N-CSRS 1 efmg_ncsrs.htm SEMI-ANNUAL CERTIFIED SHAREHOLDERS REPORT



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES



Investment Company Act file number 811-22310



ETF Managers Trust
(Exact name of registrant as specified in charter)



30 Maple Street, Suite 2
Summit, NJ 07901
 (Address of principal executive offices)



U.S. Bank Global Fund Services
811 E Wisconsin Ave
Milwaukee, WI 53202
(Name and address of agent for service)



(908)-897-0518
Registrant's telephone number, including area code



Date of fiscal year end: September 30, 2021


Date of reporting period: March 31, 2021

Item 1. Reports to Stockholders.

(a)




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Semi-Annual Report
March 31, 2021
(Unaudited)

 

ETFMG Prime Cyber Security ETF
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ETFMG Prime Junior Silver Miners ETF

 

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ETFMG Prime Mobile Payments ETF

 

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ETFMG Sit Ultra Short ETF

 

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ETFMG Travel Tech ETF

 

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ETFMG Treatments, Testing and Advancements ETF
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The Funds are a series of ETF Managers Trust.

 

 

ETFMG™ ETFs

 

TABLE OF CONTENTS

March 31, 2021 (Unaudited)

 

 

Page

Shareholders’ Letter

2

 

 

Growth of $10,000 Investment and Top 10 Holdings

5

 

 

Important Disclosures and Key Risk Factors

17

 

 

Portfolio Allocations

22

 

 

Schedules of Investments

23

 

 

Statements of Assets and Liabilities

46

 

 

Statements of Operations

47

 

 

Statements of Changes in Net Assets

48

 

 

Financial Highlights

54

 

 

Notes to the Financial Statements

60

 

 

Approval of Advisory Agreements and Board Considerations

74

 

 

Expense Examples

78

 

 

Statement Regarding Liquidity Risk Management Program

80

 

 

Trustees and Officers Table

81

 

 

Supplementary Information

83

 

 

Information about Portfolio Holdings

84

 

 

Information about Proxy Voting

84
1 

 

 

ETFMG™ ETFs

Dear Shareholder,

 

On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these ETFs. The following information pertains to the fiscal period from October 1, 2020 to March 31, 2021.

 

Performance Overview

 

During the 6-month period ended March 31, 2021, the S&P 500 Information Technology Sector Index, a broad measure of US listed technology companies, returned 13.85%. During the same period, the S&P Global 1200 Information Technology Sector Index, a broad measure of global technology companies, returned 16.97%. Below is a performance overview for each Fund for the same 6-month period.

 

ETFMG Prime Cyber Security ETF (HACK)

 

The ETFMG Prime Cyber Security ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Cyber Defense Index (the “Index”).

 

Over the period, the total return for the Fund was 17.60%, while the total return for the Index was 18.06%. The best performers in the Fund on the basis of contribution to return were Cloudflare Inc - Class A, Blackberry Ltd, Fireeye Inc, Fortinet Inc, and Commvault Systems Inc, while the worst performers were Sumo Logic Inc, Ping Identity Holding Corp, Splunk Inc, Trend Micro Inc, and Solarwinds Corp.

 

At the end of the reporting period, the Fund saw an average approximate allocation of 64.0% to Software, 10.1% to Communications Equipment and 8.5% to IT Services. The Fund was exposed predominately to the United States 72.5%, followed by Israel 9.7% and the United Kingdom 6.8%.

 

ETFMG Prime Junior Silver Miners ETF (SILJ)

 

The ETFMG Prime Junior Silver ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Junior Silver Miners & Explorers Index (the “Index”).

 

Over the period, the total return for the Fund was 5.43%, while the total return for the Index, which does not incur Fund expenses, was 5.80%. The best performers in the Fund on the basis of contribution to return were First Majestic Silver Corp, Turquoise Hill Resources Ltd, Hecla Mining Co, Capstone Mining Corp, and Hudbay Minerals Inc, while the worst performers in the Fund on the basis of contribution to return were Yamana Gold Inc, Silvercorp Metals Inc, Pan American Silver Corp, Ssr Mining Inc, and Harmony Gold Mng-Spon Adr.

 

At the end of the reporting period, the Fund saw an average approximate allocation of 98.3% to Metals and Mining and 1.2% to Commercial Services & Supplies. The Fund was exposed predominately to Canada 75.1%, followed by the United States 12.4% and the United Kingdom 4.7%.

2 

 

 

ETFMG Prime Mobile Payments ETF (IPAY)

 

The ETFMG Prime Mobile Payments ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Mobile Payments Index (the “Index”).

 

Over the period, the total return for the Fund was 22.55%, while the total return for the Index was 22.91%. The best performers in the Fund on the basis of contribution to return were Square Inc - A, American Express Co, Discover Financial Services, Paypal Holdings Inc, and Ncr Corporation, while the worst performers were Affirm Holdings Inc, Nexi Spa, Fidelity National Info Serv, Qiwi Plc-Sponsored Adr, and Green Dot Corp-Class A.

 

At the end of the reporting period, the Fund saw an average approximate allocation of 83.7% to IT Services, 10.9% to Consumer Finance and 1.7% to Software. The Fund was exposed predominately to the United States 70.1%, followed by the Cayman Islands 5.0%, Netherlands 4.9% and Australia 3.6%.

 

ETFMG Sit Ultra Short ETF (VALT)

 

The ETFMG Sit Ultra Short ETF (the “Fund”) is an actively managed exchange-traded fund (“ETF”) that seeks maximum current income, consistent with preservation of capital and daily liquidity.

 

Over the fiscal period, the total return for the Fund was 0.33%, while the total return for its benchmark, the Bloomberg Barclays U.S. Treasury Bills Index: 1-3 month Index, was 0.04%.

 

The Fund 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. The Fund uses the Bloomberg Barclays U.S. Treasury Bills Index: 1-3-month Index as its benchmark index. The Fund seeks to maintain an average effective duration within a range of 2 months to 1 year.

 

ETFMG Travel Tech ETF (AWAY)

 

The ETFMG Travel Tech ETF (the “Fund”) 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”).

 

Over the fiscal period, the total return for the Fund was 64.05%, while the total return the for the Index was 64.19%. The best performers in the Fund on the basis of contribution to return were Tripadvisor Inc, Trivago Nv, Facedrive Inc, Lyft Inc-A, and Sabre Corp, while the worst performers were Tuniu Corp-Spon, Veltra Corp, Temairazu Inc, Adventure Inc, and Cvc Brasil Operadora.

 

At the end of the reporting period, the Fund saw an average approximate allocation of 46.4% to Internet & Direct Marketing Retail, 18.4% to Hotels, Restaurants & Leisure, and 11.9% to Road & Rail. The Fund was exposed predominately to the United States 31.2%, followed by the United Kingdom 12.8%, the Cayman Islands 11.1% and the Japan 8.0%.

3 

 

 

ETFMG Treatments, Testing and Advancements ETF (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”).

 

Over the fiscal period, the total return for the Fund was 28.90%, while the total return the for the Index was 28.30%. The best performers in the Fund on the basis of contribution to return were Moderna Inc, Biontech Se-Adr, Curevac Nv, Zai Lab Ltd-Adr, and Novavax Inc, while the worst performers were Quidel Corp, Vaxcyte Inc, Adaptive Biotechnologies, Assembly Biosciences Inc, and Emergent Biosolutions Inc.

 

At the end of the reporting period, the Fund saw an average approximate allocation of 57.5% to Biotechnology, 14.0% to Life Sciences Tools & Services and 10.5% to Health Care Providers & Services. The Fund was exposed predominately to the United States 71.0%, followed by Germany 6.5% and Canada 5.9%.

 

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,

 

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Samuel Masucci III

Chairman of the Board

 

4 

 

 ETFMG Prime Junior Silver Miners ETF

Growth of $10,000 (Unaudited)


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Average Annual Returns

1 Year

5 Year

Since Inception

Value of $10,000

Period Ended March 31, 2021

Return

Return

(11/28/12)

(3/31/21)

ETFMG Prime Junior Silver Miners ETF (NAV)

115.80%

11.86%

-3.04%

$7,733

ETFMG Prime Junior Silver Miners ETF (Market)

119.88%

11.74%

-2.98%

$7,770

S&P 500 Index

56.35%

16.29%

15.54%

$33,348

Prime Junior Silver Miners & Explorers Index

118.34%

12.94%

-2.04%

$8,418

 

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.

5 

 

ETFMG Prime Junior Silver Miners ETF

 

 

Top Ten Holdings as of March 31, 2021* (Unaudited)

Security

 

% of Total Investments

1    Pan American Silver Corp.

 

12.62%

2    First Majestic Silver Corp.

 

10.67%

3    Hecla Mining Co.

 

8.96%

4    MAG Silver Corp.**

 

6.21%

5    Hochschild Mining PLC

 

4.68%

6    Yamana Gold, Inc.

 

4.58%

7    Turquoise Hill Resources, Ltd.

 

3.80%

8    SilverCrest Metals, Inc.

 

3.69%

9    SSR Mining, Inc.

 

3.68%

10    Harmony Gold Mining Co., Ltd.

 

3.07%

 

Top Ten Holdings = 61.96% of Total Investments

* Current Fund holdings may not be indicative of future Fund holdings.

** Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.

6 

 

ETFMG Prime Cyber Security ETF

Growth of $10,000 (Unaudited)

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Average Annual Returns
Period Ended March 31, 2021

1 Year
Return

5 Year
Return

Since
Inception
(11/11/14)

Value of
$10,000
(3/31/21)

ETFMG Prime Cyber Security ETF (NAV)

52.78%

18.75%

13.66%

$22,647

ETFMG Prime Cyber Security ETF (Market)

54.09%

18.85%

13.73%

$22,732

S&P 500 Index

56.35%

16.29%

13.25%

$22,130

Prime Cyber Defense Index

54.11%

19.09%

14.12%

$23,235

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

7 

 

ETFMG Prime Cyber Security ETF

 

 Top Ten Holdings as of March 31, 2021* (Unaudited)

 

 

Security

% of Total Investments

1

 

Cisco Systems, Inc.

3.81%

2

 

Fortinet, Inc.

2.70%

3

 

Akamai Technologies, Inc.

2.60%

4

 

CloudFlare, Inc. - Class A

2.59%

5

 

Qualys, Inc.

2.59%

6

 

CACI International, Inc. - Class A

2.58%

7

 

Parsons Corp.

2.52%

8

 

Proofpoint, Inc.

2.51%

9

 

ETFMG Sit Ultra Short ETF**

2.48%

10

 

Juniper Networks, Inc.

2.47%

 

Top Ten Holdings = 26.85% of Total Investments

*

Current Fund holdings may not be indicative of future Fund holdings.

**

Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.
8 

 

ETFMG Prime Mobile Payments ETF

Growth of $10,000 (Unaudited)

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Average Annual Returns
Period Ended March 31, 2021

1 Year
Return

5 Year
Return

Since
Inception
(7/15/15)

Value of
$10,000
(3/31/21)

ETFMG Prime Mobile Payments ETF (NAV)

77.79%

22.96%

18.96%

$26,955

ETFMG Prime Mobile Payments ETF (Market)

79.21%

23.01%

19.03%

$27,046

S&P 500 Index

56.35%

16.29%

13.98%

$21,122

Prime Mobile Payments Index

78.73%

23.67%

19.68%

$27,902

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

9 

 

ETFMG Prime Mobile Payments ETF

 

 

 Top Ten Holdings as of March 31, 2021* (Unaudited)

 

 

Security

% of Total Investments

1

 

Square, Inc. - Class A

6.23%

2

 

MasterCard, Inc. - Class A

6.10%

3

 

PayPal Holdings, Inc.

6.09%

4

 

Fidelity National Information Services, Inc.

6.03%

5

 

Visa, Inc. - Class A

6.00%

6

 

American Express Co.

5.94%

7

 

Fiserv, Inc.

5.62%

8

 

Adyen NV

4.93%

9

 

Global Payments, Inc.

4.54%

10

 

Discover Financial Services

2.84%

 

Top Ten Holdings = 54.32% of Total Investments

*

Current Fund holdings may not be indicative of future Fund holdings.
10 

 

ETFMG Sit Ultra Short ETF

Growth of $10,000 (Unaudited)

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Average Annual Returns
 Period Ended March 31, 2021

1 Year
 Return

Since Inception
(10/8/2019)

Value of $10,000
(3/31/2021)

ETFMG Sit Ultra Short ETF (NAV)

4.75%

1.03%

$10,153

ETFMG Sit Ultra Short ETF (Market)

4.85%

1.04%

$10,154

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

11 

 

ETFMG Sit Ultra Short ETF

 

 Top Ten Holdings as of March 31, 2021* (Unaudited)

 

 

Security

% of Total Investments

1

 

Florida Power & Light Co.

2.47%

2

 

Hewlett Packard Enterprise Co.

2.38%

3

 

Commonwealth Bank of Australia

2.29%

4

 

Verizon Communications, Inc.

2.24%

5

 

Daimler Finance North America LLC

2.18%

6

 

Equifax, Inc.

2.16%

7

 

Otis Worldwide Corp.

2.14%

8

 

Capital One Financial Corp.

2.06%

9

 

Honeywell International, Inc.

2.03%

10

 

AstraZeneca PLC

1.98%

 

Top Ten Holdings = 21.93% of Total Investments

*

Current Fund holdings may not be indicative of future Fund holdings.
12 

 

ETFMG Travel Tech ETF

Growth of $10,000 (Unaudited)

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Average Annual Returns
Period Ended March 31, 2021

1 Year
Return

  

Since Inception
(2/12/2020)

  

Value of $10,000
(3/31/2021)

ETFMG Travel Tech ETF (NAV)

116.96%

  

20.81%

  

$12,386

ETFMG Travel Tech ETF (Market)

118.69%

  

21.88%

  

$12,509

S&P 500 Index

  56.35%

  

17.45%

  

$11,996

Prime Travel Technology Index GTR

118.31%

  

20.21%

  

$12,315

Prime Travel Technology Index NTR

118.29%

  

20.17%

  

$12,311

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

13 

 

 

ETFMG Travel Tech ETF

 

 

 

Top Ten Holdings as of March 31, 2021* (Unaudited)

 

Security

% of Total Investments

  1

  Expedia Group, Inc.

4.88%

  2

  Booking Holdings, Inc.

4.72%

  3

  Airbnb, Inc.

4.69%

  4

  Trivago NV**

4.62%

  5

  Uber Technologies, Inc.

4.62%

  6

  Despegar.com Corp.

4.25%

  7

  TripAdvisor, Inc.

4.16%

  8

  Tongcheng-Elong Holdings, Ltd.

4.16%

  9

  Lyft, Inc.

4.08%

10

  Trip.com Group, Ltd.

4.05%

 

Top Ten Holdings = 44.23% of Total Investments

* Current Fund holdings may not be indicative of future Fund holdings.

** Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.

14 

 

ETFMG Treatments, Testing and Advancements ETF

Growth of $10,000 (Unaudited)

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Average Cumulative Returns

Since

Inception

  

Value of

$10,000

Period Ended March 31, 2021

(6/17/2020)

  

(3/31/2021)

ETFMG Treatments, Testing and Advancements ETF (NAV)

42.85%

  

$14,285

ETFMG Treatments, Testing and Advancements ETF (Market)

43.14%

  

$14,314

S&P 500 Index

29.22%

  

$12,922

Prime Treatments, Testing and Advancements Index NTR

42.26%

  

$14,235

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

15 

 

ETFMG Treatments, Testing and Advancements ETF

 

 

 

Top Ten Holdings as of March 31, 2021* (Unaudited)

 

Security

% of Total Investments

  1

  BioNTech SE

6.61%

  2

  Laboratory Corp. of America Holdings

6.24%

  3

  Alnylam Pharmaceuticals, Inc.

5.92%

  4

  Bio-Rad Laboratories, Inc. - Class A

5.85%

  5

  Moderna, Inc.

5.70%

  6

  Novavax, Inc.

4.39%

  7

  AbCellera Biologics, Inc.

4.35%

  8

  CureVac NV

4.32%

  9

  Quest Diagnostics, Inc.

4.19%

10

  Zai Lab, Ltd.

3.84%

 

Top Ten Holdings = 51.41% of Total Investments

* Current Fund holdings may not be indicative of future Fund holdings.

16 

 

 

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.

17 

 

ETFMG™ ETFs

 

 

HACK

 

The ETFMG Prime Cyber Security ETF (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. 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”).

18 

 

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.

19 

 

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 LLC 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.

20 

 

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.

21 

 

 

ETFMG™ ETFs

 

PORTFOLIO ALLOCATIONS

As of March 31, 2021 (Unaudited)

 

 

 

 

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

 

 

ETFMG
Treatments,
Testing and Advancements
 ETF

 

As a percent of Net Assets:

Australia

 

 

—

%

 

 

—

%

 

 

3.6

%

 

 

—

%

 

 

3.9

%

 

 

—

%

Bermuda

 

 

—

 

 

 

—

 

 

 

1.5

 

 

 

—

 

 

 

—

 

 

 

—

 

Brazil

 

 

—

 

 

 

—

 

 

 

1.5

 

 

 

—

 

 

 

3.1

 

 

 

—

 

Canada

 

 

75.1

 

 

 

3.3

 

 

 

2.0

 

 

 

—

 

 

 

3.2

 

 

 

5.9

 

Cayman Islands

 

 

—

 

 

 

—

 

 

 

5.0

 

 

 

—

 

 

 

11.1

 

 

 

5.7

 

China

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3.8

 

 

 

—

 

Cyprus

 

 

—

 

 

 

—

 

 

 

0.4

 

 

 

—

 

 

 

—

 

 

 

—

 

Denmark

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.1

 

Finland

 

 

—

 

 

 

0.2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

France

 

 

—

 

 

 

—

 

 

 

2.5

 

 

 

—

 

 

 

—

 

 

 

0.6

 

Germany

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6.5

 

Israel

 

 

—

 

 

 

9.7

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Italy

 

 

—

 

 

 

—

 

 

 

1.8

 

 

 

—

 

 

 

—

 

 

 

—

 

Japan

 

 

—

 

 

 

3.8

 

 

 

3.0

 

 

 

—

 

 

 

8.0

 

 

 

0.7

 

Jersey

 

 

—

 

 

 

1.2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Luxembourg

 

 

1.6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2.9

 

 

 

—

 

Mauritius

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3.9

 

 

 

—

 

Netherlands

 

 

—

 

 

 

—

 

 

 

4.9

 

 

 

—

 

 

 

4.6

 

 

 

4.4

 

Peru

 

 

2.6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Puerto Rico

 

 

—

 

 

 

—

 

 

 

1.4

 

 

 

—

 

 

 

—

 

 

 

—

 

Republic of Korea

 

 

—

 

 

 

0.8

 

 

 

—

 

 

 

—

 

 

 

7.3

 

 

 

—

 

South Africa

 

 

3.1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Spain

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3.8

 

 

 

—

 

Sweden

 

 

—

 

 

 

1.1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

United Kingdom

 

 

4.7

 

 

 

6.8

 

 

 

1.8

 

 

 

—

 

 

 

12.8

 

 

 

4.7

 

United States

 

 

12.4

 

 

 

72.5

 

 

 

70.1

 

 

 

—

 

 

 

31.2

 

 

 

71.0

 

Asset Backed Securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.6

 

 

 

—

 

 

 

—

 

Coporate Obligations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

97.4

 

 

 

—

 

 

 

—

 

Municipal Debt Obligations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.9

 

 

 

—

 

 

 

—

 

Short-Term and other Net Assets
(Liabilities)

 

 

0.5

 

 

 

0.6

 

 

 

0.5

 

 

 

1.1

 

 

 

0.4

 

 

 

0.4

 

 

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%
22 

 

ETFMG™ ETFs

 

ETFMG Prime Junior Silver Miners ETF

 

Schedule of Investments

March 31, 2021 (Unaudited)

 

 

 

 

Shares

 

 

Value

 

COMMON STOCKS - 99.5%

Canada - 75.1%

Commercial Services & Supplies - 1.2%

Alexco Resource Corp. (a)

 

 

 

 

3,603,264

 

 

$

 

 

9,044,193

 

Metals & Mining - 73.9% (c)

Americas Gold & Silver Corp. (a)

 

 

 

3,367,073

 

 

 

 

7,635,998

 

Aya Gold & Silver, Inc. (a)

 

 

2,475,432

 

 

 

9,711,053

 

Bear Creek Mining Corp. (a)

 

 

2,949,712

 

 

 

5,093,400

 

Canada Silver Cobalt Works, Inc. (a)

 

 

1,057,376

 

 

 

349,177

 

Capstone Mining Corp. (a)

 

 

3,575,534

 

 

 

11,779,033

 

Discovery Metals Corp. (a)

 

 

8,431,314

 

 

 

14,759,999

 

Dundee Precious Metals, Inc.

 

 

1,586,317

 

 

 

9,681,747

 

Eldorado Gold Corp. (a)

 

 

1,528,548

 

 

 

16,517,611

 

Endeavour Silver Corp. (a)

 

 

4,135,941

 

 

 

20,514,267

 

Excellon Resources, Inc. (a)

 

 

849,245

 

 

 

2,426,028

 

First Majestic Silver Corp. (a)

 

 

5,098,215

 

 

 

79,430,190

 

Fortuna Silver Mines, Inc. (a)

 

 

1,610,722

 

 

 

10,445,917

 

Gran Colombia Gold Corp.

 

 

540,819

 

 

 

2,319,579

 

Great Panther Mining, Ltd. (a)

 

 

3,075,195

 

 

 

2,367,900

 

GT Gold Corp. (a)

 

 

1,117,140

 

 

 

2,862,410

 

Hudbay Minerals, Inc.

 

 

2,284,722

 

 

 

15,635,083

 

Kootenay Silver, Inc. (a)(f)

 

 

8,355,076

 

 

 

2,160,738

 

Liberty Gold Corp. (a)

 

 

2,285,629

 

 

 

2,637,194

 

MAG Silver Corp. (a)(f)

 

 

3,069,556

 

 

 

46,213,097

 

Mandalay Resources Corp. (a)(e)

 

 

797,743

 

 

 

1,237,844

 

Metalla Royalty & Streaming, Ltd.

 

 

353,331

 

 

 

3,157,402

 

Minaurum Gold, Inc. (a)(e)

 

 

2,978,640

 

 

 

1,042,891

 

Minco Silver Corp. (a)(e)

 

 

1,600,920

 

 

 

605,106

 

Mirasol Resources, Ltd. (a)

 

 

473,225

 

 

 

199,578

 

New Gold, Inc. (a)(f)

 

 

5,911,571

 

 

 

9,125,844

 

New Pacific Metals Corp. (a)

 

 

1,342,731

 

 

 

5,545,296

 

Orla Mining, Ltd. (a)

 

 

2,010,218

 

 

 

7,486,131

 

Pan American Silver Corp.

 

 

3,131,909

 

 

 

93,954,778

 

Premier Gold Mines, Ltd. (a)

 

 

2,089,929

 

 

 

4,623,222

 

Sabina Gold & Silver Corp. (a)

 

 

2,855,683

 

 

 

4,112,983

 

Seabridge Gold, Inc. (a)

 

 

648,591

 

 

 

10,482,122

 

Sierra Metals, Inc. (a)

 

 

1,422,367

 

 

 

4,470,717

 

Silvercorp Metals, Inc.

 

 

4,600,316

 

 

 

22,659,311

 

SilverCrest Metals, Inc. (a)

 

 

3,393,360

 

 

 

27,488,187

 

Sombrero Resources, Inc. (a)(b)

 

 

585,867

 

 

 

130,064

 

SSR Mining, Inc.

 

 

1,916,087

 

 

 

27,398,809

 

Tier One Silver, Inc. (a)(b)

 

 

585,867

 

 

 

153,713

 

Trevali Mining Corp. (a)

 

 

8,649,224

 

 

 

1,342,085

 

Turquoise Hill Resources, Ltd. (a)

 

 

1,758,022

 

 

 

28,314,129

 

Yamana Gold, Inc.

 

 

7,849,211

 

 

 

34,065,576

 

Total Metals & Mining

 

 

 

 

 

 

550,136,209

 

Total Canada

 

 

 

 

 

 

559,180,402

 

 

The accompanying notes are an integral part of these financial statements.

23 

 

ETFMG™ ETFs

 

ETFMG Prime Junior Silver Miners ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

 

Shares

 

 

Value

 

Luxembourg - 1.6%

Metals & Mining - 1.6% (c)

Nexa Resources SA

 

 

1,156,565

 

 

$

11,854,791

 

 

 

 

 

 

 

 

 

 

Peru - 2.6%

Metals & Mining - 2.6% (c)

Cia de Minas Buenaventura SAA - ADR (a)

 

 

1,965,086

 

 

 

19,709,813

 

 

 

 

 

 

 

 

 

 

South Africa - 3.1%

Metals & Mining - 3.1% (c)

Harmony Gold Mining Co., Ltd. - ADR

 

 

5,242,292

 

 

 

22,856,393

 

 

 

 

 

 

 

 

 

 

United Kingdom - 4.7%

Metals & Mining - 4.7% (c)

Hochschild Mining PLC

 

 

12,924,703

 

 

 

34,869,989

 

 

 

 

 

 

 

 

 

 

United States - 12.4%

 

 

 

 

 

 

 

 

Metals & Mining - 12.4% (c)

Coeur Mining, Inc. (a)

 

 

 

2,127,108

 

 

 

 

19,207,785

 

Gold Resource Corp.

 

 

650,068

 

 

 

1,716,180

 

Golden Minerals Co. (a)

 

 

1,418,821

 

 

 

935,429

 

Hecla Mining Co.

 

 

11,718,928

 

 

 

66,680,700

 

McEwen Mining, Inc. (a)

 

 

4,009,249

 

 

 

4,169,619

 

Total Metals & Mining

 

 

 

 

 

 

92,709,713

 

Total United States

 

 

 

 

 

 

92,709,713

 

TOTAL COMMON STOCKS (Cost $728,848,593)

 

 

 

 

 

 

741,181,101

 
                 

SHORT-TERM INVESTMENTS - 0.5%

Money Market Funds - 0.5%

Invesco Advisers, Inc. STIT - Treasury Portfolio –

Institutional Class, 0.01% (d)

 

 

 

 

 

3,587,114

 

 

 

 

 

 

3,587,114

 

TOTAL SHORT-TERM INVESTMENTS (Cost $3,587,114)

 

 

 

 

 

 

3,587,114

 
                 

Total Investments (Cost $732,435,707) - 100.0%

 

 

 

 

 

 

744,768,215

 

Liabilities in Excess of Other Assets - (0.0)% (g)

 

 

 

 

 

 

(234,691

)

TOTAL NET ASSETS - 100.0%

 

 

 

 

 

$

744,533,524

 

 

The accompanying notes are an integral part of these financial statements.

24 

 

ETFMG™ ETFs

 

ETFMG Prime Junior Silver Miners ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

Percentages are stated as a percent of net assets.

 

ADR American Depositary Receipt

PLC   Public Limited Company

 

(a)

Non-income producing security.

(b)

Value determined based on estimated fair value. The value of these securities total $283,777, which represents 0.04% of total net assets. Classified as Level 3 in the fair value hierarchy. Please refer to Note 2 of the Notes to Financial Statements.

(c)

As of March 31, 2021, the Fund had a significant portion of its assets invested in the Metals & Mining Industry.

(d)

The rate quoted is the annualized seven-day yield at March 31, 2021.

(e)

These securities have been deemed illiquid according to the Fund’s liquidity guidelines. The value of these securities total $2,885,841, which represents 0.4% of total net assets.

(f)

Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.

(g)

Value less than 0.05%

 

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.

25 

 

 

ETFMG™ ETFs

 

ETFMG Prime Cyber Security ETF

 

Schedule of Investments

March 31, 2021 (Unaudited)

 

 

 

 

Shares

 

 

Value

 

COMMON STOCKS - 99.4%

 

 

 

 

 

 

 

 

Canada - 3.3%

 

 

 

 

 

 

 

 

Software - 3.3% (d)

 

 

 

 

 

 

 

 

Absolute Software Corp.

 

 

1,565,742

 

 

$

21,741,225

 

BlackBerry, Ltd. (a)

 

 

5,279,788

 

 

 

44,281,822

 

Total Canada

 

 

 

 

 

 

66,023,047 

 
                 

Finland - 0.2%

 

 

 

 

 

 

 

 

Software - 0.2% (d)

 

 

 

 

 

 

 

 

F-Secure Oyj

 

 

785,704

 

 

 

3,722,449

 
                 

Israel - 9.7%

 

 

 

 

 

 

 

 

Communications Equipment - 1.2%

 

 

 

 

 

 

 

 

Radware, Ltd. (a)

 

 

934,192

 

 

 

24,363,727

 

Software - 8.5% (d)

 

 

 

 

 

 

 

 

Allot Communications, Ltd. (a)

 

 

1,059,627

 

 

 

16,922,243

 

Check Point Software Technologies, Ltd. (a)

 

 

429,197

 

 

 

48,057,188

 

Cognyte Software, Ltd. (a)

 

 

1,654,398

 

 

 

46,008,809

 

CyberArk Software, Ltd. (a)

 

 

328,909

 

 

 

42,541,090

 

Tufin Software Technologies Ltd. (a)

 

 

1,523,446

 

 

 

15,996,183

 

Total Software

 

 

 

 

 

 

169,525,513

 

Total Israel

 

 

 

 

 

 

193,889,240

 
                 

Japan - 3.8%

 

 

 

 

 

 

 

 

Software - 3.8% (d)

 

 

 

 

 

 

 

 

Digital Arts, Inc.

 

 

262,243

 

 

 

22,949,963

 

FFRI Security, Inc. (a)

 

 

319,876

 

 

 

6,349,853

 

Trend Micro, Inc.

 

 

960,808

 

 

 

48,072,940

 

Total Japan

 

 

 

 

 

 

77,372,756

 
                 

Jersey - 1.2%

 

 

 

 

 

 

 

 

Software - 1.2% (d)

 

 

 

 

 

 

 

 

Mimecast, Ltd. (a)

 

 

587,678

 

 

 

23,630,533

 
                 

Republic of Korea - 0.8%

 

 

 

 

 

 

 

 

Software - 0.8% (d)

 

 

 

 

 

 

 

 

Ahnlab, Inc.

 

 

274,035

 

 

 

15,859,768

 
                 

Sweden - 1.1%

 

 

 

 

 

 

 

 

Electronic Equipment, Instruments &

 

 

 

 

 

 

 

 

Components - 1.1%

 

 

 

 

 

 

 

 

Fingerprint Cards AB - Class B (b)

 

 

6,672,657

 

 

 

22,271,605

 

 

The accompanying notes are an integral part of these financial statements.

26 

 

 

ETFMG™ ETFs

 

ETFMG Prime Cyber Security ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

 

Shares

 

 

Value

 

United Kingdom - 6.8%

 

 

 

 

 

 

 

 

Aerospace & Defense - 3.6%

 

 

 

 

 

 

 

 

BAE Systems PLC

 

 

3,659,706

 

 

$

25,478,743

 

QinetiQ Group PLC

 

 

5,299,506

 

 

 

23,086,754

 

Ultra Electronics Holdings PLC

 

 

856,484

 

 

 

23,945,704

 

Total Aerospace & Defense

 

 

 

 

 

 

72,511,201 

 

IT Services - 1.0%

 

 

 

 

 

 

 

 

NCC Group PLC

 

 

5,447,380

 

 

 

19,375,271

 

Software - 2.2% (d)

 

 

 

 

 

 

 

 

Avast PLC (f)

 

 

7,185,134

 

 

 

45,168,964

 

Total United Kingdom

 

 

 

 

 

 

137,055,436 

 
                 

United States - 72.5%

 

 

 

 

 

 

 

 

Aerospace & Defense - 2.5%

 

 

 

 

 

 

 

 

Parsons Corp. (a)(b)

 

 

1,251,208

 

 

 

50,598,852

 

Communications Equipment - 8.9%

 

 

 

 

 

 

 

 

Cisco Systems, Inc.

 

 

1,477,938

 

 

 

76,424,174

 

F5 Networks, Inc. (a)

 

 

136,998

 

 

 

28,580,523

 

Juniper Networks, Inc.

 

 

1,958,236

 

 

 

49,602,118

 

NetScout Systems, Inc. (a)

 

 

872,325

 

 

 

24,564,672

 

Total Communications Equipment

 

 

 

 

 

 

179,171,487

 

Internet Software & Services - 0.8%

 

 

 

 

 

 

 

 

Zix Corp. (a)

 

 

2,129,728

 

 

 

16,079,446

 

IT Services - 7.5%

 

 

 

 

 

 

 

 

Akamai Technologies, Inc. (a)

 

 

511,957

 

 

 

52,168,418

 

LiveRamp Holdings, Inc. (a)

 

 

826,754

 

 

 

42,891,998

 

Okta, Inc. (a)(b)

 

 

129,311

 

 

 

28,504,024

 

VeriSign, Inc. (a)

 

 

136,751

 

 

 

27,180,629

 

Total IT Services

 

 

 

 

 

 

150,745,069

 

Professional Services - 8.8%

 

 

 

 

 

 

 

 

Booz Allen Hamilton Holding Corp.

 

 

326,679

 

 

 

26,307,460

 

CACI International, Inc. - Class A (a)

 

 

210,153

 

 

 

51,836,339

 

Leidos Holdings, Inc.

 

 

282,187

 

 

 

27,168,964

 

ManTech International Corp. - Class A

 

 

305,786

 

 

 

26,588,093

 

Science Applications International Corp.

 

 

527,208

 

 

 

44,069,317

 

Total Professional Services

 

 

 

 

 

 

175,970,173

 

Software - 44.0% (d)

 

 

 

 

 

 

 

 

A10 Networks, Inc. (a)

 

 

2,583,826

 

 

 

24,830,568

 

Cloudflare, Inc. - Class A (a)

 

 

741,252

 

 

 

52,080,365

 

CommVault Systems, Inc. (a)

 

 

748,243

 

 

 

48,261,673

 

Crowdstrike Holdings, Inc. - Class A (a)

 

 

181,179

 

 

 

33,066,979

 

Everbridge, Inc. (a)(b)

 

 

172,331

 

 

 

20,883,071

 

FireEye, Inc. (a)

 

 

2,490,549

 

 

 

48,740,044

 

Fortinet, Inc. (a)

 

 

293,629

 

 

 

54,151,060

 

McAfee Corp. - Class A (b)

 

 

1,135,106

 

 

 

25,812,310

 

NortonLifeLock, Inc. (b)

 

 

2,320,240

 

 

 

49,328,302

 

OneSpan, Inc. (a)

 

 

950,692

 

 

 

23,291,954

 

 

The accompanying notes are an integral part of these financial statements.

27 

 

 

ETFMG™ ETFs

 

ETFMG Prime Cyber Security ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

 

Shares

 

 

Value

 

Palo Alto Networks, Inc. (a)

 

 

152,353

 

 

$

49,066,807

 

Ping Identity Holding Corp. (a)(b)

 

 

1,933,640

 

 

 

42,404,725

 

Proofpoint, Inc. (a)

 

 

401,104

 

 

 

50,454,872

 

Qualys, Inc. (a)(b)

 

 

495,977

 

 

 

51,968,470

 

Rapid7, Inc. (a)(b)

 

 

306,201

 

 

 

22,845,657

 

Sailpoint Technologies Holdings, Inc. (a)(b)

 

 

846,233

 

 

 

42,853,239

 

SecureWorks Corp. - Class A (a)(b)(e)

 

 

1,388,102

 

 

 

18,572,805

 

SolarWinds Corp. (a)(b)

 

 

2,840,964

 

 

 

49,546,412

 

Splunk, Inc. (a)

 

 

358,926

 

 

 

48,627,294

 

Sumo Logic, Inc. (a)(b)

 

 

1,662,115

 

 

 

31,347,489

 

Tenable Holdings, Inc. (a)

 

 

1,191,767

 

 

 

43,124,089

 

Varonis Systems, Inc. (a)

 

 

457,220

 

 

 

23,473,675

 

Zscaler, Inc. (a)

 

 

161,634

 

 

 

27,747,709

 

Total Software

 

 

 

 

 

 

882,479,569

 

Total United States

 

 

 

 

 

 

1,455,044,596

 

TOTAL COMMON STOCKS (Cost $1,655,085,573)

 

 

 

 

 

 

1,994,869,430

 
                 

INVESTMENTS PURCHASED WITH PROCEEDS FROM

 

 

 

 

 

 

 

 

SECURITIES LENDING COLLATERAL - 8.1%

 

 

 

 

 

 

 

 

ETFMG Sit Ultra Short ETF (e)

 

 

1,000,000

 

 

 

49,745,500

 

Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (c)

 

 

112,946,580

 

 

 

112,946,580

 

TOTAL INVESTMENTS PURCHASED WITH PROCEEDS

 

 

 

 

 

 

 

 

FROM SECURITIES LENDING COLLATERAL (Cost $163,055,457)

 

 

 

 

 

 

162,692,080

 
                 

SHORT-TERM INVESTMENTS - 0.5%

 

 

 

 

 

 

 

 

Money Market Funds - 0.5%

 

 

 

 

 

 

 

 

Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.01% (c)

 

 

10,720,628

 

 

 

10,720,628

 

TOTAL SHORT-TERM INVESTMENTS (Cost $10,720,628)

 

 

 

 

 

 

10,720,628

 

Total Investments (Cost $1,828,861,658) - 108.0%

 

 

 

 

 

 

2,168,282,138

 

Liabilities in Excess of Other Assets - (8.0)%

 

 

 

 

 

 

(160,443,257

)

TOTAL NET ASSETS - 100.0%

 

 

 

 

 

$

2,007,838,881

 

 

Percentages are stated as a percent of net assets.

 

PLC Public Limited Company

(a)

Non-income producing security.

(b)

All or a portion of this security is out on loan as of March 31, 2021.

(c)

The rate quoted is the annualized seven-day yield at March 31, 2021.

(d)

As of March 31, 2021 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.

(f)

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 $45,168,964, which represented 2.25% of the net assets of the Fund.

 

The accompanying notes are an integral part of these financial statements.

28 

 

ETFMG™ ETFs

 

ETFMG Prime Mobile Payments ETF

 

Schedule of Investments

March 31, 2021 (Unaudited)

 

 

 

 

Shares

 

 

Value

 

COMMON STOCKS - 99.5%

 

 

 

 

 

 

 

 

Australia - 3.6%

 

 

 

 

 

 

 

 

IT Services - 3.6% (d)

 

 

 

 

 

 

 

 

Afterpay, Ltd. (a)

 

 

354,228

 

 

$

27,308,948

 

EML Payments, Ltd. (a)

 

 

4,155,044

 

 

 

15,464,210

 

Total IT Services

 

 

 

 

 

 

42,773,158

 

 

Bermuda - 1.5%

 

 

 

 

 

 

 

 

Electronic Equipment, Instruments & Components - 1.5%

 

 

 

 

 

 

 

 

PAX Global Technology, Ltd.

 

 

17,073,078

 

 

 

18,337,840

 

 

Brazil - 1.5%

 

 

 

 

 

 

 

 

IT Services - 1.5% (d)

 

 

 

 

 

 

 

 

Cielo SA

 

 

26,841,617

 

 

 

17,787,432

 

 

Canada - 2.0%

 

 

 

 

 

 

 

 

IT Services - 2.0% (d)

 

 

 

 

 

 

 

 

Nuvei Corp. (a)(f)

 

 

396,668

 

 

 

23,894,141

 

 

Cayman Islands - 5.0%

 

 

 

 

 

 

 

 

IT Services - 5.0% (d)

 

 

 

 

 

 

 

 

Pagseguro Digital, Ltd. - Class A (a)(b)

 

 

506,097

 

 

 

23,432,291

 

StoneCo., Ltd. - Class A (a)

 

 

400,151

 

 

 

24,497,244

 

Yeahka, Ltd. (a)

 

 

1,773,249

 

 

 

12,203,190

 

Total IT Services

 

 

 

 

 

 

60,132,725

 

 

Cyprus - 0.4%

 

 

 

 

 

 

 

 

IT Services - 0.4% (d)

 

 

 

 

 

 

 

 

QIWI PLC - ADR (b)

 

 

405,093

 

 

 

4,314,240

 

 

France - 2.5%

 

 

 

 

 

 

 

 

IT Services - 2.5% (d)

 

 

 

 

 

 

 

 

Worldline SA (a)(f)

 

 

364,271

 

 

 

30,517,890

 

 

Italy - 1.8%

 

 

 

 

 

 

 

 

IT Services - 1.8% (d)

 

 

 

 

 

 

 

 

Nexi SpA (a)(f)

 

 

1,276,537

 

 

 

22,275,363

 

 

Japan - 3.0%

 

 

 

 

 

 

 

 

Consumer Finance - 0.4%

 

 

 

 

 

 

 

 

Jaccs Co., Ltd.

 

 

220,199

 

 

 

4,512,364

 

IT Services - 2.4% (d)

 

 

 

 

 

 

 

 

GMO Financial Gate, Inc.

 

 

29,276

 

 

 

6,052,180

 

GMO Payment Gateway, Inc.

 

 

169,743

 

 

 

22,504,649

 

Total IT Services

 

 

 

 

 

 

28,556,829

 

 

The accompanying notes are an integral part of these financial statements.

29 

 

ETFMG™ ETFs

 

ETFMG Prime Mobile Payments ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

Software - 0.2%

 

Shares

 

 

Value

 

 

 

 

 

 

 

 

 

Intelligent Wave, Inc.

 

 

287,926

 

 

$

1,817,659

 

Total Japan

 

 

 

 

 

 

34,886,852

 

 

Netherlands - 4.9%

 

 

 

 

 

 

 

 

IT Services - 4.9% (d)

 

 

 

 

 

 

 

 

Adyen NV (a)(f)

 

 

26,669

 

 

 

59,531,671

 

 

Puerto Rico - 1.4%

 

 

 

 

 

 

 

 

IT Services - 1.4% (d)

 

 

 

 

 

 

 

 

EVERTEC, Inc.

 

 

466,456

 

 

 

17,361,492

 

 

United Kingdom - 1.8%

 

 

 

 

 

 

 

 

Commercial Services & Supplies - 0.3%

 

 

 

 

 

 

 

 

PayPoint PLC

 

 

371,823

 

 

 

3,024,326

 

IT Services - 1.5% (d)

 

 

 

 

 

 

 

 

Network International Holdings PLC (a)(f)

 

 

3,245,138

 

 

 

18,503,510

 

Total United Kingdom

 

 

 

 

 

 

21,527,836

 

 

United States - 70.1%

 

 

 

 

 

 

 

 

Consumer Finance - 10.2%

 

 

 

 

 

 

 

 

American Express Co.

 

 

507,145

 

 

 

71,730,589

 

Discover Financial Services (b)

 

 

361,129

 

 

 

34,303,644

 

Green Dot Corp. - Class A (a)

 

 

369,276

 

 

 

16,909,148

 

Total Consumer Finance

 

 

 

 

 

 

122,943,381

 

IT Services - 56.7% (d)

 

 

 

 

 

 

 

 

Affirm Holdings, Inc. (a)(b)

 

 

349,653

 

 

 

24,727,460

 

Boku, Inc. (a)(f)

 

 

1,942,415

 

 

 

4,739,753

 

Euronet Worldwide, Inc. (a)

 

 

134,681

 

 

 

18,626,382

 

Evo Payments, Inc. - Class A (a)(b)

 

 

652,824

 

 

 

17,965,716

 

Fidelity National Information Services, Inc.

 

 

518,266

 

 

 

72,873,382

 

Fiserv, Inc. (a)

 

 

570,574

 

 

 

67,921,129

 

FleetCor Technologies, Inc. (a)

 

 

109,598

 

 

 

29,441,311

 

Global Payments, Inc.

 

 

271,889

 

 

 

54,807,385

 

I3 Verticals, Inc. - Class A (a)(b)

 

 

496,865

 

 

 

15,464,923

 

International Money Express, Inc. (a)

 

 

214,928

 

 

 

3,226,069

 

MasterCard, Inc. - Class A

 

 

207,035

 

 

 

73,714,812

 

Net 1 UEPS Technologies, Inc. (a)

 

 

584,276

 

 

 

3,271,946

 

PayPal Holdings, Inc. (a)

 

 

302,671

 

 

 

73,500,626

 

Paysign, Inc. (a)(b)

 

 

645,132

 

 

 

2,819,227

 

Sezzle, Inc. (a)

 

 

796,083

 

 

 

4,450,330

 

Shift4 Payments, Inc. - Class A (a)

 

 

249,485

 

 

 

20,460,265

 

Square, Inc. - Class A (a)

 

 

331,298

 

 

 

75,221,212

 

USA Technologies, Inc. (a)

 

 

448,687

 

 

 

5,258,612

 

Visa, Inc. - Class A (b)

 

 

342,126

 

 

 

72,438,338

 

Western Union Co. (b)

 

 

920,965

 

 

 

22,710,997

 

WEX, Inc. (a)

 

 

101,973

 

 

 

21,334,791

 

Total IT Services

 

 

 

 

 

 

684,974,666

 

 

The accompanying notes are an integral part of these financial statements.

30 

 

ETFMG™ ETFs

 

ETFMG Prime Mobile Payments ETF

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

Software - 1.5%

 

Shares

 

 

Value

 

 

 

 

 

 

 

 

 

ACI Worldwide, Inc. (a)

 

 

491,835

 

 

$

18,714,322

 

Technology Hardware, Storage & Peripherals - 1.7%

 

 

 

 

 

 

 

 

NCR Corp. (a)

 

 

533,262

 

 

 

20,237,293

 

Total United States

 

 

 

 

 

 

846,869,662

 

TOTAL COMMON STOCKS (Cost $1,011,463,970)

 

 

 

 

 

 

1,200,210,302

 

 

INVESTMENTS PURCHASED WITH PROCEEDS FROM

 

 

 

 

 

 

 

 

SECURITIES LENDING COLLATERAL - 9.4%

 

 

 

 

 

 

 

 

ETFMG Sit Ultra Short ETF (e)

 

 

600,000

 

 

 

29,847,300

 

Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (c)

 

 

84,242,577

 

 

 

84,242,577

 

TOTAL INVESTMENTS PURCHASED WITH PROCEEDS

 

 

 

 

 

 

 

 

FROM SECURITIES LENDING COLLATERAL (Cost

 

 

 

 

 

 

 

 

$114,324,845)

 

 

 

 

 

 

114,089,877

 

 

SHORT-TERM INVESTMENTS - 0.1%

 

 

 

 

 

 

 

 

Money Market Funds - 0.1%

 

 

 

 

 

 

 

 

Invesco Advisers, Inc. STIT-Treasury Portfolio –

 

 

 

 

 

 

 

 

Institutional Class, 0.01% (c)

 

 

1,767,533

 

 

 

1,767,533

 

TOTAL SHORT-TERM INVESTMENTS (Cost $1,767,533)

 

 

 

 

 

 

1,767,533

 

 

Total Investments (Cost $1,127,556,348) - 109.0%

 

 

 

 

 

 

1,316,067,712

 

Liabilities in Excess of Other Assets - (9.0)%

 

 

 

 

 

 

 (108,362,693

)  

TOTAL NET ASSETS - 100.0%

 

 

 

 

 

$

1,207,705,019

 

 

Percentages are stated as a percent of net assets.

 

ADR American Depositary Receipt

PLC   Public Limited Company

(a)

Non-income producing security.

(b)

All or a portion of this security is out on loan as of March 31, 2021.

(c)

The rate quoted is the annualized seven-day yield at March 31, 2021.

(d)

As of March 31, 2021 the Fund had a significant portion of its assets in the IT Services Industry.

(e)

Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.

(f)

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 $159,462,328, which represented 13.20% of the net assets of the Fund.

 

The accompanying notes are an integral part of these financial statements.

31 

 

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

March 31, 2021 (Unaudited)

 

 

 

  

Principal

Amount

     Value  

ASSET BACKED SECURITIES - 0.6%

 

  

 

  

 

      

Carvana Auto Receivables Trust

 

 

 

 

 

 

 

 

Series 2019-2, 2.580%, 03/15/2023 (a)

 

$

649,074

 

 

$

650,050

 

TOTAL ASSET BACKED SECURITIES (Cost $650,104)

 

 

 

 

 

 

650,050

 

CORPORATE OBLIGATIONS - 97.4%

 

 

 

 

 

 

 

 

Agriculture - 0.2%

 

 

 

 

 

 

 

 
Bunge, Ltd. Finance Corp. 

 

 

 

 

 

 

 

 

3.000%, 09/25/2022

 

 

206,000

 

 

 

212,464

 

Automotive - 9.9%

 

 

 

 

 

 

 

 
American Honda Finance Corp.

 

 

 

 

 

 

 

 

0.545% (3 Month LIBOR + 0.350%) 11/05/2021 (b)

 

 

450,000

 

 

 

450,866

 

0.503% (3 Month LIBOR + 0.280%) 01/12/2024 (b)

 

 

2,000,000

 

 

 

2,000,347

 

BMW US Capital LLC

 

 

 

 

 

 

 

 

0.634% (3 Month LIBOR + 0.410%) 04/12/2021 (a)(b)

 

 

500,000

 

 

 

500,054

 

0.698% (3 Month LIBOR + 0.500%) 08/13/2021 (a)(b)

 

 

160,000

 

 

 

160,251

 

0.877%(3 Month LIBOR + 0.640%) 04/06/2022 (a)(b)

 

 

1,290,000

 

 

 

1,295,705

 

Daimler Finance North America LLC

 

 

 

 

 

 

 

 

1.062% (3 Month LIBOR + 0.880%) 02/22/2022 (a)(b)

 

 

2,422,000

 

 

 

2,437,035

 
General Motors Financial Co., Inc. 

 

 

 

 

 

 

 

 

3.150%, 06/30/2022

 

 

1,488,000

 

 

 

1,530,027

 

Hyundai Capital America

 

 

 

 

 

 

 

 

2.850%, 11/01/2022 (a)

 

 

2,000,000

 

 

 

2,063,512

 
PACCAR Financial Corp. 

 

 

 

 

 

 

 

 

0.455% (3 Month LIBOR + 0.260%) 05/10/2021 (b)

 

 

190,000

 

 

 

190,062

 
Toyota Motor Credit Corp. 

 

 

 

 

 

 

 

 

0.592% (3 Month LIBOR + 0.400%) 05/17/2022 (b)

 

 

500,000

 

 

 

501,561

 

 

 

 

 

 

 

 

11,129,420

 

Banks - 27.5% (e)

 

 

 

 

 

 

 

 

Bank of America Corp.

 

 

 

 

 

 

 

 

1.643% (3 Month LIBOR + 1.420%) 04/19/2021 (b)

 

 

1,000,000

 

 

 

1,000,556

 

1.404% (3 Month LIBOR + 1.180%) 10/21/2022 (b)

 

 

100,000

 

 

 

100,603

 

1.218% (3 Month LIBOR + 1.000%) 04/24/2023 (b)

 

 

1,000,000

 

 

 

1,008,638

 

1.178% (3 Month LIBOR + 0.960%) 07/23/2024 (b)

 

 

1,250,000

 

 

 

1,268,751

 

Bank of Montreal

 

 

 

 

 

 

 

 

0.807% (3 Month LIBOR + 0.630%) 09/11/2022 (b)

 

 

250,000

 

 

 

251,904

 

Bank of Nova Scotia

 

 

 

 

 

 

 

 

0.816% (3 Month LIBOR + 0.640%) 03/07/2022 (b)

 

 

150,000

 

 

 

150,783

 

Barclays PLC

 

 

 

 

 

 

 

 

1.850% (3 Month LIBOR + 1.625%) 01/10/2023 (b)

 

 

1,500,000

 

 

 

1,513,210

 

Citibank NA

 

 

 

 

 

 

 

 

0.782% (3 Month LIBOR + 0.600%) 05/20/2022 (b)

 

 

1,821,000

 

 

 

1,822,520

 
Citizens Financial Group, Inc.

 

 

 

 

 

 

 

 

4.150%, 09/28/2022 (a)

 

 

672,000

 

 

 

703,413

 

Commonwealth Bank of Australia

 

 

 

 

 

 

 

 

0.870% (3 Month LIBOR + 0.680%) 09/18/2022 (a)(b)

 

 

2,539,000

 

 

 

2,559,537

 

 

The accompanying notes are an integral part of these financial statements.

32 

 

 

ETFMG™ ETFs

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

Principal

Amount

  

Value

  

Cooperatieve Rabobank UA 

 

    

 

 

  

0.705% (3 Month LIBOR + 0.480%) 01/10/2023 (b)

$

  895,000

 

$

900,151

  

Credit Suisse AG

 

 

 

 

 

  

0.531% (3 Month SOFR + 0.450%) 02/04/2022 (b)

 

1,490,000

 

 

1,490,952

  

Fifth Third Bank NA

 

 

 

 

 

  

0.845% (3 Month LIBOR + 0.640%) 02/01/2022 (b)

 

2,000,000

 

 

2,009,686

  

First Niagara Financial Group, Inc.

 

 

 

 

 

  

7.250%, 12/15/2021

 

1,050,000

 

 

1,099,028

  

Fulton Financial Corp.

 

 

 

 

 

  

3.600%, 03/16/2022

 

87,000

 

 

89,459

  

Goldman Sachs Group, Inc.

 

 

 

 

 

  

0.992% (3 Month LIBOR + 0.780%) 10/31/2022 (b)

 

698,000

 

 

700,391

  

Huntington Bancshares, Inc.

 

 

 

 

 

  

4.350%, 02/04/2023

 

766,000

 

 

815,027

  

JPMorgan Chase & Co.

 

 

 

 

 

  

1.241% (3 Month LIBOR + 1.000%) 01/15/2023 (b)

 

1,000,000

 

 

1,007,063

  

1.118% (3 Month LIBOR + 0.900%) 04/25/2023 (b)

 

1,155,000

 

 

1,164,033

  

0.590% (3 Month SOFR + 0.580%) 03/16/2024 (b)

 

1,000,000

 

 

1,003,556

  

Mitsubishi UFJ Financial Group, Inc.

 

 

 

 

 

  

1.008% (3 Month LIBOR + 0.790%) 07/25/2022 (b)

 

409,000

 

 

412,147

  

Mizuho Financial Group, Inc.

 

 

 

 

 

  

1.063% (3 Month LIBOR + 0.840%) 07/16/2023 (b)

 

500,000

 

 

503,373

  

Morgan Stanley

 

 

 

 

 

  

0.725% (3 Month SOFR + 0.700%) 01/20/2023 (b)

 

1,678,000

 

 

1,683,355

  

PNC Bank NA

 

 

 

 

 

  

0.713% (3 Month LIBOR + 0.500%) 07/27/2022 (b)

 

2,160,000

 

 

2,172,218

  

Royal Bank of Canada

 

 

 

 

 

  

0.602% (3 Month LIBOR + 0.390%) 04/30/2021 (b)

 

445,000

 

 

445,154

  

0.583% (3 Month LIBOR + 0.360%) 01/17/2023 (b)

 

1,000,000

 

 

1,003,899

  

Swedbank AB

 

 

 

 

 

  

0.884% (3 Month LIBOR + 0.700%) 03/14/2022 (a)(b)

 

200,000

 

 

201,106

  

Truist Bank

 

 

 

 

 

  

0.792% (3 Month LIBOR + 0.590%) 08/02/2022 (b)

 

590,000

 

 

591,010

  

US Bank NA

 

 

 

 

 

  

0.615% (3 Month LIBOR + 0.440%) 05/23/2022 (b)

 

805,000

 

 

808,024

  

Wells Fargo Bank NA

 

 

 

 

 

  

0.845% (3 Month LIBOR + 0.660%) 09/09/2022 (b)

 

750,000

 

 

752,527

  

2.082%, 09/09/2022 (c)

 

200,000

 

 

201,540

  

Westpac Banking Corp.

 

 

 

 

 

  

0.795% (3 Month LIBOR + 0.570%) 01/11/2023 (b)

 

1,500,000

 

 

1,510,986

  

Business Support Services - 2.4%

 

 

 

 

30,944,600

  

 

 

 

 

 

  

Glencore Finance Canada, Ltd.

 

 

 

 

 

  

4.950%, 11/15/2021 (a)

 

1,200,000

 

 

1,233,769

  

4.250%, 10/25/2022 (a)

 

1,000,000

 

 

1,053,585

  

Pentair Finance

 

 

 

 

 

  

5.000%, 05/15/2021

 

400,000

 

 

401,226

  

 

 

 

 

 

 

2,688,580

  

 

The accompanying notes are an integral part of these financial statements.

33 

 

ETFMG™ ETFs

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

Principal

Amount

 

Value

  

Capital Markets - 5.0%

 

 

 

 

 

  

Bank of New York Mellon Corp.

 

 

 

 

 

  

1.262% (3 Month LIBOR + 1.050%) 10/30/2023 (b)

$

  400,000

 

$

405,611

  

BGC Partners, Inc.

 

 

 

 

 

  

5.125%, 05/27/2021

 

1,148,000

 

 

1,154,079

  

5.375%, 07/24/2023

 

1,245,000

 

 

1,354,183

  

Charles Schwab Corp.

 

 

 

 

 

  

0.502% (3 Month LIBOR + 0.320%) 05/21/2021 (b)

 

649,000

 

 

649,105

  

0.510% (3 Month SOFR + 0.500%) 03/18/2024 (b)

 

2,000,000

 

 

2,013,561

  

Chemicals - 3.1%

 

 

 

 

5,576,539

  

 

 

 

 

 

  

LYB International Finance III LLC

 

 

 

 

 

  

1.202% (3 Month LIBOR + 1.000%) 10/01/2023 (b)

 

2,000,000

 

 

2,006,056

  

Sherwin-Williams Co.

 

 

 

 

 

  

2.750%, 06/01/2022

 

293,000

 

 

299,632

  

Westlake Chemical Corp.

 

 

 

 

 

  

3.600%, 07/15/2022

 

1,150,000

 

 

1,176,761

  

Communications Equipment - 0.3%

 

 

 

 

3,482,449

  

 

 

 

 

 

  

Motorola Solutions, Inc.

 

 

 

 

 

  

3.500%, 03/01/2023

 

361,000

 

 

379,633

  

Consumer Finance - 3.2%

 

 

 

 

 

  

AIG Global Funding

 

 

 

 

 

  

0.661% (3 Month LIBOR + 0.460%) 06/25/2021 (a)(b)

 

1,132,000

 

 

1,133,246

  

2.700%, 12/15/2021 (a)

 

75,000

 

 

76,289

  

Capital One Financial Corp.

 

 

 

 

 

  

0.932% (3 Month LIBOR + 0.720%) 01/30/2023 (b)

 

2,291,000

 

 

2,308,170

  

Containers & Packaging - 0.5%

 

 

 

 

3,517,705

  

 

 

 

 

 

  

WestRock RKT LLC

 

 

 

 

 

  

4.000%, 03/01/2023

 

500,000

 

 

526,771

  

Diversified Telecommunication Services - 2.2%

 

 

 

 

 

  

Verizon Communications, Inc.

 

 

 

 

 

  

0.510% (3 Month SOFR + 0.500%) 03/22/2024 (b)

 

2,500,000

 

 

2,507,841

  

Electronic Products - 0.5%

 

 

 

 

 

  

Arrow Electronics, Inc.

 

 

 

 

 

  

3.500%, 04/01/2022

 

500,000

 

 

511,807

  

Energy - 0.1%

 

 

 

 

 

  

ConocoPhillips Co.

 

 

 

 

 

  

1.098% (3 Month LIBOR + 0.900%) 05/15/2022 (b)

 

150,000

 

 

151,161

  

Food Products - 1.5%

 

 

 

 

 

  

General Mills, Inc.

 

 

 

 

 

  

1.233% (3 Month LIBOR + 1.010%) 10/17/2023 (b)

 

1,650,000

 

 

1,674,695

  

 

The accompanying notes are an integral part of these financial statements.

34 

 

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

Principal 
Amount

 

Value

  

Health Care Providers & Services - 2.0%

 

 

 

 

 

    

Cigna Corp.

 

 

 

 

 

    

1.131% (3 Month LIBOR + 0.890%) 07/15/2023 (b)

 

$

1,920,000

 

$

1,944,020

  

UnitedHealth Group, Inc.

 

 

 

 

 

    

0.444% (3 Month LIBOR + 0.260%) 06/15/2021 (b)

 

 

270,000

 

 

270,101

  

Household Products - 0.2%

 

 

 

 

 

 2,214,121  

 

 

 

 

 

    

Reckitt Benckiser Treasury Services PLC

 

 

 

 

 

    

0.751% (3 Month LIBOR + 0.560%) 06/24/2022 (a)(b)

 

 

200,000

 

 

201,156

  

Industrial Conglomerates - 2.0%

 

 

 

 

 

    

Honeywell International, Inc.

 

 

 

 

 

    

0.411% (3 Month LIBOR + 0.230%) 08/19/2022 (b)

 

 

2,270,000

 

 

2,271,825

  

Insurance - 7.2%

 

 

 

 

 

    

Allstate Corp.

 

 

 

 

 

    

0.823% (3 Month LIBOR + 0.630%) 03/29/2023 (b)

 

 

1,683,000

 

 

1,696,989

  

Athene Global Funding

 

 

 

 

 

    

1.468% (3 Month LIBOR + 1.230%) 07/01/2022 (a)(b)

 

 

200,000

 

 

202,180

  

Fidelity National Financial, Inc.

 

 

 

 

 

    

5.500%, 09/01/2022

 

 

 500,000

 

 

 534,106  

Infinity Property and Casualty Corp.

 

 

 

 

 

    

5.000%, 09/19/2022

 

 

 295,000

 

 

 311,362  

Jackson National Life Global Funding

 

 

 

 

 

    

0.657% (3 Month LIBOR + 0.480%) 06/11/2021 (a)(b)

 

 

250,000

 

 

250,200

  

0.692% (3 Month SOFR + 0.600%) 01/06/2023 (a)(b)

 

 

2,000,000

 

 

2,010,466

  

Metropolitan Life Global Funding I

 

 

 

 

 

    

0.662% (3 Month SOFR + 0.570%) 01/13/2023 (a)(b)

 

 

2,000,000

 

 

2,012,380

  

Progressive Corp.

 

 

 

 

 

    

3.750%, 08/23/2021

 

 

 1,000,000

 

 

 1,013,533  

Insurance Carriers - 1.2%

 

 

 

 

 

 8,031,216  

 

 

 

 

 

    

John Hancock Life Insurance Co.

 

 

 

 

 

    

7.375%, 02/15/2024 (a)

 

 

 245,000

 

 

 287,478  

Metropolitan Life Insurance Co.

 

 

 

 

 

    

7.875%, 02/15/2024 (a)

 

 

 825,000

 

 

 985,156  

Internet & Direct Marketing Retail - 1.4%

 

 

 

 

 

 1,272,634  

 

 

 

 

 

    

Expedia Group, Inc.

 

 

 

 

 

    

3.600%, 12/15/2023 (a)

 

 

 1,500,000

 

 

 1,597,252  

Investment & Miscellaneous Financial Services - 1.1%

 

 

 

 

 

    

FMR LLC

 

 

 

 

 

 

  

5.350%, 11/15/2021 (a)

 

 

 200,000

 

 

 205,933  

Intercontinental Exchange, Inc.

 

 

 

 

 

    

0.834% (3 Month LIBOR + 0.650%) 06/15/2023 (b)

 

 

1,000,000

 

 

1,001,383

  

 

 

 

 

 

 

1,207,316

  

 

The accompanying notes are an integral part of these financial statements.

35 

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

Principal 
Amount

 

Value

  

Machinery - 2.4%

 

 

 

 

 

 

  

Caterpillar Financial Services Corp.

 

 

 

 

 

 

  

0.456% (3 Month LIBOR + 0.280%) 09/07/2021 (b)

 

$

260,000

 

$

260,294

  

Otis Worldwide Corp.

 

 

 

 

 

 

  

0.653% (3 Month LIBOR + 0.450%) 04/05/2023 (b)

 

 

2,400,000

 

 

2,400,130

  

Machinery - Construction / Farm - 0.3%

 

 

 

 

 

2,660,424

  

 

 

 

 

      

John Deere Capital Corp.

 

 

 

 

 

 

  

0.443% (3 Month LIBOR + 0.260%) 09/10/2021 (b)

 

 

300,000

 

 

300,339

  

Motion Picture and Video Industries - 0.7%

 

 

 

 

 

 

  

Historic TW, Inc.

 

 

 

 

 

 

  

9.150%, 02/01/2023

 

 

650,000

 

 

741,512

  

Multi Utilities - 5.9%

 

 

 

 

 

 

  

CenterPoint Energy Houston Electric LLC

 

 

 

 

 

 

  

1.850%, 06/01/2021

 

 

350,000

 

 

350,412

  

Dominion Energy, Inc.

 

 

 

 

 

 

  

0.714% (3 Month LIBOR + 0.530%) 09/15/2023 (b)

 

 

1,000,000

 

 

1,001,657

  

Duke Energy Florida LLC

 

 

 

 

 

 

  

0.440% (3 Month LIBOR + 0.250%) 11/26/2021 (b)

 

 

520,000

 

 

520,562

  

Duke Energy Florida Project Finance LLC

 

 

 

 

 

 

  

1.731%, 09/01/2024

 

 

153,729

 

 

155,422

  

Duke Energy Progress LLC

 

 

 

 

 

 

  

0.369% (3 Month LIBOR + 0.180%) 02/18/2022 (b)

 

 

1,000,000

 

 

999,860

  

Duquesne Light Holdings, Inc.

 

 

 

 

 

 

  

5.900%, 12/01/2021 (a)

 

 

395,000

 

 

407,949

  

Florida Power & Light Co.

 

 

 

 

 

 

  

0.599% (3 Month LIBOR + 0.380%) 07/28/2023 (b)

 

 

2,761,000

 

 

2,761,066

  

Wisconsin Power and Light Co.

 

 

 

 

 

 

  

2.250%, 11/15/2022

 

 

442,000

 

 

452,735

  

Nondepository Credit Intermediation - 0.4%

 

 

 

 

 

6,649,663

  

 

 

 

 

      

7-Eleven, Inc.

 

 

 

 

 

 

  

0.645% (3 Month LIBOR + 0.450%) 08/10/2022 (a)(b)

 

 

500,000

 

 

500,539

  

Oil, Gas & Consumable Fuels - 4.2%

 

 

 

 

 

 

  

BP Capital Markets PLC

 

 

 

 

 

 

  

0.840% (3 Month LIBOR + 0.650%) 09/19/2022 (b)

 

 

100,000

 

 

100,470

  

Kinder Morgan, Inc.

 

 

 

 

 

 

  

1.521% (3 Month LIBOR + 1.280%) 01/15/2023 (b)

 

 

1,508,000

 

 

1,531,715

  

Phillips 66

 

 

 

 

 

 

  

0.814% (3 Month LIBOR + 0.620%) 02/15/2024 (b)

 

 

1,900,000

 

 

1,903,101

  

Valero Energy Corp.

 

 

 

 

 

 

  

1.334% (3 Month LIBOR + 1.150%) 09/15/2023 (b)

 

 

1,158,000

 

 

1,162,022

  

 

 

 

 

 

 

4,697,308

  

 

The accompanying notes are an integral part of these financial statements.

36 

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

 

Principal
Amount

 

 Value

  

Pharmaceuticals - 4.5%

 

 

 

 

 

    

AbbVie, Inc.

 

 

 

 

 

 

  

0.832% (3 Month LIBOR + 0.650%) 11/21/2022 (b)

 

$

2,000,000

 

$

2,012,934

  

AstraZeneca PLC

 

 

 

 

 

 

  

0.857% (3 Month LIBOR + 0.665%) 08/17/2023 (b)

 

 

2,195,000

 

 

2,215,558

  

Perrigo Co. PLC

 

 

 

 

 

 

  

4.000%, 11/15/2023

 

 

400,000

 

 

422,696

  

Pfizer, Inc.

 

 

 

 

 

 

  

0.514% (3 Month LIBOR + 0.330%) 09/15/2023 (b)

 

 

386,000

 

 

388,007

  

Professional Services - 2.3%

 

 

 

 

 

5,039,195

  

 

 

 

 

 

 

  

Equifax, Inc.

 

 

 

 

 

 

  

1.064% (3 Month LIBOR + 0.870%) 08/15/2021 (b)

 

 

2,411,000

 

 

2,416,373

  

Semiconductors & Semiconductor Equipment - 1.1%

 

 

 

 

 

 

  

QUALCOMM, Inc.

 

 

 

 

 

 

  

0.942% (3 Month LIBOR + 0.730%) 01/30/2023 (b)

 

 

1,267,000

 

 

1,280,525

  

Technology Hardware, Storage & Peripherals - 3.9%

 

 

 

 

 

 

  

Apple, Inc.

 

 

 

 

 

 

  

0.553% (3 Month LIBOR + 0.350%) 05/11/2022 (b)

 

 

1,650,000

 

 

1,656,764

  

Hewlett Packard Enterprise Co.

 

 

 

 

 

 

  

0.958% (3 Month LIBOR + 0.720%) 10/05/2021 (b)

 

 

2,662,000

 

 

2,662,449

  

 

 

 

 

 

 

4,319,213

  

Trading Companies & Distributors - 0.2%

 

 

 

 

 

  

GATX Corp.

 

 

 

 

 

 

  

0.915% (3 Month LIBOR + 0.720%) 11/05/2021 (b)

 

 

140,000

 

 

140,484

  

SMBC Aviation Capital Finance DAC

 

 

 

 

 

 

  

3.000%, 07/15/2022 (a)

 

 

200,000

 

 

204,943

  

TOTAL CORPORATE OBLIGATIONS (Cost $108,583,883)

 

 

 

 

 

 345,427

  

 

 

 

 

 

109,049,703

  

 

 

 

 

 

 

  

MUNICIPAL DEBT OBLIGATIONS - 0.9%

 

 

 

 

 

    

City of Moline IL

 

 

 

 

 

 

  

2.080%, 12/01/2021

 

 

135,000

 

 

135,286

  

2.130%, 12/01/2022

 

 

100,000

 

 

100,619

  

City of Oakland CA

 

 

 

 

 

 

  

4.000%, 12/15/2022

 

 

700,000

 

 

741,251

  

TOTAL MUNICIPAL MUNICIPAL DEBT OBLIGATIONS

 

 

 

 

 

 

  

(Cost $974,664)

 

 

 

 

 

977,156

  

 

The accompanying notes are an integral part of these financial statements.

37 

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

 

Shares

 

Value

  

SHORT-TERM INVESTMENTS - 0.8%

 

 

 

 

 

 

  

MONEY MARKET FUNDS - 0.8%

 

 

 

 

 

 

  

First American Government Obligations Fund – Class X, 0.04% (d)

 

 

904,647

 

$

904,647

  

TOTAL SHORT-TERM INVESTMENTS (Cost $904,647)

 

 

 

 

 

904,647

  

 

 

 

 

 

 

 

  

Total Investments (Cost $111,113,298) - 99.7%

 

 

 

 

 

111,581,556

  

Other Assets in Excess of Liabilities - 0.3%

 

 

 

 

 

334,396

  

TOTAL NET ASSETS - 100.0%

 

 

 

 

$

111,915,952

  

 

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 $22,933,184, which represented 20.49% 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 March 31, 2021.

(c)

Variable rate security. The coupon is based on an underlying pool of assets. The rate reported is the rate in effect as of March 31, 2021.

(d)

The rate quoted is the annualized seven-day yield at March 31, 2021.

(e)

As of March 31, 2021, 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.

38 

 

 

ETFMG™ ETFs

 

ETFMG Travel Tech ETF

 

Schedule of Investments

March 31, 2021 (Unaudited)

 

 

Shares

 

Value

 

COMMON STOCKS - 99.6%

 

 

 

 

 

 

 

Australia - 3.9%

 

 

 

 

 

 

 

Internet & Direct Marketing Retail - 3.9% (d)

 

 

 

 

 

 

 

Webjet, Ltd. (b)

 

 

2,896,157

 

$

12,274,741

 

 

 

 

 

 

 

 

 

Brazil - 3.1%

 

 

 

 

 

 

 

Hotels, Restaurants & Leisure - 3.1%

 

 

 

 

 

 

 

CVC Brasil Operadora e Agencia de Viagens SA (b)

 

 

2,805,761

 

 

9,815,042

 

 

 

 

 

 

 

 

 

Canada - 3.2%

 

 

 

 

 

 

 

Road & Rail - 3.2%

 

 

 

 

 

 

 

Facedrive, Inc. (a)(b)

 

 

524,103

 

 

10,280,209

 

 

 

 

 

 

 

 

 

Cayman Islands - 11.1%

 

 

 

 

 

 

 

Hotels, Restaurants & Leisure - 1.8%

 

 

 

 

 

 

 

Tuniu Corp. - ADR (a)(b)

 

 

1,668,432

 

 

5,772,775

 

Internet & Direct Marketing Retail - 8.3% (d)

 

 

 

 

 

 

 

Tongcheng-Elong Holdings, Ltd. (a)

 

 

5,845,998

 

 

13,189,798

 

Trip.com Group, Ltd. - ADR (a)

 

 

324,557

 

 

12,862,194

 

Total Internet & Direct Marketing Retail

 

 

 

 

 

26,051,992

 

Software - 1.0%

 

 

 

 

 

 

 

Lvji Technology Holdings, Inc. (a)

 

 

20,766,380

 

 

3,018,486

 

Total Cayman Islands

 

 

 

 

 

34,843,253

 

 

 

 

 

 

 

 

 

China - 3.8%

 

 

 

 

 

 

 

IT Services - 3.8%

 

 

 

 

 

 

 

TravelSky Technology, Ltd.

 

 

5,208,277

 

 

12,179,735

 

 

 

 

 

 

 

 

 

Japan - 8.0%

 

 

 

 

 

 

 

Hotels, Restaurants & Leisure - 1.5%

 

 

 

 

 

 

 

Adventure, Inc.

 

 

97,063

 

 

4,768,776

 

Internet & Direct Marketing Retail - 6.5% (d)

 

 

 

 

 

 

 

Airtrip Corp.

 

 

302,516

 

 

6,275,721

 

Open Door, Inc. (a)

 

 

446,212

 

 

7,394,888

 

Temairazu, Inc.

 

 

92,486

 

 

4,410,260

 

Veltra Corp. (a)

 

 

467,226

 

 

2,641,531

 

  Total Internet & Direct Marketing Retail

 

 

 

 

 

20,722,400

 

Total Japan

 

 

 

 

 

25,491,176

 

 

 

 

 

 

 

 

 

Luxembourg - 2.9%

 

 

 

 

 

 

 

Internet & Direct Marketing Retail - 2.9% (d)

 

 

 

 

 

 

 

eDreams ODIGEO SA (a)

 

 

1,688,858

 

 

9,328,300

 

 

 

 

 

 

 

 

 

Mauritius - 3.9%

 

 

 

 

 

 

 

Internet & Direct Marketing Retail - 3.9% (d)

 

 

 

 

 

 

 

MakeMyTrip, Ltd. (a)

 

 

394,066

 

 

12,444,604

 

 

The accompanying notes are an integral part of these financial statements.

39 

 

ETFMG™ ETFs

 

ETFMG Travel Tech ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

Shares

 

Value

 

Netherlands - 4.6%

 

 

 

 

 

 

 

Interactive Media & Services - 4.6%

 

 

 

 

 

 

 

Trivago NV - ADR (a)(b)(e)

 

 

3,407,932

 

$

14,654,107

 

 

 

 

 

 

 

 

 

Republic of Korea - 7.3%

 

 

 

 

 

 

 

Hotels, Restaurants & Leisure - 7.3%

 

 

 

 

 

 

 

Hana Tour Service, Inc. (a)

 

 

197,621

 

 

11,838,925

 

Lotte Tour Development Co., Ltd. (a)

 

 

693,874

 

 

11,464,938

 

  Total Hotels, Restaurants & Leisure

 

 

 

 

 

23,303,863

 

 

 

 

 

 

 

 

 

Spain - 3.8%

 

 

 

 

 

 

 

IT Services - 3.8%

 

 

 

 

 

 

 

Amadeus IT Group SA (a)

 

 

171,191

 

 

12,121,671

 

 

 

 

 

 

 

 

 

United Kingdom - 12.8%

 

 

 

 

 

 

 

Internet & Direct Marketing Retail - 11.2% (d)

 

 

 

 

 

 

 

Despegar.com Corp. (a)

 

 

988,520

 

 

13,473,528

 

On the Beach Group PLC

 

 

1,947,892

 

 

10,902,631

 

Trainline PLC (a)

 

 

1,823,280

 

 

11,537,361

 

  Total Internet & Direct Marketing Retail

 

 

 

 

 

35,913,520

 

Software - 1.6%

 

 

 

 

 

 

 

accesso Technology Group PLC (a)

 

 

580,709

 

 

5,083,615

 

Total United Kingdom

 

 

 

 

 

40,997,135

 

 

 

 

 

 

 

 

 

United States - 31.2%

 

 

 

 

 

 

 

Hotels, Restaurants & Leisure - 4.7%

 

 

 

 

 

 

 

Airbnb, Inc. (a)(b)

 

 

79,132

 

 

14,872,068

 

Interactive Media & Services - 4.2%

 

 

 

 

 

 

 

TripAdvisor, Inc. (a)(b)

 

 

245,263

 

 

13,192,697

 

Internet & Direct Marketing Retail - 9.7% (d)

 

 

 

 

 

 

 

Booking Holdings, Inc. (a)

 

 

6,425

 

 

14,969,222

 

Expedia Group, Inc.

 

 

90,028

 

 

15,495,620

 

  Total Internet & Direct Marketing Retail

 

 

 

 

 

30,464,842

 

IT Services - 3.9%

 

 

 

 

 

 

 

Sabre Corp.

 

 

828,041

 

 

12,263,287

 

Road & Rail - 8.7%

 

 

 

 

 

 

 

Lyft, Inc. - Class A (a)(b)

 

 

204,898

 

 

12,945,456

 

Uber Technologies, Inc. (a)

 

 

268,726

 

 

14,648,254

 

  Total Road & Rail

 

 

 

 

 

27,593,710

 

Total United States

 

 

 

 

 

98,386,604

 

TOTAL COMMON STOCKS (Cost $309,460,197)

 

 

 

 

 

316,120,440

 

 

The accompanying notes are an integral part of these financial statements.

40 

 

 

ETFMG™ ETFs

 

ETFMG Travel Tech ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

 

Shares

 

Value

 

INVESTMENTS PURCHASED WITH PROCEEDS FROM

 

 

 

 

 

 

 

SECURITIES LENDING COLLATERAL – 15.0%

 

 

 

 

 

 

 

ETFMG Sit Ultra Short ETF (e)

 

 

200,000

 

$

9,949,100

 

Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (c)

 

 

37,492,170

 

 

37,492,170

 

TOTAL INVESTMENTS PURCHASED WITH PROCEEDS

 

 

 

 

 

 

 

FROM SECURITIES LENDING COLLATERAL (Cost $47,439,870)

 

 

 

 

 

47,441,270

 

 

 

 

 

 

 

 

 

SHORT-TERM INVESTMENTS - 0.4%

 

 

 

 

 

 

 

Money Market Funds - 0.4%

 

 

 

 

 

 

 

Invesco Advisers, Inc. STIT-Treasury Portfolio –

 

 

 

 

 

 

 

Institutional Class, 0.01% (c)

 

 

1,165,850

 

 

1,165,850

 

TOTAL SHORT-TERM INVESTMENTS (Cost $1,165,850)

 

 

 

 

 

1,165,850

 

 

 

 

 

 

 

 

 

Total Investments (Cost $358,065,917) - 115.0%

 

 

 

 

 

364,727,560

 

Liabilities in Excess of Other Assets - (15.0)%

 

 

 

 

 

(47,466,725

)

TOTAL NET ASSETS - 100.0%

 

 

 

 

$

317,260,835

 

 

Percentages are stated as a percent of net assets.

 

ADR    American Depositary Receipt

PLC     Public Limited Company

(a)

Non-income producing security.

(b)

All or a portion of this security is out on loan as of March 31, 2021.

(c)

The rate quoted is the annualized seven-day yield at March 31, 2021.

(d)

As of March 31, 2021 the Fund had a significant portion of its assets in the Internet & Direct Marketing Retail 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.

41 

 

 

ETFMG™ ETFs

ETFMG Treatments, Testing and Advancements ETF

 

Schedule of Investments

March 31, 2021 (Unaudited)

 

 

 

 

Shares

 

 

Value

  

COMMON STOCKS - 99.6%

 

 

 

 

 

 

  

Canada - 5.9%

 

 

 

 

 

 

  

Biotechnology - 1.5% (d)

 

 

 

 

 

 

  

Arbutus Biopharma Corp. (a)

 

26,009

 

 

$

86,610

  

IMV, Inc. (a)(b)

 

20,519

 

 

 

68,123

  

VBI Vaccines, Inc. (a)(b)

 

155,649

 

 

 

484,068

  

XBiotech, Inc. (a)

 

8,963

 

 

 

153,895

  

Total Biotechnology

 

 

 

 

 

792,696

  

Life Sciences Tools & Services - 4.4%

 

 

 

 

 

 

  

AbCellera Biologics, Inc. (a)(b)

 

72,624

 

 

 

2,466,311

  

Total Canada

 

 

 

 

 

3,259,007

  

 

 

 

 

 

 

 

  

Cayman Islands - 5.7%

 

 

 

 

 

 

  

Biotechnology - 5.7% (d)

 

 

 

 

 

 

  

I-Mab - ADR (a)

 

22,040

 

 

 

1,068,279

  

Zai Lab Ltd. - ADR (a)

 

16,315

 

 

 

2,176,910

  

Total Biotechnology

 

 

 

 

 

3,245,189

  

 

 

 

 

 

 

 

  

Denmark - 0.1%

 

 

 

 

 

 

  

Biotechnology - 0.1% (d)

 

 

 

 

 

 

  

Evaxion Biotech A/S - ADR (a)

 

5,918

 

 

 

34,916

  

France - 0.6%

 

 

 

 

 

 

  

Pharmaceuticals - 0.6%

 

 

 

 

 

 

  

Sanofi - ADR

 

7,894

 

 

 

390,437

  

 

 

 

 

 

 

 

  

Germany - 6.5%

 

 

 

 

 

 

  

Biotechnology - 6.5% (d)

 

 

 

 

 

 

  

BioNTech SE - ADR (a)(b)

 

34,288

 

 

 

3,743,907

  

 

 

 

 

 

 

 

  

Japan - 0.7%

 

 

 

 

 

 

  

Pharmaceuticals - 0.7%

 

 

 

 

 

 

  

Takeda Pharmaceutical Co., Ltd. - ADR (b)

 

20,773

 

 

 

379,315

  

 

 

 

 

 

 

 

  

Netherlands - 4.4%

 

 

 

 

 

 

  

Biotechnology - 4.4% (d)

 

 

 

 

 

 

  

CureVac NV (a)(b)

 

26,744

 

 

 

2,446,006

  

InflaRx NV (a)

 

13,326

 

 

 

51,971

  

Total Biotechnology

 

 

 

 

 

2,497,977

  

 

 

 

 

 

 

 

  

United Kingdom - 4.7%

 

 

 

 

 

 

  

Biotechnology - 1.0% (d)

 

 

 

 

 

 

  

Immunocore Holdings PLC - ADR (a)

 

13,211

 

 

 

562,392

  

Health Care Equipment & Supplies - 2.3%

 

 

 

 

 

 

  

Ortho Clinical Diagnostics Holdings PLC (a)

 

68,618

 

 

 

1,323,984

  

 

The accompanying notes are an integral part of these financial statements.

42 

 

 

ETFMG™ ETFs

ETFMG Treatments, Testing and Advancements ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 


  

Shares

 

 

Value

  

Pharmaceuticals - 1.4%

 

 

 

 

 

 

  

AstraZeneca PLC - ADR (b)

 

7,672

 

 

$

381,452

  

GlaxoSmithKline PLC - ADR (b)

 

10,569

 

 

 

377,208

  

Total Pharmaceuticals

 

 

 

 

 

758,660

  

Total United Kingdom

 

 

 

 

 

2,645,036

  

 

 

 

 

 

 

 

  

United States - 71.0%

 

 

 

 

 

 

  

Biotechnology - 38.3% (d)

 

 

 

 

 

 

  

AbbVie, Inc.

 

3,428

 

 

 

370,978

  

Alexion Pharmaceuticals, Inc. (a)

 

2,437

 

 

 

372,642

  

Aligos Therapeutics, Inc. (a)(b)

 

11,675

 

 

 

265,490

  

Alnylam Pharmaceuticals, Inc. (a)

 

23,760

 

 

 

3,354,674

  

Arcturus Therapeutics Holdings, Inc. (a)(b)

 

8,053

 

 

 

332,589

  

Assembly Biosciences, Inc. (a)

 

11,726

 

 

 

53,940

  

Athersys, Inc. (a)(b)

 

60,558

 

 

 

109,004

  

BioCryst Pharmaceuticals, Inc. (a)(b)

 

54,272

 

 

 

551,946

  

CEL-SCI Corp. (a)(b)

 

12,418

 

 

 

188,878

  

Chimerix, Inc. (a)

 

26,290

 

 

 

253,436

  

Codiak Biosciences, Inc. (a)

 

6,603

 

 

 

99,573

  

ContraFect Corp. (a)

 

8,519

 

 

 

40,891

  

Cue Biopharma, Inc. (a)

 

9,275

 

 

 

113,155

  

Dicerna Pharmaceuticals, Inc. (a)

 

23,379

 

 

 

597,801

  

Dynavax Technologies Corp. (a)

 

34,697

 

 

 

341,072

  

Emergent BioSolutions, Inc. (a)

 

16,326

 

 

 

1,516,849

  

Enanta Pharmaceuticals, Inc. (a)

 

6,179

 

 

 

304,748

  

Enochian Biosciences, Inc. (a)

 

14,319

 

 

 

50,689

  

Gilead Sciences, Inc.

 

5,727

 

 

 

370,136

  

Hookipa Pharma, Inc. (a)

 

10,086

 

 

 

135,657

  

iBio, Inc. (a)(b)

 

66,233

 

 

 

101,999

  

ImmunityBio, Inc. (a)(b)

 

33,386

 

 

 

792,584

  

Immunome, Inc. (a)

 

3,250

 

 

 

110,110

  

Inovio Pharmaceuticals, Inc. (a)(b)

 

63,673

 

 

 

590,885

  

Moderna, Inc. (a)

 

24,656

 

 

 

3,228,703

  

Novavax, Inc. (a)

 

13,733

 

 

 

2,489,930

  

OPKO Health, Inc. (a)(b)

 

205,229

 

 

 

880,432

  

PhaseBio Pharmaceuticals, Inc. (a)

 

8,995

 

 

 

31,123

  

Regeneron Pharmaceuticals, Inc. (a)

 

806

 

 

 

381,351

  

Silverback Therapeutics, Inc. (a)(b)

 

10,726

 

 

 

467,975

  

SQZ Biotechnologies Co. (a)

 

8,532

 

 

 

116,718

  

Tonix Pharmaceuticals Holding Corp. (a)

 

99,855

 

 

 

127,814

  

Translate Bio, Inc. (a)(b)

 

23,039

 

 

 

379,913

  

Vaxart, Inc. (a)(b)

 

36,090

 

 

 

218,345

  

Vaxcyte, Inc. (a)

 

15,606

 

 

 

308,219

  

Vir Biotechnology, Inc. (a)

 

39,157

 

 

 

2,007,579

  

Total Biotechnology

 

 

 

 

 

21,657,828

  

 

The accompanying notes are an integral part of these financial statements.

43 

 

 

ETFMG™ ETFs

ETFMG Treatments, Testing and Advancements ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

Shares

 

 

Value

  

Health Care Equipment & Supplies - 5.9%

 

 

 

 

 

 

  

Abbott Laboratories

 

3,121

 

 

$

374,021

  

Co-Diagnostics, Inc. (a)(b)

 

8,659

 

 

 

82,607

  

Hologic, Inc. (a)

 

5,145

 

 

 

382,685

  

Lucira Health, Inc. (a)

 

11,395

 

 

 

137,880

  

Meridian Bioscience, Inc. (a)

 

13,215

 

 

 

346,894

  

OraSure Technologies, Inc. (a)

 

22,037

 

 

 

257,172

  

Quidel Corp. (a)

 

13,000

 

 

 

1,663,089

  

Talis Biomedical Corp. (a)

 

7,876

 

 

 

101,207

  

Total Health Care Equipment & Supplies

 

 

 

 

 

3,345,555

  

Health Care Providers & Services - 10.5%

 

 

 

 

 

 

  

Enzo Biochem, Inc. (a)

 

14,671

 

 

 

50,468

  

Laboratory Corp. of America Holdings (a)

 

13,866

 

 

 

3,536,246

  

Quest Diagnostics, Inc.

 

18,496

 

 

 

2,373,777

  

Total Health Care Providers & Services

 

 

 

 

 

5,960,491

  

Life Sciences Tools & Services - 9.6%

 

 

 

 

 

 

  

Adaptive Biotechnologies Corp. (a)

 

42,727

 

 

 

1,720,189

  

Bio-Rad Laboratories, Inc. - Class A (a)

 

5,800

 

 

 

3,312,786

  

Luminex Corp.

 

14,301

 

 

 

456,202

  

Total Life Sciences Tools & Services

 

 

 

 

 

5,489,177

  

Pharmaceuticals - 6.7%

 

 

 

 

 

 

  

Atea Pharmaceuticals, Inc. (a)(b)

 

25,312

 

 

 

1,563,015

  

Bristol-Myers Squibb Co.

 

6,105

 

 

 

385,409

  

CorMedix, Inc. (a)

 

9,843

 

 

 

98,332

  

Eli Lilly and Co.

 

1,803

 

 

 

336,836

  

Johnson & Johnson

 

2,366

 

 

 

388,852

  

Merck & Co., Inc.

 

5,021

 

 

 

387,069

  

Paratek Pharmaceuticals, Inc. (a)

 

13,981

 

 

 

98,706

  

Pfizer, Inc.

 

10,597

 

 

 

383,929

  

SIGA Technologies, Inc. (a)

 

23,709

 

 

 

154,109

  

Total Pharmaceuticals

 

 

 

 

 

3,796,257

  

Total United States

 

 

 

 

 

40,249,308

  

TOTAL COMMON STOCKS (Cost $53,459,991)

 

 

 

 

 

56,445,092

  

 

 

 

 

 

 

 

  

INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 25.0%

 

 

 

 

 

 

  

ETFMG Sit Ultra Short ETF (e)

 

25,000

 

 

 

1,243,637

  

Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (c)

 

12,912,840

 

 

 

12,912,840

  

TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $14,156,814)

 

 

 

 

 

14,156,477

  

 

The accompanying notes are an integral part of these financial statements.

44 

 

 

ETFMG™ ETFs

 

ETFMG Treatments, Testing and Advancements ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

 

Shares

 

 

Value

 

SHORT-TERM INVESTMENTS - 0.4%

 

 

 

 

 

 

 

 

Money Market Funds - 0.4%

 

 

 

 

 

 

 

 

Invesco Advisers, Inc. STIT-Treasury Portfolio – Institutional Class, 0.01% (c)

 

 

219,057

 

 

$

219,057

 

TOTAL SHORT-TERM INVESTMENTS (Cost $219,057)

 

 

 

 

 

 

219,057

 

 

 

      

 

  

 

  

Total Investments (Cost $67,835,862) - 125.0%

 

 

 

 

 

 

70,820,626

 

Liabilities in Excess of Other Assets - (25.0)%

 

 

 

 

 

 

(14,152,368

)

TOTAL NET ASSETS - 100.0%

 

 

 

 

 

$

56,668,258

 

 

Percentages are stated as a percent of net assets.

 

ADR  American Depositary Receipt

PLC   Public Limited Company

(a)

Non-income producing security.

(b)

All or a portion of this security is out on loan as of March 31, 2021.

(c)

The rate quoted is the annualized seven-day yield at March 31, 2021.

(d)

As of March 31, 2021 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.

 

45 

 

ETFMG™ ETFs

 

STATEMENTS OF ASSETS AND LIABILITIES

As of March 31, 2021 (Unaudited)

 

 

 

ETFMG

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ETFMG

 

 

 

Prime Junior

 

 

ETFMG

 

 

ETFMG

 

 

 

 

 

 

 

 

Treatments,

 

 

 

Silver

 

 

Prime Cyber

 

 

Prime Mobile

 

 

ETFMG Sit

 

 

ETFMG

 

 

Testing and

 

 

 

Miners

 

 

Security

 

 

Payments

 

 

Ultra Short

 

 

Travel Tech

 

 

Advancements

 

 

 

ETF

 

 

ETF

 

 

ETF

 

 

ETF

 

 

ETF

 

 

ETF

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in unaffiliated securities, at value*

 

$

687,268,536

 

 

$

2,099,963,833

 

 

$

1,286,220,412

 

 

$

111,581,556

 

 

$

340,124,353

 

 

$

69,576,989

 

Investments in affiliated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

securities, at value*

 

 

57,499,679

 

 

 

68,318,305

 

 

 

29,847,300

 

 

 

—

 

 

 

24,603,207

 

 

 

1,243,637

 

Cash

 

 

1,804

 

 

 

—

 

 

 

648

 

 

 

—

 

 

 

—

 

 

 

—

 

Foreign currency*

 

 

—

 

 

 

—

 

 

 

20,812

 

 

 

—

 

 

 

—

 

 

 

—

 

Receivables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable for fund shares issued

 

 

—

 

 

 

—

 

 

 

6,608,780

 

 

 

—

 

 

 

—

 

 

 

—

 

Dividends and interest receivable

 

 

221,089

 

 

 

377,221

 

 

 

336,081

 

 

 

361,902

 

 

 

3,766

 

 

 

13,299

 

Securities lending income receivable

 

 

—

 

 

 

43,806

 

 

 

16,615

 

 

 

—

 

 

 

157,644

 

 

 

24,555

 

Receivable for investments sold

 

 

—

 

 

 

833,936

 

 

 

4,842,039

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Assets

 

 

744,991,108

 

 

 

2,169,537,101

 

 

 

1,327,892,687

 

 

 

111,943,458

 

 

 

364,888,970

 

 

 

70,858,480

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateral received for securities loaned (Note 7)

 

$

—

 

 

$

160,646,580

 

 

$

112,862,577

 

 

$

—

 

 

$

47,439,870

 

 

$

14,156,814

 

Payables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable for investments purchased

 

 

—

 

 

 

—

 

 

 

6,562,986

 

 

 

—

 

 

 

2,184

 

 

 

—

 

Management fees payable

 

 

457,584

 

 

 

1,051,640

 

 

 

762,105

 

 

 

27,506

 

 

 

186,081

 

 

 

33,408

 

Total Liabilities

 

457,584

 

 

 

161,698,220

 

 

 

120,187,668

 

 

 

27,506

 

 

 

47,628,135

 

 

 

14,190,222

 

Net Assets

 

$

744,533,524

 

 

$

2,007,838,881

 

 

$

1,207,705,019

 

 

$

111,915,952

 

 

$

317,260,835

 

 

$

56,668,258

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS CONSIST OF:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid-in Capital

 

$

769,543,616

 

 

$

1,802,570,840

 

 

$

1,021,444,431

 

 

$

112,679,083

 

 

$

297,818,271

 

 

$

51,961,093

 

Total Distributable Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Accumulated Losses)

 

 

(25,010,092

)

 

 

205,268,041

 

 

 

186,260,588

 

 

 

(763,131

)

 

 

19,442,564

 

 

 

4,707,165

 

Net Assets

 

$

744,533,524

 

 

$

2,007,838,881

 

 

$

1,207,705,019

 

 

$

111,915,952

 

 

$

317,260,835

 

 

$

56,668,258

 
                                                 

*Identified Cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
                                                 

Investments in unaffiliated securities

 

$

669,847,676

 

 

$

1,760,035,635

 

 

$

1,097,474,080

 

 

$

111,113,298

 

 

$

334,735,131

 

 

$

66,591,888

 

Investments in affiliated securities

 

 

62,588,031

 

 

 

68,826,023

 

 

 

30,082,268

 

 

 

—

 

 

 

23,330,786

 

 

 

1,243,974

 

Foreign currency

 

 

—

 

 

 

—

 

 

 

20,703

 

 

 

—

 

 

 

—

 

 

 

—

 

Shares Outstanding^

 

 

51,950,000

 

 

 

36,700,000

 

 

 

18,150,000

 

 

 

2,250,000

 

 

 

10,250,000

 

 

 

1,600,000

 

Net Asset Value, Offering and Redemption Price per Share

 

$

14.33

 

 

$

54.71

 

 

$

66.54

 

 

$

49.74

 

 

$

30.95

 

 

$

35.42

 

 

^ No par value, unlimited number of shares authorized

 

The accompanying notes are an integral part of these financial statements.

 

 

46 

 

ETFMG™ ETFs

 

STATEMENTS OF OPERATIONS

For the Period ended March 31, 2021 (Unaudited)

 

 

ETFMG

 

 

  

 

 

ETFMG

 

 

  

 

 

  

 

 

ETFMG

 
 

 

Prime

 

 

ETFMG

 

 

Prime

 

 

ETFMG

 

 

  

 

 

Treatments,

 
 

 

Junior Silver

 

 

Prime Cyber

 

 

Mobile

 

 

Sit Ultra

 

 

ETFMG

 

 

Testing and

 
 

 

Miners

 

 

Security

 

 

Payments

 

 

Short

 

 

Travel Tech

 

 

Advancements

 
 

 

ETF

 

 

ETF

 

 

ETF

 

 

ETF

 

 

ETF

 

 

ETF

 

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends from unaffiliated securities (net of foreign withholdings tax of $195,194, $217,481, $46,458, $-, $-, $-)

 

$

1,691,660

 

 

$

5,846,098

 

 

$

2,674,568

 

 

$

—

 

 

$

—

 

 

$

102,852

 

Interest

 

 

82

 

 

 

488

 

 

 

376

 

 

 

554,856

 

 

 

37

 

 

 

16

 

Securities lending income

 

 

—

 

 

 

376,335

 

 

 

108,213

 

 

 

—

 

 

 

295,756

 

 

 

484,647

 

Total Investment Income

 

 

1,691,742

 

 

 

6,222,921

 

 

 

2,783,157

 

 

 

554,856

 

 

 

295,793

 

 

 

587,515

 
                                                 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 

2,100,621

 

 

 

5,670,474

 

 

 

3,778,766

 

 

 

157,654

 

 

 

394,344

 

 

 

198,681

 

Total Expenses

 

  

2,100,621

  

 

  

5,670,474

  

 

  

3,778,766

  

 

  

157,654

  

 

  

394,344

  

 

  

198,681

  

Net Investment Income (Loss)

 

 

(408,879

)

 

 

552,447

 

 

 

(995,609

)

 

 

397,202

 

 

 

(98,551

)

 

 

388,834

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Realized Gain (Loss) on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaffiliated Investments

 

 

(13,832,734

)

 

 

3,718,155

 

 

 

(2,527,791

)

 

 

116,869

 

 

 

(10,595,408

)

 

 

(1,430,487

)

Affiliated Investments

 

 

1,105,303

 

 

 

(156,439

)

 

 

—

 

 

 

—

 

 

 

3,533,147

 

 

 

—

 

In-Kind redemptions

 

 

39,371,282

 

 

 

106,758,041

 

 

 

66,687,888

 

 

 

—

 

 

 

20,886,508

 

 

 

5,949,884

 

Foreign currency and foreign currency translation

 

 

(45,294

)

 

 

(56,541

)

 

 

(134,143

)

 

 

—

 

 

 

(59,899

)

 

 

—

 

Net Realized Gain (Loss) on Investments and In-Kind redemptions

 

  

26,598,557

 

 

  

110,263,216

 

 

  

64,025,954

 

 

  

116,869

  

 

  

13,764,348

 

 

  

4,519,397

  

Net Change in Unrealized Appreciation (Depreciation) of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaffiliated Investments

 

 

(32,629,538

)

 

 

146,948,010

 

 

 

115,447,394

 

 

 

(159,525

)

 

 

5,642,460

 

 

 

8,183,635

 

Affiliated Investments

 

 

(10,337,376

)

 

 

2,244,068

 

 

 

(23,700

)

 

 

—

 

 

 

1,398,189

 

 

 

(988

)

Foreign currency and foreign currency translation

 

 

3,295

 

 

 

(5,107

) 

 

 

(5,630

) 

 

 

—

 

 

 

53

 

 

 

—

 

Net change in Unrealized Appreciation (Depreciation) of Investments

 

 

(42,963,619

)

 

 

149,186,971

 

 

 

115,418,064

 

 

 

(159,525

)

 

 

7,040,702

 

 

 

8,182,647

 

Net Realized and Unrealized Gain (Loss) on Investments

 

 

(16,365,062

)

 

 

259,450,187

 

 

 

179,444,018

 

 

 

(42,656

)

 

 

20,805,050

 

 

 

12,702,044

 

NET INCREASE

(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

(16,773,941

)

 

$

260,002,634

 

 

$

178,448,409

 

 

$

354,546

 

 

$

 

20,706,499

 

 

$

13,090,878

 

 

The accompanying notes are an integral part of these financial statements.

 

 

47 

 

 

ETFMG Prime Junior Silver Miners ETF

 

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

 

Period Ended

 

 

 

 

 

March 31,

2021

(Unaudited)

 

Year Ended

September 30,

2020

 

OPERATIONS

 

 

 

 

 

 

 

Net investment income (loss)

 

$

(408,879

)

$

(940,100

)

Net realized gain (loss) on investments and In-Kind

 

 

 

 

 

 

 

Redemptions

 

 

26,598,557

 

 

11,084,085

 

Net change in unrealized appreciation (depreciation) of

 

 

 

 

 

 

 

investments and foreign currency and foreign currency

 

 

 

 

 

 

 

translation

 

 

(42,963,619

)

 

60,060,330

 

Net increase (decrease) in net assets resulting from

 

 

 

 

 

 

 

operations

 

 

(16,773,941

)

 

70,204,315

 
               

DISTRIBUTIONS TO SHAREHOLDERS

 

 

 

 

 

 

 

Total distributions from distributable earnings

 

 

(7,160,000

)

 

(1,980,500

)
               

CAPITAL SHARE TRANSACTIONS

 

 

 

 

 

 

 

Net increase (decrease) in net assets derived

 

 

 

 

 

 

 

from net change in outstanding shares

 

 

360,148,060

 

 

239,976,195

 

Transaction Fees (See Note 1)

 

 

822

 

 

—

 

Net increase (decrease) in net assets from capital share

 

 

 

 

 

 

 

transactions

 

 

360,148,882

 

 

239,976,195

 

Total increase (decrease) in net assets

 

$ 

336,214,941

 

$ 

308,200,010

 
               

NET ASSETS

 

 

 

 

 

 

 

Beginning of Year/Period

 

 

408,318,583

 

 

100,118,573

 

End of Year/Period

 

$

744,533,524

 

$

408,318,583

 

 

Summary of share transactions is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ended

March 31, 2021

(Unaudited)

 

 

Year Ended

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

Shares Sold

 

 

28,000,000

 

 

$

445,760,425

 

 

 

26,050,000

 

 

$

330,230,225

 

Transaction Fees (See Note 1)

 

 

—

 

 

 

822

 

 

 

—

 

 

 

—

 

Shares Redeemed

 

 

(5,650,000

)

 

 

(85,612,365

)

 

 

(7,050,000

)

 

 

(90,254,030

)

Net Transactions in Fund Shares

 

 

22,350,000

 

 

$

360,148,882

 

 

 

19,000,000

 

 

$

239,976,195

 

Beginning Shares

 

 

29,600,000

 

 

 

 

 

 

 

10,600,000

 

 

 

 

 

Ending Shares

 

 

51,950,000

 

 

 

 

 

 

 

29,600,000

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

48 

 

 

 

ETFMG Prime Cyber Security ETF

 

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

Period Ended

 

 

 

 

 

March 31,

2021

(Unaudited)

 

Year Ended

September 30,

 2020

 

 

 

 

 

 

 

 

 

OPERATIONS

 

 

 

 

 

 

 

Net investment income (loss)

 

$

552,447

 

$

21,528,502

 

Net realized gain (loss) on investments and In-Kind

 

 

 

 

 

 

 

Redemptions

 

 

110,263,216

 

 

126,566,289

 

Net change in unrealized appreciation (depreciation) of

 

 

 

 

 

 

 

investments and foreign currency and foreign currency

 

 

 

 

 

 

 

translation

 

 

149,186,971

 

 

167,281,470

 

Net increase (decrease) in net assets resulting from

 

 

 

 

 

 

 

operations

 

 

260,002,634

 

 

315,376,261

 
               

DISTRIBUTIONS TO SHAREHOLDERS

 

 

 

 

 

 

 

Total distributions from distributable earnings

 

 

(1,330,000

)

 

(21,333,000

)
               

CAPITAL SHARE TRANSACTIONS

 

 

 

 

 

 

 

Net increase (decrease) in net assets derived from net change

 

 

 

 

 

 

 

in outstanding shares

 

 

245,332,080

 

 

(217,450,615

)

Transaction Fees (See Note 1)

 

 

20,179

 

 

20,965

 

Net increase (decrease) in net assets from capital share

 

 

 

 

 

 

 

transactions

 

 

245,352,259

 

 

(217,429,650

)

Total increase (decrease) in net assets

 

$

504,024,893

 

$

76,613,611

 
               

NET ASSETS

 

 

 

 

 

 

 

Beginning of Year/Period

 

  

1,503,813,988

    

1,427,200,377

  
     End of Year/Period  

$

2,007,838,881

   $

1,503,813,988

  

 

Summary of share transactions is as follows:

 

 

 

 

 

 

 

 

 

 

Period Ended

March 31, 2021

(Unaudited) 

  

 

Year Ended

September 30, 2020 

  

 

 

Shares

 

 

  

Amount

 

 

Shares

 

 

Amount

 

Shares Sold

 

 

8,050,000

 

 

$

452,570,505

 

 

 

6,000,000

 

 

$

265,419,220

 

Transaction Fees (See Note 1)

 

 

—

 

 

 

20,179

 

 

 

—

 

 

 

20,965

 

Shares Redeemed

 

 

(3,650,000

)

 

 

(207,238,425

)

 

 

(11,800,000

)

 

 

(482,869,835

)

Net Transactions in Fund Shares

 

 

4,400,000

 

 

$

245,352,259

 

 

 

(5,800,000 

)

 

$

(217,429,650

)

Beginning Shares

 

 

32,300,000

 

 

 

 

 

 

 

38,100,000

 

 

 

 

 

Ending Shares

 

 

36,700,000

 

 

 

 

 

 

 

32,300,000

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

49 

 

 

 

ETFMG Prime Mobile Payments ETF

 

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

 

 

 

 

 

 

Period Ended
March 31, 2021 (Unaudited)

 

Year Ended September 30, 2020

 

OPERATIONS

 

 

 

 

 

 

 

Net investment income (loss)

 

$

(995,609

)

$

(520,736

)

Net realized gain (loss) on investments and In-Kind

 

 

 

 

 

 

 

Redemptions

 

 

64,025,954

 

 

46,567,698

 

Net change in unrealized appreciation (depreciation) of

 

 

 

 

 

 

 

investments and foreign currency and foreign currency

 

 

 

 

 

 

 

translation

 

 

115,418,064

 

 

54,396,310

 

Net increase (decrease) in net assets resulting from

 

 

 

 

 

 

 

operations

 

 

178,448,409

 

 

100,443,272

 
               

DISTRIBUTIONS TO SHAREHOLDERS

 

 

 

 

 

 

 

Total distributions from distributable earnings

 

 

—

 

 

(216,000

)
               

CAPITAL SHARE TRANSACTIONS

 

 

 

 

 

 

 

Net increase (decrease) in net assets derived from net change in

 

 

 

 

 

 

 

outstanding shares

 

 

231,085,065

 

 

(45,375,255

)

Transaction Fees (See Note 1)

 

 

29,105

 

 

92,896

 

Net increase (decrease) in net assets from capital share

 

 

 

 

 

 

 

transactions

 

 

231,114,170

 

 

(45,282,359

)

Total increase (decrease) in net assets

 

$

409,562,579

 

$

54,944,913

 
               

NET ASSETS

 

 

 

 

 

 

 

Beginning of Year/Period

 

 

798,142,440

 

 

743,197,527

 

End of Year/Period

 

$ 

1,207,705,019

 

$

798,142,440

 

 

 Summary of share transactions is as follows:

 

 

 

 

 

 

 

 

Period Ended

 

 

 

 

 

 

 

March 31, 2021

 

Year Ended

 

 

 

(Unaudited)

 

September 30, 2020

 

 

 

Shares 

 

Amount

 

Shares

 

Amount

 

Shares Sold

 

 

5,650,000

 

$

378,156,715

 

 

9,650,000

 

$

474,195,120

 

Transaction Fees (See Note 1)

 

 

—

 

 

29,105

 

 

—

 

 

92,896

 

Shares Redeemed

 

 

(2,200,000

)

 

(147,071,650

)

 

(10,900,000

)

 

(519,570,375

)

Net Transactions in Fund Shares

 

 

3,450,000

 

$

231,114,170

 

 

  (1,250,000 

) 

$

(45,282,359

)

Beginning Shares

 

 

14,700,000

 

 

 

 

 

15,950,000

 

 

 

 

Ending Shares

 

 

18,150,000

 

 

 

 

 

14,700,000

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

50 

 

 

ETFMG Sit Ultra Short ETF

STATEMENTS OF CHANGES IN NET ASSETS

 

 

    Period Ended
March 31,
2021
(Unaudited)		    

Period Ended

September 30,

20201

  
OPERATIONS                
Net investment income (loss)   $ 397,202     $ 1,331,200  
Net realized gain (loss) on investments and In-Kind Redemptions     116,869       (1,407,472 )
Net change in unrealized appreciation (depreciation) of                
Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation     (159,525 )     627,783  
Net increase (decrease) in net assets resulting from operations     354,546       551,511  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions from distributable earnings     (418,932 )     (1,250,256 )
                 
CAPITAL SHARE TRANSACTIONS                
Net increase in net assets derived from net change in outstanding shares     6,210,178       106,468,905  
Net increase in net assets   $ 6,145,792     $ 105,770,160  
                 
NET ASSETS                
Beginning of Period     105,770,160       —  
End of Period   $ 111,915,952     $ 105,770,160  

 

 Summary of share transactions is as follows:

 

     

Period Ended

March 31, 2021

(Unaudited)

    

Year Ended

September 30, 20201

  
      Shares     Amount     Shares     Amount  

Shares Sold

       225,000     $ 11,190,038       2,200,000     $ 110,191,975  

Shares Redeemed

       (100,000 )     (4,979,860 )     (75,000 )
    (3,723,070 )

Net Transactions in Fund Shares

       125,000     $ 6,210,178       2,125,000     $ 106,468,905  

Beginning Shares

       2,125,000               —          

Ending Shares

       2,250,000               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.

 

51 

 

ETFMG Travel Tech ETF

 

STATEMENTS OF CHANGES IN NET ASSETS

 

 

    Period Ended
March 31,
2021 (Unaudited)		    

Period Ended

September 30,

20201

  
             
OPERATIONS                
Net investment income (loss)   $ (98,551 )   $ (12,667 )
Net realized gain (loss) on investments and In-Kind Redemptions     13,764,348       (585,565 )
Net change in unrealized appreciation (depreciation) of                
Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation     7,040,702       (378,893 )
Net increase (decrease) in net assets resulting from operations     20,706,499       (977,125 )
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions from distributable earnings     (24,500 )     —  
                 
CAPITAL SHARE TRANSACTIONS                

Net increase in net assets derived from net change in outstanding shares 2

     281,375,165       16,070,650  
Transaction Fees (See Note 1)     103,652       6,494  
Net increase in net assets from capital share transactions     281,478,817       16,077,144  
Net increase in net assets   $ 302,160,816     $ 15,100,019  
                 
NET ASSETS                
Beginning of Period     15,100,019       —  
End of Period   $ 317,260,835     $ 15,100,019  

 

 Summary of share transactions is as follows:

 

    Period Ended
March 31, 2021
(Unaudited)		    

Period Ended

September 30, 20201

  
    Shares     Amount     Shares     Amount  
Shares Sold     11,350,000     $ 340,592,245       900,000     $ 18,057,660  
Transaction Fees (See Note 1)     —       103,652       —       6,494  
Shares Redeemed     (1,900,000 )     (59,217,080 )
    (100,000       (1,987,010 )
Net Transactions in Fund Shares     9,450,000     $ 281,478,817       800,000     $ 16,077,144  
Beginning Shares     800,000               —          
Ending Shares     10,250,000               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.

2

Includes reimbursement of $1,545 due to net asset value error.

 

The accompanying notes are an integral part of these financial statements.

 

52 

 

ETFMG Treatments, Testing and Advancements ETF

STATEMENTS OF CHANGES IN NET ASSETS

 

 

   

Period Ended

March 31,

 2021

(Unaudited)

    

PeriodEnded

September 30,

 20201

  
OPERATIONS                
Net investment income (loss)   $ 388,834     $ 36,158  
Net realized gain (loss) on investments and In-Kind Redemptions     4,519,397       (1,086,125 )
Net change in unrealized appreciation (depreciation) of investments and foreign currency and foreign currency translation     8,182,647       (5,197,883 )
Net increase (decrease) in net assets resulting from operations     13,090,878       (6,247,850 )
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions from distributable earnings     (498,750 )     —  
                 
CAPITAL SHARE TRANSACTIONS                
Net increase in net assets derived from net change in outstanding shares     (9,953,760 )     60,277,740  
Net increase in net assets   $ 2,638,368     $ 54,029,890  
                 
NET ASSETS                
Beginning of Period     54,029,890       —  
End of Period   $ 56,668,258     $ 54,029,890  

 

Summary of share transactions is as follows:

 

     

Period Ended

March 31,

2021

 (Unaudited)

    

Period Ended

September 30,

20201

  
      Shares     Amount     Shares     Amount  

Shares Sold

    
400,000     $ 14,496,795    
2,500,000     $ 75,601,825  

Shares Redeemed

       (750,000 )     (24,450,555 )     (550,000 )     (15,324,085 )

Net Transactions in Fund Shares

       (350,000 )
  $ (9,953,760 )     1,950,000     $ 60,277,740  

Beginning Shares

       1,950,000               —          

Ending Shares

       1,600,000               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.

 

53 

 

 

ETFMG Prime Junior Silver Miners ETF

 

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

 

    Period Ended March 31, 2021 (Unaudited)     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/Period   $ 13.79     $ 9.45     $ 8.70     $ 11.84     $ 15.57     $ 5.28  
Income (Loss) from                                                
Investment Operations:                                                
Net investment (loss)1     (0.01 )     (0.05 )     (0.02 )     (0.03 )     (0.06 )     (0.06 )
Net realized and unrealized gain (loss) on investments     0.75       4.56       0.91       (3.11 )     (3.61 )     10.47  
Total from investment operations     0.74       4.51       0.89       (3.14 )     (3.67 )     10.41  
Less Distributions:                                                
Distributions from net investment income     (0.20 )     (0.17 )     (0.14 )     —       (0.06 )     (0.12 )
Total distributions     (0.20 )     (0.17 )     (0.14 )     —       (0.06 )     (0.12 )
Net asset value, end year/period   $ 14.33     $ 13.79     $ 9.45     $ 8.70     $ 11.84     $ 15.57  
Total Return     5.43 %3     48.06 %     10.45 %     -26.50 %     -23.53 %     201.99 %
                                                 
Ratios/Supplemental Data:                                                
Net assets at end year/period (000’s)   $ 744,534     $ 408,319     $ 100,119     $ 45,265     $ 58,033     $ 77,065  
                                                 
Expenses to Average Net Assets before legal expense     0.69 %4     0.69 %     0.69 %     0.69 %     0.69 %     0.69 %
Gross Expenses to Average Net Assets     0.69 %4     0.69 %     0.69 %     0.69 %     0.72 %2     0.69 %
Net Investment Loss to Average Net Assets     -0.13 %4     -0.46 %     -0.21 %     -0.32 %     -0.48 %     -0.45 %
Portfolio Turnover Rate     8 %3     71 %     34 %     36 %     69 %     33 %

 

1 Calculated based on average shares outstanding during the year/period.
2 The ratio of expenses to average net assets includes legal expense.
3 Not annualized.
4 Annualized.

 

The accompanying notes are an integral part of these financial statements.

 

 

 

54 

 

ETFMG Prime Cyber Security ETF

 

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

  

    Period Ended March 31, 2021 (Unaudited)     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/Period   $ 46.56     $ 37.46     $ 40.08     $ 30.11     $ 27.91     $ 25.28  
Income (Loss) from                                                
Investment Operations:                                                
Net investment income (loss)1     0.02       0.64       0.07       0.03       (0.01 )     0.30  
Net realized and unrealized gain (loss) on investments     8.17       9.10       (2.64 )     9.94       2.34       2.52  
Total from investment operations     8.19       9.74       (2.57 )     9.97       2.33       2.82  
Less Distributions:                                                
Distributions from net investment income     (0.04 )     (0.64 )     (0.05 )     (0.00 )3     (0.13 )     (0.19 )
Total distributions     (0.04 )     (0.64 )     (0.05 )     (0.00 )3     (0.13 )     (0.19 )
Net asset value, end year/period   $ 54.71     $ 46.56     $ 37.46     $ 40.08     $ 30.11     $ 27.91  
Total Return     17.60 %4     26.75 %     -6.42 %     33.16 %     8.42 %     11.23 %
                                                 
Ratios/Supplemental Data:                                                
Net assets at end of year/period (000’s)   $ 2,007,839     $ 1,503,814     $ 1,427,200     $ 1,835,861     $ 1,097,360     $ 803,794  
                                                 
Expenses to Average Net Assets before legal expense     0.60 %5     0.60 %     0.60 %     0.60 %     0.68 %     0.75 %
Gross Expenses to Average Net Assets     0.60 %5     0.60 %     0.60 %     0.60 %     0.72 %2     0.75 %
Net Investment Income (Loss) to Average Net Assets     0.06 %5     1.50 %     0.19 %     0.07 %     -0.03 %     1.21 %
Portfolio Turnover Rate     16 %4     33 %     36 %     41 %     53 %     34 %

 

1 Calculated based on average shares outstanding during the year/period.
2 The ratio of expenses to average net assets includes legal expense.
3 Per share amount is less than $0.01.
4 Not annualized.
5 Annualized.

 

The accompanying notes are an integral part of these financial statements.

 

 

55 

 

ETFMG Prime Mobile Payments ETF

 

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

 

    Period Ended March 31, 2021 (Unaudited)     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/Period   $ 54.30     $ 46.60     $ 42.86     $ 32.57     $ 24.96     $ 23.53  
Income (Loss) from                                                
Investment Operations:                                                
Net investment income (loss)1     (0.06 )     (0.04 )     0.03       0.07       0.03       0.15  
Net realized and unrealized gain (loss) on investments     12.30       7.75       3.93       10.22       7.60       1.39  
Total from investment operations     12.24       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/period   $ 66.54     $ 54.30     $ 46.60     $ 42.86     $ 32.57     $ 24.96  
Total Return     22.55 %3     16.56 %     9.49 %     31.62 %     30.59 %     6.51 %

                                               
Ratios/Supplemental Data:                                                
Net assets at end year/period (000’s)   $ 1,207,705     $ 798,142     $ 743,198     $ 522,874     $ 170,993     $ 8,734  
                                                 
Expenses to Average Net Assets before legal expense     0.75 %4     0.75 %     0.75 %     0.75 %     0.75 %     0.75 %
Gross Expenses to Average Net Assets     0.75 %4     0.75 %     0.75 %     0.75 %     0.80 %2     0.75 %
Net Investment Income (Loss) to Average Net Assets     -0.19 %4     -0.08 %     0.06 %     0.16 %     0.12 %     0.63 %
Portfolio Turnover Rate     14 %3     19 %     28 %     16 %     31 %     32 %

 

1 Calculated based on average shares outstanding during the year/period.
2 The ratio of expenses to average net assets includes legal expense.
3 Not annualized.
4 Annualized.

 

The accompanying notes are an integral part of these financial statements.

  

 

56 

 

ETFMG Sit Ultra Short ETF

 

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

 

    Period Ended March 31, 2021 (Unaudited)     Period Ended September 30, 20201  
Net Asset Value, Beginning Year/Period   $ 49.77     $ 50.00  
Income from Investment Operations:                
Net investment income 2     0.19       0.86  
Net realized and unrealized gain (loss) on investments     (0.02 )     (0.27 )
Total from investment operations     0.17       0.59  
Less Distributions:                
Distributions from net investment income     (0.20 )     (0.82 )
Total distributions     (0.20 )     (0.82 )
Net asset value at end of year/period   $ 49.74     $ 49.77  
Total Return     0.33 %3     1.19 %3
                 
Ratios/Supplemental Data:                
Net assets at end of year/period (000’s)   $ 111,916     $ 105,770  
                 
Expenses to Average Net Assets before legal expense     0.30 %4     0.30 %4
Gross Expenses to Average Net Assets     0.30 %4     0.30 %4
Net Investment Income to Average Net Assets     0.76 %4     1.78 %4
Portfolio Turnover Rate     27 %3     132 %3

 

1 Commencement of operations on October 8, 2019.
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.

 

 

57 

 

ETFMG Travel Tech ETF

 

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

 

    Period Ended March 31, 2021 (Unaudited)     Period Ended September 30, 20201  
Net Asset Value, Beginning Year/Period   $ 18.88     $ 25.00  
Income (Loss) from Investment Operations:                
Net investment income (loss)2     (0.01 )     (0.02 )
Net realized and unrealized gain (loss) on investments     12.06       (6.12 )
Total from investment operations     12.05       (6.14 )
Less Distributions:                
Distributions from net investment income     (0.01 )     —  
Total distributions     (0.01 )     —  
Capital Share Transactions:                
Transaction fees added to paid-in capital     0.03       0.02  
Net asset value at end of year/period   $ 30.95     $ 18.88  
Total Return     64.05 %3     -24.50 %3
                 
Ratios/Supplemental Data:                
Net assets at end of year/period (000’s)   $ 317,261     $ 15,100  
                 
Expenses to Average Net Assets before legal expense     0.75 %4     0.75 %4
Gross Expenses to Average Net Assets     0.75 %4     0.75 %4
Net Investment Income to Average Net Assets     0.01 %4     0.30 %4
Portfolio Turnover Rate     24 %3     49 %3

 

1 Commencement of operations on February 12, 2020.
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.

 

 

58 

 

ETFMG Treatments, Testing and Advancements ETF

 

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

 

    Period Ended March 31, 2021 (Unaudited)     Period Ended September 30, 20201  
Net Asset Value, Beginning Year/Period   $ 27.71     $ 25.00  
Income from Investment Operations:                
Net investment income2     0.22       0.02  
Net realized and unrealized gain (loss) on investments     7.78       2.69  
Total from investment operations     8.00       2.71  
Less Distributions:                
Distributions from net investment income     (0.29 )     —  
Total distributions     (0.29 )     —  
Net asset value at end of year/period   $ 35.42     $ 27.71  
Total Return     28.90 %3     10.82 %3
                 
Ratios/Supplemental Data:                
Net assets at end of year/period (000’s)   $ 56,668     $ 54,030  
                 
Expenses to Average Net Assets before legal expense     0.68 %4     0.68 %4
Gross Expenses to Average Net Assets     0.68 %4     0.68 %4
Net Investment Income to Average Net Assets     1.33 %4     0.25 %4
Portfolio Turnover Rate     26 %3     41 %3

 

1 Commencement of operations on June 17, 2020.
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.

 

59 

 

 

ETFMG™ ETFs

 

NOTES TO FINANCIAL STATEMENTS 

March 31, 2021 (Unaudited)

 

NOTE 1 – ORGANIZATION

 

ETFMG Prime Junior Silver Miners ETF (“SILJ”), ETFMG Prime Cyber Security ETF (“HACK”), ETFMG Prime Mobile Payments ETF (“IPAY”), ETFMG Sit Ultra Short ETF (“VALT”), ETFMG Travel Tech ETF (“AWAY”), 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, was adjourned until December 7, 2020 and has now been adjourned until May 28, 2021. 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

Strategy
Commencement
Date

 Strategy
ETFMG Prime
Junior Silver
Miners ETF		 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”).
ETFMG Prime
Cyber Security
ETF		 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”).
ETFMG Prime
Mobile
Payments ETF		 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”).
ETFMG Sit
Ultra Short
ETF		 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.
ETFMG Travel
Tech ETF		 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”).
ETFMG
Treatments,
Testing and
Advancements
ETF		 6/17/2020 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.

 

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March 31, 2021 (Unaudited) (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.” Except for VALT, VALT is the only fund that trades in blocks of 25,000 shares. 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 the underlying fund’s operations and policies, please refer to those 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.

 

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March 31, 2021 (Unaudited) (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 March 31, 2021, 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.

 

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NOTES TO FINANCIAL STATEMENTS 

March 31, 2021 (Unaudited) (Continued)

 

The following is a summary of the inputs used to value the Funds’ net assets as of March 31, 2021:

 

ETFMG Prime Junior Silver Miners ETF                        
Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 740,897,324     $ —     $ 283,777     $ 741,181,101  
Short-Term Investments     3,587,114       —       —       3,587,114  
Total Investments in Securities   $ 744,484,438     $ —     $ 283,777     $ 744,768,215  
                                 
ETFMG Prime Cyber Security ETF                                
Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 1,994,869,430     $ —     $ —     $ 1,994,869,430  
Short-Term Investments     10,720,628       —       —       10,720,628  
ETFMG Sit Ultra Short ETF**     49,745,500       —       —       49,745,500  
Investments Purchased with Securities  Lending Collateral*     —       —       —       112,946,580  
Total Investments in Securities   $ 2,055,335,558     $ —     $ —     $ 2,168,282,138  
                                 
ETFMG Prime Mobile Payments ETF                                
Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 1,200,210,302     $ —     $ —     $ 1,200,210,302  
Short-Term Investments     1,767,533       —       —       1,767,533  
ETFMG Sit Ultra Short ETF**     29,847,300       —       —       29,847,300  
Investments Purchased with Securities Lending Collateral*     —       —       —       84,242,577  
Total Investments in Securities   $ 1,231,825,135     $ —     $ —     $ 1,316,067,712  
                                 
ETFMG Sit Ultra Short ETF                                
Assets^   Level 1     Level 2     Level 3     Total  
Fixed Income                                
Asset Backed Securities   $ —     $ 650,050     $ —     $ 650,050  
Corporate Obligations     —       109,049,703       —       109,049,703  
Municipal Debt Obligations     —       977,156       —       977,156  
Short-Term Investments     904,647       —       —       904,647  
Total Investments in Securities   $ 904,647     $ 110,676,909     $ —     $ 111,581,556  
                                 
ETFMG Travel Tech ETF                                
Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 316,120,440     $ —     $ —     $ 316,120,440  
Short-Term Investments     1,165,850       —       —       1,165,850  
ETFMG Sit Ultra Short ETF**     9,949,100       —       —       9,949,100  
Investments Purchased with Securities Lending Collateral*     —       —       —       37,492,170  
Total Investments in Securities   $ 327,235,390     $ —     $ —     $ 364,727,560  

 

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March 31, 2021 (Unaudited) (Continued)

 

ETFMG Treatments, Testing and Advancements ETF                        
Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 56,445,092     $ —     $ —     $ 56,445,092  
Short-Term Investments     219,057       —       —       219,057  
ETFMG Sit Ultra Short ETF**     1,243,637       —       —       1,243,637  
Investments Purchased with Securities Lending Collateral*     —       —       —       12,912,840  
Total Investments in Securities   $ 57,907,786     $ —     $ —     $ 70,820,626  

 

^ 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 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 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 March 31, 2021, 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.

 

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March 31, 2021 (Unaudited) (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.

 

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NOTES TO FINANCIAL STATEMENTS 

March 31, 2021 (Unaudited) (Continued)


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 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 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.

 

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.

 

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March 31, 2021 (Unaudited) (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:

 

ETFMG Prime Junior Silver Miners ETF     0.69 %
ETFMG Prime Cyber Security ETF     0.60 %
ETFMG Prime Mobile Payments ETF     0.75 %
ETFMG Sit Ultra Short ETF     0.30 %
ETFMG Travel Tech ETF     0.75 %
ETFMG Treatments, Testing and Advancements ETF     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 March 31, 2021, 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 period ended March 31, 2021:

 

    Purchases     Sales  
ETFMG Prime Junior Silver Miners ETF   $ 48,766,666     $ 57,834,448  
ETFMG Prime Cyber Security ETF     307,292,920       300,751,800  
ETFMG Prime Mobile Payments ETF     148,358,404       143,476,663  
ETFMG Sit Ultra Short ETF     45,894,347       23,458,525  
ETFMG Travel Tech ETF     87,323,760       28,534,140  
ETFMG Treatments, Testing and Advancements ETF     14,776,739       15,104,722  

 

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NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

  

The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the period ended March 31, 2021:

 

    Purchases In-Kind     Sales In-Kind  
ETFMG Prime Junior Silver Miners ETF   $ 442,881,280     $ 83,098,934  
ETFMG Prime Cyber Security ETF     433,900,630       200,288,119  
ETFMG Prime Mobile Payments ETF     366,944,586       144,038,383  
ETFMG Sit Ultra Short ETF     —       —  
ETFMG Travel Tech ETF     283,122,016       51,717,555  
ETFMG Treatments, Testing and Advancements ETF     14,433,926       24,134,899  

 

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 March 31, 2021.

 

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. 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.

 

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NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

  

As of the period ended March 31, 2021 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*  
ETFMG Prime Cyber Security ETF   $ 161,619,360     $ 163,055,457  
ETFMG Prime Mobile Payments ETF     113,520,296       114,324,845  
ETFMG Travel Tech ETF     46,881,776       47,439,870  
ETFMG Treatments, Testing and Advancements ETF     14,788,812       14,156,814  

 

* 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)  
ETFMG Prime Junior Silver Miners ETF   $ 380,118,215     $ 71,538,065     $ (42,215,328 )   $ 29,322,737  
ETFMG Prime Cyber Security ETF     1,592,035,516       276,804,520       (132,584,561 )     144,219,959  
ETFMG Prime Mobile Payments ETF     834,183,894       133,568,333       (80,211,507 )     53,356,826  
ETFMG Sit Ultra Short ETF     104,598,990       648,594       (20,811 )     627,783  
ETFMG Travel Tech ETF     18,518,532       734,322       (1,917,702 )     (1,183,380 )
ETFMG Treatments, Testing and Advancements ETF     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.

 

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)  
ETFMG Prime Junior Silver Miners ETF   $ 6,942,754     $ —     $ 6,942,754     $ (37,341,642 )   $ (1,076,151 )
ETFMG Prime Cyber Security ETF     267,547       —       267,547       (197,892,099 )     (53,404,593 )
ETFMG Prime Mobile Payments ETF     —       —       —       (45,544,647 )     7,812,179  
ETFMG Sit Ultra Short ETF     88,164       —       88,164       (1,414,692 )     (698,745 )
ETFMG Travel Tech ETF     24,389       —       24,389       (59,289 )     (1,218,280 )
ETFMG Treatments, Testing and Advancements ETF     95,210       —       95,210       (2,212,292 )     (7,884,963 )

 

69 

 

ETFMG™ ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

  

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  
ETFMG Prime Junior Silver Miners ETF   $ (19,782,810 )   $ (17,555,549 )     Indefinite  
ETFMG Prime Cyber Security ETF     (86,782,369 )     (111,109,228 )     Indefinite  
ETFMG Prime Mobile Payments ETF     (21,125,249 )     (24,081,540 )     Indefinite  
ETFMG Sit Ultra Short ETF     (1,414,692 )     —       Indefinite  
ETFMG Travel Tech ETF     (59,402 )     —       Indefinite  
ETFMG Treatments, Testing and Advancements ETF     (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  
ETFMG Prime Junior Silver Miners ETF   $ —     $ —  
ETFMG Prime Cyber Security ETF     —       —  
ETFMG Prime Mobile Payments ETF     (339,075 )     —  
ETFMG Sit Ultra Short ETF     —       —  
ETFMG Travel Tech ETF     —       —  
ETFMG Treatments, Testing and Advancements ETF     —       —  

 

The tax character of distributions paid during the period ended March 31, 2021, and the year ended September 30, 2020 were as follows:

 

    Period Ended March 31, 2021     Year Ended September 30, 2020  
    From Ordinary Income     From Capital Gains     From Ordinary Income     From Capital Gains  
ETFMG Prime Junior Silver Miners ETF   $ 7,160,000     $ —     $ 1,980,500     $ —  
ETFMG Prime Cyber Security ETF     1,330,000       —       21,333,000       —  
ETFMG Prime Mobile Payments ETF     —       —       216,000       —  
ETFMG Sit Ultra Short ETF     418,932       —       1,250,256       —  
ETFMG Travel Tech ETF     24,500       —       —       —  
ETFMG Treatments, Testing and Advancements ETF     498,750       —       —       —  

 

70 

 

ETFMG™ ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

  

NOTE 9 – INVESTMENTS IN AFFILIATES

 

ETFMG Prime Junior Silver Miners ETF

ETFMG Prime Junior Silver Miners ETF owned the following companies during the period ended March 31, 2021. Kootenay Silver, Inc., MAG Silver Corp. and New Gold, Inc. are deemed to be affiliates of the Fund as defined by the 1940 Act as of the period ended March 31, 2021. Transactions during the period in these securities were as follows:

 

Security Name   Value at September 30, 2020     Purchases     Sales     Realized Gain (Loss)(1)     Change in Unrealized Appreciation (Depreciation)     Dividend Income     Value at
March 31, 2021		     Ending Shares  
Kootenay Silver, Inc.*   $ 1,371,967     $ 1,422,233     $ (305,630 )   $ 110,609     $ (438,441 )   $ —     $ 2,160,738       8,355,076  
MAG Silver Corp. *     20,520,080       35,551,130       (2,583,885 )     493,442       (7,767,670 )     —       46,213,097       3,069,556  
New Gold, Inc. *     6,281,951       6,549,850       (2,075,944 )     501,252       (2,131,265 )     —       9,125,844       5,911,571  
Total   $ 28,173,998       43,523,213       (4,965,459 )   $ 1,105,303     $ (10,337,376 )   $ —     $ 57,499,679       17,336,203  

 

ETFMG Prime Cyber Security ETF

ETFMG Prime Cyber Security ETF owned the following companies during the period ended March 31, 2021. Secure Works Corp. – Class A, and ETFMG Sit Ultra Short ETF are deemed to be affiliates of the Fund as defined by the 1940 Act as of the period ended March 31, 2021. Transactions during the period in these securities were as follows:

 

Security Name   Value at September 30, 2020     Purchases     Sales     Realized Gain (Loss)(1)     Change in Unrealized Appreciation (Depreciation)     Dividend Income     Value at
March 31, 2021		     Ending Shares  
SecureWorks Corp. -Class A*   $ 12,800,697     $ 5,393,949     $ (1,748,970 )   $ (156,439 )   $ 2,283,568     $ —     $ 18,572,805       1,388,102  
ETFMG Sit Ultra Short ETF *     49,785,000       —       —       —       (39,500 )     —       49,745,500       1,000,000  
Tufin Software Technologies, Ltd.**     16,657,303       8,566,164       (13,395,136 )     (13,597,765 )     17,765,617       —       15,996,183       1,523,446  
Total   $ 79,243,000     $ 13,960,113     $ (15,144,106 )   $ (13,754,204 )   $ 20,009,685     $ —     $ 84,314,488       3,911,548  

 

ETFMG Prime Mobile Payments ETF 

ETFMG Prime Mobile Payments ETF owned the following company during the period ended March 31, 2021. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the period ended March 31, 2021. Transactions during the period in this security was as follows:

 

Security Name   Value at September 30, 2020     Purchases     Sales     Realized Gain (Loss)(1)     Change in Unrealized Appreciation (Depreciation)     Dividend Income     Value at
March 31, 2021		     Ending Shares  
ETFMG Sit Ultra Short ETF *   $ 29,871,000     $ —     $ —     $ —     $ (23,700 )   $ —     $ 29,847,300       600,000  

 

71 

 

ETFMG™ ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

  

ETFMG Travel Tech ETF

ETFMG Travel Tech ETF owned the following companies during the period ended March 31, 2021. ETFMG Sit Ultra Short ETF and Trivago NV are deemed to be affiliates of the Fund as defined by the 1940 Act as of the period ended March 31, 2021. Transactions during the period in these securities were as follows:

 

Security Name   Value at September 30, 2020     Purchases     Sales     Realized Gain (Loss)(1)     Change in Unrealized Appreciation (Depreciation)     Dividend Income     Value at
March 31, 2021		     Ending Shares  
ETFMG Sit Ultra Short ETF *   $ —     $ 9,947,700     $ —     $ —     $ 1,400     $ —     $
9,949,100       200,000  
Trivago NV *     560,015       17,405,790       (8,241,634 )     3,533,147       1,396,789       —       14,654,107       3,407,932  
Total   $ 560,015     $ 27,353,490     $ (8,241,634 )   $ 3,533,147     $ 1,398,189     $ —     $
24,603,207       3,607,932  

 

ETFMG Treatments, Testing and Advancements ETF

ETFMG Treatments, Testing and Advancements ETF owned the following company during the period ended March 31, 2021. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the period ended March 31, 2021. Transactions during the period in this security was as follows:

 

Security Name   Value at September 30, 2020     Purchases     Sales     Realized Gain (Loss)1     Change in Unrealized Appreciation (Depreciation)     Dividend Income     Value at
March 31, 2021		     Ending Shares  
ETFMG Sit Ultra Short ETF *   $ 1,244,625     $ —     $ —     $ —     $ (988 )   $ —     $ 1,243,637       25,000  

 


 * Affiliate as of March 31, 2021.

** These securities were not affiliated as of March 31, 2021.

 

1 Realized Losses include transactions in affiliated investments and affiliated in-kind redemptions.

 

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 Plaintiffs requests for punitive damages and equitable relief.

 

72 

 

ETFMG™ ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

  

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 transaction is expected to close prior to July 31, 2021. 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.

 

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.

 

73 

 

 

 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

 

APPROVAL OF ADVISORY AGREEMENTS AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited)

 

 

Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on March 30, 2021, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the renewal of:

 

 

•

the Amended and Restated Investment Advisory Agreement (the “Advisory Agreement”) between ETF Managers Group LLC (the “Adviser”) and the Trust, on behalf of each of ETFMG Prime Junior Silver Miners ETF (“SILJ”), ETFMG Prime Cyber Security ETF (“HACK”), ETFMG Prime Mobile Payments ETF (“IPAY”), ETFMG Sit Ultra Short ETF (“VALT”) and ETFMG Travel Tech ETF (“AWAY”) (each a “Fund” and collectively, the “Funds”); and

 

 

•

a Sub-Advisory Agreement between the Adviser and Sit Fixed Income Advisors II, LLC (the “Sub-Adviser”) with respect to the Fund (the “Sub-Advisory Agreement” and, together with the Advisory Agreement, the “Agreements”).

 

Pursuant to Section 15(c) of the 1940 Act, the Board must annually review and approve the Agreements after their initial two-year term: (i) by the vote of the Trustees or by a vote of the shareholders of the Funds; and (ii) by the vote of a majority of the Trustees who are not parties to the Agreements 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. Each year, the Board calls and holds a meeting to decide whether to renew the Agreements for an additional one-year term. In preparation for such meeting, the Board requests and reviews a wide variety of information from the Adviser and Sub-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 provided to the Funds’ shareholders by the Adviser and Sub-Adviser; (ii) the investment performance of the Funds; (iii) the Adviser’s costs and profits realized in providing services to the Funds, including any fall-out benefits enjoyed by the Adviser; (iv) comparative fee and expense data for the Funds in relation to other similar investment companies; (v) the extent to which economies of scale would be realized as the Funds grow and whether the advisory fees for the Funds reflect these economies of scale for the benefit of the Funds; and (vi) other financial benefits to the Adviser or Sub-Adviser and their affiliates resulting from services rendered to the Funds. The Board’s review included written and oral information furnished to the Board prior to and at the meeting held on March 30, 2021, and throughout the year. Among other things, each of the Adviser and Sub-Adviser provided responses to a detailed series of questions, which included information about the Adviser’s and Sub-Adviser’s operations, service offerings, personnel, compliance program and financial condition. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentations and any other information that the Board received at the meeting, and deliberated on the renewal of the Agreements 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 renewal of the Agreements, and the weight to be given to each such factor. The conclusions reached with respect to the Agreements 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 each Fund. The Independent Trustees conferred amongst themselves and independent legal counsel during a telephonic contract renewal meeting held prior to the March 30, 2021 meeting and also conferred in executive sessions both with and without representatives of management before and during the March 30th meeting. The Independent Trustees requested, received and considered additional information arising out of these executive sessions.

 

 

74 

 

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

 

APPROVAL OF ADVISORY AGREEMENTS AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

Nature, Extent and Quality of Services Provided by the Adviser

The Trustees considered the scope of services provided under the Advisory Agreement, noting that the Adviser provides investment management services to the Funds. The Board discussed the responsibilities of the Adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Funds; determining the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; responsibility for daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Funds. 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 and the quality of the Adviser’s compliance and risk assessment infrastructure. The Board also considered the Adviser’s experience managing exchange-traded funds (“ETFs”), as well as the Adviser’s response to the market volatility and uncertainty during the recent pandemic.

 

The Board also considered other services provided to the Funds, such as overseeing the activities of the Sub-Adviser, as well as the Funds’ other service providers, monitoring adherence to the Fund’s investment restrictions, and monitoring compliance with various policies and procedures and with applicable securities laws.

 

With respect to VALT, the Board then considered the scope of services provided under the Sub- Advisory Agreement, noting that the Sub-Adviser will be providing investment sub-advisory services to the Adviser in the form of selecting and trading portfolio securities on behalf of the Fund and selecting broker-dealers to execute purchase and sale transactions, subject to the supervision of the Adviser and the oversight of the Board.

 

In considering the nature, extent and quality of the services to be provided by the Sub-Adviser, the Board noted that it had received a copy of the Sub-Adviser’s Form ADV, as well as the response of the Sub-Adviser to a detailed series of questions which included, among other things, information about the background and experience of the Sub-Adviser’s personnel. The Board considered the experience of the Sub-Adviser’s personnel in the financial services industry, particularly in regards to fixed-income securities. The Board also considered the quality of the Sub-Adviser’s compliance program and Code of Ethics.

 

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 provided to the Funds by the Adviser and Sub- Adviser, as applicable.

 

Historical Performance

The Board then considered the past performance of the Funds. The Board reviewed information regarding each Fund’s performance with the performance of a group of peer funds and with the performance of each Fund’s underlying index, as applicable, for various time periods.

 

 

75 

 

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

 

APPROVAL OF ADVISORY AGREEMENTS AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

With respect to SILJ, HACK, IPAY, and AWAY, which are index-based ETFs, the Board noted management’s explanation that analysis of investment performance, in absolute terms, is less relevant for the index-based Funds than it is for actively managed funds, given the Funds’ index-based investment objectives. The Board also noted management’s further explanation that it is more relevant to review the performance of the Funds by focusing on the extent to which each Fund tracked its underlying index. The Board reviewed information regarding each Fund’s index tracking, discussing, as applicable, factors which contributed to each Fund’s tracking error. The Board noted that the Funds had underperformed their underlying indexes over certain periods, but that such underperformance was, at least in part, a result of costs incurred by the Funds not incurred by their underlying indexes. The Board considered other factors that contributed to the Funds’ tracking error, including cash drag and the process of rebalancing the Funds’ portfolios. The Board noted management’s representations that the Funds’ performance satisfactorily tracked their underlying indexes. The Board concluded that, after taking these factors into account, each of the Funds satisfactorily tracked its underlying index.

 

With respect to VALT, the Board noted that the Fund underperformed in relation to its peer group for the one-year period and the period since the Fund’s inception. The Board considered management’s discussion of VALT’s performance, noting the effect of adverse credit market developments at the beginning of the COVID-19 pandemic on the Fund’s performance.

 

The Board further noted that it had received and would continue to receive regular reports regarding each Fund’s performance, including with respect to its tracking error, at its quarterly meetings.

 

Cost of Services Provided, Profits and Economies of Scale 

The Board reviewed the advisory fees for the Funds and compared them to the total operating expenses of comparable ETFs, as determined by an independent third party and the Adviser. Among other information, the Board noted that the advisory fee for each of the Funds was higher than the average and median expense ratios for its peer ETFs. The Trustees also considered the total expense ratios of other ETFs that they considered to be comparable, based on the investment objectives and strategies of the ETFs. The Board took into consideration management’s discussion of the fees, including that the Funds have niche investment strategies that are substantially different than the strategies of many of the peer ETFs and, therefore, the information provided about the comparable ETFs may not provide meaningful direct comparisons to the Funds.

 

The Board noted the importance of the fact that the advisory fee for each Fund is a “unified fee,” meaning that the shareholders of the Funds pay no expenses other than the advisory fee and certain other costs such as 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, non-standard Board-related expenses and litigation against the Board, Trustees, Funds, Adviser, and officers of the Adviser), and distribution (12b-1) fees and expenses. The Board also noted that the Adviser was responsible for compensating the Trust’s other service providers and paying the Funds’ other expenses (except as noted above) out of its own fees and resources. The Board concluded that the advisory fee for each of the Funds is reasonable in light of the factors considered.

 

 

76 

 

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

 

APPROVAL OF ADVISORY AGREEMENTS AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

The Board also evaluated the compensation and other benefits received by the Adviser from its relationship with the Funds, taking into account profitability information provided by the Adviser. The Board received and reviewed profitability information on a fund by fund basis and considered how profit margins could affect the Adviser’s long-term viability and ability to attract and retain high-quality personnel. The Board also considered the impact on the Adviser’s profitability of payments made to, or received from, partners involved with certain of the Funds. Based on the information provided to the Trustees, the Trustees concluded that the net revenue retained by the Adviser from providing services to each Fund was not excessive in view of the nature, extent and quality of services provided to each Fund. The Board further considered other benefits derived by the Adviser and its affiliates from the Adviser’s relationship with the Funds.

 

In addition, the Board considered whether economies of scale may be realized for the Funds. The Board noted that the Adviser regularly considers whether fee reductions are appropriate as the Funds grow in size. The Board noted that a unitary fee provides a level of certainty in expenses for the Funds and effectively acts as a cap on the fees and expenses (except as noted above) that are borne by the Funds. The Board also took into account the significant investments that the Adviser has made in its business to help ensure the continued provision of high-quality services to the Funds, such as the hiring of new trading, legal and compliance personnel, and enhancements to technology and related systems. The Board concluded that no changes to the advisory fee structure of the Funds were necessary.

 

The Board also reviewed the sub-advisory fee paid to the Sub-Adviser for its services to VALT under the Sub-Advisory Agreement. The Board considered this fee in light of the services the Sub-Adviser provides as investment sub-adviser to VALT. The Board determined that the fee reflected an appropriate allocation of the advisory fee paid to the Adviser and Sub-Adviser given the work performed by each firm. The Board concluded that the proposed sub-advisory fee was reasonable in light of the services rendered.

 

The Board also considered that the sub-advisory fee paid to the Sub-Adviser is paid out of the Adviser’s unified fee and represents an arm’s-length negotiation between the Adviser and the Sub- Adviser. For these reasons, the Trustees determined that the profitability to the Sub-Adviser from its relationship with VALT was not a material factor in their deliberations with respect to consideration of approval of the Sub-Advisory Agreement. The Board considered that, because the sub-advisory fee was paid by the Adviser out of its unified fee, any economies of scale would not benefit shareholders and, thus, were not relevant for the consideration of the approval of the sub-advisory fee.

 

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 Agreements are fair and reasonable; (b) concluded that the Adviser’s and Sub-Adviser’s fee is reasonable in light of the services that the Adviser and Sub-Adviser each provide to the Funds, as applicable; and (c) approved the renewal of the Agreements for another year.

 

 

77 

 

ETFMG™ ETFs

 

EXPENSE EXAMPLES

Period Ended March 31, 2021 (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.

 

 

78 

 

ETFMG™ ETFs

 

EXPENSE EXAMPLES

Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

Fund Name

 

Beginning

Account

Value

October 1,

2020

 

 

Ending

Account

Value

March 31,

2021

 

 

Expenses

Paid

During

the

Period ^

 

 

Annualized

Expense

Ratio

During the

Period

October 1,

2020 to

March 31,

2021

 

ETFMG Prime Junior Silver Miners ETF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual

 

$

1,000.00

 

 

$

1,054.30

 

 

$

3.53

 

 

 

0.69

%

Hypothetical (5% annual)

 

 

1,000.00

 

 

 

1,021.49

 

 

 

3.48

 

 

 

0.69

%

ETFMG Prime Cyber Security ETF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual

 

 

1,000.00

 

 

 

1,176.00

 

 

 

3.26

 

 

 

0.60

%

Hypothetical (5% annual)

 

 

1,000.00

 

 

 

1,021.94

 

 

 

3.02

 

 

 

0.60

%

ETFMG Prime Mobile Payments ETF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual

 

 

1,000.00

 

 

 

1,225.50

 

 

 

4.16

 

 

 

0.75

%

Hypothetical (5% annual)

 

 

1,000.00

 

 

 

1,021.19

 

 

 

3.78

 

 

 

0.75

%

ETFMG Sit Ultra Short ETF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual

 

 

1,000.00

 

 

 

1,003.30

 

 

 

1.50

 

 

 

0.30

%

Hypothetical (5% annual)

 

 

1,000.00

 

 

 

1,023.44

 

 

 

1.51

 

 

 

0.30

%

ETFMG Travel Tech ETF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual

 

 

1,000.00

 

 

 

1,640.50

 

 

 

4.94

 

 

 

0.75

%

Hypothetical (5% annual)

 

 

1,000.00

 

 

 

1,021.19

 

 

 

3.78

 

 

 

0.75

%

ETFMG Treatments, Testing and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advancements ETF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual

 

 

1,000.00

 

 

 

1,289.00

 

 

 

3.88

 

 

 

0.68

%

Hypothetical (5% annual)

 

 

1,000.00

 

 

 

1,021.54

 

 

 

3.43

 

 

 

0.68

%

 

^ 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 182/365 (to reflect the one-half year period).

 

79 

 

 

 

 

ETFMG™ ETFs

 

Statement Regarding Liquidity Risk Management Program (Unaudited)

 

 

ETF Managers Trust (the “Trust”) has adopted a liquidity risk management program (the “Program”). The Trust’s Board of Trustees (the “Board”) has designated ETF Managers Group LLC (the “Program Administrator”) as the administrator of the Program. The Program Administrator has designated a committee (the “Committee”), composed of personnel from multiple departments, including investment operations and compliance, that is responsible for the implementation and ongoing administration of the Program, which includes assessing the liquidity risk of the 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 (each a “Fund” and, collectively, the “Funds”) under both normal and reasonably foreseeable stressed conditions.

 

Under the Program, the Program Administrator assesses, manages and periodically reviews each Fund’s liquidity risk, based on factors specific to the circumstances of the Fund. Liquidity risk is the risk that a Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in that Fund. This risk is managed by monitoring the degree of liquidity of each Fund’s investments and limiting the amount of the Fund’s illiquid investments, among other means. The Program Administrator’s process of determining the degree of liquidity of each Fund’s investments is supported by one or more third-party liquidity assessment vendors.

 

At a meeting of the Board on March 30, 2021, the Adviser provided a written report to the Board addressing the operation, and the adequacy and effectiveness of the implementation, of the Program, including, the operation of any Highly Liquid Investment Minimum, where applicable, and any material changes to the Program, for the initial period from February 29, 2020 through March 30, 2021 (the “Reporting Period”). No significant liquidity events impacting any Fund were noted in the report and it was represented that, as of March 30, 2021, each Fund was primarily highly liquid and, during the Reporting Period, each Fund held less than 15% in illiquid securities. In addition, the Program Administrator provided its assessment that Program implementation was effective and that the Program operated adequately and effectively to enable the Program Administrator to oversee and manage liquidity risk and ensure each Fund is able to meet requests to redeem shares without significant dilution to the remaining investors’ interest in the Fund.

 

There can be no assurance that the Program will achieve its objectives in the future. Please refer to your Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

 

 

80 

 

 

ETFMG™ ETFs

 

Board of Trustees (Unaudited)

 

 

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).

 

 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

Interested Trustee and Officers

Samuel Masucci, III (1962)

Trustee, Chairman of the Board and President (since 2012); Secretary (since 2014)

Chief Executive Officer, Exchange Traded Managers Group LLC (since 2013); Chief Executive Officer, ETF Managers Group LLC (since 2016); Chief Executive Officer, ETF Managers Capital LLC (commodity pool operator) (since 2014); Chief Executive Officer (2012-2016) and Chief Compliance Officer (2012-2014), Factor Advisors, LLC (investment adviser); President and Chief Executive Officer, Factor Capital Management LLC (2012-2014) (commodity pool operator).

11

None

John A. Flanagan, (1946)

Treasurer (since 2015)

President, John A. Flanagan CPA, LLC (accounting services) (since 2010); Treasurer, ETF Managers Trust (since 2015); Chief Financial Officer, ETF Managers Capital, LLC (commodity pool operator) (since 2015).

n/a

n/a

Reshma A.

Tanczos (1978)

Chief Compliance Officer (since 2016)

Chief Compliance Officer of ETFMG Financial LLC (Since 2017); Chief Compliance Officer, ETF Managers Group LLC (since 2016); Chief Compliance Officer, ETF Managers Capital LLC (since 2016); Partner, Crow & Cushing (law firm) (2007-2016).

n/a

n/a

 

* Mr. Masucci is an interested Trustee by virtue of his role as the Chief Executive Officer of the Adviser.

 

 

81 

 

 

ETFMG™ ETFs

 

Board of Trustees (Unaudited) (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

Matthew J. Bromberg (1973)

Assistant Secretary (since 2020)

General Counsel and Secretary of Exchange Traded Managers Group LLC (since 2020);

ETF Managers Group LLC (since 2020); ETFMG Financial LLC (since 2020); ETF Managers Capital LLC (since 2020); Partner of Dorsey & Whitney LLP (law firm) (2019-2020); General Counsel of WBI Investments, Inc. (2016-2019); Millington Securities, Inc. (2016-2019); and Partner of Reed Smith (law firm) (2015-2016).

n/a

n/a

Independent Trustees

Terry Loebs (1963)

Trustee (since 2014); Lead Independent Trustee (since 2020)

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 Wiegel (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

 

 

82 

 

 

ETFMG™ ETFs

 

SUPPLEMENTARY INFORMATION

March 31, 2021 (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

ETFMG Prime Junior Silver Miners ETF

13.35%

ETFMG Prime Cyber Security ETF

100.00%

ETFMG Prime Mobile Payments 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

Dividends Received Deduction

ETFMG Prime Junior Silver Miners ETF

1.49%

ETFMG Prime Cyber Security ETF

100.00%

ETFMG Prime Mobile Payments 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 each Fund were as follows:

 

Fund Name

Short-Term Capital Gain

ETFMG Prime Junior Silver Miners ETF

0.00%

ETFMG Prime Cyber Security ETF

0.00%

ETFMG Prime Mobile Payments ETF

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

 

ETFMG Prime Junior

Silver Miners ETF

 

 $

 

462,841

 

$

64,426

 

$

0.01563652

 

$

0.00234548

 

$

29,600,000

 

 

83 

 

ETFMG™ ETFs

 

SUPPLEMENTARY INFORMATION

March 31, 2021 (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 Part F of Form N-PORT. The Funds’ Part F of Form N-PORT is available on the website of the SEC at www.sec.gov and the Funds’ website at www.etfmgfunds.com. 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.

 

84 

 

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

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

 

 


 




 

 

 

Semi-Annual Report

 



March 31, 2021

 

(Unaudited)

 


Wedbush ETFMG Video Game Tech ETF

 

 

 

Wedbush ETFMG Global Cloud Technology ETF

 

 

 

 

 






 

 

 

 

 

 

The Funds are a series of ETF Managers Trust.

 

 

 

Wedbush ETFMG TM ETFs

 

TABLE OF CONTENTS 

March 31, 2021 (Unaudited)

 

 

  Page
Shareholder Letter 2
   
Growth of $10,000 Investment - Wedbush ETFMG Global Cloud Technology ETF 3
   
Top 10 Holdings - Wedbush ETFMG Global Cloud Technology ETF 4
   
Growth of $10,000 Investment - Wedbush ETFMG Video Game Tech ETF 5
   
Top 10 Holdings - Wedbush ETFMG Video Game Tech ETF 6
   
Important Disclosures and Key Risk Factors 7
   
Portfolio Allocations 9
   
Schedule of Investments 10
   
Statements of Assets and Liabilities 19
   
Statements of Operations 20
   
Statements of Changes in Net Assets 21
   
Financial Highlights 23
   
Notes to the Financial Statements 25
   
Approval of Advisory Agreements and Board Considerations 36
   
Expense Example 39
   
Statement Regarding Liquidity Risk Management Program 40
   
Supplementary Information 41
   
Information About Portfolio Holdings 42
   
Information About Proxy Voting 42
   
Trustees and Officers Table 43

 

 

 

Wedbush ETFMG TM ETFs

 

Dear Shareholder,

 

On behalf of the entire team, we want to express our appreciation for the confidence you have placed in these ETFs. The following information pertains to the fiscal period from October 1, 2020 to March 31, 2021

 

Performance Overview

 

During the 6-month period ended March 31, 2021, the S&P 500 Information Technology Sector Index, a broad measure of US listed technology companies, returned 13.85%. During the same period, the S&P Global 1200 Information Technology Sector Index, a broad measure of global technology companies, returned 16.97%. Below is a performance overview for each Fund for the same 6-month period.

 

Wedbush ETFMG Global Cloud Technology ETF (IVES)*

 

The Wedbush ETFMG Global Cloud Technology ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Dan Ives Global Cloud Technology Prime Index (the “Index”).

 

Over the period, the total return for the Fund was 13.54%, while the total return for the Index was 13.99%. The best performers in the Fund on the basis of contribution to return were Sinch AB., Cloudflare Inc., Netapp Inc., Appian Corp. and Kingsoft Cloud Holdings-ADR. while the worst performers were Datadog Inc., Itochu Techno-Solutions Corp., Fastly Inc., Chindata Group Holdings-ADR and Software AG.

 

At the end of the reporting period, the Fund saw an average approximate allocation of 57.4% to Software, 32.0% to IT Services, 4.8% to Equity Real Estate Investment Trusts and 4.8% to Technology Hardware, Storage & Peripherals. The Fund was exposed predominately to the United States 65.4%, followed by Japan 8.9%, Canada 4.9%, Israel 4.5% and Sweden 4.5%.

 

Wedbush ETFMG Video Game Tech ETF (GAMR)**

 

The Wedbush ETFMG Video Game Tech ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the EEFund Video Game Tech Index (the “Index”).

 

Over the period, the total return for the Fund was 43.49%, while the total return for the Index was 43.80%. The best performers in the Fund on the basis of contribution to return were Gamestop Corp., Corsair Gaming Inc., Bilbili Inc., Codemasters Group Holdings, Plc and Wemade Co Ltd. while the worst performers were CD Projekt SA., Paradox Interactive AB., Stillfront Group AB, Square Enix Holdings Co., Ltd., and Netmarble Corp.

 

At the end of the reporting period, the Fund saw an average approximate allocation of 69.5% to Entertainment, 9.8% to Technology Hardware, Storage & Peripherals and 4.6% to Interactive Media & Services. The Fund was exposed predominately to the United States 37.8%, followed by the Republic of Korea 18.5%, Japan 16.7%, and Sweden 9.5%.

 

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 total return 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”.

 

2 

 

Wedbush ETFMG Global Cloud Technology ETF

Growth of $10,000 (Unaudited)

 

 

 

Average Annual Returns
Period Ended March 31, 2021		   1 Year
Return		   5 Year
Return		   Since
Inception
(3/8/2016)		   Value of
$10,000
(3/31/2021)
Wedbush ETFMG Global Cloud Technology ETF (NAV)   74.55%   13.72%   14.56%   $19,899
Wedbush ETFMG Global Cloud Technology ETF (Market)   78.03%   13.68%   14.65%   $19,979
S&P 500 Index   56.35%   16.29%   17.02%   $22,161
ETFMG Global Cloud Blended Index   75.97%   13.43%   14.30%   $19,672

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

 

3 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Global Cloud Technology ETF

 

 

Top Ten Holdings as of March 31, 2021* (Unaudited)

    Security   % of Total Investments
1   Open Text Corp. 4.87%
2   ETFMG Sit Ultra Short ETF** 4.72%
3   Nice, Ltd. 4.54%
4   Sinch AB 4.53%
5   Elastic NV 4.13%
6   GDS Holdings, Ltd. 4.07%
7   Cloudflare, Inc. - Class A 3.59%
8   Itochu Techno-Solutions Corp. 3.42%
9   Datadog, Inc. - Class A 3.37%
10   Kingsoft Cloud Holdings, Ltd. 3.37%
       
    Top Ten Holdings = 40.61% of Total Investments
     
   

* Current Fund holdings may not be indicative of future Fund holdings.

** Affiliated security. Please refer to Note 9 of the Notes to the Financial Statements.

 

4 

 

Wedbush ETFMG Video Game Tech ETF

Growth of $10,000 (Unaudited)

 

 

 

 

Average Annual Returns
Period Ended March 31, 2021		   1 Year
Return		   5 Year
Return		   Since
Inception
(3/8/2016)		   Value of
$10,000
(3/31/2021)
Wedbush ETFMG Video Game Tech ETF (NAV)   127.24%   30.92%   32.17%   $41,041
Wedbush ETFMG Video Game Tech ETF (Market)   130.80%   31.01%   32.37%   $41,365
S&P 500 Index   56.35%   16.29%   17.02%   $22,161
EEFund Video Game Tech Index   129.94%   31.31%   32.57%   $41,689

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment. 

 

5 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Video Game Tech ETF

 

 

Top Ten Holdings as of March 31, 2021* (Unaudited)

    Security   % of Total Investments
1   ETFMG Sit Ultra Short ETF** 3.23%
2   WeMade Entertainment Co., Ltd. 2.38%
3   Com2uS Corp. 2.04%
4   LeoVegas AB 1.95%
5   Webzen, Inc. 1.95%
6   Team17 Group PLC 1.86%
7   Razer, Inc. 1.86%
8   Micro-Star International Co., Ltd. 1.84%
9   Netmarble Corp. 1.77%
10   Kakao Games Corp. 1.76%
       
    Top Ten Holdings = 20.64% of Total Investments
     
   

* Current Fund holdings may not be indicative of future Fund holdings. 

** Affiliated security. Please refer to Note 9 of the Notes to Financial Statements. 

 

6 

 

Wedbush ETFMG TM 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.

 

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.

 

7 

 

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. 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.

 

8 

 

Wedbush ETFMG TM ETFs

 

PORTFOLIO ALLOCATIONS 

As of March 31, 2021 (Unaudited)

 

 

    Wedbush
ETFMG
Global
Cloud
Technology
ETF		     Wedbush
ETFMG
Video
Game
Tech ETF		  
As a percent of Net Assets:            
Australia     2.4 %     — %
Canada     4.9       —  
France     —       3.0  
Germany     1.4       —  
Israel     4.5       —  
Italy     —       0.4  
Japan     8.9       16.7  
Netherlands     4.1       —  
Norway     —       0.2  
Poland     —       1.8  
Republic of Korea     0.2       18.5  
Singapore     1.4       —  
Sweden     4.5       9.5  
Switzerland     —       0.3  
Taiwan, Province of China     —       5.5  
United Kingdom     1.7       5.8  
United States     65.4       37.8  
Exchange Traded Funds     4.7       3.2  
Short-Term and other Net Assets (Liabilities)     (4.1 )     (2.7 )
      100.0 %     100.0 %

 

9 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Global Cloud Technology ETF

Schedule of Investments 

March 31, 2021 (Unaudited)

 

 

    Shares     Value  
             
COMMON STOCKS - 99.4%                
Australia - 2.4%                
IT Services - 2.4% (d)                
Data#3, Ltd.     35,240     $ 138,918  
Megaport, Ltd. (a)     36,472       307,218  
NEXTDC, Ltd. (a)     104,621       828,023  
Total IT Services             1,274,159  
                 
Canada - 4.9%                
Software - 4.9% (d)                
Open Text Corp.     53,807       2,565,542  
                 
Germany - 1.4%                
Software - 1.4% (d)                
Software AG     17,398       733,273  
                 
Israel - 4.5%                
Software - 4.5% (d)                
Nice, Ltd. (a)     11,064       2,389,461  
                 
Japan - 8.9%                
IT Services - 8.4% (d)                
Hennge KK (a)     3,788       252,818  
i3 Systems, Inc. (a)     1,139       49,839  
Itochu Techno-Solutions Corp.     55,964       1,801,867  
NS Solutions Corp.     22,565       715,314  
SCSK Corp.     24,330       1,441,452  
TechMatrix Corp.     10,481       186,192  
Total IT Services             4,447,482  
Software - 0.5% (d)                
Cybozu, Inc.     12,175       245,424  
Total Japan             4,692,906  
                 
Netherlands - 4.1%                
Software - 4.1% (d)                
Elastic NV (a)     19,588       2,178,186  
                 
Republic of Korea - 0.2%                
Diversified Telecommunication Services - 0.2%                
KINX, Inc.     1,162       76,799  
                 
Singapore - 1.4%                
Real Estate Investment Trusts (REITs) - 1.4%                
Keppel DC REIT     377,416       757,525  

 

The accompanying notes are an integral part of these financial statements.

 

10 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Global Cloud Technology ETF

Schedule of Investments 

March 31, 2021 (Unaudited) (Continued)

 

 

    Shares     Value  
Sweden - 4.5%            
Software - 4.5% (d)            
Sinch AB (a)(f)     13,562     $ 2,385,224  
                 
United Kingdom - 1.7%                
Software - 1.7% (d)                
Bytes Technology Group PLC (a)     56,055       308,648  
Micro Focus International PLC     78,135       595,893  
Total Software             904,541  
                 
United States - 65.4%                
Communications Equipment - 0.2%                
Inseego Corp. (a)(b)     10,612       106,120  
IT Services - 21.2% (d)                
21Vianet Group, Inc. - ADR (a)     31,671       1,022,973  
Chinasoft International, Ltd.     682,605       734,050  
Chindata Group Holdings, Ltd. - ADR (a)(b)     85,720       1,417,809  
Fastly, Inc. - Class A (a)(b)     11,957       804,467  
GDS Holdings, Ltd. - ADR (a)(b)     26,422       2,142,561  
Grid Dynamics Holdings, Inc. (a)     5,294       84,333  
Kingsoft Cloud Holdings, Ltd. - ADR (a)     45,108       1,773,648  
Limelight Networks, Inc. (a)     12,922       46,132  
MongoDB, Inc. (a)     5,521       1,476,481  
Rackspace Technology, Inc. (a)(b)     21,444       509,938  
SUNeVision Holdings, Ltd.     544,622       561,148  
Switch, Inc. - Class A     25,112       408,321  
Unisys Corp. (a)     6,562       166,806  
Total IT Services             11,148,667  
Real Estate Investment Trusts (REITs) - 3.4%                
CoreSite Realty Corp.     4,462       534,771  
CyrusOne, Inc.     12,568       851,105  
QTS Realty Trust, Inc. - Class A (b)     6,729       417,467  
Total Real Estate Investment Trusts (REITs)             1,803,343  
Software - 35.8% (d)                
8x8, Inc. (a)     11,189       362,971  
Alteryx, Inc. - Class A (a)(b)     6,976       578,729  
Anaplan, Inc. (a)     14,805       797,249  
Appfolio, Inc. - Class A (a)(b)     3,589       507,520  
Appian Corp. (a)(b)     7,376       980,639  
Blackbaud, Inc. (a)     5,035       357,888  
Box, Inc. - Class A (a)     16,514       379,161  
Cloudera, Inc. (a)     32,554       396,182  
Cloudflare, Inc. - Class A (a)     26,933       1,892,313  
CommVault Systems, Inc. (a)     4,892       315,534  
Coupa Software, Inc. (a)     6,046       1,538,586  
Datadog, Inc. - Class A (a)(b)     21,325       1,777,226  
Datto Holding Corp. (a)     16,754       383,834  
Domo, Inc. - Class B (a)     3,118       175,512  

 

The accompanying notes are an integral part of these financial statements.

 

11 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Global Cloud Technology ETF

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

    Shares     Value  
Dropbox, Inc. - Class A (a)(b)     43,270     $ 1,153,578  
Everbridge, Inc. (a)(b)     3,774       457,333  
Jamf Holding Corp. (a)     12,165       429,668  
MicroStrategy, Inc. - Class A (a)(b)     1,000       678,800  
nCino, Inc. (a)     9,630       642,514  
New Relic, Inc. (a)(b)     6,566       403,678  
Nutanix, Inc. - Class A (a)     21,029       558,530  
PagerDuty, Inc. (a)(b)     8,530       343,162  
Smartsheet, Inc. - Class A (a)     12,755       815,300  
SolarWinds Corp. (a)(b)     32,931       574,317  
Sumo Logic, Inc. (a)     10,653       200,916  
Teradata Corp. (a)(b)     11,373       438,315  
Xunlei, Ltd. - ADR (a)(b)     15,654       102,377  
Zendesk, Inc. (a)(b)     12,286       1,629,369  
Total Software             18,871,201  
Technology Hardware, Storage & Peripherals - 4.8%                
NetApp, Inc.     23,225       1,687,760  
Pure Storage, Inc. - Class A (a)     28,464       613,115  
Super Micro Computer, Inc. (a)     5,263       205,573  
Total Technology Hardware, Storage & Peripherals             2,506,448  
Total United States             34,435,779  
TOTAL COMMON STOCKS (Cost $36,083,324)             52,393,395  
                 
INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 21.2%                
ETFMG Sit Ultra Short ETF (e)     50,000       2,487,275  
Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (c)     8,680,083       8,680,083  
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $11,168,033)             11,167,358  
                 
SHORT-TERM INVESTMENTS - 0.5%                
Money Market Funds - 0.5%                
Invesco Advisers, Inc. STIT-Treasury Portfolio – Institutional Class, 0.01% (c)     248,357       248,357  
TOTAL SHORT-TERM INVESTMENTS (Cost $248,357)             248,357  
Total Investments (Cost $47,499,714) - 121.1%             63,809,110  
Liabilities in Excess of Other Assets - (21.1)%             (11,125,204 )
TOTAL NET ASSETS - 100.0%           $ 52,683,906  

 

The accompanying notes are an integral part of these financial statements.

 

12 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Global Cloud Technology ETF

Schedule of Investments 

March 31, 2021 (Unaudited) (Continued)

 

 

Percentages are stated as a percent of net assets.

 

ADR American Depositary Receipt
PLC Public Limited Company

 

(a) Non-income producing security.
(b) All or a portion of this security was out on loan as of March 31, 2021.
(c) The rate shown is the annualized seven-day yield at March 31, 2021.
(d) As of March 31, 2021, 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.
(f) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. This security may be resold in transactions exempt from registration to qualified institutional investors.

 

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.

 

13 

 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Video Game Tech ETF

Schedule of Investments

March 31, 2021 (Unaudited)

 

 

    Shares     Value  
COMMON STOCKS - 99.5%                
France - 3.0%                
Entertainment - 2.6% (d)                
Atari SA (a)     763,281     $ 730,404  
Focus Home Interactive SA (a)     5,442       433,966  
Ubisoft Entertainment SA (a)     23,959       1,822,922  
Total Entertainment             2,987,292  
Technology Hardware, Storage & Peripherals - 0.4%                
Guillemot Corp. (a)     28,211       499,556  
Total France             3,486,848  
                 
Italy - 0.4%                
Entertainment - 0.4% (d)                
Digital Bros SpA     15,466       451,612  
                 
Japan - 16.7%                
Distributors - 0.3%                
Happinet Corp.     28,835       399,745  
Entertainment - 13.1% (d)                
Aeria, Inc.     85,697       485,275  
Aiming, Inc. (a)(b)     113,205       433,497  
Akatsuki, Inc.     48,112       1,944,468  
Capcom Co., Ltd.     61,156       1,985,602  
COLOPL, Inc.     36,192       272,604  
DeNa Co., Ltd.     14,524       283,593  
Gumi, Inc.     52,578       431,641  
GungHo Online Entertainment, Inc.     14,097       278,312  
Imagineer Co., Ltd.     36,416       411,437  
KLab, Inc. (a)     55,641       404,525  
Koei Tecmo Holdings Co., Ltd.     6,357       285,053  
Konami Holdings Corp.     28,547       1,699,027  
Marvelous, Inc.     54,194       421,414  
Nexon Co., Ltd.     60,351       1,956,740  
Nintendo Co., Ltd.     3,455       1,928,684  
Square Enix Holdings Co., Ltd.     34,515       1,917,067  
Total Entertainment             15,138,939  
Household Durables - 1.2%                
Sony Corp. - ADR (a)     12,706       1,346,963  
Interactive Media & Services - 1.6%                
Gree, Inc.     355,861       1,796,581  
Leisure Products - 0.5%                
Bandai Namco Holdings, Inc.     3,918       279,294  
Sega Sammy Holdings, Inc.     18,202       283,900  
Total Leisure Products             563,194  
Total Japan             19,245,422  

 

The accompanying notes are an integral part of these financial statements.

 

14 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Video Game Tech ETF

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

    Shares     Value  
Norway - 0.2%                
Semiconductors & Semiconductor Equipment - 0.2%                
Nordic Semiconductor ASA (a)     16,045     $ 287,578  
                 
Poland - 1.8%                
Entertainment - 1.8% (d)                
11 bit studios SA (a)     3,165       442,086  
CD Projekt SA (a)     32,941       1,587,910  
Total Entertainment             2,029,996  
                 
Republic of Korea - 18.5%                
Entertainment - 17.8% (d)                
Actoz Soft Co., Ltd. (a)     56,696       457,375  
Com2uS Corp.     15,767       2,354,427  
Gravity Co., Ltd. - ADR (a)     13,688       1,574,120  
Kakao Games Corp. (a)     43,858       2,030,624  
NCSoft Corp.     2,308       1,780,326  
Neowiz (a)     21,311       440,625  
Netmarble Corp.     17,909       2,041,317  
Nexon GT Co., Ltd. (a)     36,441       441,124  
NHN Corp. (a)     31,604       2,024,555  
Pearl Abyss Corp. (a)     7,251       1,973,963  
Webzen, Inc. (a)     61,402       2,248,830  
WeMade Entertainment Co., Ltd.     51,910       2,752,021  
Wysiwyg Studios Co., Ltd. (a)     52,632       597,589  
Total Entertainment             20,716,896  
Hotels, Restaurants & Leisure - 0.4%                
ME2ON Co., Ltd.     69,894       423,039  
Interactive Media & Services - 0.3%                
AfreecaTV Co., Ltd.     4,246       294,509  
Total Republic of Korea             21,434,444  
                 
Sweden - 9.5%                
Electronic Equipment, Instruments & Components - 0.3%                
Thunderful Group AB (a)     62,412       392,333  
Entertainment - 7.0% (d)                
Embracer Group AB (a)     72,068       1,982,119  
Enad Global 7 AB (a)     165,003       1,877,986  
G5 Entertainment AB     7,826       445,359  
Modern Times Group MTG - Class B (a)     19,993       289,589  
Paradox Interactive AB     82,417       1,859,076  
Stillfront Group AB (a)     176,607       1,632,919  
Total Entertainment             8,087,048  
Hotels, Restaurants & Leisure - 2.0%                
LeoVegas AB     385,587       2,258,302  

 

The accompanying notes are an integral part of these financial statements.

 

15 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Video Game Tech ETF

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

    Shares     Value  
Technology Hardware, Storage & Peripherals - 0.2%                
Tobii AB (a)     38,867     $ 277,480  
Total Sweden             11,015,163  
                 
Switzerland - 0.3%                
Technology Hardware, Storage & Peripherals - 0.3%                
Logitech International SA (b)     2,883       301,274  
                 
Taiwan, Province of China - 5.5%                
Entertainment - 1.5% (d)                
Chinese Gamer International Corp. (a)     219,532       453,944  
Gamania Digital Entertainment Co., Ltd.     185,284       432,479  
Softstar Entertainment, Inc.     189,723       438,185  
Userjoy Technology Co., Ltd.     131,234       445,220  
Total Entertainment             1,769,828  
Technology Hardware, Storage & Peripherals - 4.0%                
Acer, Inc.     295,482       325,690  
Asustek Computer, Inc.     25,453       332,290  
HTC Corp. (a)     1,249,640       1,351,116  
Micro-Star International Co., Ltd.     348,316       2,124,101  
Thermaltake Technology Co., Ltd.     154,644       432,502  
Total Technology Hardware, Storage & Peripherals             4,565,699  
Total Taiwan, Province of China             6,335,527  
                 
United Kingdom - 5.8%                
Entertainment - 4.1% (d)                
Frontier Developments PLC (a)     42,110       1,579,045  
Sumo Group PLC (a)     205,636       995,054  
Team17 Group PLC (a)     194,279       2,153,388  
Total Entertainment             4,727,487  
IT Services - 1.7%                
Keywords Studios PLC (a)     55,463       1,968,123  
Total United Kingdom             6,695,610  
                 
United States - 37.8%                
Electronic Equipment, Instruments & Components - 0.3%                
VSTECS Holdings, Ltd.     332,029       301,957  
Entertainment - 21.2% (d)                
Activision Blizzard, Inc.     20,471       1,903,803  
Bilibili, Inc. - ADR (a)(b)     17,227       1,844,323  
DouYu International Holdings, Ltd. - ADR (a)(b)     133,141       1,385,998  
Electronic Arts, Inc.     14,486       1,960,970  
Glu Mobile, Inc. (a)     152,573       1,904,111  
HUYA, Inc. - ADR (a)(b)     10,943       213,170  
iDreamSky Technology Holdings, Ltd. (a)     3,521,106       1,689,421  
IGG, Inc.     1,308,669       1,686,737  

 

The accompanying notes are an integral part of these financial statements.

 

16 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Video Game Tech ETF 

Schedule of Investments 

March 31, 2021 (Unaudited) (Continued)

 

 

    Shares     Value  
NetDragon Websoft Holdings, Ltd.     787,715     $ 2,006,246  
NetEase, Inc. - ADR     2,653       273,949  
Playtika Holding Corp. (a)(b)     68,586       1,866,225  
ROBLOX Corp. - Class A (a)     25,746       1,669,113  
Sciplay Corp. - Class A (a)(b)     110,487       1,787,680  
Sea, Ltd. - ADR (a)     1,215       271,224  
Skillz, Inc. (a)(b)     10,352       197,102  
Take-Two Interactive Software, Inc. (a)     11,152       1,970,558  
Zynga, Inc. - Class A (a)(b)     186,346       1,902,593  
Total Entertainment             24,533,223  
Household Durables - 0.4%                
Turtle Beach Corp. (a)(b)     15,670       417,919  
Interactive Media & Services - 2.7%                
Alphabet, Inc. - Class C (a)     614       1,270,139  
JOYY, Inc. - ADR (b)     2,254       211,267  
Momo, Inc. - ADR     17,189       253,366  
Sohu.com, Ltd. - ADR (a)     16,120       253,406  
Tencent Holdings, Ltd.     14,703       1,153,681  
Total Interactive Media & Services             3,141,859  
Semiconductors & Semiconductor Equipment - 3.9%                
Advanced Micro Devices, Inc. (a)(b)     15,875       1,246,188  
Intel Corp.     20,369       1,303,616  
Kopin Corp. (a)(b)     27,598       289,503  
NVIDIA Corp.     2,481       1,324,680  
Qualcomm, Inc.     2,183       289,444  
Total Semiconductors & Semiconductor Equipment             4,453,431  
Software - 3.2%                
Cheetah Mobile, Inc. - ADR     160,086       360,194  
Kingsoft Corp., Ltd.     41,473       275,274  
Microsoft Corp.     5,438       1,282,117  
Unity Software, Inc. (a)(b)     17,848       1,790,333  
Total Software             3,707,918  
Specialty Retail - 1.2%                
GameStop Corp. - Class A (a)(b)     7,317       1,388,913  
Technology Hardware, Storage & Peripherals - 4.9%                
Apple, Inc.     10,574       1,291,614  
Corsair Gaming, Inc. (a)(b)     56,190       1,870,565  
Immersion Corp. (a)     37,972       363,772  
Razer, Inc. (a)     6,335,530       2,151,477  
Total Technology Hardware, Storage & Peripherals             5,677,428  
Total United States             43,622,648  
TOTAL COMMON STOCKS (Cost $94,163,528)             114,906,122  

 

The accompanying notes are an integral part of these financial statements.

 

17 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Video Game Tech ETF

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

    Shares     Value  
INVESTMENTS PURCHASED WITH PROCEEDS FROM                
SECURITIES LENDING COLLATERAL - 12.4%                
ETFMG Sit Ultra Short ETF (e)     75,000     $ 3,730,913  
Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (c)     10,594,914       10,594,914  
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS                
FROM SECURITIES LENDING COLLATERAL (Cost $14,342,762)             14,325,827  
                 
SHORT-TERM INVESTMENTS - 0.2%                
Money Market Funds - 0.2%                
Invesco Advisers, Inc. STIT-Treasury Portfolio – Institutional Class, 0.01% (c)     262,885       262,885  
TOTAL SHORT-TERM INVESTMENTS (Cost $262,885)             262,885  
                 
Total Investments (Cost $108,769,175) - 112.1%             129,494,834  
Liabilities in Excess of Other Assets - (12.1)%             (13,940,066 )
TOTAL NET ASSETS - 100.0%           $ 115,554,768  
Percentages are stated as a percent of net assets.                

  

ADR American Depositary Receipt
PLC Public Limited Company

 


 (a) Non-income producing security.

(b) All or a portion of this security is out on loan as of March 31, 2021.

(c) The rate shown is the annualized seven-day yield at March 31, 2021.

(d) As of March 31, 2021, 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 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. 

 

18 

 

Wedbush ETFMG TM ETFs

 

STATEMENTS OF ASSETS AND LIABILITIES 

As of March 31, 2021 (Unaudited)

 

 

   

Wedbush

ETFMG

Global Cloud Technology

ETF

    

Wedbush

ETFMG Video

Game Tech

ETF

  
ASSETS                
Investments in unaffiliated securities, at value*   $ 61,321,835     $ 125,763,921  
Investments in affiliated securities, at value*     2,487,275       3,730,913  
Total Investments in securities, at value     63,809,110       129,494,834  
Foreign currency*     1,774       26,615  
Dividends and interest receivable     70,740       322,936  
Securities lending income receivable     1,638       7,967  
Total Assets     63,883,262       129,852,352  
                 
LIABILITIES                
Collateral received for securities loaned (Note 7)     11,168,033       14,223,377  
Payables:                
Management fees payable     31,323       74,207  
Total Liabilities     11,199,356       14,297,584  
Net Assets   $ 52,683,906     $ 115,554,768  
                 
NET ASSETS CONSIST OF:                
Paid-in Capital   $ 45,148,308     $ 49,837,458  
Total Distributable Earnings     7,535,598       65,717,310  
Net Assets   $ 52,683,906     $ 115,554,768  
                 
*Identified Cost:                
                 
Investments in unaffiliated securities   $ 45,011,765     $ 105,021,327  
Investments in affiliated securities     2,487,949       3,747,848  
Foreign currency     1,775       26,607  
Shares Outstanding^     1,100,000       1,200,000  
                 
Net Asset Value, Offering and Redemption Price per Share   $ 47.89     $ 96.30  

 

^ No par value, unlimited number of shares authorized

 

The accompanying notes are an integral part of these financial statements. 

 

19 

 

Wedbush ETFMG TM ETFs

 

STATEMENTS OF OPERATIONS 

For the Period Ended March 31, 2021 (Unaudited)

 

 

    Wedbush
ETFMG
Global Cloud
Technology ETF		     Wedbush
ETFMG Video
Game Tech
ETF		  
INVESTMENT INCOME                
Income:                
Dividends from unaffiliated securities (net of foreign withholdings tax of $8,275, $52,059)   $ 146,416     $ 436,968  
Interest     10       39  
Securities lending income     18,994       205,133  
Total Investment Income     165,420       642,140  
                 
Expenses:                
Management fees     184,882       498,321  
Total Expenses     184,882       498,321  
Net Investment Income (Loss)     (19,462 )     143,819  
                 
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS                
Net Realized Gain (Loss) on:                
Unaffiliated Investments     468,839       56,446,309  
In-Kind redemptions     1,588,343       7,589,323  
Foreign currency and foreign currency translation     (2,476 )     (72,235 )
Net Realized Gain on Investments     2,054,706       63,963,397  
Net Change in Unrealized Appreciation (Depreciation) of:                
Unaffiliated Investments     4,279,259       (6,533,874 )
Affiliated Investments     (1,975 )     (1,800 )
Foreign currency and foreign currency translation     (293 )     (1,272 )
Net change in Unrealized Appreciation (Depreciation) of Investments     4,276,991       (6,536,946 )
Net Realized and Unrealized Gain on Investments     6,331,697       57,426,451  
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS   $ 6,312,235     $ 57,570,270  

 

The accompanying notes are an integral part of these financial statements.

 

20 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Global Cloud Technology ETF

STATEMENTS OF CHANGES IN NET ASSETS

 

 

    Period Ended
March 31,
2021		     Year Ended
September 30,		  
    (Unaudited)     2020  
OPERATIONS                
Net investment income (loss)   $ (19,462 )   $ 261,974  
Net realized gain (loss) on investments and In-Kind  Redemptions     2,054,706       (3,421,749 )
Net change in unrealized appreciation of investments and  foreign currency and foreign currency translation     4,276,991       10,336,862  
Net increase in net assets resulting from operations     6,312,235       7,177,087  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions from distributable earnings     (137,500 )     (226,000 )
                 
CAPITAL SHARE TRANSACTIONS                
Net increase (decrease) in net assets derived from net change  in outstanding shares     (6,320 )     1,842,050  
Transaction Fees (See Note 1)     —       2,150  
Net increase (decrease) in net assets from capital share  transactions     (6,320 )     1,844,200  
Total increase in net assets   $ 6,168,415     $ 8,795,287  
                 
NET ASSETS                
Beginning of Period     46,515,491       37,720,204  
End of Period   $ 52,683,906     $ 46,515,491  

 

Summary of share transactions is as follows:

               

    Period Ended              
    March 31, 2021     Year Ended  
    (Unaudited)     September 30, 2020  
    Shares     Amount     Shares     Amount  
Shares Sold     100,000     $ 5,212,020       350,000     $ 12,901,765  
Transaction Fees (See Note 1)     —       —       —       2,150  
Shares Redeemed     (100,000 )     (5,218,340 )     (300,000 )     (11,059,715 )
Net Transactions in Fund Shares     —     $ (6,320 )     50,000     $ 1,844,200  
Beginning Shares     1,100,000               1,050,000          
Ending Shares     1,100,000               1,100,000          

 

The accompanying notes are an integral part of these financial statements.

 

21 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Video Game Tech ETF

STATEMENTS OF CHANGES IN NET ASSETS

 

   

    Period Ended
March 31,
2021		     Year Ended
September 30,		  
    (Unaudited)     2020  
OPERATIONS                
Net investment income   $ 143,819     $ 451,211  
Net realized gain on investments and In-Kind Redemptions     63,963,397       10,026,884  
Net change in unrealized appreciation (depreciation) of  investments and foreign currency and foreign currency translation     (6,536,946 )     35,830,476  
Net increase in net assets resulting from operations     57,570,270       46,308,571  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions from distributable earnings     (1,039,000 )     (726,000 )
                 
CAPITAL SHARE TRANSACTIONS                
Net decrease in net assets derived from net change in outstanding shares     (62,761,220 )     (6,893,375 )
Transaction Fees (See Note 1)     86,112       8,922  
Net decrease in net assets from capital share transactions     (62,675,108 )     (6,884,453 )
Total increase (decrease) in net assets   $ (6,143,838 )   $ 38,698,118  
                 
NET ASSETS                
Beginning of Period     121,698,606       83,000,488  
End of Period   $ 115,554,768     $ 121,698,606  

 

Summary of share transactions is as follows:

 

    Period Ended              
    March 31, 2021     Year Ended  
    (Unaudited)     September 30, 2020  
    Shares     Amount     Shares     Amount  
Shares Sold     700,000     $ 60,910,445       400,000     $ 24,396,890  
Transaction Fees (See Note 1)     —       86,112       —       8,922  
Shares Redeemed     (1,300,000 )     (123,671,665 )     (600,000 )     (31,290,265 )
Net Transactions in Fund Shares     (600,000 )   $ (62,675,108 )     (200,000 )   $ (6,884,453 )
Beginning Shares     1,800,000               2,000,000          
Ending Shares     1,200,000               1,800,000          

 

The accompanying notes are an integral part of these financial statements.

 

22 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Global Cloud Technology ETF  

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

 

    Period
Ended
March 31,
2021
(Unaudited)		     Year Ended
September 30,
2020		     Year Ended
September 30,
2019		     Year Ended
September 30,
2018		     Year Ended
September 30,
2017		     Period Ended
September 30,
20161		  
                                     
Net Asset Value,                                                
Beginning of                                                
Year/Period   $ 42.29     $ 35.92     $ 39.05     $ 36.14     $ 26.75     $ 25.00  
Income (Loss) from                                                
Investment Operations:                                                
Net investment income (loss)2     (0.02 )     0.26       0.28       0.15       0.27       0.11  
Net realized and unrealized gain (loss) on investments     5.75       6.34       (3.11 )     3.08       9.26       1.68  
Total from investment operations     5.73       6.60       (2.83 )     3.23       9.53       1.79  
Less Distributions:                                                
Distributions from net investment income     (0.13 )     (0.23 )     (0.30 )     (0.13 )     (0.04 )     (0.04 )
Net realized gains     —       —       —       (0.19 )     (0.10 )     —  
Total distributions     (0.13 )     (0.23 )     (0.30 )     (0.32 )     (0.14 )     (0.04 )
Net asset value, end of year/period   $ 47.89     $ 42.29     $ 35.92     $ 39.05     $ 36.14     $ 26.75  
Total Return     13.54 %3     18.58 %     -7.23 %     9.03 %     36.39 %     7.15 %3
                                                 
Ratios/Supplemental                                                
Data:                                                
Net assets at end of year/period (000’s)   $ 52,684     $ 46,515     $ 37,720     $ 50,771     $ 37,948     $ 6,686  
                                                 
Expenses to Average Net Assets before legal expense     0.68 %4     0.71 %5     0.75 %     0.75 %     0.75 %     0.75 %4
Gross Expenses to Average Net Assets     0.68 %4     0.71 %5     0.75 %     0.75 %     0.79 %6     0.75 %4
Net Investment Income (Loss) to Average Net Assets     -0.07 %4     0.70 %     0.83 %     0.42 %     0.87 %     0.68 %4
Portfolio Turnover Rate     8 %3     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. 

23 

 

Wedbush ETFMG TM ETFs

 

Wedbush ETFMG Video Game Tech ETF  

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

 

    Period Ended
March 31,
2021
(Unaudited)		     Year Ended
September 30,
2020		     Year Ended
September 30,
2019		     Year Ended
September 30,
2018		     Year Ended
September 30,
2017		     Period Ended
September 30,
20161		  
                                     
Net Asset Value,                                                
Beginning Year/Period   $ 67.61     $ 41.50     $ 47.49       44.37     $ 32.90     $ 25.00  
Income (Loss) from                                                
Investment Operations:                                                
Net investment income2     0.14       0.25       0.52       0.74       0.33       0.08  
Net realized and unrealized gain (loss) on investments     29.08       26.26       (5.87 )     2.98       11.71       7.82  
Total from investment operations     29.22       26.51       (5.35 )     3.72       12.04       7.90  
Less Distributions:                                                
Distributions from net investment income     (0.58 )     (0.41 )     (0.65 )     (0.59 )     (0.18 )     —  
Net realized gains     —       —       —       (0.03 )     (0.39 )     —  
Total distributions     (0.58 )     (0.41 )     (0.65 )     (0.62 )     (0.57 )     —  
Capital Share                                                
Transactions:                                                
Transaction fees added to paid-in capital     0.05       0.01       0.01       0.02       —       —  
Net asset at end of year/period   $ 96.30     $ 67.61     $ 41.50       47.49     $ 44.37     $ 32.90  
Total Return     43.49 %3     64.12 %     -11.26 %     8.38 %     37.67 %     31.62 %3
                                                 
Ratios/Supplemental                                                
Data:                                                
Net assets at end of year/period (000’s)   $ 115,555     $ 121,699     $ 83,000     $ 130,609     $ 39,934     $ 6,581  
                                                 
Expenses to Average Net Assets before legal expense     0.75 %4     0.75 %     0.75 %     0.75 %     0.75 %     0.74 %4
Gross Expenses to Average Net Assets     0.75 %4     0.75 %     0.75 %     0.75 %     0.82 %5     0.74 %4
Net Investment Income to Average Net Assets     0.35 %4     0.51 %     1.22 %     1.48 %     0.86 %     0.44 %4
Portfolio Turnover Rate     33 %3     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.

24 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited)

 

 

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 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 U.S. Securities and Exchange Commission (“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 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 Name Strategy
Commencement
Date		 Strategy
Wedbush
ETFMG Global
Cloud
Technology ETF		 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.
Wedbush
ETFMG Video
Game Tech ETF		 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.

25 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 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.

 


 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 NAV of its shares to differ significantly from the NAV that would be calculated without regard to such considerations. As of March 31, 2021, the Fund 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 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.
26 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 March 31, 2021:

 

Wedbush ETFMG Global Cloud Technology ETF 

Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 52,393,395     $ —     $ —     $ 52,393,395  
Short Term Investments     248,357       —       —       248,357  
ETFMG Sit Ultra Short ETF**     2,487,275       —       —       2,487,275  
Investments Purchased with Securities Lending Collateral*     —       —       —       8,680,083  
Total Investments in Securities   $ 55,129,027     $ —     $ —     $ 63,809,110  

 

Wedbush ETFMG Video Game Tech ETF 

Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 114,906,122     $ —     $ —     $ 114,906,122  
Short Term Investments     262,885       —       —       262,885  
ETFMG Sit Ultra Short ETF**     3,730,913       —       —       3,730,913  
Investments Purchased with Securities Lending Collateral*     —       —       —       10,594,914  
Total Investments in Securities   $ 118,899,920     $ —     $ —     $ 129,494,834  

 


 ^ 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 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, 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.
27 

 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

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 their tax position and have 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 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 March 31, 2021, 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.

 


 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.

 


 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, 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.

 


 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 NAV per share of each Fund is calculated by dividing the sum of the value of the securities held by each Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of each Fund, rounded to the nearest cent. Each 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 each Fund is equal to each Fund’s NAV per share.
28 

 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 


 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 Wedbush ETFMG Global Cloud Technology ETF and the Wedbush ETFMG 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, the Funds 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 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 wide spread 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.

29 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

  

NOTE 4 – MANAGEMENT AND OTHER CONTRACTS

 

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 (“Parent”), 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.

 

Advisory Fees:

 

Wedbush ETFMG Global Cloud Technology ETF 0.68%

Wedbush ETFMG Video Game Tech ETF 0.75%

 

The Adviser 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.

 

In May, 2020, Wedbush acquired a minority, non-voting, equity interest in Parent. Wedbush is not however, an affiliate of the Funds, 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.

30 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

  

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 period ended March 31, 2021, 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 period ended March 31, 2021:

 

    Purchases     Sales  
Wedbush ETFMG Global Cloud Technology ETF   $ 4,369,345     $ 6,744,332  
Wedbush ETFMG Video Game Tech ETF   $ 43,212,812     $ 49,325,516  

 

The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the period ended March 31, 2021:

 

    Purchases
In-Kind		     Sales
In-Kind		  
Wedbush ETFMG Global Cloud Technology ETF   $ 5,179,223     $ 3,018,053  
Wedbush ETFMG Video Game Tech ETF   $ 48,004,715     $ 104,302,106  

 

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 March 31, 2021.

31 

 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

NOTE 7 — SECURITIES LENDING

 

The Funds may lend up to 33 1/3% of the value of the securities in their 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 Funds receive 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 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 in 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. 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 March 31, 2021, 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*		  
Wedbush ETFMG Global Cloud Technology ETF   $ 11,224,617     $ 11,168,033  
Wedbush ETFMG Video Game Tech ETF     14,146,299       14,342,762  

 

*      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.

32 

 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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, the Funds’ most recent fiscal year end, were as follows:

 

    Cost     Gross
Unrealized
Appreciation		     Gross
Unrealized
Depreciation		     Net Unrealized
Appreciation
(Depreciation)		  
Wedbush ETFMG Global Cloud Technology ETF   $ 46,702,361     $ 12,236,018     $ (491,781 )   $ 11,744,237  
Wedbush ETFMG Video Game Tech ETF     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 Funds’ most recent fiscal year end, 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)		  
Wedbush ETFMG Global Cloud Technology ETF   $ 134,746     $ —     $ 134,746     $ (10,518,120 )   $ 1,360,863  
Wedbush ETFMG Video Game Tech ETF     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’ most recent fiscal year end, the Funds had accumulated capital loss carryovers of:

 

    Capital Loss
Carryforward
ST		     Capital Loss
Carryforward
LT		     Expires  
Wedbush ETFMG Global Cloud Technology ETF   $ (1,596,689 )   $ (8,921,431 )     Indefinite  
Wedbush ETFMG Video Game Tech ETF     (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, the Funds’ most recent fiscal year end.

 

      Late Year
Ordinary
Loss		       Post-
October
Capital
Loss		  
Wedbush ETFMG Global Cloud Technology ETF   $ —     $ —  
Wedbush ETFMG Video Game Tech ETF     —       —  
33 

 

Wedbush ETFMG TM ETFs

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

The tax charter of distributions paid during the period ended March 31, 2021, and the year ended September 30, 2020 were as follows:

 

   

Period Ended

March 31, 2021

    

Year Ended

September 30, 2020

  
    From Ordinary Income     From Capital Gains     From Ordinary Income     From Capital Gains  
Wedbush ETFMG Global Cloud Technology ETF   $ 137,500     $ —     $ 226,000     $ —  
Wedbush ETFMG Video Game Tech ETF     1,039,000       —       726,000       —  

 

NOTE 9 – INVESTMENTS IN AFFILIATES

 

Wedbush ETFMG Global Cloud Technology ETF

 

Wedbush ETFMG Global Cloud Technology ETF owned the following company during the period ended March 31, 2021. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the period ended March 31, 2021. Transactions during the period in the security were as follows:

 

Security Name   Value, at September 30, 2020     Purchases     Sales     Realized Gain (Loss)     Change in Unrealized Appreciation (Depreciation)     Dividend Income     Value, at March 31, 2021     Ending Shares  
ETFMG Sit Ultra Short ETF   $ 2,489,250     $ —     $ —     $ —     $ (1,975 )   $ —     $ 2,487,275       50,000  

 

Wedbush ETFMG Video Game Tech ETF

 

Wedbush ETFMG Video Game Tech ETF owned the following company during the period ended March 31, 2021. ETFMG Sit Ultra Short ETF is deemed to be an affiliate of the Fund as defined by the 1940 Act as of the period ended March 31, 2021. Transactions during the period in the security were as follows:

 

Security Name   Value, at September 30, 2020     Purchases     Sales     Realized Gain (Loss)     Change in Unrealized Appreciation (Depreciation)     Dividend Income     Value, at March 31, 2021     Ending Shares  
ETFMG Sit Ultra Short ETF   $ 2,489,250     $ 1,243,463     $ —     $ —     $ (1,800 )   $ —     $ 3,730,913       75,000  

 

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.

 

34 

 

Wedbush ETFMG TM ETFs 

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued) 

 

 

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 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 transaction is expected to close prior to July 31, 2021. 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.

 

35 

 

Wedbush ETFMG TM ETFs

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS For the Period Ended March 31, 2021 (Unaudited)

 

 

Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on March 30, 2021, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the renewal of the Amended and Restated Investment Advisory Agreement (the “Advisory Agreement”) between ETF Managers Group LLC (the “Adviser”) and the Trust, on behalf of each of Wedbush ETFMG Global Cloud Technology ETF (formerly, the ETFMG Drone Economy Strategy ETF) (“IVES”) and Wedbush ETFMG Video Game Tech ETF (formerly, the ETFMG Video Game Tech ETF) (“GAMR”) (each a “Fund” and collectively, the “Funds”).

 

Pursuant to Section 15(c) of the 1940 Act, the Board must annually review and approve the Advisory Agreement after its initial two-year term: (i) by the vote of the Trustees or by a vote of the shareholders of the Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Advisory 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. Each year, the Board calls and holds a meeting to decide whether to renew the Advisory Agreement for an additional one-year term. 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 provided to the Funds’ shareholders by the Adviser; (ii) the investment performance of the Funds; (iii) the Adviser’s costs and profits realized in providing services to the Funds, including any fall-out benefits enjoyed by the Adviser; (iv) comparative fee and expense data for the Funds in relation to other similar investment companies; (v) the extent to which economies of scale would be realized as the Funds grow and whether the advisory fees for the Funds reflect these economies of scale for the benefit of the Funds; and (vi) other financial benefits to the Adviser and its affiliates resulting from services rendered to the Funds. The Board’s review included written and oral information furnished to the Board prior to and at the meeting held on March 30, 2021, and throughout the year. Among other things, the Adviser provided responses to a detailed series of questions, which included information about the Adviser’s operations, service offerings, personnel, compliance program and financial condition. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentations and any other information that the Board received at the meeting, and deliberated on the renewal of the Advisory 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 renewal of the Advisory Agreement, and the weight to be given to each such factor. The conclusions reached with respect to the Advisory 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 each Fund. The Independent Trustees conferred amongst themselves and independent legal counsel during a telephonic contract renewal meeting held prior to the March 30, 2021 meeting and also conferred in executive sessions both with and without representatives of management before and during the March 30th meeting. The Independent Trustees requested, received and considered additional information arising out of these executive sessions.

 

Nature, Extent and Quality of Services Provided by the Adviser 

The Trustees considered the scope of services provided under the Advisory Agreement, noting that the Adviser provides investment management services to the Funds. The Board discussed the responsibilities of the Adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Funds; determining the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; responsibility for daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Funds. 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 and the quality of the Adviser’s compliance and risk assessment infrastructure. The Board also considered the Adviser’s experience managing exchange-traded funds (“ETFs”), as well as the Adviser’s response to the market volatility and uncertainty during the recent pandemic.

 

36 

 

Wedbush ETFMG TM ETFs

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

The Board also considered other services provided to the Funds, such as overseeing the Funds’ service providers, monitoring adherence to the Funds’ investment restrictions, and monitoring compliance with various policies and procedures and with applicable securities laws.

 

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 provided to the Funds by the Adviser.

 

Historical Performance 

The Board then considered the past performance of the Funds. The Board reviewed information regarding each Fund’s performance with the performance of a group of peer funds and with the performance of the Fund’s underlying index for various time periods. The Board noted management’s explanation that analysis of investment performance, in absolute terms, is less relevant for the Funds than it is for actively managed funds, given the Funds’ index-based investment objectives. The Board also noted management’s further explanation that it is more relevant to review the performance of the Funds by focusing on the extent to which each Fund tracked its underlying index. The Board reviewed information regarding each Fund’s index tracking, discussing, as applicable, factors which contributed to each Fund’s tracking error. The Board noted that the Funds had underperformed their underlying indexes over certain periods, but that such underperformance was, at least in part, a result of costs incurred by the Funds not incurred by their underlying indexes. The Board considered other factors that contributed to the Funds’ tracking error, including cash drag and the process of rebalancing the Funds’ portfolios. The Board also considered that the underlying index for IVES was changed during the prior year. The Board noted management’s representations that the Funds’ performance satisfactorily tracked their underlying indexes. The Board concluded that, after taking these factors into account, each of the Funds satisfactorily tracked its underlying index. The Board further noted that it had received and would continue to receive regular reports regarding each Fund’s performance, including with respect to its tracking error, at its quarterly meetings.

 

Cost of Services Provided, Profits and Economies of Scale

The Board reviewed the advisory fees for the Funds and compared them to the total operating expenses of comparable ETFs, as determined by an independent third party and the Adviser. Among other information, the Board noted that the advisory fee for each of the Funds was higher than the average and median expense ratios for its peer ETFs. The Trustees also considered the total expense ratios of other ETFs that they considered to be comparable, based on the investment objectives and strategies of the ETFs. The Board took into consideration management’s discussion of the fees, including that the Funds have niche investment strategies that are substantially different than the strategies of many of the peer ETFs and, therefore, the information provided about the comparable ETFs may not provide meaningful direct comparisons to the Funds.

 

The Board noted the importance of the fact that the advisory fee for each Fund is a “unified fee,” meaning that the shareholders of the Funds pay no expenses other than the advisory fee and certain other costs such as 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, non-standard Board-related expenses and litigation against the Board, Trustees, Funds, Adviser, and officers of the Adviser), and distribution (12b-1) fees and expenses. The Board also noted that the Adviser was responsible for compensating the Trust’s other service providers and paying the Funds’ other expenses (except as noted above) out of its own fees and resources. The Board concluded that the advisory fee for each of the Funds is reasonable in light of the factors considered.

 

37 

 

Wedbush ETFMG TM ETFs

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

The Board also evaluated the compensation and other benefits received by the Adviser from its relationship with the Funds, taking into account profitability information provided by the Adviser. The Board received and reviewed profitability information on a fund by fund basis and considered how profit margins could affect the Adviser’s long-term viability and ability to attract and retain high-quality personnel. The Board also considered the impact on the Adviser’s profitability of payments made to, or received from, partners involved with the Funds. Based on the information provided to the Trustees, the Trustees concluded that the net revenue retained by the Adviser from providing services to each Fund was not excessive in view of the nature, extent and quality of services provided to each Fund. The Board further considered other benefits derived by the Adviser and its affiliates from the Adviser’s relationship with the Funds.

 

In addition, the Board considered whether economies of scale may be realized for the Funds. The Board noted that the Adviser regularly considers whether fee reductions are appropriate as the Funds grow in size. The Board noted that a unitary fee provides a level of certainty in expenses for the Funds and effectively acts as a cap on the fees and expenses (except as noted above) that are borne by the Funds. The Board also took into account the significant investments that the Adviser has made in its business to help ensure the continued provision of high-quality services to the Funds, such as the hiring of new trading, legal and compliance personnel, and enhancements to technology and related systems. The Board concluded that no changes to the advisory fee structure of the Funds were necessary.

 

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 Advisory Agreement are fair and reasonable; (b) concluded that the Adviser’s fees are reasonable in light of the services that the Adviser provides to the Funds; and (c) approved the renewal of the Advisory Agreement for another year.

 

38 

 

Wedbush ETFMG TM ETFs

 

Expense Example

Period Ended March 31, 2021 (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.

 

Fund Name   Beginning Account Value October 1, 2020     Ending Account Value March 31, 2021     Expenses Paid During the Period ^     Annualized Expense Ratio During the Period October 1, 2020 to March 31, 2021  
Wedbush ETFMG Global Cloud Technology ETF                                
Actual   $ 1,000.00     $ 1,135.40     $ 3.62       0.68 %
Hypothetical (5% annual)   $ 1,000.00     $ 1,021.54     $ 3.43       0.68 %
Wedbush ETFMG Video Game Tech ETF                                
Actual   $ 1,000.00     $ 1,434.90     $ 4.55       0.75 %
Hypothetical (5% annual)   $ 1,000.00     $ 1,021.19     $ 3.78       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 182/365 (to reflect the period from October 1, 2020 to March 31, 2021).

 

39 

 

Wedbush ETFMG TM ETFs

 

Statement Regarding Liquidity Risk Management Program (Unaudited)

 

 

ETF Managers Trust (the “Trust”) has adopted a liquidity risk management program (the “Program”). The Trust’s Board of Trustees (the “Board”) has designated ETF Managers Group LLC (the “Program Administrator”) as the administrator of the Program. The Program Administrator has designated a committee (the “Committee”), composed of personnel from multiple departments, including investment operations and compliance, that is responsible for the implementation and ongoing administration of the Program, which includes assessing the liquidity risk of the Wedbush ETFMG Global Cloud Technology ETF and Wedbush ETFMG Video Game Tech ETF (the “Funds”) under both normal and reasonably foreseeable stressed conditions.

 

Under the Program, the Program Administrator assesses, manages and periodically reviews the Funds’ liquidity risk, based on factors specific to the circumstances of the Funds. Liquidity risk is the risk that each Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in each Fund. This risk is managed by monitoring the degree of liquidity of each Fund’s investments and limiting the amount of each Fund’s illiquid investments, among other means. The Program Administrator’s process of determining the degree of liquidity of the Funds’ investments is supported by one or more third-party liquidity assessment vendors.

 

At a meeting of the Board on March 30, 2021, the Adviser provided a written report to the Board addressing the operation, and the adequacy and effectiveness of the implementation, of the Program, including, the operation of any Highly Liquid Investment Minimum, where applicable, and any material changes to the Program, for the initial period from February 29, 2020 through March 30, 2021 (the “Reporting Period”). No significant liquidity events impacting the Funds were noted in the report and it was represented that, as of March 30, 2021, the Funds were primarily highly liquid and, during the Reporting Period, the Funds held less than 15% in illiquid securities. In addition, the Program Administrator provided its assessment that Program implementation was effective and that the Program operated adequately and effectively to enable the Program Administrator to oversee and manage liquidity risk and ensure the Funds are able to meet requests to redeem shares without significant dilution to the remaining investors’ interest in each Fund.

 

There can be no assurance that the Program will achieve its objectives in the future. Please refer to the Funds’ prospectus for more information regarding each Fund’s exposure to liquidity risk and other principal risks to which an investment in the Funds may be subject.

 

40 

 

Wedbush ETFMG TM ETFs

 

SUPPLEMENTARY INFORMATION

March 31, 2021 (Unaudited)

 

 

NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS

 

Information regarding how often shares of the Funds 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 Funds’ 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 QDI
Wedbush ETFMG Global Cloud Technology ETF 78.85%
Wedbush ETFMG Video Game Tech ETF 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 DRD
Wedbush ETFMG Global Cloud Technology ETF 40.02%
Wedbush ETFMG Video Game Tech ETF 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 the Fund was as follows:

 

Fund Name Short-Term Capital Gain
Wedbush ETFMG Global Cloud Technology ETF 0.00%
Wedbush ETFMG Video Game Tech ETF 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 September 30, 2020  
Wedbush ETFMG Video Game Tech ETF   $ 1,021,980     $ 64,668     $ 0.56776649     $ 0.03592684       1,800,000  

 

41 

 

Wedbush ETFMG TM ETFs

 

SUPPLEMENTARY INFORMATION

March 31, 2021 (Unaudited) (Continued)

 

 

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.

 

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 with the SEC for their first and third fiscal quarters on Part F of Form N-PORT. Once filed, each Fund’s Part F of Form N-PORT is available without charge, on the SEC’s website at www.sec.gov and the Funds’ website at www.etfmgfunds.com. 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 1-877-756-7873, 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 1-877-756-7873 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.

 

42 

 

Wedbush ETFMG TM ETFs

 

Board of Trustees (Unaudited)

 

 

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).

 

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 
Interested Trustee and Officers

Samuel Masucci, III (1962)

 

Trustee, Chairman of the Board and President (since 2012); Secretary (since 2014)

 

Chief Executive Officer, Exchange Traded Managers Group LLC (since 2013); Chief Executive Officer, ETF Managers Group LLC (since 2016); Chief Executive Officer, ETF Managers Capital LLC (commodity pool operator) (since 2014); Chief Executive Officer (2012-2016) and Chief Compliance Officer (2012-2014), Factor Advisors, LLC (investment adviser); President and Chief Executive Officer, Factor Capital Management LLC (2012-2014) (commodity pool operator).

 

 11 None
John A. Flanagan, (1946)

Treasurer (since 2015)

 

President, John A. Flanagan CPA, LLC (accounting services) (since 2010); Treasurer, ETF Managers Trust (since 2015); Chief Financial Officer, ETF Managers Capital, LLC (commodity pool operator) (since 2015).

 

 n/a n/a

Reshma A. Tanczos (1978)

 

Chief Compliance Officer (since 2016)

 

Chief Compliance Officer of ETFMG Financial LLC (since 2017); Chief Compliance Officer, ETF Managers Group LLC (since 2016); Chief Compliance Officer, ETF Managers Capital LLC (since 2016); Partner, Crow & Cushing (law firm) (2007-2016). 

 n/a n/a

* Mr. Masucci is an interested Trustee by virtue of his role as the Chief Executive Officer of the Adviser.

 

43 

 

Wedbush ETFMG TM ETFs

 

Board of Trustees (Unaudited) (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 
Matthew J. Bromberg (1973)

Assistant Secretary (since 2020)

 

General Counsel and Secretary of Exchange Traded Managers Group LLC (since 2020); ETF Managers Group LLC (since 2020); ETFMG Financial LLC (since 2020); ETF Managers Capital LLC (since 2020); Partner of Dorsey & Whitney LLP (law firm) (2019-2020); General Counsel of WBI Investments, Inc. (2016-2019); Millington Securities, Inc. (2016-2019); and Partner of Reed Smith (law firm) (2015-2016). 

 n/a n/a
Independent Trustees
Terry Loebs (1963)

Trustee (since 2014); Lead Independent Trustee (since 2020)

 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 Wiegel (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

  

44 

 

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 

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

 

 

 


 

 

 




 

 

 

 

 

 



 

 

 

Semi-Annual Report 

March 31, 2021

 

 

 

 

ETFMG Alternative Harvest ETF

 

 

Ticker: MJ

 

 

 








 

 

 

 

 

The fund is a series of ETF Managers Trust.

 

 




 

 

 

 

 

ETFMG Alternative Harvest ETF

 

TABLE OF CONTENTS 

March 31, 2021 (Unaudited)

 

 

  Page
Shareholders’ Letter 2
   
Growth of $10,000 Investment 3
   
Top Ten Holdings 4
   
Important Disclosures and Key Risk Factors 5
   
Portfolio Allocations 6
   
Schedule of Investments 7
   
Statement of Assets and Liabilities 9
   
Statement of Operations 10
   
Statements of Changes in Net Assets 11
   
Financial Highlights 12
   
Notes to the Financial Statements 13
   
Approval of Advisory Agreement and Board Consideration 24
   
Expense Example 27
   
Statement Regarding Liquidity Risk Management Program 28
   
Supplementary Information 29

 

1 

 

ETFMG Alternative Harvest ETF

 

Dear Shareholder,

 

On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the ETFMG Alternative Harvest Exchange-Traded Fund (“MJ” or the “Fund”). The following information pertains to the fiscal period from October 1, 2020 to March 31, 2021.

 

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 121.55%, while the total return for the Index was 120.18%. The best performers based on contribution to return were Aphria, Inc., Tilray, Inc., Canopy Growth Corp. and GW Pharmaceuticals while the worst performers were Hydrofarm Holdings Group, Inc., Arena Pharmaceuticals, Inc., Medipharm Labs Corp. and Swedish Match AB.

 

Shortly after the 2020 Vice Presidential debate where the Democratic nominee pledged to decriminalize marijuana the securities in our portfolio gained momentum which continued throughout the period. In addition to the prospect of federal decriminalization, multiple states took steps to approve legal cannabis adding to this positive momentum. As we write this letter in late April, several companies have announced acquisitions; most notably Tilray, Inc. announced the acquisition of Aphria, Inc. for CAD 2.5 billion. The transaction was announced on December 16, 2020 and is expected to be completed by June 30, 2021.

 

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

 

2 

 

ETFMG Alternative Harvest ETF 

Growth of $10,000 (Unaudited)

 

 

 

The Fund’s performance figures* for the periods ended March 31, 2021, as compared to its benchmarks:

 

    Six
Months		   One
Year		   Annualized
Three Year		   Annualized
Five Year		   Annualized
Since
Inception** -
March 31, 2021
ETFMG Alternative Harvest ETF - NAV   121.55%   111.76%   -4.83%   2.31%   4.21%
ETFMG Alternative Harvest ETF - Market Price   122.30%   108.95%   -4.57%   1.85%   3.56%
S&P 500 Index *** (1)   19.07%   56.35%   16.78%   16.29%   15.49%
Prime Alternative Harvest Blended Index **** (1)   120.18%   101.30%   -5.72%   1.97%   3.76%
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 March 31, 2021. 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 closing price 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 29, 2021 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.

 

**** Please be aware that as of December 26, 2017 the following changes went into effect for the Tierra XP Latin America Real Estate ETF (LARE): (i) The Fund’s name was changed to the ETFMG Prime Alternative Harvest ETF; (ii) The Fund’s previous underlying index, the Solactive Latin America Real Estate Index (the “Previous Index”), was replaced with the Prime Alternative Harvest Index; (iii) The Fund’s investment objective was changed to the following: “The ETFMG Alternative Harvest ETF (the “Fund”) 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”).”; (iv) The Fund’s ticker was changed to “MJ”; and (v) 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.

 

(1) The return reflects the actual performance through March 31, 2021 (the last day of the semi-annual period 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 29, 2021.

 

3 

 

ETFMG Alternative Harvest ETF

 

 

Top Ten Holdings

as of March 31, 2021* (Unaudited)

 

Security   % of Total
Investments †		  
GW Pharmaceuticals PLC   10.4 %
Aphria, Inc.   10.1 %
Tilray, Inc.   6.5 %
GrowGeneration Corp.   5.8 %
Canopy Growth Corp.   5.7 %
Cronos Group, Inc.   4.8 %
Schweitzer-Mauduit International, Inc.   4.0 %
Altria Group, Inc.   3.8 %
Vector Group Ltd.   3.7 %
HEXO Corp.   3.6 %
Top Ten Holdings of Total Investments†   58.4 %

 

* 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 Semi-Annual report for a detailed listing of the Fund’s holdings.

 

4 

 

ETFMG Alternative Harvest ETF

 

Important Disclosures and Key Risk Factors

 

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.

 

This is not a complete list of risks that may affect the Fund. For additional information concerning the risks applicable to the Fund, please see the Fund’s prospectus.

 

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.

 

ETF shares are not individually redeemable and owners of the shares may acquire those shares from the Fund and tender those shares for redemption to the Fund in Creation Units only and Redemption Units only, typically consisting of aggregations of 50,000 shares.

 

5 

 

ETFMG Alternative Harvest ETF

 

PORTFOLIO ALLOCATIONS (Unaudited) 

As of March 31, 2021

 

 

    ETFMG
Alternative Harvest
ETF		  
As a percent of Net Assets:      
Canada   43.7 %
United States   36.4 %
United Kingdom   16.6 %
Sweden   1.4 %
Japan   0.9 %
Mexico   0.0 ^%
Short-Term and other Net Assets (Liabilities)   1.0 %
    100.0 %

 

^ Less than 0.05%.

 

6 

 

ETFMG Alternative Harvest ETF

 

Schedule of Investments (Unaudited) 

March 31, 2021

 

 

    Shares     Value  
COMMON STOCKS - 99.0%                
Canada - 43.7%                
Investment Companies - 4.8%                
Cronos Group, Inc. (a) ^     9,137,725     $ 86,442,879  
                 
Pharmaceuticals - 38.9%                
Aphria, Inc. (a) ^     9,894,592       181,763,655  
Aurora Cannabis, Inc. (a) ^     5,456,595       50,800,899  
Auxly Cannabis Group, Inc. (a)     44,344,941       13,408,990  
Canopy Growth Corp. (a)     3,165,984       101,406,467  
Charlottes Web Holdings, Inc. (a) ^     6,492,023       29,239,158  
Green Organic Dutchman Holdings Ltd. (a) ^     34,795,476       8,444,832  
HEXO Corp. (a) ^     9,862,329       63,907,892  
MediPharm Labs Corp. (a) ^     9,759,048       3,533,355  
Organigram Holdings, Inc. (a) ^     16,644,239       57,755,509  
Tilray, Inc. (a) ^     5,141,701       116,870,864  
Valens Groworks Corp. (a) ^     8,017,194       17,352,405  
Village Farms International, Inc. (a) ^     4,566,038       60,408,683  
Total Pharmaceuticals             704,892,709  
Total Canada             791,335,588  
                 
Japan - 0.9%                
Tobacco - 0.9%                
Japan Tobacco, Inc.     892,758       17,133,536  
                 
Mexico - 0.0%                
Construction & Engineering - 0.0%                
Empresas ICA SAB de CV (a)(b)     155,893       —  
                 
Sweden - 1.4%                
Tobacco - 1.4%                
Swedish Match AB     321,711       25,115,225  
                 
United Kingdom - 16.6%                
Pharmaceuticals - 10.4%                
GW Pharmaceuticals PLC - ADR (a)     862,727       187,125,486  
Tobacco - 6.2%                
British American Tobacco PLC     1,505,190       57,562,069  
Imperial Brands PLC     2,713,386       55,810,899  
Total Tobacco             113,372,968  
Total United Kingdom             300,498,454  

 

The accompanying notes are an integral part of these financial statements

 

7 

 

ETFMG Alternative Harvest ETF

 

Schedule of Investments (Unaudited) (Continued) 

March 31, 2021

 

 

    Shares     Value  
United States - 36.4%                
Biotechnology - 4.0%                
Arena Pharmaceuticals, Inc. (a)     726,447     $ 50,408,157  
Corbus Pharmaceuticals Holdings, Inc. (a) ^     6,020,395       11,860,178  
Zynerba Pharmaceuticals Inc. (a) ^     1,987,786       9,243,205  
Total Biotechnology             71,511,540  
Chemicals - 3.4%                
Scotts Miracle-Gro Co.     248,410       60,852,998  
Machinery - 4.0%                
Hydrofarm Holdings Group, Inc. (a)     274,620       16,565,078  
Paper & Forest Products - 4.0%                
Schweitzer-Mauduit International, Inc.     1,477,449       72,350,678  
Specialty Retail - 2.4%                
GrowGeneration Corporation (a)     2,089,079       103,806,335  
Tobacco - 18.6%                
22nd Century Group, Inc. (a)     13,304,013       43,770,203  
Altria Group, Inc.     1,320,041       67,533,297  
Philip Morris International, Inc.     692,647       61,465,495  
Turning Point Brands, Inc.     1,191,540       62,162,642  
Universal Corp.     579,385       34,177,921  
Vector Group Ltd.     4,739,422       66,114,937  
Total Tobacco             335,224,495  
Total United States             660,311,124  
TOTAL COMMON STOCKS (Cost $1,325,468,889)             1,794,393,927  
                 
COLLATERAL FOR SECURITIES LOANED - 10.5% +                
Stock Loan Cash Collateral - 10.5%                
Stock Loan Cash Collateral (Cost $190,021,606)             190,021,606  
                 
Total Investments (Cost $1,515,490,495) - 109.5%           $ 1,984,415,533  
Liabilities in Excess of Other Assets - (9.5)%             (172,795,745 )
NET ASSETS - 100.0%           $ 1,811,619,788  

 

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 $190,021,606 as of March 31, 2021.
^ All or a portion of this security is out on loan as of March 31, 2021. Total value of securities out on loan is $190,021,606.

 

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,

 

8 

 

ETFMG Alternative Harvest ETF

 

STATEMENT OF ASSETS AND LIABILITIES (Unaudited) 

As of March 31, 2021

 

 

ASSETS      
Investments in securities, at value*   $ 1,984,415,533  
Cash     12,981,804  
Foreign Currency*     1,768,450  
Receivables:        
Securities lending income receivable     227,145  
Dividends and interest receivable     3,323,578  
TOTAL ASSETS     2,002,716,510  
         
LIABILITIES        
Collateral received for securities loaned (Note 7)     190,021,606  
Payables:        
Management fees payable     1,075,116  
TOTAL LIABILITIES     191,096,722  
NET ASSETS   $ 1,811,619,788  
         
NET ASSETS CONSIST OF:        
Paid in capital   $ 2,096,317,794  
Total accumulated deficit     (284,698,006 )
NET ASSETS   $ 1,811,619,788  
         
*Identified Cost:        
Investments in securities   $ 1,515,490,495  
Foreign Currency     1,768,450  
         
NET ASSET VALUE PER SHARE:        
Net Assets   $ 1,811,619,788  
Shares of beneficial interest outstanding ($0 par value, unlimited shares authorized)     79,450,000  
Net asset value (Net Assets ÷ Shares Outstanding)   $ 22.80  

 

The accompanying notes are an integral part of these financial statements.

 

9 

 

ETFMG Alternative Harvest ETF

 

STATEMENT OF OPERATIONS (Unaudited) 

Six Months Ended March 31, 2021

 

 

INVESTMENT INCOME      
Dividends (Net of Foreign tax withholdings of $61,286)   $ 11,066,013  
Securities Lending Income     4,736,152  
TOTAL INVESTMENT INCOME     15,802,165  
         
EXPENSES        
Management fees     4,510,173  
TOTAL EXPENSES     4,510,173  
NET INVESTMENT INCOME     11,291,992  
         
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS        
Net realized gain (loss) on:        
In-kind redemptions     68,465,211  
Investments     (241,629,385 )
Foreign currency transactions     (26,002 )
      (173,190,176 )
         
Net change in unrealized appreciation on:        
Investments     967,437,296  
Foreign currency translations     2,147  
      967,439,443  
         
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS     794,249,267  
         
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS   $ 805,541,259  

 

The accompanying notes are an integral part of these financial statements.

 

10 

 

ETFMG Alternative Harvest ETF

 

STATEMENTS OF CHANGES IN NET ASSETS

 

 

    Six Months
Ended
March 31,
2021
(Unaudited)		     Year Ended
September 30,
2020		  
FROM OPERATIONS                
Net investment income   $ 11,291,992     $ 38,371,401  
Net realized loss on investments and foreign currency transactions     (173,190,176 )     (316,504,714 )
Net change in unrealized appreciation (depreciation) on investments and foreign currency transactions     967,439,443       (135,942,672 )
Net increase (decrease) in net assets resulting from operations     805,541,259       (414,075,985 )
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions paid:     (8,134,000 )     (37,958,000 )
Net decrease in net assets resulting from distributions to shareholders     (8,134,000 )     (37,958,000 )
                 
FROM SHARES OF BENEFICIAL INTEREST                
Proceeds from shares sold     650,529,600       203,682,152  
Cost of shares redeemed     (132,362,212 )     (56,673,991 )
Transaction Fees (Note 1)     74,344       39,219  
Net increase in net assets resulting from shares of beneficial interest     518,241,732       147,047,380  
                 
TOTAL INCREASE (DECREASE) IN NET ASSETS     1,315,648,991       (304,986,605 )
                 
NET ASSETS                
Beginning of Period     495,970,797       800,957,402  
End of Period   $ 1,811,619,788     $ 495,970,797  
                 
SHARE ACTIVITY                
Shares Sold     37,700,000       13,200,000  
Shares Redeemed     (6,100,000 )     (3,800,000 )
Net increase in shares of beneficial interest outstanding     31,600,000       9,400,000  
Beginning Shares     47,850,000       38,450,000  
Ending Shares     79,450,000       47,850,000  

 

The accompanying notes are an integral part of these financial statements.

 

11 

 

ETFMG Alternative Harvest ETF

 

FINANCIAL HIGHLIGHTS

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

 

  

    Six Months                                
    Ended                                
    March 31,     Year Ended     Year Ended     Year Ended     Year Ended     Period Ended  
    2021     September 30,     September 30,     September 30,     September 30,     September 30,  
    (Unaudited)     2020     2019     2018     2017     2016(1)  
Net asset value, beginning of period   $ 10.37     $ 20.83     $ 39.74     $ 31.36     $ 29.64     $ 25.00  
                                                 
Activity from investment operations:                                                
Net investment income (2)     0.17       0.91       1.02       0.37       0.57       0.98  
Net realized and unrealized gain (loss) on investments     12.38       (10.49 )     (18.96 )     8.95       4.42       4.59  
Total from investment operations     12.55       (9.58 )     (17.94 )     9.32       4.99       5.57  
                                                 
Less distributions from:                                                
Net investment income     (0.12 )     (0.88 )     (0.97 )     (0.74 )     (2.56 )     (0.93 )
Net realized gains     —       —       —       (0.20 )     (0.71 )     —  
Total distributions     (0.12 )     (0.88 )     (0.97 )     (0.94 )     (3.27 )     (0.93 )
                                                 
Net asset value, end of period   $ 22.80     $ 10.37     $ 20.83     $ 39.74     $ 31.36     $ 29.64  
                                                 
Total return (3)(4)     121.55 %(6)     (46.83 )%     (45.60 )%     33.85 %     20.23 %     22.63 %(6)
                                                 
Ratios/Supplemental Data:                                                
Net assets, at end of period (000s)   $ 1,811,620     $ 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 %     0.75 %     0.79 %     0.79 %
Ratio of net investment income to average net assets (5)     1.87 %     6.27 %     3.26 %     1.18 %     1.98 %     5.88 %
                                                 
Portfolio Turnover Rate     38 %(6)     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.

 

12 

 

ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) 

March 31, 2021

 

 

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”).

 

13 

 

ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) 

March 31, 2021

 

 

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.

 

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 March 31, 2021, 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.

 

14 

 

ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

March 31, 2021

 

 

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 table presents a summary of the Funds’ assets measured at fair value as of March 31, 2021:

 

ETFMG Alternative Harvest ETF    
Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 1,794,393,927     $ —     $ — (a)   $ 1,794,393,927  
Collateral for Securities Loaned*     —       —       —       190,021,606  
Total Investments in Securities   $ 1,794,393,927     $ —     $ —     $ 1,984,415,533  

 

^ 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, 2018 – September 30, 2020 tax returns or expected to be taken in the Fund’s September 30, 2021 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.

 

15 

 

ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) 

March 31, 2021

 

 

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.

 

16 

 

ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

March 31, 2021

 

 

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.

 

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.

 

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ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) 

March 31, 2021

 

 

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.

 

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 lobal, 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 wide spread 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.

 

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ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) 

March 31, 2021

 

 

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 six months ended March 31, 2021, the Fund did not incur any 12b-1 expenses.

 

19 

 

ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) 

March 31, 2021

 

 

6. PURCHASES AND SALES OF SECURITIES

 

The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the six months ended March 31, 2021:

 

Purchases     Sales  
$ 435,392,505     $ 437,555,828  

 

The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the six months ended March 31, 2021:

 

Purchases In-Kind     Sales In-Kind  
$ 639,179,641     $ 129,148,335  

 

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.

 

There were no purchases or sales of U.S. Government obligations for the six months ended March 31, 2021.

 

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 receives 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.

 

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ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) 

March 31, 2021

 

 

As of March 31, 2021, 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*  
$ 190,021,606     $ 190,021,606  

 

* The securities on loan were collateralized in full with cash, as shown on the Schedule of Investments.

 

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)		  
$ (14,942,937 )   $ 14,942,397  

 

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ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

March 31, 2021

 

 

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.

 

10. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS

 

Tax Cost     Gross Unrealized
Appreciation		     Gross Unrealized
Depreciation		     Net Unrealized
Depreciation		  
$ 1,621,091,082     $ 495,739,589     $ (132,415,138 )   $ 363,324,451  

 

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, 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 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 transaction is expected to close prior to July 31, 2021. 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.

 

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ETFMG Alternative Harvest ETF

 

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

March 31, 2021

 

 

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.

 

Effective May 17, 2021, The Trust and U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (the “Administrator”), have entered into an administration agreement (the “Administration Agreement”), under which the Administrator provides the Trust, including as related to the Fund, with administrative services. Such services include regulatory reporting and all necessary office space, equipment, personnel and facilities. Pursuant to a schedule to the Administration Agreement, the Administrator also serves as the shareholder servicing agent for the Fund whereby the Administrator provides certain shareholder services to the Fund. The Administrator also serves as the Fund’s transfer agent and dividend disbursing agent under a transfer agency agreement with the Trust. Also effective on May 17, 2021, U.S. Bank National Association (the “Custodian”), was appointed to serve as the custodian of the Fund. The Custodian holds cash, securities and other assets of the Fund as required by the 1940 Act.

 

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.

 

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ETFMG Alternative Harvest ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS For the Period Ended March 31, 2021 (Unaudited)

 

 

Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on March 30, 2021, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the renewal of the Amended and Restated Investment Advisory Agreement (the “Advisory Agreement”) between ETF Managers Group LLC (the “Adviser”) and the Trust, on behalf of ETFMG Alternative Harvest ETF (the “Fund”).

 

Pursuant to Section 15(c) of the 1940 Act, the Board must annually review and approve the Advisory Agreement after its initial two-year term: (i) by the vote of the Trustees or by a vote of the shareholders of the Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Advisory 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. Each year, the Board calls and holds a meeting to decide whether to renew the Advisory Agreement for an additional one-year term. 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 provided to the Fund’s shareholders by the Adviser; (ii) the investment performance of the Fund; (iii) the Adviser’s costs and profits realized in providing services to the Fund, including any fall-out benefits enjoyed by the Adviser; (iv) comparative fee and expense data for the Fund in relation to other similar investment companies; (v) the extent to which economies of scale would be realized as the Fund grows and whether the advisory fees for the Fund reflects these economies of scale for the benefit of the Fund; and (vi) other financial benefits to the Adviser and its affiliates resulting from services 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 March 30, 2021, and throughout the year. Among other things, the Adviser provided responses to a detailed series of questions, which included information about the Adviser’s operations, service offerings, personnel, compliance program and financial condition. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentations and any other information that the Board received at the meeting, and deliberated on the renewal of the Advisory 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 renewal of the Advisory Agreement, and the weight to be given to each such factor. The conclusions reached with respect to the Advisory 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 Independent Trustees conferred amongst themselves and independent legal counsel during a telephonic contract renewal meeting held prior to the March 30, 2021 meeting and also conferred in executive sessions both with and without representatives of management before and during the March 30th meeting. The Independent Trustees requested, received and considered additional information arising out of these executive sessions.

 

Nature, Extent and Quality of Services Provided by the Adviser 

The Trustees considered the scope of services provided under the Advisory Agreement, noting that the Adviser provides investment management services to the Fund. The Board discussed the responsibilities of the Adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Fund; determining the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; responsibility for daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Fund. 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 and the quality of the Adviser’s compliance and risk assessment infrastructure. The Board also considered the Adviser’s experience managing exchange-traded funds (“ETFs”), as well as the Adviser’s response to the market volatility and uncertainty during the recent pandemic.

 

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ETFMG Alternative Harvest ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

The Board also considered other services provided to the Fund, such as overseeing the Fund’s service providers, monitoring adherence to the Fund’s investment restrictions, and monitoring compliance with various policies and procedures and with applicable securities laws.

 

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 provided to the Fund by the Adviser.

 

Historical Performance 

The Board then considered the past performance of the Fund. The Board reviewed information regarding the Fund’s performance with the performance of a group of peer funds and with the performance of the Fund’s underlying index for various time periods. The Board noted management’s explanation that analysis of investment performance, in absolute terms, is less relevant for the Fund than it is for actively managed funds, given the Fund’s index-based investment objectives. The Board also noted management’s further explanation that it is more relevant to review the performance of the Fund by focusing on the extent to which the Fund tracked its underlying index. The Board reviewed information regarding the Fund’s index tracking, discussing, as applicable, factors which contributed to the Fund’s tracking error. The Board noted that the Fund had underperformed its underlying index over certain periods, but that such underperformance was, at least in part, a result of costs incurred by the Fund not incurred by its underlying index. The Board also considered that the Fund’s underlying index was changed during the time period for which performance information was presented. The Board noted management’s representations that the Fund’s performance satisfactorily tracked its underlying index, and the Board concluded that the Fund satisfactorily tracked its underlying index. The Board further noted that it had received and would continue to receive regular reports regarding the Fund’s performance, including with respect to its tracking error, at its quarterly meetings.

 

Cost of Services Provided, Profits and Economies of Scale 

The Board reviewed the advisory fee for the Fund and compared it to the total operating expenses of comparable ETFs, as determined by an independent third party and the Adviser. The Board noted that the advisory fee of the Fund was higher than the average and equal to the median expense ratios of its peer ETFs. The Board took into consideration management’s discussion of the fees, including that the Fund has a niche investment strategy that is substantially different than the strategies of many of the peer ETFs and, therefore, the information provided by the third party report may not provide meaningful direct comparisons to the Fund.

 

The Board noted the importance of the fact that the advisory fee for the Fund is a “unified fee,” meaning that the shareholders of the Fund pay no expenses other than the advisory fee and certain other costs such as 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, 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 Board also noted that the Adviser was responsible for compensating the Trust’s other service providers and paying the Fund’s other expenses (except as noted above) out of its own fees and resources. The Board concluded that the advisory fee for the Fund is reasonable in light of the factors considered.

 

25 

 

ETFMG Alternative Harvest ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

The Board also evaluated the compensation and other benefits received by the Adviser from its relationship with the Fund, taking into account profitability information provided by the Adviser. The Board received and reviewed profitability information with respect to the Fund and considered how profit margins could affect the Adviser’s long-term viability and ability to attract and retain high-quality personnel. The Board also considered the impact on the Adviser’s profitability of payments made to partners involved with the Fund. Based on the information provided to the Trustees, the Trustees concluded that the net revenue retained by the Adviser from providing services to the Fund was not excessive in view of the nature, extent and quality of services provided to the Fund. The Board further considered other benefits derived by the Adviser and its affiliates from the Adviser’s relationship with the Fund.

 

In addition, the Board considered whether economies of scale may be realized for the Fund. The Board noted that the Adviser regularly considers whether fee reductions are appropriate as the Fund grows in size. The Board noted that a unitary fee provides a level of certainty in expenses for the Fund and effectively acts as a cap on the fees and expenses (except as noted above) that are borne by the Fund. The Board also took into account the significant investments that the Adviser has made in its business to help ensure the continued provision of high -quality services to the Funds, such as the hiring of new trading, legal and compliance personnel, and enhancements to technology and related systems. The Board concluded that no changes to the advisory fee structure of the Fund were necessary.

 

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 Advisory Agreement are fair and reasonable; (b) concluded that the Adviser’s fees are reasonable in light of the services that the Adviser provides to the Fund; and (c) approved the renewal of the Advisory Agreement for another year.

 

26 

 

ETFMG Alternative Harvest ETF

 

EXPENSE EXAMPLE (Unaudited) 

Six Months Ended March 31, 2021

 

 

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 October 1, 2020 through March 31, 2021.

 

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
10/1/2020		   Ending
Account Value
3/31/2021		   Expenses Paid
During Period*
10/1/20 - 3/31/21		   Expenses Paid
During Period**
10/1/20 - 3/31/21
Actual   $1,000.00   $2,215.50   $6.01   0.75%
Hypothetical   $1,000.00   $1,021.19   $3.78   0.75%
(5% return before expenses)                

 

*”Actual” expense information for the Fund is for the period from October 1, 2020 to March 31, 2021. Actual expenses are equal to the Fund’s annualized net expense ratio multiplied by 182/365 (to reflect the period from October 1, 2020 to March 31, 2021). “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 182/365 (to reflect the full half-year period).

** Annualized.

 

27 

 

ETFMG Alternative Harvest ETF

 

Statement Regarding Liquidity Risk Management Program (Unaudited)

 

 

ETF Managers Trust (the “Trust”) has adopted a liquidity risk management program (the “Program”). The Trust’s Board of Trustees (the “Board”) has designated ETF Managers Group LLC (the “Program Administrator”) as the administrator of the Program. The Program Administrator has designated a committee (the “Committee”), composed of personnel from multiple departments, including investment operations and compliance, that is responsible for the implementation and ongoing administration of the Program, which includes assessing the liquidity risk of the AI Powered Equity ETF (the “Fund”) under both normal and reasonably foreseeable stressed conditions.

 

Under the Program, the Program Administrator assesses, manages and periodically reviews the Fund’s liquidity risk, based on factors specific to the circumstances of the Fund. Liquidity risk is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments and limiting the amount of the Fund’s illiquid investments, among other means. The Program Administrator’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.

 

At a meeting of the Board on March 30, 2021, the Adviser provided a written report to the Board addressing the operation, and the adequacy and effectiveness of the implementation, of the Program, including, the operation of any Highly Liquid Investment Minimum, where applicable, and any material changes to the Program, for the initial period from February 29, 2020 through March 30, 2021 (the “Reporting Period”). No significant liquidity events impacting the Fund were noted in the report and it was represented that, as of March 30, 2021, the Fund was primarily highly liquid and, during the Reporting Period, the Fund held less than 15% in illiquid securities. In addition, the Program Administrator provided its assessment that Program implementation was effective and that the Program operated adequately and effectively to enable the Program Administrator to oversee and manage liquidity risk and ensure the Fund is able to meet requests to redeem shares without significant dilution to the remaining investors’ interest in the Fund.

 

There can be no assurance that the Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

 

28 

 

ETFMG Alternative Harvest ETF

 

SUPPLEMENTARY INFORMATION (Unaudited) 

March 31, 2021

 

 

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 Part F of Form N-PORT, within sixty days after the end of the period. The Funds Part F of Form N-PORT reports are available at the SEC’s website at www.sec.gov. The Fund’s portfolio holdings are posted on the Fund’s website at www.etfmj.com daily.

 

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.

 

29 

 

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 

 


 

 



 

image

 

Semi-Annual Report

 

March 31, 2021
(Unaudited)

 

BlueStar Israel Technology ETF

Ticker: ITEQ

 

 

 

 

image

 

The Fund is a series of ETF Managers Trust.

 

 

 

BlueStar Israel Technology ETF

 

TABLE OF CONTENTS

March 31, 2021 (Unaudited)

 

 

 

Page

Shareholder Letter

2
   

Growth of $10,000 Investment

3
   

Top 10 Holdings

4
   

Important Disclosures and Key Risk Factors

5
   

Portfolio Allocations

6
   

Schedule of Investments

7
   

Statement of Assets and Liabilities

11
   

Statement of Operations

12
   

Statements of Changes in Net Assets

13
   

Financial Highlights

14
   

Notes to the Financial Statements

15
   

Approval of Advisory Agreement and Board Considerations

24
   

Expense Example

27
   

Statement Regarding Liquidity Risk Management Program

28
   

Supplementary Information

29
   

Information About Portfolio Holdings

29
   

Information About Proxy Voting

29
   

Trustees and Officers Table

30

 

 

 

BlueStar Israel Technology ETF

 

Dear Shareholder,

 

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, 2020 to March 31, 2021.

 

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 IndexTM (the “Index”).

 

Over the 6-month period ending March 31, 2021, the total return for the Fund was 17.52% while the total return for the Index, which does not incur Fund expenses, was 17.75%. The best performers in the Fund on the basis of contribution to its return were SolarEdge Technologies, Novocure Ltd., Verint Systems Inc., Amdocs Ltd. and Kornit Digital Ltd. while the worst performers were Jfrog Ltd., Brainstorm Cell Therapeutics, Compugen Ltd., Check Point Software Technologies Ltd. and Lemonade Inc.

 

At the end of the reporting period, the Fund saw an approximate allocation of 31.1% to Software, 16.3% to IT Services, 13.0% to Semiconductors & Semiconductor Equipment, 8.1% to Health Care Equipment & Supplies and 2.1% to Independent Power and Renewable Electricity Producers. The Fund was exposed predominately to Israel 62.0%, followed by the United States 23.5%.

 

We continue to 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. From cybersecurity and defense to clean energy and agriculture, Israeli innovations power some of the biggest names in the tech industry today.

 

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 Israel-based Research & Development and non-public companies are usually significant contributors to that same sub-industry’s ecosystem.

 

There is much ahead for Israeli Technology companies and we are thankful you have joined us. You can find further details about ITEQ by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS. (1- 844-383-6477).

 

Sincerely,

 

 image

Samuel Masucci III

Chairman of the Board

 

 

2 

 

 

BlueStar Israel Technology ETF

Growth of $10,000 (Unaudited)

image

 

Average Annual Returns

 

1 Year

 

 

5 Year

 

 

Since

Inception

 

 

Value of

$10,000

 

Period Ended March 31, 2021

 

Return

 

 

Return

 

 

(11/2/2015)

 

 

(3/31/2021)

 

BlueStar Israel Technology ETF (NAV)

 

 

80.73

%

 

 

22.58

%

 

 

19.69

%

 

$

26,449

 

BlueStar Israel Technology ETF (Market)

 

 

82.88

%

 

 

22.47

%

 

 

19.73

%

 

$

26,489

 

S&P 500 Index

 

 

56.35

%

 

 

16.29

%

 

 

14.73

%

 

$

21,031

 

BlueStar Israel Global Technology IndexTM

 

 

83.08

%

 

 

23.76

%

 

 

20.82

%

 

$

27,830

 

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

 

 

3 

 

BlueStar Israel Technology ETF

 

 

Top Ten Holdings as of March 31, 2021 (Unaudited)*

 

 

Security

 

% of Total Investments

1

 

Wix.com, Ltd.

7.85%

2

 

SolarEdge Technologies, Inc.

7.52%

3

 

Check Point Software Technologies, Ltd.

6.66%

4

 

Nice, Ltd.

6.42%

5

 

Amdocs, Ltd.

6.38%

6

 

Novocure, Ltd.

5.48%

7

 

CyberArk Software, Ltd.

4.02%

8

 

Ormat Technologies, Inc.

3.71%

9

 

Fiverr International, Ltd.

3.26%

10

 

Elbit Systems, Ltd.

3.20%

 

Top Ten Holdings = 54.50% of Total Investments

* Current Fund holdings may not be indicative of future Fund holdings.

 

 

4 

 

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 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.

 

 

5 

 

BlueStar Israel Technology ETF

 

PORTFOLIO ALLOCATIONS

As of March 31, 2021 (Unaudited)

 

 

   

BlueStar

Israel

Technology

ETF

  
       
As a percent of Net Assets:        
Gibraltar     1.2 %
Guernsey     6.4  
Israel     62.0  
Jersey     5.5  
United Kingdom     0.9  
United States     23.5  
Short-Term and other Net Assets (Liabilities)     0.5  
      100.0 %

 

6 

 

 

BlueStar Israel Technology ETF

 

Schedule of Investments 

March 31, 2021 (Unaudited)

 

 

    Shares     Value  
COMMON STOCKS - 99.5%                
Gibraltar - 1.2%                
Hotels, Restaurants & Leisure - 1.2%                
888 Holdings PLC     430,342     $ 2,343,426  
                 
Guernsey - 6.4%                
IT Services - 6.4%                
Amdocs, Ltd.     182,972       12,835,486  
                 
Israel - 62.0%                
Aerospace & Defense - 3.7%                
Elbit Systems, Ltd.     45,467       6,428,839  
RADA Electronic Industries, Ltd. (a)     83,939       1,008,107  
Total Aerospace & Defense             7,436,946  
Biotechnology - 0.7%                
Kamada, Ltd. (a)     109,088       665,994  
UroGen Pharma, Ltd. (a)(b)     39,692       773,200  
Total Biotechnology             1,439,194  
Capital Markets - 0.4%                
Electreon Wireless, Ltd. (a)     12,314       800,773  
Communications Equipment - 3.7%                
AudioCodes, Ltd.     49,776       1,342,956  
BATM Advanced Communications, Ltd. (a)     664,055       888,007  
Ceragon Networks, Ltd. (a)(b)     218,770       824,763  
Gilat Satellite Networks, Ltd.     108,386       1,129,215  
Ituran Location and Control, Ltd.     36,964       784,746  
Radware, Ltd. (a)     68,580       1,788,566  
Silicom, Ltd. (a)     14,730       664,618  
Total Communications Equipment             7,422,871  
Diversified Financial Services - 1.5%                
Plus500, Ltd.     156,777       3,025,874  
Health Care Equipment & Supplies - 2.6%                
Inmode, Ltd. (a)     37,247       2,695,565  
Nano-X Imaging, Ltd. (a)(b)     62,818       2,603,806  
Total Health Care Equipment & Supplies             5,299,371  
Household Durables - 0.8%                
Maytronics, Ltd.     85,583       1,553,665  
Independent Power & Renewable Electricity                
Producers - 2.1%                
Doral Group Renewable Energy Resources, Ltd. (a)     177,654       815,175  
Energix-Renewable Energies, Ltd.     394,448       1,492,557  
Enlight Renewable Energy, Ltd. (a)     1,006,000       1,883,749  
Total Independent Power & Renewable Electricity Producers             4,191,481  
Internet & Direct Marketing Retail - 3.2%                
Fiverr International, Ltd. (a)(b)     30,180       6,554,492  

 

The accompanying notes are an integral part of these financial statements.

 

7 

 

 

BlueStar Israel Technology ETF

 

Schedule of Investments 

March 31, 2021 (Unaudited) (Continued)

 

 

    Shares     Value  
IT Services - 9.9%                
Formula Systems 1985, Ltd.     15,462     $ 1,363,927  
Matrix IT, Ltd.     57,151       1,367,959  
One Software Technologies, Ltd.     6,234       811,533  
Splitit, Ltd. (a)(b)     958,672       538,837  
Wix.com, Ltd. (a)     56,495       15,774,534  
Total IT Services             19,856,790  
Life Sciences Tools & Services - 0.5%                
Compugen, Ltd. (a)(b)     121,817       1,046,408  
Machinery - 3.1%                
Kornit Digital, Ltd. (a)     63,080       6,252,490  
Media - 1.4%                
Perion Network, Ltd. (a)     78,570       1,406,403  
Tremor International, Ltd. (a)     156,066       1,506,076  
Total Media             2,912,479  
Pharmaceuticals - 0.3%                
Redhill Biopharma, Ltd. - ADR (a)(b)     78,633       575,594  
Semiconductors & Semiconductor Equipment - 4.2%                
Camtek, Ltd. (a)     53,027       1,585,507  
Nova Measuring Instruments, Ltd. (a)     35,246       3,089,072  
Tower Semiconductor, Ltd. (a)     133,855       3,726,447  
Total Semiconductors & Semiconductor Equipment             8,401,026  
Software - 22.5% (d)                
Allot, Ltd. (a)     59,786       954,782  
Check Point Software Technologies, Ltd. (a)     119,553       13,386,350  
Cognyte Software, Ltd. (a)     88,888       2,471,975  
CyberArk Software, Ltd.  (a)     62,523       8,086,725  
Hilan, Ltd.     24,408       1,155,019  
JFrog, Ltd. (a)(b)     103,613       4,597,309  
Magic Software Enterprises, Ltd.     54,785       850,510  
Nice, Ltd. (a)     59,778       12,910,089  
Tufin Software Technologies, Ltd. (a)(b)     69,931       734,276  
Total Software             45,147,035  
Technology Hardware, Storage & Peripherals - 1.4%                
Nano Dimension, Ltd. - ADR (a)(b)     113,314       973,367  
Stratasys, Ltd. (a)(b)     74,528       1,930,275  
Total Technology Hardware, Storage & Peripherals             2,903,642  
Total Israel             124,820,131  
                 
Jersey - 5.5%                
Health Care Equipment & Supplies - 5.5%                
Novocure, Ltd. (a)(b)     83,292       11,009,537  
                 
United Kingdom - 0.9%                
Software - 0.9% (d)                
Sapiens International Corp. NV     56,337       1,769,431  

 

The accompanying notes are an integral part of these financial statements.

 

 

8 

 

BlueStar Israel Technology ETF

 

Schedule of Investments 

March 31, 2021 (Unaudited) (Continued)

 

 

 

    Shares     Value  
United States - 23.5%            
Biotechnology - 0.7%            
89bio, Inc. (a)     28,467     $ 674,099  
BrainStorm Cell Therapeutics, Inc. (a)(b)     114,318       437,838  
Pluristem Therapeutics, Inc. (a)     74,988       337,581  
Total Biotechnology             1,449,518  
Electric Utilities - 3.7%                
Ormat Technologies, Inc.     95,253       7,456,465  
Electronic Equipment, Instruments & Components - 0.4%                
Powerfleet, Inc. (a)(b)     96,850       796,107  
Insurance - 2.2%                
Lemonade, Inc. (a)(b)     47,002       4,377,296  
Semiconductors & Semiconductor Equipment - 8.8%                
CEVA, Inc. (a)     36,262       2,036,111  
DSP Group, Inc. (a)     47,455       676,234  
SolarEdge Technologies, Inc. (a)(b)     52,575       15,112,159  
Total Semiconductors & Semiconductor Equipment             17,824,504  
Software - 7.7% (d)                
LivePerson, Inc. (a)     106,698       5,607,621  
Varonis Systems, Inc. (a)     112,559       5,778,779  
Verint Systems, Inc. (a)(b)     88,888       4,043,515  
Total Software             15,429,915  
Total United States             47,333,805  
TOTAL COMMON STOCKS (Cost $161,966,472)             200,111,816  
                 
INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 24.5%                
Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (c)     49,122,664       49,122,664  
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLATTERAL (Cost $49,122,664)             49,122,664  
                 
SHORT-TERM INVESTMENTS - 0.4%                
Money Market Funds - 0.4%                
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.01% (c)     811,524       811,524  
TOTAL SHORT-TERM INVESTMENTS (Cost $811,524)             811,524  
                 
Total Investments (Cost $211,900,660) - 124.4%             250,046,004  
Liabilities in Excess of Other Assets - (24.4)%             (48,982,748 )
TOTAL NET ASSETS - 100.0%           $ 201,063,256  

 

The accompanying notes are an integral part of these financial statements.

 

 

9 

 

BlueStar Israel Technology ETF

 

Schedule of Investments 

March 31, 2021 (Unaudited) (Continued)

 

 

Percentages are stated as a percent of net assets.

 

ADR American Depositary Receipt
PLC Public Limited Company

 

(a) Non-income producing security.
(b) All or a portion of this security is out on loan as of March 31, 2021.
(c) The rate quoted is the annualized seven-day yield at March 31, 2021.
(d) As of March 31, 2021, the Fund had a significant portion of its assets invested in the Software Industry.

 

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.

  

 

10 

 

BlueStar Israel Technology ETF

 

STATEMENT OF ASSETS AND LIABILITIES 

As of March 31, 2021 (Unaudited)

 

 

   

BlueStar Israel Technology

ETF

  
ASSETS      
Investments in securities, at value*   $ 250,046,004  
Foreign currency*     209  
Receivables:        
Dividends and interest receivable     248,285  
Securities lending income receivable     21,551  
Total Assets   $ 250,316,049  
         
LIABILITIES        
Collateral received for securities loaned (Note 7)     49,122,664  
Payables:        
Unitary fees payable     130,129  
Total Liabilities     49,252,793  
Net Assets   $ 201,063,256  
         
NET ASSETS CONSIST OF:        
Paid-in capital   $ 152,268,490  
Total Distributable Earnings     48,794,766  
Net Assets   $ 201,063,256  
         
*Identified Cost:        
Investments in securities   $ 211,900,660  
Foreign currency     209  
         
Shares Outstanding^     3,100,000  
Net Asset Value, Offering and Redemption Price per Share   $ 64.86  

 

^ No par value, unlimited number of shares authorized

 

The accompanying notes are an integral part of these financial statements.

 

 

11 

 

BlueStar Israel Technology ETF

 

STATEMENT OF OPERATIONS 

For the Period Ended March 31, 2021 (Unaudited)

 

 

   

BlueStar Israel Technology

ETF

  
INVESTMENT INCOME      
Income:      
Dividends from securities (net of foreign withholdings tax and issuance fees of $78,483)   $ 463,559  
Interest     37  
Securities lending income     473,166  
Total Investment Income     936,762  
         
Expenses:        
Unitary Fees     648,844  
Total Expenses     648,844  
Net Investment Income     287,918  
         
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS        
Net Realized Gain (Loss) on:        
Unaffiliated investments     (1,285,730 )
Affiliated investments     (23,355 )
In-Kind redemptions     16,210,857  
Foreign currency and foreign currency translation     (11,640 )
Net Realized Gain on Investments and In-Kind Redemptions     14,890,132  
Net Change in Unrealized Appreciation of:        
Unaffiliated investments     2,142,038  
Affiliated investments     23,606  
Foreign currency and foreign currency traslation     3  
Net Change in Unrealized Appreciation of Investments     2,165,647  
Net Realized and Unrealized Gain on Investments     17,055,779  
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS   $ 17,343,697  

 

The accompanying notes are an integral part of these financial statements.

 

 

12 

 

BlueStar Israel Technology ETF

 

STATEMENTS OF CHANGES IN NET ASSETS

 

 

    Period Ended March 31, 2021 (Unaudited)     Year Ended September 30, 2020  
OPERATIONS            
Net investment income (loss)   $ 287,918     $ (117,631 )
Net realized gain on investments and in-kind redemptions     14,890,132       8,325,852  
Net change in unrealized appreciation of investments     2,165,647       23,883,271  
Net increase in net assets resulting from operations     17,343,697       32,091,492  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions from distributable earnings     (1,110,500 )     —  
                 
CAPITAL SHARE TRANSACTIONS                
Net increase in net assets derived from net change in outstanding shares     57,028,010       21,863,905  
Net increase in net assets   $ 73,261,207     $ 53,955,397  
                 
NET ASSETS                
Beginning of Period     127,802,049       73,846,652  
End of Period   $ 201,063,256     $ 127,802,049  

 

Summary of share transactions is as follows:

 

      Period Ended     Year Ended  
      March 31, 2021 (Unaudited)     September 30, 2020  
      Shares     Amount     Shares     Amount  
Shares Sold       1,200,000     $ 83,109,965       900,000     $ 42,363,755  
Shares Redeemed       (400,000 )     (26,081,955 )     (450,000 )     (20,499,850 )
Net Transactions in Fund Shares       800,000     $ 57,028,010       450,000     $ 21,863,905  
                                   
Beginning Shares       2,300,000               1,850,000          
Ending Shares       3,100,000               2,300,000          

 

The accompanying notes are an integral part of these financial statements.

 

 

13 

 

BlueStar Israel Technology ETF

 

FINANCIAL HIGHLIGHTS 

For a capital share outstanding throughout the year/period

 

 

 

    Period Ended March 31, 2021 (Unaudited)     Year Ended September 30, 2020     Year Ended September 30, 2019     Year Ended September 30, 2018     Year Ended September 30, 2017     Period Ended September 30, 20161  
Net Asset Value,Beginning of Period/Year   $ 55.57     $ 39.92     $ 36.03     $ 31.38     $ 25.58     $ 25.00  
Income (Loss) from Investment Operations:                                                
Net investment income (loss)2     0.11       (0.06 )     (0.04 )     0.04       0.02       0.05  
Net realized and unrealized gain on investments     9.62       15.71       4.03       4.78       5.87       0.53  
Total from investment operations     9.73       15.65       3.99       4.82       5.89       0.58  
Less Distributions:                                                
Distributions from net investment income     (0.44 )     —       (0.09 )     (0.17 )     (0.09 )     —  
Return of Capital     —       —       (0.01 )     —       —       —  
Total Distributions     (0.44 )     —       (0.10 )     (0.17 )     (0.09 )     —  
Net Asset Value, end of period/year   $ 64.86     $ 55.57     $ 39.92     $ 36.03     $ 31.38     $ 25.58  
Total Return     17.52 %3     39.20 %     11.17 %     15.41 %     23.16 %     2.31 %3
                                                 
Ratios/Supplemental Data:                                                
Net assets at end of period/year (000’s)   $ 201,063     $ 127,802     $ 73,847     $ 61,243     $ 23,538     $ 5,116  
Expenses to Average Net Assets     0.75 %4     0.75 %     0.75 %     0.75 %     0.75 %     0.75 %4
Net Investment Income (Loss) to Average Net Assets     0.33 %4     -0.12 %     -0.12 %     0.12 %     0.07 %     0.23 %4
Portfolio Turnover Rate     11 %3     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.

 

 

14 

 

 

BlueStar Israel Technology ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited)

 

 

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 IndexTM (“BIGITech®TM” 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.

 

 

15 

 

BlueStar Israel Technology ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 NAV of its shares to differ significantly from the NAV that would be calculated without regard to such considerations. As of March 31, 2021, 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.

 

 

16 

 

BlueStar Israel Technology ETF

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

The following is a summary of the inputs used to value the Fund’s net assets as of March 31, 2021:

 

BlueStar Israel Technology ETF

 

Assets^

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

Common Stocks

 

$

200,111,816

 

 

$

—

 

 

$

—

 

 

$

200,111,816

Short-Term Investments

 

 

811,524

 

 

 

—

 

 

 

—

 

 

 

811,524

Investments Purchased with Securities Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateral*

 

 

—

 

 

 

—

 

 

 

—

 

 

 

49,122,664

Total Investments in Securities

 

$

200,923,340

 

 

$

—

 

 

$

—

 

 

$

250,046,004

 

^ See Schedule of Investments for classifications by country and industry.

 

* Certain investments that are measured at fair value using the NAV 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.

 

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 March 31, 2021, 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.

 

C.

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.

 

 

17 

 

BlueStar Israel Technology ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

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 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 NAV 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.

 

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.

 

 

18 

 

BlueStar Israel Technology ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 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 Fund and its 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 Fund may have difficulty achieving its investment objective 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 Fund’s 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 Fund’s investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Fund 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 the Fund’s performance, resulting in losses to the Fund.

 

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 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 Fund (the “Distributor”). The Distributor provides marketing support for the Fund, including distributing marketing materials related to the Fund.

 

 

19 

 

BlueStar Israel Technology ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

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 period ended March 31, 2021, 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 period ended March 31, 2021:

 

 

 

Purchases

 

 

Sales

BlueStar Israel Technology ETF

 

$

18,008,720

 

 

$

22,666,338

 

The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the period ended March 31, 2021:

 

 

 

Purchases In-

 

 

Sales In-

 

 

Kind

 

 

Kind

BlueStar Israel Technology ETF

 

$

82,839,739

 

 

$

24,740,062

 

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 period ended March 31, 2021.

 

 

20 

 

BlueStar Israel Technology ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

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 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 the 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 the 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 March 31, 2021, 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

 

$

50,441,817

 

 

$

49,122,664

 

* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, 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, the Fund’s most recent fiscal year end, were as follows:

 

 

 

Cost

 

 

Gross
Unrealized Appreciation

 

 

Gross
Unrealized Depreciation

 

 

Net
Unrealized Appreciation (Depreciation)

BlueStar Israel Technology ETF

 

$

117,071,095

 

 

$

42,259,445

 

 

$

(9,501,084

)

 

$

32,758,361

 

21 

 

BlueStar Israel Technology ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

 

 

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’s most recent fiscal year end, the Fund had accumulated capital loss carryovers of:

 

 

 

Capital

 

 

Capital

 

 

 

 

 

Loss

 

 

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 Fund 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, the Fund’s most recent fiscal year end, as follows:

 

 

 

Late Year Ordinary Loss

 

 

Post-October
Capital Loss

BlueStar Israel Technology ETF

 

None

 

 

None

 

The tax character of distributions paid by the Fund during the fiscal periods ended March 31, 2021 and September 30, 2020 are as follows:

 

 

 

Period Ended

 

 

Year Ended

 

 

March 31. 2021

 

 

September 30, 2020

 

 

From

 

 

From

 

 

From

 

 

From

 

 

Ordinary

 

 

Capital

 

 

Ordinary

 

 

Capital

 

 

Income

 

 

Gains

 

 

Income

 

 

Gains

BlueStar Israel Technology ETF

 

$

1,110,500

 

 

$

—

 

 

$

—

 

 

$

—

 

NOTE 9 – INVESTMENTS IN AFFILIATES

 

BlueStar Israel Technology ETF

 

BlueStar Israel Technology ETF owned the following company during the period ended March 31, 2021. ETFMG Sit Ultra Short ETF was deemed to be an affiliate of the Fund as defined by the 1940 Act during the period ended March 31, 2021, however, was no longer held as of March 31, 2021. Transactions during the period in this security were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Security Name

 

Value, at
September 30,
2020

 

 

Purchases

 

 

Sales

 

 

Gain
Realized
(Loss)

 

 

Change in
Unrealized
Appreciation
(Depreciation)

 

 

Dividend
Income

 

 

Value, at
March 31,
2021

 

 

Ending
Shares

ETFMG Sit Ultra Short ETF

 

$

2,489,250

 

 

$

—

 

 

$

2,489,500

 

 

$

(23,355

)

 

$

23,606

 

 

$

—

 

 

$

—

 

 

$

—

 

22 

 

BlueStar Israel Technology ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 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 transaction is expected to close prior to July 31, 2021. 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.

 

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.

 

 

23 

 

BlueStar Israel Technology ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited)

 

 

Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on March 30, 2021, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the renewal of the Amended and Restated Investment Advisory Agreement (the “Advisory Agreement”) between ETF Managers Group LLC (the “Adviser”) and the Trust, on behalf of BlueStar Israel Technology ETF (the “Fund”).

 

Pursuant to Section 15(c) of the 1940 Act, the Board must annually review and approve the Advisory Agreement after its initial two-year term: (i) by the vote of the Trustees or by a vote of the shareholders of the Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Advisory 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. Each year, the Board calls and holds a meeting to decide whether to renew the Advisory Agreement for an additional one-year term. 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 provided to the Fund’s shareholders by the Adviser; (ii) the investment performance of the Fund; (iii) the Adviser’s costs and profits realized in providing services to the Fund, including any fall-out benefits enjoyed by the Adviser; (iv) comparative fee and expense data for the Fund in relation to other similar investment companies; (v) the extent to which economies of scale would be realized as the Fund grows and whether the advisory fees for the Fund reflects these economies of scale for the benefit of the Fund; and (vi) other financial benefits to the Adviser and its affiliates resulting from services 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 March 30, 2021, and throughout the year. Among other things, the Adviser provided responses to a detailed series of questions, which included information about the Adviser’s operations, service offerings, personnel, compliance program and financial condition. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentations and any other information that the Board received at the meeting, and deliberated on the renewal of the Advisory 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 renewal of the Advisory Agreement, and the weight to be given to each such factor. The conclusions reached with respect to the Advisory 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 Independent Trustees conferred amongst themselves and independent legal counsel during a telephonic contract renewal meeting held prior to the March 30, 2021 meeting and also conferred in executive sessions both with and without representatives of management before and during the March 30th meeting. The Independent Trustees requested, received and considered additional information arising out of these executive sessions.

 

Nature, Extent and Quality of Services Provided by the Adviser

The Trustees considered the scope of services provided under the Advisory Agreement, noting that the Adviser provides investment management services to the Fund. The Board discussed the responsibilities of the Adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Fund; determining the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; responsibility for daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Fund. 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 and the quality of the Adviser’s compliance and risk assessment infrastructure. The Board also considered the Adviser’s experience managing exchange-traded funds (“ETFs”), as well as the Adviser’s response to the market volatility and uncertainty during the recent pandemic.

 

 

24 

 

BlueStar Israel Technology ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

The Board also considered other services provided to the Fund, such as overseeing the Fund’s service providers, monitoring adherence to the Fund’s investment restrictions, and monitoring compliance with various policies and procedures and with applicable securities laws.

 

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 provided to the Fund by the Adviser.

 

Historical Performance

The Board then considered the past performance of the Fund. The Board reviewed information regarding the Fund’s performance with the performance of a group of peer funds and with the performance of the Fund’s underlying index for various time periods. The Board noted management’s explanation that analysis of investment performance, in absolute terms, is less relevant for the Fund than it is for actively managed funds, given the Fund’s index-based investment objectives. The Board also noted management’s further explanation that it is more relevant to review the performance of the Fund by focusing on the extent to which the Fund tracked its underlying index. The Board reviewed information regarding the Fund’s index tracking, discussing, as applicable, factors which contributed to the Fund’s tracking error. The Board noted that the Fund had underperformed its underlying index over certain periods, but that such underperformance was, at least in part, a result of costs incurred by the Fund not incurred by its underlying index. The Board considered other factors that contributed to the Fund’s tracking error, including cash drag and the process of rebalancing the Fund’s portfolio. The Board noted management’s representations that the Fund’s performance satisfactorily tracked its underlying index. The Board concluded that, after taking these factors into account, the Fund satisfactorily tracked its underlying index. The Board further noted that it had received and would continue to receive regular reports regarding the Fund’s performance, including with respect to its tracking error, at its quarterly meetings.

 

Cost of Services Provided, Profits and Economies of Scale

The Board reviewed the advisory fee for the Fund and compared it to the total operating expenses of comparable ETFs, as determined by an independent third party and the Adviser. Among other information, the Board noted that the advisory fee for the Fund was higher than the average and median expense ratios for its peer ETFs. The Trustees also considered the total expense ratios of other ETFs that they considered to be comparable, based on the investment objectives and strategies of the ETFs. The Board took into consideration management’s discussion of the fees, including the research involved in the construction of the underlying index.

 

The Board noted the importance of the fact that the advisory fee for the Fund is a “unified fee,” meaning that the shareholders of the Fund pay no expenses other than the advisory fee and certain other costs such as 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, 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 Board also noted that the Adviser was responsible for compensating the Trust’s other service providers and paying the Fund’s other expenses (except as noted above) out of its own fees and resources. The Board concluded that the advisory fee for the Fund is reasonable in light of the factors considered.

 

 

25 

 

BlueStar Israel Technology ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

The Board also evaluated the compensation and other benefits received by the Adviser from its relationship with the Fund, taking into account profitability information provided by the Adviser. The Board received and reviewed profitability information with respect to the Fund and considered how profit margins could affect the Adviser’s long-term viability and ability to attract and retain high-quality personnel. The Board also considered the impact on the Adviser’s profitability of payments made to partners involved with the Fund. Based on the information provided to the Trustees, the Trustees concluded that the net revenue retained by the Adviser from providing services to the Fund was not excessive in view of the nature, extent and quality of services provided to the Fund. The Board further considered other benefits derived by the Adviser and its affiliates from the Adviser’s relationship with the Fund.

 

In addition, the Board considered whether economies of scale may be realized for the Fund. The Board noted that the Adviser regularly considers whether fee reductions are appropriate as the Fund grows in size. The Board noted that a unitary fee provides a level of certainty in expenses for the Fund and effectively acts as a cap on the fees and expenses (except as noted above) that are borne by the Fund. The Board also took into account the significant investments that the Adviser has made in its business to help ensure the continued provision of high -quality services to the Funds, such as the hiring of new trading, legal and compliance personnel, and enhancements to technology and related systems. The Board concluded that no changes to the advisory fee structure of the Fund were necessary.

 

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 Advisory Agreement are fair and reasonable; (b) concluded that the Adviser’s fees are reasonable in light of the services that the Adviser provides to the Fund; and (c) approved the renewal of the Advisory Agreement for another year.

 

 

26 

 

BlueStar Israel Technology ETF

 

EXPENSE EXAMPLE 

Period Ended March 31, 2021 (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 period and held for the entire period (October 1, 2020 to March 31, 2021).

 

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   Beginning
Account
Value
October 1,
2020		     Ending
Account Value
March 31,
2021		     Expenses
Paid
During the
Period^		     Annualized
Expense Ratio
During Period
October 1, 2020
to March 31,
2021		  
Actual   $ 1,000.00     $ 1,175.20     $ 4.07       0.75 %
                                 
Hypothetical (5% annual)   $ 1,000.00     $ 1,021.19     $ 3.78       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 182/365 (to reflect the period from October 1, 2020 to March 31, 2021).

 

27 

 

BlueStar Israel Technology ETF

 

Statement Regarding Liquidity Risk Management Program (Unaudited)

 

 

ETF Managers Trust (the “Trust”) has adopted a liquidity risk management program (the “Program”). The Trust’s Board of Trustees (the “Board”) has designated ETF Managers Group LLC (the “Program Administrator”) as the administrator of the Program. The Program Administrator has designated a committee (the “Committee”), composed of personnel from multiple departments, including investment operations and compliance, that is responsible for the implementation and ongoing administration of the Program, which includes assessing the liquidity risk of the BlueStar Israel Technology ETF (the “Fund”) under both normal and reasonably foreseeable stressed conditions.

 

Under the Program, the Program Administrator assesses, manages and periodically reviews the Fund’s liquidity risk, based on factors specific to the circumstances of the Fund. Liquidity risk is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments and limiting the amount of the Fund’s illiquid investments, among other means. The Program Administrator’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.

 

At a meeting of the Board on March 30, 2021, the Adviser provided a written report to the Board addressing the operation, and the adequacy and effectiveness of the implementation, of the Program, including, the operation of any Highly Liquid Investment Minimum, where applicable, and any material changes to the Program, for the initial period from February 29, 2020 through March 30, 2021 (the “Reporting Period”). No significant liquidity events impacting the Fund were noted in the report and it was represented that, as of March 30, 2021, the Fund was primarily highly liquid and, during the Reporting Period, the Fund held less than 15% in illiquid securities. In addition, the Program Administrator provided its assessment that Program implementation was effective and that the Program operated adequately and effectively to enable the Program Administrator to oversee and manage liquidity risk and ensure the Fund is able to meet requests to redeem shares without significant dilution to the remaining investors’ interest in the Fund.

 

There can be no assurance that the Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

 

28 

 

BlueStar Israel Technology ETF

 

SUPPLEMENTARY INFORMATION 

March 31, 2021 (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), the Fund’s website (www.iteqetf.com) and is available by calling (877) 756-7873. The Fund’s portfolio holdings are posted on the Fund’s website 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.

 

29 

 

BlueStar Israel Technology ETF

 

Board of Trustees (Unaudited)

 

 

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).

 

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
Interested Trustee and Officers
Samuel Masucci, III
(1962)		 Trustee, Chairman of the Board and President (since 2012); Secretary (since 2014) Chief Executive Officer, Exchange Traded Managers Group LLC (since 2013); Chief Executive Officer, ETF Managers Group LLC (since 2016); Chief Executive Officer, ETF Managers Capital LLC (commodity pool operator) (since 2014); Chief Executive Officer (2012-2016) and Chief Compliance Officer (2012-2014), Factor Advisors, LLC (investment adviser); President and Chief Executive Officer, Factor Capital Management LLC (2012-2014) (commodity pool operator). 11 None
John A. Flanagan,
(1946)		 Treasurer (since 2015) President, John A. Flanagan CPA, LLC (accounting services) (since 2010); Treasurer, ETF Managers Trust (since 2015); Chief Financial Officer, ETF Managers Capital, LLC (commodity pool operator) (since 2015). n/a n/a
Reshma A. Tanczos
(1978)		 Chief Compliance Officer (since 2016) Chief Compliance Officer of ETFMG Financial LLC (since 2017); Chief Compliance Officer, ETF Managers Group LLC (since 2016); Chief Compliance Officer, ETF Managers Capital LLC (since 2016); Partner, Crow & Cushing (law firm) (2007-2016). n/a n/a

 

* Mr. Masucci is an interested Trustee by virtue of his role as the Chief Executive Officer of the Adviser.

 

30 

 

BlueStar Israel Technology ETF

 

Board of Trustees (Unaudited) (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
Matthew J. Bromberg
(1973)		 Assistant Secretary (since 2020) General Counsel and Secretary of Exchange Traded Managers Group LLC (since 2020); ETF Managers Group LLC (since 2020); ETFMG Financial LLC (since 2020); ETF Managers Capital LLC (since 2020); Partner of Dorsey & Whitney LLP (law firm) (2019-2020); General Counsel of WBI Investments, Inc. (2016-2019); Millington Securities, Inc. (2016-2019); and Partner of Reed Smith (law firm) (2015-2016). n/a n/a
Independent Trustees
Terry Loebs
(1963)		 Trustee (since 2014); Lead Independent Trustee (since 2020) 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 Wiegel
(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

 

31 

 

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 

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

 

 


 

image

 

Semi-Annual Report

 

March 31, 2021

(Unaudited)

 

Etho Climate Leadership U.S. ETF

Ticker: ETHO

 

 

image

 

 The Fund is a series of ETF Managers Trust.

 

 

 

 

Etho Climate Leadership U.S. ETF

 

TABLE OF CONTENTS

March 31, 2021 (Unaudited)

 

 

 

Page

Shareholder Letter

2

 

 

Growth of $10,000 Investment

3

 

 

Top 10 Holdings

4

 

 

Important Disclosures and Key Risk Factors

5

 

 

Portfolio Allocations

6

 

 

Schedule of Investments

7

 

 

Statement of Assets and Liabilities

16

 

 

Statement of Operations

17

 

 

Statements of Changes in Net Assets

18

 

 

Financial Highlights

19

 

 

Notes to the Financial Statements

20

 

 

Approval of Advisory Agreement and Board Considerations

29

 

 

Expense Example

32

 

 

Statement Regarding Liquidity Risk Management Program

33

 

 

Supplementary Information

34

 

 

Information About Portfolio Holdings

34

 

 

Information About Proxy Voting

34

 

 

Trustees and Officers Table

35

 

1 

 

Etho Climate Leadership U.S. ETF

 

Dear Shareholder,

 

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, 2020 to March 31, 2021.

 

The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Etho Climate Leadership Index – U.S. (the “Index”).

 

For the period ended March 31, 2021, the total return for the Fund was 29.89% while the total return for the Index was 29.83%. The best performers in the Fund, on the basis of contribution to its return were, Sunpower Corp, Tesla, Inc. Genmark Diagonstics, Inc., Wesco International Inc. and SVB Financial Group, while the worst performers were Zoom Video Communications, Beyond Meat, Inc., Prog Holdings, Inc., Seagen, Inc. and Splunk, Inc.

 

At the end of the reporting period, the Fund saw an approximate allocation of 12.1% to Semiconductors & Semiconductor Equipment, 5.6% to Software, 5.4% to Capital Markets and 6.2% to Health Care Equipment & Supplies. The Fund invests primarily in the United States.

 

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, etc. Equal weighting of the Fund allows for the elimination of equities that do not meet ETHO’s standards without there being a significant impact on the diversification or performance of the Fund. It also creates broad exposure to both the sectors and factors that potentially make for greater stability and higher performance.

 

There is much ahead for environmentally sustainable and socially responsible investing. 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,

 

image

 

Samuel Masucci III

Chairman of the Board

 

 

1 Etho Capital. www.ethocapital.com

 

2 

 

 

Etho Climate Leadership U.S. ETF

Growth of $10,000 (Unaudited)

 

(GRAPHIC) 

 

Average Annual Returns

Period Ended March 31, 2021

1 Year

Return

5 Year

Return

Since Inception

(11/18/2015)

Value of $10,000

(3/31/2021)

Etho Climate Leadership U.S. ETF (NAV)

74.86%

19.00%

17.70%

$23,978

Etho Climate Leadership U.S. ETF (Market)

76.39%

19.14%

17.87%

$24,171

S&P 500 Index

56.35%

16.29%

15.03%

$21,199

Etho Climate Leadership Index – U.S.

74.62%

18.46%

17.15%

$23,386

 

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, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

 

 

3 

 

Etho Climate Leadership U.S. ETF

 

 

Top Ten Holdings as of March 31, 2021 (Unaudited)*

 

Security

% of Total Investments

1

SunPower Corp.

1.42%

2

Tesla, Inc.

1.38%

3

GenMark Diagnostics, Inc.

1.26%

4

WESCO International, Inc.

0.82%

5

Advanced Drainage Systems, Inc.

0.76%

6

Gernerac Holdings, Inc.

0.76%

7

ON Semiconductor Corp.

0.72%

8

SVB Financial Group

0.70%

9

United Rentals, Inc.

0.69%

10

Align Technology, Inc.

0.67%

 

Top Ten Holdings = 9.18% of Total Investments (GRAPHIC)

* Current Fund holdings may not be indicative of future Fund holdings.

 

 

4 

 

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 U.S. 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 – U.S. (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 — U.S. 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.

 

 

5 

 

Etho Climate Leadership U.S. ETF

PORTFOLIO ALLOCATIONS

As of March 31, 2021 (Unaudited)

 

 

 

Etho Climate

Leadership U.S.

ETF

  

As a percent of Net Assets:

 

  

Puerto Rico

0.4

 %

Singapore

0.2

  

United States

98.5

  

Closed-End Funds

0.4

  

Short-Term and other Net Assets (Liabilities)

0.5

  

 

100.0

 %

 

6 

 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited)
 

 

    Shares     Value  
             
COMMON STOCKS - 99.1%                
Puerto Rico - 0.4%                
Banks - 0.4%                
Popular, Inc.     9,513     $ 668,954  
                 
Singapore - 0.2%                
Semiconductors & Semiconductor Equipment - 0.2%                
Maxeon Solar Technologies, Ltd. (a)(b)     7,918       249,892  
                 
United States - 98.5%                
Automobiles - 1.4%                
Tesla, Inc. (a)(b)     3,068       2,049,208  
Banks - 4.3%                
Bank of Hawaii Corp.     5,850       523,517  
Comerica, Inc.     11,088       795,453  
Commerce Bancshares, Inc. (a)     6,718       514,666  
Cullen/Frost Bankers, Inc.     5,945       646,578  
First Republic Bank     3,912       652,326  
M&T Bank Corp.     3,295       499,555  
South State Corp.     5,497       431,569  
SVB Financial Group (b)     2,116       1,044,585  
Truist Financial Corp.     11,002       641,637  
Zions Bancorp NA     12,544       689,418  
Total Banks             6,439,304  
Biotechnology - 1.3%                
Agios Pharmaceuticals, Inc. (b)     9,055       467,600  
Alnylam Pharmaceuticals, Inc. (b)     3,012       425,264  
Ionis Pharmaceuticals, Inc. (b)     6,975       313,596  
Seagen, Inc. (b)     2,778       385,753  
Vertex Pharmaceuticals, Inc. (b)     1,339       287,738  
Total Biotechnology             1,879,951  
Building Products - 2.2%                
Advanced Drainage Systems, Inc.     10,928       1,129,846  
Apogee Enterprises, Inc.     15,628       638,873  
Armstrong World Industries, Inc.     4,042       364,144  
Lennox International, Inc.     1,771       551,826  
Simpson Manufacturing Co., Inc.     5,336       553,503  
Total Building Products             3,238,192  
Capital Markets - 5.4%                
Ares Management Corp. - Class A     10,463       586,242  
Cboe Global Markets, Inc.     3,604       355,679  
Charles Schwab Corp.     9,816       639,806  
CME Group, Inc.     1,922       392,530  
FactSet Research Systems, Inc.     1,226       378,331  
Federated Hermes, Inc.     18,100       566,530  
Intercontinental Exchange, Inc.     4,082       455,878  
KKR & Co, Inc.     13,740       671,198  
MarketAxess Holdings, Inc.     960       478,003  
Morningstar, Inc.     2,765       622,236  

 

The accompanying notes are an integral part of these financial statements.

7 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited) (Continued)
 

 

    Shares     Value  
MSCI, Inc.     1,109     $ 464,982  
Nasdaq, Inc.     3,471       511,834  
Northern Trust Corp.     4,278       449,661  
S&P Global, Inc.     1,378       486,255  
SEI Investments Co.     7,133       434,614  
T. Rowe Price Group, Inc.     3,412       585,499  
Total Capital Markets             8,079,278  
Chemicals - 1.2%                
Air Products and Chemicals, Inc.     1,615       454,364  
Albemarle Corp.     5,707       833,849  
Ecolab, Inc.     2,127       455,327  
Total Chemicals             1,743,540  
Commercial Services & Supplies - 2.0%                
Brink’s Co.     6,204       491,543  
Cintas Corp.     1,847       630,400  
Clean Harbors, Inc. (b)     6,255       525,795  
Rollins, Inc. (a)     13,660       470,177  
Stericycle, Inc. (b)     6,612       446,376  
Waste Management, Inc. (a)     3,569       460,472  
Total Commercial Services & Supplies             3,024,763  
Communications Equipment - 1.9%                
Arista Networks, Inc. (b)     1,580       476,986  
Ciena Corp. (a)(b)     8,069       441,536  
Cisco Systems, Inc.     8,219       425,004  
F5 Networks, Inc. (b)     3,002       626,278  
Motorola Solutions, Inc.     2,418       454,705  
Viavi Solutions, Inc. (a)(b)     28,662       449,993  
Total Communications Equipment             2,874,502  
Construction & Engineering - 0.7%                
EMCOR Group, Inc.     5,238       587,494  
Northwest Pipe Co. (b)     14,433       482,351  
Total Construction & Engineering             1,069,845  
Consumer Finance - 0.8%                
American Express Co.     3,843       543,554  
PROG Holdings, Inc.     14,110       610,822  
Total Consumer Finance             1,154,376  
Containers & Packaging - 0.7%                
AptarGroup, Inc.     3,238       458,727  
Avery Dennison Corp.     3,245       595,945  
Total Containers & Packaging             1,054,672  
Distributors - 0.4%                
Genuine Parts Co.     4,798       554,601  
Diversified Consumer Services - 1.1%                
Graham Holdings Co. - Class B     945       531,506  
H&R Block, Inc.     23,994       523,069  
Service Corp. International     8,238       420,550  
Strategic Education, Inc.     2,301       211,485  
Total Diversified Consumer Services             1,686,610  

 

The accompanying notes are an integral part of these financial statements.

8 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited) (Continued)
 

 

    Shares     Value  
Diversified Financial Services - 0.6%                
Cannae Holdings, Inc. (b)     9,589     $ 379,916  
Voya Financial, Inc.     8,286       527,321  
Total Diversified Financial Services             907,237  
Diversified Telecommunication Services - 0.8%                
Cincinnati Bell, Inc. (b)     21,948       336,902  
Lumen Technologies, Inc. (a)     36,302       484,632  
Verizon Communications, Inc.     6,063       352,563  
Total Diversified Telecommunication Services             1,174,097  
Electrical Equipment - 2.0%                
AMETEK, Inc.     4,682       598,032  
Emerson Electric Co.     6,783       611,962  
Generac Holdings, Inc. (b)     3,445       1,128,065  
Rockwell Automation, Inc.     2,136       566,980  
Total Electrical Equipment             2,905,039  
Electronic Equipment, Instruments & Components - 4.6%                
Amphenol Corp. - Class A     9,176       605,341  
Badger Meter, Inc.     6,000       558,420  
CDW Corp.     3,533       585,595  
Dolby Laboratories, Inc. - Class A     5,941       586,496  
IPG Photonics Corp. (b)     2,913       614,468  
Itron, Inc. (b)     5,836       517,361  
Keysight Technologies, Inc. (b)     3,904       559,834  
Littelfuse, Inc.     2,409       637,036  
National Instruments Corp.     9,754       421,226  
Trimble, Inc. (b)     10,293       800,692  
Vontier Corp. (b)     2,321       70,257  
Zebra Technologies Corp. - Class A (b)     1,766       856,828  
Total Electronic Equipment, Instruments & Components             6,813,554  
Entertainment - 1.7%                
Activision Blizzard, Inc.     5,530       514,290  
Electronic Arts, Inc.     3,200       433,184  
Netflix, Inc. (b)     870       453,844  
Take-Two Interactive Software, Inc. (b)     2,708       478,504  
Walt Disney Co. (b)     3,315       611,684  
Total Entertainment             2,491,506  
Food & Staples Retailing - 0.8%                
Casey’s General Stores, Inc. (a)     2,478       535,719  
PriceSmart, Inc.     6,108       590,949  
Total Food & Staples Retailing             1,126,668  
Food Products - 1.4%                
Beyond Meat, Inc. (a)(b)     4,885       635,636  
Hain Celestial Group, Inc. (b)     12,362       538,983  
Lamb Weston Holdings, Inc.     5,637       436,755  
McCormick & Co., Inc.     4,576       407,996  
Total Food Products             2,019,370  

 

The accompanying notes are an integral part of these financial statements.

9 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited) (Continued)
 

 

    Shares     Value  
Health Care Equipment & Supplies - 6.2%                
ABIOMED, Inc. (b)     2,243     $ 714,911  
Align Technology, Inc. (b)     1,841       996,957  
Becton Dickinson & Co.     1,390       337,979  
Boston Scientific Corp. (b)     9,843       380,432  
Cooper Cos.     1,161       445,928  
Danaher Corporation     2,315       521,060  
DexCom, Inc. (a)(b)     1,217       437,378  
Edwards Lifesciences Corp. (b)     5,107       427,149  
GenMark Diagnostics, Inc. (b)     78,523       1,876,699  
IDEXX Laboratories, Inc. (b)     1,355       663,015  
Intuitive Surgical, Inc. (b)     643       475,138  
ResMed, Inc.     2,185       423,934  
Stryker Corp.     1,932       470,597  
Teleflex, Inc.     1,097       455,760  
Varian Medical Systems, Inc. (b)     3,128       552,186  
Total Health Care Equipment & Supplies             9,179,123  
Health Care Providers & Services - 2.7%                
AMN Healthcare Services, Inc. (b)     5,548       408,888  
Anthem, Inc.     1,468       526,939  
Centene Corp. (b)     5,409       345,689  
Cigna Corp.     1,803       435,857  
Humana, Inc.     1,016       425,958  
Laboratory Corp. of America Holdings (b)     2,585       659,253  
RadNet, Inc. (b)     30,563       664,744  
UnitedHealth Group, Inc.     1,323       492,249  
Total Health Care Providers & Services             3,959,577  
Health Care Technology - 0.5%                
Cerner Corp.     5,107       367,091  
Teladoc Health, Inc. (a)(b)     2,110       383,493  
Total Health Care Technology             750,584  
Household Durables - 0.5%                
Newell Brands, Inc.     25,238       675,874  
Household Products - 0.3%                
Church & Dwight Co., Inc.     5,012       437,798  
Independent Power & Renewable Electricity Producers - 0.2%                
Ormat Technologies, Inc.     4,749       372,939  
Insurance - 4.2%                
Aflac, Inc.     9,726       497,777  
American Financial Group, Inc.     4,628       528,055  
Arthur J Gallagher & Co.     3,954       493,341  
Brown & Brown, Inc.     9,069       414,544  
Cincinnati Financial Corp.     4,413       454,936  
Erie Indemnity Co. - Class A (a)     2,165       478,270  
Fidelity National Financial, Inc.     13,297       540,656  
Globe Life, Inc.     4,473       432,226  
Hanover Insurance Group, Inc.     3,556       460,360  
Hartford Financial Services Group, Inc.     9,489       633,769  

 

The accompanying notes are an integral part of these financial statements.

10 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited) (Continued)
 

 

    Shares     Value  
Markel Corp. (b)     338     $ 385,192  
Marsh & McLennan Cos., Inc.     3,861       470,270  
W R Berkley Corp.     6,161       464,231  
Total Insurance             6,253,627  
Interactive Media & Services - 1.0%                
Alphabet, Inc. - Class A (b)     283       583,692  
IAC/InterActiveCorp (b)     1,834       396,713  
Match Group, Inc. (b)     3,862       530,562  
Total Interactive Media & Services             1,510,967  
Internet & Direct Marketing Retail - 1.2%                
Amazon.com, Inc. (b)     163       504,335  
Booking Holdings, Inc. (b)     242       563,821  
eBay, Inc.     10,901       667,578  
Total Internet & Direct Marketing Retail             1,735,734  
IT Services - 4.2%                
Akamai Technologies, Inc. (b)     3,506       357,261  
Automatic Data Processing, Inc.     2,356       444,035  
Broadridge Financial Solutions, Inc.     3,395       519,775  
Fidelity National Information Services, Inc.     2,810       395,114  
Fiserv, Inc. (b)     3,382       402,593  
FleetCor Technologies, Inc. (b)     1,721       462,312  
Global Payments, Inc.     2,219       447,306  
Jack Henry & Associates, Inc.     2,063       312,998  
MasterCard, Inc. - Class A     1,353       481,736  
Paychex, Inc.     5,377       527,054  
PayPal Holdings, Inc. (b)     3,350       813,514  
Switch, Inc. - Class A     19,004       309,005  
VeriSign, Inc. (b)     1,781       353,992  
Visa, Inc. - Class A (a)     2,040       431,929  
Total IT Services             6,258,624  
Leisure Products - 0.3%                
Hasbro, Inc.     4,672       449,073  
Life Sciences Tools & Services - 0.7%                
Bio-Techne Corp.     1,689       645,079  
Illumina, Inc. (b)     1,194       458,568  
Total Life Sciences Tools & Services             1,103,647  
Machinery - 6.3%                
Deere & Co.     2,324       869,501  
Donaldson Co., Inc.     8,604       500,409  
Dover Corp.     3,831       525,345  
Energy Recovery, Inc. (b)     43,183       791,976  
Flowserve Corp.     13,506       524,168  
Fortive Corp.     5,826       411,549  
Hillenbrand, Inc.     17,371       828,770  
Lincoln Electric Holdings, Inc.     4,949       608,430  
Lindsay Corp.     3,510       584,836  
Mueller Water Products, Inc. - Class A     40,278       559,461  
Stanley Black & Decker, Inc.     3,225       643,936  
Tennant Co.     5,548       443,230  
                 

The accompanying notes are an integral part of these financial statements.

11 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited) (Continued)
 

 

    Shares     Value  
Toro Co.     5,123     $ 528,386  
Trinity Industries, Inc. (a)     20,281       577,806  
Watts Water Technologies, Inc. - Class A     3,802       451,716  
Xylem, Inc.     4,946       520,220  
Total Machinery             9,369,739  
Media - 2.5%                
Charter Communications, Inc. - Class A (b)     735       453,510  
Discovery, Inc. - Class A (a)(b)     16,519       717,916  
Interpublic Group of Cos., Inc.     20,720       605,024  
New York Times Co. - Class A     10,469       529,941  
Omnicom Group, Inc.     5,894       437,040  
Sirius XM Holdings, Inc. (a)     65,143       396,721  
TEGNA, Inc.     30,256       569,720  
Total Media             3,709,872  
Pharmaceuticals - 1.5%                
Bristol-Myers Squibb Co.     5,790       365,523  
Eli Lilly and Co.     2,316       432,675  
Merck & Co, Inc.     4,190       323,007  
Nektar Therapeutics (a)(b)     18,000       360,000  
Pfizer, Inc.     9,970       361,213  
Viatris, Inc. (b)     1,230       17,183  
Zoetis, Inc.     2,805       441,732  
Total Pharmaceuticals             2,301,333  
Professional Services - 1.4%                
CoreLogic, Inc.     10,543       835,533  
CoStar Group, Inc. (b)     541       444,642  
FTI Consulting, Inc. (b)     2,676       374,934  
Verisk Analytics, Inc.     2,304       407,094  
Total Professional Services             2,062,203  
Real Estate Investment Trusts (REITs) - 2.9%                
Alexandria Real Estate Equities, Inc.     2,406       395,306  
Duke Realty Corp.     9,966       417,874  
Extra Space Storage, Inc. (a)     3,367       446,296  
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (a)     16,208       909,269  
Mid-America Apartment Communities, Inc.     3,230       466,282  
Prologis, Inc.     4,013       425,378  
Public Storage, Inc.     1,677       413,817  
Regency Centers Corp.     8,957       507,951  
SBA Communications Corp.     1,181       327,787  
Total Real Estate Investment Trusts (REITs)             4,309,960  
Road & Rail - 0.5%                
Lyft, Inc. - Class A (b)     11,966       756,012  
Semiconductors & Semiconductor Equipment - 12.1%                
Advanced Micro Devices, Inc. (a)(b)     7,055       553,818  
Analog Devices, Inc. (a)     3,596       557,668  
Applied Materials, Inc.     7,030       939,208  
Broadcom, Inc.     1,362       631,505  
Cree, Inc. (a)(b)     9,156       990,038  
First Solar, Inc. (a)(b)     9,031       788,406  
                 

The accompanying notes are an integral part of these financial statements.

12 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited) (Continued)
 

 

    Shares     Value  
Intel Corp.     6,184     $ 395,776  
KLA Corp.     2,241       740,426  
Lam Research Corp.     1,333       793,455  
Maxim Integrated Products, Inc.     6,839       624,879  
Microchip Technology, Inc.     4,748       736,985  
Micron Technology, Inc. (b)     7,629       672,954  
NVIDIA Corp.     1,214       648,191  
ON Semiconductor Corp. (b)     25,822       1,074,454  
Power Integrations, Inc.     7,440       606,211  
Qorvo, Inc. (b)     3,978       726,781  
Qualcomm, Inc.     4,945       655,658  
Rambus, Inc. (a)(b)     28,941       562,613  
Skyworks Solutions, Inc.     3,601       660,711  
SunPower Corp. (a)(b)     63,674       2,129,896  
Teradyne, Inc.     6,053       736,529  
Texas Instruments, Inc.     3,377       638,219  
Universal Display Corp.     2,429       575,114  
Xilinx, Inc.     4,129       511,583  
Total Semiconductors & Semiconductor Equipment             17,951,078  
Software - 5.4%                
Adobe Systems, Inc. (b)     1,005       477,747  
Ansys, Inc. (b)     1,375       466,895  
Autodesk, Inc. (b)     2,101       582,292  
Cadence Design System, Inc. (b)     4,973       681,252  
Intuit, Inc.     1,390       532,453  
Microsoft Corp.     2,038       480,499  
Palo Alto Networks, Inc. (b)     1,996       642,832  
salesforce.com, Inc. (b)     2,221       470,563  
ServiceNow, Inc. (b)     1,115       557,623  
Slack Technologies, Inc. - Class A (b)     11,969       486,300  
Splunk, Inc. (b)     2,534       343,306  
Synopsys, Inc. (b)     2,557       633,573  
VMware, Inc. - Class A (a)(b)     2,653       399,144  
Workday, Inc. - Class A (b)     2,462       611,635  
Zoom Video Communications, Inc. - Class A (b)     2,224       714,550  
Total Software             8,080,664  
Specialty Retail - 2.2%                
Aaron’s Co., Inc.     7,050       181,044  
Advance Auto Parts, Inc.     3,444       631,940  
Lowe’s Cos., Inc.     3,756       714,316  
O’Reilly Automotive, Inc. (b)     1,061       538,192  
The Home Depot, Inc.     1,725       526,556  
Tractor Supply Co.     3,806       673,966  
Total Specialty Retail             3,266,014  
Technology Hardware, Storage & Peripherals - 1.3%                
Apple, Inc.     5,153       629,439  
NCR Corp. (a)(b)     18,804       713,612  
NetApp, Inc.     7,954       578,017  
Total Technology Hardware, Storage & Peripherals             1,921,068  

 

The accompanying notes are an integral part of these financial statements.

13 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited) (Continued)
 

 

    Shares     Value  
Textiles, Apparel & Luxury Goods - 0.9%                
Hanesbrands, Inc.     42,746     $ 840,814  
VF Corp.     6,176       493,586  
Total Textiles, Apparel & Luxury Goods             1,334,400  
Thrifts & Mortgage Finance - 0.3%                
Washington Federal, Inc.     12,933       398,336  
Trading Companies & Distributors - 2.6%                
Fastenal Co.     10,367       521,253  
GATX Corp. (a)     5,162       478,724  
MSC Industrial Direct Co., Inc. - Class A     6,329       570,813  
United Rentals, Inc. (b)     3,122       1,028,106  
WESCO International, Inc. (b)     14,058       1,216,438  
Total Trading Companies & Distributors             3,815,334  
Water Utilities - 1.0%                
American States Water Co.     3,933       297,413  
American Water Works Co., Inc.     2,686       402,685  
California Water Service Group     6,404       360,801  
Middlesex Water Co.     5,541       437,851  
Total Water Utilities             1,498,750  
Wireless Telecommunication Services - 0.3%                
T-Mobile US, Inc. (b)     3,828       479,610  
Total United States             146,228,253  
TOTAL COMMON STOCKS (Cost $101,564,539)             147,147,099  
                 
INVESTMENT COMPANIES - 0.4%                
Closed-End Funds - 0.4%                
Oaktree Specialty Lending Corp.     105,512       654,174  
TOTAL INVESTMENT COMPANIES (Cost $528,726)             654,174  
                 
INVESTMENTS PURCHASED WITH PROCEEDS                
FROM SECURITIES LENDING COLLATERAL - 11.0%                
Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (c)     16,330,584       16,330,584  
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $16,330,584)             16,330,584  
                 
SHORT-TERM INVESTMENTS - 0.5%                
Money Market Funds - 0.5%                
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.01% (c)     680,616       680,616  
TOTAL SHORT-TERM INVESTMENTS (Cost $680,616)             680,616  
                 
Total Investments (Cost $119,104,465) - 111.0%             164,812,473  
Liabilities in Excess of Other Assets - (11.0)%             (16,305,298 )
TOTAL NET ASSETS - 100.0%  

    $ 148,507,175  

 

The accompanying notes are an integral part of these financial statements.

14 

 

Etho Climate Leadership U.S. ETF

 

Schedule of Investments
March 31, 2021 (Unaudited) (Continued)
 

 

Percentages are stated as a percent of net assets.

 


 (a) All or a portion of this security is out on loan as of March 31, 2021.

(b) Non-income producing security.

(c) The rate quoted is the annualized seven-day yield at March 31, 2021.

 

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.

15 

 

Etho Climate Leadership U.S. ETF
 
STATEMENT OF ASSETS AND LIABILITIES
As of March 31, 2021 (Unaudited)
 

 

    Etho Climate
Leadership
U.S. ETF		  
ASSETS      
Investments in securities, at value*   $ 164,812,473  
Receivables:        
Dividends and interest receivable     79,595  
Securities lending income receivable     1,228  
Total Assets     164,893,296  
         
LIABILITIES        
Collateral received for securities loaned (Note 7)     16,330,584  
Payables:        
Management fees payable     55,537  
Total Liabilities     16,386,121  
Net Assets   $ 148,507,175  
         
NET ASSETS CONSIST OF:        
Paid-in capital   $ 108,253,881  
Total Distributable Earnings     40,253,294  
Net Assets   $ 148,507,175  
         
         
*Identified Cost:        
Investments in securities   $ 119,104,465  
         
Shares Outstanding^     2,600,000  
Net Asset Value, Offering and Redemption Price per Share   $ 57.12  
         
^ No par value, unlimited number of shares authorized        

 

The accompanying notes are an integral part of these financial statements.

16 

 

Etho Climate Leadership U.S. ETF
 
STATEMENT OF OPERATIONS
For the Period Ended March 31, 2021 (Unaudited)
 

 

    Etho Climate
Leadership
U.S. ETF		  
INVESTMENT INCOME      
Income:      
Dividends from unaffiliated securities (net of foreign withholding tax of $687)   $ 746,733  
Interest     30  
Securities lending income     12,026  
Total Investment Income     758,789  
         
Expenses:        
Management fees     267,941  
Total Expenses     267,941  
Net Investment Income     490,848  
         
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS        
Net Realized Gain (Loss) on:        
Unaffiliated investments     297,905  
Affiliated investments     (23,355 )
In-Kind redemptions     168  
Net Realized Gain (Loss) on Investments and In-Kind Redemptions     274,718  
Net Change in Unrealized Appreciation (Depreciation) of:        
Unaffiliated investments     27,775,035  
Affiliated Investments     23,606  
Net Change in Unrealized Appreciation of Investments     27,798,641  
Net Realized and Unrealized Gain (Loss) on Investments     28,073,359  
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS   $ 28,564,207  

 

The accompanying notes are an integral part of these financial statements.

17 

 

Etho Climate Leadership U.S. ETF
 
STATEMENTS OF CHANGES IN NET ASSETS
 

 

    Period Ended
March 31, 2021
(Unaudited)		     Year Ended
September 30,
2020		  
OPERATIONS            
Net investment income   $ 490,848     $ 746,997  
Net realized gain (loss) on investments and In-Kind Redemptions     274,718       (4,238,356 )
Net change in unrealized appreciation of investments     27,798,641       12,770,763  
Net increase in net assets resulting from operations   $ 28,564,207     $ 9,279,404  
                 
DISTRIBUTIONS TO SHAREHOLDERS                
Total Distributions to Shareholders     (556,000 )     (660,500 )
                 
CAPITAL SHARE TRANSACTIONS                
Net increase in net assets derived from net change in outstanding shares     29,938,285       28,510,725  
Net increase in net assets   $ 57,946,492     $ 37,129,629  
                 
NET ASSETS                
Beginning of Period     90,560,683       53,431,054  
End of Period   $ 148,507,175     $ 90,560,683  

 

Summary of share transactions is as follows:

 

      Period Ended
March 31, 2021 (Unaudited)		     Year Ended
September 30, 2020		  
      Shares     Amount     Shares     Amount  
Shares Sold       550,000
  $ 29,938,285       800,000     $ 32,325,825  
Shares Redeemed       —       —       (100,000 )     (3,815,100 )
Net Transactions in Fund Shares       550,000
  $ 29,938,285       700,000     $ 28,510,725  
                                   
Beginning Shares       2,050,000               1,350,000          
Ending Shares       2,600,000               2,050,000          

 

The accompanying notes are an integral part of these financial statements.

18 

 

Etho Climate Leadership U.S. ETF
 
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period/year
 

 

    Period Ended
March 31,
2021
(Unaudited)		     Year Ended
September 30,
2020		     Year Ended
September 30,
2019		     Year Ended
September 30,
2018		     Year Ended
September 30,
2017		     Period Ended
September 30,
20161		  
                                                 
Net Asset Value, Beginning of Period/Year   $ 44.18     $ 39.58     $ 37.50     $ 32.01     $ 27.00     $ 25.00  
Income from Investment Operations:                                                
Net Investment Income2     0.22       0.41       0.33       0.29       0.31       0.23  
Net realized and unrealized gain (loss) on investments     12.96       4.54       2.08       5.51       5.09       1.87  
Total from investment operations     13.18       4.95       2.41       5.80       5.40       2.10  
Less Distributions:                                                
From net investment income     (0.24 )     (0.35 )     (0.33 )     (0.29 )     (0.25 )     (0.10 )
From net realized gains     —       —       —       (0.02 )     (0.14 )     —  
Total distributions     (0.24 )     (0.35 )     (0.33 )     (0.31 )     (0.39 )     (0.10 )
Net asset value, end of period/year   $ 57.12     $ 44.18     $ 39.58     $ 37.50     $ 32.01     $ 27.00  
Total Return     29.89 %3     12.59 %     6.53 %     18.16 %     20.14 %     8.43 %3
                                                 
Ratios/Supplemental Data:                                                
Net assets at end of period/year (000’s)   $ 148,507     $ 90,561     $ 53,431     $ 35,627     $ 19,208     $ 6,751  
Expenses to Average Net Assets     0.45 %4     0.45 %     0.45 %     0.45 %     0.45 %     0.50 %4
Net Investment Income to Average Net Assets     0.82 %4     1.00 %     0.88 %     0.82 %     1.03 %     1.04 %4
Portfolio Turnover Rate     1 %3     37 %     41 %     19 %     45 %     25 %3

 

1 Commencement of operations on November 18, 2015.
2 Calculated based on average shares outstanding during the period/year.
3 Not annualized.
4 Annualized.

 

The accompanying notes are an integral part of these financial statements.

19 

 

Etho Climate Leadership U.S. ETF
 
NOTES TO FINANCIAL STATEMENTS
March 31, 2021 (Unaudited)
 

 

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 – U.S. (“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.

20 

 

Etho Climate Leadership U.S. ETF
 
NOTES TO FINANCIAL STATEMENTS
March 31, 2021 (Unaudited) (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 March 31, 2021, 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.

21 

 

Etho Climate Leadership U.S. ETF
 
NOTES TO FINANCIAL STATEMENTS
March 31, 2021 (Unaudited) (Continued)
 

 

The following table presents a summary of the inputs used to value the Fund’s net assets as of March 31, 2021:

 

Etho Climate Leadership U.S. ETF                        
Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 147,147,099     $ —     $ —     $ 147,147,099  
Closed-End Funds     654,174       —       —       654,174  
Short-Term Investments     680,616       —       —       680,616  
Investments Purchased with Securities Lending                                
Collateral*     —       —       —       16,330,584  
Total Investments in Securities   $ 148,481,889     $ —     $ —     $ 164,812,473  

 

^ 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.

 

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 March 31, 2021, 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.

 

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.
22 

 

Etho Climate Leadership U.S. ETF

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

 

 

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 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.

 

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.

23 

 

 

Etho Climate Leadership U.S. ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued) 

 

 

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 Fund and its 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 Fund may have difficulty achieving its investment objective 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 Fund’s 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 Fund’s investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Fund 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 the Fund’s performance, resulting in losses to the Fund.

 

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 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.

 

24

 

Etho Climate Leadership U.S. ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 Fund (the “Distributor”). The Distributor provides marketing support for the Fund, including distributing marketing materials related to the Fund.

 

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 Advisor 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 period ended March 31, 2021, 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 period ended March 31, 2021:

 

    Purchases     Sales  
Etho Climate Leadership U.S. ETF   $ 1,293,218     $ 3,578,015  

  

The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the period ended March 31, 2021:

 

    Purchases In-     Sales In-  
    Kind     Kind  
Etho Climate Leadership U.S. ETF   $ 29,528,490     $ —  

 

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 period ended March 31, 2021.

 

25

 

Etho Climate Leadership U.S. ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued) 

 

 

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 the 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, 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 the 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 March 31, 2021, 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   $ 16,340,653     $ 16,330,584  

 

* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio as shown on the Schedule of Investments, an investment with an overnight and continuous maturity.

 

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, the Fund’s most recent fiscal year end, 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  
                                 

 

26

 

Etho Climate Leadership U.S. ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued) 

 

 
    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’s most recent fiscal year end, the Fund had accumulated capital loss carryovers of:

 

    Capital     Capital        
    Loss     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 Fund 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, the Fund’s most recent fiscal year end, as follows:

 

    Late Year   Post-October
    Ordinary Loss   Capital Loss
Etho Climate Leadership U.S. ETF   None   None

 

The tax character of distributions paid by the Fund during the fiscal periods ended March 31, 2021 and September 30, 2020 are as follows:

 

    Period Ended     Year Ended  
    March 31. 2021     September 30, 2020  
    From     From     From     From  
    Ordinary     Capital     Ordinary     Capital  
    Income     Gains     Income     Gains  
Etho Climate Leadership U.S. ETF   $ 556,000     $ —     $ 660,500     $ —  

  

NOTE 9 – INVESTMENTS IN AFFILIATES

 

Etho Climate Leadership U.S. ETF owned the following company during the period ended March 31, 2021. ETFMG Sit Ultra Short ETF was deemed to be an affiliate of the Fund as defined by the 1940 Act during the period ended March 31, 2021, however, was no longer held as of March 31, 2021. Transactions during the period in this security were as follows: 

 

                            Change in                    
    Value, at                 Realized     Unrealized           Value, at        
    September 30,                 Gain     Appreciation           March 31,     Ending  
Security Name   2020     Purchases     Sales     (Loss)     (Depreciation)     Income     2021     Shares  
ETFMG Sit Ultra Short ETF   $ 2,489,250     $ —     $ 2,489,500     $ (23,355 )   $ 23,606     $ —     $ —     $ —  

 

27

 

Etho Climate Leadership U.S. ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 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 transaction is expected to close prior to July 31, 2021. 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.

 

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.

 

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Etho Climate Leadership U.S. ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS   

For the Period Ended March 31, 2021 (Unaudited)

 

 

Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on March 30, 2021, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the renewal of the Amended and Restated Investment Advisory Agreement (the “Advisory Agreement”) between ETF Managers Group LLC (the “Adviser”) and the Trust, on behalf of Etho Climate Leadership U.S. ETF (the “Fund”).

 

Pursuant to Section 15(c) of the 1940 Act, the Board must annually review and approve the Advisory Agreement after its initial two-year term: (i) by the vote of the Trustees or by a vote of the shareholders of the Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Advisory 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. Each year, the Board calls and holds a meeting to decide whether to renew the Advisory Agreement for an additional one-year term. 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 provided to the Fund’s shareholders by the Adviser; (ii) the investment performance of the Fund; (iii) the Adviser’s costs and profits realized in providing services to the Fund, including any fall-out benefits enjoyed by the Adviser; (iv) comparative fee and expense data for the Fund in relation to other similar investment companies; (v) the extent to which economies of scale would be realized as the Fund grows and whether the advisory fees for the Fund reflects these economies of scale for the benefit of the Fund; and (vi) other financial benefits to the Adviser and its affiliates resulting from services 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 March 30, 2021, and throughout the year. Among other things, the Adviser provided responses to a detailed series of questions, which included information about the Adviser’s operations, service offerings, personnel, compliance program and financial condition. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentations and any other information that the Board received at the meeting, and deliberated on the renewal of the Advisory 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 renewal of the Advisory Agreement, and the weight to be given to each such factor. The conclusions reached with respect to the Advisory 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 Independent Trustees conferred amongst themselves and independent legal counsel during a telephonic contract renewal meeting held prior to the March 30, 2021 meeting and also conferred in executive sessions both with and without representatives of management before and during the March 30th meeting. The Independent Trustees requested, received and considered additional information arising out of these executive sessions.

 

Nature, Extent and Quality of Services Provided by the Adviser 

The Trustees considered the scope of services provided under the Advisory Agreement, noting that the Adviser provides investment management services to the Fund. The Board discussed the responsibilities of the Adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Fund; determining the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; responsibility for daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Fund. 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 and the quality of the Adviser’s compliance and risk assessment infrastructure. The Board also considered the Adviser’s experience managing exchange-traded funds (“ETFs”), as well as the Adviser’s response to the market volatility and uncertainty during the recent pandemic.

 

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Etho Climate Leadership U.S. ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS  

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

The Board also considered other services provided to the Fund, such as overseeing the Fund’s service providers, monitoring adherence to the Fund’s investment restrictions, and monitoring compliance with various policies and procedures and with applicable securities laws.

 

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 provided to the Fund by the Adviser.

 

Historical Performance 

The Board then considered the past performance of the Fund. The Board reviewed information regarding the Fund’s performance with the performance of a group of peer funds and with the performance of the Fund’s underlying index for various time periods. The Board noted management’s explanation that analysis of investment performance, in absolute terms, is less relevant for the Fund than it is for actively managed funds, given the Fund’s index-based investment objectives. The Board also noted management’s further explanation that it is more relevant to review the performance of the Fund by focusing on the extent to which the Fund tracked its underlying index. The Board reviewed information regarding the Fund’s index tracking, discussing, as applicable, factors which contributed to the Fund’s tracking error. The Board noted management’s representations that the Fund’s performance satisfactorily tracked its underlying index, and the Board concluded that the Fund satisfactorily tracked its underlying index. The Board further noted that it had received and would continue to receive regular reports regarding the Fund’s performance, including with respect to its tracking error, at its quarterly meetings.

 

Cost of Services Provided, Profits and Economies of Scale 

The Board reviewed the advisory fee for the Fund and compared it to the total operating expenses of comparable ETFs, as determined by an independent third party and the Adviser. Among other information, the Board noted that the advisory fee of the Fund was lower than the average and median expense ratios of its peer ETFs. The Trustees also considered the total expense ratios of other ETFs that they considered to be comparable, based on the investment objectives and strategies of the ETFs. The Board took into consideration management’s discussion of the fees, including that the Fund has a niche investment strategy that is substantially different than the strategies of many of the peer ETFs and, therefore, the information provided about the comparable ETFs may not provide meaningful direct comparisons to the Funds.

 

The Board noted the importance of the fact that the advisory fee for the Fund is a “unified fee,” meaning that the shareholders of the Fund pay no expenses other than the advisory fee and certain other costs such as 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, 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 Board also noted that the Adviser was responsible for compensating the Trust’s other service providers and paying the Fund’s other expenses (except as noted above) out of its own fees and resources. The Board concluded that the advisory fee for the Fund is reasonable in light of the factors considered. 

 

30

 

 

Etho Climate Leadership U.S. ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS  

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

The Board also evaluated the compensation and other benefits received by the Adviser from its relationship with the Fund, taking into account profitability information provided by the Adviser. The Board received and reviewed profitability information with respect to the Fund and considered how profit margins could affect the Adviser’s long-term viability and ability to attract and retain high-quality personnel. The Board also considered the impact on the Adviser’s profitability of payments received from partners involved with the Fund. Based on the information provided to the Trustees, the Trustees concluded that the net revenue retained by the Adviser from providing services to the Fund was not excessive in view of the nature, extent and quality of services provided to the Fund. The Board further considered other benefits derived by the Adviser and its affiliates from the Adviser’s relationship with the Fund.

 

In addition, the Board considered whether economies of scale may be realized for the Fund. The Board noted that the Adviser regularly considers whether fee reductions are appropriate as the Fund grows in size. The Board noted that a unitary fee provides a level of certainty in expenses for the Fund and effectively acts as a cap on the fees and expenses (except as noted above) that are borne by the Fund. The Board also took into account the significant investments that the Adviser has made in its business to help ensure the continued provision of high-quality services to the Funds, such as the hiring of new trading, legal and compliance personnel, and enhancements to technology and related systems. The Board concluded that no changes to the advisory fee structure of the Fund were necessary.

 

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 Advisory Agreement are fair and reasonable; (b) concluded that the Adviser’s fees are reasonable in light of the services that the Adviser provides to the Fund; and (c) approved the renewal of the Advisory Agreement for another year.

 

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Etho Climate Leadership U.S. ETF

 

Expense Example 

Period Ended March 31, 2021 (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 period and held for the entire period (October 1, 2020 to March 31, 2021).

 

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  
                            During Period  
    Beginning                     October 1,  
    Account Value     Ending     Expenses Paid     2020 to  
    October 1,     Account Value     During the     March 31,  
    2020     March 31, 2021     Period^     2021  
Actual   $ 1,000.00     $ 1,298.90     $ 2.58       0.45 %
                                 
Hypothetical (5% annual)   $ 1,000.00     $ 1,022.69     $ 2.27       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 182/365 (to reflect the period from October 1, 2020 to March 31, 2021).

 

32

 

Etho Climate Leadership U.S. ETF

 

Statement Regarding Liquidity Risk Management Program (Unaudited)

 

ETF Managers Trust (the “Trust”) has adopted a liquidity risk management program (the “Program”). The Trust’s Board of Trustees (the “Board”) has designated ETF Managers Group LLC (the “Program Administrator”) as the administrator of the Program. The Program Administrator has designated a committee (the “Committee”), composed of personnel from multiple departments, including investment operations and compliance, that is responsible for the implementation and ongoing administration of the Program, which includes assessing the liquidity risk of the Etho Climate Leadership U.S. ETF (the “Fund”) under both normal and reasonably foreseeable stressed conditions.

 

Under the Program, the Program Administrator assesses, manages and periodically reviews the Fund’s liquidity risk, based on factors specific to the circumstances of the Fund. Liquidity risk is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments and limiting the amount of the Fund’s illiquid investments, among other means. The Program Administrator’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.

 

At a meeting of the Board on March 30, 2021, the Adviser provided a written report to the Board addressing the operation, and the adequacy and effectiveness of the implementation, of the Program, including, the operation of any Highly Liquid Investment Minimum, where applicable, and any material changes to the Program, for the initial period from February 29, 2020 through March 30, 2021 (the “Reporting Period”). No significant liquidity events impacting the Fund were noted in the report and it was represented that, as of March 30, 2021, the Fund was primarily highly liquid and, during the Reporting Period, the Fund held less than 15% in illiquid securities. In addition, the Program Administrator provided its assessment that Program implementation was effective and that the Program operated adequately and effectively to enable the Program Administrator to oversee and manage liquidity risk and ensure the Fund is able to meet requests to redeem shares without significant dilution to the remaining investors’ interest in the Fund.

 

There can be no assurance that the Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

 

33

 

Etho Climate Leadership U.S. ETF

 

SUPPLEMENTARY INFORMATION 

March 31, 2021 (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), the Fund’s website (www.ethoetf.com) 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.

 

34

 

Etho Climate Leadership U.S. ETF

 

Board of Trustees (Unaudited)

 

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).

 

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 
Interested Trustee and Officers

Samuel Masucci,

III (1962)

 Trustee, Chairman of the Board and President (since 2012); Secretary (since 2014)

Chief Executive Officer, Exchange Traded Managers Group LLC (since 2013); Chief Executive Officer, ETF Managers Group LLC (since 2016); Chief Executive Officer, ETF Managers Capital LLC (commodity pool operator) (since 2014); Chief Executive Officer (2012-2016) and Chief Compliance Officer (2012- 2014), Factor Advisors, LLC (investment adviser); President and Chief Executive Officer, Factor Capital Management LLC (2012- 2014) (commodity pool operator). 

 11 None

John A. Flanagan,

(1946)

 Treasurer (since 2015) President, John A. Flanagan CPA, LLC (accounting services) (since 2010); Treasurer, ETF Managers Trust (since 2015); Chief Financial Officer, ETF Managers Capital, LLC (commodity pool operator) (since 2015). n/a n/a

Reshma A. Tanczos

(1978)

 Chief Compliance Officer (since 2016)

Chief Compliance Officer of ETFMG Financial LLC (since 2017); Chief Compliance Officer, ETF Managers Group LLC (since 2016); Chief Compliance Officer, ETF Managers Capital LLC (since 2016); Partner, Crow & Cushing (law firm) (2007-2016). 

 n/a n/a

 

* Mr. Masucci is an interested Trustee by virtue of his role as the Chief Executive Officer of the Adviser.

 

35

 

Etho Climate Leadership U.S. ETF

 

Board of Trustees (Unaudited) (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 

Matthew J. Bromberg

(1973)

 Assistant Secretary (since 2020)

General Counsel and Secretary of Exchange Traded Managers Group LLC (since 2020); 

ETF Managers Group LLC (since 2020); ETFMG Financial LLC (since 2020); ETF Managers Capital LLC (since 2020); Partner of Dorsey & Whitney LLP (law firm) (2019-2020); General Counsel of WBI Investments, Inc. (2016-2019); Millington Securities, Inc. (2016-2019); and Partner of Reed Smith (law firm) (2015-2016). 

 n/a n/a
Independent Trustees

Terry Loebs

(1963)

 Trustee (since 2014); Lead Independent Trustee (since 2020)

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 Wiegel

(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

 

36

 

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 

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

 

 


 

 



image

 

Semi-Annual

Report

 

March 31, 2021

(Unaudited)

 

AI Powered Equity ETF

Ticker: AIEQ



 

 

 image

The Fund is a series of ETF Managers Trust.

 

 

 

 

 

AI Powered Equity ETF

 

TABLE OF CONTENTS

March 31, 2021 (Unaudited)

 

 

 

Page

Shareholder Letter

2

 

 

Growth of $10,000 Investment

3

 

 

Top 10 Holdings

4

 

 

Important Disclosures and Key Risk Factors

5

 

 

Portfolio Allocations

6

 

 

Schedule of Investments

7

 

 

Statement of Assets and Liabilities

14

 

 

Statement of Operations

15

 

 

Statements of Changes in Net Assets

16

 

 

Financial Highlights

17

 

 

Notes to the Financial Statements

18

 

 

Approval of Advisory Agreement and Board Considerations

28

 

 

Expense Example

31

 

 

Statement Regarding Liquidity Risk Management Program

32

 

 

Supplementary Information

33

 

 

Information About Portfolio Holdings

33

 

 

Information About Proxy Voting

33

 

 

Trustees and Officers Table

34

 

 

 

AI Powered Equity ETF

 

Dear Shareholder,

 

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, 2020 to March 31, 2021.

 

The AI Powered Equity ETF is actively managed and seeks capital appreciation. Over the period, the total return for the Fund was 24.47%, while the total return for its benchmark, the S&P 500 Index, was 19.07%. The best performers in the Fund on the basis of contribution to return were Tesla Inc., Applied Materials Inc., Alphabet Inc.- Class A, The Michaels Companies Inc. and Roku Inc., while the worst performers were Plug Power Inc., Beyond Meat Inc., Ocugen Inc., Pfizer Inc. and Arcturus Therapeutics Holdings, Inc.

 

At the end of the reporting period, the Fund saw an approximate allocation of 12.2% to Semiconductors & Semiconductor Equipment, 3.4% to Software, 5.1% to Biotechnology, 3.2% to Internet & Direct Marketing Retail and 3.2% to Automobiles.

 

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 200 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,

 

 image

 

Samuel Masucci III

Chairman of the Board

 

2 

 

AI Powered Equity ETF
Growth of $10,000 (Unaudited)

image

Average Annual Returns

1 Year

Since Inception

 

Value of $10,000

Period Ended March 31, 2021

Return

(10/17/2017)

 

(3/31/2021)

AI Powered Equity ETF (NAV)

70.83%

16.61%

 

$              16,996

AI Powered Equity ETF (Market)

71.45%

16.52%

 

$              16,952

S&P 500 Index

56.35%

15.77%

 

$              16,578

 

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, if any. The index returns do not reflect fees or expenses and are not available for direct investment.

 

3 

 

AI Powered Equity ETF

 

Top Ten Holdings as of March 31, 2021* (Unaudited)

 

 

Security

% of Total
Investments

1

Applied Materials, Inc.

5.21%

2

Alphabet, Inc. - Class A

2.91%

3

Moderna, Inc.

2.56%

4

Mosaic Co.

2.52%

5

Apple, Inc.

2.49%

6

Intel Corp.

2.45%

7

Roku, Inc.

1.96%

8

Advanced Micro Devices, Inc.

1.82%

9

Etsy, Inc.

1.80%

10

Tesla, Inc.

1.64%

 

Top Ten Holdings = 25.36% of Total Investments

* Current Fund holdings may not be indicative of future Fund holdings.

 

4 

 

AI Powered Equity ETF

 

Important Disclosures and Key Risks 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 U.S. 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.

 

ETF Managers Group LLC is the investment adviser to the fund. EquBot LLC serves as the sub-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 EquBot LLC.

 

5 

 

 AI Powered Equity ETF

 

PORTFOLIO ALLOCATIONS

As of March 31, 2021 (Unaudited)

 

 

 

AI Powered
Equity ETF

 

As a percent of Net Assets:

 

 

Bermuda

1.4

%

Canada

0.2

 

Ireland

0.6

 

United Kingdom

0.0

*

United States

96.4

 

Rights

0.0

*

Short-Term and other Net Assets (Liabilities)

1.4

 

 

100.0

%

*Amount is less than 0.05%.

 

 

 

6 

 

AI Powered Equity ETF

  

Schedule of Investments            
March 31, 2021 (Unaudited)            
             
    Shares     Value  
             
COMMON STOCKS - 98.6%                
Bermuda - 1.4%                
Insurance - 1.4%                

Athene Holding, Ltd. - Class A (a)

     42,118     $ 2,122,747  
                 
Canada - 0.2%                
Entertainment - 0.2%                

Lions Gate Entertainment Corp. - Class A (a)(b)

     22,323       333,729  
                 
Ireland - 0.6%                
Pharmaceuticals - 0.6%                

Horizon Therapeutics PLC (a)

     10,034       923,529  
                 

United Kingdom - 0.0% (e)

                

Chemicals - 0.0% (e)

                
Tronox Holdings PLC - Class A     100       1,830  
                 
United States - 96.4%                
Aerospace & Defense - 1.6%                

Boeing Co. (a)

     3,656       931,257  
Raytheon Technologies Corp.     20,790       1,606,444  
Total Aerospace & Defense             2,537,701  
Air Freight & Logistics - 0.6%                
FedEx Corp.     3,485       989,879  
Auto Components - 0.1%                

BorgWarner, Inc. (b)

     3,753       173,989  
Automobiles - 3.2%                

Ford Motor Co. (a)

     159,446       1,953,214  

General Motors Co. (a)

     8,249       473,988  
Tesla, Inc. (a)(b)     3,829       2,557,503  
Total Automobiles             4,984,705  
Banks - 5.6%                
Bank of America Corp.     59,601       2,305,962  
First Republic Bank     8,410       1,402,368  
Huntington Bancshares, Inc.     32,374       508,919  

Investors Bancorp, Inc. (b)

     57,254       841,061  

Silvergate Capital Corp. - Class A (a)

     11,758       1,671,635  
TCF Financial Corp.     16,900       785,174  
Zions Bancorp NA     21,861       1,201,481  
Total Banks             8,716,600  
Beverages - 0.9%                
Constellation Brands, Inc. - Class A     925       210,900  

Keurig Dr. Pepper, Inc. (b)

     22,892       786,798  

Monster Beverage Corp. (a)

     3,548       323,187  
Total Beverages             1,320,885  

 

The accompanying notes are an integral part of these financial statements.

 

7 

 

AI Powered Equity ETF

 

Schedule of Investments            
March 31, 2021 (Unaudited) (Continued)            
             
    Shares     Value  
Biotechnology - 5.1%                
AbbVie, Inc.     4,082     $ 441,754  

Amicus Therapeutics, Inc. (a)

     12,482       123,322  

Arcturus Therapeutics Holdings, Inc. (a)(b)

     9,768       403,418  

Concert Pharmaceuticals, Inc. (a)

     31,327       156,322  

DermTech, Inc. (a)(b)

     5,301       269,238  

Esperion Therapeutics, Inc. (a)(b)

     13,579       380,891  

Fate Therapeutics, Inc. (a)

     2,263       186,584  

ImmunityBio, Inc. (a)(b)

     4,248       100,848  

Invitae Corp. (a)(b)

     55       2,102  

Moderna, Inc. (a)

     30,473       3,990,439  

Myriad Genetics, Inc. (a)

     9,405       286,382  

Novavax, Inc. (a)(b)

     1,051       190,557  

Ocugen, Inc. (a)(b)

     172,751       1,172,979  

Sorrento Therapeutics, Inc. (a)

     1,092       9,031  

Syros Pharmaceuticals, Inc. (a)(b)

     22,267       166,557  
Total Biotechnology             7,880,424  
Building Products - 0.2%                
Fortune Brands Home & Security, Inc.     2,581       247,311  
Capital Markets - 0.8%                
B Riley Financial, Inc.     4,466       251,793  
BlackRock, Inc.     948       714,754  
Houlihan Lokey, Inc.     96       6,385  
Morgan Stanley     4,027       312,737  
Total Capital Markets             1,285,669  
Chemicals - 2.8%                
DuPont de Nemours, Inc.     6,572       507,884  
Mosaic Co.     123,927       3,917,333  
Total Chemicals             4,425,217  
Communications Equipment - 0.5%                

CommScope Holding Co., Inc. (a)

     47,165       724,454  
Construction & Engineering - 0.1%                

Great Lakes Dredge & Dock Corp. (a)

     6,037       88,019  
Distributors - 0.8%                

LKQ Corp. (a)

     30,285       1,281,964  
Diversified Consumer Services - 0.2%                

Chegg, Inc. (a)(b)

     4,221       361,571  
Diversified Financial Services - 1.0%                

Berkshire Hathaway, Inc. - Class B (a)

     6,365       1,626,067  
Diversified Telecommunication Services - 0.3%                
Verizon Communications, Inc.     8,084       470,085  
Electrical Equipment - 0.4%                

Plug Power, Inc. (a)(b)

     16,623       595,768  
Electronic Equipment, Instruments & Components - 0.5%                
Belden, Inc.     5,556       246,520  

MicroVision, Inc. (a)(b)

     29,136       540,473  
Total Electronic Equipment, Instruments & Components             786,993  

 

The accompanying notes are an integral part of these financial statements.

 

8 

 

AI Powered Equity ETF

 

Schedule of Investments            
March 31, 2021 (Unaudited) (Continued)            
             
    Shares     Value  
Energy Equipment & Services - 0.6%                

ChampionX Corp. (a)

     42,454     $ 922,525  

U.S. Well Services, Inc. (a)

     1,874       1,949  
Total Energy Equipment & Services             924,474  
Entertainment - 3.4%                

Glu Mobile, Inc. (a)

     77       961  

Roku, Inc. (a)

     9,373       3,053,441  

Take-Two Interactive Software, Inc. (a)

     940       166,098  

Walt Disney Co. (a)

     7,759       1,431,691  

Zynga, Inc. - Class A (a)

     59,951       612,100  
Total Entertainment             5,264,291  
Food & Staples Retailing - 1.3%                
Andersons, Inc.     13,440       367,987  
Costco Wholesale Corp.     1,257       443,068  
Walmart, Inc.     8,998       1,222,199  
Total Food & Staples Retailing             2,033,254  
Food Products - 1.0%                

Beyond Meat, Inc. (a)(b)

     6,617       861,004  

Darling Ingredients, Inc. (a)

     8,934       657,364  
Total Food Products             1,518,368  
Health Care Equipment & Supplies - 2.4%                

Asensus Surgical, Inc. (a)(b)

     268,841       873,733  

Meridian Bioscience, Inc. (a)(b)

     35,099       921,349  

SmileDirectClub, Inc. (a)

     116,526       1,201,383  
Zimmer Biomet Holdings, Inc.     4,911       786,153  
Total Health Care Equipment & Supplies             3,782,618  
Health Care Providers & Services - 1.9%                
Cigna Corp.     6,755       1,632,954  

Molina Healthcare, Inc. (a)

     5,987       1,399,521  
Total Health Care Providers & Services             3,032,475  
Health Care Technology - 0.8%                

Teladoc Health, Inc. (a)(b)

     6,760       1,228,630  
Hotels, Restaurants & Leisure - 1.5%                

Denny’s Corp. (a)

     24,950       451,845  

DraftKings, Inc. - Class A (a)

     31,336       1,921,836  
Total Hotels, Restaurants & Leisure             2,373,681  

Household Durables - 0.0% (e)

                
PulteGroup, Inc.     78       4,090  
Household Products - 0.7%                
Clorox Co.     5,314       1,024,964  
Insurance - 0.4%                
First American Financial Corp.     8,098       458,752  
ProAssurance Corp.     5,765       154,271  
Total Insurance             613,023  
Interactive Media & Services - 4.5%                

Alphabet, Inc. - Class A (a)

     2,196       4,529,294  

Pinterest, Inc. - Class A (a)

     15,447       1,143,541  

Twitter, Inc. (a)

     21,482       1,366,900  
Total Interactive Media & Services             7,039,735  

 

The accompanying notes are an integral part of these financial statements.

 

9 

 

AI Powered Equity ETF

 

Schedule of Investments            
March 31, 2021 (Unaudited) (Continued)            
             
    Shares     Value  
Internet & Direct Marketing Retail - 3.2%                

Amazon.com, Inc. (a)

     349     $ 1,079,834  

Etsy, Inc. (a)

     13,874       2,797,970  

Magnite, Inc. (a)

     17,917       745,526  

Stitch Fix, Inc. - Class A (a)

     8,102       401,373  
Total Internet & Direct Marketing Retail             5,024,703  
IT Services - 4.8%                
Alliance Data Systems Corp.     17,623       1,975,362  

Conduent, Inc. (a)

     57,097       380,266  

Exela Technologies, Inc. (a)

     1,674       3,649  

International Money Express, Inc. (a)

     11,190       167,962  

Marathon Digital Holdings, Inc. (a)(b)

     24,867       1,194,113  

MongoDB, Inc. (a)

     1,020       272,779  

Sabre Corp. (a)

     87,381       1,294,113  

Square, Inc. - Class A (a)

     9,347       2,122,236  
Total IT Services             7,410,480  
Life Sciences Tools & Services - 3.0%                
Bio-Techne Corp.     3,821       1,459,355  

Charles River Laboratories International, Inc. (a)

     3,547       1,028,027  

Pacific Biosciences of California, Inc. (a)

     38,656       1,287,631  

Personalis, Inc. (a)

     12,995       319,807  

Syneos Health, Inc. (a)

     6,586       499,548  
Total Life Sciences Tools & Services             4,594,368  
Machinery - 0.6%                
Caterpillar, Inc.     4,252       985,911  
Media - 1.2%                

iHeartMedia, Inc. - Class A (a)(b)

     20,702       375,741  
Nexstar Media Group, Inc. - Class A     10,368       1,455,979  
Total Media             1,831,720  
Metals & Mining - 0.3%                

Century Aluminum Co. (a)

     9,504       167,841  

Coeur Mining, Inc. (a)

     37,494       338,570  
Total Metals & Mining             506,411  
Multiline Retail - 0.3%                
Dollar General Corp.     2,205       446,777  
Oil and Gas Extraction - 0.7%                
OVINITIV, Inc.     46,924       1,117,730  
Oil, Gas & Consumable Fuels - 3.4%                
Antero Midstream Corp.     53,185       480,261  

Cimarex Energy Co. (b)

     35,110       2,085,183  
Diamondback Energy, Inc.     18,986       1,395,281  
Exxon Mobil Corp.     24,198       1,350,974  
Total Oil, Gas & Consumable Fuels             5,311,699  
Paper & Forest Products - 0.5%                
Louisiana-Pacific Corp.     13,889       770,284  

Personal Products - 0.0% (e)

                

Coty, Inc. - Class A (a)

     216       1,946  

 

The accompanying notes are an integral part of these financial statements.

 

10 

 

AI Powered Equity ETF

 

Schedule of Investments            
March 31, 2021 (Unaudited) (Continued)            
             
    Shares     Value  
Pharmaceuticals - 5.6%                

Adamis Pharmaceuticals Corp. (a)

     6,216     $ 5,843  
Bristol-Myers Squibb Co.     27,713       1,749,522  

Cassava Sciences, Inc. (a)(b)

     20,360       915,182  

Catalent, Inc. (a)

     6,527       687,358  

cbdMD, Inc. (a)(b)

     34,200       141,588  
Johnson & Johnson     6,962       1,144,205  

Ocular Therapeutix, Inc. (a)

     74,388       1,220,707  
Pfizer, Inc.     51,682       1,872,438  

Revance Therapeutics, Inc. (a)

     33,930       948,344  

Xeris Pharmaceuticals, Inc. (a)

     5,428       24,480  
Total Pharmaceuticals             8,709,667  
Professional Services - 0.1%                

CoStar Group, Inc. (a)

     240       197,254  
Real Estate Investment Trusts (REITs) - 3.1%                
Healthpeak Properties, Inc.     54,990       1,745,383  
Host Hotels & Resorts, Inc.     100,641       1,695,801  
STAG Industrial, Inc.     6,023       202,433  

Vornado Realty Trust (b)

     24,872       1,128,940  
Total Real Estate Investment Trusts (REITs)             4,772,557  
Real Estate Management & Development - 0.9%                

Redfin Corp. (a)(b)

     19,789       1,317,750  
Road & Rail - 1.3%                
Marten Transport, Ltd.     13,735       233,083  

Uber Technologies, Inc. (a)

     33,017       1,799,757  
Total Road & Rail             2,032,840  
Semiconductors & Semiconductor Equipment - 12.2%                

Advanced Micro Devices, Inc. (a)(b)

     35,997       2,825,765  
Applied Materials, Inc.     60,720       8,112,191  

Enphase Energy, Inc. (a)

     2,361       382,860  
Intel Corp.     59,504       3,808,256  

MACOM Technology Solutions Holdings, Inc. (a)(b)

     5,946       344,987  
Microchip Technology, Inc.     8       1,242  
NVIDIA Corp.     2,154       1,150,085  

Rambus, Inc. (a)

     13,228       257,152  
Skyworks Solutions, Inc.     3,934       721,810  

SolarEdge Technologies, Inc. (a)(b)

     1,093       314,172  

SunPower Corp. (a)(b)

     31,796       1,063,576  
Total Semiconductors & Semiconductor Equipment             18,982,096  
Software - 3.4%                

Cloudera, Inc. (a)(b)

     44,040       535,967  

Crowdstrike Holdings, Inc. - Class A (a)

     4,055       740,078  

DocuSign, Inc. (a)

     4,575       926,209  

Dropbox, Inc. - Class A (a)(b)

     39,464       1,052,110  
Microsoft Corp.     1,823       429,809  

Zoom Video Communications, Inc. - Class A (a)

     2,875       923,709  

Zscaler, Inc. (a)

     3,823       656,294  
Total Software             5,264,176  

 

The accompanying notes are an integral part of these financial statements.

 

11 

 

AI Powered Equity ETF

 

Schedule of Investments            
March 31, 2021 (Unaudited) (Continued)            
             
    Shares     Value  
Specialty Retail - 3.6%                
American Eagle Outfitters, Inc. (b)     30,420     $ 889,481  
Dick’s Sporting Goods, Inc. (b)     6,558       499,392  
GrowGeneration Corp. (a)(b)     12,935       642,740  
Michaels Cos., Inc. (a)     56,601       1,241,827  
O’Reilly Automotive, Inc. (a)     1,708       866,383  
RH (a)(b)     804       479,666  
Tractor Supply Co.     5,775       1,022,637  
Total Specialty Retail             5,642,126  
Technology Hardware, Storage & Peripherals - 3.9%                
3D Systems Corp. (a)(b)     25,942       711,848  
Apple, Inc.     31,759       3,879,362  
Dell Technologies, Inc. - Class C (a)     16,481       1,452,800  
Immersion Corp. (a)     8,624       82,618  
Total Technology Hardware, Storage & Peripherals             6,126,628  
Thrifts & Mortgage Finance - 1.1%                
PennyMac Financial Services, Inc.     25,778       1,723,775  
Total United States             150,107,802  
TOTAL COMMON STOCKS (Cost $133,497,620)             153,489,637  
                 
RIGHTS - 0.0% (e)                
United States - 0.0% (e)                
NewStar Financial, Inc. (c)     115,783       —  
TOTAL RIGHTS (Cost $0)                
                 
INVESTMENTS PURCHASED WITH PROCEEDS FROM                
SECURITIES LENDING COLLATERAL - 15.9%                
Mount Vernon Liquid Assets Portfolio, LLC, 0.11% (d)     24,665,927       24,665,927  
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS                
FROM SECURITIES LENDING COLATTERAL                
(Cost $24,665,927)             24,665,927  
                 
SHORT-TERM INVESTMENTS - 0.8%                
Money Market Funds - 0.8%                
Invesco Advisers, Inc. STIT - Treasury Portfolio -                
Institutional Class, 0.01% (d)     1,251,311       1,251,311  
TOTAL SHORT-TERM INVESTMENTS (Cost $1,251,311)             1,251,311  
                 
Total Investments (Cost $159,414,858) - 115.3%             179,406,875  
Liabilities in Excess of Other Assets - (15.3)%             (23,755,047 )
TOTAL NET ASSETS - 100.0%           $ 155,651,828  

 

Percentages are stated as a percent of net assets.

 

PLC Public Limited Company

 


 (a) Non-income producing security.

(b) All or a portion of this security is out on loan as of March 31, 2021.

(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.

 

The accompanying notes are an integral part of these financial statements.

 

12 

 

AI Powered Equity ETF

 

Schedule of Investments

March 31, 2021 (Unaudited) (Continued)

 

 

(d)          The rate quoted is the annualized seven-day yield at March 31, 2021.

(e)           Amount is less than 0.05%.

 

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.

 

13 

 

AI Powered Equity ETF

 

STATEMENT OF ASSETS AND LIABILITIES

As of March 31, 2021 (Unaudited)

 

    AI Powered  
    Equity ETF  
ASSETS        
Investments in securities, at value*   $ 179,406,875  
Foreign Currency*     4,345  
Receivables:        
Dividends and interest receivable     37,009  
Securities lending income receivable     5,724  
Receivable for investments sold     3,695,103  
Total Assets     183,149,056  
         
LIABILITIES        
Collateral received for securities loaned (Note 7)     24,665,927  
Payables:        
Payable for investments purchased     2,732,095  
Unitary fees payable     99,206  
Total Liabilities     27,497,228  
Net Assets   $ 155,651,828  
         
NET ASSETS CONSIST OF:        
Paid-in Capital   $ 130,178,853  
Total Distributable Earnings     25,472,975  
Net Assets   $ 155,651,828  
         
*Identified Cost:        
Investments in Securities   $ 159,414,858  
Foreign currency     4,345  
      159,419,203  
         
Shares Outstanding^     4,075,000  
Net Asset Value, Offering and Redemption Price per Share   $ 38.20  

^

   No par value, unlimited number of shares authorized

 

The accompanying notes are an integral part of these financial statements.

 

14 

 

AI Powered Equity ETF

 

STATEMENT OF OPERATIONS

For the Period Ended March 31, 2021 (Unaudited)

 

    AI Powered  
    Equity ETF  
INVESTMENT INCOME        
Income:        
Dividends from unaffiliated securities (net of foreign withholdings tax of $159)   $ 492,592  
Interest     222  
Securities Lending Income     57,369  
Total Investment Income     550,183  
         
Expenses:        
Management fees     463,412  
Total Expenses     463,412  
Net Investment Income     86,771  
         
REALIZED & UNREALIZED GAIN ON INVESTMENTS        
Net Realized Gain on:        
Investments     15,628,640  
In-Kind Redemptions     1,857,527  
Net Realized Gain on Investments and In-Kind Redemptions     17,486,167  
Net Change in Unrealized Appreciation of:        
Investments     4,636,925  
Net Change in Unrealized Appreciation of Investments     4,636,925  
Net Realized and Unrealized Gain on Investments     22,123,092  
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS     22,209,863  

 

The accompanying notes are an integral part of these financial statements.

 

15 

 

AI Powered Equity ETF

 

STATEMENTS OF CHANGES IN NET ASSETS 

 

 

 

Period Ended
March 31,
2021
(Unaudited)

 

Year Ended
September 30,
2020

 

OPERATIONS

 

 

 

 

 

 

 

Net investment income

 

$

86,771

 

$

 489,250

 

Net realized gain on investments and in-kind redemptions

 

 

17,486,167

 

 

1,987,116

 

Net change in unrealized appreciation of investments

 

 

4,636,925

 

 

12,344,307

 

Net increase in net assets resulting from operations

 

 

22,209,863

 

 

14,820,673

 

 

 

 

 

 

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

 

 

 

 

 

 

Total distributions from distributable earnings

 

 

(145,000

)

 

(446,750

)

 

 

 

 

 

 

 

 

CAPITAL SHARE TRANSACTIONS

 

 

 

 

 

 

 

Net increase (decrease) in net assets derived from net change in

 

 

 

 

 

 

 

outstanding shares

 

 

40,653,790

 

 

(36,014,002

)

Net increase (decrease) in net assets

 

 

62,718,653

 

 

(21,640,079

)

 

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

 

 

Beginning of Year/Period

 

 

92,933,175

 

 

114,573,254

 

End of Year/Period

 

$

155,651,828

 

$

92,933,175

 

 

Summary of share transactions is as follows:

 

 

Period Ended

March 31, 2021

(Unaudited)

 

Year Ended

September 30, 2020

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

Shares Sold

 

1,200,000

 

$

 46,302,838

 

 

175,000

 

$

 5,278,763

 

Shares Redeemed

 

(150,000

)

 

(5,649,048

)

 

(1,525,000

)

 

(41,292,765

)

Net Transactions in Fund Shares

 

1,050,000

 

$

40,653,790

 

 

(1,350,000

)

$

(36,014,002

)

Beginning Shares

 

3,025,000

 

 

 

 

 

4,375,000

 

 

 

 

Ending Shares

 

4,075,000

 

 

 

 

 

3,025,000

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

16 

 

AI Powered Equity ETF

 

FINANCIAL HIGHLIGHTS

For a capital share outstanding throughout the year/period

 

  Period Ended
March 31,
2021		     Year Ended
September 30,		     Year Ended
September 30,		     Period Ended
September 30,		  
  (Unaudited)     2020     2019     20181  
Net Asset Value, Beginning of Year/Period $ 30.72   $ 26.19   $ 29.50   $ 25.00  
Income from Investment Operations:                        
Net investment income2   0.03     0.14     0.16     0.14  
Net realized and unrealized gain (loss) on Investments   7.49     4.52     (1.41 )   4.49  
Total from investment operations   7.52     4.66     (1.25 )   4.63  
Less Distributions:                        
Distributions from net investment income   (0.04 )   (0.13 )   (0.17 )   (0.12 )
Net realized gains   —     —     (1.89 )   (0.01 )
Total distributions   (0.04 )   (0.13 )   (2.06 )   (0.13 )
Net asset value, end of year/period $ 38.20   $ 30.72   $ 26.19   $ 29.50  
Total Return   24.47 %3   17.94 %   -2.32 %   18.53 %3
                         
Ratios/Supplemental Data:                        
Net Assets at end of year/period (000’s) $ 155,652   $ 92,933   $ 114,573   $ 206,472  
                         
Expenses to Average Net Assets   0.75 %4   0.75 %   0.75 %   0.75 %4
Net Investment Income to Average Net Assets   0.14 %4   0.49 %   0.64 %   0.52 %4
Portfolio Turnover Rate   173 %3   239 %   129 %   260 %3

 

1

     Commencement of operations on October 17, 2017. 

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.

 

17 

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS
 March 31, 2021 (Unaudited)

 

 

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 Participant”). 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.

 

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.

 

18 

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 March 31, 2021, 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.

 

19 

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

The following table presents a summary of the Fund’s investments in securities, at fair value, as of March 31, 2021:

 

AI Powered Equity ETF

 

Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 153,489,637     $ —     $ —     $ 153,489,637  
Rights     —       —       — (1)     —  
Short Term Investments     1,251,311       —       —       1,251,311  
Investments Purchased with Securities Lending Collateral*     —       —       —       24,665,927  
Total Investments in Securities   $ 154,740,948     $ —     $ —     $ 179,406,875  

 

(1) Includes a security valued at $0.

 

The AI Powered Equity ETF held a Level 3 security at the end of the period. 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.

 

 

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 March 31, 2021, 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.

 

20 

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 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.

 

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 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 NAV 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 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.

 

21 

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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.

 

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.

 

Real Estate Investment Trust (“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.

 

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 Fund and its 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 Fund may have difficulty achieving its investment objective 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 Fund’s 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 Fund’s investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the ability of the Fund 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 the Fund’s performance, resulting in losses to the Fund.

 

22 

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

NOTE 4 – MANAGEMENT AND OTHER CONTRACTS

 

ETF Managers Group, LLC (the “Adviser”), serves as the investment Adviser to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Adviser, the Adviser 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 Adviser 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 Adviser 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 Adviser at an annual rate of 0.75% of the Fund’s average daily net assets. Under the Investment Advisory Agreement, the Adviser has agreed to pay all expenses of the Fund, 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”). The Adviser has entered into an Agreement with its affiliate, ETFMG Financial LLC, to serve as distributor the Fund (the “Distributor”). The Distributor provides marketing support for the Fund, including distributing marketing materials related to the Fund.

 

EquBot, LLC serves as the sub-adviser to the Fund (the “Sub-Adviser”) and provides investment advice using the EquBot Model to the Adviser and the Fund. The Adviser 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.

 

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 Adviser compensates the Administrator for these services under an administration agreement between the two entities.

 

The Adviser pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Adviser for all reasonable out-of-pocket expenses incurred in connection with their duties as Trustee, including travel and related expenses incurred in attending Board meetings.

 

23 

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

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 the Fund’s daily average net assets. For the period ended March 31, 2021, 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 period ended March 31, 2021:

 

    Purchases     Sales  
AI Powered Equity ETF   $ 203,964,843     $ 202,907,140  

 

The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the period ended March 31, 2021:

 

    Purchases
In-Kind		     Sales
In-Kind		  
AI Powered Equity ETF   $ 43,632,299     $ 5,340,347  

 

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 period ended March 31, 2021.

 

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 the Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Adviser; however, 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 the 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 adviser. 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.

 

24 

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (Continued)

 

 

As of March 31, 2021, 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*  
AI Powered Equity ETF   $ 24,893,077     $ 24,665,927  

 

* The cash collateral received was invested in the Mount Vernon Liquid Assets Portfolio, LLC, 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, the Fund’s most recent fiscal year end, were as follows:

 

                      Net  
          Gross     Gross     Unrealized  
          Unrealized     Unrealized     Appreciation  
    Cost     Appreciation     Depreciation     (Depreciation)  
AI Powered Equity ETF   $ 105,545,338     $ 17,056,648     $ (2,686,628 )   $ 14,370,020  
                                 

 

    Undistributed   Undistributed     Total     Other     Total  
    Ordinary     Long-Term     Distributable     Accumulated     Accumulated  
    Income     Gain     Earnings     (Loss)     Gain  
 AI Powered Equity ETF    $ 62,712     $ —     $ 62,712     $ (11,024,620 )   $ 3,408,112  

 

As of September 30, 2020, the Fund’s most recent fiscal year end, the Fund had accumulated capital loss carryovers of:

 

    Capital Loss     Capital Loss        
    Carryover ST     Carryover LT     Expires  
AI Powered Equity ETF   $ (9,794,433 )   $ (1,230,206 )  

Indefinite

  

 

25 

 

AI Powered Equity ETF

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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 Fund 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, the Fund’s most recent fiscal year end, as follows:

 

 

Late Year Ordinary Loss

 

Post-October Capital Loss

AI Powered Equity ETF

None

 

None

 

The tax character of distributions paid by the Fund during the fiscal periods ended March 31, 2021 and September 30, 2020 are as follows:

 

   

Period Ended

March 31. 2021

    

Year Ended

September 30, 2020

  
   

From

Ordinary

Income

    

From

Capital

Gains

    

From

Ordinary

Income

    

From

Capital

Gains

  
AI Powered Equity ETF   $ 145,000     $ —     $ 446.750     $ —  

 

NOTE 9 – 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 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 transaction is expected to close prior to July 31, 2021. 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.

 

26 

 

AI Powered Equity ETF

NOTES TO FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) (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. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements.

 

27 

 

AI Powered Equity ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited)

 

 

Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on March 30, 2021, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the renewal of the following agreements:

 

 

●

an Amended and Restated Investment Advisory Agreement between ETF Managers Group, LLC (the “Adviser”) and the Trust, on behalf of AI Powered Equity ETF (the “Fund”) (the “Advisory Agreement”); and

 

 

●

a Sub-Advisory Agreement between the Adviser and Equbot LLC (the “Sub-Adviser”) with respect to the Fund (the “Sub-Advisory Agreement” and, together with the Advisory Agreement, the “Agreements”).

 

Pursuant to Section 15(c) of the 1940 Act, the Board must annually review and approve the Agreements after their initial two-year term: (i) by the vote of the Trustees or by a vote of the shareholders of the Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Agreements 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. Each year, the Board calls and holds a meeting to decide whether to renew the Agreements for an additional one-year term. In preparation for such meeting, the Board requests and reviews a wide variety of information from the Adviser and Sub-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 provided to the Fund’s shareholders by the Adviser and Sub-Adviser; (ii) the investment performance of the Fund; (iii) the Adviser’s costs and profits realized in providing services to the Fund, including any fall-out benefits enjoyed by the Adviser; (iv) comparative fee and expense data for the Fund in relation to other similar investment companies; (v) the extent to which economies of scale would be realized as the Fund grows and whether the advisory fees for the Fund reflects these economies of scale for the benefit of the Fund; and (vi) other financial benefits to the Adviser or Sub-Adviser and their affiliates resulting from services 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 March 30, 2021, and throughout the year. Among other things, each of the Adviser and Sub-Adviser provided responses to a detailed series of questions, which included information about the Adviser’s and Sub-Adviser’s operations, service offerings, personnel, compliance program and financial condition. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentations and any other information that the Board received at the meeting, and deliberated on the renewal of the Agreements 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 renewal of the Agreements, and the weight to be given to each such factor. The conclusions reached with respect to the Agreements 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 Independent Trustees conferred amongst themselves and independent legal counsel during a telephonic contract renewal meeting held prior to the March 30, 2021 meeting and also conferred in executive sessions both with and without representatives of management before and during the March 30th meeting. The Independent Trustees requested, received and considered additional information arising out of these executive sessions.

 

28 

 

 AI Powered Equity ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

Nature, Extent and Quality of Services Provided by the Adviser

The Trustees considered the scope of services provided under the Advisory Agreement, noting that the Adviser provides investment management services to the Fund. The Board discussed the responsibilities of the Adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Fund, based on recommendations provided by the Sub-Adviser; determining the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; responsibility for daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Fund. 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 and the quality of the Adviser’s compliance and risk assessment infrastructure. The Board also considered the Adviser’s experience managing exchange-traded funds (“ETFs”), as well as the Adviser’s response to the market volatility and uncertainty during the recent pandemic.

 

The Board also considered other services provided to the Fund, such as overseeing the activities of the Sub-Adviser, as well as the Fund’s other service providers, monitoring adherence to the Fund’s investment restrictions, and monitoring compliance with various policies and procedures and with applicable securities laws.

 

The Board then considered the scope of services provided under the Sub-Advisory Agreement, noting that the Sub-Adviser provides investment sub-advisory services to the Adviser in the form of recommendations based on the Sub-Adviser’s algorithm-based model. The Board noted that the responsibility for trading the Fund’s portfolio securities would continue to rest with the Adviser. In considering the nature, extent and quality of the services provided by the Sub-Adviser, the Board noted that it had received a copy of the Sub-Adviser’s Form ADV, as well as the response of the Sub-Adviser to a detailed series of questions which included, among other things, information about the background and experience of the Sub-Adviser’s personnel. The Board considered the experience of the Sub-Adviser’s personnel in the financial services and artificial intelligence businesses. The Board also considered the quality of the Sub-Adviser’s compliance program and Code of Ethics.

 

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 provided to the Fund by the Adviser and Sub-Adviser.

 

Historical Performance

The Board then considered the Fund’s performance history over various time periods ending January 31, 2021, including the most recent one-year period and the period since the Fund’s inception. The Board noted that the Fund underperformed the median of its peer group for the period since the Fund’s inception and outperformed for the one-year period. The Board considered management’s discussion of AIEQ’s performance, noting that, over time, the model powered by artificial intelligence employed in the management of the Fund becomes more refined, which was reflected in the Fund’s more recent performance. The Board further noted that it had received and would continue to receive regular reports regarding the Fund’s performance at its quarterly meetings.

 

Cost of Services Provided, Profits and Economies of Scale

The Board reviewed the advisory fee for the Fund and compared it to the total operating expenses of comparable ETFs, as determined by an independent third party. The Board noted that the expense ratio for the Fund was higher than the average and median expense ratios of its peer ETFs. The Board considered the unique technology and processes required to manage this active fund.

 

29 

 

AI Powered Equity ETF

 

APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS

For the Period Ended March 31, 2021 (Unaudited) (Continued)

 

 

The Board noted the importance of the fact that the advisory fee for the Fund is a “unified fee,” meaning that the shareholders of the Fund pay no expenses other than the advisory fee and certain other costs such as 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, 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 Board also noted that the Adviser was responsible for compensating the Trust’s other service providers (including the Sub-Adviser) and paying the Fund’s other expenses (except as noted above) out of its own fees and resources. The Board concluded that the advisory fee for the Fund is reasonable in light of the factors considered.

 

The Board also evaluated the compensation and other benefits received by the Adviser from its relationship with the Fund, taking into account profitability information provided by the Adviser. The Board received and reviewed profitability information with respect to the Fund and considered how profit margins could affect the Adviser’s long-term viability and ability to attract and retain high-quality personnel. The Board also considered the impact on the Adviser’s profitability of payments made to partners involved with the Fund. Based on the information provided to the Trustees, the Trustees concluded that the net revenue retained by the Adviser from providing services to the Fund was not excessive in view of the nature, extent and quality of services provided to the Fund. The Board further considered other benefits derived by the Adviser and its affiliates from the Adviser’s relationship with the Fund.

 

In addition, the Board considered whether economies of scale may be realized for the Fund. The Board noted that the Adviser regularly considers whether fee reductions are appropriate as the Fund grows in size. The Board noted that a unitary fee provides a level of certainty in expenses for the Fund and effectively acts as a cap on the fees and expenses (except as noted above) that are borne by the Fund. The Board also took into account the significant investments that the Adviser has made in its business to help ensure the continued provision of high-quality services to the Funds, such as the hiring of new trading, legal and compliance personnel, and enhancements to technology and related systems. The Board concluded that no changes to the advisory fee structure of the Fund were necessary.

 

The Board also reviewed the sub-advisory fee paid to the Sub-Adviser for its services to the Fund under the Sub-Advisory Agreement. The Board considered this fee in light of the services the Sub-Adviser provides as investment sub-adviser to the Fund. The Board determined that the fee reflected an appropriate allocation of the advisory fee paid to the Adviser and Sub-Adviser given the work performed by each firm.

 

The Board also considered that the sub-advisory fee paid to the Sub-Adviser is paid out of the Adviser’s unified fee and represents an arm’s-length negotiation between the Adviser and the Sub-Adviser. For these reasons, the Trustees determined that the profitability to the Sub-Adviser from its relationship with the Fund was not a material factor in their deliberations with respect to consideration of approval of the Sub-Advisory Agreement. The Board concluded that the proposed sub-advisory fee was reasonable in light of the services rendered. The Board considered that, because the proposed sub-advisory fee would be paid by the Adviser out of its unified fee, any economies of scale would not benefit shareholders and, thus, were not relevant for the consideration of the approval of the sub-advisory fee.

 

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 Agreements are fair and reasonable; (b) concluded that the Adviser’s and Sub-Adviser’s fee is reasonable in light of the services that the Adviser and Sub-Adviser each provide to the Fund; and (c) approved the renewal of the Agreements for another year.

 

30 

 

AI Powered Equity ETF

Expense Example

Period Ended March 31, 2021 (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 period and held for the entire period (October 1, 2020 to March 31, 2021).

 

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

October 1, 2020

    

Ending

Account Value

March 31, 2021

    

Expenses Paid

During the

Period^

    

Annualized

Expense Ratio

During Period

October 1,

2020 to

March 31,

2021

  
Actual   $ 1,000.00     $ 1,244.70     $ 4.20       0.75 %
                                 
Hypothetical (5% annual)   $ 1,000.00     $ 1,021.19     $ 3.78       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 182/365 (to reflect the period from October 1, 2020 to March 31, 2021).

 

31 

 

AI Powered Equity ETF 

 

Statement Regarding Liquidity Risk Management Program (Unaudited)

 

 

ETF Managers Trust (the “Trust”) has adopted a liquidity risk management program (the “Program”). The Trust’s Board of Trustees (the “Board”) has designated ETF Managers Group LLC (the “Program Administrator”) as the administrator of the Program. The Program Administrator has designated a committee (the “Committee”), composed of personnel from multiple departments, including investment operations and compliance, that is responsible for the implementation and ongoing administration of the Program, which includes assessing the liquidity risk of the AI Powered Equity ETF (the “Fund”) under both normal and reasonably foreseeable stressed conditions.

 

Under the Program, the Program Administrator assesses, manages and periodically reviews the Fund’s liquidity risk, based on factors specific to the circumstances of the Fund. Liquidity risk is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments and limiting the amount of the Fund’s illiquid investments, among other means. The Program Administrator’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.

 

At a meeting of the Board on March 30, 2021, the Adviser provided a written report to the Board addressing the operation, and the adequacy and effectiveness of the implementation, of the Program, including, the operation of any Highly Liquid Investment Minimum, where applicable, and any material changes to the Program, for the initial period from February 29, 2020 through March 30, 2021 (the “Reporting Period”). No significant liquidity events impacting the Fund were noted in the report and it was represented that, as of March 30, 2021, the Fund was primarily highly liquid and, during the Reporting Period, the Fund held less than 15% in illiquid securities. In addition, the Program Administrator provided its assessment that Program implementation was effective and that the Program operated adequately and effectively to enable the Program Administrator to oversee and manage liquidity risk and ensure the Fund is able to meet requests to redeem shares without significant dilution to the remaining investors’ interest in the Fund.

 

There can be no assurance that the Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

 

32 

 

AI Powered Equity ETF

SUPPLEMENTARY INFORMATION

March 31, 2021 (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.aieqetf.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

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), the Fund’s website (www.aieqetf.com) and is available by calling (877) 756-7873. The Fund’s portfolio holdings are posted on its website at www.aieqetf.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.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.

 

33 

 

AI Powered Equity ETF


Board of Trustees (Unaudited)

 

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).

 

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

Interested Trustee and Officers

Samuel Masucci, III (1962)

Trustee, Chairman of the Board and President (since 2012); Secretary (since 2014)

Chief Executive Officer, Exchange Traded Managers Group LLC (since 2013); Chief Executive Officer, ETF Managers Group LLC (since 2016); Chief Executive Officer, ETF Managers Capital LLC (commodity pool operator) (since 2014); Chief Executive Officer (2012-2016) and Chief Compliance Officer (2012-2014), Factor Advisors, LLC (investment adviser); President and Chief Executive Officer, Factor Capital Management LLC (2012-2014)
(commodity pool operator).

11

None

John A. Flanagan, (1946)

Treasurer (since 2015)

President, John A. Flanagan CPA, LLC (accounting services) (since 2010); Treasurer, ETF Managers Trust (since 2015); Chief Financial Officer, ETF Managers Capital, LLC (commodity pool operator) (since 2015).

n/a

n/a

Reshma A.

Tanczos (1978)

Chief Compliance Officer (since 2016)

Chief Compliance Officer of ETFMG Financial LLC (since 2017); Chief Compliance Officer, ETF Managers Group LLC (since 2016); Chief Compliance Officer, ETF Managers Capital LLC (since 2016); Partner, Crow & Cushing (law firm)

(2007-2016).

n/a

n/a

 

* Mr. Masucci is an interested Trustee by virtue of his role as the Chief Executive Officer of the Adviser.

 

34 

 

AI Powered Equity ETF


Board of Trustees (Unaudited) (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

Matthew J. Bromberg (1973)

Assistant Secretary (since 2020)

General Counsel and Secretary of Exchange Traded Managers Group LLC (since 2020);

ETF Managers Group LLC (since 2020); ETFMG Financial LLC (since 2020); ETF Managers Capital LLC (since 2020); Partner of Dorsey & Whitney LLP (law firm) (2019-2020); General Counsel of WBI Investments, Inc. (2016-2019); Millington Securities, Inc. (2016-2019); and Partner of Reed Smith (law firm) (2015-2016).

n/a

n/a

Independent Trustees

Terry Loebs (1963)

Trustee (since 2014); Lead Independent Trustee (since 2020)

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 Wiegel (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

 

35 

 

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
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

 

 

 


      (b) 
Not applicable.

Item 2. Code of Ethics.

Not applicable for semi-annual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semi-annual reports.

Item 4. Principal Accountant Fees and Services.

Not applicable for semi-annual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semi-annual reports.

Item 6. Investments.

a)
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
b)
Not Applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to open-end investment companies.


Item 9. Purchases of Equity Securities by Closed‑End Management Investment Company and Affiliated Purchasers.

Not applicable to open-end investment companies.


Item 10. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 11. Controls and Procedures.

(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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies

Not applicable to open-end investment companies.

Item 13. Exhibits.

(a)
(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Incorporated by reference to previous Form N-CSR filing.

(2) A separate certification for each principal executive and Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c‑1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.  Not applicable to open-end investment companies.

(4) Change in the registrant's independent public accountant. There was no change in the registrant's independent public accountant for the period covered by this report.

(b)
Certifications pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.  Furnished herewith.
SIGNATURES

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


(Registrant)  ETF Managers Trust                                                          


By (Signature and Title)* /s/ Samuel Masucci III                                      
          Samuel Masucci III, Principal Executive Officer

Date  June 4, 2021                                                                                


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)* /s/ Samuel Masucci III                                     
          Samuel Masucci III, Principal Executive Officer

Date  June 4, 2021                                                                                 


By (Signature and Title)* /s/ John Flanagan                                              
John Flanagan, Principal Financial Officer/Treasurer

Date  June 4, 2021                                                                               


* Print the name and title of each signing officer under his or her signature.