The Fund uses a “passive management” (or “indexing”) approach to seek to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Index. The Fund invests at least 80% of its total assets in the component securities of the Index. The Index is a proprietary, rules-based index designed to track the performance of a portfolio of Cannabis Companies. The Fund will also invest, under normal circumstances, at least 80% of its net assets, plus borrowings for investment purposes, in exchange listed common stock or corresponding American Depositary Receipts (“ADRs”) of Cannabis Companies. “Cannabis Companies” are companies that have a business interest in the legal cannabis-based pharmaceutical and consumer wellness & product markets. Cannabis is defined for this purpose as (i) marijuana (or products derived from marijuana) or (ii) hemp (or products derived from hemp, which includes CBD-based products (i.e., products that contain cannabidiol)). A company has a business interest in the legal cannabis-based pharmaceutical and consumer wellness & product markets if a significant percentage (at least 50%) of its revenues are derived from such activity. As of the date of this prospectus, Cannabis Companies do not include companies that grow or distribute marijuana inside the United States (unless and until such time as the cultivation, production, or distribution of such marijuana or products become legal under U.S. federal law). As of the date of this prospectus, Cannabis Companies may, however, include companies that have a business interest in the legal hemp-based pharmaceutical and consumer wellness & product markets within the United States.

Unlike many investment companies, the Fund does not try to “beat” the Index and does not seek temporary defensive positions when markets decline or appear overvalued. The Fund will generally use a “replication” strategy to achieve its investment objective, meaning it generally will invest in all of the component securities of the Index in approximately the same proportion as in the Index. However, when the Fund’s investment advisor believes it is in the best interests of the Fund (e.g., when replicating the Index involves practical difficulties or substantial costs; an Index constituent becomes temporarily illiquid, unavailable, or less liquid; or as a result of legal restrictions or limitations (such as tax diversification requirements) that apply to the Fund but not to the Index), the Fund may use a “representative sampling” strategy. Representative sampling is an indexing strategy that involves investing in a sample of the component securities in the Index, the risk, return and other characteristics of which closely resemble the risk, return and other characteristics of the Index as a whole.

AXS Cannabis Index

The initial universe of potential Index constituents (the “Index Universe”) consists of publicly listed Cannabis Companies that are involved in the legal cannabis industry. These Cannabis Companies are primarily located in the United States and Canada, but may be located in other countries as well. The term “legal” refers to being permitted under the applicable (i) controlled substance or (ii) food, drug, and cosmetics, or equivalent laws and regulations under whose jurisdiction the Cannabis Company is subject, that govern the cultivation, production or distribution, for medical or non-medical purposes, of cannabis in a particular country. Cannabis Companies that have a business interest in the legal hemp-based pharmaceutical and consumer wellness & product markets within the United States are companies that have business interests in “hemp” as defined in the Agricultural Improvement Act of 2018, also known as the “Farm Bill.” “Hemp,” as defined in the Farm Bill, was exempted from the definition of “marijuana” under the Controlled Substances Act (the “CSA”), which effectively allows companies to legally grow, manufacture, and produce hemp in the United States, if done so in compliance with the provisions of the Farm Bill.1

The Index Provider eliminates from the Index Universe any Cannabis Company that it knows, based on the Cannabis Company’s publicly available information, to be involved in cannabis-related business activities that are illegal under the national and local laws of the relevant jurisdiction, including U.S. federal and state laws. “Publicly available information” is information available in a company’s publicly available filings with the U.S. Securities and Exchange Commission (the “SEC”), publicly available filings with the 13 Canadian provincial and territorial securities regulatory authorities (“Canadian Securities Administrators”), publicly available filings with equivalent securities authorities in other applicable countries, investor presentations posted on a company’s website, and press releases or other public statements by a company. The Index Provider also eliminates from the Index Universe any Cannabis Company that it knows, based on the Cannabis Company’s publicly available information, to invest in other companies (“Related Companies”) that the Index Provider knows, based on the Related Company’s publicly available information, to be involved in cannabis-related business activities that are illegal under the national and local laws of the relevant jurisdiction, including U.S. federal and state laws. These assessments are made at the time a Cannabis Company is added to the Index and upon any reconstitution of the Index. The Index is rebalanced and reconstituted monthly, effective at the close of trading on the second Friday of the month. The Fund is rebalanced and reconstituted in accordance with the Index. Upon the monthly rebalancing and reconstitution of the Index, the Fund’s investment advisor will also examine each Cannabis Company’s publicly available information in order to eliminate from the Fund’s portfolio any Cannabis Company that it knows to be involved in cannabis-related business activities that are illegal under the national and local laws of the relevant jurisdiction, including U.S. federal and state laws. If the Advisor identifies or becomes aware that a particular company no longer meets the Fund’s definition of Cannabis Companies, the Fund intends to promptly sell that position.

The Index Universe is then screened to exclude stocks that have a market capitalization below $100 million and stocks listed on the Canadian Securities Exchange (the “CSE”). The Index constituents must be listed on exchanges that require compliance with all laws, rules and regulations applicable to their business, including U.S. federal laws. As of the date of this prospectus, the exchanges identified by the Index Provider that meet this criterion are the New York Stock Exchange (“NYSE”), Nasdaq Stock Market (“Nasdaq”), TSX Exchange (“TSX”), TSX Venture Exchange (“TSX Venture”), and the Australian Securities Exchange (“ASX”). Other exchanges that meet the criterion noted above could be identified, and companies listed on such exchanges could be included in the Index at any time. Index constituents must also have traded at least 200,000 shares during the month of reconstitution. At the time of each monthly reconstitution, the Index constituents are weighted according to their market capitalization with the individual weight of an Index constituent capped at eight percent (8.00%), with the excess weighting proportionately distributed between the remaining constituents.

The Index is rebalanced and reconstituted monthly, effective at the close of trading on the second Friday of the month. The Fund is rebalanced and reconstituted in accordance with the Index.

AXS Investments LLC is the Index Provider. The Index is calculated, maintained and distributed by Indxx LLC, an independent, third-party index calculated agent that is not affiliated with the Fund, or AXS.

As of February 28, 2023, the Index had 25 constituents, and the five largest stocks and their weightings in the Index were Scotts Miracle-Gro Company (7.77%), AFC Gamma, Inc. (6.62%), Innovative Industrial Properties (6.41%), Organigram Holdings, Inc. (5.32%), and Fire and Flower Holdings Corp. (4.98%).

To generate income, the Fund may lend its portfolio securities to broker-dealers and other financial institutions desiring to borrow securities to complete transactions and for other purposes. In connection with such loans, the Fund receives liquid collateral equal to at least 102% of the value of the domestic portfolio securities being lent and 105% of the value of the foreign portfolio securities being lent. This collateral is marked to market on a daily basis and will be maintained in an amount equal to at least the percentages noted above of the portfolio securities being lent. The Fund will also receive fee income in exchange for the securities it lends.

The Fund is non-diversified, which means that it may invest a greater percentage of its assets in the securities of a single issuer, or a smaller number of issuers, than a diversified fund.

To the extent the Index concentrates in the securities of a particular industry or group of related industries, the Fund will concentrate its investments (i.e., hold more than 25% of its total assets) to approximately the same extent as the Index. As of February 28, 2023, the Index was concentrated in the health care sector. The Fund’s focus on Cannabis Companies may result in volatile performance.