Defiance Drone & Modern Warfare ETF

Modern defense is being reshaped by drones, autonomous systems, and AI-driven capabilities operating across land, sea, air, and space. From military and commercial drones to eVTOL aircraft, space and defense infrastructure, and military cybersecurity, a new generation of technology is transforming how nations defend, secure, and operate. JEDI targets the companies building that future, including Shield AI, the San Diego autonomy company behind the Hivemind AI pilot and the V-BAT aircraft, which remains privately held.

Why Shield AI?

Founded in 2015 and headquartered in San Diego, Shield AI builds autonomy software and aircraft for defense applications, with offices and facilities across the United States, Europe, the Middle East, and Asia-Pacific.

• Hivemind autonomy. Shield AI’s AI pilot software enables aircraft to operate without GPS or communications links, in environments where both are jammed or denied. The company has described Hivemind as continuously deployed in real-world operational environments since 2018.
• Air Force CCA production award. In June 2026, the U.S. Air Force awarded Shield AI a production contract to implement Hivemind as mission autonomy software for the Collaborative Combat Aircraft program, under an architecture that treats autonomy as a capability separate from the airframe. Hivemind is currently flying aboard Anduril’s YFQ-44A as part of the program’s ongoing development efforts. Shield AI is one of three companies continuing to compete to provide CCA autonomy, alongside Anduril and RTX subsidiary Collins Aerospace.
• V-BAT aircraft. The MQ-35 V-BAT is a single-engine ducted-fan vertical takeoff and landing unmanned aircraft system that launches and recovers from a hover, requiring no runway or launch infrastructure. In July 2024, the U.S. Coast Guard awarded Shield AI a $198 million contract for maritime unmanned aircraft system services, among the largest contractor-owned, contractor-operated deployments for maritime intelligence, surveillance, and reconnaissance. V-BAT has also been procured by allied militaries including the Netherlands Ministry of Defence.
• X-BAT development. Shield AI is developing X-BAT, an autonomous vertical takeoff and landing combat aircraft. On July 20, 2026, Shield AI and GE Aerospace announced completion of integration, actuation, and engine light-off testing of an Axisymmetric Vectoring Exhaust Nozzle for the aircraft’s F110-GE-129E engine, which the companies described as a milestone on the path to vertical flight.
• Institutional backing. In March 2026, Shield AI announced a $2 billion raise at a $12.7 billion post-money valuation, comprising $1.5 billion in Series G equity led by Advent International and co-led by the Strategic Investment Group of JPMorganChase’s Security and Resiliency Initiative, plus $500 million in preferred equity from funds managed by Blackstone.

What Is Changing

• Secondary investment objective: The Fund’s primary investment objective, which is to seek to track the total return performance, before fees and expenses, of the BITA Drone & Modern Warfare Select Index, is unchanged. The Fund has added a secondary investment objective: with respect to up to 15% of the Fund’s net assets, from time to time and at the Adviser’s discretion, the Fund seeks to provide exposure to companies that would have qualified for inclusion in the Index except that their securities are not publicly traded.
• Private company investments: The Fund may invest in privately issued securities of drone and modern warfare companies, held directly or through interests in single-asset special purpose vehicles (SPVs) sponsored by unaffiliated third parties. The Adviser does not currently expect the Fund’s aggregate investment in privately issued securities to exceed approximately 5% of net assets at the time of purchase; 15% is an outside limit, not a target allocation. Such investments are treated as illiquid investments under Rule 22e-4 under the Investment Company Act of 1940.
• Fees and expenses: The Fund’s management fee is not changing and remains 0.69%. The Fund’s fee table has been restated to reflect estimated Acquired Fund Fees and Expenses of approximately 0.30%, representing a one-time upfront access fee associated with an investment through an SPV, resulting in estimated Total Annual Fund Operating Expenses of 0.99%. Because the access fee is a one-time, non-recurring charge expected to be incurred only in the year of investment, ongoing expenses in later years are expected to be lower.
• Portfolio management: Brendan Cavanaugh, CFA, Chief Strategy Officer of Defiance ETFs, has been added to the Fund’s portfolio management team, joining the Fund’s existing portfolio managers at Penserra Capital Management LLC.

What Is Not Changing

• Primary objective and index: The Fund continues to seek to track the BITA Drone & Modern Warfare Select Index and, under normal circumstances, invests at least 80% of its net assets in drone and modern warfare companies.
• Ticker and listing: The Fund continues to trade on NYSE under the ticker JEDI.
• Management fee: The Fund’s management fee remains 0.69%.
• Transparency and trading: The Fund continues to publish its full holdings daily, and shares remain fully tradable intraday.

BITA Drone & Modern Warfare Select Index

The Index is a thematic index that tracks the performance of companies that are publicly traded on recognized global exchanges in developed markets and generate significant revenue from the drone and modern warfare industry, as determined by BITA GmbH. Each Index constituent must derive at least 50% of total revenue from one or a combination of the advanced capability areas within the drone and modern warfare industry: military and commercial drones; unmanned aerial systems; AI-driven warfare and military information technology; unmanned surface, ground, and underwater systems; electronic and communication warfare solutions; ISR; space and defense infrastructure, military satellites and missile solutions; military cybersecurity; military robotics; and eVTOL aircraft and related advanced air mobility solutions.

Companies are screened semi-annually from the universe of globally listed stocks by BITA, then screened for investibility, including a minimum market capitalization of $100 million and minimum liquidity thresholds.

How the Exposure Works

The Fund obtains its Shield AI exposure indirectly. The Fund holds an interest in a single-asset special purpose vehicle sponsored by an unaffiliated third party, and that SPV holds the Shield AI securities. The Fund does not hold Shield AI shares directly, and shareholders do not hold Shield AI shares.

• Passive participation. The Fund participates as a passive investor. The SPV’s governing documents are negotiated to provide for orderly distribution of the underlying securities upon a qualifying liquidity event.
• Illiquid treatment. The SPV interest is treated as an illiquid investment under Rule 22e-4 under the Investment Company Act of 1940 and counts toward the Fund’s 15% illiquid investment limit.
• Fair valuation. The interest is carried at fair value under the Fund’s Rule 2a-5 procedures and is reflected in the Fund’s daily net asset value.
• Daily transparency. The SPV interest appears in the Fund’s daily holdings file alongside every other position.
• Access fee. The Fund pays a one-time upfront access fee in connection with acquiring the investment, expected to range from approximately 5% to 8% of the amount invested. This fee reduces the net amount of the Fund’s capital invested in the underlying company. The Fund does not currently expect to invest through vehicles that charge a recurring management fee or a performance-based allocation.