N-CSR 1 etfmanagers_n-csr.htm ANNUAL CERTIFIED SHAREHOLDER 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, LLC
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, 2020

Date of reporting period: September 30, 2020


Item 1. Reports to Stockholders.

 

 

 

 

 

Annual

Report

 

September 30, 2020

 

AI Powered Equity ETF

Ticker: AIEQ

 

Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the Fund’s reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communications electronically.

 

You may elect to receive all future Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held with your financial intermediary.

 

 

 

 

 

The fund is a series of ETF Managers Trust.

 


 

AI Powered Equity ETF

 

TABLE OF CONTENTS  
September 30, 2020  
   
  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 13
   
Statement of Operations 14
   
Statements of Changes in Net Assets 15
   
Financial Highlights 16
   
Notes to the Financial Statements 17
   
Report of Independent Registered Public Accounting Firm 27
   
Expense Example 28
   
Supplementary Information 29
   
Information About Portfolio Holdings 29
   
Information About Proxy Voting 29
   
Trustees and Officers Table 30
   
Privacy Policy 32

 


 

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, 2019 to September 30, 2020. During this period, market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty regarding the long-term implications continues to exist. Such disruptions, along with various government orders and precautionary measures such as social distancing, business shutdowns and similar policies, led to a reduction in global economic activity. These policies have also resulted in periods of high market volatility which can adversely affect assets of the Fund and thus Fund performance. During the reporting period the COVID-19 pandemic contributed to approximately a five-fold increase in volatility for both the broad market (represented by the Chicago Board Options Exchange Volatility Index) as well as the technology sector (represented by the Chicago Board Options Exchange NDX Volatility Index).

 

The AI Powered Equity ETF is actively managed and seeks capital appreciation. Over the fiscal period, the total return for the Fund was 17.94%, while the total return for its benchmark, the S&P 500 Index, was 15.15%. The best performers in the Fund on the basis of contribution to return were Moderna, Amazon, and Livongo Health, while the worst performers were Martin Marietta Materials, Cimarex Energy, and Devon Energy.

 

During the reporting period, the Fund saw an average approximate allocation of 12% of its total assets to Software, 5% to Interactive Media & Services, 5% to Biotechnology and 5% to Semiconductors & Semiconductor Equipment.

 

AIEQ invests primarily in equity securities listed on a U.S. exchange, based on the results of a proprietary, quantitative model developed by EquBot LLC that runs on the Watson™ platform. Each day, the EquBot Model ranks each company based on the probability of the company benefiting from current economic conditions, trends, and world events and identifies approximately 30 to 150 companies with the greatest potential over the next twelve months for appreciation and weights those companies to seek a level of volatility comparable to that of the broader U.S. equity market. EquBot, the Fund’s sub-adviser, is a technology-based company focused on applying artificial intelligence (“AI”) based solutions to investment analyses.

 

You can find further details about AIEQ by visiting www.etfmg.com, or by calling 1-844-ETF-MGRS (1-844-383-6477).

 

Sincerely,

 

 

 

Samuel Masucci III

Chairman of the Board

 

2

 

AI Powered Equity ETF

Growth of $10,000 (Unaudited)


 

 

Average Annual Returns   1 Year     Since Inception     Value of $10,000  
Year Ended September 30, 2020     Return       (10/17/17)
    (9/30/2020)
AI Powered Equity ETF (NAV)     17.94%       11.12%     $ 13,654  
AI Powered Equity ETF (Market)     18.26%       10.95%     $ 13,593  
S&P 500 Index     15.15%       11.86%     $ 13,923  

 

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).

 

The chart illustrates the performance of a hypothetical $10,000 investment made on October 17, 2017, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The index returns do not reflect fees or expenses and are not available for direct investment.

 

3

 

AI Powered Equity ETF

 

 

Top Ten Holdings as of September 30, 2020 (Unaudited)*

 

         
    Security   % of Total
Investments
1   Amazon.com, Inc.   3.11%
2   Alphabet, Inc. - Class A 2.99%
3   Apple Inc.   2.79%
4   Advanced Micro Devices, Inc. 2.12%
5   Microsoft Corp.   1.89%
6   Tesla Inc.   1.76%
7   Teladoc Health, Inc. 1.76%
8   Livongo Health, Inc. 1.39%
9   Thermo Fisher Scientific, Inc. 1.31%
10   NVIDIA Corp.   1.28%

 

Top Ten Holdings = 20.40% of Total Investments

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

 

4

 

AI Powered Equity ETF

 

Important Disclosures and Key Risk Factors

 

Past performance is not indicative of future return. A fund’s performance for very short time periods may not be indicative of future performance.

 

AIEQ

 

The AI Powered Equity Technology ETF (the “Fund”) seeks long-term capital appreciation within risk constraints commensurate with broad market US equity indices.

 

Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The equity securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors that affect securities markets generally or factors affecting specific issuers, industries, or sectors in which the Fund invests such as political, market and economic developments, as well as events that impact specific issuers.

 

The Fund is actively-managed and may not meet its investment objective based on the success or failure of the Equbot Model to identify investment opportunities. Fund holdings are subject to change. For full holdings information, please visit www.etfmg.com.

 

The portfolio managers may actively and frequently trade securities or other instruments in the Fund’s portfolio to carry out its investment strategies. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.

 

Some of the models used by the Adviser for the Fund are predictive in nature. The use of predictive models has inherent risks. When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. For example, by relying on Models and Data, the Adviser may be induced to buy certain investments at prices that are too high, to sell certain other investments at prices that are too low, or to miss favorable opportunities altogether. Similarly, any hedging based on faulty Models and Data may prove to be unsuccessful.

 

Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.

 

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 September 30, 2020 (Unaudited)

 

 

    AI Powered
    Equity ETF
As a percent of Net Assets:        
Canada     0.2 %
United States     98.9  
Rights     0.0  
Short-Term and other Net Assets (Liabilities)     0.9  
      100.0 %

 

6

 

AI Powered Equity ETF

 

Schedule of Investments

September 30, 2020

 

 

    Shares     Value  
COMMON STOCKS - 99.1%                
Canada - 0.2%                
Commercial Services & Supplies - 0.2%                
Waste Connections, Inc.     1,521     $ 157,880  
                 
United States - 98.9%                
Air Freight & Logistics - 1.0%                
FedEx Corp.     3,863       971,622  
Auto Components - 0.1%                
BorgWarner, Inc. (a)     3,276       126,912  
Automobiles - 3.2%                
Ford Motor Co.     56,193       374,245  
General Motors Co.     15,765       466,486  
Tesla, Inc. (b)     4,917       2,109,443  
Total Automobiles             2,950,174  
Beverages - 1.1%                
Constellation Brands, Inc. - Class A     1,005       190,458  
Monster Beverage Corp. (b)     3,929       315,106  
PepsiCo, Inc.     4,036       559,389  
Total Beverages             1,064,953  
Biotechnology - 7.6%                
AbbVie, Inc.     3,177       278,273  
Aimmune Therapeutics, Inc. (b)     5,431       187,098  
Fate Therapeutics, Inc. (a)(b)     14,726       588,598  
Gilead Sciences, Inc.     17,355       1,096,662  
Inovio Pharmaceuticals, Inc. (a)(b)     13,167       152,737  
Invitae Corp. (a)(b)     15,110       655,019  
Moderna, Inc. (a)(b)     16,848       1,191,996  
Novavax, Inc. (a)(b)     11,233       1,217,096  
Sorrento Therapeutics, Inc. (a)(b)     91,537       1,020,638  
Syros Pharmaceuticals, Inc. (a)(b)     38,033       336,212  
Vertex Pharmaceuticals, Inc. (b)     1,557       423,691  
Total Biotechnology             7,148,020  
Building Products - 0.8%                
Masco Corp.     13,249       730,417  
Capital Markets - 1.7%                
BlackRock, Inc.     589       331,931  
CME Group, Inc.     1,018       170,322  
Intercontinental Exchange, Inc.     3,405       340,670  
MSCI, Inc.     1,663       593,325  
State Street Corp.     2,765       164,047  
Total Capital Markets             1,600,295  
Chemicals - 1.3%                
Air Products and Chemicals, Inc.     1,068       318,114  
Mosaic Co.     19,883       363,262  
Sherwin-Williams Co.     723       503,744  
Total Chemicals             1,185,120  
                 

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

 

7

 

AI Powered Equity ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
Commercial Services & Supplies - 2.5%                
Cintas Corp.     2,081     $ 692,619  
IAA, Inc. (b)     14,507       755,379  
Rollins, Inc. (a)     12,941       701,273  
Waste Management, Inc.     1,108       125,392  
Total Commercial Services & Supplies             2,274,663  
Communications Equipment - 0.1%                
Ciena Corp. (b)     1,921       76,244  
Consumer Finance - 0.4%                
Green Dot Corp. - Class A (a)(b)     6,547       331,344  
Diversified Financial Services - 1.0%                
Berkshire Hathaway, Inc. - Class B (b)     4,522       962,915  
Diversified Telecommunication Services - 0.3%                
Verizon Communications, Inc.     4,422       263,065  
Electronic Equipment, Instruments & Components - 0.1%                
Amphenol Corp. - Class A     1,212       131,223  
Entertainment - 4.0%                
Activision Blizzard, Inc.     7,408       599,678  
Netflix, Inc. (a)(b)     2,438       1,219,073  
Roku, Inc. (b)     6,777       1,279,498  
Take-Two Interactive Software, Inc. (b)     1,754       289,796  
Zynga, Inc. - Class A (b)     34,503       314,667  
Total Entertainment             3,702,712  
Food & Staples Retailing - 1.8%                
Costco Wholesale Corp.     2,073       735,915  
Kroger Co.     7,240       245,508  
Walmart, Inc.     4,668       653,100  
Total Food & Staples Retailing             1,634,523  
Food Products - 1.3%                
Campbell Soup Co. (a)     8,979       434,314  
Conagra Brands, Inc.     10,027       358,064  
General Mills, Inc.     4,799       296,002  
Kellogg Co. (a)     2,428       156,825  
Total Food Products             1,245,205  
Gas Utilities - 0.1%                
Atmos Energy Corp.     813       77,715  
Health Care Equipment & Supplies - 4.2%                
Abbott Laboratories     7,715       839,623  
DexCom, Inc. (b)     1,431       589,901  
IDEXX Laboratories, Inc. (b)     2,896       1,138,447  
Intuitive Surgical, Inc. (b)     1,143       811,004  
ResMed, Inc.     2,828       484,804  
Total Health Care Equipment & Supplies             3,863,779  
Health Care Providers & Services - 1.7%                
Anthem, Inc.     1,613       433,236  
Centene Corp. (b)     7,527       439,050  
Humana, Inc.     1,160       480,112  
Molina Healthcare, Inc. (b)     1,059       193,839  
Total Health Care Providers & Services             1,546,237  

 

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

 

8

 

AI Powered Equity ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
Health Care Technology - 5.1%                
Cerner Corp. (a)     6,188     $ 447,331  
Livongo Health, Inc. (a)(b)     11,866       1,661,833  
Teladoc Health, Inc. (a)(b)     9,613       2,107,555  
Veeva Systems, Inc. - Class A (b)     1,813       509,797  
Total Health Care Technology             4,726,516  
Hotels, Restaurants & Leisure - 1.5%                
Domino’s Pizza, Inc.     2,218       943,271  
McDonald’s Corp.     2,180       478,488  
Total Hotels, Restaurants & Leisure             1,421,759  
Household Products - 2.0%                
Church & Dwight Co., Inc.     6,620       620,360  
Clorox Co. (a)     2,404       505,249  
Kimberly-Clark Corp.     1,826       269,627  
Procter & Gamble Co.     3,107       431,842  
Total Household Products             1,827,078  
Insurance - 0.4%                
eHealth, Inc. (a)(b)     4,370       345,230  
Interactive Media & Services - 4.0%                
Alphabet, Inc. - Class A (b)     2,446       3,584,857  
Facebook, Inc. - Class A (b)     833       218,163  
Total Interactive Media & Services             3,803,020  
Internet & Direct Marketing Retail - 7.1%                
Amazon.com, Inc. (b)     1,184       3,728,097  
Etsy, Inc. (a)(b)     8,945       1,087,980  
Grubhub, Inc. (b)     3,348       242,161  
Overstock.com, Inc. (a)(b)     5,970       433,721  
Stitch Fix, Inc. - Class A (a)(b)     19,381       525,807  
Wayfair, Inc. - Class A (a)(b)     2,049       596,279  
Total Internet & Direct Marketing Retail             6,614,045  
IT Services - 3.5%                
Akamai Technologies, Inc. (a)(b)     4,831       534,019  
Broadridge Financial Solutions, Inc.     3,233       426,756  
MasterCard, Inc. - Class A     268       90,630  
PayPal Holdings, Inc. (b)     1,984       390,908  
Square, Inc. - Class A (b)     4,735       769,674  
Twilio, Inc. - Class A (a)(b)     4,172       1,030,859  
Total IT Services             3,242,846  
Life Sciences Tools & Services - 3.9%                
Agilent Technologies, Inc.     4,515       455,744  
Mettler-Toledo International, Inc. (b)     336       324,492  
PerkinElmer, Inc.     3,268       410,167  
Syneos Health, Inc. (a)(b)     8,753       465,309  
Thermo Fisher Scientific, Inc.     3,545       1,565,189  
Waters Corp. (b)     2,041       399,383  
Total Life Sciences Tools & Services             3,620,284  
Machinery - 0.7%                
Stanley Black & Decker, Inc.     3,828       620,902  

 

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

 

9

 

AI Powered Equity ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
Media - 0.4%        
News Corp. - Class A     23,360     $ 327,507  
Metals & Mining - 0.9%                
Coeur Mining, Inc. (b)     65,515       483,501  
Royal Gold, Inc.     2,859       343,566  
Total Metals & Mining             827,067  
Multiline Retail - 0.7%                
Dollar General Corp.     1,185       248,400  
Target Corp.     2,617       411,968  
Total Multiline Retail             660,368  
Multi-Utilities - 0.1%                
Sempra Energy (a)     865       102,381  
Oil, Gas & Consumable Fuels - 1.7%                
Cabot Oil & Gas Corp. (a)     9,872       171,378  
Cimarex Energy Co. (a)     28,857       702,090  
EQT Corp.     43,061       556,779  
Williams Cos., Inc.     8,261       162,329  
Total Oil, Gas & Consumable Fuels             1,592,576  
Pharmaceuticals - 1.9%                
Catalent, Inc. (b)     3,257       278,995  
Eli Lilly and Co.     3,213       475,588  
Johnson & Johnson     2,931       436,367  
Pfizer, Inc.     15,529       569,914  
Total Pharmaceuticals             1,760,864  
Professional Services - 0.2%                
Verisk Analytics, Inc.     1,216       225,337  
Real Estate Management & Development - 0.9%                
Redfin Corp. (a)(b)     16,395       818,602  
Road & Rail - 0.2%                
Union Pacific Corp.     1,131       222,660  
Semiconductors & Semiconductor Equipment - 6.9%                
Advanced Micro Devices, Inc. (a)(b)     30,973       2,539,476  
Enphase Energy, Inc. (a)(b)     2,945       243,228  
Intel Corp.     6,186       320,311  
Microchip Technology, Inc.     1,065       109,439  
NVIDIA Corp.     2,825       1,528,947  
Qualcomm, Inc.     5,394       634,766  
Skyworks Solutions, Inc.     4,462       649,221  
Teradyne, Inc.     4,652       369,648  
Total Semiconductors & Semiconductor Equipment             6,395,036  
                 

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

 

10

 

AI Powered Equity ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
Software - 14.9%        
2U, Inc. (a)(b)     12,861     $ 435,473  
Adobe Systems, Inc. (b)     281       137,811  
Autodesk, Inc. (b)     594       137,220  
Avaya Holdings Corp. (a)(b)     34,802       528,990  
Box, Inc. - Class A (b)     35,455       615,499  
Citrix Systems, Inc. (a)     3,810       524,675  
Cloudera, Inc. (a)(b)     84,819       923,679  
Coupa Software, Inc. (b)     2,888       792,005  
Crowdstrike Holdings, Inc. - Class A (b)     9,080       1,246,866  
DocuSign, Inc. (b)     1,918       412,830  
Everbridge, Inc. (a)(b)     4,665       586,530  
Fortinet, Inc. (b)     3,870       455,925  
Intuit, Inc.     1,629       531,396  
Microsoft Corp.     10,777       2,266,726  
PagerDuty, Inc. (a)(b)     15,951       432,432  
RingCentral, Inc. - Class A (b)     1,660       455,853  
salesforce.com, Inc. (b)     2,259       567,732  
ServiceNow, Inc. (b)     1,452       704,220  
Slack Technologies, Inc. - Class A (a)(b)     16,340       438,892  
SS&C Technologies Holdings, Inc.     5,286       319,909  
Tenable Holdings, Inc. (b)     11,788       444,997  
Zscaler, Inc. (a)(b)     6,406       901,260  
Total Software             13,860,920  
Specialty Retail - 1.5%                
AutoNation, Inc. (a)(b)     7,342       388,612  
Michaels Cos., Inc. (a)(b)     20,277       195,774  
RH (a)(b)     2,109       806,946  
Total Specialty Retail             1,391,332  
Technology Hardware, Storage & Peripherals - 3.8%                
Apple, Inc.     28,922       3,349,456  
Pure Storage, Inc. - Class A (a)(b)     12,963       199,501  
Total Technology Hardware, Storage & Peripherals             3,548,957  
Textiles, Apparel & Luxury Goods - 0.3%                
Tapestry, Inc. (a)     15,869       248,032  
Trading Companies & Distributors - 0.6%                
Fastenal Co.     1,520       68,537  
United Rentals, Inc. (b)     2,898       505,701  
Total Trading Companies & Distributors             574,238  
Water Utilities - 1.0%                
Essential Utilities, Inc. (a)     22,127       890,612  
Wireless Telecommunication Services - 0.4%                
T-Mobile US, Inc. (b)     3,314       378,989  
Total United States             91,934,296  
TOTAL COMMON STOCKS (Cost $76,737,121)             92,092,176  
                 

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

 

11

 

AI Powered Equity ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
         
RIGHTS - 0%                
United States - 0.0%                
NewStar Financial, Inc. (c)     115,783     $ 0  
TOTAL RIGHTS (Cost $0)             0  
INVESTMENTS PURCHASED WITH PROCEEDS FROM                
SECURITIES LENDING COLLATERAL - 29.1%                
Mount Vernon Liquid Assets Portfolio, LLC, 0.18% (d)     27,033,268       27,033,268  
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $27,033,268)             27,033,268  
                 
SHORT-TERM INVESTMENTS - 0.8%                
Money Market Funds - 0.8%                
Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02%(d)     789,914       789,914  
TOTAL SHORT-TERM INVESTMENTS (Cost $789,914)             789,914  
                 
Total Investments (Cost $104,560,303) - 129.0%             119,915,358  
Liabilities in Excess of Other Assets - (29.0)%             (26,982,183 )
TOTAL NET ASSETS - 100.0%           $ 92,933,175  

 

Percentages are stated as a percent of net assets.

 

(a) All or a portion of this security was out on loan at September 30, 2020.
(b) Non-income producing security.
(c) Value determined using significant unobservable inputs. The value of this security totals $0, which represents 0.00% of total net assets. Classified as Level 3 in the fair value hierarchy.
(d) The rate quote is the annualized seven-day yield at September 30, 2020.

 

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).

 

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

 

12

 

AI Powered Equity ETF

 

STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2020

 

 


  AI Powered
Equity ETF
 
ASSETS    
Investments in securities, at value*   $ 119,915,358  
Receivables:        
Dividends and interest receivable     22,079  
Securities lending income receivable     6,472  
Receivable for investments sold     749,460  
Total Assets     120,693,369  
         
LIABILITIES        
Collateral received for securities loaned (Note 7)     27,033,268  
Payables:        
Payable for investments purchased     670,332  
Unitary fees payable     56,594  
Total Liabilities     27,760,194  
Net Assets   $ 92,933,175  
         
NET ASSETS CONSIST OF:        
Paid-in Capital   $ 89,525,063  
Total Distibutable Earnings     3,408,112  
Net Assets   $ 92,933,175  
         
*Identified Cost:        
Investments in securities   $ 104,560,303  
         
Shares Outstanding^     3,025,000  
Net Asset Value, Offering and Redemption Price per Share   $ 30.72  

 

^ No par value, unlimited number of shares authorized

 

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

 

13

 

AI Powered Equity ETF

 

STATEMENT OF OPERATIONS
For the Year Ended September 30, 2020

 

  


  AI Powered
Equity ETF
 
INVESTMENT INCOME    
Income:    
Dividends from investments (net of foreign withholdings tax of $972)   $ 1,143,919  
Interest     23,318  
Securities lending income     67,058  
Total Investment Income     1,234,295  
Expenses:        
Unitary fees     745,045  
Total Expenses     745,045  
Net Investment Income     489,250  
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS        
Net Realized Gain (Loss) on:        
Investments     (1,909,340 )
In-Kind redemptions     4,024,259  
Closed-End Funds     (127,803 )
Net Realized Gain on Investments and In-Kind Redemptions     1,987,116  
Net Change in Unrealized Appreciation of:        
Investments     12,344,307  
Net Change in Unrealized Appreciation of Investments     12,344,307  
Net Realized and Unrealized Gain on Investments     14,331,423  
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS   $ 14,820,673  
         

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

 

14

 

AI Powered Equity ETF

 

STATEMENTS OF CHANGES IN NET ASSETS

 

  

   

Year Ended
September 30,

2020
   

Year Ended
September 30,

2019
 
OPERATIONS        
Net investment income   $ 489,250     $ 905,874  
Net realized gain (loss) on investments and in-kind redemptions     1,987,116       (10,405,925 )
Net change in unrealized appreciation (depreciation) of investments     12,344,307       (3,012,955 )
Net increase (decrease) in net assets resulting from operations     14,820,673       (12,513,006 )
DISTRIBUTIONS TO SHAREHOLDERS                
Total distributions from distributable earnings     (446,750 )     (12,575,043 )
                 
CAPITAL SHARE TRANSACTIONS                
Net decrease in net assets derived from net change in                
outstanding shares     (36,014,002 )     (66,811,078 )
Net decrease in net assets     (21,640,079 )     (91,899,127 )
NET ASSETS                
Beginning of Year     114,573,254       206,472,381  
End of Year   $ 92,933,175     $ 114,573,254  

 

Summary of share transactions is as follows:

 

     

Year Ended
September 30, 2020

   

Year Ended
September 30, 2019

 
     

Shares

   

Amount

    Shares     Amount  
Shares Sold       175,000     $ 5,278,763       175,000     $ 4,859,175  
Shares Redeemed       (1,525,000 )     (41,292,765 )     (2,800,000 )     (71,670,253 )
        (1,350,000 )   $ (36,014,002 )     (2,625,000 )   $ (66,811,078 )
Beginning Shares       4,375,000               7,000,000          
Ending Shares       3,025,000               4,375,000          

 

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

 

15

 

AI Powered Equity ETF

 

FINANCIAL HIGHLIGHTS

For a capital share outstanding throughout the year/period

 

  

   

Year Ended
September 30,
2020

   

Year Ended
September 30,
2019

   

Period Ended
September 30,
20181

 
Net Asset Value, Beginning of Year/Period   $ 26.19     $ 29.50     $ 25.00  
Income from Investment Operations:                        
Net investment income 2     0.14       0.16       0.14  
Net realized and unrealized gain (loss) on investments     4.52       (1.41 )     4.49  
Total from investment operations     4.66       (1.25 )     4.63  
Less Distributions:                        
Distributions from net investment income     (0.13 )     (0.17 )     (0.12 )
Net realized gains           (1.89 )     (0.01 )
Total distributions     (0.13 )     (2.06 )     (0.13 )
Net asset value, end of year/period   $ 30.72     $ 26.19     $ 29.50  
Total Return     17.94 %     -2.32 %     18.53 %3
                         
Ratios/Supplemental Data:                        
Net assets at end of year/period (000’s)   $ 92,933     $ 114,573     $ 206,472  
Expenses to Average Net Assets     0.75 %     0.75 %     0.75 %4
Net Investment Income to Average Net Assets     0.49 %     0.64 %     0.52 %4
Portfolio Turnover Rate     239 %     129 %     260 %3

 


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.

16

 

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020

 

 

NOTE 1 – ORGANIZATION

 

The AI Powered Equity ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The investment objective of the Fund is capital appreciation. The Fund commenced operations on October 17, 2017.

 

The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.

 

Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 25,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and are subject to customary brokerage commissions or fees.

 

Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in Net Assets.

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946 Financial Services – Investment Companies.

 

The Fund may invest in certain other investment companies (underlying funds). For specific investments in underlying funds, please refer to the complete schedule of portfolio holdings on Form N-CSR for this reporting period, which is filed with the U.S. Securities and Exchange Commission (SEC). For more information about the underlying Fund’s operations and policies, please refer to those Fund’s semiannual and annual reports, which are filed with the SEC.

 


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.

 

 

17

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 

 

Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of September 30, 2020, the Fund held one fair valued security. More detail about this security can be found in the Schedule of Investments.

 

As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:

 

Level 1  Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

 

Level 2  Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

 

Level 3  Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

 

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

 

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

 

 

18

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 

The following table presents a summary of the Funds’ investments in securities, at fair value, as of September 30, 2020:

 

AI Powered Equity ETF

 

Assets^   Level 1     Level 2     Level 3     Total  
Common Stocks   $ 92,092,176     $     $     $ 92,092,176  
Rights                 (1)      
Short Term Investments     789,914                   789,914  
Investments Purchased with Securities Lending Collateral*                       27,033,268  
Total Investments in Securities   $ 92,882,090     $     $     $ 119,915,358  

 

(1) Includes a security valued at $0.

 

The AI Powered Equity ETF held a Level 3 security at the end of the year. The security classified as Level 3 is deemed immaterial.

 

^ For further information regarding security characteristics, see the Schedule of Investments.

 

* Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Investments.

 


B. Federal Income Taxes. The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made.

 

To avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.

 

Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.

 

The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Fund’s 2020 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however, the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

 

As of September 30, 2020, management has reviewed the tax positions for open periods (for Federal purposes, three years from the date of filing and for state purposes, four years from the date of filing), as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements.

 

 

19

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 


C. Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries.

 


D. Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences.

 


E. Distributions to Shareholders. Distributions to shareholders from net investment income 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 net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share.

 


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.

 

 

20

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 

Management Risk. The Fund is subject to management risk as an actively-managed investment portfolio. The Adviser’s investment approach may fail to produce the intended results. If the Adviser’s implementation of the EquBot Model is inaccurate or incomplete, the Fund may not perform as expected and your investment could lose value over short or long-term periods. Additionally, the Adviser has not previously managed a Fund whose strategy relies on the use of AI, which may create additional risks for the Fund.

 

Market Trading Risk. An investment in the Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses from trading in secondary markets, periods of high volatility and disruption in the creation/redemption process of the Fund. Any of these factors, among others, may lead to the Fund’s shares trading at a premium or discount to NAV.

 

Models and Data Risk. The Fund relies heavily on proprietary quantitative models as well as information and data supplied by third parties (“Models and Data”). When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks.

 

Non-Diversification Risk. Because the Fund is “non-diversified,” it may invest a greater percentage of its assets in the securities of a single issuer or a small number of issuers than if it was a diversified fund. As a result, a decline in the value of an investment in a single issuer or a small number of issuers could cause the Fund’s overall value to decline to a greater degree than if the Fund held a more diversified portfolio. This may increase the Fund’s volatility and have a greater impact on the Fund’s performance.

 

Portfolio Turnover Risk. The portfolio managers may actively and frequently trade securities or other instruments in the Fund’s portfolio to carry out its investment strategies. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.

 

REIT Investment Risk. Investments in REITs involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume, and may be more volatile than other securities. REITs may be affected by changes in the value of their underlying properties or mortgages or by defaults by their borrowers or tenants. Furthermore, these entities depend upon specialized management skills, have limited diversification and are, therefore, subject to risks inherent in financing a limited number of projects. In addition, the performance of a REIT may be affected by changes in the tax laws or by its failure to qualify for tax-free pass-through of income.

 

Sector Risk. To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.

 

Smaller Companies Risk. Smaller companies in which the Fund may invest may be more vulnerable to adverse business or economic events than larger, more established companies, and may underperform other segments of the market or the equity market as a whole. The securities of smaller companies also tend to be bought and sold less frequently and at significantly lower trading volumes than the securities of larger companies. As a result, it may be more difficult for the Fund to buy or sell a significant amount of the securities of a smaller company without an adverse impact on the price of the company’s securities, or the Fund may have to sell such securities in smaller quantities over a longer period of time, which may increase the Fund’s tracking error.

 

 

21

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 

Natural Disaster/Epidemic Risk. Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics (for example, the novel coronavirus COVID-19), have been and can be highly disruptive to economies and markets and have recently led, and may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate political, social, and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation, and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on the operating performance of the Funds and their investments. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global, regional, and local economies and reduce the availability of potential investment opportunities, and increases the difficulty of performing due diligence and modeling market conditions, potentially reducing the accuracy of financial projections. Under these circumstances, the Funds may have difficulty achieving their investment objectives which may adversely impact performance. Further, such events can be highly disruptive to economies and markets, significantly disrupt the operations of individual companies (including, but not limited to, the Funds’ Sponsor and third party service providers), sectors, industries, markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Funds’ investments. These factors can cause substantial market volatility, exchange trading suspensions and closures and can impact the abilityof the Funds to complete redemptions and otherwise affect Fund performance and Fund trading in the secondary market. A widespread crisis may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on a Fund’s performance, resulting in losses to the Funds.

 

NOTE 4 – MANAGEMENT AND OTHER CONTRACTS

 

ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust.

 

Under the Investment Advisory Agreement with the Fund, the Advisor has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Advisor bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Advisor at an annual rate of 0.75% of the Fund’s average daily net assets. Under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Fund, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an Agreement with its affiliate, ETFMG Financial, LLC, to serve as distributor to the Funds (the “Distributor”). The Distributor provides marketing support for the Funds, including distributing marketing materials related to the Funds.

 

EquBot, LLC serves as the sub-adviser to the Fund (the “Sub-Adviser”) and provides investment advice using the EquBot Model to the Advisor and the Fund. The Advisor is responsible for paying the entire amount of the Sub-Adviser’s fee for the Fund. The Sub-Adviser also provides marketing support for the Fund..

 

 

22

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 

U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Fund. The Advisor compensates the Administrator for these services under an administration agreement between the two entities.

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

 

NOTE 5 – DISTRIBUTION PLAN

 

The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s daily average net assets. For the year ended September 30, 2020, the Fund did not incur any 12b-1 expenses.

 

NOTE 6 - PURCHASES AND SALES OF SECURITIES

 

The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the year ended September 30, 2020:

 

    Purchases     Sales  
AI Powered Equity ETF   $ 229,985,588     $ 229,645,773  

 

The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the year ended September 30, 2020:

 

    Purchases
In-Kind
    Sales In-
Kind
 
AI Powered Equity ETF   $ 5,043,115     $ 39,034,460  

 

Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Fund’s taxable gains and are not distributed to shareholders.

 

There were no purchases or sales of U.S. Government obligations for the year ended September 30, 2020.

 

NOTE 7 — SECURITIES LENDING

 

The Fund may lend up to 33 1/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations either directly on behalf of each Fund or through one or more joint accounts, money market funds, or short-term bond funds, including those advised by or affiliated with the Advisor; however, all such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. Other investment companies in which a Fund may invest cash collateral can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, which would be in addition to those incurred by the Fund, and which may be received in full or in part by the Advisor. Pursuant to guidance issued by the SEC staff, fees and expenses of money market funds used for cash collateral received in connection with loans of securities are not treated as Acquired Fund Fees and Expenses, which reflect a Fund’s pro rata share of the fees and expenses incurred by other investment companies in which the Fund invests (as disclosed in the Prospectus, as applicable). The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.

 

 

23

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 

As of September 30, 2020, the value of the securities on loan and payable for collateral due to broker were as follows:

 

Value of Securities on Loan Collateral Received

 

Fund   Values of
Securities
on Loan
    Fund
Collateral
Received*
 
AI Powered Equity ETF   $ 26,421,520     $ 27,033,268  

 

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

 

NOTE 8 – FEDERAL INCOME TAXES

 

The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2020 were as follows:

 

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

 

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

 

As of September 30, 2020, the Fund had accumulated capital loss carryovers of:

 

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

 

24

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 

Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2020.

 

  Late Year
Ordinary
Loss
  Post-October
Capital Loss
AI Powered Equity ETF None   None

 

U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the fiscal year ended September 30, 2020, the following table shows the reclassifications made:

 

    Total
Distributable
Earnings/(Loss)
    Paid-In
Capital
 
AI Powered Equity ETF   $ (3,538,631 )   $ 3,538,631  

 

The tax character of distributions paid by the Fund during the fiscal years ended September 30, 2020 and September 30, 2019 are as follows:

 

    Year Ended
September 30, 2020
    Year Ended
September 30, 2019
 
    From
Ordinary Income
    From
Capital Gains
    From
Ordinary Income
    From
Capital Gains
 
AI Powered Equity ETF   $ 446,750     $     $ 12,571,140     $  

 

NOTE 9 – LEGAL MATTERS

 

The Trust, the Adviser and certain officers of the Adviser were defendants in an action filed May 2, 2017 in the Superior Court of New Jersey captioned PureShares, LLC d/b/a PureFunds et al. v. ETF Managers Group, LLC et al., Docket No. C-63-17. The PureShares action alleged claims based on disputes arising out of contractual relationships with the Adviser relating to certain series of the Trust. The action sought damages in unspecified amounts and injunctive relief based on breach of contract, wrongful termination, and several other claims.

 

The Adviser and its parent, Exchange Traded Managers Group, LLC (the “Company”), were defendants in a case filed on October 26, 2017 in the United States District Court for the Southern District of New York by NASDAQ, Inc. (“Nasdaq”) captioned Nasdaq, Inc. v. Exchange Traded Managers Group, LLC et al., Case 1:17-cv-08252. This action arose out of the same facts and circumstances, and relates to the same series of the Trust, as the New Jersey litigation and asserted claims for breach of contract, conversion and certain other claims. The matter was the subject of a bench trial in May 2019, and on December 20, 2019, the Court issued an Opinion and Order awarding compensatory damages to Plaintiff in the amount of $78,403,172.36, plus prejudgment interest. The Court also denied Plaintiff’s requests for punitive damages and equitable relief.

 

On May 1, 2020, Nasdaq, PureShares LLC (“PureShares”), and the Company announced a global settlement that resolves all claims in both the PureShares action and the Nasdaq action. The settlement is subject to ongoing negotiations and approvals among independent third parties. As part of the settlement, Nasdaq and the Company have agreed to certain cash payments from the Company to Nasdaq and PureShares, and have executed an asset purchase agreement to transfer certain Company intellectual property and related assets, to a Nasdaq affiliate. If the events set forth in the settlement agreement do not occur, and a subsequent settlement is not reached, the resulting conditions may adversely affect the Adviser’s future operations. However, Management of the Trust and the Fund, after consultation with legal counsel, believes that the resolution of these matters will not have a material adverse effect on the Fund’s financial statements.

 

 

25

AI Powered Equity ETF

 

NOTES TO FINANCIAL STATEMENTS

September 30, 2020 (Continued)

 

NOTE 10 – SUBSEQUENT EVENTS

 

In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. The evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments to the financial statements. .

 

 

26

AI Powered Equity ETF

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of ETF Managers Trust
and the Shareholders of AI Powered Equity ETF:

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of AI Powered Equity ETF (the “Fund”) (a series of ETF Managers Trust) as of September 30, 2020, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the three years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of September 30, 2020, and the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2020 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

 

/s/WithumSmith+Brown, PC

 

We have served as the auditor of one or more series of the Trust since 2013.

 

New York, New York

November 30, 2020

 

 

27

AI Powered Equity ETF

 

Expense Example
Six Months Ended September 30, 2020 (Unaudited)

 

As a shareholder of AI Powered Equity ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (April 1, 2020 to September 30, 2020).

 

Actual Expenses

The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.

 

AI Powered Equity ETF

    Beginning
Account
Value
April 1, 2020
    Ending
Account
Value
September 30,
2020
    Expenses
Paid
During the
Period^
    Annualized
Expense Ratio
During Period
April 1, 2020 to
September 30,
2020
 
Actual   $ 1,000.00     $ 1,372.40     $ 4.45       0.75 %
Hypothetical (5% annual)   $ 1,000.00     $ 1,021.25     $ 3.79       0.75 %

 

^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 183/366 (to reflect the period from April 1, 2020 to September 30, 2020).

 

28

AI Powered Equity ETF

 

SUPPLEMENTARY INFORMATION

September 30, 2020 (Unaudited)

 

NOTE 1 – FREQUENCY DISTRIBUTION OF PREMIUMS AND DISCOUNTS

 

Information regarding how often shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the NAV is available on the Fund’s website at www.etfmgfunds.com.

 

NOTE 2 – FEDERAL TAX INFORMATION

 

Qualified Dividend Income/Dividends Received Dedumattction

 

For the fiscal year ended September 30, 2020, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:

 

Fund Name QDI
AI Powered Equity ETF 100.00%

 

For corporate shareholders, the percent of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended September 30, 2020 was as follows:

 

Fund Name DRD
AI Powered Equity ETF 100.00%

 

Short Term Capital Gain

 

The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) for the Fund was as follows:

 

Fund Name Short-Term Capital Gain
AI Powered Equity ETF 0.00%

 

NOTE 3 – INFORMATION ABOUT PORTFOLIO HOLDINGS

 

The Fund files a complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters on Part F of Form N-PORT. Once filed, the Fund’s Part F of Form N-PORT is available without charge, upon request on the SEC’s website (www.sec.gov) and is available by calling (877) 756-7873.

 

NOTE 4 – INFORMATION ABOUT PROXY VOTING

 

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.AIEQetf.com.

 

Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.

 

Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.AIEQetf.com. Read the prospectus carefully before investing.

 

29

AI Powered Equity ETF

 

Board of Trustees

 

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

 

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 of Exchange Traded Managers Group LLC (since 2013); ETF Managers Group LLC (since 2016); ETFMG Financial LLC (since 2017); ETF Managers Capital LLC (commodity pool operator) (since 2014); and 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); 12 None
John A. Flanagan (1946) Treasurer (since 2015) President, John A. Flanagan CPA, LLC (accounting services) (since 2010); Chief Financial Officer and Treasurer of Exchange Traded Managers Group LLC (since 2015); ETF Managers Group LLC (since 2016); and 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); ETF Managers Group LLC (since 2016); ETF Managers Capital LLC (since 2016); and Partner, Crow & Cushing (law firm) (2007-2016). N/A N/A
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
* Mr. Masucci is an interested Trustee by virtue of his role as the Chief Executive Officer of the Adviser.

 

30

AI Powered Equity ETF

 

Board of Trustees (Continued)

 

Name and Year of Birth Position(s) Held with the Trust, Term of Office and Length of Time Served Principal Occupation(s) During Past 5 Years Number of Portfolios in Fund Complex Overseen By Trustee Other Directorships Held by Trustee During Past 5 Years
Terry Loebs (1963) Trustee (since 2014) Founder and Managing Member, Pulsenomics LLC (index product development and consulting firm) (since 2011); Managing Director, MacroMarkets, LLC (exchange-traded products firm) (2006-2011). 12 None
Eric Weigel (1960) Trustee (since 2020) Senior Portfolio Manager, Little House Capital (2019-present); Managing Partner, Global Focus Capital LLC (2013-present); Chief Investment Officer, Insight Financial Strategist LLC (2017-2018) 12 None

 

31

AI Powered Equity ETF

 

ETF MANAGERS TRUST

 

Privacy Policy and Procedures

 

ETF Managers Trust, (the “Trust”) has adopted the following privacy policies in order to safeguard the personal information of the Trust’s customers and consumers in accordance with Regulation S-P as promulgated by the U.S. Securities and Exchange Commission.

 

Trust officers are responsible for ensuring that the following policies and procedures are implemented:

 

1) The Trust is committed to protecting the confidentiality and security of the information they collect and will handle personal customer and consumer information only in accordance with Regulation S-P and any other applicable laws, rules and regulations1. The Trust will ensure: (a) the security and confidentiality of customer records and information; (b) that customer records and information are protected from any anticipated threats and hazards; and (c) that customer records and information are protected from unauthorized access or use.

 

2) The Trust conducts its business affairs through its trustees, officers and third parties that provide services pursuant to agreements with the Trust. The Trust has no employees. It is anticipated that the trustees and officers of the Trust who are not employees of service providers of the Trust will not have access to customer records and information in the performance of their normal responsibilities for the Trust.

 

3) The Trust may share customer information with its affiliates, subject to the customers’ right to prohibit such sharing.

 

4) The Trust may share customer information with unaffiliated third parties only in accordance with the requirements of Regulation S-P. Pursuant to this policy, the Trust will not share customer information with unaffiliated third parties other than as permitted by law, unless authorized to do so by the customer.

 

Consistent with these policies, the Trust has adopted the following procedures:

 

1) The Trust will determine that the policies and procedures of its affiliates and Service Providers are reasonably designed to safeguard customer information and only permit appropriate and authorized access to and use of customer information through the application of appropriate administrative, technical and physical protections.

 

2) The Trust will direct each of its Service Providers to adhere to the privacy policy of the Trust and to its privacy policies with respect to all customer information of the Trust and to take all actions reasonably necessary so that the Trust is in compliance with the provisions of Regulation S-P, including, as applicable, the development and delivery of privacy notices and the maintenance of appropriate and adequate records.

 

3) The Trust requires its Service Providers to provide periodic reports to the Trust’s Board of Trustees outlining their privacy policies and the implementation of such policies. Each Service Provider is required to promptly report to the Trust’s Board any material changes to its privacy policy before, or promptly after, the adoption of such changes.

 

 

(1)   Generally, the Funds have institutional clients which are not considered “customers” for purposes of regulation S-P.

 

32

Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901

 

Distributor
ETFMG Financial, Inc.
30 Maple Street, Suite 2, Summit, NJ 07901

 

Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212

 

Transfer Agent
U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services
615 East Michigan Street, Milwaukee, Wisconsin 53202

 

Securities Lending Agent
U.S Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020

 

Independent Registered Public Accounting Firm
WithumSmith + Brown, PC
1411 Broadway, 9th Floor, New York, NY 10018

 

Legal Counsel
Sullivan & Worcester LLP
1666 K Street NW, Washington, DC 20006

 

 

 

 

 

 

 

 

Annual Report 

September 30, 2020

 

ETFMG Prime Cyber Security ETF

 

ETFMG Prime Junior Silver Miners ETF

 

ETFMG Prime Mobile Payments ETF

 

ETFMG Sit Ultra Short ETF

 

ETFMG Travel Tech ETF

 


ETFMG Treatments, Testing and Advancements ETF

 

Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the Fund’s reports from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Please contact your financial intermediary to elect to receive shareholder reports and other Fund communications electronically.

 

You may elect to receive all future Fund reports in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies of Fund shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held with your financial intermediary.

 

The funds are a series of ETF Managers Trust.

 



 

ETFMG™ ETFs

 

TABLE OF CONTENTS

September 30, 2020

 

 

  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 45
   
Statements of Operations 46
   
Statements of Changes in Net Assets 47
   
Financial Highlights 53
   
Notes to the Financial Statements 59
   
Report of Independent Registered Public Accounting Firm 73
   
Approval of Advisory Agreement and Board Considerations 74
   
Expense Examples 76
   
Trustees and Officers Table 78
   
Federal Tax Information 80
   
Information about Portfolio Holdings 81
   
Information about Proxy Voting 81
   
Privacy Policy 82

 


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 referenced below (each a “Fund”). The following information pertains to the fiscal period from October 1, 2019 to September 30, 2020.

 

Performance Overview

 

Below is a performance overview for each Fund for the same 12-month period, except as noted otherwise. During this period, market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty regarding the long-term implications continues to exist. Such disruptions, along with various government orders and precautionary measures such as social distancing, business shutdowns and similar policies, led to a reduction in global economic activity. These policies have also resulted in periods of high market volatility which can adversely affect assets of each Funds and thus each respective Fund’s performance. During the reporting period the COVID-19 pandemic contributed to approximately a five-fold increase in volatility for the broad market (represented by the Chicago Board Options Exchange Volatility Index).

 

ETFMG Prime Cyber Security ETF (HACK)

 

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

 

Over the period, the total return for HACK was 26.75%, while the total return for the Cyber Defense Index was 26.65%. The best performers in HACK on the basis of contribution to return were Cloudflare, SailPoint Technologies, and Zscaler, while the worst performers were Proofpoint, Cisco Systems, and Tufin Software Technologies.

 

During the reporting period, HACK saw an average approximate allocation of 67% of its total assets to Software, 16% to IT Services and 10% to Communications Equipment.

 

ETFMG Prime Junior Silver ETF (SILJ)

 

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

 

Over the period, the total return for SILJ was 48.06%, while the total return for the Silver Miners Index was 48.51%. The best performers in SILJ on the basis of contribution to return were Pan American Silver, Hecla Mining and Silvercorp Metals, while the worst performers in SILJ on the basis of contribution to return were McEwen Mining, Trevali Mining, and Hochschild Mining.

 

During the reporting period, SILJ saw an average approximate allocation of 98% of its total assets to Metals and Mining and the remaining 2% to Commercial Services & Supplies.

 


2

 

ETFMG Prime Mobile Payments ETF (IPAY)

 

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

 

Over the period, the total return for IPAY was 16.56%, while the total return for the Mobile Payments Index was 17.31%. The best performers in IPAY on the basis of contribution to return were Square, PayPal, and Adyen, while the worst performers were Discover Financial Services, Cielo S.A., and Wirecard.

 

During the reporting period, IPAY saw an average approximate allocation of 79% of its total assets to IT Services, 10% to Consumer Finance and 3% to Electronic Equipment, Instruments & Services.

 

ETFMG Sit Ultra Short ETF (VALT)

 

The following information pertains to the fiscal period from the Fund’s inception, October 8, 2019 to September 30, 2020.

 

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

 

Over the fiscal period, the total return for VALT was 1.19%, while the total return for its benchmark, the Bloomberg Barclays U.S. Treasury Bills Index: 1-3 month Index, was 0.96%.

 

VALT seeks to achieve its investment objective by investing in a diversified portfolio of high-quality, short-term U.S. dollar-denominated domestic and foreign debt securities and other instruments. VALT uses the Bloomberg Barclays U.S. Treasury Bills Index: 1-3-month Index as its benchmark index. VALT seeks to maintain an average effective duration within a range of 2 months to 1 year.

 

ETFMG Travel Tech ETF (AWAY)

 

The following information pertains to the fiscal period from the Fund’s inception, February 12, 2020 to September 30, 2020.

 

The ETFMG Travel Tech ETF (“AWAY”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Travel Technology Index NTR (the “Travel Tech Index”).

 

Over the fiscal period, the total return for AWAY was -24.50%, while the total return the for the Travel Tech Index was -24.99%. The best performers in AWAY on the basis of contribution to return were Lotte Tour Development Facedrive, and Tongcheng-Elong Holdings, while the worst performers were Despegar.com, Lyft and Sabre.

 

During the reporting period, AWAY saw an average approximate allocation of 50% of its total assets to Internet & Direct Marketing Retail, 17% to Road & Rail and 13% to IT Services.

 


3

 

ETFMG Treatments, Testing and Advancements ETF (GERM)

 

The following information pertains to the fiscal period from the Fund’s inception, June 17, 2020 to September 30, 2020.

 

The ETFMG Treatments, Testing and Advancements ETF (“GERM”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Treatments, Testing and Advancements Index (the “Treatments, Testing and Advancements Index”).

 

Over the fiscal period, the total return for GERM was 10.82%, while the total return the for the Treatments, Testing and Advancements Index was 10.88%. The best performers in GERM on the basis of contribution to return were Novavax, BioNTech SE, and Emergent BioSolutions, while the worst performers were Athersys, Cue Biopharma, and Dicerna Pharmaceuticals.

 

During the reporting period, GERM saw an average approximate allocation of 63% of its total assets to Biotechnology, 11% to Life Sciences Tools & Services and 10% to Health Care Providers & Services.

 

You can find further details about HACK, SILJ, IPAY, VALT, AWAY and GERM by visiting www.etfmg.com, or by calling 1-844-383-6477.

 

Sincerely,

 

 

Samuel Masucci III

Chairman of the Board

 


4

 

ETFMG Prime Junior Silver Miners ETF

Growth of $10,000 (Unaudited)

 

 

 

Average Annual Returns 1 Year 5 Year Since Inception Value of $10,000
Year Ended September 30, 2020 Return Return (11/28/12) (9/30/20)
ETFMG Prime Junior Silver Miners ETF (NAV) 48.06% 22.65% -3.88% $7,335
ETFMG Prime Junior Silver Miners ETF Miners (Market) 47.99% 21.82% -3.87% $7,338
S&P 500 Index 15.15% 14.15% 14.04% $28,006
Prime Junior Silver Miners & Explorers Index 48.51% 24.14% -2.87% $7,957

 

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).

 

The chart illustrates the performance of a hypothetical $10,000 investment made on November 28, 2012, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The index returns do not reflect fees or expenses and are not available for direct investment.

 


5

 

ETFMG Prime Junior Silver Miners ETF

 

 

Top Ten Holdings as of September 30, 2020 (Unaudited)*

 

    Security % of Total Investments
1   Pan American Silver Corp. 13.04%
2   Hecla Mining Co. 11.02%
3   First Majestic Silver Corp. 7.91%
4   Yamana Gold, Inc. 7.10%
5   Hochschild Mining PLC 5.15%
6   MAG Silver Corp. 5.01%
7   Silvercorp Metals, Inc. 4.33%
8   SilverCrest Metals, Inc. 4.32%
9   Harmony Gold Mining Co., Ltd. 4.25%
10   SSR Mining, Inc. 3.05%

 

Top Ten Holdings = 65.18% of Total Investments

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

 


6

 

ETFMG Prime Cyber Security ETF

Growth of $10,000 (Unaudited)

 

 

 

Average Annual Returns 1 Year 5 Year Since Inception Value of $10,000
Year Ended September 30, 2020 Return Return (11/11/14) (9/30/2020)
ETFMG Prime Cyber Security ETF (NAV) 26.75% 13.75% 11.78% $19,258
ETFMG Prime Cyber Security ETF (Market) 26.95% 13.78% 11.78% $19,256
S&P 500 Index 15.15% 14.15% 11.11% $18,585
Prime Cyber Defense Index 26.65% 13.97% 12.19% $19,681

 

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).

 

The chart illustrates the performance of a hypothetical $10,000 investment made on November 11, 2014, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

 


7

 

ETFMG Prime Cyber Security ETF

 

 

Top Ten Holdings as of September 30, 2020 (Unaudited)*

 

    Security % of Total Investments
1   Cisco Systems, Inc. 2.95%
2   CloudFlare, Inc. 2.74%
3   Palo Alto Networks, Inc. 2.57%
4   Splunk, Inc. 2.51%
5   Akamai Technologies, Inc. 2.39%
6   Fortinet, Inc. 2.33%
7   SailPoint Technologies Holdings, Inc. 2.31%
8   Tenable Holdings, Ltd. 2.28%
9   CyberArk Software, Ltd. 2.28%
10   Checkpoint Therapeutics, Inc. 2.27%

 

Top Ten Holdings = 24.63% of Total Investments

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

 


8

 

ETFMG Prime Mobile Payments ETF

Growth of $10,000 (Unaudited)

 

 

 

Average Annual Returns 1 Year 5 Year Since Inception Value of $10,000
Year Ended September 30, 2020 Return Return (7/15/15) (9/30/2020)
ETFMG Prime Mobile Payments ETF (NAV) 16.56% 18.50% 16.33% $21,995
ETFMG Prime Mobile Payments ETF (Market) 16.75% 18.74% 16.36% $22,029
S&P 500 Index 15.15% 14.15% 11.63% $17,738
Prime Mobile Payments Index 17.31% 19.22% 17.04% $22,701

 

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).

 

The chart illustrates the performance of a hypothetical $10,000 investment made on July 15, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

 


9

 

ETFMG Prime Mobile Payments ETF

 

 

Top Ten Holdings as of September 30, 2020 (Unaudited)*

 

    Security % of Total Investments
1   Square, Inc. 5.73%
2   PayPal Holdings, Inc. 5.58%
3   Fiserv, Inc. 5.45%
4   MasterCard, Inc. 5.34%
5   Fidelity National Information Services, Inc. 5.32%
6   Visa, Inc. 5.19%
7   American Express Co. 5.05%
8   Adyen N.V. 4.74%
9   Global Payments, Inc. 4.50%
10   Fleetcor Technologies, Inc. 2.58%

 

Top Ten Holdings= 49.48% of Total Investments

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

 


10

 

ETFMG Sit Ultra Short ETF

Growth of $10,000 (Unaudited)

 

 

Average Annual Returns Since Inception Value of $10,000
Period Ended September 30, 2020 (10/8/2019) (9/30/2020)
ETFMG Sit Ultra Short ETF (NAV) 1.19% $10,119
ETFMG Sit Ultra Short ETF (Market) 1.21% $10,121

 

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).

 

The chart illustrates the performance of a hypothetical $10,000 investment made on October 8, 2019, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

 


11

 

ETFMG Sit Ultra Short ETF

 

 

Top Ten Holdings as of September 30, 2020 (Unaudited)*

 

    Security % of Total Investments
1   Intercontinental Exchange, Inc. 2.86%
2   Carvana Auto Receivables Trust 2.75%
3   HSBC Holdings PLC 2.60%
4   Citizens Financial Group, Inc. 2.53%
5   Commonwealth Bank of Australia 2.43%
6   Canadian Imperial Bank of Commerce 2.38%
7   Daimler Finance North America LLC 2.31%
8   Equifax, Inc. 2.30%
9   Honeywell International, Inc. 2.16%
10   Northrop Grumman Corp. 2.08%

 

Top Ten Holdings =24.40% of Total Investments

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

 


12

 

ETFMG Travel Tech ETF

Growth of $10,000 (Unaudited)

 

 

Average Annual Returns Since Inception Value of $10,000
Period Ended September 30, 2020 (2/12/2020) (9/30/2020)
ETFMG Travel Tech ETF (NAV) -24.50% $7,550
ETFMG Travel Tech ETF (Market) -23.84% $7,616
S&P 500 Index 0.74% $10,074
Prime Travel Technology Index GTR -24.99% $7,501

 

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).

 

The chart illustrates the performance of a hypothetical $10,000 investment made on February 12, 2020, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

 


13

 

ETFMG Travel Tech ETF

 

 

Top Ten Holdings as of September 30, 2020 (Unaudited)*

 

    Security % of Total Investments
1   Trip.com Group, Ltd. 4.93%
2   Uber Technologies, Inc. 4.63%
3   Expedia Group, Inc. 4.30%
4   Booking Holdings, Inc. 4.30%
5   Hongcheng-Elong Holdings, Ltd. 3.80%
6   Lotte Tour Development C., Ltd. 3.64%
7   TravelSky, Ltd. 3.61%
8   Webjet, Ltd. 3.57%
9   Hanatour Service, Inc. 3.47%
10   Amadeus IT Group S.A. 3.46%

 

Top Ten Holdings = 39.71% of Total Investments

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


14

 

ETFMG Treatments, Testing and Advancements ETF 

Growth of $10,000 (Unaudited)

 

 

Average Annual Returns Since Inception Value of $10,000
Period Ended September 30, 2020 6/17/20 (9/30/2020)
ETFMG Treatments, Testing and Advancements ETF (NAV) 10.82% $11,082
ETFMG Treatments, Testing and Advancements ETF (Market) 10.56% $11,056
S&P 500 Index 8.52% $10,852
Prime Treatments, Testing and Advancements Index NTR 10.88% $11,091

 

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).

 

The chart illustrates the performance of a hypothetical $10,000 investment made on June 17, 2020, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions from the sales of Fund shares. The chart assumes reinvestment of capital gains and dividends. The chart assumes reinvestment of capital gains and dividends, if any. The Index Returns do not reflect fees or expenses and are not available for direct investment.

 


15

 

ETFMG Treatments, Testing and Advancements ETF

 

 

Top Ten Holdings as of September 30, 2020 (Unaudited)*

 

    Security % of Total Investments
1   Moderna, Inc. 5.03%
2   BioNTech SE 4.63%
3   Quest Diagnostics, Inc. 4.24%
4   Laboratory Corp. of America Holdings 4.24%
5   Bio-Rad Laboratories, Inc. 4.19%
6   Quidel Corp. 3.94%
7   Adaptive Biotechnologies Corp. 3.39%
8   Vir Biotechnology, Inc. 3.32%
9   Alnylam Pharmaceuticals, Inc. 3.27%
10   Novavax, Inc. 3.17%

 

Top Ten Holdings = 39.42% of Total Investments

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

 


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 Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Prime Cyber Defense Index (the “Index”).

 

Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The fund is concentrated in technology-related companies that face intense competition, both domestically and internationally, which may have an adverse effect on profit margins. Such companies may have limited product lines, markets, financial resources or personnel. The products of such companies may face obsolescence due to rapid technological developments, frequent new product introduction, unpredictable changes in growth rates, competition for the services of qualified personnel, and competition from foreign competitors with lower production costs. Technology companies are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Funds are non-diversified, meaning they may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Diversification does not assure a profit or protect against a loss in a declining market. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Cyber Defense Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Prime Cyber Defense Index.

 

Unlike with an actively managed fund, the Fund’s adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. This means that, based on market and economic conditions, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline.

 

Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and may be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries, including the U.S. Any such events could have a significant adverse impact on the value of the Fund’s investments.

 

ETF Managers Group LLC is the investment adviser to the Fund.

 

The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.

 

IPAY

 

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

 


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 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 September 30, 2020 (Unaudited)

 

 

    ETFMG                                
    Prime     ETFMG     ETFMG                 ETFMG  
    Junior     Prime     Prime           ETFMG     Treatments,  
    Silver     Cyber     Mobile     ETFMG     Travel     Testing and  
    Miners     Security     Payments     Sit Ultra     Tech     Advancements  
    ETF     ETF     ETF     ETF     ETF     ETF  
As a percent of Net Assets:                                                
Australia     %     %     3.2 %     %     4.1 %     %
Brazil                 1.4             3.8        
Canada     72.2       3.8                   3.3       2.6  
China                             4.1        
Cyprus                 0.6                    
Finland           0.2                          
France                 4.5                   0.6  
Germany                                   6.0  
Israel           8.0                          
Italy                 2.4                    
Japan           4.2       2.7             12.8       0.6  
Luxembourg     0.9                         2.7        
Mauritus                             3.9        
Netherlands                 5.3             3.7       3.1  
Peru     2.7                                
Republic of Korea           0.7                   8.1        
South Africa     4.3                                
Spain                             4.0        
Sweden           1.1                          
United Kingdom     5.2       7.0       1.7             7.5       1.6  
United States     14.4       74.5       77.3             41.5       85.0  
Asset Backed Securities                       2.7              
Coporate Obligations                       92.6              
Municipal Debt Obligations                       0.2              
Short-Term and other Net                                                
Assets (Liabilities)     0.3       0.5       0.9       4.5       0.5       0.5  
      100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %

 


22

 

ETFMG™ ETFs

 

ETFMG Prime Junior Silver Miners ETF

 

Schedule of Investments

September 30, 2020

 
    Shares     Value  
COMMON STOCKS - 99.7%                
Canada - 72.2%                
Commercial Services & Supplies - 1.4%                
Alexco Resource Corp. (a)     2,230,374     $ 5,888,187  
Metals & Mining - 70.8% (b)                
Americas Gold & Silver Corp. (a)     1,731,429       4,564,091  
Auryn Resources, Inc. (a)     585,867       1,165,970  
Aya Gold & Silver, Inc. (a)     1,505,579       2,951,118  
Bear Creek Mining Corp. (a)     1,835,825       4,342,945  
Canada Silver Cobalt Works, Inc. (a)     544,746       212,735  
Capstone Mining Corp. (a)     2,182,775       2,376,947  
Dundee Precious Metals, Inc.     987,284       7,073,478  
Eldorado Gold Corp. (a)     947,994       10,002,866  
Endeavour Silver Corp. (a)     2,538,144       8,908,885  
Excellon Resources, Inc. (a)     518,736       1,503,752  
First Majestic Silver Corp. (a)     3,399,861       32,366,677  
Fortuna Silver Mines, Inc. (a)     1,001,644       6,371,465  
Gran Colombia Gold Corp.     337,112       1,587,392  
Great Panther Mining, Ltd. (a)     1,947,916       1,729,555  
GT Gold Corp. (a)     688,258       697,795  
Hudbay Minerals, Inc.     1,422,424       6,014,229  
Kootenay Silver, Inc. (a)(d)     4,807,480       1,371,967  
Liberty Gold Corp. (a)     1,344,507       2,140,629  
MAG Silver Corp. (a)     1,262,056       20,520,080  
Mandalay Resources Corp. (a)     496,428       592,783  
Metalla Royalty & Streaming, Ltd.     205,701       1,615,886  
Minaurum Gold, Inc. (a)     1,850,949       903,546  
Minco Silver Corp. (a)     995,380       362,554  
Mirasol Resources, Ltd. (a)     294,938       99,675  
New Gold, Inc. (a)(d)     3,684,904       6,281,951  
New Pacific Metals Corp. (a)     829,163       4,010,221  
Orla Mining, Ltd. (a)     1,234,940       4,850,540  
Pan American Silver Corp.     1,660,166       53,375,169  
Premier Gold Mines, Ltd. (a)     1,291,892       2,483,755  
Sabina Gold & Silver Corp. (a)     1,773,461       3,436,243  
Seabridge Gold, Inc. (a)     365,020       6,864,257  
Sierra Metals, Inc. (a)     886,370       1,291,396  
Silvercorp Metals, Inc.     2,457,605       17,736,911  
SilverCrest Metals, Inc. (a)     2,084,974       17,678,162  
SSR Mining, Inc. (a)     670,214       12,507,843  
Trevali Mining Corp. (a)     4,369,331       442,987  
Turquoise Hill Resources, Ltd. (a)     10,955,521       9,297,239  
Yamana Gold, Inc.     5,117,419       29,066,940  
Total Metals & Mining             288,800,634  
Total Canada             294,688,821  
                 
Luxembourg - 0.9%                
Metals & Mining - 0.9% (b)                
Nexa Resources SA     725,744       3,839,186  

 

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

 


23

 

ETFMG™ ETFs

 

ETFMG Prime Junior Silver Miners ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
Peru - 2.7%                
Metals & Mining - 2.7% (b)                
Cia de Minas Buenaventura SAA - ADR     891,905     $ 10,899,079  
                 
South Africa - 4.3%                
Metals & Mining - 4.3% (b)                
Harmony Gold Mining Co., Ltd. - ADR (a)     3,300,725       17,394,821  
                 
United Kingdom - 5.2%                
Metals & Mining - 5.2% (b)                
Hochschild Mining PLC     7,469,496       21,088,618  
                 
United States - 14.4%                
Metals & Mining - 14.4% (b)                
Coeur Mining, Inc. (a)     1,326,826       9,791,976  
Gold Resource Corp.     381,468       1,300,806  
Golden Minerals Co. (a)     809,541       340,007  
Hecla Mining Co.     8,882,639       45,123,806  
McEwen Mining, Inc. (a)     2,191,019       2,322,480  
Total Metals & Mining             58,879,075  
TOTAL COMMON STOCKS (Cost $351,490,177)             406,789,600  
                 
SHORT-TERM INVESTMENTS - 0.6%                
Money Market Funds - 0.6%                
Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02% (c)     2,651,352       2,651,352  
TOTAL SHORT-TERM INVESTMENTS (Cost $2,651,352)             2,651,352  
                 
Total Investments (Cost $354,141,529) - 100.3%             409,440,952  
Liabilities in Excess of Other Assets - (0.3)%             (1,122,369 )
TOTAL NET ASSETS - 100.0%           $ 408,318,583  

 

Percentages are stated as a percent of net assets.

 

ADR American Depositary Receipt 


(a) Non-income producing security.

(b) As of September 30, 2020, the Fund had a significant portion of its assets invested in the Metals & Mining Industry.

(c) The rate quoted is the annualized seven-day yield at September 30, 2020.

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

 

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).

 

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

 


24

 

ETFMG™ ETFs

 

ETFMG Prime Cyber Security ETF

 

Schedule of Investments

September 30, 2020

 

 

    Shares     Value  
COMMON STOCKS - 99.5%                
Canada - 3.8%                
Software - 3.8% (d)                
Absolute Software Corp.     1,769,146     $ 21,484,053  
BlackBerry, Ltd. (a)     7,827,391       35,917,058  
Total Software             57,401,111  
                 
Finland - 0.2%                
Software - 0.2% (d)                
F-Secure Oyj     654,525       2,586,146  
                 
Israel - 8.0%                
Communications Equipment - 1.1%                
Radware, Ltd. (a)     646,947       15,681,995  
Software - 6.9% (d)                
Allot Communications, Ltd. (a)     829,330       7,546,903  
Check Point Software Technologies, Ltd. (a)     327,896       39,459,004  
CyberArk Software, Ltd. (a)(b)     382,242       39,531,468  
Tufin Software Technologies, Ltd. (a)(e)     2,019,067       16,657,303  
Total Software             103,194,678  
Total Israel             118,876,673  
                 
Japan - 4.2%                
Software - 4.2%                
Digital Arts, Inc.     216,365       17,581,644  
FFRI Security, Inc. (a)     314,416       8,249,078  
Trend Micro, Inc.     612,956       37,254,520  
Total Software             63,085,242  
                 
Republic of Korea - 0.7%                
Software - 0.7%                
Ahnlab, Inc.     190,029       10,707,919  
                 
Sweden - 1.1%                
Electronic Equipment, Instruments & Components - 1.1%                
Fingerprint Cards AB - Class B (b)     7,821,618       15,615,551  
                 
United Kingdom - 7.0%                
Aerospace & Defense - 3.0%                
BAE Systems PLC     2,480,949       15,430,300  
QinetiQ Group PLC     3,892,934       13,954,645  
Ultra Electronics Holdings PLC     565,207       15,213,577  
Total Aerospace & Defense             44,598,522  
IT Services - 0.5%                
NCC Group PLC     3,299,509       7,493,272  

 

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

 

25

 

ETFMG™ ETFs

 

ETFMG Prime Cyber Security ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
Software - 3.5% (d)            
Avast PLC     5,379,305     $ 36,580,218  
Mimecast, Ltd. (a)(b)     345,780       16,223,998  
Total Software             52,804,216  
Total United Kingdom             104,896,010  
                 
United States - 74.5%                
Aerospace & Defense - 2.3%                
Parsons Corp. (a)(b)     1,040,624       34,902,529  
Communications Equipment - 7.9%                
Cisco Systems, Inc.     1,298,271       51,138,895  
F5 Networks, Inc. (a)     140,508       17,250,167  
Juniper Networks, Inc.     1,642,080       35,304,720  
NetScout Systems, Inc. (a)     708,260       15,461,316  
Total Communications Equipment             119,155,098  
Internet Software & Services - 0.7%                
Zix Corp. (a)(b)     1,890,715       11,041,776  
IT Services - 16.3%                
Akamai Technologies, Inc. (a)     375,201       41,474,719  
Booz Allen Hamilton Holding Corp.     198,749       16,492,192  
CACI International, Inc. - Class A (a)     167,848       35,778,480  
Leidos Holdings, Inc.     193,864       17,282,976  
LiveRamp Holdings, Inc. (a)     735,368       38,070,001  
ManTech International Corp. - Class A     215,328       14,831,793  
Okta, Inc. (a)(b)     114,992       24,591,039  
Science Applications International Corp.     487,519       38,231,240  
VeriSign, Inc. (a)     90,335       18,505,125  
Total IT Services             245,257,565  

 

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

 

26

 

ETFMG™ ETFs

 

ETFMG Prime Cyber Security ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
Software - 47.3% (d)            
A10 Networks, Inc. (a)     1,595,830     $ 10,165,437  
Cloudflare, Inc. - Class A (a)     1,159,955       47,627,752  
CommVault Systems, Inc. (a)     913,698       37,278,878  
Crowdstrike Holdings, Inc. - Class A (a)     268,120       36,818,238  
Everbridge, Inc. (a)(b)     141,147       17,746,412  
FireEye, Inc. (a)     2,994,095       36,962,103  
Fortinet, Inc. (a)     342,736       40,377,728  
MobileIron, Inc. (a)     2,762,095       19,362,286  
NortonLifeLock, Inc.     1,849,304       38,539,495  
OneSpan, Inc. (a)     779,194       16,331,906  
Palo Alto Networks, Inc. (a)     181,975       44,538,381  
Ping Identity Holding Corp. (a)(b)     1,251,003       39,043,804  
Proofpoint, Inc. (a)     371,907       39,254,784  
Qualys, Inc. (a)(b)     388,033       38,031,114  
Rapid7, Inc. (a)(b)     270,137       16,543,190  
Sailpoint Technologies Holdings, Inc. (a)(b)     1,014,654       40,149,859  
SecureWorks Corp. - Class A (a)(b)(e)     1,123,854       12,800,697  
SolarWinds Corp. (a)(b)     1,913,197       38,914,427  
Splunk, Inc. (a)     231,963       43,639,199  
Tenable Holdings, Inc. (a)     1,049,293       39,610,811  
Varonis Systems, Inc. (a)(b)     150,741       17,398,526  
Verint Systems, Inc. (a)(b)     323,853       15,603,238  
Zscaler, Inc. (a)(b)     176,989       24,900,582  
Total Software             711,638,847  
Total United States             1,121,995,815  
TOTAL COMMON STOCKS (Cost $1,304,612,188)             1,495,164,467  
                 
INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 15.4%                
ETFMG Sit Ultra Short ETF (e)     1,000,000       49,785,000  
Mount Vernon Liquid Assets Portfolio, LLC, 0.18% (c)     182,465,962       182,465,962  
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $232,574,838)             232,250,962  
                 
SHORT-TERM INVESTMENTS - 0.6%                
Money Market Funds - 0.6%                
Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02% (c)     8,840,046       8,840,046  
TOTAL SHORT-TERM INVESTMENTS (Cost $8,840,046)             8,840,046  
                 
Total Investments (Cost $1,546,027,072) - 115.5%             1,736,255,475  
Liabilities in Excess of Other Assets - (15.5)%             (232,441,487 )
TOTAL NET ASSETS - 100.0%  
      $ 1,503,813,988  

 

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

 

27

 

ETFMG™ ETFs

 

ETFMG Prime Cyber Security ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

Percentages are stated as a percent of net assets.

 

(a) Non-income producing security.
(b) All or a portion of this security is out on loan as of September 30, 2020.
(c) The rate quoted is the annualized seven-day yield at September 30, 2020.
(d) As of September 30, 2020 the Fund had a significant portion of its assets in the Software Industry.
(e) Affiliated security. Please refer to Note 9 of the Notes to Financial Statements.

 

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

 

28

 

ETFMG™ ETFs

 

ETFMG Prime Mobile Payments ETF

 

Schedule of Investments

September 30, 2020

 

 

    Shares     Value  
COMMON STOCKS - 99.4%                
Australia - 3.2%                
IT Services - 3.2% (d)                
Afterpay, Ltd. (a)     375,152     $ 21,493,531  
EML Payments, Ltd. (a)     2,128,080       4,344,078  
Total IT Services             25,837,609  
                 
Brazil - 1.4%                
IT Services - 1.4% (d)                
Cielo SA     16,438,811       11,562,404  
                 
Cyprus - 0.6%                
IT Services - 0.6% (d)                
QIWI PLC - ADR (b)     286,455       4,969,994  
                 
France - 4.5%                
Electronic Equipment, Instruments & Components - 2.1%                
Ingenico Group SA     107,390       16,657,908  
IT Services - 2.4% (d)                
Worldline SA (a)     232,587       19,121,596  
Total France             35,779,504  
                 
Italy - 2.4%                
IT Services - 2.4% (d)                
Nexi SpA (a)     961,489       19,299,447  
                 
Japan - 2.7%                
Consumer Finance - 0.3%                
Jaccs Co, Ltd.     145,110       2,339,041  
IT Services - 2.2% (d)                
GMO Payment Gateway, Inc.     162,387       17,306,499  
Software - 0.2%                
Intelligent Wave, Inc.     202,258       1,591,752  
Total Japan             21,237,292  
                 
Netherlands - 5.3%                
IT Services - 5.3% (d)                
Adyen NV (a)     22,842       42,113,523  
                 
United Kingdom - 1.8%                
Commercial Services & Supplies - 0.3%                
PayPoint PLC     301,906       1,963,414  
Electronic Equipment, Instruments & Components - 0.3%                
PAX Global Technology, Ltd.     4,443,858       2,660,564  
IT Services - 1.2% (d)                
Network International Holdings     2,755,473       9,713,737  
Total United Kingdom             14,337,715  

 

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

 

29

 

ETFMG™ ETFs

 

ETFMG Prime Mobile Payments ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
United States - 77.5%                
Consumer Finance - 10.2%                
American Express Co.     447,469     $ 44,858,768  
Discover Financial Services     382,518       22,101,890  
Green Dot Corp. - Class A (a)(b)     279,967       14,169,130  
Total Consumer Finance             81,129,788  
IT Services - 63.5% (d)                
Euronet Worldwide, Inc. (a)     162,467       14,800,744  
EVERTEC, Inc.     408,300       14,172,093  
Evo Payments, Inc. - Class A (a)(b)     550,175       13,671,849  
Fidelity National Information Services, Inc.     320,666       47,205,242  
Fiserv, Inc. (a)     469,686       48,401,142  
FleetCor Technologies, Inc. (a)     96,356       22,942,364  
Global Payments, Inc.     225,102       39,973,613  
Huifu Payment, Ltd. (a)     7,556,301       2,018,251  
I3 Verticals, Inc. - Class A (a)(b)     143,160       3,614,790  
International Money Express, Inc. (a)(b)     206,785       2,970,467  
MasterCard, Inc. - Class A     140,085       47,372,544  
Net 1 UEPS Technologies, Inc. (a)(b)     457,705       1,542,466  
Pagseguro Digital, Ltd. - Class A (a)(b)     521,509       19,666,104  
PayPal Holdings, Inc. (a)     251,354       49,524,279  
Paysign, Inc. (a)(b)     441,853       2,509,725  
Shift4 Payments, Inc. - Class A (a)     291,723       14,107,724  
Square, Inc. - Class A (a)     313,071       50,889,691  
StoneCo, Ltd. - Class A (a)(b)     402,967       21,312,925  
Visa, Inc. - Class A (b)     230,459       46,084,886  
Western Union Co.     772,975       16,564,854  
WEX, Inc. (a)     107,341       14,917,179  
Yeahka, Ltd. (a)     2,105,859       12,906,794  
Total IT Services             507,169,726  
Software - 1.9%                
ACI Worldwide, Inc. (a)     567,223       14,821,537  
Technology Hardware, Storage & Peripherals - 1.9%                
NCR Corp. (a)(b)     678,623       15,024,713  
Total United States             618,145,764  
TOTAL COMMON STOCKS (Cost $719,984,314)             793,283,252  
                 
INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL - 11.3%                
ETFMG Sit Ultra Short ETF (e)     600,000       29,871,000  
Mount Vernon Liquid Assets Portfolio, LLC, 0.18% (c)     60,574,592       60,574,592  
TOTAL INVESTMENTS PURCHASED WITH PROCEEDS FROM SECURITIES LENDING COLLATERAL (Cost $90,656,859)             90,445,592  

 

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

 

30

 

ETFMG™ ETFs

 

ETFMG Prime Mobile Payments ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Shares     Value  
SHORT-TERM INVESTMENTS - 0.5%                
Money Market Funds - 0.5%                
Invesco Advisers, Inc. STIT-Treasury Portfolio - Institutional Class, 0.02% (c)     3,816,328     $ 3,816,328  
TOTAL SHORT-TERM INVESTMENTS (Cost $3,816,328)             3,816,328  
                 
Total Investments (Cost $814,457,501) - 111.2%             887,545,172  
Liabilities in Excess of Other Assets - (11.2)%             (89,402,732 )
TOTAL NET ASSETS - 100.0%           $ 798,142,440  

 

Percentages are stated as a percent of net assets.

 

ADR American Depositary Receipt
(a) Non-income producing security.
(b) All or a portion of this security is out on loan as of September 30, 2020.
(c) The rate quoted is the annualized seven-day yield at September 30, 2020.
(d) As of September 30, 2020, the Fund had a significant portion of its assets in the IT Services 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.

 

31

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

September 30, 2020

 

 

    Principal
Amount
    Value  
ASSET BACKED SECURITIES - 2.7%                
Carvana Auto Receivables Trust
    Series 2019-2, 2.580%, 03/15/2023 (a)
  $ 2,871,326     $ 2,891,580  
TOTAL ASSET BACKED SECURITIES (Cost $2,878,598)             2,891,580  
                 
CORPORATE OBLIGATIONS - 92.6%                
Aerospace & Defense - 4.1%                
BAE Systems Holdings, Inc.                
2.850%, 12/15/2020 (a)     1,165,000       1,168,249  
Northrop Grumman Corp.                
2.080%, 10/15/2020     2,183,000       2,184,458  
Textron, Inc.                
0.793% (3 Month LIBOR + 0.550%) 11/10/2020 (b)     1,000,000       1,000,030  
              4,352,737  
Automobiles – 9.3%                
American Honda Finance Corp.                
0.531% (3 Month LIBOR + 0.280%) 11/02/2020 (b)     1,000,000       1,000,324  
0.599% (3 Month LIBOR + 0.350%) 11/05/2021 (b)     450,000       450,952  
BMW US Capital LLC                
0.754% (3 Month LIBOR + 0.500%) 08/13/2021 (a)(b)     160,000       160,351  
0.944% (3 Month LIBOR + 0.640%) 04/06/2022 (a)(b)     1,290,000       1,295,433  
Daimler Finance North America LLC                
1.238%, 02/22/2022 (a)(b)     2,422,000       2,429,588  
General Motors Financial Co., Inc.                
3.150%, 06/30/2022     1,488,000       1,529,291  
Hyundai Capital America                
2.850%, 11/01/2022 (a)     2,000,000       2,069,592  
John Deere Capital Corp.                
2.587% (3 Month LIBOR + 0.260%) 09/10/2021 (b)     300,000       300,504  
PACCAR Financial Corp.                
0.503% (3 Month LIBOR + 0.260%) 05/10/2021 (b)     85,000       85,107  
Toyota Motor Credit Corp.                
0.786% (3 Month LIBOR + 0.400%) 05/17/2022 (b)     500,000       501,762  
              9,822,904  

 

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

 

32

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Principal
Amount
    Value  
Banks - 26.2% (e)            
Bank of America Corp.                
1.692% (3 Month LIBOR + 1.420%) 04/19/2021 (b)     1,000,000     $ 1,007,544  
1.451% (3 Month LIBOR + 1.180%) 10/21/2022 (b)     100,000       101,057  
1.264% (3 Month LIBOR + 1.000%) 04/24/2023 (b)     1,000,000       1,010,123  
Bank of Montreal                
0.945% (3 Month LIBOR + 0.630%) 09/11/2022 (b)     250,000       252,461  
Bank of Nova Scotia                
0.958% (3 Month LIBOR + 0.640%) 03/07/2022 (b)     150,000       151,162  
Barclays PLC                
2.353% (3 Month LIBOR + 2.110%) 08/10/2021 (b)     450,000       457,614  
1.898% (3 Month LIBOR + 1.625%) 01/10/2023 (b)     1,300,000       1,309,634  
Canadian Imperial Bank of Commerce                
0.614% (3 Month LIBOR + 0.310%) 10/05/2020 (b)     2,500,000       2,500,098  
Citizens Financial Group, Inc.                
4.150%, 09/28/2022 (a)     2,522,000       2,667,106  
Commonwealth Bank of Australia                
0.988% (3 Month LIBOR + 0.680%) 09/18/2022 (a)(b)     2,539,000       2,560,725  
Cooperatieve Rabobank UA                
0.753% (3 Month LIBOR + 0.480%) 01/10/2023 (b)     895,000       900,055  
Credit Suisse AG/New York NY                
0.527% (3 Month SOFR + 0.450%) 02/04/2022 (b)     970,000       972,306  
First Niagara Financial Group, Inc.                
7.250%, 12/15/2021     1,050,000       1,133,039  
Fulton Financial Corp.                
3.600%, 03/16/2022     600,000       613,493  
HSBC Holdings PLC                
1.804% (3 Month LIBOR + 1.500%) 01/05/2022 (b)     2,700,000       2,737,455  
Huntington Bancshares, Inc.                
4.350%, 02/04/2023     766,000       823,076  
Huntington National Bank                
0.799% (3 Month LIBOR + 0.550%) 02/05/2021 (b)     799,000       800,134  
JPMorgan Chase & Co.                
1.275% (3 Month LIBOR + 1.000%) 01/15/2023 (b)     1,000,000       1,008,997  
1.145% (3 Month LIBOR + 0.900%) 04/25/2023 (b)     155,000       156,314  
PNC Bank NA                
0.745% (3 Month LIBOR + 0.500%) 07/27/2022 (b)     1,535,000       1,543,463  
Regions Financial Corp.                
3.200%, 02/08/2021     328,000       330,421  
Reliance Standard Life Global Funding II                
2.625%, 07/22/2022 (a)     314,000       323,470  
Royal Bank of Canada                
0.633% (3 Month LIBOR + 0.360%) 01/17/2023 (b)     1,000,000       1,003,548  
Swedbank AB                
1.013% (3 Month LIBOR + 0.700%) 03/14/2022 (a)(b)     200,000       201,619  
Wells Fargo Bank NA                
0.973% (3 Month LIBOR + 0.660%) 09/09/2022 (b)     500,000       502,367  
2.082%, 09/09/2022 (c)     200,000       202,866  

 

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

 

33

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Principal
Amount
    Value  
Wells Fargo & Co.                
1.374% (3 Month LIBOR + 1.110%) 01/24/2023 (b)     878,000     $ 884,821  
Westpac Banking Corp.                
0.836% (3 Month LIBOR + 0.570%) 01/11/2023 (b)     1,500,000       1,509,264  
              27,664,232  
Biotechnology - 2.4%                
AbbVie, Inc.                
1.024% (3 Month LIBOR + 0.650%) 11/21/2022 (a)(b)     2,000,000       2,010,456  
GlaxoSmithKline Capital PLC                
3.125%, 05/14/2021     495,000       503,526  
              2,513,982  
Capital Markets - 6.4%                
Bank of New York Mellon Corp.                
2.450%, 11/27/2020     1,265,000       1,267,017  
                 
Charles Schwab Corp.                
0.694% (3 Month LIBOR + 0.320%) 05/21/2021 (b)     1,300,000       1,301,992  
Intercontinental Exchange, Inc.                
0.000% (3 Month LIBOR + 0.650%) 06/15/2023 (b)     3,000,000       3,010,146  
Morgan Stanley                
0.751% (3 Month SOFR + 0.700%) 01/20/2023 (b)     1,137,000       1,140,320  
              6,719,475  
Chemicals - 2.0%                
Albemarle Corp.                
1.442% (3 Month LIBOR + 1.050%) 11/15/2022 (b)     585,000       583,107  
Sherwin Williams Co.                
2.750%, 06/01/2022     293,000       303,410  
Westlake Chemical Corp.                
3.600%, 07/15/2022     1,150,000       1,199,829  
              2,086,346  

 

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

 

34

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Principal
Amount
    Value  
Consumer Finance - 10.3%                
AIG Global Funding                
0.757% (3 Month LIBOR + 0.460%) 06/25/2021 (a)(b)     271,000     $ 271,745  
2.700%, 12/15/2021 (a)     75,000       77,043  
BBVA USA                
1.045% (3 Month LIBOR + 0.730%) 06/11/2021 (b)     500,000       501,577  
Capital One Financial Corp.                
0.988% (3 Month LIBOR + 0.720%) 01/30/2023 (b)     1,575,000       1,576,333  
Citibank NA                
0.977% (3 Month LIBOR + 0.600%) 05/20/2022 (b)     1,821,000       1,826,213  
3.165%, 02/19/2022 (c)     400,000       404,356  
Fifth Third Bank NA                
0.891% (3 Month LIBOR + 0.640%) 02/01/2022 (b)     2,000,000       2,012,587  
FMR LLC                
5.350%, 11/15/2021 (a)     200,000       210,858  
Manufacturers & Traders Trust Co.                
1.388% (1 Month LIBOR + 01.215%) 12/28/2020 (c)     250,000       250,134  
0.515% (3 Month LIBOR + 0.270%) 01/25/2021 (b)     1,205,000       1,206,162  
0.990% (3 Month LIBOR + 0.640%) 12/01/2021 (c)     1,553,000       1,553,241  
Truist Bank                
0.841% (3 Month LIBOR + 0.680%) 08/02/2022 (b)     500,000       501,801  
US Bank NA                
0.800% (3 Month LIBOR + 0.440%) 05/23/2022 (b)     500,000       502,485  
              10,894,535  
Containers & Packaging - 0.5%                
WestRock Co.                
4.000%, 03/01/2023     500,000       534,600  
                 
Diversed Financial Services - 1.1%                
Century Housing Corp.                
3.824%, 11/01/2020     1,000,000       1,000,592  
Reckitt Benckiser Treasury Services PLC                
0.857% (3 Month LIBOR + 0.560%) 06/24/2022 (a)(b)     200,000       200,788  
              1,201,380  
Diversified Telecommunication Services - 1.5%                
Comcast Corp.                
0.626% (3 Month LIBOR + 0.330%) 10/01/2020 (b)     1,600,000       1,600,000  

 

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

 

35

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Principal
Amount
    Value  
Electric Utilities – 3.1%                
Duke Energy Florida LLC                
0.610% (3 Month LIBOR + 0.250%) 11/26/2021 (b)     130,000     $ 130,238  
Duke Energy Progress LLC                
0.000% (3 Month LIBOR + 0.180%) 02/18/2022 (b)     1,000,000       999,897  
Duquesne Light Holdings, Inc.                
5.900%, 12/01/2021 (a)     200,000       210,187  
Florida Power & Light Co.                
0.641% (3 Month LIBOR + 0.380%) 07/28/2023 (b)     1,500,000       1,501,166  
Wisconsin Power & Light Co.                
2.250%, 11/15/2022     442,000       454,276  
              3,295,764  
Electrical Equipment - 2.0%                
Arrow Electronics, Inc.                
3.500%, 04/01/2022     2,000,000       2,068,721  
Food & Staples Retailing - 1.4%                
Walmart, Inc.                
1.900%, 12/15/2020     1,500,000       1,505,214  
Health Care Providers & Services - 3.1%                
Cigna Corp.                
0.949% (3 Month LIBOR + 0.650%) 09/17/2021 (b)     2,000,000       2,000,408  
1.165% (3 Month LIBOR + 0.890%) 07/15/2023 (b)     360,000       363,918  
UnitedHealth Group, Inc.                
0.345% (3 Month LIBOR + 0.070%) 10/15/2020 (b)     898,000       898,038  
              3,262,364  
Industrial Conglomerates - 2.1%                
Honeywell International, Inc.                
0.000% (3 Month LIBOR + 0.230%) 08/19/2022 (b)     2,270,000       2,272,111  

 

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

 

36

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Principal
Amount
    Value  
Insurance - 8.0%            
Allstate Corp.                
0.936% (3 Month LIBOR + 0.630%) 03/29/2023 (b)     1,215,000     $ 1,224,969  
Fidelity National Financial, Inc.                
5.500%, 09/01/2022     500,000       543,022  
Infinity Property and Casualty Corp.                
5.000%, 09/19/2022     160,000       171,233  
Jackson National Life Global Funding                
0.649% (3 Month SOFR + 0.600%) 01/06/2023 (a)(b)     2,000,000       2,003,424  
Marsh & McLennan Cos., Inc.                
1.506% (3 Month LIBOR + 1.200%) 12/29/2021 (b)     600,000       600,579  
Metropolitan Life Global Funding I                
0.626% (3 Month SOFR + 0.570%) 01/13/2023 (a)(b)     2,000,000       2,008,052  
Nationwide Financial Services, Inc.                
5.375%, 03/25/2021 (a)     324,000       331,197  
Progressive Corp.                
3.750%, 08/23/2021     1,000,000       1,030,996  
W R Berkley Corp.                
4.625%, 03/15/2022     513,000       542,083  
              8,455,555  
                 
Machinery - 0.2%                
Bunge, Ltd.                
3.000%, 09/25/2022     206,000       214,281  
                 
Metals & Mining - 2.2%                
Glencore Finance Canada, Ltd.                
4.950%, 11/15/2021 (a)     1,200,000       1,253,149  
4.250%, 10/25/2022 (a)     1,000,000       1,062,165  
              2,315,314  
Multi-Utilities - 1.3%                
CenterPoint Energy Houston Electric LLC                
1.850% (3 Month LIBOR + 0.880%) 06/01/2021     350,000       353,147  
Dominion Energy, Inc.                
0.000% (3 Month LIBOR + 0.530%) 09/15/2023 (b)     1,000,000       1,001,746  
              1,354,893  
Paper & Forest Products - 0.4%                
Georgia-Pacific LLC                
5.400%, 11/01/2020 (a)     470,000       471,856  
                 
Professional Services - 2.5%                
Equifax, Inc.                
1.262% (3 Month LIBOR + 0.870%) 08/15/2021 (b)     2,411,000       2,420,907  
Athene Global Funding                
1.534% (3 Month LIBOR + 1.230%) 07/01/2022 (a)(b)     200,000       201,597  
              2,622,504  

 

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

 

37

 

ETFMG™ ETFs

 

ETFMG Sit Ultra Short ETF

 

Schedule of Investments

September 30, 2020 (Continued)

 

 

    Principal
Amount
    Value  
Semiconductors & Semiconductor Equipment - 1.0%                
Xilinx, Inc.                
3.000%, 03/15/2021     1,073,000     $ 1,085,814  
Technology Hardware, Storage & Peripherals - 1.5%                
Hewlett Packard Enterprise Co.                
0.998% (3 Month LIBOR + 0.680%) 03/12/2021 (b)     500,000       501,043  
1.024% (3 Month LIBOR + 0.720%) 10/05/2021 (b)     1,062,000       1,062,154  
              1,563,197  
TOTAL CORPORATE OBLIGATIONS (Cost $97,264,017)             97,877,779  
                 
MUNICIPAL DEBT OBLIGATIONS - 0.2%                
City of Moline IL                
2.080%, 12/01/2021     135,000       135,394  
2.130%, 12/01/2022     100,000       100,645  
TOTAL MUNICIPAL DEBT OBLIGATIONS (Cost $235,000)             236,039  
                 
    Shares     Value  
SHORT-TERM INVESTMENTS - 4.0%                
Money Market Funds - 4.0%                
First American Government Obligations Fund - Class X, 0.07% (d)     4,221,375       4,221,375  
TOTAL SHORT TERM INVESTMENTS (Cost $4,221,375)