

 

Statements of Changes in Net Assets

 

 

   

Six-Months Ended
January 31, 2023
(Unaudited)

    

Year Ended
July 31, 2022

  

OPERATIONS

                

Net investment income (loss)

  $ 275,334     $ 380,970  

Net realized gain (loss) on investments

    (1,216,075 )     694,417  

Change in unrealized appreciation (depreciation) on investments

    (29,925 )     (10,513,437 )

Net increase (decrease) in net assets resulting from operations

    (970,666 )     (9,438,050 )
                 

DISTRIBUTIONS TO SHAREHOLDERS

                

Net distributions to shareholders

    (303,419 )     (337,892 )

Total distributions to shareholders

    (303,419 )     (337,892 )
                 

CAPITAL SHARE TRANSACTIONS

                

Proceeds from shares sold

    —       23,454,548  

Payments for shares redeemed

    —       (5,163,675 )

Net increase (decrease) in net assets derived from capital share transactions (a)

    —       18,290,873  

Net increase (decrease) in net assets

  $ (1,274,085 )   $ 8,514,931  
                 

NET ASSETS

                

Beginning of period/year

  $ 67,876,298     $ 59,361,367  

End of period/year

  $ 66,602,213     $ 67,876,298  

 

(a)

A summary of capital share transactions is as follows:

 

   

Shares

    

Shares

  

Shares sold

    —       575,000  

Shares redeemed

    —       (125,000 )

Net increase (decrease)

    —       450,000  

 

The accompanying notes are an integral part of these financial statements.

 

16

 

 

US Vegan Climate ETF

 

Financial Highlights

For a capital share outstanding throughout the period/year

 

 

      Six-Months
Ended
January 31, 2023		    

Year Ended July 31,

       Period Ended
July 31, 		 
   

(Unaudited)

    

2022

    

2021

    

2020(1)

  

Net asset value, beginning of period/year

  $ 35.26     $ 40.24     $ 28.93     $ 25.00  
                                 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

                                

Net investment income (loss) (2)

    0.14       0.22       0.20       0.27  

Net realized and unrealized gain (loss) on investments (3)

    (0.64 )     (5.01 )     11.31       3.87  

Total from investment operations

    (0.50 )     (4.79 )     11.51       4.14  
                                 

DISTRIBUTIONS TO SHAREHOLDERS:

                                

Distributions from:

                                

Net investment income

    (0.16 )     (0.19 )     (0.20 )     (0.21 )

Total distributions to shareholders

    (0.16 )     (0.19 )     (0.20 )     (0.21 )
                                 

Net asset value, end of period/year

  $ 34.60     $ 35.26     $ 40.24     $ 28.93  
                                 

Total return

    -1.41 %(4)     -11.94 %     39.89 %     16.71 %(4)
                                 

SUPPLEMENTAL DATA:

                                

Net assets at end of period/year (000’s)

  $ 66,602     $ 67,876     $ 59,361     $ 22,424  
                                 

RATIOS TO AVERAGE NET ASSETS:

                                

Expenses to average net assets

    0.60 %(5)     0.60 %     0.60 %     0.60 %(5)

Net investment income (loss) to average net assets

    0.86 %(5)     0.56 %     0.58 %     1.16 %(5)

Portfolio turnover rate (6)

    8 %(4)     17 %     22 %     18 %(4)

 

(1)

Commencement of operations on September 9, 2019.

(2)

Calculated based on average shares outstanding during the period/year.

(3)

Net realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Statement of Operations due to share transactions for the period.

(4)

Not annualized.

(5)

Annualized.

(6)

Excludes the impact of in-kind transactions.

 

The accompanying notes are an integral part of these financial statements.

 

17

 

 

US Vegan Climate ETF

 

Notes to Financial Statements
January 31, 2023 (Unaudited)

 

 

NOTE 1 – ORGANIZATION

 

US Vegan Climate ETF (the “Fund”) is a diversified series of ETF Series Solutions (“ESS” or the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on February 9, 2012. The Trust is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares is registered under the Securities Act of 1933, as amended (the “Securities Act”). The investment objective of the Fund is to track the performance, before fees and expenses, of the Beyond Investing US Vegan Climate® Index (the “Index”). The Fund commenced operations on September 9, 2019.

 

The end of the reporting period for the Fund is January 31, 2023, and the period covered by these Notes to Financial Statements is the six-month period from August 1, 2022 through January 31, 2023 (the “current fiscal period”).

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 Financial Services - Investment Companies.

 

The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

 

A.

Security Valuation. All equity securities, including domestic and foreign common stocks, preferred stocks and exchange traded funds that are traded on a national securities exchange, except those listed on the Nasdaq Global Market®, Nasdaq Global Select Market®, and the Nasdaq Capital Market® Exchanges (collectively, “Nasdaq”), are valued at the last reported sale price on the exchange on which the security is principally traded. Securities traded on Nasdaq will be valued at the Nasdaq Official Closing Price (“NOCP”). If, on a particular day, an exchange-traded or Nasdaq security does not trade, then the mean between the most recent quoted bid and asked prices will be used. All equity securities that are not traded on a listed exchange are valued at the last sale price in the over-the-counter market. If a non-exchange traded security does not trade on a particular day, then the mean between the last quoted closing bid and asked price will be used. Prices denominated in foreign currencies are converted to U.S. dollar equivalents at the current exchange rate, which approximates fair value.

 

18

 

 

US Vegan Climate ETF

 

NOTES TO FINANCIAL STATEMENTS
January 31, 2023 (Unaudited) (Continued)

 

 

Investments in mutual funds, including money market funds, are valued at their net asset value (“NAV”) per share.

 

Securities for which quotations are not readily available are valued at their respective fair values in accordance with pricing procedures adopted by the Fund’s Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Board. The use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would be calculated without regard to such considerations.

 

As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuations methods. The three levels of inputs are:

 

 

Level 1 –

Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

 

 

Level 2 –

Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

 

 

Level 3 –

Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

 

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.

 

19

 

 

US Vegan Climate ETF

 

NOTES TO FINANCIAL STATEMENTS
January 31, 2023 (Unaudited) (Continued)

 

 

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 following is a summary of the inputs used to value the Fund’s investments as of the end of the current fiscal period:

 

Assets^

  

Level 1

    

Level 2

    

Level 3

    

Total

  

Common Stocks

   $ 66,450,272     $ —     $ —     $ 66,450,272  

Short-Term Investments

     129,214       —       —       129,214  

Total Investments in Securities

   $ 66,579,486     $ —     $ —     $ 66,579,486  

 

^

See Schedule of Investments for breakout of investments by sector.

 

During the current fiscal period, the Fund did not recognize any transfers to or from Level 3.

 

 

B.

Federal Income Taxes. The Fund’s policy is to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and to distribute substantially all of its net investment income and net capital gains to shareholders. Therefore, no federal income tax provision is required. The Fund plans to file U.S. Federal and applicable state and local tax returns.

 

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits on uncertain tax positions as income tax expenses in the Statement of Operations. During the current fiscal period, the Fund did not incur any interest or penalties.

 

 

C.

Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis.

 

20

 

 

US Vegan Climate ETF

 

NOTES TO FINANCIAL STATEMENTS
January 31, 2023 (Unaudited) (Continued)

 

 

Dividend income and expense are recorded on the ex-dividend date. Non-cash dividends included in dividend income or separately disclosed, if any, are recorded at the fair value of the security received. Withholding taxes on foreign dividends, if any, have been provided for in accordance with the Fund’s understanding of the applicable tax rules and regulations. Interest income and expense is recorded on an accrual basis.

 

Distributions received from the Fund’s investments in Real Estate Investment Trusts (“REITs”) may be characterized as ordinary income, net capital gain, or a return of capital. The proper characterization of REIT distributions is generally not known until the end of each calendar year. As such, the Fund must use estimates in reporting the character of its income and distributions received during the current calendar year for financial statement purposes. The actual character of distributions to the Fund’s shareholders will be reflected on the Form 1099 received by shareholders after the end of the calendar year. Due to the nature of REIT investments, a portion of the distributions received by the Fund’s shareholders may represent a return of capital.

 

 

D.

Distributions to Shareholders. Distributions to shareholders from net investment income, if any, are declared and paid quarterly by the Fund. Distributions to shareholders of net realized gains on securities are declared and paid by the Fund on an annual basis. Distributions are recorded on the ex-dividend date.

 

 

E.

Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the current fiscal period. Actual results could differ from those estimates.

 

 

F.

Share Valuation. The NAV per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the New York Stock Exchange (“NYSE”) is closed for trading. The offering and redemption price per share of the Fund is equal to the Fund’s NAV per share.

 

 

G.

Reclassification of Capital Accounts. U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share.

 

21

 

 

US Vegan Climate ETF

 

NOTES TO FINANCIAL STATEMENTS
January 31, 2023 (Unaudited) (Continued)

 

 

The permanent differences primarily relate to redemptions in-kind. For the fiscal year ended July 31, 2022, the following table shows the reclassifications made:

 

Distributable Earnings
(Accumulated Deficit)

  

Paid-In Capital

  

$(2,667,640)

   $ 2,667,640  

 

During the fiscal year ended July 31, 2022, the Fund realized $2,667,640 of net capital gains resulting from in-kind redemptions in which shareholders exchanged Fund shares for securities held by the Fund rather than for cash. Because such gains are not taxable to the Fund, and are not distributed to shareholders, they have been reclassified from distributable earnings (accumulated deficit) to paid-in capital.

 

 

H.

Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.

 

 

I.

Subsequent Events. In preparing these financial statements, management has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. There were no events or transactions that occurred during the period subsequent to the end of the current fiscal period, that materially impacted the amounts or disclosures in the Fund’s financial statements.

 

NOTE 3 – COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS

 

Beyond Investing LLC (the “Adviser”), serves as the investment adviser to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Adviser, the Adviser provides investment advice to the Fund and oversees the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Adviser is also responsible for arranging, in consultation with Penserra Capital Management, LLC (the “Sub-Adviser”), transfer agency, custody, fund administration and accounting, and all other non-distribution related services necessary for the Fund to operate. Under the Advisory Agreement, the Adviser has agreed to pay all expenses of the Fund, except for: the fee paid to the Adviser pursuant to the Advisory Agreement, interest charges on any borrowings, dividends and other expenses on securities sold short, taxes, brokerage commissions and other expenses incurred in placing orders

 

22

 

 

US Vegan Climate ETF

 

NOTES TO FINANCIAL STATEMENTS
January 31, 2023 (Unaudited) (Continued)

 

 

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. For the services it provides to the Fund, the Fund pays the Adviser a unified management fee, which is calculated daily and paid monthly, at an annual rate of 0.60% of the Fund’s average daily net assets. The Adviser is responsible for paying the Sub-Adviser.

 

U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services” or “Administrator”), acts as the Fund’s Administrator and, in that capacity, performs various administrative and accounting services for the Fund. The Administrator prepares various federal and state regulatory filings, reports and returns for the Fund, including regulatory compliance monitoring and financial reporting; prepares reports and materials to be supplied to the trustees; monitors the activities of the Fund’s Custodian, transfer agent and fund accountant. Fund Services also serves as the transfer agent and fund accountant to the Fund. U.S. Bank N.A. (the “Custodian”), an affiliate of Fund Services, serves as the Fund’s Custodian.

 

A Trustee and all officers of the Trust are affiliated with the Administrator and Custodian.

 

NOTE 4 – PURCHASES AND SALES OF SECURITIES

 

During the current fiscal period, purchases and sales of securities by the Fund, excluding short-term securities and in-kind transactions, were $5,296,072 and $5,262,839, respectively.

 

During the current fiscal period, there were no purchases or sales of U.S. Government securities.

 

During the current fiscal period, there were no in-kind transactions associated with creations and redemptions.

 

23

 

 

US Vegan Climate ETF

 

NOTES TO FINANCIAL STATEMENTS
January 31, 2023 (Unaudited) (Continued)

 

 

NOTE 5 – INCOME TAX INFORMATION

 

The amount and character of tax basis distributions and composition of net assets, including distributable earnings (accumulated deficit), are finalized at fiscal year-end; accordingly, tax basis balances have not been determined for the current fiscal period.

 

The components of distributable earnings (accumulated deficit) and cost basis of investments for federal income tax purposes at July 31, 2022 were as follows:

 

Tax cost of investments

  $ 64,735,842  

Gross tax unrealized appreciation

  $ 10,429,108  

Gross tax unrealized depreciation

    (7,315,336 )

Net tax unrealized appreciation (depreciation)

    3,113,772  

Undistributed ordinary income

    73,754  

Undistributed long-term capital gains

    —  

Other accumulated gain (loss)

    (1,951,542 )

Distributable earnings (accumulated deficit)

  $ 1,235,984  

 

The differences between the cost basis for financial statement and federal income tax purposes are primarily due to timing differences in recognizing wash sales.

 

A regulated investment company may elect for any taxable year to treat any portion of any qualified late year loss as arising on the first day of the next taxable year. Qualified late year losses are certain capital and ordinary losses which occur during the portion of the Fund’s taxable year subsequent to October 31 and December 31, respectively. For the taxable year ended July 31, 2022, the Fund did not elect to defer any post-October capital losses or late-year ordinary losses.

 

As of July 31, 2022, the Fund had $1,872,577 of short-term capital loss carryforward and $78,965 of long-term capital loss carryforward available for federal income tax purposes. These amounts do not have an expiration date.

 

The tax character of distributions paid by the Fund during the fiscal years ended July 31, 2022 and July 31, 2021, was as follows:

 

   

Year Ended
July 31, 2022

    

Year Ended
July 31, 2021

  

Ordinary Income

   $ 337,892     $ 223,463  

 

24

 

 

US Vegan Climate ETF

 

NOTES TO FINANCIAL STATEMENTS
January 31, 2023 (Unaudited) (Continued)

 

 

NOTE 6 – SHARE TRANSACTIONS

 

Shares of the Fund are listed and traded on the Cboe BZX Exchange, Inc. (“Cboe”). Prior to December 2, 2022, Shares of the Fund were listed and traded on the New York Stock Exchange Arca, Inc. (“NYSE Arca”). Market prices for the shares may be different from their NAV. The Fund issues and redeems shares on a continuous basis at NAV generally in blocks of 25,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified universe. Once created, shares generally trade in the secondary market at market prices that change throughout the day. Except when aggregated in Creation Units, shares are not redeemable securities of the Fund. Creation Units may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a Depository Trust Company participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem shares directly from the Fund. Rather, most retail investors may purchase shares in the secondary market with the assistance of a broker and are subject to customary brokerage commissions or fees.

 

The Fund currently offers one class of shares, which has no front-end sales load, no deferred sales charge, and no redemption fee. A fixed transaction fee is imposed for the transfer and other transaction costs associated with the creation or redemption of Creation Units. The standard fixed transaction fee for the Fund is $500, payable to the Custodian. The fixed transaction fee may be waived on certain orders if the Fund’s Custodian has determined to waive some or all of the costs associated with the order or another party, such as the Adviser, has agreed to pay such fee. In addition, a variable fee, payable to the Fund, may be charged on all cash transactions or substitutes for Creation Units of up to a maximum of 2% as a percentage of the value of the Creation Units subject to the transaction. Variable fees received by the Fund, if any, are displayed in the Capital Shares Transactions section of the Statements of Changes in Net Assets. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. Shares of the Fund have equal rights and privileges.

 

NOTE 7 – RISKS

 

Concentration Risk. To the extent the Fund invests more heavily in particular industries, groups of industries, or sectors of the economy, its performance will be especially sensitive to developments that significantly affect those industries, groups of industries, or sectors of the economy, and the value of shares may rise and fall more than the value of shares that invest in securities of companies in a broader range of industries or sectors.

 

25

 

 

US Vegan Climate ETF

 

NOTES TO FINANCIAL STATEMENTS
January 31, 2023 (Unaudited) (Continued)

 

 

COVID-19 Risk. The recent global outbreak of COVID-19 has disrupted economic markets and the prolonged economic impact is uncertain. The operational and financial performance of the issuers of securities in which the Fund invests depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn impact the value of the Fund’s investments.

 

26

 

 

US Vegan Climate ETF

 

Expense Example

For the Six-Months Ended January 31, 2023 (Unaudited)

 

 

As a shareholder of the Fund, you 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 funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period as indicated in the following 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 the Period’’ to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

 

The second line of the table provides information about hypothetical account values based on a hypothetical return 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 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 brokerage commissions paid on purchases and sales of Fund shares. 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. If these transactional costs were included, your costs would have been higher.

 

27

 

 

US Vegan Climate ETF

 

Expense Example

For the Six-Months Ended January 31, 2023 (Unaudited) (Continued)

 

 

   

Beginning
Account Value
August 1, 2022

    

Ending
Account Value
January 31, 2023

    

Expenses Paid
During the Period(1)

  

Actual

  $ 1,000.00     $ 985.90     $ 3.00  

Hypothetical (5% annual return before expenses)

  $ 1,000.00     $ 1,022.18     $ 3.06  

 

(1)

The dollar amounts shown as expenses paid during the period are equal to the annualized expense ratio, 0.60%, multiplied by the average account value during the six-month period, multiplied by 184/365, to reflect the one-half year period.

 

28

 

 

US Vegan Climate ETF

 

Review of Liquidity Risk Management Program

(Unaudited)

 

 

Pursuant to Rule 22e-4 under the Investment Company Act of 1940, the Trust, on behalf of the series of the Trust covered by this shareholder report (the “Series”), has adopted a liquidity risk management program to govern the Trust’s approach to managing liquidity risk. Rule 22e-4 seeks to promote effective liquidity risk management, thereby reducing the risk that a fund will be unable to meet its redemption obligations and mitigating dilution of the interests of fund shareholders. The Trust’s liquidity risk management program is tailored to reflect the Series’ particular risks, but not to eliminate all adverse impacts of liquidity risk, which would be incompatible with the nature of such Series.

 

The investment adviser to the Series has adopted and implemented its own written liquidity risk management program (the “Program”) tailored specifically to assess and manage the liquidity risk of the Series.

 

At a recent meeting of the Board of Trustees of the Trust, the Trustees received a report pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the period ended December 31, 2021. The report concluded that the Program is reasonably designed to assess and manage the Series’ liquidity risk and has operated adequately and effectively to manage such risk. The report reflected that there were no liquidity events that impacted the Series’ ability to timely meet redemptions without dilution to existing shareholders. The report further noted that no material changes have been made to the Program since its implementation.

 

There can be no assurance that the Program will achieve its objectives in the future. Please refer to the prospectus for more information regarding the Series’ exposure to liquidity risk and other principal risks to which an investment in the Series may be subject.

 

29

 

 

US Vegan Climate ETF

 

Federal Tax Information

(Unaudited)

 

 

For the fiscal year ended July 31, 2022, certain dividends paid by the Fund may be subject to the maximum rate of 23.8%, as provided for by the Jobs and Growth Tax relief Reconciliation Act of 2003.

 

The percentage of dividends declared from ordinary income designated as qualified dividend income was 100.00%.

 

For corporate shareholders, the percentage of ordinary income distributions that qualified for the corporate dividend received deduction for the fiscal year ended July 31, 2022 was 100.00%.

 

The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871(k)(2)(C) for the Fund was 0.00%.

 

Information About Portfolio Holdings
(Unaudited)

 

 

The Fund files its complete schedules of portfolio holdings for its first and third fiscal quarters with the SEC on Part F of Form N-PORT. The Fund’s Part F of Form N-PORT is available without charge, upon request, by calling toll-free at (800) 617-0004 or by accessing the Fund’s website at www.veganetf.com. Furthermore, you may obtain the Part F of Form N-PORT on the SEC’s website at www.sec.gov. The Fund’s portfolio holdings are posted on its website at www.veganetf.com daily.

 

Information About Proxy Voting
(Unaudited)

 

 

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge, upon request, by calling toll-free at (800) 617-0004, by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.veganetf.com.

 

When available, information regarding how the Fund voted proxies relating to portfolio securities during the twelve-months ending June 30 is available by calling toll-free at (800) 617-0004 or by accessing the SEC’s website at www.sec.gov.

 

30

 

 

US Vegan Climate ETF

 

Information About the Fund’s Trustees

(Unaudited)

 

 

The SAI includes additional information about the Fund’s Trustees and is available without charge, upon request, by calling (800) 617-0004, by accessing the SEC’s website at www.sec.gov or by accessing the Fund’s website at www.veganetf.com.

 

Frequency Distribution of Premiums and Discounts
(Unaudited)

 

 

Information regarding how often shares of the Fund trade on the exchange at a price above (i.e. at a premium) or below (i.e. at a discount) the NAV of the Fund is available, without charge, on the Fund’s website at www.veganetf.com.

 

31

 

 

(This Page Intentionally Left Blank.)

 

 

(This Page Intentionally Left Blank.)

 

 

Adviser
Beyond Investing LLC
14391 Spring Hill Drive, Suite 301
Spring Hill, Florida 34609

 

Sub-Adviser
Penserra Capital Management, LLC
4 Orinda Way, Suite 100-A
Orinda, California 94563

 

Index Provider
Beyond Advisors IC
Digital Hub Jersey, Block 3, Ground Floor Grenville Street
St. Helier, Jersey JE2 4UF

 

Distributor
Quasar Distributors, LLC
111 East Kilbourn Avenue, Suite 2200
Milwaukee, Wisconsin 53202

 

Custodian
U.S. Bank National Association
1555 North Rivercenter Drive, Suite 302
Milwaukee, Wisconsin 53212

 

Transfer Agent
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202

 

Independent Registered Public Accounting Firm
Cohen & Company, Ltd.
342 North Water Street, Suite 830
Milwaukee, Wisconsin 53202

 

Legal Counsel
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

 

US Vegan Climate ETF
Symbol – VEGN
CUSIP – 26922A297

 

 

 

 

(b)Not applicable.

 

Item 2. Code of Ethics.

 

Not applicable for semi-annual reports.

 

Item 3. Audit Committee Financial Expert.

 

Not applicable for semi-annual reports.

 

Item 4. Principal Accountant Fees and Services.

 

Not applicable for semi-annual reports.

 

Item 5. Audit Committee of Listed Registrants.

 

Not applicable for semi-annual reports.

 

Item 6. Investments.

 

Schedule of Investments 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 to open-end investment companies.

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

 

Not applicable to open-end investment companies.

 

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

 

Not applicable to open-end investment companies.

 

Item 10. Submission of Matters to a Vote of Security Holders.

 

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.

 

 

 

Item 11. Controls and Procedures.

 

(a)The Registrant’s President (principal executive officer) and Treasurer (principal financial officer) have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider.

 

(b)There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) 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 Management Investment Companies.

 

Not applicable to open-end investment companies.

 

Item 13. Exhibits.

 

(a)(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not Applicable.

 

(2) A separate certification for each principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.

 

(4) Change in the registrant’s independent public accountant. There was no change in the registrant’s independent public accountant for the period covered by this report.

 

(b)Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished 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.

 

(Registrant) ETF Series Solutions  
     
By (Signature and Title)* /s/ Kristina R. Nelson   
  Kristina R. Nelson, President (principal executive officer)  
     
Date 4/10/23  

 

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.

 

By (Signature and Title)* /s/ Kristina R. Nelson   
  Kristina R. Nelson, President (principal executive officer)  
     
Date 4/10/23  
     
By (Signature and Title)* /s/ Kristen M. Weitzel  
  Kristen M. Weitzel, Treasurer (principal financial officer)  
     
Date 4/10/23  

 

*Print the name and title of each signing officer under his or her signature.