N-CSR 1 zacksncsr.htm N-CSR

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 811-23435

 

Zacks Trust

(Exact name of registrant as specified in charter)

 

227 West Monroe Street Suite 4350, Chicago, IL 60606

(Address of principal executive offices) (Zip code)

 

Corporation Trust Company

1209 Orange Street

Wilmington, Delaware 19808

(Name and address of agent for service)

 

Registrant's telephone number, including area code: 312-265-9359

 

Date of fiscal year end: 1/31

 

Date of reporting period: 1/31/22

 

Item 1. Reports to Stockholders.

 

 
 
 
 
 
(ZACKS LOGO) 
 
 
 
 
 
Zacks Earnings Consistent Portfolio ETF
(ZECP)
 
 
 
 
 
 
 
 
 
 
Annual Report
 
January 31, 2022
 
 
 
 
 
 
 
 
 
 
 
1-855-813-3507
 
www.ZacksETFs.com

 

 

 

Zacks Earnings Consistent Portfolio Fund

 

The Zacks Earnings Consistent Portfolio returned 1.71% (NAV) for the period from 8/23/2021 to 1/31/2022 outperforming its benchmark, the Russell 3000 Index, which returned -2.42%.

 

Indicators of economic activity have gained strength despite the ongoing pandemic. However, there are continuing supply chain bottlenecks and supply-demand imbalances leading to elevated inflation. With unemployment hitting 3.9%, close to the pre-pandemic levels, the consensus is that the Fed will raise interest rates and remove the monetary stimulus programs. In this environment investors preferred less growth sensitive larger stocks.

 

During the holding period, Health Care, Consumer Staples, Financials, and Information Technology sectors outperformed. Communication services, Energy, and Industrials sectors underperformed. Our overweight to Consumer Staples and underweight to Communication Services sector helped the relative performance. Our overweight to Health Care and underweight to Energy Sectors hurt the relative performance.

 

 

 

Disclosure

 

Investing involves risk. Principal loss is possible. The Fund is subject to management risk because it is an actively managed portfolio. The Advisor’s judgments about the attractiveness, value, and stability of particular stocks in which the Fund invests may prove to be incorrect, and there is no guarantee that the Advisor’s judgment will produce the desired results. Equity securities are subject to changes in value, and their values may be more volatile than those of other asset classes. Investments selected using quantitative methods may perform differently from the market as a whole. 

 

 

1

 

Zacks Earnings Consistent Portfolio ETF
PORTFOLIO REVIEW (Unaudited)

 

The Portfolio’s performance figures* for the period ended January 31, 2022, as compared to its benchmark:

 

  Since Inception**
Zacks Earnings Consistent Portfolio ETF - NAV 1.71%
Zacks Earnings Consistent Portfolio ETF - Market Price 1.75%
Russell 3000 Index *** (1.08)%

 

*The Fund’s past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when sold may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the sale of Fund shares. 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.ZacksETFs.com or by calling 1-855-813-3507. The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing shares. The NAV return is based on the NAV of the Fund and the market return is based on the market price per share of the Fund. Market price returns are calculated using the closing price and account for distributions from the Fund. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively. Information detailing the number of days the Market Price of the Fund was greater than the Fund’s NAV and the number of days it was less than the Fund’s NAV can be obtained at www.ZacksETFs.com. The Fund’s total annual operating expenses, before fee waivers and/or expense reimbursements, is 1.12% per the August 06, 2021 prospectus.

 

**Inception date is August 23, 2021.

 

***The Russell 3000 Index is composed of 3000 large U.S. companies, as determined by market capitalization. This portfolio of Securities represents approximately 98% of the investable U.S. equity market. The Russell 3000 Index is comprised of stocks within the Russell 1000 and the Russell 2000 Indices. The index was developed with a base value of 140.00 as of December 31, 1986.

 

Comparison of the Change in Value of a $10,000 Investment

 

(LINE GRAPH)

 

Top 10 Holdings by Asset Class  % of Net Assets 
Software   10.4%
Technology Hardware   7.5%
Health Care Facilities & Services   7.1%
Medical Equipment & Devices   6.3%
Biotech & Pharma   5.9%
Insurance   4.9%
Household Products   4.6%
Electric Utilities   4.1%
Semiconductors   3.7%
Banking   3.5%
Other, Cash & Cash Equivalents   42.0%
    100.0%

 

Please refer to the Schedule of Investments in this report for a detailed listing of the Fund’s holdings.

2

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
SCHEDULE OF INVESTMENTS
January 31, 2022

 

Shares      Fair Value 
     COMMON STOCKS — 98.8%     
     APPAREL & TEXTILE PRODUCTS - 1.4%     
 1,103   NIKE, Inc., Class B  $163,321 
           
     ASSET MANAGEMENT - 2.4%     
 565   Ameriprise Financial, Inc.   171,936 
 127   BlackRock, Inc.   104,513 
         276,449 
     BANKING - 3.5%     
 1,406   JPMorgan Chase & Company   208,932 
 7,882   KeyCorporation   197,523 
         406,455 
     BEVERAGES - 2.3%     
 1,518   PepsiCo, Inc.   263,403 
           
     BIOTECH & PHARMA - 5.9%     
 669   Amgen, Inc.   151,957 
 1,907   Bristol-Myers Squibb Company   123,745 
 453   Eli Lilly & Company   111,162 
 1,323   Johnson & Johnson   227,940 
 1,312   Pfizer, Inc.   69,129 
         683,933 
     CHEMICALS - 1.7%     
 1,224   Celanese Corporation   190,589 
           
     COMMERCIAL SUPPORT SERVICES - 2.6%     
 363   Cintas Corporation   142,125 
 1,252   Republic Services, Inc.   159,831 
         301,956 
     DIVERSIFIED INDUSTRIALS - 1.6%     
 910   Honeywell International, Inc.   186,077 
           
     ELECTRIC UTILITIES - 4.1%     
 2,713   American Electric Power Company, Inc.   245,255 
 1,634   NextEra Energy, Inc.   127,648 

 

See accompanying notes which are an integral part of these schedule of statements.

3

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
SCHEDULE OF INVESTMENTS (Continued)
January 31, 2022

 

Shares      Fair Value 
     COMMON STOCKS — 98.8% (Continued)     
     ELECTRIC UTILITIES - 4.1% (Continued)     
 1,394   Southern Company (The)  $96,869 
         469,772 
     ELECTRICAL EQUIPMENT - 0.7%     
 290   Rockwell Automation, Inc.   83,874 
           
     FOOD - 1.8%     
 1,069   Hershey Company (The)   210,668 
           
     HEALTH CARE FACILITIES & SERVICES - 7.1%     
 2,162   CVS Health Corporation   230,274 
 513   Laboratory Corp of America Holdings(a)   139,208 
 381   Molina Healthcare, Inc.(a)   110,673 
 712   UnitedHealth Group, Inc.   336,469 
         816,624 
     HOUSEHOLD PRODUCTS - 4.6%     
 1,652   Colgate-Palmolive Company   136,207 
 2,427   Procter & Gamble Company (The)   389,413 
         525,620 
     INFRASTRUCTURE REIT - 1.2%     
 745   Crown Castle International Corporation   135,970 
           
     INSTITUTIONAL FINANCIAL SERVICES - 1.7%     
 2,081   State Street Corporation   196,655 
           
     INSURANCE - 4.9%     
 2,420   Hartford Financial Services Group, Inc. (The)   173,925 
 1,367   Marsh & McLennan Companies, Inc.   210,025 
 2,619   MetLife, Inc.   175,630 
         559,580 
     INTERNET MEDIA & SERVICES - 3.4%     
 145   Alphabet, Inc., Class A(a)   392,380 

 

See accompanying notes which are an integral part of these schedule of statements.

4

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
SCHEDULE OF INVESTMENTS (Continued)
January 31, 2022

 

Shares      Fair Value 
     COMMON STOCKS — 98.8% (Continued)     
     LEISURE FACILITIES & SERVICES - 1.4%     
 1,609   Starbucks Corporation  $158,197 
           
     MACHINERY - 2.9%     
 1,011   Caterpillar, Inc.   203,776 
 309   Deere & Company   116,308 
         320,084 
     MEDICAL EQUIPMENT & DEVICES - 6.3%     
 1,132   Baxter International, Inc.   96,718 
 785   Danaher Corporation   224,345 
 1,185   Edwards Lifesciences Corporation(a)   129,402 
 454   Stryker Corporation   112,615 
 273   Thermo Fisher Scientific, Inc.   158,695 
         721,775 
     RESIDENTIAL REIT - 1.4%     
 799   Mid-America Apartment Communities, Inc.   165,137 
           
     RETAIL - CONSUMER STAPLES - 1.8%     
 1,504   Walmart, Inc.   210,274 
           
     RETAIL - DISCRETIONARY - 3.0%     
 943   Home Depot, Inc. (The)   346,062 
           
     SEMICONDUCTORS - 3.7%     
 1,489   Applied Materials, Inc.   205,750 
 421   QUALCOMM, Inc.   73,995 
 798   Texas Instruments, Inc.   143,233 
         422,978 
     SOFTWARE - 10.4%     
 273   ANSYS, Inc.(a)   92,823 
 673   Cadence Design Systems, Inc.(a)   102,390 
 289   Intuit, Inc.   160,461 
 2,075   Microsoft Corporation   645,284 
 671   Synopsys, Inc.(a)   208,346 
         1,209,304 

 

See accompanying notes which are an integral part of these schedule of statements.

5

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
SCHEDULE OF INVESTMENTS (Continued)
January 31, 2022

 

Shares      Fair Value 
     COMMON STOCKS — 98.8% (Continued)     
     SPECIALTY FINANCE - 2.1%     
 1,371   American Express Company  $246,533 
           
     TECHNOLOGY HARDWARE - 7.5%     
 4,300   Apple, Inc.   751,554 
 2,216   Cisco Systems, Inc.   123,365 
         874,919 
     TECHNOLOGY SERVICES - 3.5%     
 711   Accenture plc, Class A   251,395 
 436   Moody’s Corporation   149,548 
         400,943 
     TELECOMMUNICATIONS - 1.3%     
 2,873   Verizon Communications, Inc.   152,930 
           
     TRANSPORTATION & LOGISTICS - 1.5%     
 715   FedEx Corporation   175,790 
           
     WHOLESALE - CONSUMER STAPLES - 1.1%     
 1,597   Sysco Corporation   124,806 
           
           
     TOTAL COMMON STOCKS (Cost $11,456,803)   11,393,058 
           
     TOTAL INVESTMENTS - 98.8% (Cost $11,456,803)  $11,393,058 
     OTHER ASSETS IN EXCESS OF LIABILITIES - 1.2%   137,960 
     NET ASSETS - 100.0%  $11,531,018 

 

PLC- Public Limited Company

 

REIT- Real Estate Investment Trust

 

(a)Non-income producing security.

 

See accompanying notes which are an integral part of these schedule of statements.

6

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF 

STATEMENT OF ASSETS AND LIABILITIES 

January 31, 2022

 

ASSETS    
Investment in securities at value (identified cost $11,456,803)  $11,393,058 
Cash   135,096 
Dividends receivable   11,449 
Receivable due from Advisor   53,795 
Deferred Offering costs (see note 2)   12,045 
TOTAL ASSETS   11,605,443 
      
LIABILITIES     
Payable to related parties   32,566 
Payable for transfer agent fees   8,214 
Payable for legal fees   6,958 
Accrued expenses and other liabilities   26,687 
TOTAL LIABILITIES   74,425 
NET ASSETS  $11,531,018 
      
Net Assets Consist Of:     
Paid in capital  $11,601,980 
Accumulated losses   (70,962)
NET ASSETS  $11,531,018 
      
Net Asset Value Per Share:     
Net Assets  $11,531,018 
Shares of beneficial interest outstanding ($0 par value, unlimited shares authorized)   454,000 
Net asset value (Net Assets ÷ Shares Outstanding), offering price and redemption price per share  $25.40 

 

See accompanying notes which are an integral part of these financial statements.

7

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF 

STATEMENT OF OPERATIONS 

For the Period Ended January 31, 2022 *

 

INVESTMENT INCOME    
Dividends  $31,176 
TOTAL INVESTMENT INCOME   31,176 
     
EXPENSES     
Investment advisory fees   10,738 
Administrative services fees   18,100 
Compliance officer fees   14,466 
Audit fees   12,750 
Transfer agent fees   8,214 
Legal fees   6,958 
Trustees fees and expenses   5,000 
Custodian fees   4,753 
Printing and postage expenses   2,997 
Offering Cost Expense   9,506 
Insurance expense   1,288 
Other expenses   2,399 
TOTAL EXPENSES   97,169 
Fees Waived/Expenses Reimbursed by the Advisor   (83,584)
NET EXPENSES   13,585 
      
NET INVESTMENT INCOME   17,591 
     
REALIZED AND UNREALIZED LOSS ON INVESTMENTS     
      
Net realized loss from security transactions   (12,986)
Net change in unrealized depreciation on investments   (63,745)
      
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS   (76,731)
      
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS  $(59,140)

 

*Commencement of Operations was August 23, 2021.

 

See accompanying notes which are an integral part of these financial statements.

8

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF 

STATEMENTS OF CHANGES IN NET ASSETS

 

   For The 
   Period Ended 
   January 31, 2022 * 
FROM OPERATIONS    
Net investment income  $17,591 
Net realized loss from security transactions   (12,986)
Net change in unrealized depreciation of investments   (63,745)
Net decrease in net assets resulting from operations   (59,140)
      
DISTRIBUTIONS TO SHAREHOLDERS     
Total distributions paid   (11,822)
Net decrease in net assets resulting from distributions to shareholders   (11,822)
     
FROM SHARES OF BENEFICIAL INTEREST     
Proceeds from shares sold:   11,601,980 
Net increase in net assets resulting from shares of beneficial interest   11,601,980 
      
TOTAL INCREASE IN NET ASSETS   11,531,018 
      
NET ASSETS     
Beginning of Period   — 
End of Period  $11,531,018 
     
SHARE ACTIVITY     
Shares sold   454,000 
Net increase in shares of beneficial interest outstanding   454,000 

 

*Commencement of Operations was August 23, 2021.

 

See accompanying notes which are an integral part of these financial statements. 

9

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF 

FINANCIAL HIGHLIGHTS

 

Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout The Period

 

   For The 
   Period Ended 
   January 31, 2022 * 
Net asset value, beginning of period  $25.00 
      
Activity from investment operations:     
Net investment income (1)   0.08 
Net realized and unrealized gain on investments   0.35 (4)
      
Total from investment operations   0.43 
      
Less distributions from:     
Net investment income   (0.03)
Total distributions   (0.03)
      
Net asset value, end of period  $25.40 
      
Market price, end of period  $25.40 
Total return (2)   1.71%
Net assets, at end of period (000s)  $11,531 
      
Ratio of gross expenses to average net assets   3.93% (5)
Ratio of net expenses to average net assets   0.55% (5)
Ratio of net investment income to average net assets   0.71% (5)
Portfolio Turnover Rate (3)   6% (6)

 

 

*Commencement of Operations was August 23, 2021.

 

(1)Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(2)Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any. Total returns for periods less than one year are not annualized.

 

(3)Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units. (Note 3)

 

(4)As required by SEC standard per share data calculation methodology, this represents a balancing figure derived from the other amounts in the financial highlights tables that captures all other changes affecting net asset value per share. This per share gain amount may not correlate to the aggregate of the net realized and unrealized loss in the Statement of Operations, primarily due to the timing of sales and repurchases of the Fund’s shares in relation to fluctuating market values of the Fund’s portfolio.

 

(5)Annualized for periods less than one full year.

 

(6)Not annualized.

 

See accompanying notes which are an integral part of these financial statements.

10

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF

NOTES TO FINANCIAL STATEMENTS

January 31, 2022

 

1.ORGANIZATION

 

Zacks Earnings Consistent Portfolio ETF (the “Fund”) is a diversified series of shares of beneficial interest in the Zacks Trust (the “Trust”), a statutory trust organized under the laws of the State of Delaware on November 14, 2018, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund seeks to provide long-term total returns and minimize capital loss. The Fund commenced operations on August 23, 2021.

 

2.SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies followed by the Fund in preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements 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 and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services – Investment Companies.”

 

Security Valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the primary exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ at the NASDAQ Official Closing Price (“NOCP”). In the absence of a sale such securities shall be valued at the mean between the current bid and ask prices on the day of valuation. Investments valued in currencies other than the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services. Short-term debt obligations having 60 days or less remaining until maturity, at time of purchase, may be valued at amortized cost. Investments in open-end investment companies are valued at net asset value.

 

A Fund may hold securities, such as private investments, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued using the “fair value” procedures approved by the Trusts’ Board of Trustees (the “Board”). The Board has delegated execution of these procedures to a fair value committee composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) Adviser. The committee may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board has also engaged a third-party valuation firm to attend valuation meetings held by the Trust, review minutes of such meetings and report to the Board on a quarterly basis. The Board reviews and ratifies the

11

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF

NOTES TO FINANCIAL STATEMENTS (Continued)

January 31, 2022

 

execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.

 

Fair Valuation Process – As noted above, the fair value committee is composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) Adviser. The applicable investments are valued collectively via inputs from each of these groups. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source), (ii) securities for which, in the judgment of the adviser, the prices or values available do not represent the fair value of the instrument. Factors which may cause the Adviser to make such a judgment include, but are not limited to, the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to a Fund’s calculation of its net asset values. Specifically, interests in commodity pools or managed futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other asset held by a pool, as adjusted for pool expenses. Restricted or illiquid securities, such as private investments or non-traded securities are valued via inputs from the Adviser based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If the Adviser is unable to obtain a current bid from such independent dealers or other independent parties, the fair value committee shall determine the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of the Fund’s holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.

 

The Fund utilizes various methods to measure fair value of all of their investments on a recurring basis. GAAP establishes the hierarchy that prioritizes inputs to valuation methods. The three levels of input are:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Fund has the ability to access.

12

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF

NOTES TO FINANCIAL STATEMENTS (Continued)

January 31, 2022

 

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 in 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.

 

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables summarize the inputs used as of January 31, 2022 for the Fund’s assets and liabilities measured at fair value: 

 

Assets*  Level 1   Level 2   Level 3   Total 
Common Stocks  $11,393,058   $—   $—   $11,393,058 
Total  $11,393,058   $—   $—   $11,393,058 

 

The Fund did not hold any Level 3 securities during the period.

 

*Please refer to the Schedule of Investments for industry classifications.

 

Security Transactions and Related Income – Security transactions are accounted for on trade date. Interest income is recognized on an accrual basis. Discounts are accreted and premiums are amortized on securities purchased over the lives of the respective securities. Dividend income is recorded on the ex-dividend date. Realized gains or losses from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.

 

Dividends and Distributions to Shareholders – Dividends from net investment income, if any, are declared and paid annually. Distributable net realized capital gains, if any, are declared and distributed annually in December. Dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either temporary 

13

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF

NOTES TO FINANCIAL STATEMENTS (Continued)

January 31, 2022

 

(i.e., deferred losses, capital loss carry forwards) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions to shareholders are recorded on ex-dividend date.

 

Federal Income Taxes – The Fund intends to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no provision for Federal income tax is required. The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Interest and penalties related to income taxes would be recorded as tax expense in the Statement of Operations. During the period ended January 31, 2022, the Fund did not incur any interest or penalties. Management has analyzed the Fund’s tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Fund’s January 31, 2022, year-end tax return. The Fund has identified its major tax jurisdictions as U.S. Federal and Ohio, however, the Fund 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 twelve months.

 

Organizational and Offering Costs – Organizational costs include legal fees pertaining to the organization of the Trust, costs of forming the Fund, drafting of bylaws, administration, custody and transfer agency agreements, and audit fees for the initial seed audit. Organizational costs of the Fund are charged to expense as incurred. Offering costs include legal fees pertaining to the preparation, review and filing of the Fund’s initial registration statement with the SEC, and printing, mailing or other distribution charges related to the Fund’s Prospectus and SAI. Offering costs incurred by the Fund were treated as deferred charges until the commencement of operation on August 23, 2021, and thereafter are amortized into expense over a 12 month period using the straight line method. For the period ended January 31, 2022 $9,506 in deferred offering costs were expensed. The remaining balance of offering costs to be amortized as of January 31, 2022 reflected on the Statement of Assets and Liabilities under Deferred Offering costs.

 

Organizational and offering costs are subject to recoupment by the Advisor in accordance with the expense limitation agreement discussed in Note 4.

 

Indemnification – The Trust indemnifies its officers and trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be remote.

14

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF

NOTES TO FINANCIAL STATEMENTS (Continued)

January 31, 2022

 

3.INVESTMENT TRANSACTIONS

 

For the period ended January 31, 2022, cost of purchases and proceeds from sales of portfolio securities (excluding in-kind transactions and short-term investments), amounted to $509,449 and $302,611 respectively. For the period ended January 31, 2022, cost of purchases and proceeds from sales of portfolio securities for in-kind transactions, amounted to $11,262,951 and $0 respectively.

 

4.INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES

 

Zacks Investment Management, Inc., (“Adviser”) serves as investment adviser to the Fund. Pursuant to an Advisory Agreement with the Trust, under the oversight of the Board, the Adviser manages the investment and reinvestment of the Fund’s assets. As compensation for its services and the related expenses borne by the Adviser, the Fund pays the Adviser a management fee, computed and accrued daily and paid monthly, at an annual rate of 0.44% of average daily net assets. For the period ended January 31, 2022, the Fund incurred $10,738 in advisory fees.

 

Pursuant to a written contract (the “Waiver Agreement”), the Adviser has agreed, at least until August 31, 2022, to waive a portion of its advisory fee and has agreed to reimburse the Fund for other expenses to the extent necessary so that the total expenses incurred by the Fund (exclusive of any front-end or contingent deferred loads, taxes, brokerage fees and commissions, borrowing costs (such as interest and dividend expense on securities sold short), acquired fund fees and expenses, fees and expenses associated with investments in other collective investment vehicles or derivative instruments (including for example option and swap fees and expenses), or extraordinary expenses such as litigation) do not exceed 0.55%. For the period ended January 31, 2022, the Adviser waived fees/reimbursed expenses of $83,584. As of January 31, 2022 the Adviser owed the Fund $53,795, as reflected on the Statement of Assets and Liabilities.

 

If the Adviser waives any fee or reimburses any expenses pursuant to the Waiver Agreement, and any Fund operating expenses are subsequently lower than their respective expense limitation, the Adviser shall be entitled to reimbursement by the Fund provided that such reimbursement does not cause the Fund’s operating expenses to exceed the expense limitation. The Adviser is permitted to receive reimbursement from the Fund for fees it waived and Fund expenses it paid, subject to the limitation that: (1) the reimbursement for fees and expenses will be made only if payable within three years from the date the fees and expenses were initially waived or reimbursed; and (2) the reimbursement may not be made if it would cause the expense limitation in effect at the time of the waiver or currently in effect, whichever is lower, to be exceeded. The Fund must pay its current ordinary operating expenses before the Adviser is entitled to any reimbursement of management fees and/or expenses. This Operating Expense Limitation Agreement can be terminated only by, or with the consent, of the Board of Trustees.

15

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF

NOTES TO FINANCIAL STATEMENTS (Continued)

January 31, 2022

 

As of January 31, 2022, the Advisor has $139,533 of waived fees within 3 years of reimbursement that may be recovered by the following dates:

 

June 28, 2024   January 31, 2025   Total 
$55,949   $83,584   $139,533 

 

Foreside Financial Services, LLC, (the “Distributor”), is the distributor for the shares of the Fund. The Distributor has entered into a Distribution Agreement with the Trust pursuant to which it distributes Fund shares for the Fund.

 

The Fund is authorized to pay distribution fees to the distributor and other firms that provide distribution and shareholder services (“Service Providers”). If a Service Provider provides these services, the Fund may pay fees at an annual rate not to exceed 0.25% of average daily net assets. No distribution or service fees are currently paid by the Fund, and will not be paid by the Fund unless authorized by the Board of Trustees. There are no current plans to impose these fees.

 

Ultimus Fund Solutions, LLC (“UFS”) – UFS provides administration and fund accounting services to the Trust. Pursuant to separate servicing agreements with UFS, the Fund pays UFS customary fees for providing administration and fund accounting services to the Fund. Certain officers of the Trust are also officers of UFS, and are not paid any fees directly by the Trust for serving in such capacities.

 

Northern Lights Compliance Services, LLC (“NLCS”) – NLCS, an affiliate of UFS, provides a Chief Compliance Officer to the Trust, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Trust. Under the terms of such agreement, NLCS receives customary fees from the Fund.

 

Blu Giant, LLC (“Blu Giant”) – Blu Giant, an affiliate of UFS, provides EDGAR conversion and filing services as well as print management services for the Fund on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Fund.

 

5.AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS

  

    Gross Unrealized   Gross Unrealized   Net Unrealized 
Tax Cost   Appreciation   Depreciation   Depreciation 
$11,458,318   $362,292   $(427,552)  $(65,260)

16

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF

NOTES TO FINANCIAL STATEMENTS (Continued)

January 31, 2022

 

6.DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL

 

The tax character of fund distributions paid for the period ended January 31, 2022, was as follows:

 

   Fiscal Period Ended 
   January 31, 2022 
Ordinary Income  $11,822 
Long-Term Capital Gain   — 
   $11,822 

 

As of January 31, 2022, the components of accumulated earnings/ (deficit) on a tax basis were as follows:

 

Undistributed   Undistributed   Post October Loss   Capital Loss   Other   Unrealized   Total 
Ordinary   Long-Term   and   Carry   Book/Tax   Appreciation/   Accumulated 
Income   Gains   Late Year Loss   Forwards   Differences   (Depreciation)   Earnings/(Deficits) 
$4,965   $—   $—   $(10,667)  $—   $(65,260)  $(70,962)

 

The difference between book basis and tax basis and unrealized depreciation from investments is primarily attributable to the tax deferral of losses on wash sales and adjustments for real estate investment trusts.

 

At January 31, 2022, the Fund had a capital loss carryforward for federal income tax purposes available to offset future capital gains as follows:

 

Non-Expiring   Non-Expiring         
Short-Term   Long-Term   Total   CLCF Utilized 
$10,667   $—   $10,667   $— 

 

7.CAPITAL SHARE TRANSACTIONS

 

Shares are not individually redeemable and may be redeemed by the Fund at NAV only in large blocks known as “Creation Units.” Shares are created and redeemed by the Fund only in Creation Unit size aggregations of 25,000 shares. Only Authorized Participants are permitted to purchase or redeem Creation Units from the Fund. 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. Such transactions are generally permitted on an in-kind basis, with a balancing cash component to equate the transaction to the NAV per share of the Fund on the transaction date. Cash may be substituted equivalent to the value of certain securities generally when they are not available in sufficient quantity for delivery, not eligible for trading by the Authorized Participant or as a result of other market circumstances. In addition, the Fund may impose transaction fees on purchases and redemptions of Fund shares to cover the custodial and other costs incurred by the Fund in effecting trades A fixed fee payable to the Custodian is imposed on each creation and redemption transaction regardless of the number of Creation Units involved in the transaction (“Fixed Fee”). Purchases and redemptions of Creation Units for cash or involving cash-in-lieu (as defined below) are required to pay an additional variable charge to

17

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF

NOTES TO FINANCIAL STATEMENTS (Continued)

January 31, 2022

 

compensate the Fund and its ongoing shareholders for brokerage and market impact expenses relating to Creation Unit transactions (“Variable Charge,” and together with the Fixed Fee, the “Transaction Fees”). With the approval of the Board, the Adviser may waive or adjust the Transaction Fees, including the Fixed Fee and/or Variable Charge (shown in the table below), from time to time. In such cases, the Authorized Participant will reimburse the Fund for, among other things, any difference between the market value at which the securities and/or financial instruments were purchased by the Fund and the cash-in-lieu amount, applicable registration fees, brokerage commissions and certain taxes. In addition, purchasers of Creation Units are responsible for the costs of transferring the Deposit Securities to the accounts of the Fund. Transactions in capital shares for the Fund are disclosed in the Statements of Changes in Net Assets.

 

Investors who use the services of a broker, or other such intermediary may be charged a fee for such services. The Transaction Fees for the Fund are listed in the table below: 

 

Fee for In-Kind and Maximum Additional Variable
Cash Purchases Charge for Cash Purchases*
$500 0.40%

 

*As a percentage of the amount invested.

 

8.SUBSEQUENT EVENTS

 

Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements.

18

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Trustees of Zacks Trust and

Shareholders of Zacks Earnings Consistent Portfolio ETF

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Zacks Trust comprising Zacks Earnings Consistent Portfolio ETF (the “Fund”) as of January 31, 2022, the related statement of operations, changes in net assets, the related notes, and the financial highlights for the period from August 23, 2021 (commencement of operations) through January 31, 2022 (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 January 31, 2022, and the results of its operations, the changes in net assets, and the financial highlights for the period from August 23, 2021 (commencement of operations) through January 31, 2022, 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 audit. 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 audit 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 audit 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 January 31, 2022, by correspondence with the custodian. Our audit 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 audit provides a reasonable basis for our opinion.

 

We have served as the Fund’s auditor since 2021.

 

 

 

COHEN & COMPANY, LTD.

Milwaukee, Wisconsin

April 11, 2022

19

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
EXPENSE EXAMPLES (Unaudited)
January 31, 2022

 

As a shareholder of the Fund, you incur ongoing costs, including management fees, transaction 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. Please note, the expenses shown in the tables are meant to highlight ongoing costs only and do not reflect any transactional costs.

 

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as disclosed in the table below.

 

Actual Expenses

 

The “Actual Expenses” line in the table below provides information about actual account values and actual expenses. You may use the information below, 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 table 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 “Hypothetical” line in 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 balances or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or redemption fees. Therefore, 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.

 

   Beginning  Ending  Expenses Paid  Expense Ratio
   Account Value  Account Value  During Period*  During Period*
Actual *  8/23/21  1/31/22  8/23/21 - 1/31/22  8/23/21 - 1/31/22
Zacks Earnings Consistent Portfolio ETF  $1,000.00  $1,017.50  $2.45  0.55%
             
   Beginning  Ending  Expenses Paid  Expense Ratio
   Account Value  Account Value  During Period**  During Period*
Hypothetical **  7/31/21  1/31/22  7/31/21 - 1/31/22  7/31/21 - 1/31/22
Zacks Earnings Consistent Portfolio ETF  $1,000.00  $1,022.43  $2.80  0.55%
(5% return before expenses)            

 

*Expenses are equal to the average account value over the period, multiplied by the Fund’s annualized expense ratio, multiplied by the number of days in the period from inception through January 31, 2022 (161), divided by the number of days in the fiscal year (365).

 

**Expenses are equal to the average account value over the period, multiplied by the Fund’s annualized expense ratio, multiplied by the number of days in the six month period ended January 31, 2022 (184), divided by the number of days in the fiscal year (365).

20

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
SUPPLEMENTAL INFORMATION (Unaudited)
January 31, 2022

 

The following is a list of the Trustees and executive officers of the Trust and each person’s principal occupation over the last five years. Unless otherwise noted, the address of each Trustee and Officer is 225 Pictoria Drive, Suite 450, Cincinnati, OH 45246.

 

Name, Year of
Birth
and Address 		Position
held with
Funds or Trust 		Length
of Time
Served 		Principal Occupation
During Past 5 Years 		Number of
Portfolios in
Fund
Complex
Overseen by
Trustee 		Other Directorships
Held by Trustee
During Past 5 Years
Independent Trustees
David Kaufman
1963 		Independent Trustee, Chairman Since 6/2021 Partner, Thompson Coburn, LLP (law firm) (since 2013) 1 None
Stuart Kaufman
1968 		Independent Trustee Since 6/2021 Managing Director, Portage Point, LLC (consulting company) (since 2018); Managing Director, Winter Harbor, LLC (consulting company) (2016-2018) 1 None
Interested Trustees
Mitch Zacks
1973 		Trustee, President, and Principal Executive Officer Since 6/2021 President and Chief Executive Officer (since 2019) and Portfolio Manager, Zacks Investment Management, Inc. (since 1999) 1 None
Other Officers
Donald Ralph 1950 Treasurer, Principal Accounting Officer, and Principal Financial Officer Since 6/2021 CFO, Zacks Investment Management (since December 2010) and Controller, Zacks Investment Research (2006-2010) n/a n/a
Eric Kane 1981 Secretary Since 6/2021 Vice President and Managing Counsel, Gemini Fund Services, LLC (since 2020); Vice President and Counsel, Gemini Fund Services, LLC (2017-2020), Assistant Vice President, Gemini Fund Services, LLC (2014-2017), Staff Attorney, Gemini Fund Services, LLC (2013-2014), Law Clerk, Gemini Fund Services, LLC (2009-2013), Legal Intern, NASDAQ OMX (2011), Hedge Fund Administrator, Gemini Fund Services, LLC (2008), Mutual Fund Accountant/Corporate Action Specialist, Gemini Fund Services, LLC (2006-2008). n/a n/a
Chad Bitterman
1972 		Chief Compliance Officer Since 6/2021 Compliance Officer, Northern Lights Compliance Services, LLC (since 2010). n/a n/a

 

The Fund’s Statement of Additional Information includes additional information about the Trustees and is available free of charge, upon request, by calling toll-free at 1-855-813-3507.

21

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
SUPPLEMENTAL INFORMATION (Unaudited)
January 31, 2022

 

Approval of Advisory Agreement – Zacks Earnings Consistent Portfolio ETF

 

In connection with a meeting held on June 22, 2021, the Board, including a majority of the Trustees who are not “interested persons,” as that term is defined in the Investment Company Act of 1940, as amended, discussed the approval of the investment advisory agreement (the “Advisory Agreement”) between Zacks Investment Management, Inc. (“Zacks” or the “Adviser”) and the Trust, with respect to the Zacks Earnings Consistent Portfolio ETF (the “Fund”). In considering the approval of the Advisory Agreement, the Board received materials specifically relating to the Fund and the Advisory Agreement.

 

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 Advisory Agreement and the weight to be given to each such factor. The Board’s conclusions were based on an evaluation of all of the information provided and were not the result of any one factor. Moreover, each Trustee may have afforded different weight to the various factors in reaching conclusions with respect to the Advisory Agreement.

 

Performance*. The Board noted that the Fund is newly formed and as such does not have a record of prior performance to submit at the Meeting. However, the Board noted that the Adviser manages three mutual funds and reviewed the performance of each fund as compared to their respective benchmarks. The Board noted that the performance of the mutual funds was generally in line with the benchmarks during the relevant time periods. The Board also took into consideration the background and experience of the prospective portfolio managers. The Board concluded that, despite a lack of close comparative data for the Fund, the returns presented for the mutual funds managed by the Adviser and the Adviser’s presentation, that the Adviser should be able to adequately fulfill the Fund’s investment mandate.

 

Nature, Extent and Quality of Services. In considering the approval of the Investment Management Agreement with the Adviser, the Board considered the nature, extent, and quality of services that the Adviser will provide to the Fund, including the Adviser’s personnel and resources and performance. The Board reviewed the services the Adviser will provide in serving as investment adviser, including the backgrounds of the personnel providing the investment management services and the Adviser’s compliance staff. The Trustees also reviewed information provided regarding risk management and compliance and regulatory matters. The Board concluded that the services the Adviser will provide were satisfactory.

 

Fees and Expenses. The Board reviewed the Fund’s proposed advisory fee and expense ratio, and reviewed information comparing the advisory fee and expense ratios to those of the peer group and Morningstar category. The Board noted that the proposed advisory fee was below both the peer group and Morningstar category averages and the proposed net expense ratio was below the Morningstar category average but slightly higher than the peer group category average. In response to the Trustees questions, Mr. Zack explained how the peer group was selected from the overall category. The Board noted that the Adviser has also agreed to waive fees and limit expense of the Fund. Given these considerations, the Board concluded that Zack’s proposed advisory fee was not unreasonable.

 

Profitability. The Board reviewed the estimated profitability of the Adviser with respect to the Fund. The Board concluded that the estimated profitability of the Adviser in connection with the management of the Fund was not unreasonable and at a level to adequately incentivize the Adviser to provide high quality services. After further discussion, the Board concluded that Zack’s expected level of profitability was not excessive.

 

Economies of Scale. The Board considered the extent to which economies of scale would be realized as the Fund grows and whether fee levels reflect a reasonable sharing of economies of scale for the benefit of Fund investors. The Board noted that breakpoints may be an appropriate way for the Adviser to share its economies of scale if the Fund experiences substantial asset growth; however, the Board recognized that the Fund may take

22

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
SUPPLEMENTAL INFORMATION (Unaudited) (Continued)
January 31, 2022

 

some time to reach an asset level where the Adviser could realize significant economies of scale. The Board observed that economies of scale will be considered in the future as Fund asset levels grow.

 

Conclusion. Based on all the information considered and the conclusions reached, the Board determined that the terms of the Advisory Agreement for the Fund are fair and reasonable, and that the approval of the Investment Advisory Agreement for an initial two-year term is in the best interests of the Fund.

 

*Due to timing of the contract approval schedule, these deliberations may or may not relate to the current performance results of the Fund.

23

 

ZACKS EARNINGS CONSISTENT PORTFOLIO ETF
SUPPLEMENTAL INFORMATION (Unaudited)
January 31, 2022

 

LIQUIDITY RISK MANAGEMENT PROGRAM

 

The Fund has adopted and implemented a written liquidity risk management program as required by Rule 22e-4 (the “Liquidity Rule”) under the 1940 Act. The program is reasonably designed to assess and manage the Fund’s liquidity risk, taking into consideration, among other factors, the Fund’s investment strategies and the liquidity of their portfolio investments during normal and reasonably foreseeable stressed conditions; its short and long-term cash flow projections; and its cash holdings and access to other funding sources.

 

During the year ended January 31, 2022, the Trust’s Liquidity Risk Management Program Committee (the “Committee”) reviewed the Fund’s investments and determined that the Fund held adequate levels of cash and highly liquid investments to meet shareholder redemption activities in accordance with applicable requirements. Accordingly, the Committee concluded that (i) the Fund’s liquidity risk management program is reasonably designed to prevent violations of the Liquidity Rule and (ii) the Fund’s liquidity risk management program has been effectively implemented.

24

 

PROXY VOTING POLICY

 

Information regarding how the Fund voted proxies relating to portfolio securities for the most recent twelve-month period ended June 30 as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies is available without charge, upon request, by calling 1-855-813-3507 or by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

PORTFOLIO HOLDINGS

 

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 reports on Form N-PORT, within sixty days after the end of the period. Form N-PORT reports are available at the SEC’s website at www.sec.gov. The information on Form N-PORT is available without charge, upon request, by calling 1-855-813-3507.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT ADVISOR
Zacks Investment Management, Inc.
227 W. Monroe, Suite 4350
Chicago, IL 60606
 
ADMINISTRATOR
Ultimus Fund Solutions, LLC
4221 North 203rd Street Suite 100
Elkhorn, Nebraska 68022
 
 
 
 
ZACKSETF-A22

 

 

Item 2. Code of Ethics.

 

(a)       As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

 

(b)        For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:

 

(1)Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(2)Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;

(3)        Compliance with applicable governmental laws, rules, and regulations;

(4)The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

(5)        Accountability for adherence to the code.

 

(c)        Amendments: During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.

 

(d)        Waivers: During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.

 

(e) The Code of Ethics is not posted on Registrant’ website.

 

(f) A copy of the Code of Ethics is attached as an exhibit.

 

 

Item 3. Audit Committee Financial Expert.

 

(a)(1)ii The Registrant’s board of trustees has determined that Stuart Kaufman is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Kaufman is independent for purposes of this Item.

 

Item 4. Principal Accountant Fees and Services.

 

(a)Audit Fees

2022 - $ 10,000

 

(b)Audit-Related Fees

2022 – None

 

(c)Tax Fees

2022 - $ 2,750

 

Preparation of Federal & State income tax returns, assistance with calculation of required income, capital gain and excise distributions and preparation of Federal excise tax returns.

 

(d)All Other Fees

2021 – None

 

 

 

(e)(1) Audit Committee’s Pre-Approval Policies

 

The registrant’s Audit Committee is required to pre-approve all audit services and, when appropriate, any non-audit services (including audit-related, tax and all other services) to the registrant. The registrant’s Audit Committee also is required to pre-approve, when appropriate, any non-audit services (including audit-related, tax and all other services) to its adviser, or any entity controlling, controlled by or under common control with the adviser that provides ongoing services to the registrant, to the extent that the services may be determined to have an impact on the operations or financial reporting of the registrant. Services are reviewed on an engagement by engagement basis by the Audit Committee.

 

(2)Percentages of Services Approved by the Audit Committee
   2022
Audit-Related Fees:   0.00%
Tax Fees:   0.00%
All Other Fees:   0.00%

 

(f)During the audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.

 

(g)The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:

 

2022 - $2,500

 

 

(h)        The registrant's audit committee has considered whether the provision of non-audit services to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence.

 

 

Item 5. Audit Committee of Listed Companies. Not applicable to open-end investment companies.

 

Item 6. Schedule of Investments. See Item 1.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. 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 Funds. Not applicable to open-end investment companies.

 

Item 10. Submission of Matters to a Vote of Security Holders. None

 

 

Item 11. Controls and Procedures.

 

(a)       Based on an evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of filing date of this Form N-CSR, the principal executive officer and principal financial officer of the Registrant have concluded that the disclosure controls and procedures of the Registrant are reasonably designed to ensure that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported by the filing date, including that information required to be disclosed is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

(b)       There were no significant changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal half-year 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) Code of Ethics herewith.

 

(a)(2) Certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 (and Item 11(a)(2) of Form N-CSR) are filed herewith.

 

(a)(3) Not applicable for open-end investment companies.

 

(b)       Certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 (and Item 11(b) of Form N-CSR) are filed herewith.

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant) Zacks Trust

 

By (Signature and Title)

/s/ Mitch Zacks

Mitch Zacks, Principal Executive Officer/President

 

Date 4/11/22

 

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/ Mitch Zacks

Mitch Zacks, Principal Executive Officer/President

 

Date 4/11/22

 

By (Signature and Title)

/s/ Donald Ralph

Sam Singh, Principal Financial Officer/Treasurer

 

Date 4/11/22