Correspondence 0001213900-25-029484 from Wedbush Series Trust (CIK 0002055464)
Wedbush Series Trust (CIK 0002055464)
Date: April 7, 2025 · CIK: 0002055464 · Accession: 0001213900-25-029484
AI Filing Summary & Sentiment
File numbers found in text: 333-284792, 811-24052
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Eversheds Sutherland (US) LLP
700 Sixth Street, NW, Suite 700
Washington, DC 20001-3980
D: +1 202.220.8412
F: +1 202.637.3593
ericsimanek@
eversheds-sutherland.com
April 7, 2025
Via EDGAR
Soo Im-Tang
Attorney-Adviser
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, NE
Washington, DC 20549
Re:
Wedbush Series Trust
File Nos.: 333-284792 and 811-24052
Dear Ms. Im-Tang:
On behalf of Wedbush Series Trust (the “Trust”
or the “Registrant”) and its series, Dan IVES Wedbush AI Revolution ETF, formerly the Wedbush IVES AI Revolution ETF (the
“Fund”), set forth below are the Registrant’s responses to the comments provided by the staff of the Division of Investment
Management (the “Staff”) of the Securities and Exchange Commission (the “SEC”) on March 10, 2025 regarding the
Registrant’s initial registration statement on Form N-1A (the “Registration Statement”). The Registrant has revised
the disclosure in its prospectus and statement of additional information in response the March 10, 2025 letter, as indicated below. The
Staff’s comments are set forth below and are followed by the Company’s responses.
GENERAL
1. We note that portions of the registration statement are incomplete. A full financial review (e.g.,
seed financial statements, auditor's report, consent) must be performed prior to declaring the registration statement effective. We may
have additional comments on such portions when you complete them in a pre-effective amendment, on disclosures made in response to this
letter, on information supplied supplementally, or on exhibits added in any amendment.
Response: The Registrant acknowledges
the Staff’s comment.
2. Please inform the staff if a party other than the Fund’s sponsor or an affiliate is providing
the Fund with initial seed capital. If so, supplementally identify the party providing the seed capital and describe its relationship
with the Fund.
Response: The Registrant confirms
that the Fund’s investment adviser will be providing the initial seed capital for the Fund.
3. Please confirm the Fund will file a fidelity bond under Form 40-17G.
Response: The Registrant confirms
the Fund will obtain a fidelity bond prior to the Fund’s launch, and will file the bond and other required materials on Form 40-17G
within 10 days of receipt of the executed bond in accordance with Rule 17g-1 under the 1940 Act.
Eversheds Sutherland (US) LLP is part of a global legal practice, operating
through various separate and distinct legal entities, under Eversheds Sutherland. For a full description of the structure and a list of
offices, please visit www.eversheds-sutherland.com.
April 7, 2025
Page 2
4. Please provide the ticker symbol and the principal trading market (exchange) for the Fund.
Response: The ticker symbol
for the Fund will be IVES, and the principal listing exchange for the Fund will be NYSE Arca.
PROSPECTUS
Investment Objective
5. The disclosure states that the Wedbush IVES AI Revolution ETF seeks to track the total return performance,
before fees and expenses, of the Wedbush IVES AI Revolution Index (the “Index”). Please provide a list of Index constituents
and the Index methodology (including the type of investments).
Response: The Registrant notes
that the Index methodology is still being constructed, and the Registrant will supplementally provide the final Index methodology and
the initial list of Index constituents to the Staff when available.
Fees and Expenses
6. The disclosure indicates that each Fund may invest in other investment companies. If acquired fund
fees and expenses (“AFFEs”) from such investments will exceed 0.01% of the average net assets of the Fund, please disclose
these fees and expenses as a separate line item in the fee table. See Item 3, Instruction 3(f)(i) of Form N-1A.
Response: The Registrant acknowledges
the Staff’s comment, and notes that, currently, the Registrant does not anticipate that the Fund’s investments in other investment
companies will cause AFFE to exceed 0.01% of the average net assets of the Fund.
7. Please confirm that there are no fee waiver/reimbursement arrangements.
Response: The Registrant does
not anticipate that the Fund and Adviser will enter into any contractual fee waiver or expense reimbursement arrangements. The Adviser
may voluntarily waive fees or reimburse expenses, however, any such voluntary waivers or reimbursements will not be subject to recoupment
by the Adviser.
Principal Investment Strategies of the Fund,
pages 1-3
8. The second paragraph discloses, “The Index is comprised exclusively of securities included in
the Dan Ives AI 30 Research Report (the ‘AI Report’). The AI Report is compiled by Dan Ives, Global Head of Technology Research
at Wedbush Securities Inc. The AI Report is a periodically released, publicly available research report…” Please: (a) clarify
what constitutes "periodically released;” and (b) supplementally explain if other funds utilize the AI Report, or if the AI
Report was created specifically for this Fund. We may have additional comments.
Response: The AI Report will
be released on a semi-annual basis, however, Dan Ives, in his sole discretion may release the report more frequently in the event that
there are material developments in the AI industry. The Registrant has revised the disclosure in the Prospectus to clarify the timing
of the AI Report release. Dan Ives, the creator of the AI Report, is a well-known research analyst and a highly sought after expert on
the technology sector. He regularly creates analyses and commentary that are available to the public free of charge or through a Wedbush
subscription service. The AI Report is a publicly available research report governed by FINRA Rule 2241. The AI Report was not created
exclusively for the Fund or for use by the Index Provider to create the Index. The AI Report will be available to Wedbush customers in
the same way that any other research reports created by Wedbush analysts, including Mr. Ives, are available. The Registrant is not aware
of any other funds or index providers that utilize the AI Report.
April 7, 2025
Page 3
9. The second paragraph on page 2 describes that the Index is constructed and maintained by “[ ]
(the ‘Index Provider’). The Index was created by Wedbush Fund Advisers, LLC (the ‘Adviser’) together with the
Index Provider, and is licensed for use by the Fund.”
(a) Please disclose if the Index Provider is affiliated with the Fund or the Adviser.
(b) Please also disclose that the Index is sponsored by an affiliate and disclose the nature of the affiliation.
(c) Please include the Index license or sublicense agreement to which the Fund is a party as an exhibit
to the registration statement.
Response:
(a) The Registration Statement has been revised to state that the Index Provider is not affiliated with the
Fund or Adviser.
(b) The Registrant notes that the Adviser designed and crafted the Index’s methodology, and has contracted
with the Index Provider to independently execute the methodology, calculate valuations, and disseminate updates and performance information
on a real-time basis. The Registrant believes that the current disclosure in the prospectus, indicating that the Index was created by
the Adviser, sufficiently describes the nature of the affiliation of the Index’s creator.
(c) The Registrant does not believe the index license agreement is required to be filed because the Registrant
and the Fund are not parties to the license agreement and, therefore, respectfully declines to file the license agreement as an exhibit
to the Registration Statement.
10. The third paragraph discloses that the Index is comprised of equity securities of companies (or corresponding
American Depositary Receipts (“ADRs”) or Global Depositary Receipts (“GDRs”)) included in the AI Report with exposure
to, or whose activities fall within, certain AI categories.
(a) Please specify types of equity securities (in addition to ADRs and GDRs) that the Fund may invest in
and disclose corresponding risks in the principal risks section.
(b) The disclosure suggests the companies in the Index may include non-US companies. Please disclose if
the Fund may invest in companies located in emerging markets and disclose corresponding risks in the principal risks section.
Response:
(a) The Fund will generally invest in the common stock of the Index’s constituents and has added additional
disclosure regarding common stock to the principal investment strategy and risks sections.
(b) The Fund may invest in companies located in emerging markets, and has updated the strategy and risk disclosures
accordingly.
11. The discussion of the Fund’s weighting methodology is overly technical and complex. For example,
disclosure states, “At the initial stage, the float-adjusted market capitalization of each constituent is adjusted by taking the
fourth root of its value (raising it to the power of one-fourth). These transformed values are then normalized by dividing each constituent's
value by the sum of all transformed float-adjusted market capitalizations.” Please re-state the Fund’s weighting methodology
in Plain English.
Response: The Registrant has
revised the disclosure regarding the Index’s weighting methodology.
April 7, 2025
Page 4
12. The second to the last paragraph on page 2 states, “As of [ ], 2025, the Index consisted of [30]
issuers from the following countries or regions: [The United States, Israel, Taiwan, and China].” If investing in each of these
countries is a principal investment strategy, please include corresponding risks of investing in issuers from each of these countries
in the principal risks section.
Response: The Fund has added
a risk factor regarding investing in Chinese companies. The Fund also has a foreign securities risk factor and has added an emerging markets
risk factor.
13. The last paragraph of page 2 states, “Under normal circumstances, the Fund will invest at least
80% of its net assets [plus borrowings for investment purposes] in the securities of AI Companies.” Please disclose: (a) what instruments
will be held principally as part of the Fund’s remaining 20% basket of securities; and (b) the circumstances in which the Adviser
would choose to invest in securities not included in the Index.
Response: (a) The Registrant
anticipates that the Fund will invest substantially all of its assets in securities of Index constituents, however, the Registrant has
added the following disclosure to the principal investment strategy section: “The Fund may invest up to 20% of its assets in investments
that are not included in the Index, but that the Adviser believes will help the Fund track the performance of the Index.”
(b) The
prospectus states that the Fund will generally us a “replication” strategy and, in the “Additional Information About
the Fund’s Investment Objective and Strategy” section, that:
The Adviser may sell securities
that are represented in the Index or purchase securities not yet represented in the Index, in anticipation of their removal from or addition
to the Index. There may also be instances in which the Adviser may choose to overweight securities in the Index, thus causing the Fund
to purchase or sell securities not in the Index, but which the Adviser believes are appropriate to substitute for certain securities in
the Index.
The Registrant believes that this
disclosure is adequate and consistent with industry practice and respectfully declines to revise this disclosure.
14. The Fund discloses in its principal strategies that it does not seek temporary defensive positions
when markets decline or appear overvalued. Please consider whether this creates principal risks that should be disclosed (e.g., this may
increase the volatility of the Fund’s performance).
Response: The Registrant respectfully
notes that the risks of “passive investing” (i.e., tracking an index and not seeking temporary defensive positions) are disclosed
in “Passive Investment Risk.” Nevertheless, the Registrant has updated “Passive Investment Risk” to indicate that
the Fund’s strategy may result in more volatile performance relative to a Fund that does take defensive positions.
April 7, 2025
Page 5
Principal Investment Risks, pages 3-6
15. The Staff notes “Concentration Risk” set forth in this section. Please reconcile this principal
risk with the Fund's stated investment limitation not to concentrate in any particular industry as provided in the Statement of Additional
Information. The Fund's Investment Limitations state that, if the Index concentrates in the securities of a particular industry or group
of industries, the Fund will concentrate its investments in the same industry or group of industries. Please disclose whether the Index
is currently concentrated and, if so, disclose the specific industry or group of industries in which the Index is concentrated.
Response: The Registrant respectfully
notes that the Fund’s “concentration risk” disclosure reflects its concentration policy to not concentrate in any particular
industry or group of industries, except that the Fund may concentrate in a particular industry or group of industries to the extent that
the Index so concentrates. The Registration Statement currently discloses that a significant portion of the Index is represented by securities
of companies in the technology and AI industries or sectors, which the Registrant respectfully believes adequately addresses the request
to disclose whether the Index is currently concentrated and, if so, the specific industry or group of industries in which the Index is
concentrated.
16. The Staff notes “ETF Risks” set forth in the section.
(a) Please supplementally confirm if the Fund invests in instruments traded outside of a collateralized
settlement system. If so, please disclose that there are a limited number of financial institutions that may act as authorized participants
that post collateral for certain trades on an agency basis (i.e., on behalf of other market participants). Please also disclose that,
to the extent that those authorized participants exit the business or are unable to process creation and/or redemption orders and no other
authorized participant is able to step forward to do so, there may be a significantly diminished trading market for the ETF’s shares.
In addition, please note that this could in turn lead to differences between the market price of the ETF’s shares and the underlying
value of those shares.
(b) Please disclose that purchases and redemptions of creation units primarily with cash, rather than through
in-kind delivery of portfolio securities, may cause the ETF to incur certain costs. Please also disclose that these costs could include
brokerage costs or taxable gains or losses that it might not have incurred if it had made redemption in-kind. In addition, please disclose
that these costs could be imposed on the ETF, and thus decrease the ETF’s net asset value, to the extent that the costs are not
offset by a transaction fee payable by an authorized participant.
(c) Please disclose that, where all or a portion of the ETF’s underlying securities trade in a market
that is closed when the market in which the ETF’s shares are listed and traded is open, there may be changes between the last quote
from its closed foreign market and the value of such security during the ETF’s domestic trading day. In addition, please note that
this, in turn could lead to differences between the market price of the ETF’s shares and the underlying value of those shares.
Response:
(a) The Registrant confirms that the Fund will not invest in securities settled outside of a collateralized
settlement system and, therefore, the Registrant has not added the additional disclosure requested.
(b) The Registrant anticipates that the majority of t