SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Exact name of registrant as specified in charter)
(Address of principal executive offices)
(Name and address of agent for service)
Annual
Report
September 30, 2020
AI Powered Equity ETF
Ticker: AIEQ
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the Fund’s reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communications electronically.
You may elect to receive all future Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held with your financial intermediary.
The fund is a series of ETF Managers Trust.
AI Powered Equity ETF
AI Powered Equity ETF
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the AI Powered Equity Exchange-Traded Fund (“AIEQ” or the “Fund”). The following information pertains to the fiscal period from October 1, 2019 to September 30, 2020. During this period, market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty regarding the long-term implications continues to exist. Such disruptions, along with various government orders and precautionary measures such as social distancing, business shutdowns and similar policies, led to a reduction in global economic activity. These policies have also resulted in periods of high market volatility which can adversely affect assets of the Fund and thus Fund performance. During the reporting period the COVID-19 pandemic contributed to approximately a five-fold increase in volatility for both the broad market (represented by the Chicago Board Options Exchange Volatility Index) as well as the technology sector (represented by the Chicago Board Options Exchange NDX Volatility Index).
The AI Powered Equity ETF is actively managed and seeks capital appreciation. Over the fiscal period, the total return for the Fund was 17.94%, while the total return for its benchmark, the S&P 500 Index, was 15.15%. The best performers in the Fund on the basis of contribution to return were Moderna, Amazon, and Livongo Health, while the worst performers were Martin Marietta Materials, Cimarex Energy, and Devon Energy.
During the reporting period, the Fund saw an average approximate allocation of 12% of its total assets to Software, 5% to Interactive Media & Services, 5% to Biotechnology and 5% to Semiconductors & Semiconductor Equipment.
AIEQ invests primarily in equity securities listed on a U.S. exchange, based on the results of a proprietary, quantitative model developed by EquBot LLC that runs on the Watson™ platform. Each day, the EquBot Model ranks each company based on the probability of the company benefiting from current economic conditions, trends, and world events and identifies approximately 30 to 150 companies with the greatest potential over the next twelve months for appreciation and weights those companies to seek a level of volatility comparable to that of the broader U.S. equity market. EquBot, the Fund’s sub-adviser, is a technology-based company focused on applying artificial intelligence (“AI”) based solutions to investment analyses.
You can find further details about AIEQ by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
AI Powered Equity ETF
| Average Annual Returns | 1 Year | Since Inception | Value of $10,000 | |||||||||
| Year Ended September 30, 2020 | Return | (10/17/17) |
|
(9/30/2020) |
|
|||||||
| AI Powered Equity ETF (NAV) | 17.94% | 11.12% | $ | 13,654 | ||||||||
| AI Powered Equity ETF (Market) | 18.26% | 10.95% | $ | 13,593 | ||||||||
| S&P 500 Index | 15.15% | 11.86% | $ | 13,923 | ||||||||
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on October 17, 2017, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The index returns do not reflect fees or expenses and are not available for direct investment.
AI Powered Equity ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| Security |
% of Total
Investments |
|||
| 1 | Amazon.com, Inc. | 3.11% | ||
| 2 | Alphabet, Inc. - Class A | 2.99% | ||
| 3 | Apple Inc. | 2.79% | ||
| 4 | Advanced Micro Devices, Inc. | 2.12% | ||
| 5 | Microsoft Corp. | 1.89% | ||
| 6 | Tesla Inc. | 1.76% | ||
| 7 | Teladoc Health, Inc. | 1.76% | ||
| 8 | Livongo Health, Inc. | 1.39% | ||
| 9 | Thermo Fisher Scientific, Inc. | 1.31% | ||
| 10 | NVIDIA Corp. | 1.28% | ||
Top Ten Holdings = 20.40% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
AI Powered Equity ETF
Important Disclosures and Key Risk Factors
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
AIEQ
The AI Powered Equity Technology ETF (the “Fund”) seeks long-term capital appreciation within risk constraints commensurate with broad market US equity indices.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The equity securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors that affect securities markets generally or factors affecting specific issuers, industries, or sectors in which the Fund invests such as political, market and economic developments, as well as events that impact specific issuers.
The Fund is actively-managed and may not meet its investment objective based on the success or failure of the Equbot Model to identify investment opportunities. Fund holdings are subject to change. For full holdings information, please visit www.etfmg.com.
The portfolio managers may actively and frequently trade securities or other instruments in the Fund’s portfolio to carry out its investment strategies. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.
Some of the models used by the Adviser for the Fund are predictive in nature. The use of predictive models has inherent risks. When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. For example, by relying on Models and Data, the Adviser may be induced to buy certain investments at prices that are too high, to sell certain other investments at prices that are too low, or to miss favorable opportunities altogether. Similarly, any hedging based on faulty Models and Data may prove to be unsuccessful.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Equbot LLC.
AI Powered Equity ETF
As of September 30, 2020 (Unaudited)
| AI Powered | ||||
| Equity ETF | ||||
| As a percent of Net Assets: | ||||
| Canada | 0.2 | % | ||
| United States | 98.9 | |||
| Rights | 0.0 | |||
| Short-Term and other Net Assets (Liabilities) | 0.9 | |||
| 100.0 | % | |||
AI Powered Equity ETF
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.1% | ||||||||
| Canada - 0.2% | ||||||||
| Commercial Services & Supplies - 0.2% | ||||||||
| Waste Connections, Inc. | 1,521 | $ | 157,880 | |||||
| United States - 98.9% | ||||||||
| Air Freight & Logistics - 1.0% | ||||||||
| FedEx Corp. | 3,863 | 971,622 | ||||||
| Auto Components - 0.1% | ||||||||
| BorgWarner, Inc. (a) | 3,276 | 126,912 | ||||||
| Automobiles - 3.2% | ||||||||
| Ford Motor Co. | 56,193 | 374,245 | ||||||
| General Motors Co. | 15,765 | 466,486 | ||||||
| Tesla, Inc. (b) | 4,917 | 2,109,443 | ||||||
| Total Automobiles | 2,950,174 | |||||||
| Beverages - 1.1% | ||||||||
| Constellation Brands, Inc. - Class A | 1,005 | 190,458 | ||||||
| Monster Beverage Corp. (b) | 3,929 | 315,106 | ||||||
| PepsiCo, Inc. | 4,036 | 559,389 | ||||||
| Total Beverages | 1,064,953 | |||||||
| Biotechnology - 7.6% | ||||||||
| AbbVie, Inc. | 3,177 | 278,273 | ||||||
| Aimmune Therapeutics, Inc. (b) | 5,431 | 187,098 | ||||||
| Fate Therapeutics, Inc. (a)(b) | 14,726 | 588,598 | ||||||
| Gilead Sciences, Inc. | 17,355 | 1,096,662 | ||||||
| Inovio Pharmaceuticals, Inc. (a)(b) | 13,167 | 152,737 | ||||||
| Invitae Corp. (a)(b) | 15,110 | 655,019 | ||||||
| Moderna, Inc. (a)(b) | 16,848 | 1,191,996 | ||||||
| Novavax, Inc. (a)(b) | 11,233 | 1,217,096 | ||||||
| Sorrento Therapeutics, Inc. (a)(b) | 91,537 | 1,020,638 | ||||||
| Syros Pharmaceuticals, Inc. (a)(b) | 38,033 | 336,212 | ||||||
| Vertex Pharmaceuticals, Inc. (b) | 1,557 | 423,691 | ||||||
| Total Biotechnology | 7,148,020 | |||||||
| Building Products - 0.8% | ||||||||
| Masco Corp. | 13,249 | 730,417 | ||||||
| Capital Markets - 1.7% | ||||||||
| BlackRock, Inc. | 589 | 331,931 | ||||||
| CME Group, Inc. | 1,018 | 170,322 | ||||||
| Intercontinental Exchange, Inc. | 3,405 | 340,670 | ||||||
| MSCI, Inc. | 1,663 | 593,325 | ||||||
| State Street Corp. | 2,765 | 164,047 | ||||||
| Total Capital Markets | 1,600,295 | |||||||
| Chemicals - 1.3% | ||||||||
| Air Products and Chemicals, Inc. | 1,068 | 318,114 | ||||||
| Mosaic Co. | 19,883 | 363,262 | ||||||
| Sherwin-Williams Co. | 723 | 503,744 | ||||||
| Total Chemicals | 1,185,120 | |||||||
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Commercial Services & Supplies - 2.5% | ||||||||
| Cintas Corp. | 2,081 | $ | 692,619 | |||||
| IAA, Inc. (b) | 14,507 | 755,379 | ||||||
| Rollins, Inc. (a) | 12,941 | 701,273 | ||||||
| Waste Management, Inc. | 1,108 | 125,392 | ||||||
| Total Commercial Services & Supplies | 2,274,663 | |||||||
| Communications Equipment - 0.1% | ||||||||
| Ciena Corp. (b) | 1,921 | 76,244 | ||||||
| Consumer Finance - 0.4% | ||||||||
| Green Dot Corp. - Class A (a)(b) | 6,547 | 331,344 | ||||||
| Diversified Financial Services - 1.0% | ||||||||
| Berkshire Hathaway, Inc. - Class B (b) | 4,522 | 962,915 | ||||||
| Diversified Telecommunication Services - 0.3% | ||||||||
| Verizon Communications, Inc. | 4,422 | 263,065 | ||||||
| Electronic Equipment, Instruments & Components - 0.1% | ||||||||
| Amphenol Corp. - Class A | 1,212 | 131,223 | ||||||
| Entertainment - 4.0% | ||||||||
| Activision Blizzard, Inc. | 7,408 | 599,678 | ||||||
| Netflix, Inc. (a)(b) | 2,438 | 1,219,073 | ||||||
| Roku, Inc. (b) | 6,777 | 1,279,498 | ||||||
| Take-Two Interactive Software, Inc. (b) | 1,754 | 289,796 | ||||||
| Zynga, Inc. - Class A (b) | 34,503 | 314,667 | ||||||
| Total Entertainment | 3,702,712 | |||||||
| Food & Staples Retailing - 1.8% | ||||||||
| Costco Wholesale Corp. | 2,073 | 735,915 | ||||||
| Kroger Co. | 7,240 | 245,508 | ||||||
| Walmart, Inc. | 4,668 | 653,100 | ||||||
| Total Food & Staples Retailing | 1,634,523 | |||||||
| Food Products - 1.3% | ||||||||
| Campbell Soup Co. (a) | 8,979 | 434,314 | ||||||
| Conagra Brands, Inc. | 10,027 | 358,064 | ||||||
| General Mills, Inc. | 4,799 | 296,002 | ||||||
| Kellogg Co. (a) | 2,428 | 156,825 | ||||||
| Total Food Products | 1,245,205 | |||||||
| Gas Utilities - 0.1% | ||||||||
| Atmos Energy Corp. | 813 | 77,715 | ||||||
| Health Care Equipment & Supplies - 4.2% | ||||||||
| Abbott Laboratories | 7,715 | 839,623 | ||||||
| DexCom, Inc. (b) | 1,431 | 589,901 | ||||||
| IDEXX Laboratories, Inc. (b) | 2,896 | 1,138,447 | ||||||
| Intuitive Surgical, Inc. (b) | 1,143 | 811,004 | ||||||
| ResMed, Inc. | 2,828 | 484,804 | ||||||
| Total Health Care Equipment & Supplies | 3,863,779 | |||||||
| Health Care Providers & Services - 1.7% | ||||||||
| Anthem, Inc. | 1,613 | 433,236 | ||||||
| Centene Corp. (b) | 7,527 | 439,050 | ||||||
| Humana, Inc. | 1,160 | 480,112 | ||||||
| Molina Healthcare, Inc. (b) | 1,059 | 193,839 | ||||||
| Total Health Care Providers & Services | 1,546,237 | |||||||
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Health Care Technology - 5.1% | ||||||||
| Cerner Corp. (a) | 6,188 | $ | 447,331 | |||||
| Livongo Health, Inc. (a)(b) | 11,866 | 1,661,833 | ||||||
| Teladoc Health, Inc. (a)(b) | 9,613 | 2,107,555 | ||||||
| Veeva Systems, Inc. - Class A (b) | 1,813 | 509,797 | ||||||
| Total Health Care Technology | 4,726,516 | |||||||
| Hotels, Restaurants & Leisure - 1.5% | ||||||||
| Domino’s Pizza, Inc. | 2,218 | 943,271 | ||||||
| McDonald’s Corp. | 2,180 | 478,488 | ||||||
| Total Hotels, Restaurants & Leisure | 1,421,759 | |||||||
| Household Products - 2.0% | ||||||||
| Church & Dwight Co., Inc. | 6,620 | 620,360 | ||||||
| Clorox Co. (a) | 2,404 | 505,249 | ||||||
| Kimberly-Clark Corp. | 1,826 | 269,627 | ||||||
| Procter & Gamble Co. | 3,107 | 431,842 | ||||||
| Total Household Products | 1,827,078 | |||||||
| Insurance - 0.4% | ||||||||
| eHealth, Inc. (a)(b) | 4,370 | 345,230 | ||||||
| Interactive Media & Services - 4.0% | ||||||||
| Alphabet, Inc. - Class A (b) | 2,446 | 3,584,857 | ||||||
| Facebook, Inc. - Class A (b) | 833 | 218,163 | ||||||
| Total Interactive Media & Services | 3,803,020 | |||||||
| Internet & Direct Marketing Retail - 7.1% | ||||||||
| Amazon.com, Inc. (b) | 1,184 | 3,728,097 | ||||||
| Etsy, Inc. (a)(b) | 8,945 | 1,087,980 | ||||||
| Grubhub, Inc. (b) | 3,348 | 242,161 | ||||||
| Overstock.com, Inc. (a)(b) | 5,970 | 433,721 | ||||||
| Stitch Fix, Inc. - Class A (a)(b) | 19,381 | 525,807 | ||||||
| Wayfair, Inc. - Class A (a)(b) | 2,049 | 596,279 | ||||||
| Total Internet & Direct Marketing Retail | 6,614,045 | |||||||
| IT Services - 3.5% | ||||||||
| Akamai Technologies, Inc. (a)(b) | 4,831 | 534,019 | ||||||
| Broadridge Financial Solutions, Inc. | 3,233 | 426,756 | ||||||
| MasterCard, Inc. - Class A | 268 | 90,630 | ||||||
| PayPal Holdings, Inc. (b) | 1,984 | 390,908 | ||||||
| Square, Inc. - Class A (b) | 4,735 | 769,674 | ||||||
| Twilio, Inc. - Class A (a)(b) | 4,172 | 1,030,859 | ||||||
| Total IT Services | 3,242,846 | |||||||
| Life Sciences Tools & Services - 3.9% | ||||||||
| Agilent Technologies, Inc. | 4,515 | 455,744 | ||||||
| Mettler-Toledo International, Inc. (b) | 336 | 324,492 | ||||||
| PerkinElmer, Inc. | 3,268 | 410,167 | ||||||
| Syneos Health, Inc. (a)(b) | 8,753 | 465,309 | ||||||
| Thermo Fisher Scientific, Inc. | 3,545 | 1,565,189 | ||||||
| Waters Corp. (b) | 2,041 | 399,383 | ||||||
| Total Life Sciences Tools & Services | 3,620,284 | |||||||
| Machinery - 0.7% | ||||||||
| Stanley Black & Decker, Inc. | 3,828 | 620,902 | ||||||
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Media - 0.4% | ||||||||
| News Corp. - Class A | 23,360 | $ | 327,507 | |||||
| Metals & Mining - 0.9% | ||||||||
| Coeur Mining, Inc. (b) | 65,515 | 483,501 | ||||||
| Royal Gold, Inc. | 2,859 | 343,566 | ||||||
| Total Metals & Mining | 827,067 | |||||||
| Multiline Retail - 0.7% | ||||||||
| Dollar General Corp. | 1,185 | 248,400 | ||||||
| Target Corp. | 2,617 | 411,968 | ||||||
| Total Multiline Retail | 660,368 | |||||||
| Multi-Utilities - 0.1% | ||||||||
| Sempra Energy (a) | 865 | 102,381 | ||||||
| Oil, Gas & Consumable Fuels - 1.7% | ||||||||
| Cabot Oil & Gas Corp. (a) | 9,872 | 171,378 | ||||||
| Cimarex Energy Co. (a) | 28,857 | 702,090 | ||||||
| EQT Corp. | 43,061 | 556,779 | ||||||
| Williams Cos., Inc. | 8,261 | 162,329 | ||||||
| Total Oil, Gas & Consumable Fuels | 1,592,576 | |||||||
| Pharmaceuticals - 1.9% | ||||||||
| Catalent, Inc. (b) | 3,257 | 278,995 | ||||||
| Eli Lilly and Co. | 3,213 | 475,588 | ||||||
| Johnson & Johnson | 2,931 | 436,367 | ||||||
| Pfizer, Inc. | 15,529 | 569,914 | ||||||
| Total Pharmaceuticals | 1,760,864 | |||||||
| Professional Services - 0.2% | ||||||||
| Verisk Analytics, Inc. | 1,216 | 225,337 | ||||||
| Real Estate Management & Development - 0.9% | ||||||||
| Redfin Corp. (a)(b) | 16,395 | 818,602 | ||||||
| Road & Rail - 0.2% | ||||||||
| Union Pacific Corp. | 1,131 | 222,660 | ||||||
| Semiconductors & Semiconductor Equipment - 6.9% | ||||||||
| Advanced Micro Devices, Inc. (a)(b) | 30,973 | 2,539,476 | ||||||
| Enphase Energy, Inc. (a)(b) | 2,945 | 243,228 | ||||||
| Intel Corp. | 6,186 | 320,311 | ||||||
| Microchip Technology, Inc. | 1,065 | 109,439 | ||||||
| NVIDIA Corp. | 2,825 | 1,528,947 | ||||||
| Qualcomm, Inc. | 5,394 | 634,766 | ||||||
| Skyworks Solutions, Inc. | 4,462 | 649,221 | ||||||
| Teradyne, Inc. | 4,652 | 369,648 | ||||||
| Total Semiconductors & Semiconductor Equipment | 6,395,036 | |||||||
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Software - 14.9% | ||||||||
| 2U, Inc. (a)(b) | 12,861 | $ | 435,473 | |||||
| Adobe Systems, Inc. (b) | 281 | 137,811 | ||||||
| Autodesk, Inc. (b) | 594 | 137,220 | ||||||
| Avaya Holdings Corp. (a)(b) | 34,802 | 528,990 | ||||||
| Box, Inc. - Class A (b) | 35,455 | 615,499 | ||||||
| Citrix Systems, Inc. (a) | 3,810 | 524,675 | ||||||
| Cloudera, Inc. (a)(b) | 84,819 | 923,679 | ||||||
| Coupa Software, Inc. (b) | 2,888 | 792,005 | ||||||
| Crowdstrike Holdings, Inc. - Class A (b) | 9,080 | 1,246,866 | ||||||
| DocuSign, Inc. (b) | 1,918 | 412,830 | ||||||
| Everbridge, Inc. (a)(b) | 4,665 | 586,530 | ||||||
| Fortinet, Inc. (b) | 3,870 | 455,925 | ||||||
| Intuit, Inc. | 1,629 | 531,396 | ||||||
| Microsoft Corp. | 10,777 | 2,266,726 | ||||||
| PagerDuty, Inc. (a)(b) | 15,951 | 432,432 | ||||||
| RingCentral, Inc. - Class A (b) | 1,660 | 455,853 | ||||||
| salesforce.com, Inc. (b) | 2,259 | 567,732 | ||||||
| ServiceNow, Inc. (b) | 1,452 | 704,220 | ||||||
| Slack Technologies, Inc. - Class A (a)(b) | 16,340 | 438,892 | ||||||
| SS&C Technologies Holdings, Inc. | 5,286 | 319,909 | ||||||
| Tenable Holdings, Inc. (b) | 11,788 | 444,997 | ||||||
| Zscaler, Inc. (a)(b) | 6,406 | 901,260 | ||||||
| Total Software | 13,860,920 | |||||||
| Specialty Retail - 1.5% | ||||||||
| AutoNation, Inc. (a)(b) | 7,342 | 388,612 | ||||||
| Michaels Cos., Inc. (a)(b) | 20,277 | 195,774 | ||||||
| RH (a)(b) | 2,109 | 806,946 | ||||||
| Total Specialty Retail | 1,391,332 | |||||||
| Technology Hardware, Storage & Peripherals - 3.8% | ||||||||
| Apple, Inc. | 28,922 | 3,349,456 | ||||||
| Pure Storage, Inc. - Class A (a)(b) | 12,963 | 199,501 | ||||||
| Total Technology Hardware, Storage & Peripherals | 3,548,957 | |||||||
| Textiles, Apparel & Luxury Goods - 0.3% | ||||||||
| Tapestry, Inc. (a) | 15,869 | 248,032 | ||||||
| Trading Companies & Distributors - 0.6% | ||||||||
| Fastenal Co. | 1,520 | 68,537 | ||||||
| United Rentals, Inc. (b) | 2,898 | 505,701 | ||||||
| Total Trading Companies & Distributors | 574,238 | |||||||
| Water Utilities - 1.0% | ||||||||
| Essential Utilities, Inc. (a) | 22,127 | 890,612 | ||||||
| Wireless Telecommunication Services - 0.4% | ||||||||
| T-Mobile US, Inc. (b) | 3,314 | 378,989 | ||||||
| Total United States | 91,934,296 | |||||||
| TOTAL COMMON STOCKS (Cost $76,737,121) | 92,092,176 | |||||||
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| RIGHTS - 0% | ||||||||
| United States - 0.0% | ||||||||
| NewStar Financial, Inc. (c) | 115,783 | $ | 0 | |||||
| TOTAL RIGHTS (Cost $0) | 0 | |||||||
| INVESTMENTS PURCHASED WITH PROCEEDS FROM | ||||||||
| SECURITIES LENDING COLLATERAL - 29.1% | ||||||||
| Mount Vernon Liquid Assets Portfolio, LLC, 0.18% (d) | 27,033,268 | 27,033,268 | ||||||
| TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $27,033,268) | 27,033,268 | |||||||
| SHORT-TERM INVESTMENTS - 0.8% | ||||||||
| Money Market Funds - 0.8% | ||||||||
| Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02%(d) | 789,914 | 789,914 | ||||||
| TOTAL SHORT-TERM INVESTMENTS (Cost $789,914) | 789,914 | |||||||
| Total Investments (Cost $104,560,303) - 129.0% | 119,915,358 | |||||||
| Liabilities in Excess of Other Assets - (29.0)% | (26,982,183 | ) | ||||||
| TOTAL NET ASSETS - 100.0% | $ | 92,933,175 | ||||||
Percentages are stated as a percent of net assets.
| (a) | All or a portion of this security was out on loan at September 30, 2020. |
| (b) | Non-income producing security. |
| (c) | Value determined using significant unobservable inputs. The value of this security totals $0, which represents 0.00% of total net assets. Classified as Level 3 in the fair value hierarchy. |
| (d) | The rate quote is the annualized seven-day yield at September 30, 2020. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2020
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AI Powered
Equity ETF |
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| ASSETS | ||||
| Investments in securities, at value* | $ | 119,915,358 | ||
| Receivables: | ||||
| Dividends and interest receivable | 22,079 | |||
| Securities lending income receivable | 6,472 | |||
| Receivable for investments sold | 749,460 | |||
| Total Assets | 120,693,369 | |||
| LIABILITIES | ||||
| Collateral received for securities loaned (Note 7) | 27,033,268 | |||
| Payables: | ||||
| Payable for investments purchased | 670,332 | |||
| Unitary fees payable | 56,594 | |||
| Total Liabilities | 27,760,194 | |||
| Net Assets | $ | 92,933,175 | ||
| NET ASSETS CONSIST OF: | ||||
| Paid-in Capital | $ | 89,525,063 | ||
| Total Distibutable Earnings | 3,408,112 | |||
| Net Assets | $ | 92,933,175 | ||
| *Identified Cost: | ||||
| Investments in securities | $ | 104,560,303 | ||
| Shares Outstanding^ | 3,025,000 | |||
| Net Asset Value, Offering and Redemption Price per Share | $ | 30.72 | ||
| ^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
STATEMENT OF OPERATIONS
For the Year Ended September 30, 2020
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AI Powered
Equity ETF |
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| INVESTMENT INCOME | ||||
| Income: | ||||
| Dividends from investments (net of foreign withholdings tax of $972) | $ | 1,143,919 | ||
| Interest | 23,318 | |||
| Securities lending income | 67,058 | |||
| Total Investment Income | 1,234,295 | |||
| Expenses: | ||||
| Unitary fees | 745,045 | |||
| Total Expenses | 745,045 | |||
| Net Investment Income | 489,250 | |||
| REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
| Net Realized Gain (Loss) on: | ||||
| Investments | (1,909,340 | ) | ||
| In-Kind redemptions | 4,024,259 | |||
| Closed-End Funds | (127,803 | ) | ||
| Net Realized Gain on Investments and In-Kind Redemptions | 1,987,116 | |||
| Net Change in Unrealized Appreciation of: | ||||
| Investments | 12,344,307 | |||
| Net Change in Unrealized Appreciation of Investments | 12,344,307 | |||
| Net Realized and Unrealized Gain on Investments | 14,331,423 | |||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 14,820,673 | ||
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
STATEMENTS OF CHANGES IN NET ASSETS
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Year Ended
|
Year Ended
|
|||||||
| OPERATIONS | ||||||||
| Net investment income | $ | 489,250 | $ | 905,874 | ||||
| Net realized gain (loss) on investments and in-kind redemptions | 1,987,116 | (10,405,925 | ) | |||||
| Net change in unrealized appreciation (depreciation) of investments | 12,344,307 | (3,012,955 | ) | |||||
| Net increase (decrease) in net assets resulting from operations | 14,820,673 | (12,513,006 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Total distributions from distributable earnings | (446,750 | ) | (12,575,043 | ) | ||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Net decrease in net assets derived from net change in | ||||||||
| outstanding shares | (36,014,002 | ) | (66,811,078 | ) | ||||
| Net decrease in net assets | (21,640,079 | ) | (91,899,127 | ) | ||||
| NET ASSETS | ||||||||
| Beginning of Year | 114,573,254 | 206,472,381 | ||||||
| End of Year | $ | 92,933,175 | $ | 114,573,254 | ||||
Summary of share transactions is as follows:
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Year Ended
|
Year Ended
|
||||||||||||||||
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Shares |
Amount |
Shares | Amount | ||||||||||||||
| Shares Sold | 175,000 | $ | 5,278,763 | 175,000 | $ | 4,859,175 | |||||||||||
| Shares Redeemed | (1,525,000 | ) | (41,292,765 | ) | (2,800,000 | ) | (71,670,253 | ) | |||||||||
| (1,350,000 | ) | $ | (36,014,002 | ) | (2,625,000 | ) | $ | (66,811,078 | ) | ||||||||
| Beginning Shares | 4,375,000 | 7,000,000 | |||||||||||||||
| Ending Shares | 3,025,000 | 4,375,000 | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
For a capital share outstanding throughout the year/period
|
Year Ended
|
Year Ended
|
Period Ended
|
||||||||||
| Net Asset Value, Beginning of Year/Period | $ | 26.19 | $ | 29.50 | $ | 25.00 | ||||||
| Income from Investment Operations: | ||||||||||||
| Net investment income 2 | 0.14 | 0.16 | 0.14 | |||||||||
| Net realized and unrealized gain (loss) on investments | 4.52 | (1.41 | ) | 4.49 | ||||||||
| Total from investment operations | 4.66 | (1.25 | ) | 4.63 | ||||||||
| Less Distributions: | ||||||||||||
| Distributions from net investment income | (0.13 | ) | (0.17 | ) | (0.12 | ) | ||||||
| Net realized gains | — | (1.89 | ) | (0.01 | ) | |||||||
| Total distributions | (0.13 | ) | (2.06 | ) | (0.13 | ) | ||||||
| Net asset value, end of year/period | $ | 30.72 | $ | 26.19 | $ | 29.50 | ||||||
| Total Return | 17.94 | % | -2.32 | % | 18.53 | %3 | ||||||
| Ratios/Supplemental Data: | ||||||||||||
| Net assets at end of year/period (000’s) | $ | 92,933 | $ | 114,573 | $ | 206,472 | ||||||
| Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | %4 | ||||||
| Net Investment Income to Average Net Assets | 0.49 | % | 0.64 | % | 0.52 | %4 | ||||||
| Portfolio Turnover Rate | 239 | % | 129 | % | 260 | %3 | ||||||
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1 | Commencement of operations on October 17, 2017. |
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2 | Calculated based on average shares outstanding during the year/period. |
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3 | Not annualized. |
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4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
AI Powered Equity ETF
September 30, 2020
NOTE 1 – ORGANIZATION
The AI Powered Equity ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The investment objective of the Fund is capital appreciation. The Fund commenced operations on October 17, 2017.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 25,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized”). 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 DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and are subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Fund may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying Fund’s operations and policies, please refer to those Fund’s semiannual and annual reports, which are filed with the SEC.
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A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2020, the Fund held one fair valued security. More detail about this security can be found in the Schedule of Investments.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
Level 2 Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
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.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The following table presents a summary of the Funds’ investments in securities, at fair value, as of September 30, 2020:
AI Powered Equity ETF
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 92,092,176 | $ | — | $ | — | $ | 92,092,176 | ||||||||
| Rights | — | — | — | (1) | — | |||||||||||
| Short Term Investments | 789,914 | — | — | 789,914 | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 27,033,268 | ||||||||||||
| Total Investments in Securities | $ | 92,882,090 | $ | — | $ | — | $ | 119,915,358 | ||||||||
(1) Includes a security valued at $0.
The AI Powered Equity ETF held a Level 3 security at the end of the year. The security classified as Level 3 is deemed immaterial.
^ For further information regarding security characteristics, see the Schedule of Investments.
* Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments.
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B. | Federal Income Taxes. The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.
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. The Fund has analyzed its tax position 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 2020 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; 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.
As of September 30, 2020, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for state purposes, four years from the date of filing), as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
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C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries. |
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D. | Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
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E. | Distributions to Shareholders. Distributions to shareholders from net investment income are declared and paid for the Fund on a quarterly basis. Net realized gains on securities for the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
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F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
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G. | Share Valuation. The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share. |
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H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in the AI Powered Equity ETF may involve certain risks, as discussed in the Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Equity Market Risk. The equity securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors that affect securities markets generally or factors affecting specific issuers, industries, or sectors in which the Fund invests such as political, market and economic developments, as well as events that impact specific issuers.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Management Risk. The Fund is subject to management risk as an actively-managed investment portfolio. The Adviser’s investment approach may fail to produce the intended results. If the Adviser’s implementation of the EquBot Model is inaccurate or incomplete, the Fund may not perform as expected and your investment could lose value over short or long-term periods. Additionally, the Adviser has not previously managed a Fund whose strategy relies on the use of AI, which may create additional risks for the Fund.
Market Trading Risk. An investment in the Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses from trading in secondary markets, periods of high volatility and disruption in the creation/redemption process of the Fund. Any of these factors, among others, may lead to the Fund’s shares trading at a premium or discount to NAV.
Models and Data Risk. The Fund relies heavily on proprietary quantitative models as well as information and data supplied by third parties (“Models and Data”). When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks.
Non-Diversification Risk. Because the Fund is “non-diversified,” it may invest a greater percentage of its assets in the securities of a single issuer or a small number of issuers than if it was a diversified fund. As a result, a decline in the value of an investment in a single issuer or a small number of issuers could cause the Fund’s overall value to decline to a greater degree than if the Fund held a more diversified portfolio. This may increase the Fund’s volatility and have a greater impact on the Fund’s performance.
Portfolio Turnover Risk. The portfolio managers may actively and frequently trade securities or other instruments in the Fund’s portfolio to carry out its investment strategies. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.
REIT Investment Risk. Investments in REITs involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume, and may be more volatile than other securities. REITs may be affected by changes in the value of their underlying properties or mortgages or by defaults by their borrowers or tenants. Furthermore, these entities depend upon specialized management skills, have limited diversification and are, therefore, subject to risks inherent in financing a limited number of projects. In addition, the performance of a REIT may be affected by changes in the tax laws or by its failure to qualify for tax-free pass-through of income.
Sector Risk. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.
Smaller Companies Risk. Smaller companies in which the Fund may invest may be more vulnerable to adverse business or economic events than larger, more established companies, and may underperform other segments of the market or the equity market as a whole. The securities of smaller companies also tend to be bought and sold less frequently and at significantly lower trading volumes than the securities of larger companies. As a result, it may be more difficult for the Fund to buy or sell a significant amount of the securities of a smaller company without an adverse impact on the price of the company’s securities, or the Fund may have to sell such securities in smaller quantities over a longer period of time, which may increase the Fund’s tracking error.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under these circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the abilityof the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust.
Under the Investment Advisory Agreement with the Fund, the Advisor has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Advisor bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Advisor at an annual rate of 0.75% of the Fund’s average daily net assets. Under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Fund, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an Agreement with its affiliate, ETFMG Financial, LLC, to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds.
EquBot, LLC serves as the sub-adviser to the Fund (the “Sub-Adviser”) and provides investment advice using the EquBot Model to the Advisor and the Fund. The Advisor is responsible for paying the entire amount of the Sub-Adviser’s fee for the Fund. The Sub-Adviser also provides marketing support for the Fund..
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Fund. The Advisor compensates the Administrator for these services under an administration agreement between the two entities.
The Advisor pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s daily average net assets. For the year ended September 30, 2020, the Fund did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the year ended September 30, 2020:
| Purchases | Sales | |||||||
| AI Powered Equity ETF | $ | 229,985,588 | $ | 229,645,773 | ||||
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the year ended September 30, 2020:
|
Purchases
In-Kind |
Sales In-
Kind |
|||||||
| AI Powered Equity ETF | $ | 5,043,115 | $ | 39,034,460 | ||||
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Fund’s taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations for the year ended September 30, 2020.
NOTE 7 — SECURITIES LENDING
The Fund may lend up to 33 1/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Advisor; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Advisor. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
As of September 30, 2020, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
| Fund |
Values of
Securities on Loan |
Fund
Collateral Received* |
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| AI Powered Equity ETF | $ | 26,421,520 | $ | 27,033,268 | ||||
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio and ETFMG Sit Ultra Short ETF as shown on the Schedule of Investments, an investment with an overnight and continuous maturity, as shown on the Schedule of Investments.
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2020 were as follows:
| Cost |
Gross
Unrealized Appreciation |
Gross
Unrealized Depreciation |
Net
Unrealized Appreciation (Depreciation) |
|||||||||||||
| AI Powered Equity ETF | $ | 105,545,338 | $ | 17,056,648 | $ | (2,686,628 | ) | $ | 14,370,020 | |||||||
|
Undistributed
Ordinary Income |
Undistributed
Long-term Gain |
Total
Distributable Earnings |
Other
Accumulated (Loss) |
Total
Accumulated Gain |
||||||||||||||||
| AI Powered Equity ETF | $ | 62,712 | $ | — | $ | 62,712 | $ | (11,024,620 | ) | $ | 3,408,112 | |||||||||
As of September 30, 2020, the Fund had accumulated capital loss carryovers of:
|
Capital Loss
Carryover ST |
Capital Loss
Carryover LT |
Expires | ||||||||
| AI Powered Equity ETF | $ | (9,794,433 | ) | $ | (1,230,206 | ) | Indefinite | |||
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2020.
|
Late Year
Ordinary Loss |
Post-October
Capital Loss |
||
| AI Powered Equity ETF | None | None |
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2020, the following table shows the reclassifications made:
|
Total
Distributable Earnings/(Loss) |
Paid-In
Capital |
|||||||
| AI Powered Equity ETF | $ | (3,538,631 | ) | $ | 3,538,631 | |||
The tax character of distributions paid by the Fund during the fiscal years ended September 30, 2020 and September 30, 2019 are as follows:
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
|||||||||||||||
|
From
Ordinary Income |
From
Capital Gains |
From
Ordinary Income |
From
Capital Gains |
|||||||||||||
| AI Powered Equity ETF | $ | 446,750 | $ | — | $ | 12,571,140 | $ | — | ||||||||
NOTE 9 – LEGAL MATTERS
The Trust, the Adviser and certain officers of the Adviser were defendants in an action filed May 2, 2017 in the Superior Court of New Jersey captioned PureShares, LLC d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. C-63-17. The PureShares action alleged claims based on disputes arising out of contractual relationships with the Adviser relating to certain series of the Trust. The action sought damages in unspecified amounts and injunctive relief based on breach of contract, wrongful termination, and several other claims.
The Adviser and its parent, Exchange Traded Managers Group, LLC (the “Company”), were defendants in a case filed on October 26, 2017 in the United States District Court for the Southern District of New York by NASDAQ, Inc. (“Nasdaq”) captioned Nasdaq, Inc. v. Exchange Traded Managers Group, LLC et al., Case 1:17-cv-08252. This action arose out of the same facts and circumstances, and relates to the same series of the Trust, as the New Jersey litigation and asserted claims for breach of contract, conversion and certain other claims. The matter was the subject of a bench trial in May 2019, and on December 20, 2019, the Court issued an Opinion and Order awarding compensatory damages to Plaintiff in the amount of $78,403,172.36, plus prejudgment interest. The Court also denied Plaintiff’s requests for punitive damages and equitable relief.
On May 1, 2020, Nasdaq, PureShares LLC (“PureShares”), and the Company announced a global settlement that resolves all claims in both the PureShares action and the Nasdaq action. The settlement is subject to ongoing negotiations and approvals among independent third parties. As part of the settlement, Nasdaq and the Company have agreed to certain cash payments from the Company to Nasdaq and PureShares, and have executed an asset purchase agreement to transfer certain Company intellectual property and related assets, to a Nasdaq affiliate. If the events set forth in the settlement agreement do not occur, and a subsequent settlement is not reached, the resulting conditions may adversely affect the Adviser’s future operations. However, Management of the Trust and the Fund, after consultation with legal counsel, believes that the resolution of these matters will not have a material adverse effect on the Fund’s financial statements.
AI Powered Equity ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 10 – SUBSEQUENT EVENTS
In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. The evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements. .
AI Powered Equity ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of AI Powered Equity ETF:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of AI Powered Equity ETF (the “Fund”) (a series of ETF Managers Trust) as of September 30, 2020, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the three years in the period then ended and the related notes (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 September 30, 2020, and the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, 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 and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2020 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor of one or more series of the Trust since 2013.
New York, New York
November 30, 2020
AI Powered Equity ETF
Expense Example
Six Months Ended September 30, 2020 (Unaudited)
As a shareholder of AI Powered Equity ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (April 1, 2020 to September 30, 2020).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
AI Powered Equity ETF
|
Beginning
Account Value April 1, 2020 |
Ending
Account Value September 30, 2020 |
Expenses
Paid During the Period^ |
Annualized
Expense Ratio During Period April 1, 2020 to September 30, 2020 |
|||||||||||||
| Actual | $ | 1,000.00 | $ | 1,372.40 | $ | 4.45 | 0.75 | % | ||||||||
| Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.25 | $ | 3.79 | 0.75 | % | ||||||||
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/366 (to reflect the period from April 1, 2020 to September 30, 2020).
AI Powered Equity ETF
September 30, 2020 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Dedumattction
For the fiscal year ended September 30, 2020, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
| Fund Name | QDI |
| AI Powered Equity ETF | 100.00% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2020 was as follows:
| Fund Name | DRD |
| AI Powered Equity ETF | 100.00% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for the Fund was as follows:
| Fund Name | Short-Term Capital Gain |
| AI Powered Equity ETF | 0.00% |
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund files a complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters on Part F of Form N-PORT. Once filed, the Fund’s Part F of Form N-PORT is available without charge, upon request on the SEC’s website (www.sec.gov) and is available by calling (877) 756-7873.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.AIEQetf.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.AIEQetf.com. Read the prospectus carefully before investing.
AI Powered Equity ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon
AI Powered Equity ETF
Board of Trustees (Continued)
| Name and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen By Trustee | Other Directorships Held by Trustee During Past 5 Years |
| Terry Loebs (1963) | Trustee (since 2014) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 12 | None |
| Eric Weigel (1960) | Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018) | 12 | None |
AI Powered Equity ETF
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, Inc.
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2020
ETFMG Prime Cyber Security ETF
ETFMG Prime Junior Silver Miners ETF
ETFMG Prime Mobile Payments ETF
ETFMG Sit Ultra Short ETF
ETFMG Travel Tech ETF
ETFMG Treatments, Testing and Advancements ETF
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the Fund’s reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communications electronically.
You may elect to receive all future Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held with your financial intermediary.
The funds are a series of ETF Managers Trust.
ETFMG™ ETFs
TABLE OF CONTENTS
September 30, 2020
ETFMG™ ETFs
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these ETFs referenced below (each a “Fund”). The following information pertains to the fiscal period from October 1, 2019 to September 30, 2020.
Performance Overview
Below is a performance overview for each Fund for the same 12-month period, except as noted otherwise. During this period, market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty regarding the long-term implications continues to exist. Such disruptions, along with various government orders and precautionary measures such as social distancing, business shutdowns and similar policies, led to a reduction in global economic activity. These policies have also resulted in periods of high market volatility which can adversely affect assets of each Funds and thus each respective Fund’s performance. During the reporting period the COVID-19 pandemic contributed to approximately a five-fold increase in volatility for the broad market (represented by the Chicago Board Options Exchange Volatility Index).
ETFMG Prime Cyber Security ETF (HACK)
The ETFMG Prime Cyber Security ETF (“HACK”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Cyber Defense Index (the “Cyber Defense Index”).
Over the period, the total return for HACK was 26.75%, while the total return for the Cyber Defense Index was 26.65%. The best performers in HACK on the basis of contribution to return were Cloudflare, SailPoint Technologies, and Zscaler, while the worst performers were Proofpoint, Cisco Systems, and Tufin Software Technologies.
During the reporting period, HACK saw an average approximate allocation of 67% of its total assets to Software, 16% to IT Services and 10% to Communications Equipment.
ETFMG Prime Junior Silver ETF (SILJ)
The ETFMG Prime Junior Silver ETF (“SILJ”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Junior Silver Miners & Explorers Index (the “Silver Miners Index”).
Over the period, the total return for SILJ was 48.06%, while the total return for the Silver Miners Index was 48.51%. The best performers in SILJ on the basis of contribution to return were Pan American Silver, Hecla Mining and Silvercorp Metals, while the worst performers in SILJ on the basis of contribution to return were McEwen Mining, Trevali Mining, and Hochschild Mining.
During the reporting period, SILJ saw an average approximate allocation of 98% of its total assets to Metals and Mining and the remaining 2% to Commercial Services & Supplies.
ETFMG Prime Mobile Payments ETF (IPAY)
The ETFMG Prime Mobile Payments ETF (“IPAY”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Mobile Payments Index (the “Mobile Payments Index”).
Over the period, the total return for IPAY was 16.56%, while the total return for the Mobile Payments Index was 17.31%. The best performers in IPAY on the basis of contribution to return were Square, PayPal, and Adyen, while the worst performers were Discover Financial Services, Cielo S.A., and Wirecard.
During the reporting period, IPAY saw an average approximate allocation of 79% of its total assets to IT Services, 10% to Consumer Finance and 3% to Electronic Equipment, Instruments & Services.
ETFMG Sit Ultra Short ETF (VALT)
The following information pertains to the fiscal period from the Fund’s inception, October 8, 2019 to September 30, 2020.
The ETFMG Sit Ultra Short ETF (“VALT”) is an actively managed ETF that seeks maximum current income, consistent with preservation of capital and daily liquidity.
Over the fiscal period, the total return for VALT was 1.19%, while the total return for its benchmark, the Bloomberg Barclays U.S. Treasury Bills Index: 1-3 month Index, was 0.96%.
VALT seeks to achieve its investment objective by investing in a diversified portfolio of high-quality, short-term U.S. dollar-denominated domestic and foreign debt securities and other instruments. VALT uses the Bloomberg Barclays U.S. Treasury Bills Index: 1-3-month Index as its benchmark index. VALT seeks to maintain an average effective duration within a range of 2 months to 1 year.
ETFMG Travel Tech ETF (AWAY)
The following information pertains to the fiscal period from the Fund’s inception, February 12, 2020 to September 30, 2020.
The ETFMG Travel Tech ETF (“AWAY”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Travel Technology Index NTR (the “Travel Tech Index”).
Over the fiscal period, the total return for AWAY was -24.50%, while the total return the for the Travel Tech Index was -24.99%. The best performers in AWAY on the basis of contribution to return were Lotte Tour Development Facedrive, and Tongcheng-Elong Holdings, while the worst performers were Despegar.com, Lyft and Sabre.
During the reporting period, AWAY saw an average approximate allocation of 50% of its total assets to Internet & Direct Marketing Retail, 17% to Road & Rail and 13% to IT Services.
ETFMG Treatments, Testing and Advancements ETF (GERM)
The following information pertains to the fiscal period from the Fund’s inception, June 17, 2020 to September 30, 2020.
The ETFMG Treatments, Testing and Advancements ETF (“GERM”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Treatments, Testing and Advancements Index (the “Treatments, Testing and Advancements Index”).
Over the fiscal period, the total return for GERM was 10.82%, while the total return the for the Treatments, Testing and Advancements Index was 10.88%. The best performers in GERM on the basis of contribution to return were Novavax, BioNTech SE, and Emergent BioSolutions, while the worst performers were Athersys, Cue Biopharma, and Dicerna Pharmaceuticals.
During the reporting period, GERM saw an average approximate allocation of 63% of its total assets to Biotechnology, 11% to Life Sciences Tools & Services and 10% to Health Care Providers & Services.
You can find further details about HACK, SILJ, IPAY, VALT, AWAY and GERM by visiting www.etfmg.com, or by calling 1-844-383-6477.
Sincerely,
Samuel Masucci III
Chairman of the Board
ETFMG Prime Junior Silver Miners ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | 1 Year | 5 Year | Since Inception | Value of $10,000 |
| Year Ended September 30, 2020 | Return | Return | (11/28/12) | (9/30/20) |
| ETFMG Prime Junior Silver Miners ETF (NAV) | 48.06% | 22.65% | -3.88% | $7,335 |
| ETFMG Prime Junior Silver Miners ETF Miners (Market) | 47.99% | 21.82% | -3.87% | $7,338 |
| S&P 500 Index | 15.15% | 14.15% | 14.04% | $28,006 |
| Prime Junior Silver Miners & Explorers Index | 48.51% | 24.14% | -2.87% | $7,957 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 28, 2012, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The index returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Prime Junior Silver Miners ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| Security | % of Total Investments | ||
| 1 | Pan American Silver Corp. | 13.04% | |
| 2 | Hecla Mining Co. | 11.02% | |
| 3 | First Majestic Silver Corp. | 7.91% | |
| 4 | Yamana Gold, Inc. | 7.10% | |
| 5 | Hochschild Mining PLC | 5.15% | |
| 6 | MAG Silver Corp. | 5.01% | |
| 7 | Silvercorp Metals, Inc. | 4.33% | |
| 8 | SilverCrest Metals, Inc. | 4.32% | |
| 9 | Harmony Gold Mining Co., Ltd. | 4.25% | |
| 10 | SSR Mining, Inc. | 3.05% |
Top Ten Holdings = 65.18% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG Prime Cyber Security ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | 1 Year | 5 Year | Since Inception | Value of $10,000 |
| Year Ended September 30, 2020 | Return | Return | (11/11/14) | (9/30/2020) |
| ETFMG Prime Cyber Security ETF (NAV) | 26.75% | 13.75% | 11.78% | $19,258 |
| ETFMG Prime Cyber Security ETF (Market) | 26.95% | 13.78% | 11.78% | $19,256 |
| S&P 500 Index | 15.15% | 14.15% | 11.11% | $18,585 |
| Prime Cyber Defense Index | 26.65% | 13.97% | 12.19% | $19,681 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 11, 2014, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Prime Cyber Security ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| Security | % of Total Investments | ||
| 1 | Cisco Systems, Inc. | 2.95% | |
| 2 | CloudFlare, Inc. | 2.74% | |
| 3 | Palo Alto Networks, Inc. | 2.57% | |
| 4 | Splunk, Inc. | 2.51% | |
| 5 | Akamai Technologies, Inc. | 2.39% | |
| 6 | Fortinet, Inc. | 2.33% | |
| 7 | SailPoint Technologies Holdings, Inc. | 2.31% | |
| 8 | Tenable Holdings, Ltd. | 2.28% | |
| 9 | CyberArk Software, Ltd. | 2.28% | |
| 10 | Checkpoint Therapeutics, Inc. | 2.27% |
Top Ten Holdings = 24.63% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG Prime Mobile Payments ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | 1 Year | 5 Year | Since Inception | Value of $10,000 |
| Year Ended September 30, 2020 | Return | Return | (7/15/15) | (9/30/2020) |
| ETFMG Prime Mobile Payments ETF (NAV) | 16.56% | 18.50% | 16.33% | $21,995 |
| ETFMG Prime Mobile Payments ETF (Market) | 16.75% | 18.74% | 16.36% | $22,029 |
| S&P 500 Index | 15.15% | 14.15% | 11.63% | $17,738 |
| Prime Mobile Payments Index | 17.31% | 19.22% | 17.04% | $22,701 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on July 15, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Prime Mobile Payments ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| Security | % of Total Investments | ||
| 1 | Square, Inc. | 5.73% | |
| 2 | PayPal Holdings, Inc. | 5.58% | |
| 3 | Fiserv, Inc. | 5.45% | |
| 4 | MasterCard, Inc. | 5.34% | |
| 5 | Fidelity National Information Services, Inc. | 5.32% | |
| 6 | Visa, Inc. | 5.19% | |
| 7 | American Express Co. | 5.05% | |
| 8 | Adyen N.V. | 4.74% | |
| 9 | Global Payments, Inc. | 4.50% | |
| 10 | Fleetcor Technologies, Inc. | 2.58% |
Top Ten Holdings= 49.48% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG Sit Ultra Short ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | Since Inception | Value of $10,000 |
| Period Ended September 30, 2020 | (10/8/2019) | (9/30/2020) |
| ETFMG Sit Ultra Short ETF (NAV) | 1.19% | $10,119 |
| ETFMG Sit Ultra Short ETF (Market) | 1.21% | $10,121 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on October 8, 2019, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Sit Ultra Short ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| Security | % of Total Investments | ||
| 1 | Intercontinental Exchange, Inc. | 2.86% | |
| 2 | Carvana Auto Receivables Trust | 2.75% | |
| 3 | HSBC Holdings PLC | 2.60% | |
| 4 | Citizens Financial Group, Inc. | 2.53% | |
| 5 | Commonwealth Bank of Australia | 2.43% | |
| 6 | Canadian Imperial Bank of Commerce | 2.38% | |
| 7 | Daimler Finance North America LLC | 2.31% | |
| 8 | Equifax, Inc. | 2.30% | |
| 9 | Honeywell International, Inc. | 2.16% | |
| 10 | Northrop Grumman Corp. | 2.08% |
Top Ten Holdings =24.40% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG Travel Tech ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | Since Inception | Value of $10,000 |
| Period Ended September 30, 2020 | (2/12/2020) | (9/30/2020) |
| ETFMG Travel Tech ETF (NAV) | -24.50% | $7,550 |
| ETFMG Travel Tech ETF (Market) | -23.84% | $7,616 |
| S&P 500 Index | 0.74% | $10,074 |
| Prime Travel Technology Index GTR | -24.99% | $7,501 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on February 12, 2020, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Travel Tech ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| Security | % of Total Investments | ||
| 1 | Trip.com Group, Ltd. | 4.93% | |
| 2 | Uber Technologies, Inc. | 4.63% | |
| 3 | Expedia Group, Inc. | 4.30% | |
| 4 | Booking Holdings, Inc. | 4.30% | |
| 5 | Hongcheng-Elong Holdings, Ltd. | 3.80% | |
| 6 | Lotte Tour Development C., Ltd. | 3.64% | |
| 7 | TravelSky, Ltd. | 3.61% | |
| 8 | Webjet, Ltd. | 3.57% | |
| 9 | Hanatour Service, Inc. | 3.47% | |
| 10 | Amadeus IT Group S.A. | 3.46% |
Top Ten Holdings = 39.71% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG Treatments, Testing and Advancements ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | Since Inception | Value of $10,000 |
| Period Ended September 30, 2020 | 6/17/20 | (9/30/2020) |
| ETFMG Treatments, Testing and Advancements ETF (NAV) | 10.82% | $11,082 |
| ETFMG Treatments, Testing and Advancements ETF (Market) | 10.56% | $11,056 |
| S&P 500 Index | 8.52% | $10,852 |
| Prime Treatments, Testing and Advancements Index NTR | 10.88% | $11,091 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on June 17, 2020, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
ETFMG Treatments, Testing and Advancements ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| Security | % of Total Investments | ||
| 1 | Moderna, Inc. | 5.03% | |
| 2 | BioNTech SE | 4.63% | |
| 3 | Quest Diagnostics, Inc. | 4.24% | |
| 4 | Laboratory Corp. of America Holdings | 4.24% | |
| 5 | Bio-Rad Laboratories, Inc. | 4.19% | |
| 6 | Quidel Corp. | 3.94% | |
| 7 | Adaptive Biotechnologies Corp. | 3.39% | |
| 8 | Vir Biotechnology, Inc. | 3.32% | |
| 9 | Alnylam Pharmaceuticals, Inc. | 3.27% | |
| 10 | Novavax, Inc. | 3.17% |
Top Ten Holdings = 39.42% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
ETFMG™ ETFs
Important Disclosures and Key Risk Factors
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
SILJ
The ETFMG Prime Junior Silver Miners ETF (the “Fund” or the “Junior Silver ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Junior Silver Miners & Explorers Index (the “Index”).
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. These risks are greater for investments in emerging markets. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual issuer volatility than a diversified fund. Funds that are less diversified across countries or geographic regions are generally riskier than more geographically diversified funds and risks associated with such countries or geographic regions may negatively affect a Fund. Investments in small capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The ETFMG Prime Junior Silver Miners ETF is subject to risks associated with the worldwide price of silver and the costs of extraction and production. Worldwide silver prices may fluctuate substantially over short periods of time, so the Fund’s share price may be more volatile. Several foreign countries have begun a process of privatizing certain entities and industries. Privatized entities may lose money or be renationalized. The Fund invests in some economies that are heavily dependent upon trading with key partners. Any reduction in this trading may cause an adverse impact on the economy in which the Fund invests. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Junior Silver Miners & Explorers Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Prime Junior Silver Miners & Explorers Index. IOPV or indicative optimized portfolio value is an estimated intraday fair value of one share of an ETF determined by the last trade price of the fund’s underlying securities.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
ETFMG™ ETFs
HACK
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Cyber Defense Index (the “Index”).
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The fund is concentrated in technology-related companies that face intense competition, both domestically and internationally, which may have an adverse effect on profit margins. Such companies may have limited product lines, markets, financial resources or personnel. The products of such companies may face obsolescence due to rapid technological developments, frequent new product introduction, unpredictable changes in growth rates, competition for the services of qualified personnel, and competition from foreign competitors with lower production costs. Technology companies are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Funds are non-diversified, meaning they may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Diversification does not assure a profit or protect against a loss in a declining market. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Cyber Defense Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Prime Cyber Defense Index.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
IPAY
The ETFMG Prime Mobile Payments ETF (the “Fund” or the “Mobile Payments ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Mobile Payments Index (the “Index”).
ETFMG™ ETFs
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Mobile Payment Companies face intense competition, both domestically and internationally, and are subject to increasing regulatory constraints, particularly with respect to fees, competition and anti-trust matters, cybersecurity and privacy. Mobile Payment Companies may be highly dependent on their ability to enter into agreements with merchants and other third parties to utilize a particular payment method, system, software or service, and such agreements may be subject to increased regulatory scrutiny. Additionally, certain Mobile Payment Companies have recently faced increased costs related to class-action litigation challenging such agreements. Such factors may adversely affect the profitability and value of such companies. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Mobile Payments Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
VALT
The ETFMG Sit Ultra Short ETF (the “Fund” or the “Ultra Short ETF”) seeks maximum current income, consistent with preservation of capital and daily liquidity.
Investing involves risk. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Although the Fund’s shares are approved for listing on the Exchange, there can be no assurance that an active trading market will be maintained for Fund shares.
The market price of the Fund’s fixed-income instruments may change, sometimes rapidly or unpredictably, in response to changes in interest rates, factors affecting securities markets generally, and other factors. Generally, when interest rates rise, the values of fixed-income instruments fall, and vice versa. The Fund may invest in floating rate securities, which are generally less sensitive to interest rate changes than securities with fixed interest rates but may decline in value if their interest rates do not rise as much, or as quickly, as comparable market interest rates. The Fund may invest in U.S. dollar-denominated debt obligations of foreign issuers. Mortgage- and asset-backed securities are subject to interest rate risk. Modest movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain types of these securities. From time to time the Fund may invest a substantial amount of its assets in taxable or tax-exempt municipal securities whose interest is paid solely from revenues of similar projects.
ETFMG™ ETFs
The Fund is recently organized with a limited operating history. The Fund may not meet its investment objective based on the success or failure to implement investment strategies for the Fund.
The Fund’s investment strategy may require it to redeem shares for cash or to otherwise include cash as part of its redemption proceeds. In the event of large shareholder redemptions, the Fund may have to sell portfolio securities at times when it would not otherwise do so, which may negatively impact the Fund’s performance.
ETF Managers Group LLC is the investment advisor to the Fund. Sit Fixed Income Advisors II LLC (“Sit Advisors”) is the sub-advisor to the Fund. Sit Advisors is a subsidiary of Sit Investment Associates Inc. (“Sit”). Sit is a full product global asset manager offering management expertise in domestic equities, international equities and fixed income instruments.
ETFMG Financial is the distributor of the Fund. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Sit.
AWAY
The ETFMG Travel Tech ETF (the “Fund” or the “Travel Tech ETF”) seeks investment results that correspond generally to the price and yield, before fund fees and expenses, of the Prime Travel Technology Index (the “Index”).
Investing involves risk, including loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Companies in the technology field, including companies in the computers, telecommunications and electronics industries, face intense competition, which may have an adverse effect on profit margins. Technology companies may have limited product lines, markets, financial resources or personnel. The products of technology companies may face obsolescence due to rapid technological developments and frequent new product introduction, and such companies may face unpredictable changes in growth rates, competition for the services of qualified personnel and competition from foreign competitors with lower production costs. Companies in the technology sector are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETFMG™ ETFs
The Fund is a recently organized, diversified management investment company with limited operating history.
ETF Managers Group LLC is the investment advisor to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
GERM
The ETFMG Treatments, Testing and Advancements ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Treatments, Testing and Advancements Index (the “Index”).
Investing involves risk, including loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Treatment Companies and Testing Companies are involved in discovering, developing and commercializing novel drugs or tests with significant market potential. These companies face challenges including pre-clinical testing and clinical trial stages of development. Clinical trials may be delayed and certain programs may never advance in the clinic or may be more costly to conduct than anticipated. Such companies may be dependent on their ability to secure significant funding for research, development, and commercialization of therapeutics, vaccines, tests, and other health care products or services. If there are delays in obtaining required regulatory and marketing approvals for products, the ability of such companies to generate revenue may be materially impaired. If regulatory approval is obtained, products will still remain subject to regulatory scrutiny with regulatory authorities having the ability to impose significant restrictions on the indicated uses or marketing. Lastly, even if a licensed product is achieved, such companies may encounter difficulties in manufacturing, product release, shelf life, testing, storage, supply chain management, or shipping. The Fund is a recently organized, non-diversified management investment company with limited operating history.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
Additionally, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or other events could result in increased premiums or discounts to the Fund’s NAV.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
ETFMG™ ETFs
As of September 30, 2020 (Unaudited)
| ETFMG | ||||||||||||||||||||||||
| Prime | ETFMG | ETFMG | ETFMG | |||||||||||||||||||||
| Junior | Prime | Prime | ETFMG | Treatments, | ||||||||||||||||||||
| Silver | Cyber | Mobile | ETFMG | Travel | Testing and | |||||||||||||||||||
| Miners | Security | Payments | Sit Ultra | Tech | Advancements | |||||||||||||||||||
| ETF | ETF | ETF | ETF | ETF | ETF | |||||||||||||||||||
| As a percent of Net Assets: | ||||||||||||||||||||||||
| Australia | — | % | — | % | 3.2 | % | — | % | 4.1 | % | — | % | ||||||||||||
| Brazil | — | — | 1.4 | — | 3.8 | — | ||||||||||||||||||
| Canada | 72.2 | 3.8 | — | — | 3.3 | 2.6 | ||||||||||||||||||
| China | — | — | — | — | 4.1 | — | ||||||||||||||||||
| Cyprus | — | — | 0.6 | — | — | — | ||||||||||||||||||
| Finland | — | 0.2 | — | — | — | — | ||||||||||||||||||
| France | — | — | 4.5 | — | — | 0.6 | ||||||||||||||||||
| Germany | — | — | — | — | — | 6.0 | ||||||||||||||||||
| Israel | — | 8.0 | — | — | — | — | ||||||||||||||||||
| Italy | — | — | 2.4 | — | — | — | ||||||||||||||||||
| Japan | — | 4.2 | 2.7 | — | 12.8 | 0.6 | ||||||||||||||||||
| Luxembourg | 0.9 | — | — | — | 2.7 | — | ||||||||||||||||||
| Mauritus | — | — | — | — | 3.9 | — | ||||||||||||||||||
| Netherlands | — | — | 5.3 | — | 3.7 | 3.1 | ||||||||||||||||||
| Peru | 2.7 | — | — | — | — | — | ||||||||||||||||||
| Republic of Korea | — | 0.7 | — | — | 8.1 | — | ||||||||||||||||||
| South Africa | 4.3 | — | — | — | — | — | ||||||||||||||||||
| Spain | — | — | — | — | 4.0 | — | ||||||||||||||||||
| Sweden | — | 1.1 | — | — | — | — | ||||||||||||||||||
| United Kingdom | 5.2 | 7.0 | 1.7 | — | 7.5 | 1.6 | ||||||||||||||||||
| United States | 14.4 | 74.5 | 77.3 | — | 41.5 | 85.0 | ||||||||||||||||||
| Asset Backed Securities | — | — | — | 2.7 | — | — | ||||||||||||||||||
| Coporate Obligations | — | — | — | 92.6 | — | — | ||||||||||||||||||
| Municipal Debt Obligations | — | — | — | 0.2 | — | — | ||||||||||||||||||
| Short-Term and other Net | ||||||||||||||||||||||||
| Assets (Liabilities) | 0.3 | 0.5 | 0.9 | 4.5 | 0.5 | 0.5 | ||||||||||||||||||
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||
ETFMG™ ETFs
ETFMG Prime Junior Silver Miners ETF
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.7% | ||||||||
| Canada - 72.2% | ||||||||
| Commercial Services & Supplies - 1.4% | ||||||||
| Alexco Resource Corp. (a) | 2,230,374 | $ | 5,888,187 | |||||
| Metals & Mining - 70.8% (b) | ||||||||
| Americas Gold & Silver Corp. (a) | 1,731,429 | 4,564,091 | ||||||
| Auryn Resources, Inc. (a) | 585,867 | 1,165,970 | ||||||
| Aya Gold & Silver, Inc. (a) | 1,505,579 | 2,951,118 | ||||||
| Bear Creek Mining Corp. (a) | 1,835,825 | 4,342,945 | ||||||
| Canada Silver Cobalt Works, Inc. (a) | 544,746 | 212,735 | ||||||
| Capstone Mining Corp. (a) | 2,182,775 | 2,376,947 | ||||||
| Dundee Precious Metals, Inc. | 987,284 | 7,073,478 | ||||||
| Eldorado Gold Corp. (a) | 947,994 | 10,002,866 | ||||||
| Endeavour Silver Corp. (a) | 2,538,144 | 8,908,885 | ||||||
| Excellon Resources, Inc. (a) | 518,736 | 1,503,752 | ||||||
| First Majestic Silver Corp. (a) | 3,399,861 | 32,366,677 | ||||||
| Fortuna Silver Mines, Inc. (a) | 1,001,644 | 6,371,465 | ||||||
| Gran Colombia Gold Corp. | 337,112 | 1,587,392 | ||||||
| Great Panther Mining, Ltd. (a) | 1,947,916 | 1,729,555 | ||||||
| GT Gold Corp. (a) | 688,258 | 697,795 | ||||||
| Hudbay Minerals, Inc. | 1,422,424 | 6,014,229 | ||||||
| Kootenay Silver, Inc. (a)(d) | 4,807,480 | 1,371,967 | ||||||
| Liberty Gold Corp. (a) | 1,344,507 | 2,140,629 | ||||||
| MAG Silver Corp. (a) | 1,262,056 | 20,520,080 | ||||||
| Mandalay Resources Corp. (a) | 496,428 | 592,783 | ||||||
| Metalla Royalty & Streaming, Ltd. | 205,701 | 1,615,886 | ||||||
| Minaurum Gold, Inc. (a) | 1,850,949 | 903,546 | ||||||
| Minco Silver Corp. (a) | 995,380 | 362,554 | ||||||
| Mirasol Resources, Ltd. (a) | 294,938 | 99,675 | ||||||
| New Gold, Inc. (a)(d) | 3,684,904 | 6,281,951 | ||||||
| New Pacific Metals Corp. (a) | 829,163 | 4,010,221 | ||||||
| Orla Mining, Ltd. (a) | 1,234,940 | 4,850,540 | ||||||
| Pan American Silver Corp. | 1,660,166 | 53,375,169 | ||||||
| Premier Gold Mines, Ltd. (a) | 1,291,892 | 2,483,755 | ||||||
| Sabina Gold & Silver Corp. (a) | 1,773,461 | 3,436,243 | ||||||
| Seabridge Gold, Inc. (a) | 365,020 | 6,864,257 | ||||||
| Sierra Metals, Inc. (a) | 886,370 | 1,291,396 | ||||||
| Silvercorp Metals, Inc. | 2,457,605 | 17,736,911 | ||||||
| SilverCrest Metals, Inc. (a) | 2,084,974 | 17,678,162 | ||||||
| SSR Mining, Inc. (a) | 670,214 | 12,507,843 | ||||||
| Trevali Mining Corp. (a) | 4,369,331 | 442,987 | ||||||
| Turquoise Hill Resources, Ltd. (a) | 10,955,521 | 9,297,239 | ||||||
| Yamana Gold, Inc. | 5,117,419 | 29,066,940 | ||||||
| Total Metals & Mining | 288,800,634 | |||||||
| Total Canada | 294,688,821 | |||||||
| Luxembourg - 0.9% | ||||||||
| Metals & Mining - 0.9% (b) | ||||||||
| Nexa Resources SA | 725,744 | 3,839,186 | ||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Junior Silver Miners ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Peru - 2.7% | ||||||||
| Metals & Mining - 2.7% (b) | ||||||||
| Cia de Minas Buenaventura SAA - ADR | 891,905 | $ | 10,899,079 | |||||
| South Africa - 4.3% | ||||||||
| Metals & Mining - 4.3% (b) | ||||||||
| Harmony Gold Mining Co., Ltd. - ADR (a) | 3,300,725 | 17,394,821 | ||||||
| United Kingdom - 5.2% | ||||||||
| Metals & Mining - 5.2% (b) | ||||||||
| Hochschild Mining PLC | 7,469,496 | 21,088,618 | ||||||
| United States - 14.4% | ||||||||
| Metals & Mining - 14.4% (b) | ||||||||
| Coeur Mining, Inc. (a) | 1,326,826 | 9,791,976 | ||||||
| Gold Resource Corp. | 381,468 | 1,300,806 | ||||||
| Golden Minerals Co. (a) | 809,541 | 340,007 | ||||||
| Hecla Mining Co. | 8,882,639 | 45,123,806 | ||||||
| McEwen Mining, Inc. (a) | 2,191,019 | 2,322,480 | ||||||
| Total Metals & Mining | 58,879,075 | |||||||
| TOTAL COMMON STOCKS (Cost $351,490,177) | 406,789,600 | |||||||
| SHORT-TERM INVESTMENTS - 0.6% | ||||||||
| Money Market Funds - 0.6% | ||||||||
| Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02% (c) | 2,651,352 | 2,651,352 | ||||||
| TOTAL SHORT-TERM INVESTMENTS (Cost $2,651,352) | 2,651,352 | |||||||
| Total Investments (Cost $354,141,529) - 100.3% | 409,440,952 | |||||||
| Liabilities in Excess of Other Assets - (0.3)% | (1,122,369 | ) | ||||||
| TOTAL NET ASSETS - 100.0% | $ | 408,318,583 | ||||||
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
|
|
(a) | Non-income producing security. |
|
|
(b) | As of September 30, 2020, the Fund had a significant portion of its assets invested in the Metals & Mining Industry. |
|
|
(c) | The rate quoted is the annualized seven-day yield at September 30, 2020. |
|
|
(d) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Cyber Security ETF
Schedule of Investments
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.5% | ||||||||
| Canada - 3.8% | ||||||||
| Software - 3.8% (d) | ||||||||
| Absolute Software Corp. | 1,769,146 | $ | 21,484,053 | |||||
| BlackBerry, Ltd. (a) | 7,827,391 | 35,917,058 | ||||||
| Total Software | 57,401,111 | |||||||
| Finland - 0.2% | ||||||||
| Software - 0.2% (d) | ||||||||
| F-Secure Oyj | 654,525 | 2,586,146 | ||||||
| Israel - 8.0% | ||||||||
| Communications Equipment - 1.1% | ||||||||
| Radware, Ltd. (a) | 646,947 | 15,681,995 | ||||||
| Software - 6.9% (d) | ||||||||
| Allot Communications, Ltd. (a) | 829,330 | 7,546,903 | ||||||
| Check Point Software Technologies, Ltd. (a) | 327,896 | 39,459,004 | ||||||
| CyberArk Software, Ltd. (a)(b) | 382,242 | 39,531,468 | ||||||
| Tufin Software Technologies, Ltd. (a)(e) | 2,019,067 | 16,657,303 | ||||||
| Total Software | 103,194,678 | |||||||
| Total Israel | 118,876,673 | |||||||
| Japan - 4.2% | ||||||||
| Software - 4.2% | ||||||||
| Digital Arts, Inc. | 216,365 | 17,581,644 | ||||||
| FFRI Security, Inc. (a) | 314,416 | 8,249,078 | ||||||
| Trend Micro, Inc. | 612,956 | 37,254,520 | ||||||
| Total Software | 63,085,242 | |||||||
| Republic of Korea - 0.7% | ||||||||
| Software - 0.7% | ||||||||
| Ahnlab, Inc. | 190,029 | 10,707,919 | ||||||
| Sweden - 1.1% | ||||||||
| Electronic Equipment, Instruments & Components - 1.1% | ||||||||
| Fingerprint Cards AB - Class B (b) | 7,821,618 | 15,615,551 | ||||||
| United Kingdom - 7.0% | ||||||||
| Aerospace & Defense - 3.0% | ||||||||
| BAE Systems PLC | 2,480,949 | 15,430,300 | ||||||
| QinetiQ Group PLC | 3,892,934 | 13,954,645 | ||||||
| Ultra Electronics Holdings PLC | 565,207 | 15,213,577 | ||||||
| Total Aerospace & Defense | 44,598,522 | |||||||
| IT Services - 0.5% | ||||||||
| NCC Group PLC | 3,299,509 | 7,493,272 | ||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Cyber Security ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Software - 3.5% (d) | ||||||||
| Avast PLC | 5,379,305 | $ | 36,580,218 | |||||
| Mimecast, Ltd. (a)(b) | 345,780 | 16,223,998 | ||||||
| Total Software | 52,804,216 | |||||||
| Total United Kingdom | 104,896,010 | |||||||
| United States - 74.5% | ||||||||
| Aerospace & Defense - 2.3% | ||||||||
| Parsons Corp. (a)(b) | 1,040,624 | 34,902,529 | ||||||
| Communications Equipment - 7.9% | ||||||||
| Cisco Systems, Inc. | 1,298,271 | 51,138,895 | ||||||
| F5 Networks, Inc. (a) | 140,508 | 17,250,167 | ||||||
| Juniper Networks, Inc. | 1,642,080 | 35,304,720 | ||||||
| NetScout Systems, Inc. (a) | 708,260 | 15,461,316 | ||||||
| Total Communications Equipment | 119,155,098 | |||||||
| Internet Software & Services - 0.7% | ||||||||
| Zix Corp. (a)(b) | 1,890,715 | 11,041,776 | ||||||
| IT Services - 16.3% | ||||||||
| Akamai Technologies, Inc. (a) | 375,201 | 41,474,719 | ||||||
| Booz Allen Hamilton Holding Corp. | 198,749 | 16,492,192 | ||||||
| CACI International, Inc. - Class A (a) | 167,848 | 35,778,480 | ||||||
| Leidos Holdings, Inc. | 193,864 | 17,282,976 | ||||||
| LiveRamp Holdings, Inc. (a) | 735,368 | 38,070,001 | ||||||
| ManTech International Corp. - Class A | 215,328 | 14,831,793 | ||||||
| Okta, Inc. (a)(b) | 114,992 | 24,591,039 | ||||||
| Science Applications International Corp. | 487,519 | 38,231,240 | ||||||
| VeriSign, Inc. (a) | 90,335 | 18,505,125 | ||||||
| Total IT Services | 245,257,565 | |||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Cyber Security ETF
Schedule of Investments
September 30, 2020 (Continued)
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Cyber Security ETF
Schedule of Investments
September 30, 2020 (Continued)
Percentages are stated as a percent of net assets.
| (a) | Non-income producing security. |
| (b) | All or a portion of this security is out on loan as of September 30, 2020. |
| (c) | The rate quoted is the annualized seven-day yield at September 30, 2020. |
| (d) | As of September 30, 2020 the Fund had a significant portion of its assets in the Software Industry. |
| (e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Mobile Payments ETF
Schedule of Investments
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.4% | ||||||||
| Australia - 3.2% | ||||||||
| IT Services - 3.2% (d) | ||||||||
| Afterpay, Ltd. (a) | 375,152 | $ | 21,493,531 | |||||
| EML Payments, Ltd. (a) | 2,128,080 | 4,344,078 | ||||||
| Total IT Services | 25,837,609 | |||||||
| Brazil - 1.4% | ||||||||
| IT Services - 1.4% (d) | ||||||||
| Cielo SA | 16,438,811 | 11,562,404 | ||||||
| Cyprus - 0.6% | ||||||||
| IT Services - 0.6% (d) | ||||||||
| QIWI PLC - ADR (b) | 286,455 | 4,969,994 | ||||||
| France - 4.5% | ||||||||
| Electronic Equipment, Instruments & Components - 2.1% | ||||||||
| Ingenico Group SA | 107,390 | 16,657,908 | ||||||
| IT Services - 2.4% (d) | ||||||||
| Worldline SA (a) | 232,587 | 19,121,596 | ||||||
| Total France | 35,779,504 | |||||||
| Italy - 2.4% | ||||||||
| IT Services - 2.4% (d) | ||||||||
| Nexi SpA (a) | 961,489 | 19,299,447 | ||||||
| Japan - 2.7% | ||||||||
| Consumer Finance - 0.3% | ||||||||
| Jaccs Co, Ltd. | 145,110 | 2,339,041 | ||||||
| IT Services - 2.2% (d) | ||||||||
| GMO Payment Gateway, Inc. | 162,387 | 17,306,499 | ||||||
| Software - 0.2% | ||||||||
| Intelligent Wave, Inc. | 202,258 | 1,591,752 | ||||||
| Total Japan | 21,237,292 | |||||||
| Netherlands - 5.3% | ||||||||
| IT Services - 5.3% (d) | ||||||||
| Adyen NV (a) | 22,842 | 42,113,523 | ||||||
| United Kingdom - 1.8% | ||||||||
| Commercial Services & Supplies - 0.3% | ||||||||
| PayPoint PLC | 301,906 | 1,963,414 | ||||||
| Electronic Equipment, Instruments & Components - 0.3% | ||||||||
| PAX Global Technology, Ltd. | 4,443,858 | 2,660,564 | ||||||
| IT Services - 1.2% (d) | ||||||||
| Network International Holdings | 2,755,473 | 9,713,737 | ||||||
| Total United Kingdom | 14,337,715 | |||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Mobile Payments ETF
Schedule of Investments
September 30, 2020 (Continued)
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Prime Mobile Payments ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| SHORT-TERM INVESTMENTS - 0.5% | ||||||||
| Money Market Funds - 0.5% | ||||||||
| Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02% (c) | 3,816,328 | $ | 3,816,328 | |||||
| TOTAL SHORT-TERM INVESTMENTS (Cost $3,816,328) | 3,816,328 | |||||||
| Total Investments (Cost $814,457,501) - 111.2% | 887,545,172 | |||||||
| Liabilities in Excess of Other Assets - (11.2)% | (89,402,732 | ) | ||||||
| TOTAL NET ASSETS - 100.0% | $ | 798,142,440 | ||||||
Percentages are stated as a percent of net assets.
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2020
|
Principal
Amount |
Value | |||||||
| ASSET BACKED SECURITIES - 2.7% | ||||||||
|
Carvana Auto Receivables Trust
Series 2019-2, 2.580%, 03/15/2023 (a) |
$ | 2,871,326 | $ | 2,891,580 | ||||
| TOTAL ASSET BACKED SECURITIES (Cost $2,878,598) | 2,891,580 | |||||||
| CORPORATE OBLIGATIONS - 92.6% | ||||||||
| Aerospace & Defense - 4.1% | ||||||||
| BAE Systems Holdings, Inc. | ||||||||
| 2.850%, 12/15/2020 (a) | 1,165,000 | 1,168,249 | ||||||
| Northrop Grumman Corp. | ||||||||
| 2.080%, 10/15/2020 | 2,183,000 | 2,184,458 | ||||||
| Textron, Inc. | ||||||||
| 0.793% (3 Month LIBOR + 0.550%) 11/10/2020 (b) | 1,000,000 | 1,000,030 | ||||||
| 4,352,737 | ||||||||
| Automobiles – 9.3% | ||||||||
| American Honda Finance Corp. | ||||||||
| 0.531% (3 Month LIBOR + 0.280%) 11/02/2020 (b) | 1,000,000 | 1,000,324 | ||||||
| 0.599% (3 Month LIBOR + 0.350%) 11/05/2021 (b) | 450,000 | 450,952 | ||||||
| BMW US Capital LLC | ||||||||
| 0.754% (3 Month LIBOR + 0.500%) 08/13/2021 (a)(b) | 160,000 | 160,351 | ||||||
| 0.944% (3 Month LIBOR + 0.640%) 04/06/2022 (a)(b) | 1,290,000 | 1,295,433 | ||||||
| Daimler Finance North America LLC | ||||||||
| 1.238%, 02/22/2022 (a)(b) | 2,422,000 | 2,429,588 | ||||||
| General Motors Financial Co., Inc. | ||||||||
| 3.150%, 06/30/2022 | 1,488,000 | 1,529,291 | ||||||
| Hyundai Capital America | ||||||||
| 2.850%, 11/01/2022 (a) | 2,000,000 | 2,069,592 | ||||||
| John Deere Capital Corp. | ||||||||
| 2.587% (3 Month LIBOR + 0.260%) 09/10/2021 (b) | 300,000 | 300,504 | ||||||
| PACCAR Financial Corp. | ||||||||
| 0.503% (3 Month LIBOR + 0.260%) 05/10/2021 (b) | 85,000 | 85,107 | ||||||
| Toyota Motor Credit Corp. | ||||||||
| 0.786% (3 Month LIBOR + 0.400%) 05/17/2022 (b) | 500,000 | 501,762 | ||||||
| 9,822,904 | ||||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2020 (Continued)
|
Principal
Amount |
Value | |||||||
| Banks - 26.2% (e) | ||||||||
| Bank of America Corp. | ||||||||
| 1.692% (3 Month LIBOR + 1.420%) 04/19/2021 (b) | 1,000,000 | $ | 1,007,544 | |||||
| 1.451% (3 Month LIBOR + 1.180%) 10/21/2022 (b) | 100,000 | 101,057 | ||||||
| 1.264% (3 Month LIBOR + 1.000%) 04/24/2023 (b) | 1,000,000 | 1,010,123 | ||||||
| Bank of Montreal | ||||||||
| 0.945% (3 Month LIBOR + 0.630%) 09/11/2022 (b) | 250,000 | 252,461 | ||||||
| Bank of Nova Scotia | ||||||||
| 0.958% (3 Month LIBOR + 0.640%) 03/07/2022 (b) | 150,000 | 151,162 | ||||||
| Barclays PLC | ||||||||
| 2.353% (3 Month LIBOR + 2.110%) 08/10/2021 (b) | 450,000 | 457,614 | ||||||
| 1.898% (3 Month LIBOR + 1.625%) 01/10/2023 (b) | 1,300,000 | 1,309,634 | ||||||
| Canadian Imperial Bank of Commerce | ||||||||
| 0.614% (3 Month LIBOR + 0.310%) 10/05/2020 (b) | 2,500,000 | 2,500,098 | ||||||
| Citizens Financial Group, Inc. | ||||||||
| 4.150%, 09/28/2022 (a) | 2,522,000 | 2,667,106 | ||||||
| Commonwealth Bank of Australia | ||||||||
| 0.988% (3 Month LIBOR + 0.680%) 09/18/2022 (a)(b) | 2,539,000 | 2,560,725 | ||||||
| Cooperatieve Rabobank UA | ||||||||
| 0.753% (3 Month LIBOR + 0.480%) 01/10/2023 (b) | 895,000 | 900,055 | ||||||
| Credit Suisse AG/New York NY | ||||||||
| 0.527% (3 Month SOFR + 0.450%) 02/04/2022 (b) | 970,000 | 972,306 | ||||||
| First Niagara Financial Group, Inc. | ||||||||
| 7.250%, 12/15/2021 | 1,050,000 | 1,133,039 | ||||||
| Fulton Financial Corp. | ||||||||
| 3.600%, 03/16/2022 | 600,000 | 613,493 | ||||||
| HSBC Holdings PLC | ||||||||
| 1.804% (3 Month LIBOR + 1.500%) 01/05/2022 (b) | 2,700,000 | 2,737,455 | ||||||
| Huntington Bancshares, Inc. | ||||||||
| 4.350%, 02/04/2023 | 766,000 | 823,076 | ||||||
| Huntington National Bank | ||||||||
| 0.799% (3 Month LIBOR + 0.550%) 02/05/2021 (b) | 799,000 | 800,134 | ||||||
| JPMorgan Chase & Co. | ||||||||
| 1.275% (3 Month LIBOR + 1.000%) 01/15/2023 (b) | 1,000,000 | 1,008,997 | ||||||
| 1.145% (3 Month LIBOR + 0.900%) 04/25/2023 (b) | 155,000 | 156,314 | ||||||
| PNC Bank NA | ||||||||
| 0.745% (3 Month LIBOR + 0.500%) 07/27/2022 (b) | 1,535,000 | 1,543,463 | ||||||
| Regions Financial Corp. | ||||||||
| 3.200%, 02/08/2021 | 328,000 | 330,421 | ||||||
| Reliance Standard Life Global Funding II | ||||||||
| 2.625%, 07/22/2022 (a) | 314,000 | 323,470 | ||||||
| Royal Bank of Canada | ||||||||
| 0.633% (3 Month LIBOR + 0.360%) 01/17/2023 (b) | 1,000,000 | 1,003,548 | ||||||
| Swedbank AB | ||||||||
| 1.013% (3 Month LIBOR + 0.700%) 03/14/2022 (a)(b) | 200,000 | 201,619 | ||||||
| Wells Fargo Bank NA | ||||||||
| 0.973% (3 Month LIBOR + 0.660%) 09/09/2022 (b) | 500,000 | 502,367 | ||||||
| 2.082%, 09/09/2022 (c) | 200,000 | 202,866 | ||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2020 (Continued)
|
Principal
Amount |
Value | |||||||
| Wells Fargo & Co. | ||||||||
| 1.374% (3 Month LIBOR + 1.110%) 01/24/2023 (b) | 878,000 | $ | 884,821 | |||||
| Westpac Banking Corp. | ||||||||
| 0.836% (3 Month LIBOR + 0.570%) 01/11/2023 (b) | 1,500,000 | 1,509,264 | ||||||
| 27,664,232 | ||||||||
| Biotechnology - 2.4% | ||||||||
| AbbVie, Inc. | ||||||||
| 1.024% (3 Month LIBOR + 0.650%) 11/21/2022 (a)(b) | 2,000,000 | 2,010,456 | ||||||
| GlaxoSmithKline Capital PLC | ||||||||
| 3.125%, 05/14/2021 | 495,000 | 503,526 | ||||||
| 2,513,982 | ||||||||
| Capital Markets - 6.4% | ||||||||
| Bank of New York Mellon Corp. | ||||||||
| 2.450%, 11/27/2020 | 1,265,000 | 1,267,017 | ||||||
| Charles Schwab Corp. | ||||||||
| 0.694% (3 Month LIBOR + 0.320%) 05/21/2021 (b) | 1,300,000 | 1,301,992 | ||||||
| Intercontinental Exchange, Inc. | ||||||||
| 0.000% (3 Month LIBOR + 0.650%) 06/15/2023 (b) | 3,000,000 | 3,010,146 | ||||||
| Morgan Stanley | ||||||||
| 0.751% (3 Month SOFR + 0.700%) 01/20/2023 (b) | 1,137,000 | 1,140,320 | ||||||
| 6,719,475 | ||||||||
| Chemicals - 2.0% | ||||||||
| Albemarle Corp. | ||||||||
| 1.442% (3 Month LIBOR + 1.050%) 11/15/2022 (b) | 585,000 | 583,107 | ||||||
| Sherwin Williams Co. | ||||||||
| 2.750%, 06/01/2022 | 293,000 | 303,410 | ||||||
| Westlake Chemical Corp. | ||||||||
| 3.600%, 07/15/2022 | 1,150,000 | 1,199,829 | ||||||
| 2,086,346 | ||||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2020 (Continued)
|
Principal
Amount |
Value | |||||||
| Consumer Finance - 10.3% | ||||||||
| AIG Global Funding | ||||||||
| 0.757% (3 Month LIBOR + 0.460%) 06/25/2021 (a)(b) | 271,000 | $ | 271,745 | |||||
| 2.700%, 12/15/2021 (a) | 75,000 | 77,043 | ||||||
| BBVA USA | ||||||||
| 1.045% (3 Month LIBOR + 0.730%) 06/11/2021 (b) | 500,000 | 501,577 | ||||||
| Capital One Financial Corp. | ||||||||
| 0.988% (3 Month LIBOR + 0.720%) 01/30/2023 (b) | 1,575,000 | 1,576,333 | ||||||
| Citibank NA | ||||||||
| 0.977% (3 Month LIBOR + 0.600%) 05/20/2022 (b) | 1,821,000 | 1,826,213 | ||||||
| 3.165%, 02/19/2022 (c) | 400,000 | 404,356 | ||||||
| Fifth Third Bank NA | ||||||||
| 0.891% (3 Month LIBOR + 0.640%) 02/01/2022 (b) | 2,000,000 | 2,012,587 | ||||||
| FMR LLC | ||||||||
| 5.350%, 11/15/2021 (a) | 200,000 | 210,858 | ||||||
| Manufacturers & Traders Trust Co. | ||||||||
| 1.388% (1 Month LIBOR + 01.215%) 12/28/2020 (c) | 250,000 | 250,134 | ||||||
| 0.515% (3 Month LIBOR + 0.270%) 01/25/2021 (b) | 1,205,000 | 1,206,162 | ||||||
| 0.990% (3 Month LIBOR + 0.640%) 12/01/2021 (c) | 1,553,000 | 1,553,241 | ||||||
| Truist Bank | ||||||||
| 0.841% (3 Month LIBOR + 0.680%) 08/02/2022 (b) | 500,000 | 501,801 | ||||||
| US Bank NA | ||||||||
| 0.800% (3 Month LIBOR + 0.440%) 05/23/2022 (b) | 500,000 | 502,485 | ||||||
| 10,894,535 | ||||||||
| Containers & Packaging - 0.5% | ||||||||
| WestRock Co. | ||||||||
| 4.000%, 03/01/2023 | 500,000 | 534,600 | ||||||
| Diversed Financial Services - 1.1% | ||||||||
| Century Housing Corp. | ||||||||
| 3.824%, 11/01/2020 | 1,000,000 | 1,000,592 | ||||||
| Reckitt Benckiser Treasury Services PLC | ||||||||
| 0.857% (3 Month LIBOR + 0.560%) 06/24/2022 (a)(b) | 200,000 | 200,788 | ||||||
| 1,201,380 | ||||||||
| Diversified Telecommunication Services - 1.5% | ||||||||
| Comcast Corp. | ||||||||
| 0.626% (3 Month LIBOR + 0.330%) 10/01/2020 (b) | 1,600,000 | 1,600,000 | ||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2020 (Continued)
|
Principal
Amount |
Value | |||||||
| Electric Utilities – 3.1% | ||||||||
| Duke Energy Florida LLC | ||||||||
| 0.610% (3 Month LIBOR + 0.250%) 11/26/2021 (b) | 130,000 | $ | 130,238 | |||||
| Duke Energy Progress LLC | ||||||||
| 0.000% (3 Month LIBOR + 0.180%) 02/18/2022 (b) | 1,000,000 | 999,897 | ||||||
| Duquesne Light Holdings, Inc. | ||||||||
| 5.900%, 12/01/2021 (a) | 200,000 | 210,187 | ||||||
| Florida Power & Light Co. | ||||||||
| 0.641% (3 Month LIBOR + 0.380%) 07/28/2023 (b) | 1,500,000 | 1,501,166 | ||||||
| Wisconsin Power & Light Co. | ||||||||
| 2.250%, 11/15/2022 | 442,000 | 454,276 | ||||||
| 3,295,764 | ||||||||
| Electrical Equipment - 2.0% | ||||||||
| Arrow Electronics, Inc. | ||||||||
| 3.500%, 04/01/2022 | 2,000,000 | 2,068,721 | ||||||
| Food & Staples Retailing - 1.4% | ||||||||
| Walmart, Inc. | ||||||||
| 1.900%, 12/15/2020 | 1,500,000 | 1,505,214 | ||||||
| Health Care Providers & Services - 3.1% | ||||||||
| Cigna Corp. | ||||||||
| 0.949% (3 Month LIBOR + 0.650%) 09/17/2021 (b) | 2,000,000 | 2,000,408 | ||||||
| 1.165% (3 Month LIBOR + 0.890%) 07/15/2023 (b) | 360,000 | 363,918 | ||||||
| UnitedHealth Group, Inc. | ||||||||
| 0.345% (3 Month LIBOR + 0.070%) 10/15/2020 (b) | 898,000 | 898,038 | ||||||
| 3,262,364 | ||||||||
| Industrial Conglomerates - 2.1% | ||||||||
| Honeywell International, Inc. | ||||||||
| 0.000% (3 Month LIBOR + 0.230%) 08/19/2022 (b) | 2,270,000 | 2,272,111 | ||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2020 (Continued)
|
Principal
Amount |
Value | |||||||
| Insurance - 8.0% | ||||||||
| Allstate Corp. | ||||||||
| 0.936% (3 Month LIBOR + 0.630%) 03/29/2023 (b) | 1,215,000 | $ | 1,224,969 | |||||
| Fidelity National Financial, Inc. | ||||||||
| 5.500%, 09/01/2022 | 500,000 | 543,022 | ||||||
| Infinity Property and Casualty Corp. | ||||||||
| 5.000%, 09/19/2022 | 160,000 | 171,233 | ||||||
| Jackson National Life Global Funding | ||||||||
| 0.649% (3 Month SOFR + 0.600%) 01/06/2023 (a)(b) | 2,000,000 | 2,003,424 | ||||||
| Marsh & McLennan Cos., Inc. | ||||||||
| 1.506% (3 Month LIBOR + 1.200%) 12/29/2021 (b) | 600,000 | 600,579 | ||||||
| Metropolitan Life Global Funding I | ||||||||
| 0.626% (3 Month SOFR + 0.570%) 01/13/2023 (a)(b) | 2,000,000 | 2,008,052 | ||||||
| Nationwide Financial Services, Inc. | ||||||||
| 5.375%, 03/25/2021 (a) | 324,000 | 331,197 | ||||||
| Progressive Corp. | ||||||||
| 3.750%, 08/23/2021 | 1,000,000 | 1,030,996 | ||||||
| W R Berkley Corp. | ||||||||
| 4.625%, 03/15/2022 | 513,000 | 542,083 | ||||||
| 8,455,555 | ||||||||
| Machinery - 0.2% | ||||||||
| Bunge, Ltd. | ||||||||
| 3.000%, 09/25/2022 | 206,000 | 214,281 | ||||||
| Metals & Mining - 2.2% | ||||||||
| Glencore Finance Canada, Ltd. | ||||||||
| 4.950%, 11/15/2021 (a) | 1,200,000 | 1,253,149 | ||||||
| 4.250%, 10/25/2022 (a) | 1,000,000 | 1,062,165 | ||||||
| 2,315,314 | ||||||||
| Multi-Utilities - 1.3% | ||||||||
| CenterPoint Energy Houston Electric LLC | ||||||||
| 1.850% (3 Month LIBOR + 0.880%) 06/01/2021 | 350,000 | 353,147 | ||||||
| Dominion Energy, Inc. | ||||||||
| 0.000% (3 Month LIBOR + 0.530%) 09/15/2023 (b) | 1,000,000 | 1,001,746 | ||||||
| 1,354,893 | ||||||||
| Paper & Forest Products - 0.4% | ||||||||
| Georgia-Pacific LLC | ||||||||
| 5.400%, 11/01/2020 (a) | 470,000 | 471,856 | ||||||
| Professional Services - 2.5% | ||||||||
| Equifax, Inc. | ||||||||
| 1.262% (3 Month LIBOR + 0.870%) 08/15/2021 (b) | 2,411,000 | 2,420,907 | ||||||
| Athene Global Funding | ||||||||
| 1.534% (3 Month LIBOR + 1.230%) 07/01/2022 (a)(b) | 200,000 | 201,597 | ||||||
| 2,622,504 | ||||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Sit Ultra Short ETF
Schedule of Investments
September 30, 2020 (Continued)
|
Principal
Amount |
Value | |||||||
| Semiconductors & Semiconductor Equipment - 1.0% | ||||||||
| Xilinx, Inc. | ||||||||
| 3.000%, 03/15/2021 | 1,073,000 | $ | 1,085,814 | |||||
| Technology Hardware, Storage & Peripherals - 1.5% | ||||||||
| Hewlett Packard Enterprise Co. | ||||||||
| 0.998% (3 Month LIBOR + 0.680%) 03/12/2021 (b) | 500,000 | 501,043 | ||||||
| 1.024% (3 Month LIBOR + 0.720%) 10/05/2021 (b) | 1,062,000 | 1,062,154 | ||||||
| 1,563,197 | ||||||||
| TOTAL CORPORATE OBLIGATIONS (Cost $97,264,017) | 97,877,779 | |||||||
| MUNICIPAL DEBT OBLIGATIONS - 0.2% | ||||||||
| City of Moline IL | ||||||||
| 2.080%, 12/01/2021 | 135,000 | 135,394 | ||||||
| 2.130%, 12/01/2022 | 100,000 | 100,645 | ||||||
| TOTAL MUNICIPAL DEBT OBLIGATIONS (Cost $235,000) | 236,039 | |||||||
| Shares | Value | |||||||
| SHORT-TERM INVESTMENTS - 4.0% | ||||||||
| Money Market Funds - 4.0% | ||||||||
| First American Government Obligations Fund - Class X, 0.07% (d) | 4,221,375 | 4,221,375 | ||||||
| TOTAL SHORT TERM INVESTMENTS (Cost $4,221,375) | 4,221,375 | |||||||
| Total Investments (Cost $104,598,990) - 99.5% | 105,226,773 | |||||||
| Other Assets in Excess of Liabilities - 0.5% | 543,387 | |||||||
| TOTAL NET ASSETS - 100.0% | $ | 105,770,160 | ||||||
Percentages are stated as a percent of net assets.
| (a) | Acquired in a transaction exempt from registration under Rule 144A or Section 4(a)(2) of the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $26,080,230, which represented 24.66% of the net assets of the Fund. |
| (b) | Variable rate security based on a reference index and spread. The rate reported is the rate in effect as of September 30, 2020. |
| (c) | Variable rate security. The coupon is based on an underlying pool of assets. The rate reported is the rate in effect as of September 30, 2020. |
| (d) | The rate quoted is the annualized seven-day yield at September 30, 2020. |
| (e) | As of September 30, 2020, the Fund had a significant portion of its assets invested in the Banking Industry. |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Travel Tech ETF
Schedule of Investments
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.5% | ||||||||
| Australia - 4.1% | ||||||||
| Internet & Direct Marketing Retail - 4.1% (d) | ||||||||
| Webjet, Ltd. (a) | 221,835 | $ | 618,080 | |||||
| Brazil - 3.8% | ||||||||
| Hotels, Restaurants & Leisure - 3.8% | ||||||||
| CVC Brasil Operadora e Agencia de Viagens SA | 196,344 | 570,932 | ||||||
| Canada - 3.3% | ||||||||
| Road & Rail - 3.3% | ||||||||
| Facedrive, Inc. (a)(b) | 52,844 | 502,426 | ||||||
| China - 4.1% | ||||||||
| IT Services - 4.1% | ||||||||
| TravelSky Technology, Ltd. | 292,981 | 625,275 | ||||||
| Japan - 12.8% | ||||||||
| Hotels, Restaurants & Leisure - 2.8% | ||||||||
| Adventure, Inc. | 8,854 | 421,439 | ||||||
| Internet & Direct Marketing Retail - 10.0% (d) | ||||||||
| Airtrip Corp. | 26,659 | 354,392 | ||||||
| Open Door, Inc. (b) | 40,273 | 520,477 | ||||||
| Temairazu, Inc. | 8,485 | 449,734 | ||||||
| Veltra Corp. (a)(b) | 36,758 | 189,950 | ||||||
| Total Internet & Direct Marketing Retail | 1,514,553 | |||||||
| Total Japan | 1,935,992 | |||||||
| Luxembourg - 2.7% | ||||||||
| Internet & Direct Marketing Retail - 2.7% (d) | ||||||||
| eDreams ODIGEO SA (b) | 148,986 | 402,637 | ||||||
| Mauritius - 3.9% | ||||||||
| Internet & Direct Marketing Retail - 3.9% (d) | ||||||||
| MakeMyTrip, Ltd. (b) | 38,671 | 593,987 | ||||||
| Netherlands - 3.7% | ||||||||
| Interactive Media & Services - 3.7% | ||||||||
| Trivago NV - ADR (a)(b) | 361,300 | 560,015 | ||||||
| Republic of Korea - 8.1% | ||||||||
| Hotels, Restaurants & Leisure - 8.1% | ||||||||
| Hana Tour Service, Inc. | 17,933 | 601,089 | ||||||
| Lotte Tour Development Co., Ltd. (b) | 47,875 | 630,419 | ||||||
| Total Hotels, Restaurants & Leisure | 1,231,508 | |||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Travel Tech ETF
Schedule of Investments
September 30, 2020 (Continued)
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Travel Tech ETF
Schedule of Investments
September 30, 2020 (Continued)
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
| (a) | All or a portion of this security is out on loan as of September 30, 2020. |
| (b) | Non-income producing security. |
| (c) | The rate quoted is the annualized seven-day yield at September 30, 2020. |
| (d) | As of September 30, 2020 the Fund had a significant portion of its assets in the Internet & Direct Marketing Retail Industry |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Treatments Testing and Advancements ETF
Schedule of Investments
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.5% | ||||||||
| Canada - 2.5% | ||||||||
| Biotechnology - 2.5% (d) | ||||||||
| Arbutus Biopharma Corp. (a)(b) | 45,373 | $ | 142,017 | |||||
| IMV, Inc. (a)(b) | 37,323 | 165,714 | ||||||
| VBI Vaccines, Inc. (a)(b) | 260,158 | 744,052 | ||||||
| XBiotech, Inc. (b) | 16,239 | 310,003 | ||||||
| Total Biotechnology | 1,361,786 | |||||||
| France - 0.6% | ||||||||
| Pharmaceuticals - 0.6% | ||||||||
| Sanofi - ADR | 6,841 | 343,213 | ||||||
| Germany - 6.1% | ||||||||
| Biotechnology - 6.1% (d) | ||||||||
| BioNTech SE - ADR (a)(b) | 47,671 | 3,300,263 | ||||||
| Japan - 0.6% | ||||||||
| Pharmaceuticals - 0.6% | ||||||||
| Takeda Pharmaceutical Co., Ltd. - ADR | 19,297 | 344,258 | ||||||
| Netherlands - 3.1% | ||||||||
| Biotechnology - 3.1% (d) | ||||||||
| CureVac NV (a)(b) | 35,722 | 1,662,859 | ||||||
| United Kingdom - 1.6% | ||||||||
| Health Care Equipment & Supplies - 0.3% | ||||||||
| Oxford Immunotec Global PLC (b) | 14,534 | 170,048 | ||||||
| Pharmaceuticals - 1.3% | ||||||||
| AstraZeneca PLC - ADR | 6,535 | 358,118 | ||||||
| GlaxoSmithKline PLC - ADR (b) | 8,952 | 336,953 | ||||||
| Total Pharmaceuticals | 695,071 | |||||||
| Total United Kingdom | 865,119 | |||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Treatments Testing and Advancements ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| United States - 85.0% | ||||||||
| Biotechnology - 50.2% (d) | ||||||||
| AbbVie, Inc. (b) | 3,880 | $ | 339,849 | |||||
| Alexion Pharmaceuticals, Inc. (b) | 3,294 | 376,932 | ||||||
| Alnylam Pharmaceuticals, Inc. (b) | 15,996 | 2,329,018 | ||||||
| Arcturus Therapeutics Holdings, Inc. (b) | 13,668 | 586,357 | ||||||
| Assembly Biosciences, Inc. (b) | 18,395 | 302,414 | ||||||
| Athersys, Inc. (a)(b) | 110,605 | 215,680 | ||||||
| BioCryst Pharmaceuticals, Inc. (a)(b) | 98,949 | 339,890 | ||||||
| CEL-SCI Corp. (a)(b) | 21,640 | 275,910 | ||||||
| Chimerix, Inc. (b) | 34,833 | 86,734 | ||||||
| ContraFect Corp. (b) | 15,596 | 82,347 | ||||||
| Cue Biopharma, Inc. (b) | 16,531 | 248,792 | ||||||
| Dicerna Pharmaceuticals, Inc. (b) | 41,713 | 750,417 | ||||||
| Dynavax Technologies Corp. (b) | 61,372 | 265,127 | ||||||
| Emergent BioSolutions, Inc. (b) | 19,575 | 2,022,685 | ||||||
| Enanta Pharmaceuticals, Inc. (b) | 11,244 | 514,750 | ||||||
| Enochian Biosciences, Inc. (a)(b) | 26,356 | 94,354 | ||||||
| Gilead Sciences, Inc. | 5,445 | 344,070 | ||||||
| Hookipa Pharma, Inc. (b) | 14,374 | 136,122 | ||||||
| iBio, Inc. (a)(b) | 97,901 | 198,739 | ||||||
| I-Mab - ADR (b) | 32,407 | 1,524,101 | ||||||
| Inovio Pharmaceuticals, Inc. (a)(b) | 93,884 | 1,089,054 | ||||||
| Moderna, Inc. (a)(b) | 50,650 | 3,583,488 | ||||||
| NantKwest, Inc. (b) | 60,542 | 419,859 | ||||||
| Novavax, Inc. (a)(b) | 20,837 | 2,257,689 | ||||||
| OPKO Health, Inc. (a)(b) | 375,578 | 1,385,883 | ||||||
| PhaseBio Pharmaceuticals, Inc. (a)(b) | 16,434 | 57,683 | ||||||
| Regeneron Pharmaceuticals, Inc. (b) | 631 | 353,221 | ||||||
| Translate Bio, Inc. (b) | 41,957 | 571,035 | ||||||
| Vaxart, Inc. (a)(b) | 61,331 | 407,851 | ||||||
| Vaxcyte, Inc. (b) | 28,778 | 1,421,058 | ||||||
| Zai Lab, Ltd. - ADR (b) | 26,247 | 2,182,963 | ||||||
| Vir Biotechnology, Inc. (a)(b) | 68,808 | 2,362,179 | ||||||
| Total Biotechnology | 27,126,251 | |||||||
| Health Care Equipment & Supplies - 7.9% | ||||||||
| Abbott Laboratories (b) | 3,332 | 362,622 | ||||||
| Co-Diagnostics, Inc. (a)(b) | 15,731 | 213,784 | ||||||
| Meridian Bioscience, Inc. (b) | 24,015 | 407,775 | ||||||
| OraSure Technologies, Inc. (b) | 40,085 | 487,834 | ||||||
| Quidel Corp. (a)(b) | 12,788 | 2,805,431 | ||||||
| Total Health Care Equipment & Supplies | 4,277,446 | |||||||
| Health Care Providers & Services - 11.3% | ||||||||
| Enzo Biochem, Inc. (b) | 26,839 | 56,630 | ||||||
| Laboratory Corp. of America Holdings (b) | 16,053 | 3,022,298 | ||||||
| Quest Diagnostics, Inc. (b) | 26,399 | 3,022,422 | ||||||
| Total Health Care Providers & Services | 6,101,350 | |||||||
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
ETFMG Treatments Testing and Advancements ETF
Schedule of Investments
September 30, 2020 (Continued)
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
| (a) | All or a portion of this security was out on loan as of September 30, 2020. |
| (b) | Non-income producing security. |
| (c) | The rate shown is the annualized seven-day yield at September 30, 2020. |
| (d) | As of September 30, 2020, the Fund had a significant portion of its assets in the Biotechnology Industry. |
| (e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 2020
^ No par value, unlimited number of shares authorized
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
For the Period/Year ended September 30, 2020
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Junior Silver Miners ETF
STATEMENTS OF CHANGES IN NET ASSETS
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
|||||||
| OPERATIONS | ||||||||
| Net investment income (loss) | $ | (940,100 | ) | $ | (119,940 | ) | ||
| Net realized gain (loss) on investments and In-Kind Redemptions | 11,084,085 | (6,657,841 | ) | |||||
| Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | 60,060,330 | 10,893,314 | ||||||
| Net increase (decrease) in net assets resulting from operations | 70,204,315 | 4,115,533 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Total distributions from distributable earnings | (1,980,500 | ) | (815,294 | ) | ||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares | 239,976,195 | 51,552,865 | ||||||
| Net increase (decrease) in net assets | 308,200,010 | 54,853,104 | ||||||
| NET ASSETS | ||||||||
| Beginning of Year | 100,118,573 | 45,265,469 | ||||||
| End of Year | $ | 408,318,583 | $ | 100,118,573 | ||||
| Summary of share transactions is as follows: | ||||||||
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||
| Shares Sold | 26,050,000 | $ | 330,230,225 | 7,000,000 | $ | 67,300,540 | |||||||||||
| Shares Redeemed | (7,050,000 | ) | (90,254,030 | ) | (1,600,000 | ) | (15,747,675 | ) | |||||||||
| Net Transactions in Fund Shares | 19,000,000 | $ | 239,976,195 | 5,400,000 | $ | 51,552,865 | |||||||||||
| Beginning Shares | 10,600,000 | 5,200,000 | |||||||||||||||
| Ending Shares | 29,600,000 | 10,600,000 | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Cyber Security ETF
STATEMENTS OF CHANGES IN NET ASSETS
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
|||||||
| OPERATIONS | ||||||||
| Net investment income (loss) | $ | 21,528,502 | $ | 2,971,168 | ||||
| Net realized gain (loss) on investments and In-Kind Redemptions | 126,566,289 | 119,111,232 | ||||||
| Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | 167,281,470 | (254,577,838 | ) | |||||
| Net increase (decrease) in net assets resulting from operations | 315,376,261 | (132,495,438 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Total distributions from distributable earnings | (21,333,000 | ) | (2,039,082 | ) | ||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Net increase in net assets derived from net change in outstanding shares | (217,450,615 | ) | (274,135,215 | ) | ||||
| Transaction Fees (See Note 1) | 20,965 | 8,658 | ||||||
| Net increase (decrease) in net assets from capital share transactions | (217,429,650 | ) | (274,126,557 | ) | ||||
| Total increase (decrease) in net assets | 76,613,611 | (408,661,077 | ) | |||||
| NET ASSETS | ||||||||
| Beginning of Year | 1,427,200,377 | 1,835,861,454 | ||||||
| End of Year | $ | 1,503,813,988 | $ | 1,427,200,377 | ||||
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Shares Sold | 6,000,000 | $ | 265,419,220 | 11,550,000 | $ | 440,845,035 | ||||||||||
| Transaction Fees (See Note 1) | — | 20,965 | — | 8,658 | ||||||||||||
| Shares Redeemed | (11,800,000 | ) | (482,869,835 | ) | (19,250,000 | ) | (714,980,250 | ) | ||||||||
| Net Transactions in Fund Shares | (5,800,000 | ) | $ | (217,429,650 | ) | (7,700,000 | ) | $ | (274,126,557 | ) | ||||||
| Beginning Shares | 38,100,000 | 45,800,000 | ||||||||||||||
| Ending Shares | 32,300,000 | 38,100,000 | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Mobile Payments ETF
STATEMENTS OF CHANGES IN NET ASSETS
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
|||||||
| OPERATIONS | ||||||||
| Net investment income (loss) | $ | (520,736 | ) | $ | 322,006 | |||
| Net realized gain (loss) on investments and In-Kind Redemptions | 46,567,698 | 82,012,727 | ||||||
| Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | 54,396,310 | (59,701,724 | ) | |||||
| Net increase (decrease) in net assets resulting from operations | 100,443,272 | 22,633,009 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Total distributions from distributable earnings | (216,000 | ) | (2,286,407 | ) | ||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Net decrease in net assets derived from net change in outstanding shares | (45,375,255 | ) | 199,832,445 | |||||
| Transaction Fees (See Note 1) | 92,896 | 144,218 | ||||||
| Net increase (decrease) in net assets from capital share transactions | (45,282,359 | ) | 199,976,663 | |||||
| Total increase (decrease) in net assets | 54,944,913 | 220,323,265 | ||||||
| NET ASSETS | ||||||||
| Beginning of Year | 743,197,527 | 522,874,262 | ||||||
| End of Year | $ | 798,142,440 | $ | 743,197,527 | ||||
| Summary of share transactions is as follows: | ||||||||
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Shares Sold | 9,650,000 | $ | 474,195,120 | 14,050,000 | $ | 645,140,560 | ||||||||||
| Transaction Fees (See Note 1) | — | 92,896 | — | 144,218 | ||||||||||||
| Shares Redeemed | (10,900,000 | ) | (519,570,375 | ) | (10,300,000 | ) | (445,308,115 | ) | ||||||||
| Net Transactions in Fund Shares | (1,250,000 | ) | $ | (45,282,359 | ) | 3,750,000 | $ | 199,976,663 | ||||||||
| Beginning Shares | 15,950,000 | 12,200,000 | ||||||||||||||
| Ending Shares | 14,700,000 | 15,950,000 | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
ETFMG Sit Ultra Short ETF
STATEMENT OF CHANGES IN NET ASSETS
|
Period Ended
September 30, 20201 |
||||||||
| Shares | Amount | |||||||
| Shares Sold | 2,200,000 | $ | 110,191,975 | |||||
| Shares Redeemed | (75,000 | ) | (3,723,070 | ) | ||||
| Net Transactions in Fund Shares | 2,125,000 | $ | 106,468,905 | |||||
| Beginning Shares | — | |||||||
| Ending Shares | 2,125,000 | |||||||
| 1 | Fund commenced operations on October 8, 2019. The information presented is for the period from October 8, 2019 to September 30, 2020. |
The accompanying notes are an integral part of these financial statements.
ETFMG Travel Tech ETF
STATEMENT OF CHANGES IN NET ASSETS
|
Period Ended
September 30, 20201 |
||||||||
| Shares | Amount | |||||||
| Shares Sold | 900,000 | $ | 18,057,660 | |||||
| Transaction Fees (See Note 1) | — | 6,494 | ||||||
| Shares Redeemed | (100,000 | ) | (1,987,010 | ) | ||||
| Net Transactions in Fund Shares | 800,000 | $ | 16,077,144 | |||||
| Beginning Shares | — | |||||||
| Ending Shares | 800,000 | |||||||
| 1 | Fund commenced operations on February 12, 2020. The information presented is for the period from February 12, 2020 to September 30, 2020. |
The accompanying notes are an integral part of these financial statements.
ETFMG Treatments Testing and Advancements ETF
STATEMENT OF CHANGES IN NET ASSETS
|
Period Ended
September 30, 20201 |
||||||||
| Shares | Amount | |||||||
| Shares Sold | 2,500,000 | $ | 75,601,825 | |||||
| Shares Redeemed | (550,000 | ) | (15,324,085 | ) | ||||
| Net Transactions in Fund Shares | 1,950,000 | $ | 60,277,740 | |||||
| Beginning Shares | — | |||||||
| Ending Shares | 1,950,000 | |||||||
| 1 | Fund commenced operations on June 17, 2020. The information presented is for the period from June 17, 2020 to September 30, 2020. |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Junior Silver Miners ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year
|
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, 2018 |
Year Ended September 30, 2017 |
Year Ended September 30, 2016 |
||||||||||||||||
| Net Asset Value, Beginning Year | $ | 9.45 | $ | 8.70 | $ | 11.84 | $ | 15.57 | $ | 5.28 | ||||||||||
| Income (Loss) from Investment Operations: | ||||||||||||||||||||
| Net investment loss 1 | (0.05 | ) | (0.02 | ) | (0.03 | ) | (0.06 | ) | (0.06 | ) | ||||||||||
| Net realized and unrealized gain (loss) on investments | 4.56 | 0.91 | (3.11 | ) | (3.61 | ) | 10.47 | |||||||||||||
| Total from investment operations | 4.51 | 0.89 | (3.14 | ) | (3.67 | ) | 10.41 | |||||||||||||
| Less Distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.17 | ) | (0.14 | ) | — | (0.06 | ) | (0.12 | ) | |||||||||||
| Total distributions | (0.17 | ) | (0.14 | ) | — | (0.06 | ) | (0.12 | ) | |||||||||||
| Net asset value, end year | $ | 13.79 | $ | 9.45 | $ | 8.70 | $ | 11.84 | $ | 15.57 | ||||||||||
| Total Return | 48.06 | % | 10.45 | % | -26.50 | % | -23.53 | % | 201.99 | % | ||||||||||
| Ratios/Supplemental Data: | ||||||||||||||||||||
| Net assets at end year (000’s) | $ | 408,319 | $ | 100,119 | $ | 45,265 | $ | 58,033 | $ | 77,065 | ||||||||||
| Expenses to Average Net Assets before legal expense | 0.69 | % | 0.69 | % | 0.69 | % | 0.69 | % | 0.69 | % | ||||||||||
| Gross Expenses to Average Net Assets | 0.69 | % | 0.69 | % | 0.69 | % | 0.72 | %2 | 0.69 | % | ||||||||||
| Net Investment Loss to Average Net Assets | -0.46 | % | -0.21 | % | -0.32 | % | -0.48 | % | -0.45 | % | ||||||||||
| Portfolio Turnover Rate | 71 | % | 34 | % | 36 | % | 69 | % | 33 | % | ||||||||||
| 1 | Calculated based on average shares outstanding during the year. |
| 2 | The ratio of expenses to average net assets includes legal expense. |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Cyber Security ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year
|
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, 2018 |
Year Ended September 30, 2017 |
Year Ended September 30, 2016 |
||||||||||||||||
| Net Asset Value, Beginning Year | $ | 37.46 | $ | 40.08 | $ | 30.11 | $ | 27.91 | $ | 25.28 | ||||||||||
| Income (Loss) from Investment Operations: | ||||||||||||||||||||
| Net investment income (loss) 1 | 0.64 | 0.07 | 0.03 | (0.01 | ) | 0.30 | ||||||||||||||
| Net realized and unrealized gain (loss) on investments | 9.10 | (2.64 | ) | 9.94 | 2.34 | 2.52 | ||||||||||||||
| Total from investment operations | 9.74 | (2.57 | ) | 9.97 | 2.33 | 2.82 | ||||||||||||||
| Less Distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.64 | ) | (0.05 | ) | (0.00 | )3 | (0.13 | ) | (0.19 | ) | ||||||||||
| Total distributions | (0.64 | ) | (0.05 | ) | (0.00 | )3 | (0.13 | ) | (0.19 | ) | ||||||||||
| Net asset value, end year | $ | 46.56 | $ | 37.46 | $ | 40.08 | $ | 30.11 | $ | 27.91 | ||||||||||
| Total Return | 26.75 | % | -6.42 | % | 33.16 | % | 8.42 | % | 11.23 | % | ||||||||||
| Ratios/Supplemental Data: | ||||||||||||||||||||
| Net assets at end of year (000’s) | $ | 1,503,814 | $ | 1,427,200 | $ | 1,835,861 | $ | 1,097,360 | $ | 803,794 | ||||||||||
| Expenses to Average Net Assets before legal expense | 0.60 | % | 0.60 | % | 0.60 | % | 0.68 | % | 0.75 | % | ||||||||||
| Gross Expenses to Average Net Assets | 0.60 | % | 0.60 | % | 0.60 | % | 0.72 | %2 | 0.75 | % | ||||||||||
| Net Investment Income (Loss) to Average | ||||||||||||||||||||
| Net Assets | 1.50 | % | 0.19 | % | 0.07 | % | -0.03 | % | 1.21 | % | ||||||||||
| Portfolio Turnover Rate | 33 | % | 36 | % | 41 | % | 53 | % | 34 | % | ||||||||||
| 1 | Calculated based on average shares outstanding during the year. |
| 2 | The ratio of expenses to average net assets includes legal expense. |
| 3 | Per share amount is less than $0.01. |
The accompanying notes are an integral part of these financial statements.
ETFMG Prime Mobile Payments ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year
|
Year Ended September 30, 2020 |
Year Ended September 30, 2019 |
Year Ended September 30, 2018 |
Year Ended September 30, 2017 |
Year Ended September 30, 2016 |
||||||||||||||||
| Net Asset Value, Beginning Year | $ | 46.60 | $ | 42.86 | $ | 32.57 | $ | 24.96 | $ | 23.53 | ||||||||||
| Income (Loss) from Investment Operations: | ||||||||||||||||||||
| Net investment income (loss) 1 | (0.04 | ) | 0.03 | 0.07 | 0.03 | 0.15 | ||||||||||||||
| Net realized and unrealized gain (loss) on investments | 7.75 | 3.93 | 10.22 | 7.60 | 1.39 | |||||||||||||||
| Total from investment operations | 7.71 | 3.96 | 10.29 | 7.63 | 1.54 | |||||||||||||||
| Less Distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.02 | ) | (0.05 | ) | (0.01 | ) | (0.02 | ) | (0.11 | ) | ||||||||||
| Net realized gains | — | (0.18 | ) | — | — | — | ||||||||||||||
| Total distributions | (0.02 | ) | (0.23 | ) | (0.01 | ) | (0.02 | ) | (0.11 | ) | ||||||||||
| Capital Share Transactions: | ||||||||||||||||||||
| Transaction fees added to paid-in capital | 0.01 | 0.01 | 0.01 | — | — | |||||||||||||||
| Net asset value, end year | $ | 54.30 | $ | 46.60 | $ | 42.86 | $ | 32.57 | $ | 24.96 | ||||||||||
| Total Return | 16.56 | % | 9.49 | % | 31.62 | % | 30.59 | % | 6.51 | % | ||||||||||
| Ratios/Supplemental Data: | ||||||||||||||||||||
| Net assets at end year (000’s) | $ | 798,142 | $ | 743,198 | $ | 522,874 | $ | 170,993 | $ | 8,734 | ||||||||||
| Expenses to Average Net Assets before legal expense | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||
| Gross Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | % | 0.80 | %2 | 0.75 | % | ||||||||||
| Net Investment Income (Loss) to Average | ||||||||||||||||||||
| Net Assets | -0.08 | % | 0.06 | % | 0.16 | % | 0.12 | % | 0.63 | % | ||||||||||
| Portfolio Turnover Rate | 19 | % | 28 | % | 16 | % | 31 | % | 32 | % | ||||||||||
| 1 | Calculated based on average shares outstanding during the year. |
| 2 | The ratio of expenses to average net assets includes legal expense. |
The accompanying notes are an integral part of these financial statements.
ETFMG Sit Ultra Short ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
|
Period Ended September 30, 20201 |
||||
| Net Asset Value, Beginning Period | $ | 50.00 | ||
| Income from Investment Operations: | ||||
| Net investment income 2 | 0.86 | |||
| Net realized and unrealized gain (loss) on investments | (0.27 | ) | ||
| Total from investment operations | 0.59 | |||
| Less Distributions: | ||||
| Distributions from net investment income | (0.82 | ) | ||
| Total distributions | (0.82 | ) | ||
| Net asset at end of period | $ | 49.77 | ||
| Total Return | 1.19 | %3 | ||
| Ratios/Supplemental Data: | ||||
| Net assets at end of period (000’s) | $ | 105,770 | ||
| Expenses to Average Net Assets before legal expense | 0.30 | %4 | ||
| Gross Expenses to Average Net Assets | 0.30 | %4 | ||
| Net Investment Income to Average Net Assets | 1.78 | %4 | ||
| Portfolio Turnover Rate | 132 | %3 | ||
| 1 | Commencement of operations on October 8, 2019. |
| 2 | Calculated based on average shares outstanding during the period. |
| 3 | Not annualized. |
| 4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG Travel Tech ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
|
Period Ended September 30, 20201 |
||||
| Net Asset Value, Beginning Period | $ | 25.00 | ||
| Income from Investment Operations: | ||||
| Net investment income (loss) 2 | (0.02 | ) | ||
| Net realized and unrealized gain (loss) on investments | (6.12 | ) | ||
| Total from investment operations | (6.14 | ) | ||
| Capital Share Transactions: | ||||
| Transaction fees added to paid-in capital | 0.02 | |||
| Net asset at end of period | $ | 18.88 | ||
| Total Return | -24.50 | %3 | ||
| Ratios/Supplemental Data: | ||||
| Net assets at end of period (000’s) | $ | 15,100 | ||
| Expenses to Average Net Assets before legal expense | 0.75 | %4 | ||
| Gross Expenses to Average Net Assets | 0.75 | %4 | ||
| Net Investment Income to Average Net Assets | 0.30 | %4 | ||
| Portfolio Turnover Rate | 49 | %3 | ||
| 1 | Commencement of operations on February 12, 2020. |
| 2 | Calculated based on average shares outstanding during the period. |
| 3 | Not annualized. |
| 4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG Treatments Testing and Advancements ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
|
Period Ended September 30, 20201 |
||||
| Net Asset Value, Beginning Period | $ | 25.00 | ||
| Income from Investment Operations: | ||||
| Net investment income 2 | 0.02 | |||
| Net realized and unrealized gain (loss) on investments | 2.69 | |||
| Total from investment operations | 2.71 | |||
| Net asset at end of period | $ | 27.71 | ||
| Total Return | 10.82 | %3 | ||
| Ratios/Supplemental Data: | ||||
| Net assets at end of period (000’s) | $ | 54,030 | ||
| Expenses to Average Net Assets before legal expense | 0.68 | %4 | ||
| Gross Expenses to Average Net Assets | 0.68 | %4 | ||
| Net Investment Income to Average Net Assets | 0.25 | %4 | ||
| Portfolio Turnover Rate | 41 | %3 | ||
| 1 | Commencement of operations on June 17, 2020. |
| 2 | Calculated based on average shares outstanding during the period. |
| 3 | Not annualized. |
| 4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG™ ETFs
September 30, 2020
NOTE 1 – ORGANIZATION
ETFMG Prime Junior Silver Miners ETF (“SILJ”), ETFMG Prime Cyber Security ETF (“HACK”), ETFMG Prime Mobile Payments ETF (“IPAY”), ETFMG Travel Tech ETF (“AWAY”), ETFMG Sit Ultra Short ETF (“VALT”), and ETFMG Treatments, Testing and Advancements ETF (GERM) (each a “Fund”, or collectively the “Funds”) are series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Funds’ shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”).
On June 29, 2020 the Board of Trustees of the Trust approved an Agreement and Plan of Reorganization (the “Agreement”) providing for the reorganization of IPAY and HACK into corresponding new funds, the ISE Mobile Payments ETF and the ISE Cyber Security ETF (collectively, the “Acquiring Funds”), which are newly created series of ETF Series Solutions, with similar investment objectives and lower fees and expenses than IPAY or HACK (the “Reorganization”). The Reorganization is subject to certain conditions including approval by shareholders of IPAY and HACK, respectively. Shareholders of record, as of July 10, 2020, have received proxy materials soliciting their vote with respect to the proposed Reorganization. Pursuant to the Agreement and upon shareholder approval, each of IPAY and HACK will transfer all of its assets to the respective Acquiring Fund in return for shares of beneficial interest of the Acquiring Fund and each Acquiring Fund will assume all of the respective liabilities of IPAY and HACK, respectively. Exchange Traded Concepts, LLC (“ETC”) is the investment adviser to the Acquiring Funds. The Joint Special Meeting of Shareholders of IPAY and HACK (the “Special Meeting”), originally scheduled to be held on October 9, 2020, has been adjourned until December 7, 2020. If approved at the Special Meeting, shareholders of IPAY and HACK will become shareholders of the respective Acquiring Fund. The proposed Reorganization is expected to be a tax-free transaction for federal income tax purposes.
The following table is a summary of the Strategy Commencement Date and Strategy of the Funds:
| Fund Ticker |
Strategy Commencement Date |
Strategy |
| HACK | 8/1/2017 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield of the Prime Cyber Defense Index (“Prime Cyber Index”). |
| SILJ | 8/1/2017 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Junior Silver Miners & Explorers Index (“Prime Silver Index”). |
| IPAY | 8/1/2017 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Mobile Payments Index (“Prime Mobile Index”). |
| VALT | 10/8/2019 | Seeks to achieve its investment objective by investing in a diversified portfolio of high-quality short-term U.S. dollar denominated domestic and foreign debt securities and other instruments. |
| AWAY | 2/12/2020 | Seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Travel Technology Index NTR (the “Index”). |
| GERM | 6/17/2020 | The Fund’s investment objective seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Treatments, Testing and Advancements Index. |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The Funds each currently offer one class of shares, which have no front end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of each Fund have equal rights and privileges.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. Market prices for the shares may be different from their net asset value (“NAV”). Each Fund issues and redeems shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the shares directly from a Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Funds may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR(S) for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about an underlying Fund’s operations and policies, please refer to that Fund’s semiannual and annual reports, which are filed with the SEC.
| A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Debt obligations are generally valued on the basis of valuations provided by third party pricing services, as derived from such services’ pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and ask prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security.
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2020, the Funds did not hold any securities that were fair valued by the Board.
As described above, the Funds utilize various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
|
|
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
|
|
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
|
|
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ 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.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The following is a summary of the inputs used to value the Funds’ net assets as of September 30, 2020:
| SILJ | ||||||||||||||||
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 401,491,317 | $ | 5,298,283 | $ | — | $ | 406,789,600 | ||||||||
| Short Term Investments | 2,651,352 | — | — | 2,651,352 | ||||||||||||
| Total Investments in Securities | $ | 404,142,699 | $ | 5,298,283 | $ | — | $ | 409,440,952 | ||||||||
| HACK | ||||||||||||||||
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 1,484,456,548 |
|
$ | 10,707,919 | $ | — | $ | 1,495,164,467 | |||||||
| Short Term Investments | 8,840,046 | — | — | 8,840,046 | ||||||||||||
| ETFMG Sit Ultra Short ETF** | 49,785,000 | — | — | 49,785,000 | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 182,465,962 | ||||||||||||
| Total Investments in Securities | $ | 1,543,081,594 | $ | 10,707,919 | $ | — | $ | 1,736,255,475 | ||||||||
| IPAY | ||||||||||||||||
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 793,283,252 | $ | — | $ | — | $ | 793,283,252 | ||||||||
| Short Term Investments | 3,816,328 | — | — | 3,816,328 | ||||||||||||
| ETFMG Sit Ultra Short ETF** | 29,871,000 | — | — | 29,871,000 | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 60,574,592 | ||||||||||||
| Total Investments in Securities | $ | 826,970,580 | $ | — | $ | — | $ | 887,545,172 | ||||||||
| VALT | ||||||||||||||||
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Fixed Income | ||||||||||||||||
| Asset Backed Securities | $ | — | $ | 2,891,580 | $ | — | $ | 2,891,580 | ||||||||
| Coporate Obligations | — | 97,877,779 | — | 97,877,779 | ||||||||||||
| Municipal Obligations | — | 236,039 | — | 236,039 | ||||||||||||
| Short Term Investments | 4,221,375 | — | — | 4,221,375 | ||||||||||||
| Total Investments in Securities | $ | 4,221,375 | $ | 101,005,398 | $ | — | $ |
105,226,773 |
|
|||||||
| AWAY | ||||||||||||||||
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 12,291,780 |
|
$ | 2,734,940 | $ | — | $ | 15,026,720 | |||||||
| Short Term Investments | 88,311 | — | — | 88,311 | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 2,198,966 | ||||||||||||
| Total Investments in Securities | $ | 12,380,091 | $ | 2,734,940 | $ | — | $ | 17,313,997 | ||||||||
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| GERM | ||||||||||||||||
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 53,771,017 | $ | — | $ | — | $ | 53,771,017 | ||||||||
| Short Term Investments | 252,244 | — | — | 252,244 | ||||||||||||
| ETFMG Sit Ultra Short ETF** | 1,244,625 | — | — | 1,244,625 | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 15,954,137 | ||||||||||||
| Total Investments in Securities | $ | 55,267,886 |
|
$ | — | $ | — | $ | 71,222,023 | |||||||
| ^ | See Schedule of Investments for classifications by country and industry |
| * | Certain investments that are measured at fair value used the net asset value per share (or its equivalent) practical expediant have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedules of Investments. |
| ** | Investment was purchased with collateral. |
| B. | Federal Income Taxes. The Funds have each elected to be taxed as a “regulated investment company” and intend to distribute substantially all taxable income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of each Fund’s next taxable year.
Each 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. Each Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2020 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Funds are 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.
As of September 30, 2020, management has reviewed the tax positions for open periods (for Federal purposes, four years from the date of filing and for state purposes, four years from the date of filing), as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.
| C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Funds may be subject to income, withholding or other taxes imposed by foreign countries. |
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| D. | Foreign Currency Translations and Transactions. The Funds may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
| E. | Distributions to Shareholders. Distributions to shareholders from net investment income are generally declared and paid by each of the Funds on a quarterly basis. Distributions to shareholders from realized gains on securities for each Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
| F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
| G. | Share Valuation. The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. For Authorized Participants, the offering and redemption price per share for the Funds are equal to the Funds’ respective net asset value per share. |
| H. | Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in the Funds may involve certain risks, as discussed in the Funds’ prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a Fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Funds, other than VALT, are not actively managed (“Index Funds”). Therefore, those Funds follow the securities included in its respective index during upturns as well as downturns. Because of their indexing strategies, the Index Funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Index Funds’ expenses, the Index Funds’ performance may be below that of their respective index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that a Fund’s or an index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increase the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Funds. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Funds, and the Advisor, the Advisor provides investment advice to the Funds and oversees the day-to-day operations of the Funds, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Funds to operate.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Under the Investment Advisory Agreement, the Advisor has overall responsibility for the general management and administration of the Funds and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Funds to operate. The Funds unitary fees are accrued daily and paid monthly. The Advisor bears the costs of all advisory and non- advisory services required to operate the Funds, in exchange for a single unitary fee at the following annual rates:
| SILJ | 0.69 | % | |
| HACK | 0.60 | % | |
| IPAY | 0.75 | % | |
| VALT | 0.30 | % | |
| AWAY | 0.75 | % | |
| GERM | 0.68 | % |
Under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Funds, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an agreement with its affiliate ETFMG Financial, LLC to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds. Level ETF Ventures, LLC (“Level”) serves as the index provider for SILJ, HACK, IPAY, AWAY, and GERM. Level is not affiliated with the Trust or the Advisor.
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Funds. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Funds. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Funds have each adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to each Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. During the period ended September 30, 2020, the Funds did not incur any 12b-1 expenses.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, during the period ended September 30, 2020:
| Purchases | Sales | |||||||
| SILJ | $ | 82,134,014 | $ | 85,217,664 | ||||
| HACK | 542,675,417 | 481,600,274 | ||||||
| IPAY | 164,530,503 | 128,245,929 | ||||||
| VALT | 244,492,205 | 142,707,118 | ||||||
| AWAY | 4,819,890 | 3,538,947 | ||||||
| GERM | 7,637,241 | 7,592,700 | ||||||
The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the period ended September 30, 2020:
| Purchases In-Kind | Sales In-Kind | |||||||
| SILJ | $ | 328,291,084 | $ | 89,499,242 | ||||
| HACK | 249,703,827 | 472,124,122 | ||||||
| IPAY | 445,606,033 | 501,242,896 | ||||||
| VALT | — | — | ||||||
| AWAY | 16,337,598 | 1,635,738 | ||||||
| GERM | 75,343,742 | 14,088,633 | ||||||
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Funds’ determination of taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations during the period ended September 30, 2020.
NOTE 7 — SECURITIES LENDING
The Funds, except for SILJ and VALT, may lend up to 33 1⁄3% of the value of the securities in their portfolios to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (the “Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Funds receive compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Funds continue to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss on the fair value of securities loaned that may occur during the term of the loan will be for the account of the Funds. The Funds have the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. During the period ended September 30, 2020, the Funds had loaned securities and received cash collateral for the loans. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations, either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Advisor; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Advisor. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Funds could also experience delays in recovering their securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
As of the period ended September 30, 2020 the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
|
Fund |
Values of
|
Fund
|
||||||
| HACK | $ | 223,505,160 | $ | 230,165,962 | ||||
| IPAY | 87,277,461 | 89,194,593 | ||||||
| AWAY | 2,066,950 | 2,198,966 | ||||||
| GERM | 16,745,538 | 17,198,112 | ||||||
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, a money market fund with an overnight and continuous maturity, and ETFMG Sit Ultra Short ETF as shown on the Schedule of Investments.
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2020 were as follows:
| Cost |
Gross
Unrealized Appreciation |
Gross
Unrealized Depreciation |
Net Unrealized Appreciation (Depreciation) | |||||||||||||
| SILJ | $ | 380,118,215 |
|
$ | 71,538,065 | $ | (42,215,328 | ) | $ | 29,322,737 | ||||||
| HACK | 1,592,035,516 | 276,804,520 | (132,584,561 | ) | 144,219,959 | |||||||||||
| IPAY | 834,183,894 | 133,568,333 | (80,211,507 | ) | 53,356,826 | |||||||||||
| VALT | 104,598,990 | 648,594 | (20,811 | ) | 627,783 | |||||||||||
| AWAY | 18,518,532 | 734,322 | (1,917,702 | ) | (1,183,380 | ) | ||||||||||
| GERM | 76,989,904 | 2,005,700 | (7,773,581 | ) | (5,767,881 | ) | ||||||||||
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
As of September 30, 2020, the components of distributable earnings (loss) on a tax basis were as follows:
|
Undistributed
Ordinary Income |
Undistributed
Long-Term Gain |
Total
Distributable Earnings |
Other
Accumulated Loss |
Total
Accumulated Gain (Loss) |
||||||||||||||||
| SILJ | $ | 6,942,754 | $ | — | $ | 6,942,754 | $ | (37,341,642 | ) | $ | (1,076,151 | ) | ||||||||
| HACK | 267,547 | — | 267,547 | (197,892,099 | ) | (53,404,593 | ) | |||||||||||||
| IPAY | — | — | — | (45,544,647 | ) | 7,812,179 | ||||||||||||||
| VALT | 88,164 | — | 88,164 | (1,414,692 | ) | (698,745 | ) | |||||||||||||
| AWAY | 24,389 | — | 24,389 | (59,289 | ) | (1,218,280 | ) | |||||||||||||
| GERM | 95,210 | — | 95,210 | (2,212,292 | ) | (7,884,963 | ) | |||||||||||||
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2020, the Funds had accumulated capital loss carryovers of:
|
Capital Loss
Carryforward ST |
Capital Loss
Carryforward LT |
Expires | |||||||||
| SILJ | $ | (19,782,810 | ) | $ | (17,555,549 | ) | Indefinite | ||||
| HACK | (86,782,369 | ) | (111,109,228 | ) | Indefinite | ||||||
| IPAY | (21,125,249 | ) | (24,081,540 | ) | Indefinite | ||||||
| VALT | (1,414,692 | ) | — | Indefinite | |||||||
| AWAY | (59,402 | ) | — | Indefinite | |||||||
| GERM | (2,212,292 | ) | — | Indefinite | |||||||
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ending September 30, 2020.
|
Late Year
Ordinary Loss |
Post-October
Capital Loss |
|||||||
| SILJ | $ | — | $ | — | ||||
| HACK | — | — | ||||||
| IPAY | (339,075 | ) | — | |||||
| VALT | — | — | ||||||
| AWAY | — | — | ||||||
| GERM | — | — | ||||||
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2020, the following table shows the reclassifications made:
|
Total
Distributable Earnings/(Loss) |
Paid-In Capital | |||||||
| SILJ | $ | (26,183,146 | ) | $ | 26,183,146 | |||
| HACK | (97,703,159 | ) | 97,703,159 | |||||
| IPAY | (85,320,028 | ) | 85,320,028 | |||||
| VALT | — | — | ||||||
| AWAY | (262,310 | ) | 262,310 | |||||
| GERM | (1,637,113 | ) | 1,637,113 | |||||
The tax character of distributions paid during the year ended September 30, 2020, and the year ended September 30, 2019 were as follows:
| Year Ended September 30, 2020 | Year Ended September 30, 2019 | |||||||||||||||
|
From
Ordinary Income |
From
Capital Gains |
From
Ordinary Income |
From
Capital Gains |
|||||||||||||
| SILJ | $ | 1,980,500 | $ | — | $ | 815,294 | $ | — | ||||||||
| HACK | 21,333,000 | — | 2,039,082 | — | ||||||||||||
| IPAY | 216,000 | — | 1,559,846 | 726,561 | ||||||||||||
| VALT | 1,250,256 | — | — | — | ||||||||||||
| AWAY | — | — | — | — | ||||||||||||
| GERM | — | — | — | — | ||||||||||||
NOTE 9 – INVESTMENTS IN AFFILIATES
HACK
HACK owned 5% or more of the voting securities of the following companies during the period ended September 30, 2020. Transactions during the period in these securities were as follows:
| Security Name |
Value at
September 30, 2019 |
Purchases | Sales |
Realized
Gain (Loss)(1) |
Change in
Unrealized Appreciation (Depreciation) |
Dividend
Income |
Value at
September 30, 2020 |
Ending
Shares |
|||||||||||||||||
| SecureWorks Corp * | $ | 10,121,746 | $ | 8,012,799 | $ | (3,131,366 | ) | $ | 90,372 | $ | (2,292,854 | ) | $ | — | $ | 12,800,697 | 1,123,854 | ||||||||
| ETFMG Sit Ultra Short ETF * | — | 50,108,877 | — | — | (323,877 | ) | $ | — | 49,785,000 | 1,000,000 | |||||||||||||||
| Tufin Software Technologies Ltd.* | 40,242,313 | 14,676,276 | (22,762,578 | ) | (17,877,504 | ) | 2,378,796 | $ | — | 16,657,303 | 2,019,067 | ||||||||||||||
| Total | $ | 50,364,059 | $ | 72,797,952 | $ | (25,893,944 | ) | $ | (17,787,132 | ) | $ | (237,935 | ) | $ | — | $ | 79,243,000 | 4,142,921 | |||||||
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
SILJ
SILJ owned 5% or more of the voting securities of the following companies during the period ended September 30, 2020. Transactions during the period in this security were as follows:
| Security Name |
Value at
September 30, 2019 |
Purchases | Sales |
Realized
Gain (Loss)(1) |
Change in
Unrealized Appreciation (Depreciation) |
Dividend
Income |
Value at
September 30, 2020 |
Ending
Shares |
|||||||||||||||||
| Kootenay Silver, Inc.* | $ | 760,917 | $ | 2,042,984 | $ | (1,652,773 | ) | $ | (26,678 | ) | $ | 247,517 | $ | — | $ | 1,371,967 | 4,807,480 | ||||||||
| New Gold, Inc. * | — | 5,728,773 | (1,213,530 | ) | 292,379 | 1,474,329 | — | 6,281,951 | 3,684,904 | ||||||||||||||||
| Total | $ | 760,917 | $ | 7,771,757 | $ | (2,866,303 | ) | $ | 265,701 | $ | 1,721,846 | $ | — | $ | 7,653,918 | 8,492,384 | |||||||||
IPAY
IPAY owned 5% or more of the voting securities of the following company during the period ended September 30, 2020. Transactions during the period in this security was as follows:
| Security Name |
Value at
September 30, 2019 |
Purchases | Sales |
Realized
Gain (Loss)(1) |
Change in
Unrealized Appreciation (Depreciation) |
Dividend
Income |
Value at
September 30, 2020 |
Ending
Shares |
|||||||||||||||||
| ETFMG Sit Ultra Short ETF * | $ | — | $ | 30,082,267 | $ | — | $ | — | $ | (211,267 | ) | $ | — | $ | 29,871,000 | 600,000 | |||||||||
GERM
GERM owned 5% or more of the voting securities of the following company during the period ended September 30, 2020. Transactions during the period in this security was as follows:
| Security Name |
Value at
September 30, 2019 |
Purchases | Sales |
Realized
Gain (Loss)(1) |
Change in
Unrealized Appreciation (Depreciation) |
Dividend
Income |
Value at
September 30, 2020 |
Ending Shares | |||||||||||||||||
| ETFMG Sit Ultra Short ETF * | $ | — | $ | 1,243,975 | $ | — | $ | — | $ | 650 | $ | — | $ | 1,244,625 | 25,000 | ||||||||||
*Affiliate as of September 30, 2020.
1 Realized Losses include transactions in affiliated investments and affiliated in-kind redemptions.
As of September 30, 2020, 85.88% of outstanding shares of VALT were owned by affiliates.
NOTE 10 – LEGAL MATTERS
The Trust, the Adviser and certain officers of the Adviser were defendants in an action filed May 2, 2017 in the Superior Court of New Jersey captioned PureShares, LLC d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. C-63-17. The PureShares action alleged claims based on disputes arising out of contractual relationships with the Adviser relating to certain series of the Trust. The action sought damages in unspecified amounts and injunctive relief based on breach of contract, wrongful termination, and several other claims.
ETFMG™ ETFs
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The Adviser and its parent, Exchange Traded Managers Group, LLC (the “Company”), were defendants in a case filed on October 26, 2017 in the United States District Court for the Southern District of New York by NASDAQ, Inc. (“Nasdaq”) captioned Nasdaq, Inc. v. Exchange Traded Managers Group, LLC et al., Case 1:17-cv-08252. This action arose out of the same facts and circumstances, and relates to the same series of the Trust, as the New Jersey litigation and asserted claims for breach of contract, conversion and certain other claims. The matter was the subject of a bench trial in May 2019, and on December 20, 2019, the Court issued an Opinion and Order awarding compensatory damages to Plaintiff in the amount of $78,403,172.36, plus prejudgment interest. The Court also denied Plaintiff’s requests for punitive damages and equitable relief.
On May 1, 2020, Nasdaq, PureShares LLC (“PureShares”), and the Company announced a global settlement that resolves all claims in both the PureShares action and the Nasdaq action. The settlement is subject to ongoing negotiations and approvals among independent third parties. As part of the settlement, Nasdaq and the Company have agreed to certain cash payments from the Company to Nasdaq and PureShares, and have executed an asset purchase agreement to transfer certain Company intellectual property and related assets, to a Nasdaq affiliate. If the events set forth in the settlement agreement do not occur, and a subsequent settlement is not reached, the resulting conditions may adversely affect the Adviser’s future operations. However, Management of the Trust and the Fund, after consultation with legal counsel, believes that the resolution of these matters will not have a material adverse effect on the Fund’s financial statements.
NOTE 11 – SUBSEQUENT EVENTS
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.
ETFMG™ ETFs
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust and the Shareholders of ETFMG Prime Junior Silver Miners ETF, ETFMG Prime Cyber Security ETF, ETFMG Prime Mobile Payments ETF, ETFMG Sit Ultra Short ETF, ETFMG Travel Tech ETF and ETFMG Treatments, Testing and Advancements ETF:
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of ETFMG Prime Junior Silver Miners ETF, ETFMG Prime Cyber Security ETF, ETFMG Prime Mobile Payments ETF, ETFMG Sit Ultra Short ETF, ETFMG Travel Tech ETF and ETFMG Treatments, Testing and Advancements ETF (collectively the “Funds”) (certain of the Funds comprising ETF Managers Trust) as of September 30, 2020, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of September 30, 2020, and the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. 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 Funds 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, 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 and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2020 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor of one or more series of the Trust since 2013.
New York, New York
November 30, 2020
ETFMG™ ETFs
ETFMG Treatments, Testing and Advancements ETF
APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS
For the Period Ended September 30, 2020 (Unaudited)
Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on June 9, 2020, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the approval of the Amended and Restated Investment Advisory Agreement (the “Agreement”) between ETF Managers Group LLC (the “Adviser”) and the Trust, on behalf of ETFMG Treatments, Testing and Advancements ETF (the “Fund”).
Pursuant to Section 15 of the 1940 Act, the Agreement must be approved by the vote of a majority of the Trustees who are not parties to the Agreement or “interested persons” of any party thereto, as defined in the 1940 Act (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In preparation for such meeting, the Board requests and reviews a wide variety of information from the Adviser.
In reaching its decision, the Board, including the Independent Trustees, considered all factors it believed relevant, including: (i) the nature, extent and quality of the services to be provided to the Fund’s shareholders by the Adviser; (ii) comparative fee and expense data for the Fund in relation to other similar investment companies; (iii) the extent to which economies of scale may be realized as the Fund grows and whether the proposed advisory fee for the Fund reflects these expected economies of scale for the benefit of the Fund; and (iv) other financial benefits to the Adviser and its affiliates resulting from services to be rendered to the Fund. The Board’s review included written and oral information furnished to the Board prior to and at the meeting held on June 9, 2020, and throughout the year. Among other things, the Adviser provided responses to detailed series of questions, which included information about the Adviser’s operations, service offerings, personnel, compliance program and financial condition. Representatives of the Adviser discussed the services to be provided to the Fund, the rationale for launching the Fund, and the Fund’s proposed fees in comparison to the fees of comparable investment companies. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentation and any other information that the Board received at the meeting, and deliberated on the approval of the Agreement in light of this information.
The Independent Trustees were assisted throughout the contract review process by independent legal counsel. The Independent Trustees relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating the approval of the Agreement, and the weight to be given to each such factor. The conclusions reached with respect to the Agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each Trustee may have placed varying emphasis on particular factors in reaching conclusions with respect to the Fund. The matters discussed were also considered separately by the Independent Trustees in executive session with independent legal counsel, at which no representatives of management were present.
Nature, Extent and Quality of Services Provided.
The Trustees considered the scope of services to be provided under the Advisory Agreement, noting that the Adviser would be providing investment advisory services to the Fund. The Board discussed the responsibilities of the Adviser, including: the investment of the Fund’s assets in accordance with its investment objective and monitoring compliance with various fund policies and procedures and with applicable securities regulations, and arranging for transfer agency, custody, fund administration, and all other non-distribution related services necessary for the Fund to operate. In considering the nature, extent and quality of the services provided by the Adviser, the Board considered the qualifications, experience and responsibilities of the Adviser’s investment personnel, the quality of the Adviser’s compliance infrastructure, and the determination of the Trust’s Chief Compliance Officer that the Adviser has appropriate compliance policies and procedures in place that are reasonably designed to prevent violations of the Federal Securities laws. The Board also considered the Adviser’s experience managing ETFs.
ETFMG™ ETFs
ETFMG Treatments, Testing and Advancements ETF
APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS
For the Period Ended September 30, 2020 (Unaudited) (Continued)
Based on the factors above, as well as those discussed below, the Board concluded that it was satisfied with the nature, extent and quality of the services to be provided to the Fund by the Adviser.
Historical Performance.
The Board noted that the Fund had not yet commenced operations and that therefore there was no prior performance to review.
Cost of Services Provided, Fall-Out Benefits and Economies of Scale.
The Board reviewed the proposed investment advisory fee for the Fund and compared it to the total operating expenses of other funds in the industry falling within the same style category, or peer group, as the Fund, as determined by a third-party service provider and the Adviser. The Board noted that the expense ratio for the Fund was higher than the average and median expense ratios for its peer ETFs, but within the range of expense ratios of the peer ETFs. In response to questions from the Independent Trustees, Mr. Masucci explained that there are limited true peers for the Fund because of its niche strategy.
The Board also noted the importance of the fact that the advisory fee for the Fund was a “unified fee,” meaning that the shareholders of the Fund would pay no expenses other than the advisory fee, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses (such as, among other things and subject to Board approval, certain proxy solicitation costs and non-standard Board-related expenses and litigation against the Board, Trustees, Fund, Adviser, and officers of the Adviser), and distribution (12b-1) fees and expenses (the “Excluded Expenses”). The Board also noted that the Adviser would be responsible for compensating the Fund’s other service providers and paying the Fund’s other expenses out of its own fee and resources. The Board further noted that because the Fund was new, it was difficult to estimate the profitability of the Fund to the Adviser. The Board, however, considered whether there were any collateral or “fall-out” benefits that ETFMG and its affiliates may derive as a result of their relationship with the Fund. The Board noted services provided to the Adviser by certain brokerage firms.
The Board noted that because the Fund was new, it also was difficult to estimate whether the Fund would experience economies of scale. The Board noted that the Adviser will review expenses as the Fund’s assets grow. The Board determined to evaluate economies of scale on an ongoing basis if the Fund achieved asset growth.
In its deliberations, the Board did not identify any single piece of information discussed above that was all-important, controlling or determinative of its decision. Based on the Board’s deliberations and its evaluation of the information described above, the Board, including the Independent Trustees, unanimously: (a) concluded that the terms of the Agreement are fair and reasonable; (b) concluded that the Adviser’s fees are reasonable in light of the services that the Adviser will provide to the Fund; and (c) approved the Agreement for an initial term of two years.
ETFMG™ ETFs
Six Months Ended September 30, 2020 (Unaudited)
As a shareholder of the Funds you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 invested for the period of time as indicated in the table below.
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
ETFMG™ ETFs
EXPENSE EXAMPLES
Six Months Ended September 30, 2020 (Unaudited)(Continued)
| Annualized | ||||||||||||||
| Expense Ratio | ||||||||||||||
| Beginning | During the | |||||||||||||
| Account | Ending | Period April 1, | ||||||||||||
| Value | Account Value | Expenses Paid | 2020 to | |||||||||||
| April 1, | September 30, | During the | September 30, | |||||||||||
| Fund Name | 2020 | 2020 | Period | 2020 | ||||||||||
| ETFMG Prime Junior Silver Miners ETF | ||||||||||||||
| Actual | $ | 1,000.00 | $ | 2,046.90 | $ | 5.26 | 1 | 0.69 | % | |||||
| Hypothetical (5% annual) | 1,000.00 | 1,021.55 | 3.49 | 1 | 0.69 | % | ||||||||
| ETFMG Prime Cyber Security ETF | ||||||||||||||
| Actual | 1,000.00 | 1,299.20 | 3.45 | 1 | 0.60 | % | ||||||||
| Hypothetical (5% annual) | 1,000.00 | 1,022.00 | 3.03 | 1 | 0.60 | % | ||||||||
| ETFMG Prime Mobile Payments ETF | ||||||||||||||
| Actual | 1,000.00 | 1,450.70 | 4.60 | 1 | 0.75 | % | ||||||||
| Hypothetical (5% annual) | 1,000.00 | 1,021.25 | 3.79 | 1 | 0.75 | % | ||||||||
| ETFMG Travel Tech ETF | ||||||||||||||
| Actual | 1,000.00 | 1,322.50 | 4.35 | 1 | 0.75 | % | ||||||||
| Hypothetical (5% annual) | 1,000.00 | 1,021.25 | 3.79 | 1 | 0.75 | % | ||||||||
| ETFMG Sit Ultra Short ETF | ||||||||||||||
| Actual | 1,000.00 | 1,044.00 | 1.53 | 1 | 0.30 | % | ||||||||
| Hypothetical (5% annual) | 1,000.00 | 1,023.50 | 1.52 | 1 | 0.30 | % | ||||||||
| ETFMG Treatments, Testing and Advancements ETF | ||||||||||||||
| Actual | 1,000.00 | 1,108.20 | 2.08 | 2 | 0.68 | % | ||||||||
| Hypothetical (5% annual) | 1,000.00 | 1,011.08 | 3.42 | 2 | 0.68 | % | ||||||||
| 1 | The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/366 (to reflect the one-half year period). |
| 2 | The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 106/366 (to reflect the one-half year period). |
ETFMG™ ETFs
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
ETFMG™ ETFs
Board of Trustees (Continued)
|
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
|
Terry Loebs (1963) |
Trustee (since 2014) |
Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 12 | None |
|
Eric Weigel (1960) |
Trustee (since 2020) |
Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018) |
12 | None |
ETFMG™ ETFs
September 30, 2020
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2020, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
| Fund Name | Qualified Dividend Income |
| SILJ | 13.35% |
| HACK | 100.00% |
| IPAY | 100.00% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2020 was as follows:
| Fund Name | Dividends Received Deduction |
| SILJ | 1.49% |
| HACK | 100.00% |
| IPAY | 100.00% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for each Fund were as follows:
| Fund Name | Short-Term Capital Gain |
| SILJ | 0.00% |
| HACK | 0.00% |
| IPAY | 0.00% |
During the year ended September 30, 2020, the Funds did not declare any long-term realized gains distributions.
Pursuant to Section 853 of the Internal Revenue Code the Fund designated the following amounts as foreign taxes paid for the year ended September 30, 2020. Foreign taxes paid for purposes of Section 853 may be less than actual foreign taxes paid for financial statement purposes.
| Per Share | |||||||||||||||||
| Shares | |||||||||||||||||
| Gross Foreign | Foreign Taxes | Gross Foreign | Foreign Taxes | Outstanding at | |||||||||||||
| Fund | Source Income | Passthrough | Source Income | Passthrough | 9/30/20 | ||||||||||||
| SILJ | $ | 462,841 | $ | 64,426 | $ | 0.01563652 | $ | 0.00234548 | $ | 29,600,000 | |||||||
ETFMG™ ETFs
SUPPLEMENTARY INFORMATION
September 30, 2020 (Unaudited) (Continued)
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the Securities and Exchange Commission (“SEC”) on Form N-Q or Part F of Form N-PORT. The Funds’ Form N-Q or Part F of Form N-PORT is available on the website of the SEC at www.sec.gov. Each Fund’s portfolio holdings are posted on their website at www.etfmgfunds.com daily.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at (877) 756-7873, by accessing the SEC’s website at www.sec.gov, or by accessing the Funds’ website at www.etfmgfunds.com.
Information regarding how the Funds voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at (877) 756-7873 or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
ETFMG™ ETFs
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, Inc.
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2020
Etho Climate Leadership U.S. ETF
Ticker: ETHO
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the Fund’s reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communications electronically.
You may elect to receive all future Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held with your financial intermediary.
The fund is a series of ETF Managers Trust.
Etho Climate Leadership U.S. ETF
TABLE OF CONTENTS
September 30, 2020
Etho Climate Leadership U.S. ETF
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the Etho Climate Leadership U.S. Exchange-Traded Fund (“ETHO” or the “Fund”). The following information pertains to the fiscal period from October 1, 2019 to September 30, 2020. During this period, market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty regarding the long-term implications continues to exist. Such disruptions, along with various government orders and precautionary measures such as social distancing, business shutdowns and similar policies, led to a reduction in global economic activity. These policies have also resulted in periods of high market volatility which can adversely affect assets of the Fund and thus Fund performance. During the reporting period the COVID-19 pandemic contributed to approximately a five-fold increase in volatility for the broad market (represented by the Chicago Board Options Exchange Volatility Index).
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Etho Climate Leadership Index – U.S. (the “Index”).
For the fiscal period ended September 30, 2020, the total return for the Fund was 12.59% while the total return for the Index was 12.13%. The best performers in the Fund on the basis of contribution to its return were Tesla, Zoom Video Communications, and GenMark Diagnostics, while the worst performers were Brink’s, Herman Miller, and United Airline Holdings.
During the reporting period, the Fund saw an average approximate allocation of 9% of its total assets to Semiconductors & Semiconductor Equipment, 7% to Capital Markets, 6% to Machinery and 6% to Health Care Equipment & Supplies.
As you may know, the Etho Climate Leadership U.S. ETF offers broad diversification across companies that have demonstrated efficiency and leadership with their use of resources and their supply chains when compared to industry peers. The Fund holds roughly 270 equities equally weighted and results in a carbon emissions profile that is, on average, 50-70% lower per dollar invested than conventional U.S. benchmark indices.1 ETHO avoids investment in any direct fossil fuel companies, as well as enablers of that industry, along with a series of other unsustainable industries such as Tobacco/Weapons/Gambling.
We are thankful you have joined us by investing in the Etho Climate Leadership U.S. ETF. You can find further details about ETHO by visiting www.etfmg.com, or by calling 1- 844-ETF-MGRS (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
1 Etho Capital. www.ethocapital.com
Etho Climate Leadership U.S. ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | 1 Year | Since Inception | Value of $10,000 |
| Year Ended September 30, 2020 | Return | (11/18/2015) | (9/30/2020) |
| Etho Climate Leadership U.S. ETF (NAV) | 12.59% | 13.42% | $18,460 |
| Etho Climate Leadership U.S. ETF (Market) | 12.86% | 13.47% | $18,504 |
| S&P 500 Index | 15.15% | 12.58% | $17,803 |
| Etho Climate Leadership Index - U.S. | 12.13% | 12.85% | $18,013 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more of less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 18, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
Etho Climate Leadership U.S. ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| % of Total | |||||
| Security | Investments | ||||
| 1 | ETFMG Sit Ultra Short ETF | 2.36% | |||
| 2 | Tesla, Inc. | 0.98% | |||
| 3 | GenMark Diagnostics, Inc. | 0.83% | |||
| 4 | Zoom Video Communications, Inc. - Class A | 0.77% | |||
| 5 | Beyond Meat, Inc. | 0.60% | |||
| 6 | Aaron’s, Inc. | 0.60% | |||
| 7 | SunPower Corp. | 0.59% | |||
| 8 | CoreLogic, Inc. | 0.53% | |||
| 9 | Advanced Drainage Systems, Inc. | 0.51% | |||
| 10 | Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 0.50% | |||
| Top Ten Holdings 8.27% of Total Investments | |||||
| * Current Fund holdings may not be indicative of future Fund holdings. | |||||
Etho Climate Leadership U.S. ETF
Important Disclosures and Key Risk Factors
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
ETHO
The ETHO Climate Leadership US ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Etho Climate Leadership Index (the “Index”).
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The Fund’s return may not match or achieve a high degree of correlation with the return of the Etho Climate Leadership Index — US. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC serves as the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Etho Capital.
Etho Climate Leadership U.S. ETF
As of September 30, 2020 (Unaudited)
| Etho Climate | ||||
| Leadership U.S. | ||||
| ETF | ||||
| As a percent of Net Assets: | ||||
| Singapore | 0.1 | % | ||
| United States | 98.9 | |||
| Closed-End Funds | 0.4 | |||
| Exchange Traded Funds | 2.7 | |||
| Short-Term and other Net Assets (Liabilities) | (2.1 |
)
|
||
|
|
100.0 | % | ||
Etho Climate Leadership U.S. ETF
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.0% | ||||||||
| Singapore - 0.1% | ||||||||
| Semiconductors & Semiconductor Equipment - 0.1% | ||||||||
| Maxeon Solar Technologies, Ltd. (a)(b) | 6,246 | $ | 105,932 | |||||
| United States - 98.9% | ||||||||
| Automobiles - 1.1% | ||||||||
| Tesla, Inc. (b) | 2,419 | 1,037,775 | ||||||
| Banks - 3.5% | ||||||||
| Bank of Hawaii Corp. | 4,618 | 233,301 | ||||||
| Comerica, Inc. | 8,745 | 334,496 | ||||||
| Commerce Bancshares, Inc. (a) | 5,047 | 284,096 | ||||||
| Cullen/Frost Bankers, Inc. (a) | 4,570 | 292,252 | ||||||
| First Republic Bank | 3,087 | 336,668 | ||||||
| M&T Bank Corp. | 2,467 | 227,186 | ||||||
| Popular, Inc. | 7,305 | 264,952 | ||||||
| South State Corp. | 4,342 | 209,067 | ||||||
| SVB Financial Group (b) | 1,676 | 403,280 | ||||||
| Truist Financial Corp. | 8,298 | 315,739 | ||||||
| Zions Bancorp NA | 9,543 | 278,846 | ||||||
| Total Banks | 3,179,883 | |||||||
| Biotechnology - 1.7% | ||||||||
| Agios Pharmaceuticals, Inc. (a)(b) | 7,141 | 249,935 | ||||||
| Alnylam Pharmaceuticals, Inc. (b) | 2,327 | 338,811 | ||||||
| Ionis Pharmaceuticals, Inc. (b) | 5,358 | 254,237 | ||||||
| Seattle Genetics, Inc. (b) | 2,195 | 429,540 | ||||||
| Vertex Pharmaceuticals, Inc. (b) | 1,064 | 289,536 | ||||||
| Total Biotechnology | 1,562,059 | |||||||
| Building Products - 2.0% | ||||||||
| Advanced Drainage Systems, Inc. | 8,618 | 538,109 | ||||||
| Apogee Enterprises, Inc. | 12,328 | 263,449 | ||||||
| Armstrong World Industries, Inc. | 3,195 | 219,848 | ||||||
| Lennox International, Inc. (a) | 1,397 | 380,836 | ||||||
| Simpson Manufacturing Co., Inc. | 4,095 | 397,870 | ||||||
| Total Building Products | 1,800,112 | |||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Capital Markets - 6.4% | ||||||||
| Ares Management Corp. - Class A (a) | 8,252 | $ | 333,546 | |||||
| Cboe Global Markets, Inc. | 2,845 | 249,620 | ||||||
| Charles Schwab Corp. (a) | 7,563 | 274,007 | ||||||
| CME Group, Inc. | 1,469 | 245,778 | ||||||
| E*TRADE Financial Corp. | 7,400 | 370,370 | ||||||
| Eaton Vance Corp. | 7,970 | 304,056 | ||||||
| FactSet Research Systems, Inc. (a) | 973 | 325,838 | ||||||
| Federated Hermes, Inc. | 13,415 | 288,557 | ||||||
| Intercontinental Exchange, Inc. | 3,144 | 314,557 | ||||||
| KKR & Co, Inc. (a) | 10,836 | 372,107 | ||||||
| MarketAxess Holdings, Inc. | 762 | 366,972 | ||||||
| Morningstar, Inc. | 2,182 | 350,451 | ||||||
| MSCI, Inc. | 878 | 313,253 | ||||||
| Nasdaq, Inc. | 2,676 | 328,372 | ||||||
| Northern Trust Corp. | 3,376 | 263,227 | ||||||
| S&P Global, Inc. | 1,035 | 373,220 | ||||||
| SEI Investments Co. | 5,491 | 278,504 | ||||||
| T. Rowe Price Group, Inc. | 2,608 | 334,398 | ||||||
| Total Capital Markets | 5,686,833 | |||||||
| Chemicals - 1.2% | ||||||||
| Air Products & Chemicals, Inc. | 1,274 | 379,474 | ||||||
| Albemarle Corp. (a) | 4,508 | 402,473 | ||||||
| Ecolab, Inc. | 1,628 | 325,340 | ||||||
| Total Chemicals | 1,107,287 | |||||||
| Commercial Services & Supplies - 2.2% | ||||||||
| Brink’s Co. | 4,895 | 201,136 | ||||||
| Cintas Corp. | 1,462 | 486,596 | ||||||
| Clean Harbors, Inc. (b) | 4,935 | 276,508 | ||||||
| Rollins, Inc. | 7,020 | 380,414 | ||||||
| Stericycle, Inc. (b) | 5,215 | 328,858 | ||||||
| Waste Management, Inc. | 2,747 | 310,878 | ||||||
| Total Commercial Services & Supplies | 1,984,390 | |||||||
| Communications Equipment - 1.8% | ||||||||
| Arista Networks, Inc. (a)(b) | 1,250 | 258,663 | ||||||
| Ciena Corp. (b) | 6,364 | 252,587 | ||||||
| Cisco Systems, Inc. | 6,481 | 255,287 | ||||||
| F5 Networks, Inc. (b) | 2,375 | 291,578 | ||||||
| Motorola Solutions, Inc. (a) | 1,912 | 299,820 | ||||||
| Viavi Solutions, Inc. (b) | 22,601 | 265,110 | ||||||
| Total Communications Equipment | 1,623,045 | |||||||
| Construction & Engineering - 0.6% | ||||||||
| EMCOR Group, Inc. | 4,138 | 280,184 | ||||||
| Northwest Pipe Co. (b) | 11,386 | 301,274 | ||||||
| Total Construction & Engineering | 581,458 | |||||||
| Consumer Finance - 0.3% | ||||||||
| American Express Co. | 2,968 | 297,542 | ||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Containers & Packaging - 0.7% | ||||||||
| AptarGroup, Inc. | 2,556 | $ | 289,339 | |||||
| Avery Dennison Corp. | 2,495 | 318,961 | ||||||
| Total Containers & Packaging | 608,300 | |||||||
| Distributors - 0.4% | ||||||||
| Genuine Parts Co. | 3,786 | 360,314 | ||||||
| Diversified Consumer Services - 1.1% | ||||||||
| Graham Holdings Co. - Class B | 747 | 301,870 | ||||||
| H&R Block, Inc. | 18,217 | 296,755 | ||||||
| Service Corp. International | 6,500 | 274,170 | ||||||
| Strategic Education, Inc. | 1,817 | 166,201 | ||||||
| Total Diversified Consumer Services | 1,038,996 | |||||||
| Diversified Financial Services - 0.6% | ||||||||
| Cannae Holdings, Inc. (b) | 7,565 | 281,872 | ||||||
| Voya Financial, Inc. | 6,262 | 300,138 | ||||||
| Total Diversified Financial Services | 582,010 | |||||||
| Diversified Telecommunication Services - 0.9% | ||||||||
| CenturyLink, Inc. (a) | 27,251 | 274,963 | ||||||
| Cincinnati Bell, Inc. (b) | 17,306 | 259,590 | ||||||
| Verizon Communications, Inc. | 4,787 | 284,778 | ||||||
| Total Diversified Telecommunication Services | 819,331 | |||||||
| Electrical Equipment - 1.8% | ||||||||
| AMETEK, Inc. | 3,522 | 350,087 | ||||||
| Emerson Electric Co. | 5,353 | 350,996 | ||||||
| Generac Holdings, Inc. (b) | 2,719 | 526,507 | ||||||
| Rockwell Automation, Inc. | 1,685 | 371,846 | ||||||
| Total Electrical Equipment | 1,599,436 | |||||||
| Electronic Equipment, Instruments & Components - 4.0% | ||||||||
| Amphenol Corp. - Class A | 3,482 | 376,996 | ||||||
| Badger Meter, Inc. (a) | 4,735 | 309,527 | ||||||
| CDW Corp. | 2,723 | 325,480 | ||||||
| Dolby Laboratories, Inc. - Class A | 4,687 | 310,654 | ||||||
| IPG Photonics Corp. (a)(b) | 2,297 | 390,422 | ||||||
| Itron, Inc. (a)(b) | 4,537 | 275,577 | ||||||
| Keysight Technologies, Inc. (b) | 3,027 | 299,007 | ||||||
| Littelfuse, Inc. | 1,903 | 337,478 | ||||||
| National Instruments Corp. | 7,697 | 274,783 | ||||||
| Trimble, Inc. (b) | 7,960 | 387,652 | ||||||
| Zebra Technologies Corp. - Class A (b) | 1,379 | 348,142 | ||||||
| Total Electronic Equipment, Instruments & Components | 3,635,718 | |||||||
| Entertainment - 1.9% | ||||||||
| Activision Blizzard, Inc. | 4,279 | 346,385 | ||||||
| Electronic Arts, Inc. (b) | 2,529 | 329,807 | ||||||
| Netflix, Inc. (b) | 674 | 337,020 | ||||||
| Take-Two Interactive Software, Inc. (b) | 2,136 | 352,910 | ||||||
| Walt Disney Co. | 2,622 | 325,338 | ||||||
| Total Entertainment | 1,691,460 | |||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Food & Staples Retailing - 0.7% | ||||||||
| Casey’s General Stores, Inc. | 1,914 | $ | 340,023 | |||||
| PriceSmart, Inc. | 4,821 | 320,355 | ||||||
| Total Food & Staples Retailing | 660,378 | |||||||
| Food Products - 1.8% | ||||||||
| Beyond Meat, Inc. (a)(b) | 3,803 | 631,526 | ||||||
| Hain Celestial Group, Inc. (b) | 9,755 | 334,597 | ||||||
| Lamb Weston Holdings, Inc. (a) | 4,449 | 294,835 | ||||||
| McCormick & Co., Inc. | 1,804 | 350,156 | ||||||
| Total Food Products | 1,611,114 | |||||||
| Health Care Equipment & Supplies - 6.5% | ||||||||
| ABIOMED, Inc. (b) | 1,745 | 483,470 | ||||||
| Align Technology, Inc. (a)(b) | 1,456 | 476,636 | ||||||
| Becton Dickinson & Co. | 1,104 | 256,879 | ||||||
| Boston Scientific Corp. (b) | 7,764 | 296,662 | ||||||
| Cooper Cos. | 919 | 309,813 | ||||||
| Danaher Corp. | 1,831 | 394,269 | ||||||
| DexCom, Inc. (b) | 940 | 387,496 | ||||||
| Edwards Lifesciences Corp. (b) | 4,029 | 321,595 | ||||||
| GenMark Diagnostics, Inc. (b) | 61,495 | 873,228 | ||||||
| IDEXX Laboratories, Inc. (b) | 1,045 | 410,800 | ||||||
| Intuitive Surgical, Inc. (b) | 511 | 362,575 | ||||||
| ResMed, Inc. | 1,723 | 295,374 | ||||||
| Stryker Corp. | 1,525 | 317,764 | ||||||
| Teleflex, Inc. | 866 | 294,804 | ||||||
| Varian Medical Systems, Inc. (b) | 2,468 | 424,496 | ||||||
| Total Health Care Equipment & Supplies | 5,905,861 | |||||||
| Health Care Providers & Services - 2.7% | ||||||||
| AMN Healthcare Services, Inc. (b) | 4,382 | 256,172 | ||||||
| Anthem, Inc. | 1,118 | 300,284 | ||||||
| Centene Corp. (b) | 4,265 | 248,777 | ||||||
| Cigna Corp. | 1,429 | 242,087 | ||||||
| Humana, Inc. | 807 | 334,009 | ||||||
| Laboratory Corp. of America Holdings (b) | 2,004 | 377,293 | ||||||
| RadNet, Inc. (b) | 24,106 | 370,027 | ||||||
| UnitedHealth Group, Inc. | 1,018 | 317,382 | ||||||
| Total Health Care Providers & Services | 2,446,031 | |||||||
| Health Care Technology - 0.7% | ||||||||
| Cerner Corp. (a) | 4,029 | 291,256 | ||||||
| Teladoc Health, Inc. (a)(b) | 1,634 | 358,239 | ||||||
| Total Health Care Technology | 649,495 | |||||||
| Household Durables - 0.4% | ||||||||
| Newell Brands, Inc. | 19,294 | 331,085 | ||||||
| Household Products - 0.4% | ||||||||
| Church & Dwight Co., Inc. | 3,956 | 370,717 | ||||||
| Independent Power and Renewable Electricity Producers - 0.2% | ||||||||
| Ormat Technologies, Inc. (a) | 3,748 | 221,544 | ||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Insurance - 4.2% | ||||||||
| Aflac, Inc. | 7,441 | $ | 270,480 | |||||
| American Financial Group, Inc. | 3,649 | 244,410 | ||||||
| Arthur J Gallagher & Co. | 3,118 | 329,198 | ||||||
| Brown & Brown, Inc. | 7,005 | 317,116 | ||||||
| Cincinnati Financial Corp. | 3,380 | 263,539 | ||||||
| Erie Indemnity Co. - Class A (a) | 1,714 | 360,421 | ||||||
| Fidelity National Financial, Inc. | 10,258 | 321,178 | ||||||
| Globe Life, Inc. | 3,527 | 281,807 | ||||||
| Hanover Insurance Group, Inc. | 2,808 | 261,649 | ||||||
| Hartford Financial Services Group, Inc. | 7,231 | 266,535 | ||||||
| Markel Corp. (b) | 272 | 264,846 | ||||||
| Marsh & McLennan Cos., Inc. | 2,938 | 336,990 | ||||||
| W R Berkley Corp. | 4,863 | 297,372 | ||||||
| Total Insurance | 3,815,541 | |||||||
| Interactive Media & Services - 0.9% | ||||||||
| Alphabet, Inc. - Class A (b) | 218 | 319,501 | ||||||
| IAC/InterActiveCorp (b) | 1,412 | 169,129 | ||||||
| Match Group, Inc. (b) | 3,048 | 337,261 | ||||||
| Total Interactive Media & Services | 825,891 | |||||||
| Internet & Direct Marketing Retail - 1.3% | ||||||||
| Amazon.com, Inc. (b) | 130 | 409,335 | ||||||
| Booking Holdings, Inc. (b) | 188 | 321,608 | ||||||
| eBay, Inc. | 8,450 | 440,245 | ||||||
| Total Internet & Direct Marketing Retail | 1,171,188 | |||||||
| IT Services - 4.9% | ||||||||
| Akamai Technologies, Inc. (a)(b) | 2,769 | 306,085 | ||||||
| Automatic Data Processing, Inc. | 1,861 | 259,591 | ||||||
| Broadridge Financial Solutions, Inc. | 2,680 | 353,760 | ||||||
| Fidelity National Information Services, Inc. | 2,086 | 307,080 | ||||||
| Fiserv, Inc. (a)(b) | 2,667 | 274,834 | ||||||
| FleetCor Technologies, Inc. (b) | 1,358 | 323,340 | ||||||
| Global Payments, Inc. | 1,757 | 312,008 | ||||||
| Jack Henry & Associates, Inc. | 1,634 | 265,672 | ||||||
| MasterCard, Inc. - Class A | 1,049 | 354,740 | ||||||
| Paychex, Inc. (a) | 4,054 | 323,388 | ||||||
| PayPal Holdings, Inc. (b) | 2,646 | 521,342 | ||||||
| Switch, Inc. - Class A | 14,989 | 233,978 | ||||||
| VeriSign, Inc. (b) | 1,407 | 288,224 | ||||||
| Visa, Inc. - Class A (a) | 1,574 | 314,753 | ||||||
| Total IT Services | 4,438,795 | |||||||
| Leisure Products - 0.3% | ||||||||
| Hasbro, Inc. | 3,563 | 294,731 | ||||||
| Life Sciences Tools & Services - 0.7% | ||||||||
| Bio-Techne Corp. | 1,337 | 331,215 | ||||||
| Illumina, Inc. (b) | 927 | 286,517 | ||||||
| Total Life Sciences Tools & Services | 617,732 | |||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Machinery - 5.8% | ||||||||
| Deere & Co. | 1,840 | $ | 407,798 | |||||
| Donaldson Co., Inc. | 6,579 | 305,397 | ||||||
| Dover Corporation | 3,028 | 328,054 | ||||||
| Energy Recovery, Inc. (a)(b) | 34,053 | 279,235 | ||||||
| Flowserve Corp. | 10,657 | 290,830 | ||||||
| Fortive Corp. | 4,594 | 350,109 | ||||||
| Hillenbrand, Inc. | 13,334 | 378,151 | ||||||
| Lincoln Electric Holdings, Inc. (a) | 3,687 | 339,351 | ||||||
| Lindsay Corporation | 2,773 | 268,094 | ||||||
| Mueller Water Products, Inc. - Class A | 31,764 | 330,028 | ||||||
| Stanley Black & Decker, Inc. | 2,543 | 412,474 | ||||||
| Tennant Co. | 4,382 | 264,498 | ||||||
| Toro Co. | 3,903 | 327,657 | ||||||
| Trinity Industries, Inc. (a) | 15,991 | 311,825 | ||||||
| Watts Water Technologies, Inc. - Class A | 2,999 | 300,350 | ||||||
| Xylem, Inc. | 3,901 | 328,152 | ||||||
| Total Machinery | 5,222,003 | |||||||
| Media - 2.2% | ||||||||
| Charter Communications, Inc. - Class A (b) | 581 | 362,741 | ||||||
| Discovery, Inc. - Class A (a)(b) | 13,032 | 283,707 | ||||||
| Interpublic Group of Cos., Inc. (a) | 15,810 | 263,553 | ||||||
| New York Times Co. - Class A (a) | 8,258 | 353,359 | ||||||
| Omnicom Group, Inc. | 4,651 | 230,225 | ||||||
| Sirius XM Holdings, Inc. (a) | 51,371 | 275,349 | ||||||
| TEGNA, Inc. | 23,422 | 275,209 | ||||||
| Total Media | 2,044,143 | |||||||
| Pharmaceuticals - 1.9% | ||||||||
| Bristol-Myers Squibb Co. | 4,569 | 275,465 | ||||||
| Eli Lilly and Co. | 1,832 | 271,173 | ||||||
| Merck & Co, Inc. | 3,310 | 274,565 | ||||||
| Nektar Therapeutics (a)(b) | 14,194 | 235,478 | ||||||
| Pfizer, Inc. | 7,869 | 288,792 | ||||||
| Zoetis, Inc. | 2,157 | 356,703 | ||||||
| Total Pharmaceuticals | 1,702,176 | |||||||
| Professional Services - 1.6% | ||||||||
| CoreLogic, Inc. | 8,321 | 563,082 | ||||||
| CoStar Group, Inc. (b) | 431 | 365,708 | ||||||
| FTI Consulting, Inc. (b) | 2,115 | 224,127 | ||||||
| Verisk Analytics, Inc. | 1,820 | 337,264 | ||||||
| Total Professional Services | 1,490,181 | |||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Real Estate Investment Trusts (REITs) - 3.2% | ||||||||
| Alexandria Real Estate Equities, Inc. | 1,857 | $ | 297,120 | |||||
| Duke Realty Corp. | 7,865 | 290,219 | ||||||
| Extra Space Storage, Inc. (a) | 2,663 | 284,914 | ||||||
| Hannon Armstrong Sustainable Infrastructure Capital, Inc. (a) | 12,518 | 529,136 | ||||||
| Mid-America Apartment Communities, Inc. | 2,489 | 288,600 | ||||||
| Prologis, Inc. | 3,166 | 318,564 | ||||||
| Public Storage, Inc. (a) | 1,285 | 286,195 | ||||||
| Regency Centers Corp. | 6,668 | 253,517 | ||||||
| SBA Communications Corp. | 939 | 299,052 | ||||||
| Total Real Estate Investment Trusts (REITs) | 2,847,317 | |||||||
| Road & Rail - 0.3% | ||||||||
| Lyft, Inc. - Class A (a)(b) | 9,436 | 259,962 | ||||||
| Semiconductors & Semiconductor Equipment - 10.3% | ||||||||
| Advanced Micro Devices, Inc. (b) | 5,570 | 456,684 | ||||||
| Analog Devices, Inc. (a) | 2,837 | 331,191 | ||||||
| Applied Materials, Inc. | 5,545 | 329,650 | ||||||
| Broadcom, Inc. | 1,076 | 392,008 | ||||||
| Cree, Inc. (a)(b) | 7,145 | 455,422 | ||||||
| First Solar, Inc. (a)(b) | 7,026 | 465,122 | ||||||
| Intel Corp. | 4,699 | 243,314 | ||||||
| KLA Corp. | 1,768 | 342,532 | ||||||
| Lam Research Corp. | 1,058 | 350,992 | ||||||
| Maxim Integrated Products, Inc. | 5,242 | 354,412 | ||||||
| Microchip Technology, Inc. (a) | 3,747 | 385,042 | ||||||
| Micron Technology, Inc. (b) | 6,023 | 282,840 | ||||||
| NVIDIA Corp. | 961 | 520,113 | ||||||
| ON Semiconductor Corp. (b) | 20,366 | 441,739 | ||||||
| Power Integrations, Inc. | 5,744 | 318,218 | ||||||
| Qorvo, Inc. (b) | 3,142 | 405,349 | ||||||
| Qualcomm, Inc. | 3,765 | 443,065 | ||||||
| Rambus, Inc. (b) | 22,825 | 312,474 | ||||||
| Skyworks Solutions, Inc. | 2,842 | 413,511 | ||||||
| SunPower Corp. (a)(b) | 49,972 | 625,151 | ||||||
| Teradyne, Inc. | 4,682 | 372,032 | ||||||
| Texas Instruments, Inc. | 2,561 | 365,685 | ||||||
| Universal Display Corp. (a) | 1,923 | 347,563 | ||||||
| Xilinx, Inc. | 3,260 | 339,822 | ||||||
| Total Semiconductors & Semiconductor Equipment | 9,293,931 | |||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Software - 6.7% | ||||||||
| Adobe Systems, Inc. (b) | 796 | $ | 390,382 | |||||
| Ansys, Inc. (b) | 1,089 | 356,353 | ||||||
| Autodesk, Inc. (b) | 1,622 | 374,698 | ||||||
| Cadence Design System, Inc. (b) | 3,836 | 409,033 | ||||||
| Intuit, Inc. | 1,104 | 360,136 | ||||||
| Microsoft Corp. | 1,609 | 338,421 | ||||||
| Palo Alto Networks, Inc. (b) | 1,545 | 378,139 | ||||||
| salesforce.com, Inc. (b) | 1,759 | 442,071 | ||||||
| ServiceNow, Inc. (b) | 884 | 428,740 | ||||||
| Slack Technologies, Inc. - Class A (a)(b) | 9,439 | 253,532 | ||||||
| Splunk, Inc. (b) | 2,006 | 377,389 | ||||||
| Synopsys, Inc. (b) | 1,966 | 420,685 | ||||||
| VMware, Inc. - Class A (a)(b) | 2,092 | 300,558 | ||||||
| Workday, Inc. - Class A (b) | 1,945 | 418,428 | ||||||
| Zoom Video Communications, Inc. - Class A (b) | 1,734 | 815,170 | ||||||
| Total Software | 6,063,735 | |||||||
| Specialty Retail - 3.1% | ||||||||
| Aaron’s, Inc. | 11,129 | 630,458 | ||||||
| Advance Auto Parts, Inc. | 2,718 | 417,213 | ||||||
| Lowe’s Cos., Inc. | 2,964 | 491,609 | ||||||
| O’Reilly Automotive, Inc. (b) | 841 | 387,768 | ||||||
| The Home Depot, Inc. | 1,362 | 378,241 | ||||||
| Tractor Supply Co. | 3,003 | 430,450 | ||||||
| Total Specialty Retail | 2,735,739 | |||||||
| Technology Hardware, Storage & Peripherals - 1.2% | ||||||||
| Apple, Inc. | 3,993 | 462,429 | ||||||
| NCR Corp. (a)(b) | 14,314 | 316,912 | ||||||
| NetApp, Inc. | 6,124 | 268,476 | ||||||
| Total Technology Hardware, Storage & Peripherals | 1,047,817 | |||||||
| Textiles, Apparel & Luxury Goods - 0.9% | ||||||||
| Hanesbrands, Inc. (a) | 32,595 | 513,371 | ||||||
| VF Corp. | 4,707 | 330,667 | ||||||
| Total Textiles, Apparel & Luxury Goods | 844,038 | |||||||
| Thrifts & Mortgage Finance - 0.2% | ||||||||
| Washington Federal, Inc. | 9,822 | 204,887 | ||||||
| Trading Companies & Distributors - 2.0% | ||||||||
| Fastenal Co. | 8,178 | 368,746 | ||||||
| GATX Corp. (a) | 4,073 | 259,654 | ||||||
| MSC Industrial Direct Co., Inc. - Class A | 4,687 | 296,593 | ||||||
| United Rentals, Inc. (b) | 2,462 | 429,619 | ||||||
| WESCO International, Inc. (b) | 11,088 | 488,094 | ||||||
| Total Trading Companies & Distributors | 1,842,706 | |||||||
| Water Utilities - 1.2% | ||||||||
| American States Water Co. | 3,108 | 232,945 | ||||||
| American Water Works Co., Inc. (a) | 2,125 | 307,870 | ||||||
| California Water Service Group | 5,051 | 219,466 | ||||||
| Middlesex Water Co. | 4,227 | 262,708 | ||||||
| Total Water Utilities | 1,022,989 | |||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
Schedule of Investments
September 30, 2020 (Continued)
Percentages are stated as a percent of net assets.
| (a) | All or a portion of this security is out on loan as of September 30, 2020. |
| (b) | Non-income producing security. |
| (c) | The rate quoted is the annualized seven-day yield at September 30, 2020. |
| (d) | Affiliated security. Please refer to Note 8 of the Notes to Financial Statements. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2020
| Etho Climate | ||||
| Leadership U.S. | ||||
| ETF | ||||
| ASSETS | ||||
| Investments in unaffiliated securities, at value* | $ | 103,161,724 | ||
| Investments in affiliated securities, at value* | 2,489,250 | |||
| Total Investments in securities, at value | 105,650,974 | |||
| Receivables: | ||||
| Dividends and interest receivable | 54,601 | |||
| Securities lending income receivable | 2,604 | |||
| Total Assets | 105,708,179 | |||
| LIABILITIES | ||||
| Collateral received for securities loaned (Note 7) | 15,114,710 | |||
| Payables: | ||||
| Management fees payable | 32,786 | |||
| Total Liabilities | 15,147,496 | |||
| Net Assets | $ | 90,560,683 | ||
| NET ASSETS CONSIST OF: | ||||
| Paid-in Capital | $ | 78,315,596 | ||
| Total Distributable Earnings | 12,245,087 | |||
| Net Assets | $ | 90,560,683 | ||
| *Identified Cost: | ||||
| Investments in unaffiliated securities | $ | 85,228,751 | ||
| Investments in affiliated securities | 2,512,856 | |||
| Shares Outstanding^ | 2,050,000 | |||
| Net Asset Value, Offering and Redemption Price per Share | $ | 44.18 | ||
|
|
^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
For the Year Ended September 30, 2020
| Etho Climate | ||||
| Leadership U.S. | ||||
| ETF | ||||
| INVESTMENT INCOME | ||||
| Income: | ||||
| Dividends from unaffiliated securities (net of foreign withholdings tax of $317) | $ | 1,040,976 | ||
| Interest | 2,253 | |||
| Securities lending income | 39,488 | |||
| Total Investment Income | 1,082,717 | |||
| Expenses: | ||||
| Management fees | 335,720 | |||
| Total Expenses | 335,720 | |||
| Net Investment Income | 746,997 | |||
| REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
| Net Realized Gain (Loss) on: | ||||
| Unaffiliated investments | (5,125,928 | ) | ||
| In-Kind redemptions | 886,390 | |||
| Closed-End Funds | 1,182 | |||
| Net Realized Gain (Loss) on Investments and In-Kind Redemptions | (4,238,356 | ) | ||
| Net Change in Unrealized Appreciation (Depreciation) of: | ||||
| Unaffiliated investments | 12,794,369 | |||
| Affiliated investments | (23,606 | ) | ||
| Net Change in Unrealized Appreciation of Investments | 12,770,763 | |||
| Net Realized and Unrealized Gain (Loss) on Investments | 8,532,407 | |||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 9,279,404 | ||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
STATEMENTS OF CHANGES IN NET ASSETS
| Year Ended | Year Ended | |||||||
| September 30, | September 30, | |||||||
| 2020 | 2019 | |||||||
| OPERATIONS | ||||||||
| Net investment income | $ | 746,997 | $ | 393,689 | ||||
| Net realized gain (loss) on investments and In-Kind Redemptions | (4,238,356 | ) | 3,707,775 | |||||
| Net change in unrealized appreciation (depreciation) of investments | 12,770,763 | (487,529 | ) | |||||
| Net increase (decrease) in net assets resulting from operations | $ | 9,279,404 | $ | 3,613,935 | ||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Total Distributions to Shareholders | (660,500 | ) | (412,276 | ) | ||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares | 28,510,725 | 14,602,580 | ||||||
| Net increase (decrease) in net assets | $ | 37,129,629 | $ | 17,804,239 | ||||
| NET ASSETS | ||||||||
| Beginning of Year | 53,431,054 | 35,626,815 | ||||||
| End of Year | $ | 90,560,683 | $ | 53,431,054 | ||||
Summary of share transactions is as follows:
| Year Ended | Year Ended | ||||||||||||||||
| September 30, 2020 | September 30, 2019 | ||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||
| Shares Sold | 800,000 | $ | 32,325,825 | 900,000 | $ | 33,675,925 | |||||||||||
| Shares Redeemed | (100,000 | ) | (3,815,100 | ) | (500,000 | ) | (19,073,345 | ) | |||||||||
| Net Transactions in Fund Shares | 700,000 | $ | 28,510,725 | 400,000 | $ | 14,602,580 | |||||||||||
| Beginning Shares | 1,350,000 | 950,000 | |||||||||||||||
| Ending Shares | 2,050,000 | 1,350,000 | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
For a capital share outstanding throughout the year/period
| Year Ended | Year Ended | Year Ended | Year Ended | Period Ended | ||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2020 | 2019 | 2018 | 2017 | 20161 | ||||||||||||||||
| Net Asset Value, Beginning of Period/Year | $ | 39.58 | $ | 37.50 | $ | 32.01 | $ | 27.00 | $ | 25.00 | ||||||||||
| Income from Investment Operations: | ||||||||||||||||||||
| Net investment income 2 | 0.41 | 0.33 | 0.29 | 0.31 | 0.23 | |||||||||||||||
| Net realized and unrealized gain (loss) on investments | 4.54 | 2.08 | 5.51 | 5.09 | 1.87 | |||||||||||||||
| Total from investment operations | 4.95 | 2.41 | 5.80 | 5.40 | 2.10 | |||||||||||||||
| Less Distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.35 | ) | (0.33 | ) | (0.29 | ) | (0.25 | ) | (0.10 | ) | ||||||||||
| Net realized gains | — | — | (0.02 | ) | (0.14 | ) | — | |||||||||||||
| Total distributions | (0.35 | ) | (0.33 | ) | (0.31 | ) | (0.39 | ) | (0.10 | ) | ||||||||||
| Net asset value, end of period/year | $ | 44.18 | $ | 39.58 | $ | 37.50 | $ | 32.01 | $ | 27.00 | ||||||||||
| Total Return | 12.59 | % | 6.53 | % | 18.16 | % | 20.14 | % | 8.43 | %3 | ||||||||||
| Ratios/Supplemental Data: | ||||||||||||||||||||
| Net assets at end of period/year (000’s) | $ | 90,561 | $ | 53,431 | $ | 35,627 | $ | 19,208 | $ | 6,751 | ||||||||||
| Expenses to Average | ||||||||||||||||||||
| Net Assets | 0.45 | % | 0.45 | % | 0.45 | % | 0.45 | % | 0.50 | %4 | ||||||||||
| Net Investment Income to Average Net Assets | 1.00 | % | 0.88 | % | 0.82 | % | 1.03 | % | 1.04 | %4 | ||||||||||
| Portfolio Turnover Rate | 37 | % | 41 | % | 19 | % | 45 | % | 25 | %3 | ||||||||||
| 1 | Commencement of operations on November 18, 2015. |
| 2 | Calculated based on average shares outstanding during the year/period. |
| 3 | Not annualized. |
| 4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
Etho Climate Leadership U.S. ETF
September 30, 2020
NOTE 1 – ORGANIZATION
Etho Climate Leadership U.S. ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Etho Climate Leadership Index™ Index (“the Index”). The Fund commenced operations on November 18, 2015.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Fund may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR(S) for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying Fund’s operations and policies, please refer to those Funds’ semiannual and annual reports, which are filed with the SEC.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2020, the Fund did not hold any securities that were fair valued by the Board.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
| Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. |
| Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
| Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
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.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The following table presents a summary of the inputs used to value the Funds’ net assets as of September 30, 2020:
Etho Climate Leadership U.S. ETF
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 89,629,547 | $ | — | $ | — | $ | 89,629,547 | ||||||||
| Closed-End Funds | 384,209 | — | — | 384,209 | ||||||||||||
| Short-Term Investments | 418,258 | — | — | 418,258 | ||||||||||||
| ETFMG Sit Ultra Short ETF** | 2,489,250 | — | — | 2,489,250 | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 12,729,710 | ||||||||||||
| Total Investments in Securities | $ | 92,921,264 | $ | — | $ | — | $ | 105,650,974 | ||||||||
^ See Schedule of Investments for classifications by sector or country.
* Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments.
** Investment was purchased with collateral.
| B. | Federal Income Taxes. The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.
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. The Fund has analyzed its tax position 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 2020 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; 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.
As of September 30, 2020, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the Fund, and has determined that no provision for income tax is required in the Fund’s financial statements.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries. |
| D. | Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
| E. | Distributions to Shareholders. Distributions to shareholders from net investment income, if any, are declared and paid by the Fund on a quarterly basis. Distributions to shareholders from net realized gains on securities of the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
| F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
| G. | Share Valuation. The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding by the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share. |
| H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in the Etho Climate Leadership U.S. ETF may involve certain risks, as discussed in the Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Investment Style Risk. The Fund is not actively managed. Therefore, the Fund follows the securities included in its respective index during upturns as well as downturns. Because of its indexing strategy, the Fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Fund’s expenses, the Fund’s performance may be below that of its index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that the Fund’s or its underlying index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the Fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increase the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-today operations of the Fund, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Fund to operate.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Under the Investment Advisory Agreement with the Fund, the Advisor has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Advisor bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Advisor at an annual rate of 0.45% of the Fund’s average daily net assets. Under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Fund, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the Purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an agreement with its affiliate, ETFMG Financial, LLC, to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds.
The Advisor has entered into an Agreement with Etho Capital, LLC ( “Etho”), under which Etho agrees to sublicense the use of the Underlying Index to the Advisor. Etho also provides marketing support for the Fund. Etho does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Fund.
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Fund. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the year ended September 30, 2020, the Fund did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
| Purchases | Sales | |||||||
| Etho Climate Leadership U.S. ETF | $ | 32,123,804 | $ | 28,976,613 | ||||
| Purchases |
Sales
|
|||||||
| In-Kind | In-Kind | |||||||
| Etho Climate Leadership U.S. ETF | $ | 31,748,246 | $ | 3,763,991 | ||||
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the determination of the Fund’s taxable gains and are not distributed to shareholders. There were no purchases or sales of U.S. Government obligations for the year ended September 30, 2020.
NOTE 7 — SECURITIES LENDING
The Fund may lend up to 33 1/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. As of September 30, 2019, the Fund had loaned securities and received cash collateral for the loans. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations, either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Advisor; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Advisor. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
As of September 30, 2020, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
| Values of | Fund | |||||||
| Securities | Collateral | |||||||
| Fund | on Loan | Received* | ||||||
| Etho Climate Leadership U.S. ETF | $ | 14,885,334 | $ | 15,114,710 | ||||
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio and ETFMG Sit Ultra Short ETF as shown on the Schedule of Investments, an investment with an overnight and continuous maturity.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2020 were as follows:
| Net | ||||||||||||||||
| Gross | Gross | Unrealized | ||||||||||||||
| Unrealized | Unrealized | Appreciation | ||||||||||||||
| Cost | Appreciation | Depreciation | (Depreciation) | |||||||||||||
| Etho Climate Leadership U.S. ETF | $ | 88,161,127 | $ | 20,317,710 | $ | (2,827,863 | ) | $ | 17,489,847 | |||||||
| Undistributed | Undistributed | Total | Other | Total | ||||||||||||||||
| Ordinary | Long-Term | Distributable | Accumulated | Accumulated | ||||||||||||||||
| Income | Gain | Earnings | (Loss) | Gain | ||||||||||||||||
| Etho Climate Leadership U.S. ETF | $ | 88,247 | $ | — | $ | 88,247 | $ | (5,333,007 | ) | $ | 12,245,087 | |||||||||
As of September 30, 2020, the Fund had accumulated capital loss carryovers of:
| Capital | ||||||||||||
| Loss | Capital Loss | |||||||||||
| Carryover | Carryover | |||||||||||
| ST | LT | Expires | ||||||||||
| Etho Climate Leadership U.S. ETF | $ | (4,735,312 | ) | $ | (597,695 | ) | Indefinite | |||||
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2020.
| Late Year | ||||
| Ordinary | Post-October | |||
| Loss | Capital Loss | |||
| Etho Climate Leadership U.S. ETF | None | None |
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2020, the following table shows the reclassifications made:
| Total | ||||||||
| Distributable | Paid-In | |||||||
| Earnings/(Loss) | Capital | |||||||
| Etho Climate Leadership U.S. ETF | $ | (862,195 | ) | $ | 862,195 | |||
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The tax character of distributions paid by the Fund during the fiscal years ended September 30, 2020 and September 30, 2019 are as follows:
| Year Ended | Year Ended | |||||||||||||||
| September 30, 2020 | September 30, 2019 | |||||||||||||||
| From | From | From | From | |||||||||||||
| Ordinary | Capital | Ordinary | Capital | |||||||||||||
| Income | Gains | Income | Gains | |||||||||||||
| Etho Climate Leadership U.S. ETF | $ | 660,500 |
|
$ | — | $ | 412,276 |
|
$ | |||||||
ETFMG Etho Climate Leadership U.S. ETF
ETFMG Etho Climate Leadership U.S. ETF owned 5% or more of the voting securities of the following company during the year ended September 30, 2020. ETFMG Sit Ultra Short ETF is deemed to be affiliates of the Fund as defined by the 1940 Act as of the year ended September 30, 2020. Transactions during the year in this security was as follows:
| Change in | ||||||||||||||||||||||||||||||||
| Value at | Realized | Unrealized | Value at | |||||||||||||||||||||||||||||
| September 30, | Gain | Appreciation | Dividend | September 30, | Ending | |||||||||||||||||||||||||||
| Security Name | 2019 | Purchases | Sales | (Loss) | (Depreciation) | Income | 2020 | Shares | ||||||||||||||||||||||||
| ETFMG Sit Ultra | ||||||||||||||||||||||||||||||||
| Short ETF * | $ | — | 2,512,856 | — | $ | — | $ | (23,606 | ) | $ | — | $ | 2,489,250 | 50,000 | ||||||||||||||||||
*Affiliate as of September 30, 2020.
NOTE 9 – LEGAL MATTERS
The Trust, the Adviser and certain officers of the Adviser were defendants in an action filed May 2, 2017 in the Superior Court of New Jersey captioned PureShares, LLC d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. C-63-17. The PureShares action alleged claims based on disputes arising out of contractual relationships with the Adviser relating to certain series of the Trust. The action sought damages in unspecified amounts and injunctive relief based on breach of contract, wrongful termination, and several other claims.
The Adviser and its parent, Exchange Traded Managers Group, LLC (the “Company”), were defendants in a case filed on October 26, 2017 in the United States District Court for the Southern District of New York by NASDAQ, Inc. (“Nasdaq”) captioned Nasdaq, Inc. v. Exchange Traded Managers Group, LLC et al., Case 1:17-cv-08252. This action arose out of the same facts and circumstances, and relates to the same series of the Trust, as the New Jersey litigation and asserted claims for breach of contract, conversion and certain other claims. The matter was the subject of a bench trial in May 2019, and on December 20, 2019, the Court issued an Opinion and Order awarding compensatory damages to Plaintiff in the amount of $78,403,172.36, plus prejudgment interest. The Court also denied Plaintiff’s requests for punitive damages and equitable relief.
On May 1, 2020, Nasdaq, PureShares LLC (“PureShares”), and the Company announced a global settlement that resolves all claims in both the PureShares action and the Nasdaq action. The settlement is subject to ongoing negotiations and approvals among independent third parties. As part of the settlement, Nasdaq and the Company have agreed to certain cash payments from the Company to Nasdaq and PureShares, and have executed an asset purchase agreement to transfer certain Company intellectual property and related assets, to a Nasdaq affiliate. If the events set forth in the settlement agreement do not occur, and a subsequent settlement is not reached, the resulting conditions may adversely affect the Adviser’s future operations. However, Management of the Trust and the Fund, after consultation with legal counsel, believes that the resolution of these matters will not have a material adverse effect on the Fund’s financial statements.
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 10 – SUBSEQUENT EVENTS
In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. The evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the Financial statements.
Etho Climate Leadership U.S. ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of Etho Climate Leadership U.S. ETF:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Etho Climate Leadership U.S. ETF (the “Fund”) (a series of ETF Managers Trust) as of September 30, 2020, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, and the related notes (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 September 30, 2020, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, 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 and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2020 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor for one or more series of the Trust since 2013.
New York, New York
November 30, 2020
Etho Climate Leadership U.S. ETF
Six Months Ended September 30, 2020 (Unaudited)
As a shareholder of Etho Climate Leadership U.S. ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (April 1, 2020 to September 30, 2020).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
Etho Climate Leadership U.S. ETF
| Annualized | ||||||||||||||||
| Expense Ratio | ||||||||||||||||
| Ending | During Period | |||||||||||||||
| Beginning | Account Value | Expenses Paid | April 1, 2020 to | |||||||||||||
| Account Value | September 30, | During the | September 30, | |||||||||||||
| April 1, 2020 | 2020 | Period^ | 2020 | |||||||||||||
| Actual | $ | 1,000.00 | $ | 1,346.20 | $ | 2.64 | 0.45 | % | ||||||||
| Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,022.75 | $ | 2.28 | 0.45 | % | ||||||||
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/366 (to reflect the period from April 1, 2020 to September 30, 2020).
Etho Climate Leadership U.S. ETF
September 30, 2020 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of the Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.ethoetf.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2020, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
| Fund Name | QDI |
| Etho Climate Leadership U.S. ETF | 100.00% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2020 was as follows:
| Fund Name | DRD |
| Etho Climate Leadership U.S. ETF | 100.00% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for the Fund was as follows:
| Fund Name | Short-Term Capital Gain |
| Etho Climate Leadership U.S. ETF | 0.00% |
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund files a complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters on Part F of Form N-PORT. Once filed, the Fund’s Part F of Form N-PORT is available without charge, upon request on the SEC’s website (www.sec.gov) and is available by calling (877) 756-7873. The Fund’s portfolio holdings are posted on the Fund’s website at www.ethoetf.com daily.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.ethoetf.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.ethoetf.com. Read the prospectus carefully before investing.
Etho Climate Leadership U.S. ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
Etho Climate Leadership U.S. ETF
Board of Trustees (Continued)
| Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
| Terry Loebs (1963) | Trustee (since 2014) |
Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). |
12 | None |
| Eric Weigel (1960) | Trustee (since 2020) |
Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018) |
12 | None |
Etho Climate Leadership U.S. ETF
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, Inc.
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2020
BlueStar Israel Technology ETF
Ticker: ITEQ
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the Fund’s reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communications electronically.
You may elect to receive all future Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held with your financial intermediary.
The fund is a series of ETF Managers Trust.
BlueStar Israel Technology ETF
TABLE OF CONTENTS
September 30, 2020
BlueStar Israel Technology ETF
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the BlueStar Israel Technology Exchange-Traded Fund (“ITEQ” or the “Fund”). The following information pertains to the fiscal period from October 1, 2019 to September 30, 2020. During this period, market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty regarding the long-term implications continues to exist. Such disruptions, along with various government orders and precautionary measures such as social distancing, business shutdowns and similar policies, led to a reduction in global economic activity. These policies have also resulted in periods of high market volatility which can adversely affect assets of the Fund and thus Fund performance. During the reporting period the COVID-19 pandemic contributed to approximately a five-fold increase in volatility for both the broad market (represented by the Chicago Board Options Exchange Volatility Index) as well as the technology sector (represented by the Chicago Board Options Exchange NDX Volatility Index).
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the BlueStar Israel Global Technology Index (the “Index”).
Over the 12-month period ending September 30, 2020, the total return for the Fund was 39.20% while the total return for the Index was 41.35%. The difference was primarily attributable to Fund expenses that are not a part of the Index. The best performers in the Fund on the basis of contribution to its return were SolarEdge Technologies, Wix.com, and Nice Systems, while the worst performers were Ormat Technologies, Amdocs, and Elbit Systems.
During the reporting period, the Fund saw an average approximate allocation of 32% of its total assets to Software, 16% to IT Services and 15% to Semiconductors & Semiconductor Equipment.
We believe Israeli companies play an essential role in the global high technology value chain. Most technology users, from online shoppers to Fortune 500 companies, use Israeli technology applications and solutions every day without ever being aware of it. Even in industries where Israeli companies do not have dominant individual market share, the collective footprint of Israeli companies is significant in many key technology subsectors, and Israeli-based Research & Development and non-public companies are usually significant contributors to that same sub-industry’s ecosystem.
You can find further details about ITEQ by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS. (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
BlueStar Israel Technology ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | 1 Year | Since Inception | Value of $10,000 | |||||||||
| Year Ended September 30, 2020 | Return | (11/2/2015) |
|
(09/30/2020) |
|
|||||||
| BlueStar Israel Technology ETF (NAV) | 39.20 | % | 17.95 | % | $ | 22,506 | ||||||
| BlueStar Israel Technology ETF (Market) | 39.36 | % | 17.94 | % | $ | 22,495 | ||||||
| S&P 500 Index | 15.15 | % | 12.28 | % | $ | 17,662 | ||||||
| BlueStar Israel Global Technology IndexTM | 41.35 | % | 19.14 | % | $ | 23,636 | ||||||
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 2, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
BlueStar Israel Technology ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| Security | % of Total Investments | |
| 1 | SolarEdge Technologies, Inc. | 8.81% |
| 2 | Novocure, Ltd. | 7.32% |
| 3 | Nice, Ltd. | 6.61% |
| 4 | Wix.com, Ltd. | 6.38% |
| 5 | Check Point Software Technologies, Ltd. | 6.09% |
| 6 | Amdocs, Ltd. | 4.96% |
| 7 | CyberArk Software, Ltd. | 3.16% |
| 8 | Varonis Systems, Inc. | 2.87% |
| 9 | LivePerson, Inc. | 2.65% |
| 10 | Verint Systems, Inc. | 2.47% |
Top Ten Holdings = 51.32% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
BlueStar Israel Technology ETF
Important Disclosures and Key Risk Factors
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
ITEQ
The BlueStar Israel Technology ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the BlueStar Israel Global Technology Index (the “Index”).
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Investment in securities of Israeli companies involves risks that may negatively affect the value of your investment in the Fund. Among other things, Israel’s economy depends on imports of certain key items, such as crude oil, coal, grains, raw materials and military equipment. Foreign investing involves special risks such as currency fluctuations and political uncertainty. Funds that invest in smaller companies may experience greater volatility. Funds that emphasize investments in technology generally will experience greater price volatility. The Fund’s return may not match or achieve a high degree of correlation with the return of the BIGITech® Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC is the investment advisor to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with MV Index Solutions GmbH or its affiliates.
BlueStar Israel Technology ETF
PORTFOLIO ALLOCATIONS
As of September 30, 2020 (Unaudited)
|
BlueStar Israel
Technology ETF |
||||
| As a percent of Net Assets: | ||||
| Guernsey | 5.8 | % | ||
| Israel | 56.7 | |||
| Jersey | 8.8 | |||
| United Kingdom | 2.1 | |||
| United States | 26.0 | |||
| Short-Term and other Net Assets (Liabilities) | 0.6 | |||
| 100.0 | % | |||
BlueStar Israel Technology ETF
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.4% | ||||||||
| Guernsey - 5.8% | ||||||||
| IT Services - 5.8% | ||||||||
| Amdocs, Ltd. | 129,556 |
|
$ | 7,437,810 | ||||
| Israel - 56.7% | ||||||||
| Aerospace & Defense - 2.8% | ||||||||
| Elbit Systems, Ltd. | 25,176 | 3,063,863 | ||||||
| RADA Electronic Industries, Ltd. (a) | 87,941 | 521,490 | ||||||
| Total Aerospace & Defense | 3,585,353 | |||||||
| Biotechnology - 1.1% | ||||||||
| Galmed Pharmaceuticals, Ltd. (a) | 72,640 | 256,419 | ||||||
| Kamada, Ltd. (a) | 69,778 | 595,793 | ||||||
| UroGen Pharma, Ltd. (a)(b) | 28,684 | 553,314 | ||||||
| Total Biotechnology | 1,405,526 | |||||||
| Communications Equipment - 3.7% | ||||||||
| AudioCodes, Ltd. (b) | 31,441 | 989,134 | ||||||
| BATM Advanced Communications (a) | 503,897 | 711,976 | ||||||
| Ceragon Networks, Ltd. (a)(b) | 184,761 | 460,055 | ||||||
| Gilat Satellite Networks, Ltd. (a) | 61,663 | 347,402 | ||||||
| Ituran Location & Control, Ltd. | 34,915 | 486,017 | ||||||
| Radware, Ltd. (a) | 53,622 | 1,299,797 | ||||||
| Silicom, Ltd. (a) | 13,588 | 440,115 | ||||||
| Total Communications Equipment | 4,734,496 | |||||||
| Diversified Financial Services - 1.9% | ||||||||
| Plus500, Ltd. | 120,067 | 2,430,064 | ||||||
| Electronic Equipment, Instruments & Components - 0.2% | ||||||||
| Arad Ltd. | 25,336 | 300,198 | ||||||
| Health Care Equipment & Supplies - 0.7% | ||||||||
| Inmode, Ltd. (a)(b) | 23,952 | 866,583 | ||||||
| Household Durables - 0.9% | ||||||||
| Maytronics, Ltd. | 73,496 | 1,131,077 | ||||||
| Independent Power and Renewable Electricity Producers - 2.3% | ||||||||
| Energix-Renewable Energies, Ltd. (a) | 280,819 | 1,118,948 | ||||||
| Enlight Renewable Energy, Ltd. (a) | 1,017,477 | 1,815,936 | ||||||
| Total Independent Power and Renewable Electricity Producers | 2,934,884 | |||||||
| Internet & Direct Marketing Retail - 2.0% | ||||||||
| Fiverr International, Ltd. (a) | 18,521 | 2,574,048 | ||||||
| IT Services - 10.4% | ||||||||
| Formula Systems 1985, Ltd. | 13,959 | 1,182,503 | ||||||
| Malam-Team, Ltd. | 1,993 | 341,155 | ||||||
| Matrix IT, Ltd. | 47,575 | 1,119,346 | ||||||
| One Software Technologies, Ltd. | 7,114 | 564,435 | ||||||
| Splitit, Ltd. (a)(b) | 568,639 | 555,948 | ||||||
| Wix.com, Ltd. (a)(b) | 37,538 | 9,566,560 | ||||||
| Total IT Services | 13,329,947 | |||||||
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Life Sciences Tools & Services - 1.4% | ||||||||
| Compugen, Ltd. (a)(b) | 107,057 |
|
$ | 1,739,676 | ||||
| Machinery - 2.6% | ||||||||
| Kornit Digital, Ltd. (a) | 51,329 | 3,329,712 | ||||||
| Media - 0.9% | ||||||||
| Perion Network, Ltd. (a) | 67,107 | 468,407 | ||||||
| Tremor International, Ltd. (a) | 247,184 | 593,257 | ||||||
| Total Media | 1,061,664 | |||||||
| Pharmaceuticals - 0.5% | ||||||||
| Redhill Biopharma, Ltd. - ADR (a)(b) | 64,360 | 657,760 | ||||||
| Semiconductors & Semiconductor Equipment - 3.9% | ||||||||
| Camtek, Ltd. (a) | 53,051 | 815,924 | ||||||
| Nova Measuring Instruments, Ltd. (a) | 34,353 | 1,809,055 | ||||||
| Tower Semiconductor, Ltd. (a) | 133,156 | 2,477,945 | ||||||
| Total Semiconductors & Semiconductor Equipment | 5,102,924 | |||||||
| Software - 20.7% (d) | ||||||||
| Allot Communications, Ltd. (a) | 59,656 | 542,870 | ||||||
| Check Point Software Technologies, Ltd. (a) | 75,781 | 9,119,486 | ||||||
| CyberArk Software, Ltd. (a)(b) | 45,751 | 4,731,568 | ||||||
| Hilan, Ltd. | 22,774 | 995,203 | ||||||
| Magic Software Enterprises, Ltd. | 54,407 | 722,631 | ||||||
| Nice, Ltd. (a) | 43,868 | 9,910,221 | ||||||
| Tufin Software Technologies, Ltd. (a)(b) | 45,198 | 372,884 | ||||||
| Total Software | 26,394,863 | |||||||
| Technology Hardware, Storage & Peripherals - 0.7% | ||||||||
| Stratasys, Ltd. (a)(b) | 72,082 | 898,863 | ||||||
| Total Israel | 72,477,638 | |||||||
| Jersey - 8.8% | ||||||||
| Health Care Equipment & Supplies - 8.6% | ||||||||
| Novocure, Ltd. (a)(b) | 98,589 | 10,973,943 | ||||||
| Interactive Media & Services - 0.2% | ||||||||
| XLMedia PLC | 1,077,773 | 309,433 | ||||||
| Total Jersey | 11,283,376 | |||||||
| United Kingdom - 2.1% | ||||||||
| Hotels, Restaurants & Leisure - 1.1% | ||||||||
| 888 Holdings PLC | 446,557 | 1,452,068 | ||||||
| Software - 1.0% (d) | ||||||||
| Sapiens International Corp. NV | 40,312 | 1,257,948 | ||||||
| Total United Kingdom | 2,710,016 | |||||||
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
Schedule of Investments
September 30, 2020 (Continued)
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
Schedule of Investments
September 30, 2020 (Continued)
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
| (a) | Non-income producing security. |
| (b) | All or a portion of this security was out on loan as of September 30, 2020. |
| (c) | The rate quoted is the annualized seven-day yield at September 30, 2020. |
| (d) | As of September 30, 2020, the Fund had a significant portion of its assets invested in the Software Industry |
| (e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2020
|
BlueStar Israel
Technology ETF |
||||
| ASSETS | ||||
| Investments in unaffiliated securities, at value* | $ | 147,340,207 | ||
| Investments in affiliated securities, at value* | 2,489,250 | |||
| Foreign currency* | 195 | |||
| Receivables: | ||||
| Dividends and interest receivable | 121,588 | |||
| Securities lending income receivable | 17,351 | |||
| Other receivable | 38,073 | |||
| Total Assets | $ | 150,006,664 | ||
| LIABILITIES | ||||
| Collateral received for securities loaned (Note 7) | 22,130,039 | |||
| Payables: | ||||
| Unitary fees payable | 74,576 | |||
| Total Liabilities | 22,204,615 | |||
| Net Assets | $ | 127,802,049 | ||
| NET ASSETS CONSIST OF: | ||||
| Paid-in Capital | $ | 95,240,480 | ||
| Total Distributable Earnings | 32,561,569 | |||
| Net Assets | $ | 127,802,049 | ||
| *Identified Cost: | ||||
| Investments in unaffiliated securities | $ | 111,337,014 | ||
| Investments in affiliated securities | 2,512,856 | |||
| Foreign currency | 201 | |||
| Shares Outstanding^ | 2,300,000 | |||
| Net Asset Value, Offering and Redemption Price per Share | $ | 55.57 | ||
^ No par value, unlimited number of shares authorized
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
STATEMENT OF OPERATIONS
For the Year Ended September 30, 2020
|
|
BlueStar Israel
Technology ETF |
|||
| INVESTMENT INCOME | ||||
| Income: | ||||
| Dividends from securities (net of foreign withholdings tax of $76,877) | $ | 403,292 | ||
| Interest | 1,581 | |||
| Securities lending income | 197,684 | |||
| Total Investment Income | 602,557 | |||
| Expenses: | ||||
| Unitary fees | 720,188 | |||
| Total Expenses | 720,188 | |||
| Net Investment Loss | (117,631 | ) | ||
| REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
| Net Realized Gain (Loss) on: | ||||
| Unaffiliated investments | (563,196 | ) | ||
| In-Kind redemptions | 8,900,101 | |||
| Foreign currency and foreign currency translation | (11,053 | ) | ||
| Net Realized Gain on Investments and In-Kind Redemption | 8,325,852 | |||
| Net Change in Unrealized Appreciation of: | ||||
| Unaffiliated investments | 23,906,879 | |||
| Affiliated investments | (23,606 | ) | ||
| Foreign currency and foreign currency translation | (2 | ) | ||
| Net Change in Unrealized Appreciation of Investments | 23,883,271 | |||
| Net Realized and Unrealized Gain on Investments | 32,209,123 | |||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 32,091,492 | ||
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
STATEMENTS OF CHANGES IN NET ASSETS
|
Year Ended
|
Year Ended
|
|||||||
| OPERATIONS | ||||||||
| Net investment income (loss) | $ | (117,631 | ) | $ | (72,720 | ) | ||
| Net realized gain on investments and in-kind redemptions | 8,325,852 | 340,737 | ||||||
| Net change in unrealized appreciation of investments | 23,883,271 | 5,481,582 | ||||||
| Net increase in net assets resulting from operations | 32,091,492 | 5,749,599 | ||||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Net investment income | — | (150,718 | ) | |||||
| Return of Capital | — | (14,773 | ) | |||||
| Total distributions from distributable earnings | — | (165,491 | ) | |||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Net increase in net assets derived from net change in | ||||||||
| outstanding shares | 21,863,905 | 7,019,455 | ||||||
| Net increase in net assets | $ | 53,955,397 | $ | 12,603,563 | ||||
| NET ASSETS | ||||||||
| Beginning of Year | 73,846,652 | 61,243,089 | ||||||
| End of Year | $ | 127,802,049 | $ | 73,846,652 | ||||
Summary of share transactions is as follows:
|
Year Ended
|
Year Ended
|
||||||||||||||||
|
Shares |
Amount |
Shares | Amount | ||||||||||||||
| Shares Sold | 900,000 | $ | 42,363,755 | 500,000 | $ | 19,192,040 | |||||||||||
| Shares Redeemed | (450,000 | ) | (20,499,850 | ) | (350,000 | ) | (12,172,585 | ) | |||||||||
| 450,000 | $ | 21,863,905 | 150,000 | $ | 7,019,455 | ||||||||||||
| Beginning Shares | 1,850,000 | 1,700,000 | |||||||||||||||
| Ending Shares | 2,300,000 | 1,850,000 | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
For a capital share outstanding throughout the year/period
|
Year Ended
September 30, 2020 |
Year Ended
|
Year Ended
|
Year Ended
September 30, 2017 |
Period Ended
September 30, 20161 |
||||||||||||||||
| Net Asset Value, Beginning of Year/Period | $ | 39.92 | $ | 36.03 | $ | 31.38 | $ | 25.58 | $ | 25.00 | ||||||||||
| Income from Investment Operations: | ||||||||||||||||||||
| Net investment income (loss)2 | (0.06 | ) | (0.04 | ) | 0.04 | 0.02 | 0.05 | |||||||||||||
| Net realized and unrealized gain on investments | 15.71 | 4.03 | 4.78 | 5.87 | 0.53 | |||||||||||||||
| Total from investment operations | 15.65 | 3.99 | 4.82 | 5.89 | 0.58 | |||||||||||||||
| Less Distributions: | ||||||||||||||||||||
| Distributions from net investment income | — | (0.09 | ) | (0.17 | ) | (0.09 | ) | — | ||||||||||||
| Return of Capital | — | (0.01 | ) | — | — | — | ||||||||||||||
| Total Distributions | — | (0.10 | ) | (0.17 | ) | (0.09 | ) | — | ||||||||||||
| Net asset value, end of year/period | $ | 55.57 | $ | 39.92 | $ | 36.03 | $ | 31.38 | $ | 25.58 | ||||||||||
| Total Return | 39.20 | % | 11.17 | % | 15.41 | % | 23.16 | % | 2.31 | %3 | ||||||||||
| Ratios/Supplemental Data: | ||||||||||||||||||||
| Net assets at end of year/period (000’s) | $ | 127,802 | $ | 73,847 | $ | 61,243 | $ | 23,538 | $ | 5,116 | ||||||||||
| Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | %4 | ||||||||||
| Net Investment Income (Loss) to Average Net Assets | -0.12 | % | -0.12 | % | 0.12 | % | 0.07 | % | 0.23 | %4 | ||||||||||
| Portfolio Turnover Rate | 19 | % | 24 | % | 11 | % | 19 | % | 14 | %3 | ||||||||||
|
|
1 | Commencement of operations on November 2, 2015. |
|
|
2 | Calculated based on average shares outstanding during the year/period. |
|
|
3 | Not annualized. |
|
|
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
BlueStar Israel Technology ETF
September 30, 2020
NOTE 1 – ORGANIZATION
BlueStar Israel Technology ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the BlueStar Israel Global Technology Index® (BIGITech®” or the “Index”). The Fund commenced operations on November 2, 2015.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NASDAQ Stock Market, LLC. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Fund may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR(S) for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying Fund’s operations and policies, please refer to those Funds’ semiannual and annual reports, which are filed with the SEC.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
|
|
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2020, the Fund did not hold any fair valued securities.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
|
|
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. |
|
|
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
|
|
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
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.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The following is a summary of the inputs used to value the Funds’ net assets as of September 30, 2020:
BlueStar Israel Technology ETF
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 127,112,978 | $ | — | $ | — | $ | 127,112,978 | ||||||||
| Short-Term Investments | 482,190 | — | — | 482,190 | ||||||||||||
| ETFMG Sit Ultra Short ETF** | 2,489,250 | — | — | 2,489,250 | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 19,745,039 | ||||||||||||
| Total Investments in Securities | $ | 130,084,418 | $ | — | $ | — | $ | 149,829,457 | ||||||||
^ See Schedule of Investments for classifications by country and industry.
* Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments.
** Investment was purchased with collateral.
| B. | Federal Income Taxes. The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.
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. The Fund has analyzed its tax position 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 2020 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; 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.
As of September 30, 2020, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the Fund, and has determined that no provision for income tax is required in the Fund’s financial statements.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries. |
| D. | Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
| E. | Distributions to Shareholders. Distributions to shareholders from net investment income, if any are generally declared and paid by the Fund on a quarterly basis. Net realized gains on securities of the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
| F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
| G. | Share Valuation. The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share. |
| H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in the BlueStar Israel Technology ETF may involve certain risks, as discussed in the Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Investment Style Risk. The Fund is not actively managed. Therefore, the Fund follows the securities included in its respective index during upturns as well as downturns. Because of its indexing strategy, the Fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Fund’s expenses, the Fund’s performance may be below that of its index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that the Fund’s or its underlying index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the Fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increase the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Under the Investment Advisory Agreement with the Fund, the Advisor has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Advisor bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Advisor at an annual rate of 0.75% of the Fund’s average daily net assets. Under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Fund, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an agreement with its affiliate, ETFMG Financial, LLC, to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds.
The Advisor has entered into an Agreement with BlueStar Global Investors LLC ( “BlueStar”), under which BlueStar agrees to sublicense the use of the Underlying Index from BlueStar Indexes for use by the Advisor and the Fund. BlueStar also provides marketing support for the Fund, including distributing marketing materials related to the Fund. BlueStar does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Fund. Additionally, BlueStar is not involved in the maintenance of the Underlying Index and does not otherwise act in the capacity of an index provider.
U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (the “Administrator”), provides fund accounting, fund administration, and transfer agency services to the Fund. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the year ended September 30, 2020, the Fund did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the year ended September 30, 2020:
| Purchases | Sales | |||||||
| BlueStar Israel Technology ETF | $ | 18,771,901 | $ | 19,142,018 | ||||
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the year September 30, 2020:
| Purchases | Sales In- | |||||||
| In-Kind | Kind | |||||||
| BlueStar Israel Technology ETF | $ | 41,258,981 | $ | 17,093,958 | ||||
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the determination of the Fund’s taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations for the year September 30, 2020.
NOTE 7 — SECURITIES LENDING
The Fund may lend up to 33 (1/3)% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earns interest on the cash collateral. The amount of fees depends on a number of factors including the type earns of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. As of September 30, 2019, the Fund had loaned securities and received cash collateral for the loans. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations, either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Advisor; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Advisor. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
As of September 30, 2020, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
| Values of | Fund | |||||||
| Securities | Collateral | |||||||
| Fund | on Loan | Received* | ||||||
| BlueStar Israel Technology ETF | $ | 21,777,081 | $ | 22,130,039 | ||||
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, with an overnight and continuous maturity, and ETFMG Sit Ultra Short ETF investment as shown on the Schedule of Investments.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2020 were as follows:
| Net | ||||||||||||||||
| Gross | Gross | Unrealized | ||||||||||||||
| Unrealized | Unrealized | Appreciation | ||||||||||||||
| Cost | Appreciation | Depreciation | (Depreciation) | |||||||||||||
| BlueStar Israel Technology ETF | $ | 117,071,095 | $ | 42,259,445 | $ | (9,501,084 | ) | $ | 32,758,361 | |||||||
| Undistributed | Undistributed | Total | Other | Total | ||||||||||||||||
| Ordinary | Long-Term | Distributable | Accumulated | Accumulated | ||||||||||||||||
| Income | Gain | Earnings | (Loss) | Gain | ||||||||||||||||
| BlueStar Israel Technology ETF | $ | 945,391 | $ | — | $ | 945,391 | $ | (1,142,183 | ) | $ | 32,561,569 | |||||||||
As of September 30, 2020, the Fund had accumulated capital loss carryovers of:
| Capital Loss | Capital Loss | ||||||||||
| Carryover | Carryover | ||||||||||
| ST | LT | Expires | |||||||||
| BlueStar Israel Technology ETF | $ | (913,699 | ) | $ | (228,481 | ) | Indefinite | ||||
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2020.
| Late Year | ||||
| Ordinary | Post-October | |||
| Loss | Capital Loss | |||
| BlueStar Israel Technology ETF | None | None |
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2020, the following table shows the reclassifications made:
| Total | ||||||||
| Distributable | Paid-In | |||||||
| Earnings/(Loss) | Capital | |||||||
| BlueStar Israel Technology ETF | $ | (8,198,574 | ) | $ | 8,150,900 | |||
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The tax character of distributions paid by the Fund during the fiscal years ended September 30, 2020 and September 30, 2019 are as follows:
| Year Ended | Year Ended | |||||||||||||||
| September 30, 2020 | September 30, 2019 | |||||||||||||||
| From | From | From | From | |||||||||||||
| Ordinary | Capital | Ordinary | Capital | |||||||||||||
| Income | Gains | Income | Gains | |||||||||||||
| BlueStar Israel Technology ETF | $ | — | $ | — | $ | 150,718 | $ | — | ||||||||
NOTE 9 – INVESTMENTS IN AFFILIATES
BlueStar Israel Technology ETF
BlueStar Israel Technology ETF owned 5% or more of the voting security of the following company during the year ended September 30, 2020. Secure Works Corp, and ETFMG Sit Ultra Short ETF are deemed to be affiliates of the Fund as defined by the 1940 Act as of the year ended September 30, 2020. Transactions during the year in this security was as follows:
| Change in | ||||||||||||||||||||||||||||||||
| Value at | Realized | Unrealized | Value at | |||||||||||||||||||||||||||||
| September 30, | Gain | Appreciation | Dividend | September 30, | Ending | |||||||||||||||||||||||||||
| Security Name | 2019 | Purchases | Sales | (Loss) | (Depreciation) | Income | 2020 | Shares | ||||||||||||||||||||||||
| ETFMG Sit | ||||||||||||||||||||||||||||||||
| Ultra Short | ||||||||||||||||||||||||||||||||
| ETF * | $ | — | 2,512,856 | — | $ | — | $ | (23,606 | ) | $ | — | $ | 2,489,250 | 50,000 | ||||||||||||||||||
*Affiliate as of September 30, 2020.
NOTE 10 – LEGAL MATTERS
The Trust, the Adviser and certain officers of the Adviser were defendants in an action filed May 2, 2017 in the Superior Court of New Jersey captioned PureShares, LLC d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. C-63-17. The PureShares action alleged claims based on disputes arising out of contractual relationships with the Adviser relating to certain series of the Trust. The action sought damages in unspecified amounts and injunctive relief based on breach of contract, wrongful termination, and several other claims.
The Adviser and its parent, Exchange Traded Managers Group, LLC (the “Company”), were defendants in a case filed on October 26, 2017 in the United States District Court for the Southern District of New York by NASDAQ, Inc. (“Nasdaq”) captioned Nasdaq, Inc. v. Exchange Traded Managers Group, LLC et al., Case 1:17-cv-08252. This action arose out of the same facts and circumstances, and relates to the same series of the Trust, as the New Jersey litigation and asserted claims for breach of contract, conversion and certain other claims. The matter was the subject of a bench trial in May 2019, and on December 20, 2019, the Court issued an Opinion and Order awarding compensatory damages to Plaintiff in the amount of $78,403,172.36, plus prejudgment interest. The Court also denied Plaintiff’s requests for punitive damages and equitable relief.
On May 1, 2020, Nasdaq, PureShares LLC (“PureShares”), and the Company announced a global settlement that resolves all claims in both the PureShares action and the Nasdaq action. The settlement is subject to ongoing negotiations and approvals among independent third parties. As part of the settlement, Nasdaq and the Company have agreed to certain cash payments from the Company to Nasdaq and PureShares, and have executed an asset purchase agreement to transfer certain Company intellectual property and related assets, to a Nasdaq affiliate, subject to shareholder approval. If the events set forth in the settlement agreement do not occur, and a subsequent settlement is not reached, the resulting conditions may adversely affect the Adviser’s future operations. However, Management of the Trust and the Fund, after consultation with legal counsel, believes that the resolution of these matters will not have a material adverse effect on the Fund’s financial statements.
BlueStar Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 11 – SUBSEQUENT EVENTS
In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. The evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.
BlueStar Israel Technology ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of BlueStar Israel Technology ETF:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of BlueStar Israel Technology ETF (the “Fund”) (a series of ETF Managers Trust) as of September 30, 2020, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes (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 September 30, 2020, and the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, 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 and financial highlights. 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 and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2020 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor for one or more series of the Trust since 2013.
New York, NY
November 30, 2020
BlueStar Israel Technology ETF
Six Months Ended September 30, 2020 (Unaudited)
As a shareholder of BlueStar Israel Technology ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (April 1, 2020 to September 30, 2020).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
BlueStar Israel Technology ETF
| Annualized | ||||||||||||||||
| Beginning | Ending | Expenses | Expense Ratio | |||||||||||||
| Account | Account | Paid | During Period | |||||||||||||
| Value | Value | During | April 1, 2020 to | |||||||||||||
| April 1, | September | the | September 30, | |||||||||||||
| 2020 | 30, 2020 | Period^ | 2020 | |||||||||||||
| Actual | $ | 1,000.00 | $ | 1,537.90 | $ | 4.76 | 0.75 | % | ||||||||
| Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.25 | $ | 3.79 | 0.75 | % | ||||||||
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/366 (to reflect the period from April 1, 2020 to September 30, 2020).
BlueStar Israel Technology ETF
September 30, 2020 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of the Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.iteqetf.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2020, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
| Fund Name | QDI |
| BlueStar-Israel Technology ETF | 0.00% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2020 was as follows:
| Fund Name | DRD |
| BlueStar-Israel Technology ETF | 0.00% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for the Fund was as follows:
| Fund Name | Short-Term Capital Gain |
| BlueStar-Israel Technology ETF | 0.00% |
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund files a complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters on Part F of Form N-PORT. Once filed, the Fund’s Part F of Form N-PORT is available without charge, upon request on the SEC’s website (www.sec.gov) and is available by calling (877) 756-7873. The Fund’s portfolio holdings are posted on the Fund’s website at www.iteqetf.com daily.
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.iteqetf.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1 844-383-6477) or by accessing the SEC’s website at www.sec.gov. Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF MGRS (1-844-383-6477) or by visiting www.iteqetf.com. Read the prospectus carefully before investing.
BlueStar Israel Technology ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
BlueStar Israel Technology ETF
Board of Trustees (Continued)
| Name and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
|
Terry Loebs (1963) |
Trustee (since 2014)
|
Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). |
12 | None |
|
Eric Weigel (1960) |
Trustee (since 2020) |
Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018) |
12 | None |
BlueStar Israel Technology ETF
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, Inc.
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2020
ETFMG Alternative Harvest ETF
Ticker: MJ
Beginning on January l, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the Fund’s reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communications electronically.
You may elect to receive all future Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held with your financial intermediary.
The fund is a series of ETF Managers Trust.
ETFMG Alternative Harvest ETF
TABLE OF CONTENTS
September 30, 2020
ETFMG Alternative Harvest ETF
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the ETFMG Alternative Harvest ETF (“MJ” or the “Fund”). The following information pertains to the year ended to September 30, 2020. During this period, market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty regarding the long-term implications continues to exist. Such disruptions, along with various government orders and precautionary measures such as social distancing, business shutdowns and similar policies, led to a reduction in global economic activity. These policies have also resulted in periods of high market volatility which can adversely affect assets of the Fund and thus Fund performance. During the reporting period the COVID-19 pandemic contributed to approximately a five-fold increase in volatility for the broad market (represented by the Chicago Board Options Exchange Volatility Index).
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Alternative Harvest Index (the “Index”).
Over the period, the total return for the Fund was -46.83%, while the total return for the Index was -50.41%. The best performers on the basis of contribution to return were Swedish Match AB, Atena Pharmaceuticals, and Scotts Miracle-Gro, while the worst performers were Hexo, Tilray, and Aurora Cannabis.
During the reporting period, the Fund saw an average approximate allocation of 67% of its total assets to Pharmaceuticals, 24% to Tobacco and 7% to Biotechnology.
We thank you for your interest in the Fund. You can find further details about MJ by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS (1-844-383-6477).
Sincerely,
Samuel Masucci III
Chairman of the Board
ETFMG Alternative Harvest ETF
PORTFOLIO REVIEW (Unaudited)
September 30, 2020
The Fund’s performance figures* for the periods ended September 30, 2020, as compared to its benchmarks:
| One Year |
Annualized
Three Year |
Annualized Since
Inception** - September 30, 2020 |
|
| ETFMG Alternative Harvest ETF - NAV | (46.83)% | (27.68)% | (11.24)% |
| ETFMG Alternative Harvest ETF - Market Price | (46.65)% | (27.78)% | (11.91)% |
| S&P 500 Index *** (1) | 15.15% | 12.28% | 13.05% |
| Solactive Latin America Real Estate Index/Prime Alternative Harvest Index **** (1) | (50.41)% | (28.34)% | (11.55)% |
| Total Fund Operating Expenses (2) | 0.75% |
* 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 redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of the Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. Returns are calculated using the traded Net Asset Value “NAV” on September 30, 2020. Performance data current to the most recent month end may be obtained by visiting www.etfmj.com or by calling 1-844-383-6477.
The Fund’s per share 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. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively. The Fund’s total annual operating expenses are 0.75% per the January 31, 2020 prospectus. Please see the Financial Highlights for a more recent expense ratio.
| ** | As of the close of business on the day of commencement of trading on December 3, 2015. |
| *** | The S&P 500 Index is a widely accepted, unmanaged index of U.S. stock market performance which does not take into account charges, fees and other expenses. |
| **** | Solactive Latin America Real Estate Index/Prime Alternative Harvest Index - The Index tracks real estate companies in the Latin-America region. Weights in these companies depend on market cap, dividend yield, and share liquidity. The higher the dividend yield and share liquidity, the higher the weight of the respective company in the index. The Prime Alternative Harvest Index has been created to provide investors with a product that enables them to take advantage of both event-driven news and long-term trends in the cannabis industry as well as the industries likely to be influenced by the medicinal and recreational cannabis legalization initiatives taking place in many locations globally. |
| (1) | The return reflects the actual performance through September 30, 2020 (the last day of the fiscal year that the New York Stock Exchange was open) to maintain consistency with the Fund’s net asset value calculations used for shareholder transactions. The table reflects performance of the Solactive Latin America Real Estate Index through December 26, 2017 and the Prime Alternative Harvest Index thereafter. |
| (2) | The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2020. |
Comparison of the Change in Value of a $10,000 Investment
| Security |
% of Total
Investments † |
||||||
| 1 | Canopy Growth Corporation | 7.6 | % | ||||
| 2 | Cronos Group, Inc. | 7.5 | % | ||||
| 3 | GW Pharmaceuticals plc | 7.4 | % | ||||
| 4 | Tilray, Inc. | 6.4 | % | ||||
| 5 | HEXO Corporation | 4.7 | % | ||||
| 6 | Aphria, Inc. | 4.5 | % | ||||
| 7 | Aurora Cannabis, Inc. | 4.4 | % | ||||
| 8 | Organigram Holdings, Inc. | 4.1 | % | ||||
| 9 | Arena Pharmaceuticals, Inc. | 3.9 | % | ||||
| 10 | Vector Group Ltd. | 3.6 | % | ||||
| Top Ten Holdings of Total Investments† | 54.1 | % | |||||
* Current Fund holdings may not be indicative of future Fund holdings.
† Percentage of total investments less cash.
Please refer to the Portfolio of Investments in this
Annual Report for a detailed listing of the Fund’s holdings
ETFMG Alternative Harvest ETF
September 30, 2020
Important Disclosures and Key Risk Factors
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
MJ
The ETFMG Alternative Harvest ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Alternative Harvest Index (the “Index”).
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The possession and use of marijuana, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments. Use of marijuana is regulated by both the federal government and state governments, and state and federal laws regarding marijuana often conflict. Even in those states in which the use of marijuana has been legalized, its possession and use remains a violation of federal law. Federal law criminalizing the use of marijuana pre-empts state laws that legalizes its use for medicinal and recreational purposes. Cannabis companies and pharmaceutical companies may never be able to legally produce and sell products in the United States or other national or local jurisdictions.
The Fund’s investments will be concentrated in an industry or group of industries to the extent that the Index is so concentrated. In such event, the value of the Fund’s shares may rise and fall more than the value of shares of a fund that invests in securities of companies in a broader range of industries. The consumer staples sector may be affected by the permissibility of using various product components and production methods, marketing campaigns and other factors affecting consumer demand. Tobacco companies, in particular, may be adversely affected by new laws, regulations and litigation. The consumer staples sector may also be adversely affected by changes or trends in commodity prices, which may be influenced or characterized by unpredictable factors.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC is the investment advisor to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
ETFMG Alternative Harvest ETF
As of September 30, 2020
|
ETFMG
Alternative Harvest ETF |
||||
| As a percent of Net Assets: | ||||
| Canada | 45.1 | % | ||
| United States | 33.5 | % | ||
| United Kingdom | 13.9 | % | ||
| Japan | 3.4 | % | ||
| Sweden | 3.3 | % | ||
| Mexico | 0.0 | %^ | ||
| Short-Term and other Net Assets (Liabilities) | 0.8 | % | ||
| 100.0 | % | |||
| ^ Less than 0.05%. | ||||
ETFMG Alternative Harvest ETF
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.2% | ||||||||
| Canada - 45.1% | ||||||||
| Investment Companies - 7.6% | ||||||||
| Canopy Rivers, Inc. (a) | 1,999,397 | $ | 1,051,089 | |||||
| Cronos Group, Inc. (a) ^ | 7,321,147 | 36,678,947 | ||||||
| Total Investment Companies | 37,730,036 | |||||||
| Pharmaceuticals - 37.5% | ||||||||
| Aphria, Inc. (a) ^ | 4,947,746 | 21,918,515 | ||||||
| Aurora Cannabis, Inc. (a) ^ | 4,618,063 | 21,473,993 | ||||||
| Auxly Cannabis Group, Inc. (a) | 4,508,549 | 440,172 | ||||||
| Canopy Growth Corp. (a) ^ | 2,617,512 | 37,482,772 | ||||||
| Charlottes Web Holdings, Inc. | 1,395,883 | 3,302,190 | ||||||
| Green Organic Dutchman Holdings Ltd. (a) ^ | 19,983,083 | 3,676,809 | ||||||
| HEXO Corp. (a) ^ | 35,381,048 | 23,316,111 | ||||||
| MediPharm Labs Corp. (a) ^ | 7,497,753 | 4,955,145 | ||||||
| Organigram Holdings, Inc. (a) ^ | 19,011,805 | 19,962,395 | ||||||
| PharmaCielo Ltd. (a) | 862,661 | 294,777 | ||||||
| Sundial Growers, Inc. (a) ^ | 3,947,897 | 949,864 | ||||||
| Supreme Cannabis Co., Inc. (a) ^ | 10,079,760 | 1,021,943 | ||||||
| The Flowr Corp. (a) ^ | 1,185,267 | 347,155 | ||||||
| Tilray, Inc. (a) ^ | 6,465,484 | 31,357,597 | ||||||
| Valens Groworks Corp. (a) | 3,112,192 | 3,809,750 | ||||||
| Village Farms International, Inc. (a) ^ | 2,519,911 | 11,541,192 | ||||||
| Total Pharmaceuticals | 185,850,380 | |||||||
| Total Canada | 223,580,416 | |||||||
| Japan - 3.4% | ||||||||
| Tobacco - 3.4% | ||||||||
| Japan Tobacco, Inc. | 922,776 | 16,799,222 | ||||||
| Mexico - 0.0% | ||||||||
| Construction & Engineering - 0.0% | ||||||||
| Empresas ICA SAB de CV (a)(b) | 155,893 | — | ||||||
| Sweden - 3.3% | ||||||||
| Tobacco - 3.3% | ||||||||
| Swedish Match AB | 202,544 | 16,572,882 | ||||||
| United Kingdom - 13.9% | ||||||||
| Pharmaceuticals - 7.4% | ||||||||
| GW Pharmaceuticals PLC - ADR (a) | 375,344 | 36,539,738 | ||||||
| Tobacco - 6.5% | ||||||||
| British American Tobacco PLC | 459,975 | 16,485,272 | ||||||
| Imperial Brands PLC | 911,073 | 16,076,383 | ||||||
| Total Tobacco | 32,561,655 | |||||||
| Total United Kingdom | 69,101,393 | |||||||
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
Schedule of Investments
September 30, 2019 (Continued)
| Shares | Value | |||||||
| United States - 33.5% | ||||||||
| Biotechnology - 7.5% | ||||||||
| Arena Pharmaceuticals, Inc. (a) | 257,829 | $ | 19,283,031 | |||||
| Cara Therapeutics, Inc. (a) | 647,082 | 8,234,118 | ||||||
| Corbus Pharmaceuticals Holdings, Inc. (a) ^ | 3,649,648 | 6,569,366 | ||||||
| Zynerba Pharmaceuticals Inc. (a) ^ | 891,025 | 2,949,293 | ||||||
| Total Biotechnology | 37,035,808 | |||||||
| Chemicals - 3.2% | ||||||||
| Scotts Miracle-Gro Co. | 101,724 | 15,554,617 | ||||||
| Paper & Forest Products - 2.9% | ||||||||
| Schweitzer-Mauduit International, Inc. | 490,912 | 14,918,816 | ||||||
| Specialty Retail - 3.0% | ||||||||
| GrowGeneration Corporation | 935,811 | 14,954,260 | ||||||
| Tobacco - 16.9% | ||||||||
| 22nd Century Group, Inc. (a) ^ | 9,962,568 | 6,384,014 | ||||||
| Altria Group, Inc. | 384,757 | 14,867,011 | ||||||
| Philip Morris International, Inc. | 206,568 | 15,490,534 | ||||||
| Turning Point Brands, Inc. | 483,383 | 13,486,386 | ||||||
| Universal Corp. | 378,897 | 15,868,206 | ||||||
| Vector Group Ltd. | 1,820,357 | 17,639,259 | ||||||
| Total Tobacco | 83,735,410 | |||||||
| Total United States | 166,198,911 | |||||||
| TOTAL COMMON STOCKS (Cost $990,765,082) | 492,252,824 | |||||||
| COLLATERAL FOR SECURITIES LOANED - 25.5% + | ||||||||
| Stock Loan Cash Collateral - 25.5% | ||||||||
| Stock Loan Cash Collateral (Cost $126,295,063) | 126,295,063 | |||||||
| Total Investments (Cost $1,117,060,145) - 124.7% | $ | 618,547,887 | ||||||
| Liabilities in Excess of Other Assets - (24.7)% | (122,577,090 | ) | ||||||
| NET ASSETS - 100.0% | $ | 495,970,797 | ||||||
Percentages are stated as a percent of net assets.
AB - Aktiebolag
ADR - American Depositary Receipt
PLC - Public Limited Company
| (a) | Non-income producing security. |
| (b) | Includes a security that is categorized as Level 3 per the Trust’s fair value hierachy. This security represents $0 or 0.00% of the Fund’s net assets and is classified as a Level 3 security. |
| + | Total cash collateral has a value of $126,295,063 as of September 30, 2020. |
| ^ | All or a portion of this security is out on loan as of September 30, 2020. Total value of securities out on loan is $125,773,187. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P,
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2020
| ASSETS | ||||
| Investments in securities, at value* | $ | 618,547,887 | ||
| Cash | 2,611,354 | |||
| Foreign Cash | 226,012 | |||
| Receivables: | ||||
| Securities lending income receivable | 640,460 | |||
| Dividends and interest receivable | 730,470 | |||
| TOTAL ASSETS | 622,756,183 | |||
| LIABILITIES | ||||
| Collateral received for securities loaned (Note 7) | 126,295,063 | |||
| Payables: | ||||
| Payable for investments purchased | 213,023 | |||
| Management fees payable | 277,300 | |||
| TOTAL LIABILITIES | 126,785,386 | |||
| NET ASSETS | $ | 495,970,797 | ||
| NET ASSETS CONSIST OF: | ||||
| Paid in capital | $ | 1,578,076,062 | ||
| Total accumulated deficit | (1,082,105,265 | ) | ||
| NET ASSETS | $ | 495,970,797 | ||
| *Identified Cost: | ||||
| Investments in securities | $ | 1,117,060,145 | ||
| NET ASSET VALUE PER SHARE: | ||||
| Net Assets | $ | 495,970,797 | ||
| Shares of beneficial interest outstanding ($0 par value, unlimited shares authorized) | 47,850,000 | |||
| Net asset value (Net Assets ÷ Shares Outstanding) | $ | 10.37 | ||
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
STATEMENT OF OPERATIONS
Year Ended September 30, 2020
| INVESTMENT INCOME | ||||
| Dividends (Net of Foreign tax withholdings of $322,106) | $ | 9,478,278 | ||
| Securities Lending Income | 33,492,542 | |||
| TOTAL INVESTMENT INCOME | 42,970,820 | |||
| EXPENSES | ||||
| Management fees | 4,599,419 | |||
| TOTAL EXPENSES | 4,599,419 | |||
| NET INVESTMENT INCOME | 38,371,401 | |||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
| Net realized loss on: | ||||
| In-kind redemptions | (6,727,201 | ) | ||
| Investments | (309,545,337 | ) | ||
| Foreign currency transactions | (232,176 | ) | ||
| (316,504,714 | ) | |||
| Net change in unrealized appreciation (depreciation) on: | ||||
| Investments | (135,956,849 | ) | ||
| Foreign currency translations | 14,177 | |||
| (135,942,672 | ) | |||
| NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS | (452,447,386 | ) | ||
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (414,075,985 | ) | |
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
STATEMENTS OF CHANGES IN NET ASSETS
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
|||||||
| FROM OPERATIONS | ||||||||
| Net investment income | $ | 38,371,401 | $ | 31,100,063 | ||||
| Net realized loss on investments and foreign currency transactions | (316,504,714 | ) | (124,564,183 | ) | ||||
| Net change in unrealized depreciation on investments and foreign currency transactions | (135,942,672 | ) | (487,112,889 | ) | ||||
| Net decrease in net assets resulting from operations | (414,075,985 | ) | (580,577,009 | ) | ||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Total distributions paid: | (37,958,000 | ) | (30,165,500 | ) | ||||
| Net decrease in net assets resulting from distributions to shareholders | (37,958,000 | ) | (30,165,500 | ) | ||||
| FROM SHARES OF BENEFICIAL INTEREST | ||||||||
| Proceeds from shares sold | 203,682,152 | 1,088,901,300 | ||||||
| Cost of shares redeemed | (56,673,991 | ) | (357,641,447 | ) | ||||
| Transaction Fees (Note 1) | 39,219 | 880,806 | ||||||
| Net increase in net assets resulting from shares of beneficial interest | 147,047,380 | 732,140,659 | ||||||
| TOTAL INCREASE (DECREASE) IN NET ASSETS | (304,986,605 | ) | 121,398,150 | |||||
| NET ASSETS | ||||||||
| Beginning of Year | 800,957,402 | 679,559,252 | ||||||
| End of Year | $ | 495,970,797 | $ | 800,957,402 | ||||
| SHARE ACTIVITY | ||||||||
| Shares Sold | 13,200,000 | 32,250,000 | ||||||
| Shares Redeemed | (3,800,000 | ) | (10,900,000 | ) | ||||
| Net increase in shares of beneficial interest outstanding | 9,400,000 | 21,350,000 | ||||||
| Beginning Shares | 38,450,000 | 17,100,000 | ||||||
| Ending Shares | 47,850,000 | 38,450,000 | ||||||
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
For a capital share outstanding throughout the period/year
|
Year Ended
September 30, |
Year Ended
September 30, |
Year Ended
September 30, |
Year Ended
September 30, |
Period Ended
September 30, |
||||||||||||||||
| 2020 | 2019 | 2018 | 2017 | 2016 (1) | ||||||||||||||||
| Net asset value, beginning of period | $ | 20.83 | $ | 39.74 | $ | 31.36 | $ | 29.64 | $ | 25.00 | ||||||||||
| Activity from investment operations: | ||||||||||||||||||||
| Net investment income (2) | 0.91 | 1.02 | 0.37 | 0.57 | 0.98 | |||||||||||||||
| Net realized and unrealized gain (loss) on investments | (10.49 | ) | (18.96 | ) | 8.95 | 4.42 | 4.59 | |||||||||||||
| Total from investment operations | (9.58 | ) | (17.94 | ) | 9.32 | 4.99 | 5.57 | |||||||||||||
| Less distributions from: | ||||||||||||||||||||
| Net investment income | (0.88 | ) | (0.97 | ) | (0.74 | ) | (2.56 | ) | (0.93 | ) | ||||||||||
| Net realized gains | — | — | (0.20 | ) | (0.71 | ) | — | |||||||||||||
| Total distributions | (0.88 | ) | (0.97 | ) | (0.94 | ) | (3.27 | ) | (0.93 | ) | ||||||||||
| Net asset value, end of period | $ | 10.37 | $ | 20.83 | $ | 39.74 | $ | 31.36 | $ | 29.64 | ||||||||||
| Total return (3)(4) | (46.83 | )% | (45.60 | )% | 33.85 | % | 20.23 | % | 22.63 | %(6) | ||||||||||
| Net assets, at end of period (000s) | $ | 495,971 | $ | 800,957 | $ | 679,559 | $ | 6,271 | $ | 2,964 | ||||||||||
| Ratio of net expenses to average net assets (5) | 0.75 | % | 0.75 | % | 0.75 | % | 0.79 | % | 0.79 | % | ||||||||||
| Ratio of net investment income to average net assets (5) | 6.27 | % | 3.26 | % | 1.18 | % | 1.98 | % | 5.88 | % | ||||||||||
| Portfolio Turnover Rate | 46 | % | 71 | % | 97 | % | 44 | % | 44 | %(6) | ||||||||||
| (1) | Commencement of operations on December 2, 2015. |
| (2) | Per share amounts calculated using the average shares method. |
| (3) | Total return is calculated assuming a purchase of shares at net asset value on the first day and a sale at net asset value on the last day of the period. Distributions are assumed, for the purpose of this calculation, to be reinvested at the ex-dividend date net asset value per share on their respective payment dates. |
| (4) | Includes adjustments in accordance with accounting principles generally accepted in the United States and, consequently, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. |
| (5) | Annualized for periods less than one year. |
| (6) | Not annualized. |
The accompanying notes are an integral part of these financial statements.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020
1. ORGANIZATION
ETFMG Alternative Harvest ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”).
The Fund commenced operations on December 2, 2015 as the Tierra XP Latin America Real Estate ETF. Effective December 26, 2017, the Board of Trustees of the Trust approved the following changes to the Fund: a) The Fund’s name was changed to the ETFMG Alternative Harvest ETF; b) the Fund’s underlying index, the Solactive Latin America Real Estate Index, was replaced with the Prime Alternative Harvest Index; c) The Fund’s investment objective was changed to the following: “The ETFMG Alternative Harvest ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Alternative Harvest Index” (the “Index”); and d) the non-fundamental policy that, under normal circumstances, the Fund will not invest less than 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities of real estate related companies in Latin America was eliminated.
The Fund currently offers one class of shares, which has no front-end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and are subject to customary brokerage commissions or fees.
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges are included in “Transaction Fees” in the Statement of Changes in Net Assets.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The Fund may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR(S) for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying Fund’s operations and policies, please refer to those Funds’ semiannual and annual reports, which are filed with the SEC.
Security Valuation - Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used.
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2020, the Fund held one fair valued security which was valued by the board.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Fund has the ability to access.
Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument 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.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
The following table presents a summary of the Funds’ assets measured at fair value as of September 30, 2020:
| ETFMG Alternative Harvest ETF | ||||||||||||||||
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 492,252,824 |
|
$ | — | $ | — | (a) | $ | 492,252,824 | ||||||
| Collateral for Securities Loaned* | — | — | — | 126,295,063 | ||||||||||||
| Total Investments in Securities | $ | 492,252,824 |
|
$ | — | $ | — | $ | 618,547,887 | |||||||
^ See Schedule of Investments for classifications by country and industry.
(a) Includes a security valued at $0.
The ETFMG Alternative Harvest ETF held a Level 3 security at the end of the period. The security classified as Level 3 is deemed immaterial.
| * | Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments. |
Federal Income Taxes - The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made.
To avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.
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. 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 taken in the Fund’s September 30, 2017 – September 30, 2019 tax returns or expected to be taken in the Fund’s September 30, 2020 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; 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.
Management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the Fund, and has determined that no provision for income tax is required in the Fund’s financial statements.
Security transactions and Investment Income – Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Foreign Currency Translations and Transactions - The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis:
| (i) | market value of investment securities, assets and liabilities at the daily rates of exchange, and |
| (ii) | purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
Distributions to shareholders – Distributions to shareholders from net investment income are declared and paid by the Fund on a quarterly basis. Distributions to Shareholders from net realized gains on securities of the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date.
Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Share Valuation - The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share.
Guarantees and Indemnification – In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
3. RISK FACTORS
Investing in the ETFMG Alternative Harvest ETF may involve certain risks, as discussed in the Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
United States Regulatory Risks of the Marijuana Industry: The possession and use of marijuana, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments. Use of marijuana is regulated by both the federal government and state governments, and state and federal laws regarding marijuana often conflict. Even in those states in which the use of marijuana has been legalized, its possession and use remains a violation of federal law. Federal law criminalizing the use of marijuana pre-empts state laws that legalizes its use for medicinal and recreational purposes. Members of the Trump Administration, including former Attorney General Jeff Sessions, have made statements indicating that the Trump Administration intends to take a harsher stance on federal marijuana laws. Any such change in the federal government’s enforcement of current federal laws could adversely affect the ability of the companies in which the Fund invests to possess or cultivate marijuana, including in connection with pharmaceutical research, or it could shrink the customer pool for certain of the Fund’s portfolio companies. Any of these outcomes would negatively affect the profitability and value of the Fund’s investments. The Cannabis Companies and Pharmaceutical Companies may never be able to legally produce and sell products in the United States or other national or local jurisdictions.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Marijuana is a Schedule I controlled substance under the Controlled Substances Act (“CSA”) (21 U.S.C. § 811), meaning that it has a high potential for abuse, has no currently “accepted medical use” in the United States, lacks accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the United States. No drug product containing natural cannabis or naturally-derived cannabis extracts have been approved by the FDA for use in the United States or obtained registrations from the United States Drug Enforcement Administration (“DEA”) for commercial production and the DEA may never issue the registrations required for the commercialization of such products.
Facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered (licensed) to perform these activities and have the security, control, recordkeeping, reporting and inventory mechanisms required by the DEA to prevent drug loss and diversion. Failure to obtain the necessary registrations or comply with necessary regulatory requirements may significantly impair the ability of certain companies in which the Fund invests to pursue medical marijuana research or to otherwise cultivate, possess or distribute marijuana.
Non-U.S. Regulatory Risks of the Marijuana Industry - The companies in which the Fund invests are subject to various laws, regulations and guidelines relating to the manufacture, management, transportation, storage and disposal of marijuana, as well as being subject to laws and regulations relating to health and safety, the conduct of operations and the protection of the environment. Even if a company’s operations are permitted under current law, they may not be permitted in the future, in which case such company may not be in a position to carry on its operations in its current locations. Additionally, controlled substance legislation differs between countries and legislation in certain countries may restrict or limit the ability of certain companies in which the Fund invests to sell their products.
Operational Risks of the Marijuana Industry - Companies involved in the marijuana industry face intense competition, may have limited access to the services of banks, may have substantial burdens on company resources due to litigation, complaints or enforcement actions, and are heavily dependent on receiving necessary permits and authorizations to engage in medical marijuana research or to otherwise cultivate, possess or distribute marijuana. Since the use of marijuana is illegal under United States federal law, federally regulated banking institutions may be unwilling to make financial services available to growers and sellers of marijuana.
Concentration Risk - The Fund’s investments will be concentrated in an industry or group of industries to the extent that the Index is so concentrated. In such event, the value of the Fund’s shares may rise and fall more than the value of shares of a fund that invests in securities of companies in a broader range of industries.
Consumer Staples Sector Risk - The consumer staples sector may be affected by the permissibility of using various product components and production methods, marketing campaigns and other factors affecting consumer demand. Tobacco companies, in particular, may be adversely affected by new laws, regulations and litigation. The consumer staples sector may also be adversely affected by changes or trends in commodity prices, which may be influenced or characterized by unpredictable factors.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Equity Market Risk - The equity securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors that affect securities markets generally or factors affecting specific issuers, industries, or sectors in which the Fund invests such as political, market and economic developments, as well as events that impact specific issuers.
Non-Diversification Risk - Because the Fund is “non-diversified,” it may invest a greater percentage of its assets in the securities of a single issuer or a small number of issuers than if it was a diversified fund. As a result, a decline in the value of an investment in a single issuer or a small number of issuers could cause the Fund’s overall value to decline to a greater degree than if the Fund held a more diversified portfolio. This may increase the Fund’s volatility and have a greater impact on the Fund’s performance.
Securities Lending Risk - Securities lending involves exposure to certain risks, including operational risk (i.e., the risk of losses resulting from problems in the settlement and accounting process), “gap” risk (i.e., the risk of a mismatch between the return on cash collateral reinvestments and the fees a Fund has agreed to pay a borrower), and credit, legal, counterparty and market risk. In the event a borrower does not return a Fund’s securities as agreed, the Fund may experience losses if the proceeds received from liquidating the collateral do not at least equal the value of the loaned security at the time the collateral is liquidated plus the transaction costs incurred in purchasing replacement securities.
Natural Disaster/Epidemic Risk - Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| 4. | MANAGEMENT AND OTHER CONTRACTS |
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Fund to operate.
Under the Investment Advisory Agreement with the Fund, the Advisor has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Advisor bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single management fee. For services provided the Fund pays the Advisor at an annual rate of 0.75% of the Fund’s average daily net assets. Under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Fund, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an Agreement with its affiliate, ETFMG Financial, LLC (the “Distributor”). The Distributor provides marketing support for the Fund, including distributing marketing materials related to the Fund. Level ETF Ventures, LLC (“Level”) serves as the index provider for the Fund. Level is not affiliated with the Fund or the Advisor.
Ultimus Fund Solutions, LLC (“Ultimus”) acts as sub-administrative and sub-accounting agent of the Fund. For its services in this capacity, Ultimus is entitled to a fee based on the average daily net assets of the Fund and subject to a minimum annual fee. In addition to the asset-based fee, Ultimus is entitled to certain non-material fees, as well as out of pocket expenses. The fee paid to Ultimus is paid out of the investment advisory fee paid to the Adviser by the Fund.
Wedbush Securities Inc. (“Wedbush”), a broker-dealer that is a member of a national securities exchange, as defined in the Exchange Act, serves as the custodian of the Fund. Wedbush holds cash, securities and other assets of the Fund as required by the 1940 Act. In May, 2020, Wedbush acquired a minority, non-voting, equity interest in the parent company of the Advisor, Exchange Traded Managers Group, LLC.
The Advisor pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
| 5. | DISTRIBUTION PLAN |
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the year ended September 30, 2020, the Fund did not incur any 12b-1 expenses.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| 6. | PURCHASES AND SALES OF SECURITIES |
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the year ended September 30, 2020:
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the year ended September 30, 2020:
| Purchases | Sales | |||||
| $ | 298,003,220 | $ | 278,013,154 | |||
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the determination of the Fund’s taxable gains and are not distributed to shareholders.
|
Purchases In-Kind |
Sales In-Kind |
|||||
| $ | 193,839,582 | $ | 53,338,167 | |||
There were no purchases or sales of U.S. Government obligations for the year ended September 30, 2020.
| 7. | SECURITIES LENDING |
The Fund may lend up to 33 1⁄3% of the value of the Fund’s total assets to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by Wedbush Securities Inc (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 100% of the value of any loaned securities at the time of the loan. The Fund and the Custodian receive compensation in the form of loan fees. The amount of loan fees depends on a number of factors including the type of security, demand to borrow such security and the length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is held by the Custodian in accordance with the custody agreement. The Custodian and its associated persons will receive compensation in connection with the use of the loaned securities of the Fund. The Fund could experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the Custodian.
As of September 30, 2020, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
|
Values of Securities on Loan |
Fund Collateral Received* |
|||||
| $ | 126,295,063 | $ | 126,295,063 | |||
| * | The securities on loan were collateralized in full with cash, as shown on the Schedule of Investments. |
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| 8. | TAX COMPONENTS OF CAPITAL |
As of September 30, 2020, the components of accumulated earnings/(deficit) on a tax basis were as follows:
|
Undistributed Ordinary Income |
|
Undistributed Long-Term Gains |
Post October Loss and Late Year Loss |
Capital Loss Carry Forwards |
Other Book/Tax Differences |
Unrealized Appreciation/ (Depreciation) |
Total Accumulated Earnings/(Deficits) |
|||||||||||||||||||
| $ | 932,023 | $ | — | $ | (317,435,569 | ) | $ | (161,494,108 | ) | $ | — | $ | (604,107,611 | ) | $ | (1,082,105,265 | ) | |||||||||
The difference between book basis and tax basis undistributed net investment income, unrealized depreciation and accumulated net realized losses from investments is attributable to the tax deferral of losses on wash sales and mark-to-market on passive foreign investment companies. The unrealized depreciation in the table above includes unrealized foreign currency gains of $5,234.
Capital losses incurred after October 31 within the fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. The Fund incurred and elected to defer such capital losses of $317,435,569.
At September 30, 2020, the Fund had capital loss carry forwards for federal income tax purposes available to offset future capital gains as follows:
|
Non-Expiring Short-Term |
Non-Expiring Long-Term |
Total | CLCF Utilized | |||||||||||
| $ | 128,346,757 | $ | 33,147,351 | $ | 161,494,108 | $ | — | |||||||
Permanent book and tax differences, primarily attributable to tax adjustments for realized gains (losses) on in-kind redemptions and tax return updates related to fiscal year ended September 30, 2019, resulted in reclassifications for the year ended September 30, 2020 as follows:
|
Paid In Capital |
Accumulated Earnings (Losses) |
|||||
| $ | (14,942,397 | ) | $ | 14,942,397 | ||
| 9. | DISTRIBUTIONS TO SHAREHOLDERS |
The tax character of distributions paid during the following years was as follows:
| Year Ended September 30, 2020 | Year Ended September 30, 2019 | |||||||||||||
|
From Ordinary Income |
From Capital Gains |
From Ordinary Income |
From Capital Gains |
|||||||||||
| $ | 38,259,296 | $ | — | $ | 30,165,500 | $ | — | |||||||
The difference between ordinary distributions paid from book and ordinary distributions paid from tax relates to allowable foreign tax credits of $301,296 for year ended September 30, 2020 for the Fund which have been passed through to the Fund’s underlying shareholders and are deemed dividends for tax purposes.
ETFMG Alternative Harvest ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
| 10. | AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS |
| Tax Cost |
Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net Unrealized Depreciation |
|||||||||||
| $ | 1,222,660,732 | $ | 25,287,078 | $ | (629,399,923 | ) | $ | (604,112,845 | ) | |||||
| 11. | LEGAL MATTERS |
The Trust, a former and current trustee of the Trust, the Adviser and certain officers of the Adviser were defendants in an action filed May 2, 2017 in the Superior Court of New Jersey captioned PureShares, LLC d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. C-63-17. The PureShares action alleged claims based on disputes arising out of contractual relationships with the Adviser relating to certain series of the Trust. The action sought damages in unspecified amounts and injunctive relief based on breach of contract, wrongful termination, and several other claims.
The Adviser and its parent, ETFMG, were defendants in a case filed on October 26, 2017 in the United States District Court for the Southern District of New York by NASDAQ, Inc. (“Nasdaq”) captioned Nasdaq, Inc. v. Exchange Traded Managers Group, LLC et al., Case 1:17-cv-08252. This action arose out of the same facts and circumstances, and relates to the same series of the Trust, as the New Jersey litigation and asserted claims for breach of contract, conversion and certain other claims. The matter was the subject of a bench trial in May 2019, and on December 20, 2019, the Court issued an Opinion and Order awarding compensatory damages to Plaintiff in the amount of $78,403,172.36, plus prejudgment interest. The Court also denied Plaintiffs requests for punitive damages and equitable relief.
On May 1, 2020, Nasdaq, PureShares LLC (“PureShares”), and ETFMG announced a global settlement that resolves all claims in both the PureShares action and the Nasdaq action. The settlement is subject to future negotiations and approvals among independent third parties. As part of the settlement, Nasdaq and ETFMG have agreed to certain cash payments from ETFMG to Nasdaq and PureShares, and have executed an asset purchase agreement to transfer certain ETFMG intellectual property and related assets, to a Nasdaq affiliate. The Adviser does not believe that the resolution of these matters will have a material adverse effect on the Fund’s financial statements. If the events set forth in the settlement agreement do not occur, and a subsequent settlement is not reached, the resulting conditions may adversely affect the Adviser’s future operations.
| 12. | 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 other than as disclosed in Note 11 above.
ETFMG Alternative Harvest ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of ETFMG Alternative Harvest ETF:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of ETFMG Alternative Harvest ETF (the “Fund”) (a series of ETF Managers Trust), as of September 30, 2020, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes (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 September 30, 2020, and the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, 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 and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2020 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor for one or more series of the Trust since 2013.
New York, New York
November 30, 2020
ETFMG Alternative Harvest ETF
September 30, 2020 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; (2) ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2020 through September 30, 2020.
Actual Expenses
The “Actual” 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 brokerage commissions paid on purchases and sales of Fund shares. 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 Account Value 4/1/2020 |
Ending Account Value 9/30/2020 |
Expenses Paid During Period* 4/1/20-9/30/20 |
Expense Paid During Period**
4/1/20-9/30/20
|
|||||||||||||
| Actual | $ | 1,000.00 | $ | 955.80 | $ | 3.67 | 0.75 | % | ||||||||
|
Hypothetical (5% return before expenses) |
$ | 1,000.00 | $ | 1,021.25 | $ | 3.79 | 0.75 | % | ||||||||
*”Actual” expense information for the Fund is for the period from April 1, 2020 to September 30, 2020. Actual expenses are equal to the Fund’s annualized net expense ratio multiplied by 183/366 (to reflect the period from April 1, 2020 to September 30, 2020). “Hypothetical” expense information for the Fund is presented on the basis of the full one-half year period to enable comparison to other funds. It is based on assuming the same net expense ratio and average account value over the period, but it is multiplied by 183/366 (to reflect the full half-year period).
** Annualized.
ETFMG Alternative Harvest ETF
September 30, 2020 (Unaudited)
INFORMATION ABOUT PORTFOLIO HOLDINGS
Funds file a complete schedule of portfolio holdings with the Securities and Exchange Commission (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.
INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.etfmj.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmj.com. Read the prospectus carefully before investing.
ETFMG Alternative Harvest ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
ETFMG Alternative Harvest ETF
Board of Trustees (Continued)
|
Name and Year of Birth |
Position(s) Held with the Trust, Term of Office and Length of Time Served |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen By Trustee |
Other Directorships Held by Trustee During Past 5 Years |
|
Terry Loebs (1963) |
Trustee (since 2014) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 11 | None |
|
Eric Weigel (1960) |
Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018) | 11 | None |
ETFMG Alternative Harvest ETF
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
Wedbush Securities Inc.
1000 Wilshire Boulevard, Los Angeles, California 90017
Transfer Agent
Computershare Investor Services
480 Washington Boulevard, Jersey City, New Jersey 07310
Securities Lending Agent
Wedbush Securities Inc.
1000 Wilshire Boulevard, Los Angeles, California 90017
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
Annual Report
September 30, 2020
Wedbush ETFMG Video Game Tech ETF
Wedbush ETFMG Global Cloud Technology ETF
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the Fund’s reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communications electronically.
You may elect to receive all future Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held with your financial intermediary.
The funds are a series of ETF Managers Trust.
Wedbush ETFMG TM ETF
TABLE OF CONTENTS
September 30, 2020
Wedbush ETFMG TM ETF
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these Funds. The following information pertains to the fiscal period from October 1, 2019 to September 30, 2020. During this period, market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty regarding the long-term implications continues to exist. Such disruptions, along with various government orders and precautionary measures such as social distancing, business shutdowns and similar policies, led to a reduction in global economic activity. These policies have also resulted in periods of high market volatility which can adversely affect assets of the Funds and thus respective Fund’s performance. During the reporting period the COVID-19 pandemic contributed to approximately a five-fold increase in volatility for both the broad market (represented by the Chicago Board Options Exchange Volatility Index) as well as the technology sector (represented by the Chicago Board Options Exchange NDX Volatility Index).
Performance Overview
During the 12-month period ended September 2020, the S&P 500 Information Technology Sector Index, a broad measure of US listed technology companies, returned 47.23%. During the same period, the S&P Global 1200 Information Technology Sector Index, a broad measure of global technology companies, returned 44.94%. Below is a performance overview for each Fund for the same 12-month period.
Wedbush ETFMG Global Cloud Technology ETF (IVES)*
The Wedbush ETFMG Global Cloud Technology ETF (“IVES”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Dan Ives Global Cloud Technology Prime Index (the “Cloud Technology Index”).
Over the period, the total return for IVES was 18.58%, while the total return for the Cloud Technology Index was 18.60%. The best performers in IVES, on the basis of contribution to return, were Datadog, Elastic NV, and Sinch AB, while the worst performers were Textron, Workhorse Group, and Boeing.
During the reporting period, IVES saw an average approximate allocation of 28% of its total assets to Software, 26% to Aerospace & Defense and 17% to IT Services.
Wedbush ETFMG Video Game Tech ETF (GAMR)**
The Wedbush ETFMG Video Game Tech ETF (“GAMR”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the EE Fund Video Game Tech Index (the “Video Game Index”).
Over the period, the total return for GAMR was 64.12%, while the total return for the Video Game Index was 66.32%. The best performers in GAMR, on the basis of contribution to return, were Bilibili, Stillfront Group AB, and Embracer Group AB, while the worst performers were Konami Holdings, NetDragon Websoft Holdings, and Aeria.
During the reporting period, GAMR saw an average approximate allocation of 69% of its total assets to Entertainment, 7% to Technology Hardware, Storage & Peripherals and 6% to Interactive Media & Services.
Wedbush ETFMG TM ETF
You can find further details about IVES and GAMR by visiting www.etfmg.com, or by calling 1-844-383-6477.
Sincerely,
Samuel Masucci III
Chairman of the Board
*Please be aware that as of Tuesday, April 7, 2020 the following changes went into effect for the ETFMG Drone Economy Strategy ETF (IFLY):
1. The Fund’s name was changed to the Wedbush ETFMG Global Cloud Technology ETF;
2. The Fund’s previous underlying index, the Reality Shares Drone Index (the “Previous Index”), was replaced with the Dan Ives Global Cloud Technology Prime Index; and
3. The Fund’s investment objective was changed to the following: “The Wedbush ETFMG Global Cloud Technology ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Dan Ives Global Cloud Technology Prime Index” (the “Index”).
4. The Fund’s ticker was changed to “IVES”.
**Please be aware that as of Friday, April 17, 2020 the name of the ETFMG Video Game Tech ETF changed to the “Wedbush ETFMG Video Game Tech ETF”.
Wedbush ETFMG TM ETF
ETFMG Global Cloud Technology ETF Growth of $10,000 (Unaudited)
|
Average Annual Returns
Year Ended September 30, 2020 |
1 Year
Return |
Since Inception
(3/8/2016) |
Value of $10,000
(9/30/2020) |
| ETFMG Global Cloud Technology ETF (NAV) | 18.58% | 13.08% | $17,526 |
| ETFMG Global Cloud Technology ETF (Market) | 18.27% | 13.09% | $17,534 |
| S&P 500 Index | 15.15% | 14.58% | $18,612 |
| ETFMG Global Cloud Blended Index | 18.60% | 12.70% | $17,256 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on March 8, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| % of Total | ||||
| Security | Investments | |||
| 1 | ETFMG Sit Ultra Short ETF | 4.26% | ||
| 2 | GDS Holdings Ltd. | 3.85% | ||
| 3 | Elastic NV | 3.61% | ||
| 4 | Itochu Techno-Solutions Corp. | 3.54% | ||
| 5 | Nice, Ltd. | 3.52% | ||
| 6 | Open Text Corp. | 3.38% | ||
| 7 | Datadog, Inc. | 3.23% | ||
| 8 | Kingsoft Cloud Holdings Ltd. | 2.84% | ||
| 9 | Coupa Software, Inc. | 2.76% | ||
| 10 | SCSK Corp. | 2.65% | ||
Top Ten Holdings 33.64% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
Wedbush ETFMG TM ETF
ETFMG Video Game Tech ETF
Growth of $10,000 (Unaudited)
| Average Annual Returns | 1 Year | Since Inception | Value of $10,000 |
| Period Ended September 30, 2020 | Return | (3/8/2016) | (9/30/2020) |
| ETFMG Video Game Tech ETF (NAV) | 64.12% | 25.89% | $28,602 |
| ETFMG Video Game Tech ETF (Market) | 64.78% | 26.02% | $28,742 |
| S&P 500 Index | 15.15% | 14.58% | $18,612 |
| EEFund Video Game Tech Index | 66.32% | 26.26% | $28,991 |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on March 8, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Top Ten Holdings as of September 30, 2020 (Unaudited)*
| % of Total | ||||
| Security | Investments | |||
| 1 | Corsair Gaming, Inc. | 2.50% | ||
| 2 | Gravity Co., Ltd. | 2.25% | ||
| 3 | Sciplay Corp. | 2.11% | ||
| 4 | Stillfront Group AB | 2.00% | ||
| 5 | ETFMG Sit Ultra Short ETF | 1.91% | ||
| 6 | Unity Software, Inc. | 1.89% | ||
| 7 | Paradox Interactive AB | 1.89% | ||
| 8 | Gree, Inc. | 1.87% | ||
| 9 | Glu Mobile, Inc. | 1.86% | ||
| 10 | Zynga, Inc. | 1.84% | ||
Top Ten Holdings 20.12% of Total Investments
* Current Fund holdings may not be indicative of future Fund holdings.
Wedbush ETFMG TM ETF
Important Disclosures and Key Risk Factors
Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.
IVES
The Wedbush ETFMG Global Cloud Technology ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Dan Ives Global Cloud Technology Prime Index (the “Index”).
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Cloud Technology Companies may have limited product lines, markets, financial resources or personnel. These companies typically face intense competition and potentially rapid product obsolescence. In addition, many Cloud Technology Companies store sensitive consumer information and could be the target of cybersecurity attacks and other types of theft, which could have a negative impact on these companies. As a result, Cloud Technology Companies may be adversely impacted by government regulations, and may be subject to additional regulatory oversight with regard to privacy concerns and cybersecurity risk. These companies are also heavily dependent on intellectual property rights and may be adversely affected by loss or impairment of those rights. Cloud computing companies could be negatively impacted by disruptions in service caused by hardware or software failure, or by interruptions or delays in service by third-party data center hosting facilities and maintenance providers. Cloud Technology Companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology. Companies in the technology field, including companies in the computers, telecommunications and electronics industries, face intense competition, which may have an adverse effect on profit margins.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC is the investment advisor to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Wedbush Securities LLC, Prime Indexes or Level ETF Ventures.
Wedbush ETFMG TM ETF
GAMR
The Wedbush ETFMG Video Game Tech ETF (the “Fund” or the “Video Game Tech ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the EEFund Video Game Tech Index™ (the “Index”).
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Video Game Tech Companies face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources or personnel, may have products that face rapid obsolescence, and are heavily dependent on the protection of patent and intellectual property rights. Video Game Tech Companies are also subject to increasing regulatory constraints, particularly with respect to cybersecurity and privacy. Such factors may adversely affect the profitability and value of such companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the EEFund Video Game Tech Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.
ETF Managers Group LLC is the investment adviser to the Fund.
The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with EEFund Management or Wedbush Securities LLC.
Wedbush ETFMG TM ETF
As of September 30, 2020 (Unaudited)
|
Wedbush
ETFMG Global Cloud Technology ETF |
Wedbush
ETFMG Video Game Tech ETF |
|||||||
| As a percent of Net Assets: | ||||||||
| Australia | 3.7 | % | — | % | ||||
| Canada | 4.3 | — | ||||||
| Chile | 0.4 | — | ||||||
| France | — | 1.9 | ||||||
| Germany | 2.1 | |||||||
| Israel | 4.4 | — | ||||||
| Italy | — | 0.6 | ||||||
| Japan | 11.7 | 16.7 | ||||||
| Netherlands | 4.5 | |||||||
| Norway | — | 0.3 | ||||||
| Poland | — | 1.7 | ||||||
| Republic of Korea | 0.2 | 19.0 | ||||||
| Singapore | 2.0 | — | ||||||
| Sweden | 2.8 | 7.6 | ||||||
| Switzerland | — | 0.3 | ||||||
| Taiwan, Province of China | — | 4.5 | ||||||
| United Kingdom | 0.6 | 5.7 | ||||||
| United States | 62.8 | 41.2 | ||||||
| Exchange Traded Funds | 5.3 | 2.0 | ||||||
| Short-Term and other Net Assets (Liabilities) | (4.8 | ) | (1.5 | ) | ||||
| 100.0 | % | 100.0 | % | |||||
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.5% | ||||||||
| Australia - 3.7% | ||||||||
| IT Services - 3.7% (d) | ||||||||
| Data#3, Ltd. | 41,359 |
|
$ | 194,329 | ||||
| Megaport, Ltd. (a) | 41,008 | 472,595 | ||||||
| NEXTDC, Ltd. (a) | 121,638 | 1,069,874 | ||||||
| Total IT Services | 1,736,798 | |||||||
| Canada - 4.3% | ||||||||
| Software - 4.3% (d) | ||||||||
| Open Text Corp. | 46,795 | 1,977,862 | ||||||
| Chile - 0.4% | ||||||||
| IT Services - 0.4% (d) | ||||||||
| SONDA SA | 232,136 | 165,448 | ||||||
| Germany - 2.1% | ||||||||
| Software - 2.1% (d) | ||||||||
| Software AG | 19,687 | 971,297 | ||||||
| Israel - 4.4% | ||||||||
| Software - 4.4% (d) | ||||||||
| Nice, Ltd. (a) | 9,102 | 2,056,233 | ||||||
| Japan - 11.7% | ||||||||
| IT Services - 10.8% (d) | ||||||||
| Hennge KK (a) | 4,252 | 272,138 | ||||||
| i3 Systems, Inc. (a) | 1,339 | 91,285 | ||||||
| Itochu Techno-Solutions Corp. | 54,715 | 2,067,409 | ||||||
| NS Solutions Corp. | 25,328 | 778,104 | ||||||
| SCSK Corp. | 27,852 | 1,550,194 | ||||||
| TechMatrix Corp. | 11,855 | 256,850 | ||||||
| Total IT Services | 5,015,980 | |||||||
| Software - 0.9% (d) | ||||||||
| Cybozu, Inc. | 14,052 | 441,019 | ||||||
| Total Japan | 5,456,999 | |||||||
| Netherlands - 4.5% | ||||||||
| Software - 4.5% (d) | ||||||||
| Elastic NV (a)(b) | 19,540 | 2,108,172 | ||||||
| Republic of Korea - 0.2% | ||||||||
| Diversified Telecommunication Services - 0.2% | ||||||||
| KINX, Inc. | 1,300 | 97,597 | ||||||
| Singapore - 2.0% | ||||||||
| Real Estate Investment Trusts (REITs) - 2.0% | ||||||||
| Keppel DC REIT | 437,009 | 931,611 | ||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Sweden - 2.8% | ||||||||
| Software - 2.8% (d) | ||||||||
| Sinch AB (a) | 15,776 |
|
$ | 1,291,202 | ||||
| United Kingdom - 0.6% | ||||||||
| Software - 0.6% (d) | ||||||||
| Micro Focus International PLC | 90,949 | 288,815 | ||||||
| United States - 62.8% | ||||||||
| Communications Equipment - 0.2% | ||||||||
| Inseego Corp. (a)(b) | 10,732 | 110,754 | ||||||
| IT Services - 20.1% (d) | ||||||||
| 21Vianet Group, Inc. - ADR (a) | 34,883 | 807,890 | ||||||
| Chinasoft International, Ltd. | 725,322 | 524,100 | ||||||
| Fastly, Inc. - Class A (a)(b) | 11,666 | 1,092,871 | ||||||
| GDS Holdings, Ltd. - ADR (a)(b) | 27,497 | 2,250,080 | ||||||
| Kingsoft Cloud Holdings, Ltd. - ADR (a)(b) | 56,130 | 1,657,519 | ||||||
| Limelight Networks, Inc. (a)(b) | 13,485 | 77,674 | ||||||
| MongoDB, Inc. (a)(b) | 6,528 | 1,511,297 | ||||||
| Rackspace Technology, Inc. (a)(b) | 22,189 | 428,026 | ||||||
| SUNeVision Holdings, Ltd. | 623,363 | 508,339 | ||||||
| Switch, Inc. - Class A | 26,574 | 414,820 | ||||||
| Unisys Corp. (a)(b) | 6,960 | 74,263 | ||||||
| Total IT Services | 9,346,879 | |||||||
| Real Estate Investment Trusts (REITs) - 4.1% | ||||||||
| CoreSite Realty Corp. (b) | 4,702 | 558,974 | ||||||
| CyrusOne, Inc. | 12,960 | 907,589 | ||||||
| QTS Realty Trust, Inc. - Class A (b) | 6,786 | 427,654 | ||||||
| Total Real Estate Investment Trusts (REITs) | 1,894,217 | |||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Software - 34.8% (d) | ||||||||
| 8x8, Inc. (a)(b) | 11,513 | $ | 179,027 | |||||
| Alteryx, Inc. - Class A (a)(b) | 7,339 | 833,343 | ||||||
| Anaplan, Inc. (a) | 15,499 | 969,927 | ||||||
| Appfolio, Inc. - Class A (a) | 3,803 | 539,303 | ||||||
| Appian Corp. (a)(b) | 7,716 | 499,611 | ||||||
| Blackbaud, Inc. (b) | 5,476 | 305,725 | ||||||
| Box, Inc. - Class A (a) | 17,294 | 300,224 | ||||||
| Cloudera, Inc. (a) | 34,170 | 372,111 | ||||||
| Cloudflare, Inc. - Class A (a) | 33,903 | 1,392,057 | ||||||
| CommVault Systems, Inc. (a) | 5,124 | 209,059 | ||||||
| Coupa Software, Inc. (a) | 5,874 | 1,610,886 | ||||||
| Datadog, Inc. - Class A (a) | 18,500 | 1,889,960 | ||||||
| Domo, Inc. - Class B (a) | 3,233 | 123,921 | ||||||
| Dropbox, Inc. - Class A (a) | 45,839 | 882,859 | ||||||
| Everbridge, Inc. (a)(b) | 3,820 | 480,289 | ||||||
| Jamf Holding Corp. (a) | 12,976 | 488,027 | ||||||
| MicroStrategy, Inc. - Class A (a) | 1,070 | 161,099 | ||||||
| nCino, Inc. (a) | 9,941 | 792,099 | ||||||
| New Relic, Inc. (a) | 6,654 | 375,019 | ||||||
| Nutanix, Inc. - Class A (a)(b) | 22,308 | 494,791 | ||||||
| PagerDuty, Inc. (a)(b) | 8,774 | 237,863 | ||||||
| Smartsheet, Inc. - Class A (a)(b) | 13,375 | 660,993 | ||||||
| SolarWinds Corp. (a)(b) | 34,641 | 704,598 | ||||||
| Teradata Corp. (a)(b) | 12,040 | 273,308 | ||||||
| Xunlei Ltd. - ADR (a) | 18,274 | 62,863 | ||||||
| Zendesk, Inc. (a) | 12,800 | 1,317,376 | ||||||
| Total Software | 16,156,338 | |||||||
| Technology Hardware, Storage & Peripherals - 3.6% | ||||||||
| NetApp, Inc. | 24,619 | 1,079,298 | ||||||
| Pure Storage, Inc. - Class A (a)(b) | 29,273 | 450,511 | ||||||
| Super Micro Computer, Inc. (a) | 5,843 | 154,255 | ||||||
| Total Technology Hardware, Storage & Peripherals | 1,684,064 | |||||||
| Total United States | 29,192,252 | |||||||
| TOTAL COMMON STOCKS (Cost $34,242,175) | 46,274,286 | |||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 25.7% | ||||||||
| ETFMG Sit Ultra Short ETF (e) | 50,000 |
|
$ | 2,489,250 | ||||
| Mount Vernon Liquid Assets Portfolio, LLC, 0.18% (c) | 9,482,214 | 9,482,214 | ||||||
| TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $11,970,163) | 11,971,464 | |||||||
| SHORT-TERM INVESTMENTS - 0.4% | ||||||||
| Money Market Funds - 0.4% | ||||||||
| Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02%(c) | 200,848 | 200,848 | ||||||
| TOTAL SHORT-TERM INVESTMENTS (Cost $200,848) | 200,848 | |||||||
| Total Investments (Cost $46,413,186) - 125.6% | 58,446,598 | |||||||
| Liabilities in Excess of Other Assets - (25.6)% | (11,931,107 | ) | ||||||
| TOTAL NET ASSETS - 100.0% | $ | 46,515,491 | ||||||
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
| (a) | Non-income producing security. |
| (b) | All or a portion of this security was out on loan as of September 30, 2020. |
| (c) | The rate shown is the annualized seven-day yield at September 30, 2020. |
| (d) | As of September 30, 2020, the Fund had a significant portion of its assets in the Software & IT Services Industries. |
| (e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2020
| Shares | Value | |||||||
| COMMON STOCKS - 99.5% | ||||||||
| France - 1.9% | ||||||||
| Entertainment - 1.9% (d) | ||||||||
| Ubisoft Entertainment SA (b) | 25,049 |
|
$ | 2,263,165 | ||||
| Italy - 0.6% | ||||||||
| Entertainment - 0.6% (d) | ||||||||
| Digital Bros SpA | 27,386 | 687,130 | ||||||
| Japan - 16.7% | ||||||||
| Entertainment - 13.2% (d) | ||||||||
| Aeria, Inc. | 146,431 | 705,324 | ||||||
| Aiming, Inc. (a)(b) | 104,740 | 694,195 | ||||||
| Capcom Co., Ltd. | 42,786 | 2,377,338 | ||||||
| COLOPL, Inc. | 33,880 | 288,477 | ||||||
| DeNa Co., Ltd. | 17,250 | 316,001 | ||||||
| Gumi, Inc. | 63,234 | 580,387 | ||||||
| GungHo Online Entertainment, Inc. | 14,422 | 308,638 | ||||||
| KLab, Inc. (b) | 81,617 | 727,445 | ||||||
| Koei Tecmo Holdings Co., Ltd. | 7,560 | 362,714 | ||||||
| Konami Holdings Corp. | 51,877 | 2,233,173 | ||||||
| Marvelous, Inc. | 95,621 | 725,329 | ||||||
| Nexon Co., Ltd. | 91,374 | 2,271,679 | ||||||
| Nintendo Co., Ltd. | 3,937 | 2,227,103 | ||||||
| Square Enix Holdings Co., Ltd. | 34,960 | 2,307,131 | ||||||
| Total Entertainment | 16,124,934 | |||||||
| Household Durables - 1.0% | ||||||||
| Sony Corp. - ADR (b) | 16,647 | 1,277,657 | ||||||
| Interactive Media & Services - 2.0% | ||||||||
| Gree, Inc. | 504,732 | 2,440,746 | ||||||
| Leisure Products - 0.5% | ||||||||
| Bandai Namco Holdings, Inc. | 4,607 | 335,877 | ||||||
| Sega Sammy Holdings, Inc. | 25,309 | 306,688 | ||||||
| Total Leisure Products | 642,565 | |||||||
| Total Japan | 20,485,902 | |||||||
| Norway - 0.3% | ||||||||
| Semiconductors & Semiconductor Equipment - 0.3% | ||||||||
| Nordic Semiconductor ASA (b) | 30,099 | 309,783 | ||||||
| Poland - 1.7% | ||||||||
| Entertainment - 1.7% (d) | ||||||||
| CD Projekt SA (b) | 19,193 | 2,077,496 | ||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Republic of Korea - 19.0% | ||||||||
| Entertainment - 18.2% (d) | ||||||||
| Com2uS Corp. | 20,938 |
|
$ | 2,051,727 | ||||
| Gravity Co., Ltd. - ADR | 20,408 | 2,925,486 | ||||||
| NCSoft Corp. | 3,192 | 2,199,873 | ||||||
| Neowiz (b) | 89,263 | 1,961,573 | ||||||
| Netmarble Corp. | 14,229 | 2,019,679 | ||||||
| Nexon GT Co., Ltd. (b) | 145,053 | 1,891,456 | ||||||
| NHN Corp. (b) | 32,760 | 2,084,091 | ||||||
| Pearl Abyss Corp. (b) | 12,964 | 2,241,403 | ||||||
| Webzen, Inc. (b) | 68,800 | 2,082,531 | ||||||
| WeMade Entertainment Co., Ltd. | 68,709 | 2,191,403 | ||||||
| Wysiwyg Studios Co., Ltd. (b) | 182,175 | 665,924 | ||||||
| Total Entertainment | 22,315,146 | |||||||
| Hotels, Restaurants & Leisure - 0.5% | ||||||||
| ME2ON Co., Ltd. (b) | 118,945 | 648,883 | ||||||
| Interactive Media & Services - 0.3% | ||||||||
| AfreecaTV Co., Ltd. | 6,213 | 311,845 | ||||||
| Total Republic of Korea | 23,275,874 | |||||||
| Sweden - 7.6% | ||||||||
| Entertainment - 6.8% (d) | ||||||||
| Embracer Group AB (b) | 118,147 | 2,200,452 | ||||||
| G5 Entertainment AB | 18,378 | 770,346 | ||||||
| Modern Times Group MTG - Class B | 21,771 | 305,567 | ||||||
| Paradox Interactive AB | 72,108 | 2,455,707 | ||||||
| Stillfront Group AB (b) | 20,800 | 2,610,495 | ||||||
| Total Entertainment | 8,342,567 | |||||||
| Hotels, Restaurants & Leisure - 0.6% | ||||||||
| LeoVegas AB | 170,300 | 722,209 | ||||||
| Technology Hardware, Storage & Peripherals - 0.2% | ||||||||
| Tobii AB (b) | 50,139 | 296,439 | ||||||
| Total Sweden | 9,361,215 | |||||||
| Switzerland - 0.3% | ||||||||
| Technology Hardware, Storage & Peripherals - 0.3% | ||||||||
| Logitech International SA (a) | 4,344 | 335,835 | ||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Taiwan, Province of China - 4.5% | ||||||||
| Entertainment - 1.2% (d) | ||||||||
| Gamania Digital Entertainment Co., Ltd. | 314,336 | $ | 679,422 | |||||
| Softstar Entertainment, Inc. (b) | 274,939 | 756,600 | ||||||
| Total Entertainment | 1,436,022 | |||||||
| Technology Hardware, Storage & Peripherals - 3.3% | ||||||||
| Acer, Inc. | 365,299 | 312,804 | ||||||
| Asustek Computer, Inc. | 35,150 | 307,663 | ||||||
| HTC Corp. | 1,247,705 | 1,232,110 | ||||||
| Micro-Star International Co., Ltd. | 473,432 | 2,174,105 | ||||||
| Total Technology Hardware, Storage & Peripherals | 4,026,682 | |||||||
| Total Taiwan, Province of China | 5,462,704 | |||||||
| United Kingdom - 5.7% | ||||||||
| Entertainment - 3.9% (d) | ||||||||
| Codemasters Group Holdings PLC (b) | 451,847 | 2,128,109 | ||||||
| Frontier Developments PLC (b) | 36,122 | 1,267,798 | ||||||
| Team17 Group PLC (b) | 147,181 | 1,321,814 | ||||||
| Total Entertainment | 4,717,721 | |||||||
| IT Services - 1.8% | ||||||||
| Keywords Studios PLC | 76,927 | 2,159,967 | ||||||
| Total United Kingdom | 6,877,688 | |||||||
| United States - 41.2% | ||||||||
| Computer and Peripheral Equipment Manufacturing - 2.7% | ||||||||
| Corsair Gaming, Inc. (b) | 161,817 | 3,252,522 | ||||||
| Entertainment - 22.8% (d) | ||||||||
| Activision Blizzard, Inc. | 28,187 | 2,281,738 | ||||||
| Bilibili, Inc. - ADR (a)(b) | 51,087 | 2,125,219 | ||||||
| DouYu International Holdings Ltd. - ADR (a)(b) | 139,011 | 1,836,335 | ||||||
| Electronic Arts, Inc. (b) | 17,440 | 2,274,350 | ||||||
| HUYA, Inc. - ADR (a)(b) | 11,700 | 280,215 | ||||||
| Glu Mobile, Inc. (b) | 315,771 | 2,423,542 | ||||||
| iDreamSky Technology Holdings, Ltd. (b) | 3,066,813 | 1,840,076 | ||||||
| IGG, Inc. | 1,922,491 | 2,190,385 | ||||||
| Leyou Technologies Holdings, Ltd. (b) | 5,241,007 | 2,197,827 | ||||||
| NetDragon Websoft Holdings, Ltd. | 991,460 | 2,149,216 | ||||||
| NetEase, Inc. - ADR | 662 | 300,992 | ||||||
| Sciplay Corp. - Class A (b) | 169,843 | 2,754,852 | ||||||
| Sea, Ltd. - ADR (a)(b) | 2,163 | 333,189 | ||||||
| Take-Two Interactive Software, Inc. (b) | 14,315 | 2,365,124 | ||||||
| Zynga, Inc. - Class A (a)(b) | 263,205 | 2,400,430 | ||||||
| Total Entertainment | 27,753,490 | |||||||
| Household Durables - 0.6% | ||||||||
| Turtle Beach Corp. (a)(b) | 41,113 | 748,257 | ||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| Interactive Media & Services - 3.2% | ||||||||
| Alphabet, Inc. - Class C (b) | 850 | $ | 1,249,160 | |||||
| JOYY, Inc. | 4,028 | 324,939 | ||||||
| Momo, Inc. - ADR | 21,265 | 292,606 | ||||||
| SINA Corp. (b) | 7,565 | 322,345 | ||||||
| Sohu.com, Ltd. - ADR (b) | 16,543 | 328,544 | ||||||
| Tencent Holdings, Ltd. | 19,350 | 1,277,092 | ||||||
| Total Interactive Media & Services | 3,794,686 | |||||||
| Semiconductors & Semiconductor Equipment - 3.7% | ||||||||
| Advanced Micro Devices, Inc. (a)(b) | 16,876 | 1,383,663 | ||||||
| Intel Corp. | 26,143 | 1,353,685 | ||||||
| NVIDIA Corp. | 2,648 | 1,433,150 | ||||||
| Qualcomm, Inc. | 2,660 | 313,029 | ||||||
| Total Semiconductors & Semiconductor Equipment | 4,483,527 | |||||||
| Software - 4.0% | ||||||||
| Cheetah Mobile, Inc. - ADR | 360,950 | 743,557 | ||||||
| Kingsoft Corp., Ltd. | 60,744 | 302,934 | ||||||
| Microsoft Corp. | 6,314 | 1,328,024 | ||||||
| Unity Software, Inc. (b) | 28,172 | 2,458,852 | ||||||
| Total Software | 4,833,367 | |||||||
| Specialty Retail - 1.0% | ||||||||
| GameStop Corp. - Class A (a)(b) | 115,575 | 1,178,865 | ||||||
| Technology Hardware, Storage & Peripherals - 3.2% | ||||||||
| Apple, Inc. | 11,503 | 1,332,162 | ||||||
| Immersion Corp. (b) | 84,395 | 594,985 | ||||||
| Razer, Inc. (b) | 8,711,052 | 1,966,999 | ||||||
| Total Technology Hardware, Storage & Peripherals | 3,894,146 | |||||||
| Total United States | 49,938,860 | |||||||
| TOTAL COMMON STOCKS (Cost $93,799,184) | 121,075,652 | |||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
Schedule of Investments
September 30, 2020 (Continued)
| Shares | Value | |||||||
| INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 7.1% | ||||||||
| ETFMG Sit Ultra Short ETF (e) | 50,000 | $ | 2,489,250 | |||||
| Mount Vernon Liquid Assets Portfolio, LLC, 0.18% (c) | 6,152,606 | 6,152,606 | ||||||
| TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $8,656,991) | 8,641,856 | |||||||
| SHORT-TERM INVESTMENTS - 0.4% | ||||||||
| Money Market Funds - 0.4% | ||||||||
| Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02% (c) | 546,010 | 546,010 | ||||||
| TOTAL SHORT-TERM INVESTMENTS (Cost $546,010) | 546,010 | |||||||
| Total Investments (Cost $103,002,185) - 107.0% |
|
130,263,518 | ||||||
| Liabilities in Excess of Other Assets - (7.0)% | (8,564,912 | ) | ||||||
| TOTAL NET ASSETS - 100.0% |
|
|
$ | 121,698,606 | ||||
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
| (a) | All or a portion of this security was out on loan as of September 30, 2020. |
| (b) | Non-income producing security. |
| (c) | The rate shown is the annualized seven-day yield at September 30, 2020. |
| (d) | As of September 30, 2020, the Fund had a significant portion of its assets in the Entertainment Industry. |
| (e) | Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 2020
|
|
||||||||
|
Wedbush
|
Wedbush
|
|||||||
| ASSETS | ||||||||
| Investments in unaffiliated securities, at value* | $ | 55,957,348 | $ | 127,774,268 | ||||
| Investments in affiliated securities, at value* | 2,489,250 | 2,489,250 | ||||||
| Total Investments in securities, at value | 58,446,598 | 130,263,518 | ||||||
| Foreign currency* | — | 1,537 | ||||||
| Dividends and interest receivable | 60,755 | 58,199 | ||||||
| Securities lending income receivable | 3,827 | 12,186 | ||||||
| Receivable for investments sold | — | 5,705,194 | ||||||
| Total Assets | 58,511,180 | 136,040,634 | ||||||
| LIABILITIES | ||||||||
| Collateral received for securities loaned (Note 7) | 11,970,163 | 8,537,606 | ||||||
| Payables: | ||||||||
| Payable for investments purchased | — | 5,730,056 | ||||||
| Management fees payable | 25,526 | 74,366 | ||||||
| Total Liabilities | 11,995,689 | 14,342,028 | ||||||
| Net Assets | $ | 46,515,491 | $ | 121,698,606 | ||||
| NET ASSETS CONSIST OF: | ||||||||
| Paid-in Capital | $ | 45,154,628 | $ | 112,512,566 | ||||
| Total Distributable Earnings | 1,360,863 | 9,186,040 | ||||||
| Net Assets | $ | 46,515,491 | $ | 121,698,606 | ||||
| *Identified Cost: | ||||||||
| Investments in unaffiliated securities | $ | 43,925,237 | $ | 100,497,800 | ||||
| Investments in affiliated securities | 2,487,949 | 2,504,385 | ||||||
| Foreign currency | — | 1,561 | ||||||
| Shares Outstanding^ | 1,100,000 | 1,800,000 | ||||||
| Net Asset Value, Offering and Redemption Price per Share | $ | 42.29 | $ | 67.61 | ||||
| ^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 2020
|
Wedbush
|
Wedbush
|
|||||||
| INVESTMENT INCOME | ||||||||
| Income: | ||||||||
| Dividends from unaffiliated securities (net of foreign withholdings tax of $19,171, $64,668) | $ | 288,802 | $ | 935,063 | ||||
| Interest | 1,210 | 2,064 | ||||||
| Securities lending income | 240,750 | 186,337 | ||||||
| Total Investment Income | 530,762 | 1,123,464 | ||||||
| Expenses: | ||||||||
| Management fees | 268,788 | 672,253 | ||||||
| Total Expenses | 268,788 | 672,253 | ||||||
| Net Investment Income | 261,974 | 451,211 | ||||||
| REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||
| Net Realized Gain (Loss) on: | ||||||||
| Unaffiliated Investments | (6,217,937 | ) | (114,271 | ) | ||||
| Affiliated Investments | (49,387 | ) | — | |||||
| In-Kind redemptions | 2,875,609 | 10,157,604 | ||||||
| Foreign currency and foreign currency translation | (30,034 | ) | (16,449 | ) | ||||
| Net Realized Gain (Loss) on Investments and In-Kind redemptions | (3,421,749 | ) | 10,026,884 | |||||
| Net Change in Unrealized Appreciation (Depreciation) of: | ||||||||
| Unaffiliated Investments | 10,336,962 | 35,845,635 | ||||||
| Affiliated Investments | 1,301 | (15,135 | ) | |||||
| Foreign currency and foreign currency translation | (1,401 | ) | (24 | ) | ||||
| Net change in Unrealized Appreciation (Depreciation) of Investments | 10,336,862 | 35,830,476 | ||||||
| Net Realized and Unrealized Gain (Loss) on Investments | 6,915,113 | 45,857,360 | ||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 7,177,087 | $ | 46,308,571 | ||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
STATEMENTS OF CHANGES IN NET ASSETS
|
Year Ended
September 30, 2020 |
Year Ended
September 30, 2019 |
|||||||
| OPERATIONS | ||||||||
| Net investment income (loss) | $ | 261,974 | $ | 326,490 | ||||
| Net realized gain (loss) on investments and In-Kind Redemptions | (3,421,749 | ) | (1,104,431 | ) | ||||
| Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | 10,336,862 | (3,859,005 | ) | |||||
| Net increase (decrease) in net assets resulting from operations | 7,177,087 | (4,636,946 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Total distributions from distributable earnings | (226,000 | ) | (326,484 | ) | ||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares | 1,842,050 | (8,088,245 | ) | |||||
| Transaction Fees (See Note 1) | 2,150 | 1,012 | ||||||
| Net increase (decrease) in net assets from capital share transactions | 1,844,200 | (8,087,233 | ) | |||||
| Total increase (decrease) in net assets | $ | 8,795,287 | $ | (13,050,663 | ) | |||
| NET ASSETS | ||||||||
| Beginning of Year | 37,720,204 | 50,770,867 | ||||||
| End of Year | $ | 46,515,491 | $ | 37,720,204 | ||||
Summary of share transactions is as follows:
|
Year Ended
|
Year Ended
|
||||||||||||||||
|
Shares |
Amount |
Shares | Amount | ||||||||||||||
| Shares Sold | 350,000 | $ | 12,901,765 | 250,000 | $ | 8,965,040 | |||||||||||
| Transaction Fees (See Note 1) | — | 2,150 | — | 1,012 | |||||||||||||
| Shares Redeemed | (300,000 | ) | (11,059,715 | ) | (500,000 | ) | (17,053,285 | ) | |||||||||
| Net Transactions in Fund Shares | 50,000 | $ | 1,844,200 | (250,000 | ) | $ | (8,087,233 | ) | |||||||||
| Beginning Shares | 1,050,000 | 1,300,000 | |||||||||||||||
| Ending Shares | 1,100,000 | 1,050,000 | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
STATEMENTS OF CHANGES IN NET ASSETS
|
Year Ended
|
Year Ended
|
|||||||
| OPERATIONS | ||||||||
| Net investment gain (loss) | $ | 451,211 | $ | 1,178,862 | ||||
| Net realized gain (loss) on investments and In-Kind Redemptions | 10,026,884 | (14,064,092 | ) | |||||
| Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation | 35,830,476 | (3,031,697 | ) | |||||
| Net increase (decrease) in net assets resulting from operations | 46,308,571 | (15,916,927 | ) | |||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
| Total distributions from distributable earnings | (726,000 | ) | (1,402,817 | ) | ||||
| CAPITAL SHARE TRANSACTIONS | ||||||||
| Net increase (decrease) in net assets derived from net change in outstanding shares | (6,893,375 | ) | (30,318,420 | ) | ||||
| Transaction Fees (See Note 1) | 8,922 | 29,433 | ||||||
| Net increase (decrease) in net assets from capital share transactions | (6,884,453 | ) | (30,288,987 | ) | ||||
| Total increase (decrease) in net assets | $ | 38,698,118 | $ | (47,608,731 | ) | |||
| NET ASSETS | ||||||||
| Beginning of Year | 83,000,488 | 130,609,219 | ||||||
| End of Year | $ | 121,698,606 | $ | 83,000,488 | ||||
Summary of share transactions is as follows:
|
Year Ended
|
Year Ended
|
||||||||||||||||
|
Shares |
Amount |
Shares | Amount | ||||||||||||||
| Shares Sold | 400,000 | $ | 24,396,890 | 350,000 | $ | 14,348,180 | |||||||||||
| Transaction Fees (See Note 1) | — | 8,922 | — | 29,433 | |||||||||||||
| Shares Redeemed | (600,000 | ) | (31,290,265 | ) | (1,100,000 | ) | (44,666,600 | ) | |||||||||
| Net Transactions in Fund Shares | (200,000 | ) | $ | (6,884,453 | ) | (750,000 | ) | $ | (30,288,987 | ) | |||||||
| Beginning Shares | 2,000,000 | 2,750,000 | |||||||||||||||
| Ending Shares | 1,800,000 | 2,000,000 | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Global Cloud Technology ETF
For a capital share outstanding throughout the year/period
|
Year Ended
September 30, 2020 |
Year Ended
|
Year Ended
|
Year Ended
September 30, 2017 |
Period Ended
September 30, 20161 |
||||||||||||||||
| Net Asset Value, Beginning of Year/Period | $ | 35.92 | $ | 39.05 | $ | 36.14 | $ | 26.75 | $ | 25.00 | ||||||||||
| Income from Investment Operations: | ||||||||||||||||||||
| Net investment income 2 | 0.26 | 0.28 | 0.15 | 0.27 | 0.11 | |||||||||||||||
| Net realized and unrealized gain (loss) on investments | 6.34 | (3.11 | ) | 3.08 | 9.26 | 1.68 | ||||||||||||||
| Total from investment operations | 6.60 | (2.83 | ) | 3.23 | 9.53 | 1.79 | ||||||||||||||
| Less Distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.23 | ) | (0.30 | ) | (0.13 | ) | (0.04 | ) | (0.04 | ) | ||||||||||
| Net realized gains | — | — | (0.19 | ) | (0.10 | ) | — | |||||||||||||
| Total distributions | (0.23 | ) | (0.30 | ) | (0.32 | ) | (0.14 | ) | (0.04 | ) | ||||||||||
| Net asset value, end of year/period | $ | 42.29 | $ | 35.92 | $ | 39.05 | $ | 36.14 | $ | 26.75 | ||||||||||
| Total Return | 18.58 | % | -7.23 | % | 9.03 | % | 36.39 | % | 7.15 | %3 | ||||||||||
| Ratios/Supplemental Data: | ||||||||||||||||||||
| Net assets at end of year/period (000’s) | $ | 46,515 | $ | 37,720 | $ | 50,771 | $ | 37,948 | $ | 6,686 | ||||||||||
| Expenses to Average Net Assets before legal expense | 0.71 | %5 | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | %4 | ||||||||||
| Gross Expenses to Average Net Assets | 0.71 | %5 | 0.75 | % | 0.75 | % | 0.79 | %6 | 0.75 | %4 | ||||||||||
| Net Investment Income to Average Net Assets | 0.70 | % | 0.83 | % | 0.42 | % | 0.87 | % | 0.68 | %4 | ||||||||||
| Portfolio Turnover Rate | 104 | % | 38 | % | 42 | % | 21 | % | 13 | %3 | ||||||||||
| 1 | Commencement of operations on March 8, 2016. |
| 2 | Calculated based on average shares outstanding during the year/period. |
| 3 | Not annualized. |
| 4 | Annualized. |
| 5 | Effective April 7, 2020, the Fund’s expense ratio was reduced to 0.68%. |
|
|
6 | The ratio of expenses to average net assets includes legal expense. |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
Wedbush ETFMG Video Game Tech ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the year/period
|
Year Ended
September 30, 2020 |
Year Ended
|
Year Ended
|
Year Ended
September 30, 2017 |
Period Ended
September 30, 20161 |
||||||||||||||||
| Net Asset Value, Beginning Year/Period | $ | 41.50 | $ | 47.49 | 44.37 | $ | 32.90 | $ | 25.00 | |||||||||||
| Income from Investment Operations: | ||||||||||||||||||||
| Net investment income 2 | 0.25 | 0.52 | 0.74 | 0.33 | 0.08 | |||||||||||||||
| Net realized and unrealized gain (loss) on investments | 26.26 | (5.87 | ) | 2.98 | 11.71 | 7.82 | ||||||||||||||
| Total from investment operations | 26.51 | (5.35 | ) | 3.72 | 12.04 | 7.90 | ||||||||||||||
| Less Distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.41 | ) | (0.65 | ) | (0.59 | ) | (0.18 | ) | — | |||||||||||
| Net realized gains | — | — | (0.03 | ) | (0.39 | ) | — | |||||||||||||
| Total distributions | (0.41 | ) | (0.65 | ) | (0.62 | ) | (0.57 | ) | — | |||||||||||
| Capital Share Transactions: | ||||||||||||||||||||
| Transaction fees added to paid-in capital | 0.01 | 0.01 | 0.02 | — | — | |||||||||||||||
| Net asset at end of year/period | $ | 67.61 | $ | 41.50 | 47.49 | $ | 44.37 | $ | 32.90 | |||||||||||
| Total Return | 64.12 | % | -11.26 | % | 8.38 | % | 37.67 | % | 31.62 | %3 | ||||||||||
| Ratios/Supplemental Data: | ||||||||||||||||||||
| Net assets at end of year/period (000’s) | $ | 121,699 | $ | 83,000 | $ | 130,609 | $ | 39,934 | $ | 6,581 | ||||||||||
| Expenses to Average Net Assets before legal expense | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.74 | %4 | ||||||||||
| Gross Expenses to Average Net Assets | 0.75 | % | 0.75 | % | 0.75 | % | 0.82 | %5 | 0.74 | %4 | ||||||||||
| Net Investment Income to Average Net Assets | 0.51 | % | 1.22 | % | 1.48 | % | 0.86 | % | 0.44 | %4 | ||||||||||
| Portfolio Turnover Rate | 53 | % | 38 | % | 42 | % | 49 | % | 10 | %3 | ||||||||||
| 1 | Commencement of operations on March 8, 2016. |
| 2 | Calculated based on average shares outstanding during the year/period. |
| 3 | Not annualized. |
| 4 | Annualized. |
| 5 | The ratio of expenses to average net assets includes legal expense. |
The accompanying notes are an integral part of these financial statements.
Wedbush ETFMG TM ETF
September 30, 2020
NOTE 1 – ORGANIZATION
Wedbush ETFMG Global Cloud Technology ETF (“IVES”) and Wedbush ETFMG Video Game Tech ETF (“GAMR”) (each a “Fund”, or collectively the “Funds”) are each a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Funds’ shares (“Shares”) are registered under the Securities Act of 1933, as amended (the “Securities Act”).
The Wedbush ETFMG Global Cloud Technology ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Dan Ives Global Cloud Technology Prime Index (the “Index”). The Index is designed to include the securities of companies across the globe that are: i) engaged in providing infrastructure, equipment, connectivity, data back-up and storage services, and data center management for enterprise- based software applications, or ii) engaged in providing cloud-based software platforms that enable businesses to move data and software applications onto the cloud - cloud-enabling Software as a Service (SaaS) technologies. These companies are known collectively as “Cloud Technology Companies.” The Cloud Technology Companies will have a minimum market capitalization of $200 million and a maximum market capitalization of $10 billion.
Effective April 17, 2020, the name ETFMG Video Game Tech ETF has changed to the Wedbush ETFMG Video Game Tech ETF.
The following table is a summary of the Strategy Commencement Date and Strategy of the Funds:
| Fund Ticker |
Strategy
Date |
Strategy |
| IVES | 4/7/2020 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Dan Ives Global Cloud Technology Prime™ Index NTR. |
| GAMR | 3/8/2016 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the EEFund Video Game Tech™ Index. |
The Funds currently offer one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Funds have equal rights and privileges.
Shares of the Funds are listed and traded on the NASDAQ Stock Market, LLC. Market prices for the shares may be different from their net asset value (“NAV”). The Funds issue and redeem shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, shares are not redeemable securities of the Funds. Shares of the Funds may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the shares directly from the Funds. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
The Funds may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR(S) for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying Funds’ operations and policies, please refer to those Funds’ semiannual and annual reports, which are filed with the SEC.
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A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board. The use of fair value pricing by the Funds may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2020, the Funds did not hold any fair valued securities.
As described above, the Funds utilize various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds has the ability to access.
Level 2 Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Level 3 Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ 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 following is a summary of the inputs used to value the Funds’ net assets as of September 30, 2020:
IVES
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 46,274,286 | $ | — | $ | — | $ | 46,274,286 | ||||||||
| Short Term Investments | 200,848 | — | — | 200,848 | ||||||||||||
| ETFMG Sit Ultra Short ETF** | 2,489,250 | — | — | — | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 9,482,214 | ||||||||||||
| Total Investments in Securities | $ | 48,964,384 | $ | — | $ | — | $ | 58,446,598 | ||||||||
GAMR
| Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Common Stocks | $ | 121,075,652 | $ | — | $ | — | $ | 121,075,652 | ||||||||
| Short Term Investments | 546,010 | — | — | 546,010 | ||||||||||||
| ETFMG Sit Ultra Short ETF** | 2,489,250 | — | — | — | ||||||||||||
| Investments Purchased with Securities Lending Collateral* | — | — | — | 6,152,606 | ||||||||||||
| Total Investments in Securities | $ | 124,110,912 | $ | — | $ | — | $ | 130,263,518 | ||||||||
^ See Schedule of Investments for classifications by country and industry.
* Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments.
** Investment was purchased with collateral.
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B. | Federal Income Taxes. The Funds have elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
To avoid imposition of the excise tax applicable to regulated investment companies, the Funds intend to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Funds’ next taxable year.
The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Funds have analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2020 tax returns. The Funds indentify its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Funds are 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.
As of September 30, 2020, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.
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C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Funds may be subject to income, withholding or other taxes imposed by foreign countries. |
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D. | Foreign Currency Translations and Transactions. The Funds may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
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E. | Distributions to Shareholders. Distributions to shareholders from net investment income, if any are generally declared and paid by the Funds on a quarterly basis. Net realized gains on securities of the Funds normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
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F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
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G. | Share Valuation. The net asset value (“NAV”) per share of the Funds is calculated by dividing the sum of the value of the securities held by the Funds, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Funds, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Funds are equal to the Funds’ net asset values per share. |
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H. | Guarantees and Indemnifications. In the normal course of business, each Fund enters into contracts with service providers that contain general indemnification clauses. The Funds’ 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 Funds expect the risk of loss to be remote. |
NOTE 3 – RISK FACTORS
Investing in Wedbush Global Cloud Technology ETF and the Wedbush Video Game Tech ETF may involve certain risks, as discussed in each Fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.
Investment Style Risk. The Funds are not actively managed. Therefore, the Funds follow the securities included in its respective index during upturns as well as downturns. Because of its indexing strategy, the Funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the Funds’ expenses, the Funds’ performance may be below that of its index.
Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Securities Lending Risk. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the extent that the Funds’ or its underlying index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, each Fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increase the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under the circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.
NOTE 4 – MANAGEMENT AND OTHER CONTRACTS
Under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Funds, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an agreement with its affiliate, ETFMG Financial, LLC to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds.
Exchange Traded Managers Group, LLC (the “Parent”), the parent company of the Advisor, has entered into a licensing and marketing support agreement with Wedbush Securities, Inc. (“Wedbush”). Pursuant to agreement, Wedbush licenses its name for the use of the Advisor, consults with the Advisor and prepares educational materials, research materials, and updates on the industry and sectors relevant to the Funds. Wedbush may also provide support in connection with phone calls, appearances, and written content relating to the marketing of the Funds. In May, 2020, Wedbush acquired a minority, non-voting, equity interest in the Parent.
Level ETF Ventures, LLC serves as the index provider for GAMR and reality Shares, LLC serves as the index provider for IVES.
| IVES | 0.68 | % | |||
| GAMR | 0.75 | % |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
Under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Funds, except for: the fee paid to the Adviser pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). Wedbush Securities Inc. (“Wedbush”) has entered into a licensing and marketing support agreement with Exchange Traded Managers Group LLC, the parent company of the Adviser (the “Wedbush Agreement”). Pursuant to the Wedbush Agreement, Wedbush has agreed to (i) license the name Wedbush for the use of the Adviser; (ii) consult with the Adviser and prepare educational materials, research materials, and updates on regulation of the global video gaming technology and global cloud computing ecosystem; and (iii) provide support in connection with phone calls, appearances, and written content relating to the marketing of IVES and GAMR. Wedbush will also assumes the obligation of the Adviser to pay certain expenses of IVES and GAMR. Although Wedbush has agreed to be responsible for the payment of certain expenses of IVES and GAMR, the Adviser retains the ultimate obligation to the Funds to pay such expenses. Wedbush is not affiliated with GAMR, IVES, the Adviser, the Funds’ distributor or any of their respective affiliates. Wedbush does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Funds. Additionally, Wedbush is not involved in the maintenance of the Index and does not otherwise act in the capacity of an index provider. Level ETF Ventures, LLC serves as the index provider for GAMR and IVES.
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Funds. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Funds. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
Each Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Funds may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Funds, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the year ended September 30, 2020, the Funds did not incur any 12b-1 expenses.
NOTE 6 - PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, during the year ended September 30, 2020:
| Purchases | Sales | |||||||
| IVES | $ | 41,350,821 | $ | 39,773,393 | ||||
| GAMR | $ | 52,548,881 | $ | 48,046,275 | ||||
The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the year ended September 30, 2020:
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Purchases
In-Kind |
Sales In-
Kind |
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| IVES | $ | 12,370,825 | $ | 9,594,404 | ||||
| GAMR | $ | 18,975,355 | $ | 28,039,637 | ||||
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Funds’ determination of taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations during the year ended September 30, 2020.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 7 — SECURITIES LENDING
The Fund may lend up to 331/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earns interest on the cash collateral. The amount of fees depends on a number of factors including the type earns of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. As of September 30, 2020, the Fund had loaned securities and received cash collateral for the loans. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations, either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Advisor; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Advisor. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
As of September 30, 2020, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
| Fund |
Values of
Securities on Loan |
Fund
Collateral Received* |
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| IVES | $ | 11,971,464 | $ | 11,970,163 | ||||
| GAMR | 8,641,856 | 8,537,606 | ||||||
* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, an investment with an overnight and continuous maturity, and ETFMG Sit Ultra Short ETF, as shown on the Schedule of Investments.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2020 were as follows:
| Cost |
Gross Unrealized
Appreciation |
Gross Unrealized
Depreciation |
Net Unrealized
Appreciation (Depreciation) |
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| IVES | $ | 46,702,361 | $ | 12,236,018 |
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$ | (491,781 | ) | $ | 11,744,237 | ||||||
| GAMR | 107,515,556 | 31,424,288 | (8,676,326 | ) | 22,747,962 | |||||||||||
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2020, the components of distributable earnings (loss) on a tax basis were as follows:
|
Undistributed
Ordinary Income |
Undistributed
Long-Term Gain |
Total
Distributable Earnings |
Other
Accumulated Loss |
Total
Accumulated Gain (Loss) |
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| IVES | $ | 134,746 | $ | — | $ | 134,746 | $ | (10,518,120 | ) | $ | 1,360,863 | |||||||||
| GAMR | 930,834 | — | 930,834 | (14,492,756 | ) | 9,186,040 | ||||||||||||||
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2020, the Funds had accumulated capital loss carryovers of:
|
Capital Loss
Carryforward ST |
Capital Loss
Carryforward LT |
Expires | ||||||||||
| IVES | $ | (1,596,689 | ) | $ | (8,921,431 | ) | Indefinite | |||||
| GAMR | (4,527,161 | ) | (9,964,588 | ) | Indefinite | |||||||
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ending September 30, 2020.
|
Late Year
Ordinary Loss |
Post-
October Capital Loss |
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| IVES | $ | — | $ | — | ||||
| GAMR | — | — |
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2019, the following table shows the reclassifications made:
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Total
Distributable Earnings/(Loss) |
Paid-In
Capital |
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| IVES | $ | (1,762,415 | ) | $ | 1,762,415 | |||
| GAMR | (7,864,737 | ) | 7,864,737 | |||||
The tax character of distributions paid during the year ended September 30, 2020, and the year ended September 30, 2019 were as follows:
| Year Ended September 30, 2020 | Year Ended September 30, 2019 | |||||||||||||||
|
From Ordinary
Income |
From Capital
Gains |
From Ordinary
Income |
From Capital
Gains |
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| IVES | $ | 226,000 | — | $ | 326,484 | — | ||||||||||
| GAMR | 726,000 | — | 1,402,817 | — | ||||||||||||
NOTE 9 – INVESTMENTS IN AFFILIATES
Wedbush ETFMG Global Cloud Technology ETF
Wedbush ETFMG Global Cloud Technology ETF owned 5% or more of the voting securities of the following companies during the year ended September 30, 2020. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the year ended September 30, 2020. Transactions during the period in this security was as follows:
| Security Name |
Value at
September 30, 2019 |
Purchases | Sales |
Realized
Gain (Loss)(1) |
Change in
Unrealized Appreciation (Depreciation) |
Dividend
Income |
Value at
September 30, 2020 |
Ending
Shares |
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| ETFMG Sit Ultra Short | ||||||||||||||||||||||||||||||||
| ETF * | $ | — | 3,744,377 | (1,207,041 | ) | $ | (49,387 | ) | $ | 1,301 | $ | — | $ | 2,489,250 | 50,000 | |||||||||||||||||
Wedbush ETFMG Video Game Tech ETF
Wedbush ETFMG Video Game Tech ETF owned 5% or more of the voting securities of the following company during the year ended September 30, 2020. ETFMG Sit Ultra Short ETF is deemed to be affiliates of the Fund as defined by the 1940 Act as of the year ended September 30, 2020. Transactions during the period in this security was as follows:
| Security Name |
Value at
September 30, 2019 |
Purchases | Sales |
Realized
Gain (Loss)(1) |
Change in
Unrealized Appreciation (Depreciation) |
Dividend
Income |
Value at
September 30, 2020 |
Ending
Shares |
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| ETFMG Sit Ultra Short | ||||||||||||||||||||||||||||||||
| ETF * | $ | — | 2,504,385 | — | $ | — | $ | (15,135 | ) | $ | — | $ | 2,489,250 | 50,000 | ||||||||||||||||||
*Affiliate as of September 30, 2020.
1 Realized Losses include transactions in affiliated investments and affiliated in-kind redemptions.
Wedbush ETFMG TM ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2020 (Continued)
NOTE 10 – LEGAL MATTERS
The Trust, a former and current trustee of the Trust, the Adviser and certain officers of the Adviser were defendants in an action filed May 2, 2017 in the Superior Court of New Jersey captioned PureShares, LLC d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. C-63-17. The PureShares action alleged claims based on disputes arising out of contractual relationships with the Adviser relating to certain series of the Trust. The action sought damages in unspecified amounts and injunctive relief based on breach of contract, wrongful termination, and several other claims.
The Adviser and its parent, Exchange Traded Managers Group, LLC (“ETFMG”), were defendants in a case filed on October 26, 2017 in the United States District Court for the Southern District of New York by NASDAQ, Inc. (“Nasdaq”) captioned Nasdaq, Inc. v. Exchange Traded Managers Group, LLC et al., Case 1:17-cv 08252. This action arose out of the same facts and circumstances, and relates to the same series of the Trust, as the New Jersey litigation and asserted claims for breach of contract, conversion and certain other claims. The matter was the subject of a bench trial in May 2019, and on December 20, 2019, the Court issued an Opinion and Order awarding compensatory damages to Plaintiff in the amount of $78,403,172.36, plus prejudgment interest. The Court also denied Plaintiff’s requests for punitive damages and equitable relief.
On May 1, 2020, Nasdaq, PureShares LLC (“PureShares”), and ETFMG announced a global settlement that resolves all claims in both the PureShares action and the Nasdaq action. The settlement is subject to future negotiations and approvals among independent third parties. As part of the settlement, Nasdaq and ETFMG have agreed to certain cash payments from ETFMG to Nasdaq and PureShares,and have executed an asset purchase agreement to transfer certain ETFMG intellectual property and related assets, to a Nasdaq affiliate. The Adviser does not believe that the resolution of these matters will have a material adverse effect on the Funds’ financial statements. If the events set forth in the settlement agreement do not occur, and a subsequent settlement is not reached, the resulting conditions may adversely affect the Adviser’s future operations.
NOTE 11 – SUBSEQUENT EVENTS
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.
Wedbush ETFMG TM ETF
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of ETF Managers Trust
and the Shareholders of Wedbush ETFMG Global Cloud Technology ETF
and Wedbush ETFMG Video Game Tech ETF
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Wedbush ETFMG Global Cloud Technology ETF and Wedbush ETFMG Video Game Tech ETF (collectively the “Funds”) (certain of the Funds comprising ETF Managers Trust) as of September 30, 2020, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of September 30, 2020, and the results of their operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. 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 Funds 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, 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 and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2020 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
/s/WithumSmith+Brown, PC
We have served as the auditor of one or more series of the Trust since 2013.
New York, New York
November 30, 2020
Wedbush ETFMG TM ETF
Six Months Ended September 30, 2020 (Unaudited)
As a shareholder of the Funds you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 for the period of time as indicated in the table below.
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
|
Beginning
Account Value April 1, 2020 |
Ending
Account Value September 30, 2020 |
Expenses Paid
During the Period ^ |
Annualized
Expense Ratio During the Period April 1, 2020 to September 30, 2020 |
|||||||||||||
| Wedbush ETFMG Video | ||||||||||||||||
| Game Tech ETF | ||||||||||||||||
| Actual | $ | 1,000.00 | $ | 1,583.70 | $ | 4.84 | 0.75 | % | ||||||||
| Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.25 | 3.79 | 0.75 | % | |||||||||
| Wedbush ETFMG Global Cloud Technology ETF^^ | ||||||||||||||||
| Actual | $ | 1,000.00 | $ | 1,537.30 | $ | 4.50 | 0.71 | % | ||||||||
| Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.45 | $ | 3.59 | 0.71 | % | ||||||||
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/366 (to reflect the period from April 1, 2020 to September 30, 2020).
^^Effective April 7, 2020, the Fund’s expense ratio was reduced to 0.68%.
Wedbush ETFMG TM ETF
September 30, 2020 (Unaudited)
NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS
Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.
NOTE 2 – FEDERAL TAX INFORMATION
Qualified Dividend Income/Dividends Received Deduction
For the fiscal year ended September 30, 2020, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
| Fund Name | Qualified Dividend Income |
| IVES | 78.85% |
| GAMR | 63.71% |
For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2020 was as follows:
| Fund Name | Dividends Received Deduction |
| IVES | 40.02% |
| GAMR | 11.05% |
Short Term Capital Gain
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for each Fund were as follows:
| Fund Name | Short-Term Capital Gain |
| IVES | 0.00% |
| GAMR | 0.00% |
During the year ended September 30, 2020, the Funds did not declare any long-term realized gains distributions.
Pursuant to Section 853 of the Internal Revenue Code the Fund designated the following amounts as foreign taxes paid for the year ended September 30, 2020. Foreign taxes paid for purposes of Section 853 may be less than actual foreign taxes paid for financial statement purposes.
| Per Share | ||||||||||||||||||||
| Fund |
Gross Foreign
Source Income |
Foreign Taxes
Passthrough |
Gross Foreign
Source Income |
Foreign Taxes
Passthrough |
Shares
Outstanding at 9/30/20 |
|||||||||||||||
| GAMR | $ | 1,021,980 | $ | 64,668 | $ | 0.56776649 | $ | 0.03592684 | 1,800,000 | |||||||||||
Foreign taxes paid or withheld should be included to taxable income with an offsetting deduction from gross income or as a credit for taxes paid to foreign governments.
Above figures may differ from those cited elsewhere in this report due to difference in the calculation of income and gains under GAAP purposes and Internal Revenue Service purposes.
Wedbush ETFMG TM ETF
SUPPLEMENTARY INFORMATION
September 30, 2020 (Unaudited) (Continued)
Shareholders are strongly advised to consult their own tax advisors with respect to their investments in the Funds.
NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the Securities and Exchange Commission (“SEC”) on Form N-Q or Part F of Form N-PORT. The Funds’ Form N-Q or Part F of Form N-PORT is available on the website of the SEC at www.sec.gov.Each Fund’s portfolio holdings are posted on their website at www.etfmgfunds.com daily.”
NOTE 4 – INFORMATION ABOUT PROXY VOTING
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at (877) 756-7873, by accessing the SEC’s website at www.sec.gov, or by accessing the Funds’ website at www.etfmgfunds.com.
Information regarding how the Funds voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at (877) 756-7873 or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.etfmgfunds.com. Read the prospectus carefully before investing.
Wedbush ETFMG TM ETF
Set forth below are the names, birth years, positions with the Trust, length of term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as a Trustee of the Trust, as well as information about each officer. The business address of each Trustee and officer is 30 Maple Street, 2nd Floor, Summit, New Jersey 07901. The SAI includes additional information about Fund directors and is available, without charge, upon request by calling 1-844-ETF-MGRS (1-844-383-6477).
Wedbush ETFMG TM ETF
Board of Trustees (Continued)
| Name and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen By Trustee | Other Directorships Held by Trustee During Past 5 Years |
| Terry Loebs (1963) | Trustee (since 2014) | Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). | 12 | None |
| Eric Weigel (1960) | Trustee (since 2020) | Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017- 2018) | 12 | None |
Wedbush ETFMG TM ETF
ETF MANAGERS TRUST
ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.
Trust officers are responsible for ensuring that the following policies and procedures are implemented:
1) is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.
2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.
3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.
4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.
Consistent with these policies, the Trust has adopted the following procedures:
1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.
2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.
3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes
(1) Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, Inc.
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018
Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006
|
FYE 9/30/2020
|
FYE 9/30/2019
|
|
|
Audit Fees
|
$261,100
|
$215,500
|
|
Audit-Related Fees
|
N/A
|
N/A
|
|
Tax Fees
|
$46,850
|
$45,000
|
|
All Other Fees
|
N/A
|
N/A
|
|
FYE 9/30/2020
|
FYE 9/30/2019
|
|
|
Audit-Related Fees
|
0%
|
0%
|
|
Tax Fees
|
0%
|
0%
|
|
All Other Fees
|
0%
|
0%
|
|
Non-Audit Related Fees
|
FYE 9/30/2020
|
FYE 9/30/2019
|
|
Registrant
|
N/A
|
N/A
|
|
Registrant’s Investment Adviser
|
N/A
|
$10,000
|
|
(a)
|
The Registrant’s Principal Executive Officer and Principal Financial Officer/Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”))
as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the
disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and
by the Registrant’s service provider.
|
|
(b)
|
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.
|