UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 (formerly known as FactorShares Trust)
(Exact name of registrant as specified in charter)
(Exact name of registrant as specified in charter)
30 Maple Street, Suite 2
Summit, NJ 07901
(Address of principal executive offices) (Zip code)
(Address of principal executive offices) (Zip code)
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 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, 2017
Date of reporting period: March 31, 2017
Item 1. Reports to Stockholders.
type
![(PURE FUNDS LOGO)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure001.jpg)
Semi-Annual Report
March 31, 2017
March 31, 2017
PureFundsTM ISE Junior Silver ETF
Ticker: SILJ
PureFundsTM ISE Cyber Security ETF
Ticker: HACK
PureFundsTM ISE Big Data ETF
Ticker: BIGD
PureFundsTM ISE Mobile Payments ETF
Ticker: IPAY
PureFundsTM Drone Economy Strategy ETF
Ticker: IFLY
PureFundsTM Video Game Tech ETF
Ticker: GAMR
PureFundsTM Solactive FinTech ETF
Ticker: FINQ
PureFundsTM ETFx HealthTech ETF
Ticker: IMED
![(ETF LOGO)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure002.jpg)
Each Fund is a series of ETF Managers Trust.
PureFunds™ ETFs
TABLE OF CONTENTS March 31, 2017 |
Page | ||
Shareholders’ Letter | 2 | |
Growth of $10,000 Investment and Top 10 Holdings | 4 | |
Important Disclosures and Key Risk Factors | 20 | |
Portfolio Allocations | 25 | |
Schedules of Investments | 27 | |
Statements of Assets and Liabilities | 48 | |
Statements of Operations | 50 | |
Statements of Changes in Net Assets | 52 | |
Financial Highlights | 60 | |
Notes to the Financial Statements | 68 | |
Approval of Advisory Agreements and Board Considerations | 81 | |
Expense Examples | 83 | |
Information about Portfolio Holdings | 86 | |
Information about Proxy Voting | 86 |
1
Dear Shareholder,
The six months ended March 31, 2017 was a period of mostly positive performance for PureFunds. We continue to strive to deliver thematic technology ETFs that focus on major areas of technological advancement in business and life, namely, with the PureFunds Solactive FinTech ETFTM (Nasdaq Ticker: FINQ), PureFunds ETFx HealthTech ETFTM (Nasdaq Ticker: IMED), PureFunds ISE Cyber Security ETFTM (NYSE Arca Ticker: HACK), PureFunds ISE Junior Silver ETFTM (NYSE Arca Ticker: SILJ), PureFunds ISE Big Data ETFTM (NYSE Arca Ticker: BIGD), PureFunds Video Game Tech ETFTM (Nasdaq Ticker: GAMR), PureFunds Drone Economy Strategy ETFTM (Nasdaq Ticker: IFLY), and PureFunds ISE Mobile Payments ETFTM (NYSE Arca Ticker: IPAY). We are extremely proud of the many accomplishments PureFunds has achieved with its partners to date and strive to continue providing investors with access to in demand investment themes and strategies.
During the 6-month period from October 1, 2016 to March 31, 2017, the S&P 500 Information Technology Sector Index, a broad measure of US listed technology companies, returned 13.03%. During the same period, the S&P Global 1200 Information Technology Sector Index, a broad measure of global technology companies, returned 12.36%. It was a strong six months for the broad technology sector and the more targeted strategies followed by the tech oriented PureFunds ETFs underperformed the broader sector during the period. For all of the Funds, the primary difference between Fund returns and index returns were the expenses of the Funds, which are not part of the indexes that each of the Funds track.
The ISE Cyber Security Index (“Index”) rose 6.57% over the 6 month period. The Fund NAV return for HACK was 6.23%, in line with the performance of the Index. The best performing stocks during the period were Ahnlab Inc. (up 135.53%), Trend Micro (up 32.48%) and Check Point Software Technologies (up 32.28%). The worst performing stocks during the period were SecureWorks Corp (down 30.79%) Palo Alto Networks Inc. (down 29.28%), and Imperva Inc. (down 23.57%).
The ISE Junior Silver (Small Cap Miners/ Explorers) Index (“Index”) declined by -16.10% during the period. The Fund NAV return for SILJ was -16.37% in line with the performance of the index. The best performing stocks during the period were Sierra Metals Inc (up 85.49%), Great Panther Silver Ltd. (up 21.48%), and Trevali Mining Corp (up 19.35%). The worst performing stocks during the period were Santacruz Silver Mining Ltd. (down 41.31%), Mandalay Resources Corp (down 40.82%), and Endeavour Silver Corp (down 38.01%).
The ISE Big Data Index (“Index”) rose 1.53% during the six month period. The Fund NAV return for BIGD was 1.10% in line with the return of the Index. The best performing stocks during the period were Tubemogul Inc. (up 49.41%), Neustar Inc. (up 24.86%) and Hortonworks (up 17.49%). The worst performing stocks during the period were Isentia Group Ltd. (down - 60.21%), The Rubicon Project Inc. (down -28.86%), and Nielsen Holdings (down -21.78%).
The ISE Mobile Payments Index (“Index”) rose 12.56% during the six month period. The Fund NAV return for IPAY was 12.14% in line with the performance of the Index. The best performing stocks during the period were Moneygram International Inc. (up 136.76%), Square Inc. (up 48.20%) and Green Dot Corp (up 44.67%). The worst performing stocks during the period were CPI Card Group Inc (down 28.91%), Pax Global Technology Ltd. (down 13.16%), and Fleetcor Technologies Inc. (down 12.84%).
The Reality Shares Drone Index (“Index”) rose 5.04% during the six month period. The Fund NAV return for IFLY was 5.06%, in line with the performance of the Index. The best performing stocks were Invensense (up 70.22%), ASELSAN (up 48.80%), and Boeing (up 36.45%).The worst performing stocks during the period were GoPro (down 47.84%), Ambarella Inc. (down 25.68%), and Korea Aerospace Industries (down 24.94%).
2
The EEFund Video Game Tech Index rose 5.33% during the six month period. The Fund NAV return for GAMR was 5.19%, in line with the performance of the Index. The best performing stocks during the period were Advanced Micro Devices (up 110.56%), Nvidia Corp (up 59.41%), and Logitech International (up 41.90%). The worst performing stocks during the period were Dena Co Ltd (down 43.07%), Jakks Pacific Inc. (down 36.34%), and Capcom Co Ltd. (down 19.39%).
The Solactive FinTech Index rose 2.44% during the six month period. The Fund NAV return for FINQ was 2.14%, in line with the performance of the Index. The best performing stocks during the period were Pegasystems Inc. (up 48.92%), Square Inc. (up 48.20%), and Temenos Group (up 26.00%). The worst performing stocks during the period were Syntel Inc. (down 36.73%), Silverlake Axis Ltd. (down 21.07%), and On Deck Capital (down 11.58%).
The ETFx HealthTech Index rose 3.28% during the six month period. The Fund NAV return for IMED was 2.76%, in line with the performance of the Index. The best performing stocks during the period were Masimo Corp (up 57.54%), Quality Systems Inc. (up 34.01%), and Wright Medical Group NV (up 26.87%). The worst performing stocks during the period were NantHealth (down 61.29%), M3 Inc. (down 25.86%), and Edward Lifesciences Corp (down 21.97%).
The period ended on a strong note for technology in general and for most of the thematic strategies tracked by PureFunds.
On behalf of PureFunds and our industry leading partners, I would like to thank you for your continued interest in PureFunds and our unique suite of ETFs. We endeavor to provide our investors with new and innovative products and look forward to continuing this for years to come.
You can find further details about BIGD, FINQ, GAMR, HACK, IFLY, IMED, IPAY and SILJ by visiting www.purefunds.com, or by calling 1-877-756-PURE.
Sincerely,
![]() |
Samuel Masucci III |
Chairman of the Board |
Samuel Masucci III is a registered representative of ETFMG Financial, LLC. |
3
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF
Growth of $10,000 (Unaudited)
Growth of $10,000 (Unaudited)
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure004.jpg)
Average Annual Returns Period Ended March 31, 2017 | 6 Months Return | 1 Year Return | 3 Year Return | Since Inception (11/29/12) | ||||||||||||
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF (NAV) | -16.37 | % | 51.18 | % | 6.82 | % | -8.90 | % | ||||||||
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF (Market) | -16.18 | % | 49.49 | % | 6.43 | % | -8.92 | % | ||||||||
S&P 500 Index | 10.12 | % | 17.17 | % | 10.37 | % | 15.05 | % | ||||||||
ISE Junior Silver (Small Cap Miners/Explorers) Index | -16.10 | % | 53.60 | % | 8.76 | % | -7.53 | % |
Total Fund Operating Expenses1 | 0.69% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017. |
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 unmanaged indices do not reflect fees and are not available for direct investment.
4
PureFundsTM ISE Junior Silver (Small Cap Miners/Explorers) ETF
Top Ten Holdings*
Security | % of Total Investments† | ||||
1 | Pan American Silver Corporation | 13.24% | |||
2 | First Majestic Silver Corporation | 11.59% | |||
3 | Coeur Mining, Inc. | 11.56% | |||
4 | Silvercorp Metals, Inc. | 5.95% | |||
5 | Trevali Mining Corporation | 4.73% | |||
6 | Hochschild Mining PLC | 4.46% | |||
7 | Silver Standard Resources, Inc. | 4.44% | |||
8 | Fortuna Silver Mines, Inc. | 4.37% | |||
9 | Excellon Resources, Inc. | 4.23% | |||
10 | MAG Silver Corporation | 4.18% |
Top Ten Holdings = 68.75% of Total Investments†
* Current portfolio holdings may not be indicative of future fund holdings.
† Percentage of total investments less cash.
5
6
PureFunds™ ISE Cyber Security ETF
Growth of $10,000
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure005.jpg)
Average Annual Returns | 6 Months | 1 Year | Since Inception | |||
Period Ended March 31, 2017 | Return | Return | (11/11/14) | |||
PureFunds™ ISE Cyber Security ETF (NAV) | 6.23% | 24.55% | 7.75% | |||
PureFunds™ ISE Cyber Security ETF (Market) | 6.34% | 24.68% | 7.78% | |||
S&P 500 Index | 10.12% | 17.17% | 8.66% | |||
ISE Cyber Security Index | 6.57% | 25.34% | 8.87% | |||
Total Fund Operating Expenses1 | 0.60% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated May 1, 2017. Effective May 1, 2017, the Fund’s unitary fees went from 0.75% to 0.60%.
Performance data quoted represents past performance and does not guarantee future results may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance 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 Funds 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 sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The unmanaged indices do not reflect fees and are not available for direct investment.
6
PureFundsTM ISE Cyber Security ETF
Top Ten Holdings*
% of Total | ||||
Security | Investments† | |||
1 | Ahnlab, Inc. | 3.92% | ||
2 | FireEye, Inc. | 3.27% | ||
3 | Qualys, Inc. | 3.17% | ||
4 | Symantec Corporation | 3.14% | ||
5 | Gigamon, Inc. | 3.05% | ||
6 | Check Point Software Technologies, Ltd. | 3.03% | ||
7 | Fortinet, Inc. | 3.00% | ||
8 | Trend Micro, Inc. | 2.96% | ||
9 | Splunk, Inc. | 2.95% | ||
10 | CyberArk Software Ltd. | 2.94% | ||
Top Ten Holdings = 31.43% of Total Investments† | ||||
* Current portfolio holdings may not be indicative of future Fund holdings. | ||||
† Percentage of total investments less cash. |
7
PureFunds™ ISE Big Data ETF
Growth of $10,000 (Unaudited)
Growth of $10,000 (Unaudited)
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure006.jpg)
Average Annual Returns | 6 Months | 1 Year | Since Inception | |||
Period Ended March 31, 2017 | Return | Return | (7/15/15) | |||
PureFunds™ ISE Big Data ETF (NAV) | 1.10% | 16.60% | 0.21% | |||
PureFunds™ ISE Big Data ETF (Market) | 0.65% | 18.66% | -0.47% | |||
S&P 500 Index | 10.12% | 17.17% | 9.25% | |||
ISE Big DataTM Index | 1.53% | 17.49% | 1.03% | |||
Total Fund Operating Expenses1 | 0.75% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
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 sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The unmanaged indices do not reflect fees and are not available for direct investment.
8
PureFundsTM ISE Big Data ETF
Top Ten Holdings*
% of Total | ||||
Security | Investments† | |||
1 | Varonis Systems, Inc. | 3.04% | ||
2 | Verint Systems, Inc. | 3.01% | ||
3 | Software AG | 2.96% | ||
4 | SAP SE | 2.92% | ||
5 | Blackbaud, Inc. | 2.81% | ||
6 | New Relic, Inc. | 2.76% | ||
7 | Inovalon Holdings, Inc. | 2.75% | ||
8 | Oracle Corporation | 2.74% | ||
9 | CoreLogic, Inc. | 2.72% | ||
10 | Hewlett Packard Enterprise Co. | 2.72% | ||
Top Ten Holdings = 28.43% of Total Investments† | ||||
* Current Fund holdings may not be indicative of future Fund holdings. | ||||
† Percentage of total investments less cash. |
9
PureFunds™ ISE Mobile Payments ETF
Growth of $10,000 (Unaudited)
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure007.jpg)
Cumulative Returns | 6 Months | 1 Year | Since Inception | |||
Period Ended March 31, 2017 | Return | Return | (7/15/15) | |||
PureFunds™ ISE Mobile Payments ETF (NAV) | 12.14% | 17.27% | 7.09% | |||
PureFunds™ ISE Mobile Payments ETF (Market) | 11.74% | 17.38% | 7.25% | |||
S&P 500 Index | 10.12% | 17.17% | 9.25% | |||
ISE Mobile PaymentsTM Index | 12.56% | 17.77% | 7.72% | |||
Total Fund Operating Expenses1 | 0.75% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
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 sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The unmanaged indices do not reflect fees and are not available for direct investment.
10
PureFundsTM ISE Mobile Payments ETF
Top Ten Holdings*
% of Total | ||||
Security | Investments† | |||
1 | Visa, Inc. | 4.62% | ||
2 | MasterCard, Inc. | 4.51% | ||
3 | PayPal Holdings, Inc. | 4.24% | ||
4 | American Express Co. | 4.23% | ||
5 | Worldpay Group PLC | 3.90% | ||
6 | Discover Financial Services | 3.85% | ||
7 | Fidelity National Information Services, Inc. | 3.73% | ||
8 | Fiserv, Inc. | 3.71% | ||
9 | Global Payments, Inc. | 3.47% | ||
10 | Vantiv, Inc. | 3.22% | ||
Top Ten Holdings = 39.48% of Total Investments† | ||||
* Current Fund holdings may not be indicative of future Fund holdings. | ||||
† Percentage of total investments less cash. |
11
PureFunds™ Drone Economy Strategy ETF
Growth of $10,000 (Unaudited)
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure008.jpg)
Cumulative Returns | 6 Months | 1 Year | Since Inception | |||
Period Ended March 31, 2017 | Return | Return | (3/8/2016) | |||
PureFunds™ Drone Economy Strategy ETF (NAV) | 5.06% | 7.57% | 11.78% | |||
PureFunds™ Drone Economy Strategy ETF (Market) | 4.54% | 7.18% | 11.96% | |||
S&P 500 Index | 10.12% | 17.17% | 20.64% | |||
Reality Shares Drone Index | 5.04% | 7.62% | 12.04% | |||
Total Fund Operating Expenses1 | 0.75% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on March 8, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The unmanaged indices do not reflect fees and are not available for direct investment.
12
PureFundsTM Drone Economy Strategy ETF
Top Ten Holdings*
% of Total | ||||
Security | Investments† | |||
1 | Aerovironment, Inc. | 8.55% | ||
2 | Parrot SA | 8.26% | ||
3 | Boeing Co. | 4.01% | ||
4 | Ambarella, Inc. | 3.19% | ||
5 | GoPro, Inc. | 2.98% | ||
6 | BAE Systems PLC | 1.83% | ||
7 | Jabil Circuit, Inc. | 1.81% | ||
8 | Thales SA | 1.81% | ||
9 | Honeywell International, Inc. | 1.77% | ||
10 | L3 Technologies, Inc. | 1.74% | ||
Top Ten Holdings =35.95% of Total Investments† | ||||
* Current Fund holdings may not be indicative of future Fund holdings. | ||||
† Percentage of total investments less cash. |
13
PureFunds™ Video Game Tech ETF
Growth of $10,000 (Unaudited)
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure009.jpg)
Cumulative Returns | 6 Months | 1 Year | Since Inception | |||
Period Ended March 31, 2017 | Return | Return | (3/8/2016) | |||
PureFunds™ Video Game Tech ETF (NAV) | 5.19% | 29.77% | 35.81% | |||
PureFunds™ Video Game Tech ETF (Market) | 4.50% | 29.62% | 36.22% | |||
S&P 500 Index | 10.12% | 17.17% | 20.64% | |||
EEFund Video Game Tech Index | 5.33% | 32.72% | 37.06% | |||
Total Fund Operating Expenses1 | 0.75% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on March 8, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The unmanaged indices do not reflect fees and are not available for direct investment.
14
PureFundsTM Video Game Tech ETF
Top Ten Holdings*
% of Total | ||||
Security | Investments† | |||
1 | Activision Blizzard, Inc. | 5.52% | ||
2 | NCSoft Corporation | 5.23% | ||
3 | UBISOFT Entertainment | 5.13% | ||
4 | Konami Holdings Corporation | 4.96% | ||
5 | Changyou.com Ltd. - ADR | 4.94% | ||
6 | Take-Two Interactive Software, Inc. | 4.85% | ||
7 | Electronic Arts, Inc. | 4.63% | ||
8 | Gree, Inc. | 4.44% | ||
9 | Nexon Co. Ltd | 4.43% | ||
10 | Zynga, Inc. | 3.96% | ||
Top Ten Holdings = 48.09% of Total Investments† | ||||
* Current Fund holdings may not be indicative of future Fund holdings. | ||||
† Percentage of total investments less cash. |
15
PureFunds™ Solactive FinTech ETF
Growth of $10,000
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure010.jpg)
Cumulative Returns | 6 Months | Since Inception | ||
Period Ended March 31, 2017 | Return | (8/31/2016) | ||
PureFunds™ Solactive FinTech ETF (NAV) | 2.14% | 2.50% | ||
PureFunds™ Solactive FinTech ETF (Market) | 0.38% | 1.34% | ||
S&P 500 Index | 10.12% | 9.90% | ||
Solactive FinTech Index | 2.44% | 2.95% | ||
Total Fund Operating Expenses1 | 0.68% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
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 August 30, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The unmanaged indices do not reflect fees and are not available for direct investment.
16
PureFundsTM Solactive FinTech ETF
Top Ten Holdings*
% of Total | ||||
Security | Investments† | |||
1 | Blackline, Inc. | 1.69% | ||
2 | On Deck Capital, Inc. | 1.65% | ||
3 | Xero Ltd. | 1.64% | ||
4 | LendingClub Corporation | 1.62% | ||
5 | SimCorp AS | 1.61% | ||
6 | IRESS Ltd. | 1.61% | ||
7 | IHS Markit Ltd. | 1.61% | ||
8 | DST Systems, Inc. | 1.61% | ||
9 | Square, Inc. | 1.60% | ||
10 | Experian PLC | 1.59% | ||
Top Ten Holdings = 16.23% of Total Investments† | ||||
* Current Fund holdings may not be indicative of future Fund holdings. | ||||
† Percentage of total investments less cash. |
17
PureFunds™ ETFx HealthTech ETF
Growth of $10,000
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/pure011.jpg)
Cumulative Returns | 6 Months | Since Inception | ||
Period Ended March 31, 2017 | Return | (8/31/2016) | ||
PureFunds™ HealthTech ETF (NAV) | 2.76% | 4.67% | ||
PureFunds™ ETFx HealthTech ETF (Market) | 1.97% | 4.63% | ||
S&P 500 Index | 10.12% | 9.90% | ||
ETFx HealthTech TR Index | 3.28% | 5.27% | ||
Total Fund Operating Expenses1 | 0.75% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
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 August 30, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any. The unmanaged indices do not reflect fees and are not available for direct investment.
18
PureFundsTM ETFx HealthTech ETF
Top Ten Holdings*
% of Total | ||||
Security | Investments† | |||
1 | Evolent Health, Inc. | 1.72% | ||
2 | Inovalon Holdings, Inc. | 1.71% | ||
3 | Medidata Solutions, Inc. | 1.68% | ||
4 | CompuGroup Medical SE | 1.67% | ||
5 | athenahealth, Inc. | 1.66% | ||
6 | Veeva Systems, Inc. | 1.65% | ||
7 | Cerner Corporation | 1.63% | ||
8 | Allscripts Healthcare Solutions, Inc. | 1.63% | ||
9 | Alibaba Health Information Technology Ltd. | 1.62% | ||
10 | Teladoc, Inc. | 1.60% | ||
Top Ten Holdings =16.57% of Total Investments† | ||||
* Current Fund holdings may not be indicative of future Fund holdings. | ||||
† Percentage of total investments less cash. |
19
PureFunds™ ETFs
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
FINQ, and IMED are new Funds with limited operating history.
Past performance is no indicative of future return. A Fund’s performance for very short time periods may not be indicative of future performance.
SILJ
The PureFunds® ISE Junior SilverTM (Small Cap Miners/Explorers) 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 ISE Junior Silver (Small Cap Miners/Explorers)TM Index (the “Index”).
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 PureFundsTM ISE Junior Silver 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 than other types of economic conditions, tax treatment, government regulation and intervention, and world events in the regions in which the companies operation. 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 ISE Junior Silver (Small Cap 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 ISE Junior Silver (Small Cap 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.
The ISE Junior Silver (Small Cap Miners/Explorers) Index is designed to reflect the performance of small-capitalization companies involved in the silver industry, including companies that mine, explore and refine silver. The stocks are screened for liquidity and weighted according to modified free-float market capitalization. The Index generally is comprised of 20-30 securities. The Index was created and is maintained by ISE Indexes. An investment cannot be made directly in an index.
HACK
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Cyber SecurityTM Index (the “Index”).
The fund is concentrated in technology-related companies 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. The Fund’s return may not match or achieve a high degree of correlation with the return of the ISE Cyber Security 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 ISE Cyber Security Index.
20
PureFunds™ ETFs
The ISE Cyber Security Index is designed to reflect the performance of companies involved in the cyber security industry, including companies that provide cyber security related hardware/software and services. The stocks are screened for liquidity and weighted according to modified free-float market capitalization. The Index was created and is maintained by ISE Indexes. An investment cannot be made directly in an index.
BIGD
The PureFundsTM ISE Big Data ETF (the “Fund” or the “Big Data ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Big DataTM Index (the “Index”).
Big Data Companies face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources or personnel, may have products that face rapid obsolescence, and are heavily dependent on the protection of patent and intellectual property rights. Big Data Companies are also subject to increasing regulatory constraints, particularly with respect to cybersecurity and privacy. Such factors may adversely affect the profitability and value of such companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the ISE Big Data 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.
The ISE Big Data Index is designed to reflect the performance of companies involved in the big data and analytics industry, including companies that provide big data origination, aggregation, applications and solutions. The stocks are screened for liquidity and weighted according to a modified linear-based capitalization-weighted methodology. The Index was created and is maintained by ISE Indexes. An investment cannot be made directly in an index.
IPAY
The PureFundsTM ISE 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 ISE Mobile PaymentsTM Index (the “Index”).
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 ISE 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.
21
PureFunds™ ETFs
The ISE Mobile Payments Index is designed to reflect the performance of companies involved in the mobile and electronic payments industry, including card networks, processors, infrastructure/software and solutions companies. The stocks are screened for liquidity and weighted according to a modified linear-based capitalization-weighted methodology. The Index was created and is maintained by ISE Indexes. An investment cannot be made directly in an index.
IFLY
The PureFundsTM Drone Economy Strategy ETF (the “Fund” or the “Drone Economy ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Reality Shares DroneTM Index (the “Index”).
Drone Economy Companies face intense competition, both domestically and internationally and are heavily dependent on the protection of patent and intellectual property rights. In addition, Drone Economy Companies may be dependent on the U.S. government and its agencies for a significant portion of their sales, and their success and growth may be affected by budgetary constraints, spending reductions, congressional appropriations, and administrative allocations of funds that affect the U.S. government and its agencies. Such factors may adversely affect the profitability and value of such companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the Reality Shares Drone™ 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.
The Reality Shares Drone™ Index provides a benchmark for investors interested in tracking companies actively involved in drone technology and services. The Index uses Modified Equal Weight capitalization-weighted methodology. The index was created and is maintained by Reality Shares Index Committee. You cannot invest directly in an index.
GAMR
The PureFundsTM Video Game Tech ETF (the “Fund” or the “Video Game Tech ETF”) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the EEFund Video Game Tech Index (the “Index”).
Investing involves risk, including the possible loss of principal. The fund is new with limited operating history. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Video Game Tech Companies face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources or personnel, may have products that face rapid obsolescence, and are heavily dependent on the protection of patent and intellectual property rights. Video Game Tech Companies are also subject to increasing regulatory constraints, particularly with respect to cybersecurity and privacy. Such factors may adversely affect the profitability and value of such companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund’s return may not match or achieve a high degree of correlation with the return of the EEFund Video Game Tech Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
22
PureFunds™ ETFs
The EEFund Video Game Tech™ Index provides a benchmark for investors interested in tracking companies actively involved in the electronic gaming industry including the entertainment, education and simulation segments. The Index uses a market capitalization weighted allocation across the pure play and non-pure play sectors and a set weight for the conglomerate sector as well as an equal weighted allocation methodology for all components within each sector allocation. The index was created and is maintained by EEFund Management. You cannot invest directly in an index.
FINQ
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Solactive FinTech Index.
The Fund is new with limited operating history. The fund is concentrated in technology oriented companies, which 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 oriented 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 Fund is 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. The Fund’s return may not match or achieve a high degree of correlation with the return of the Solactive FinTech 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 Solactive FinTech Index.
The Solactive FinTech Index is designed to reflect the performance of companies involved in the financial technology industry, including companies in the financial services industry with a focus on automation of processes, enhanced distribution of products and services or the creation of new products or services that did not previously exist. An investment cannot be made directly in an index.
IMED
The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ETFx HealthTech Index.
23
PureFunds™ ETFs
The Fund is new with limited operating history. The Fund is concentrated in technology oriented companies, which 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 oriented 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. Health care companies are subject to extensive government regulation and their profitability can be significantly affected by restrictions on government reimbursement for medical expenses, rising costs of medical products and services, pricing pressure (including price discounting), limited product lines, and an increased emphasis on the delivery of healthcare through outpatient services. Health care companies are heavily dependent on obtaining and defending patents, which may be time consuming and costly, and the expiration of patents may also adversely affect the profitability of the companies. Health care companies are also subject to extensive litigation based on product liability and similar claims. In addition, their products can become obsolete due to industry innovation, changes in technologies, or other market developments. Many new products in the health care field require significant research and development and may be subject to regulatory approvals, all of which may be time consuming and costly with no guarantee that any product will come to market. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Fund is 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. The Fund’s return may not match or achieve a high degree of correlation with the return of the ETFx HealthTech 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 ETFx HealthTech Index.
The ETFx HealthTech Index is designed to reflect the performance of companies involved in the healthcare technology industry, including companies that provide three technology-driven segments affecting the allocation, delivery and management of healthcare services and products through companies engaged in Healthcare Informatics, Medical Instruments and Medical Appliances. An investment cannot be made directly in an index.
S&P 500: The S&P 500 Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices.
24
PureFunds™ ETFs
PORTFOLIO ALLOCATIONS
As of March 31, 2017 (Unaudited)
As of March 31, 2017 (Unaudited)
PureFundsTM ISE | ||||||||||||||||
Junior Silver (Small | PureFundsTM ISE | PureFundsTM ISE | ||||||||||||||
Cap Miners/ | Cyber Security | PureFundsTM ISE | Mobile Payments | |||||||||||||
Explorers) ETF | ETF | Big Data ETF | ETF | |||||||||||||
As a percent of Net Assets: | ||||||||||||||||
Australia | — | % | — | % | 1.0 | % | — | % | ||||||||
Bermuda | — | — | — | — | ||||||||||||
Canada | 82.9 | — | 3.0 | — | ||||||||||||
Cayman Islands | — | — | — | — | ||||||||||||
Cyprus | — | — | — | 0.5 | ||||||||||||
Denmark | — | — | — | — | ||||||||||||
Finland | — | 0.3 | — | — | ||||||||||||
France | — | — | — | 3.4 | ||||||||||||
Germany | — | — | 6.7 | 4.1 | ||||||||||||
Hong Kong | — | — | — | 0.1 | ||||||||||||
Ireland | — | — | — | — | ||||||||||||
Israel | — | 10.6 | 3.0 | — | ||||||||||||
Italy | — | — | — | — | ||||||||||||
Jersey | — | — | — | — | ||||||||||||
Japan | — | 4.8 | — | — | ||||||||||||
Netherlands | — | 1.5 | — | — | ||||||||||||
New Zealand | — | — | — | — | ||||||||||||
Puerto Rico | — | — | — | 1.2 | ||||||||||||
Republic of Korea | — | 5.0 | — | — | ||||||||||||
Singapore | — | — | — | — | ||||||||||||
Spain | — | — | — | — | ||||||||||||
Sweden | — | 0.6 | 0.3 | — | ||||||||||||
Switzerland | — | — | — | �� | ||||||||||||
Turkey | — | — | — | — | ||||||||||||
United Kingdom | 4.6 | 5.2 | — | 6.2 | ||||||||||||
United States | 12.6 | 71.6 | 85.8 | 84.5 | ||||||||||||
Short-Term and other Net Assets (Liabilities) | (0.1 | ) | 0.4 | 0.2 | — | |||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
25
PureFunds™ ETFs
PORTFOLIO ALLOCATIONS
As of March 31, 2017 (Unaudited) (Continued)
PureFundsTM | PureFundsTM | |||||||||||||||
Drone Economy | PureFundsTM Video | Solactive FinTech | PureFundsTM ETFx | |||||||||||||
Strategy ETF | Game Tech ETF | ETF | HealthTech ETF | |||||||||||||
As a percent of Net Assets: | ||||||||||||||||
Australia | — | % | — | % | 3.2 | % | — | % | ||||||||
Bermuda | — | — | 3.2 | — | ||||||||||||
Canada | — | — | 3.1 | — | ||||||||||||
Cayman Islands | 3.9 | 7.5 | — | — | ||||||||||||
Cyprus | — | — | — | — | ||||||||||||
Denmark | — | — | 3.2 | 2.0 | ||||||||||||
Finland | — | — | — | — | ||||||||||||
France | 13.9 | 5.7 | — | — | ||||||||||||
Germany | 1.6 | — | 3.1 | 6.5 | ||||||||||||
Hong Kong | — | 1.0 | — | 2.4 | ||||||||||||
Ireland | — | — | — | — | ||||||||||||
Israel | 1.5 | — | — | — | ||||||||||||
Italy | 1.9 | — | — | — | ||||||||||||
Jersey | — | — | 3.2 | — | ||||||||||||
Japan | 7.2 | 34.1 | — | 9.5 | ||||||||||||
Netherlands | 2.0 | — | — | 3.9 | ||||||||||||
New Zealand | — | — | 3.3 | 2.0 | ||||||||||||
Puerto Rico | — | — | — | — | ||||||||||||
Republic of Korea | 1.6 | 8.1 | — | — | ||||||||||||
Singapore | — | — | — | — | ||||||||||||
Spain | 1.9 | — | — | 1.9 | ||||||||||||
Sweden | 3.2 | — | — | 4.0 | ||||||||||||
Switzerland | — | 1.7 | 3.2 | 8.0 | ||||||||||||
Turkey | 3.4 | — | — | — | ||||||||||||
United Kingdom | 5.5 | — | 3.1 | 4.0 | ||||||||||||
United States | 52.0 | 41.4 | 71.3 | 53.7 | ||||||||||||
Short-Term and other Net Assets (Liabilities) | 0.4 | 0.5 | 0.1 | 2.1 | ||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
26
PureFunds™ ETFs
PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF
Schedule of Investments
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 100.1% | ||||||||
Metals & Mining - 100.1% | ||||||||
Canada - 82.9% | ||||||||
Americas Silver Corp. (a) | 616,407 | $ | 1,793,808 | |||||
Alexco Resource Corporation (a) | 1,017,784 | 1,557,209 | ||||||
Aurcana Corporation (a) | 1,014,116 | 297,406 | ||||||
Bear Creek Mining Corporation (a) * | 1,588,056 | 2,722,689 | ||||||
Endeavour Silver Corporation (a) | 897,258 | 2,853,280 | ||||||
Excellon Resources, Inc. (a) * | 2,437,658 | 2,932,852 | ||||||
First Majestic Silver Corporation (a) | 989,932 | 8,038,248 | ||||||
Fortuna Silver Mines, Inc. (a) | 581,780 | 3,027,347 | ||||||
Great Panther Silver Ltd. (a) | 1,703,834 | 2,794,288 | ||||||
IMPACT Silver Corporation (a) | 698,437 | 346,632 | ||||||
Kootenay Silver, Inc. (a) | 1,334,327 | 301,010 | ||||||
MAG Silver Corporation (a) | 221,162 | 2,895,387 | ||||||
Mandalay Resources Corporation (a) | 4,518,131 | 2,004,510 | ||||||
Minco Silver Corporation (a) | 478,844 | 460,894 | ||||||
Mirasol Resources Ltd. (a) | 289,702 | 368,159 | ||||||
Pan American Silver Corporation (a) | 524,560 | 9,182,808 | ||||||
Sabina Gold & Silver Corporation (a) | 2,109,748 | 2,443,141 | ||||||
Santacruz Silver Mining Ltd. (a) | 1,419,568 | 282,878 | ||||||
Sierra Metals, Inc. (a) | 175,389 | 484,023 | ||||||
Silver Standard Resources, Inc. (a) | 290,283 | 3,082,149 | ||||||
Silvercorp Metals, Inc. (a) | 1,187,911 | 4,126,893 | ||||||
Trevali Mining Corporation (a) | 3,305,893 | 3,281,407 | ||||||
Total Canada | 55,277,018 | |||||||
United Kingdom - 4.6% | ||||||||
Hochschild Mining PLC | 887,469 | 3,089,991 | ||||||
United States - 12.6% | ||||||||
Coeur Mining, Inc. (a) | 991,793 | 8,013,687 | ||||||
Golden Minerals Co. (a) | 591,200 | 373,343 | ||||||
Total United States | 8,387,030 | |||||||
Total Metals & Mining | 66,754,039 | |||||||
TOTAL COMMON STOCKS (Cost $77,216,962) | 66,754,039 | |||||||
SHORT-TERM INVESTMENTS - 0.9% | ||||||||
Money Market Funds - 0.9% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 629,876 | 629,876 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $629,876) | 629,876 | |||||||
Total Investments (Cost $77,846,838) - 101.0% | 67,383,915 | |||||||
Liabilities in Excess of Other Assets - (1.0)% | (676,615 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 66,707,300 |
The accompanying notes are an integral part of these financial statement.
27
PureFunds™ ETFs
PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Percentages are stated as a percent of net assets.
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
* | Illiquid Security - At March 31, 2017, the value of these securities amount to $5,655,541 or 8.5% of net assets. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statement.
28
PureFunds™ ETFs
PureFundsTM ISE Cyber Security ETF
Schedule of Investments
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 99.6% | ||||||||
Finland - 0.3% | ||||||||
Software - 0.3% | ||||||||
F-Secure OYJ | 953,934 | $ | 3,429,514 | |||||
Israel - 10.6% | ||||||||
Communications Equipment - 2.9% | ||||||||
Radware Ltd. (a) | 1,770,804 | 28,616,193 | ||||||
Software - 7.7% | ||||||||
Check Point Software Technologies, Ltd. (a) | 368,419 | 37,821,894 | ||||||
CyberArk Software Ltd. (a) ^ | 720,445 | 36,649,037 | ||||||
Total Software | 74,470,931 | |||||||
Total Israel | 103,087,124 | |||||||
Japan - 4.8% | ||||||||
Software - 4.8% | ||||||||
FFRI, Inc. | 216,300 | 9,578,361 | ||||||
Trend Micro, Inc. | 828,623 | 36,842,575 | ||||||
Total Software | 46,420,936 | |||||||
Netherlands - 1.5% | ||||||||
Software - 1.5% | ||||||||
Gemalto NV | 252,536 | 14,111,498 | ||||||
Republic of Korea - 5.0% | ||||||||
Internet Software & Services - 5.0% | ||||||||
Ahnlab, Inc. | 371,340 | 48,912,082 | ||||||
Sweden - 0.6% | ||||||||
Electronic Equipment, Instruments & Components - 0.6% | ||||||||
Precise Biometrics AB (a) | 17,309,367 | 6,046,249 | ||||||
United Kingdom - 5.2% | ||||||||
Aerospace & Defense - 1.6% | ||||||||
BAE Systems PLC | 1,944,532 | 15,653,221 | ||||||
Internet Software & Services - 1.8% | ||||||||
Mimecast Ltd. (a) | 774,621 | 17,343,764 | ||||||
Software - 1.8% | ||||||||
Sophos Group PLC | 5,047,260 | 17,175,165 | ||||||
Total United Kingdom | 50,172,150 | |||||||
United States - 71.6% | ||||||||
Aerospace & Defense - 2.0% | ||||||||
The KEYW Holding Corporation (a) ^ | 2,068,256 | 19,524,337 | ||||||
Communications Equipment - 11.8% | ||||||||
Cisco Systems, Inc. | 1,066,120 | 36,034,856 |
The accompanying notes are an integral part of these financial statement.
29
PureFunds™ ETFs
PureFundsTM ISE Cyber Security ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
F5 Networks, Inc. (a) | 106,404 | $ | 15,170,018 | |||||
Juniper Networks, Inc. | 1,301,429 | 36,218,769 | ||||||
Palo Alto Networks, Inc. (a) | 239,895 | 27,031,369 | ||||||
Total Communications Equipment | 114,455,012 | |||||||
Internet Software & Services - 6.2% | ||||||||
Akamai Technologies, Inc. (a) ^ | 582,110 | 34,751,967 | ||||||
VeriSign, Inc. (a) ^ | 184,850 | 16,102,283 | ||||||
Zix Corporation (a) ^ | 1,843,151 | 8,865,556 | ||||||
Total Internet Software & Services | 59,719,806 | |||||||
IT Services - 7.8% | ||||||||
Booz Allen Hamilton Holding Corporation | 426,183 | 15,082,616 | ||||||
Leidos Holdings, Inc. | 286,014 | 14,626,756 | ||||||
ManTech International Corporation | 416,290 | 14,416,123 | ||||||
Science Applications International Corporation ^ | 418,996 | 31,173,302 | ||||||
Total IT Services | 75,298,797 | |||||||
Software - 43.8% | ||||||||
A10 Networks, Inc. (a) | 1,611,471 | 14,744,960 | ||||||
Barracuda Networks, Inc. (a) | 1,540,156 | 35,593,005 | ||||||
FireEye, Inc. (a) ^ | 3,236,242 | 40,809,012 | ||||||
Fortinet, Inc. (a) ^ | 975,638 | 37,415,717 | ||||||
Gigamon, Inc. (a) | 1,070,192 | 38,045,326 | ||||||
Imperva, Inc. (a) ^ | 888,782 | 36,484,501 | ||||||
Proofpoint, Inc. (a) ^ | 462,613 | 34,399,903 | ||||||
Qualys, Inc. (a) ^ | 1,042,634 | 39,515,829 | ||||||
Rapid7, Inc. (a) ^ | 932,188 | 13,964,176 | ||||||
SecureWorks Corporation (a) | 429,153 | 4,076,953 | ||||||
Splunk, Inc. (a) ^ | 590,313 | 36,770,597 | ||||||
Symantec Corporation ^ | 1,275,467 | 39,131,328 | ||||||
Varonis Systems, Inc. (a) | 556,370 | 17,692,566 | ||||||
VASCO Data Security International, Inc. (a) ^ | 1,448,611 | 19,556,248 | ||||||
Verint Systems, Inc. (a) | 403,829 | 17,516,084 | ||||||
Total Software | 425,716,205 | |||||||
Total United States | 694,714,157 | |||||||
TOTAL COMMON STOCKS (Cost $952,561,583) | 966,893,710 | |||||||
SHORT-TERM INVESTMENTS - 0.4% | ||||||||
Money Market Funds - 0.4% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - | ||||||||
Institutional Class, 0.59% (b) | 4,001,500 | 4,001,500 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $4,001,500) | 4,001,500 |
The accompanying notes are an integral part of these financial statement.
30
PureFunds™ ETFs
PureFundsTM ISE Cyber Security ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL - 28.3% | ||||||||
Investment Companies - 28.3% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 1.17% (b) + | 275,119,283 | $ | 275,119,283 | |||||
TOTAL INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL (Cost $275,119,283) | 275,119,283 | |||||||
Total Investments (Cost $1,231,682,366) - 128.3% | 1,246,014,493 | |||||||
Liabilities in Excess of Other Assets - (28.3)% | (275,474,245 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 970,540,248 |
Percentages are stated as a percent of net assets.
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
+ Investments purchased with cash proceeds from securities lending. Total cash collateral has a value of $275,119,283 as of March 31, 2017.
^ All or a portion of this security is out on loan as of March 31, 2017. Total value of securities out on loan is $267,499,200.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statement.
31
PureFunds™ ETFs
PureFundsTM ISE Big Data ETF
Schedule of Investments
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 99.8% | ||||||||
Australia - 1.0% | ||||||||
Internet Software & Services - 1.0% | ||||||||
iSentia Group Ltd. | 20,972 | $ | 24,034 | |||||
Canada - 3.0% | ||||||||
Capital Markets - 3.0% | ||||||||
Thomson Reuters Corporation | 1,770 | 76,517 | ||||||
Germany - 6.7% | ||||||||
Software - 6.7% | ||||||||
SAP SE | 851 | 83,504 | ||||||
Software AG | 2,138 | 84,539 | ||||||
Total Software | 168,043 | |||||||
Israel - 3.0% | ||||||||
Software - 3.0% | ||||||||
NICE-Systems Ltd. - ADR | 1,097 | 74,574 | ||||||
Sweden - 0.3% | ||||||||
Electronic Equipment, Instruments & Components - 0.3% | ||||||||
Hexagon AB | 200 | 8,035 | ||||||
United States - 85.8% | ||||||||
Capital Markets - 2.8% | ||||||||
FactSet Research Systems, Inc. | 421 | 69,427 | ||||||
Health Care Technology - 6.2% | ||||||||
Inovalon Holdings, Inc. (a) | 6,242 | 78,649 | ||||||
Medidata Solutions, Inc. (a) | 1,338 | 77,189 | ||||||
Total Health Care Technology | 155,838 | |||||||
Internet Software & Services - 6.0% | ||||||||
Hortonworks, Inc. (a) | 7,534 | 73,909 | ||||||
New Relic, Inc. (a) | 2,127 | 78,847 | ||||||
Total Internet Software & Services | 152,756 | |||||||
IT Services - 18.0% | ||||||||
Acxiom Corporation (a) | 2,624 | 74,705 | ||||||
Alliance Data Systems Corporation | 308 | 76,692 | ||||||
Black Knight Financial Services, Inc. (a) | 1,944 | 74,455 | ||||||
CoreLogic, Inc. (a) | 1,910 | 77,776 | ||||||
International Business Machines Corporation ^ | 416 | 72,442 | ||||||
Teradata Corporation (a) ^ | 2,406 | 74,875 | ||||||
Total IT Services | 450,945 | |||||||
Professional Services - 8.8% | ||||||||
Dun & Bradstreet Corporation | 710 | 76,638 | ||||||
Nielsen Holdings PLC ^ | 1,687 | 69,690 | ||||||
Verisk Analytics, Inc. (a) | 903 | 73,269 |
The accompanying notes are an integral part of these financial statement.
32
PureFunds™ ETFs
PureFundsTM ISE Big Data ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Total Professional Services | $ | 219,597 | ||||||
Software - 40.9% | ||||||||
ANSYS, Inc. (a) | 701 | 74,916 | ||||||
Blackbaud, Inc. | 1,046 | 80,197 | ||||||
Fair Isaac Corporation | 575 | 74,146 | ||||||
Guidewire Software, Inc. (a) | 1,370 | 77,172 | ||||||
HubSpot, Inc. (a) | 1,257 | 76,111 | ||||||
MicroStrategy, Inc. (a) | 390 | 73,242 | ||||||
Oracle Corporation ^ | 1,757 | 78,380 | ||||||
PROS Holdings, Inc. (a) | 2,861 | 69,208 | ||||||
Rubicon Project, Inc. (a) | 7,341 | 43,238 | ||||||
Splunk, Inc. (a) ^ | 1,212 | 75,495 | ||||||
Tableau Software, Inc. (a) | 1,419 | 70,311 | ||||||
Varonis Systems, Inc. (a) | 2,733 | 86,910 | ||||||
Verint Systems, Inc. (a) | 1,983 | 86,013 | ||||||
Workiva, Inc. (a) | 3,852 | 60,284 | ||||||
Total Software | 1,025,623 | |||||||
Technology Hardware, Storage & Peripherals - 3.1% | ||||||||
Hewlett Packard Enterprise Co. | 3,281 | 77,760 | ||||||
Total United States | 2,151,946 | |||||||
TOTAL COMMON STOCKS (Cost $2,428,144) | 2,503,149 | |||||||
SHORT-TERM INVESTMENTS - 0.3% | ||||||||
Money Market Funds - 0.3% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 7,400 | 7,400 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $7,400) | 7,400 | |||||||
INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL - 13.9% | ||||||||
Investment Companies - 13.9% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 1.17% (b) + | 347,708 | 347,708 | ||||||
TOTAL INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL (Cost $347,708) | 347,708 | |||||||
Total Investments (Cost $2,783,252) - 114.0% | 2,858,257 | |||||||
Liabilities in Excess of Other Assets - (14.0)% | (349,043) | |||||||
TOTAL NET ASSETS - 100.0% | $ | 2,509,214 |
The accompanying notes are an integral part of these financial statement.
33
PureFunds™ ETFs
PureFundsTM ISE Big Data ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
+ Investments purchased with cash proceeds from securities lending. Total cash collateral has a value of $347,708 as of March 31, 2017.
^ All or a portion of this security is out on loan as of March 31, 2017. Total value of securities out on loan is $339,792.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statement.
34
PureFunds™ ETFs
PureFundsTM ISE Mobile Payments ETF
Schedule of Investments
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 100.0% | ||||||||
Cyprus - 0.5% | ||||||||
IT Services - 0.5% | ||||||||
QIWI PLC - ADR ^ | 23,537 | $ | 403,660 | |||||
France - 3.4% | ||||||||
Electronic Equipment, Instruments & Components - 3.4% | ||||||||
Ingenico Group SA | 31,274 | 2,951,309 | ||||||
Germany - 4.1% | ||||||||
IT Services - 4.1% | ||||||||
Wirecard AG ^ | 64,533 | 3,573,004 | ||||||
Hong Kong - 0.1% | ||||||||
Electronic Equipment, Instruments & Components - 0.1% | ||||||||
PAX Global Technologies Ltd. | 153,535 | 97,991 | ||||||
Puerto Rico - 1.2% | ||||||||
IT Services - 1.2% | ||||||||
EVERTEC, Inc. | 68,240 | 1,085,016 | ||||||
United Kingdom - 6.2% | ||||||||
Commercial Services & Supplies - 1.1% | ||||||||
PayPoint PLC | 78,208 | 1,004,363 | ||||||
IT Services - 5.1% | ||||||||
Worldpay Group PLC | 1,210,433 | 4,479,884 | ||||||
Total United Kingdom | 5,484,247 | |||||||
United States - 84.5% | ||||||||
Consumer Finance - 12.5% | ||||||||
American Express Co. | 61,549 | 4,869,142 | ||||||
Discover Financial Services | 64,649 | 4,421,345 | ||||||
Green Dot Corporation (a) | 50,437 | 1,682,578 | ||||||
Total Consumer Finance | 10,973,065 | |||||||
Electronic Equipment, Instruments & Components - 2.0% | ||||||||
VeriFone Systems, Inc. (a) ^ | 96,343 | 1,804,504 | ||||||
Internet Software & Services - 1.5% | ||||||||
Q2 Holdings, Inc. (a) | 37,117 | 1,293,527 | ||||||
IT Services - 62.8% | ||||||||
Blackhawk Network Holdings, Inc. (a) | 45,062 | 1,829,517 | ||||||
Euronet Worldwide, Inc. (a) | 28,025 | 2,396,698 | ||||||
Fidelity National Information Services, Inc. | 53,907 | 4,292,075 | ||||||
First Data Corporation (a) | 193,849 | 3,004,660 | ||||||
Fiserv, Inc. (a) ^ | 37,006 | 4,267,162 | ||||||
FleetCor Technologies, Inc. (a) | 24,154 | 3,657,640 | ||||||
Global Payments, Inc. ^ | 49,468 | 3,991,078 |
The accompanying notes are an integral part of these financial statement.
35
PureFunds™ ETFs
PureFundsTM ISE Mobile Payments ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
MasterCard, Inc. | 46,098 | $ | 5,184,642 | |||||
MoneyGram International, Inc. (a) | 40,208 | 675,896 | ||||||
Net 1 UEPS Technologies, Inc. (a) | 49,404 | 604,211 | ||||||
PayPal Holdings, Inc. (a) ^ | 113,412 | 4,878,984 | ||||||
Square, Inc. (a) | 123,292 | 2,130,486 | ||||||
Total System Services, Inc. | 66,329 | 3,545,948 | ||||||
Vantiv, Inc. (a) ^ | 57,785 | 3,705,174 | ||||||
Visa, Inc. ^ | 59,770 | 5,311,760 | ||||||
Western Union Co. ^ | 176,663 | 3,595,092 | ||||||
WEX, Inc. (a) | 22,150 | 2,292,524 | ||||||
Total IT Services | 55,363,547 | |||||||
Software - 2.3% | ||||||||
ACI Worldwide, Inc. (a) ^ | 93,363 | 1,997,035 | ||||||
Technology Hardware, Storage & Peripherals - 3.4% | ||||||||
CPI Card Group, Inc. | 41,018 | 172,276 | ||||||
NCR Corporation (a) | 61,928 | 2,828,871 | ||||||
Total Technology Hardware, Storage & Peripherals | 3,001,147 | |||||||
Total United States | 74,432,825 | |||||||
TOTAL COMMON STOCKS (Cost $81,775,604) SHORT-TERM INVESTMENTS - 0.0% | 88,028,052 | |||||||
Money Market Funds - 0.0% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 29,225 | 29,225 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $29,225) | 29,225 | |||||||
INVESTMENTS PURCHASED WITH SECURITIES | ||||||||
LENDING COLLATERAL - 30.5% | ||||||||
Investment Companies - 30.5% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 1.17% (b) + | 26,825,845 | 26,825,845 | ||||||
TOTAL INVESTMENTS PURCHASED WITH SECURITIES | ||||||||
LENDING COLLATERAL (Cost $26,825,845) | 26,825,845 | |||||||
Total Investments (Cost $108,630,674) - 130.5% | 114,883,122 | |||||||
Liabilities in Excess of Other Assets - (30.5)% | (26,782,163) | |||||||
TOTAL NET ASSETS - 100.0% | $ | 88,100,959 |
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
+ Investments purchased with cash proceeds from securities lending. Total cash collateral has a value of $26,825,845 as of March 31, 2017.
^ All or a portion of this security is out on loan as of March 31, 2017. Total value of securities out on loan is $26,047,739.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statement.
36
PureFunds™ ETFs
PureFundsTM Drone Economy Strategy ETF
Schedule of Investments
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 99.6% | ||||||||
Cayman Islands - 3.9% | ||||||||
Semiconductors & Semiconductor Equipment - 3.9% | ||||||||
Ambarella, Inc. (a) | 7,728 | $ | 422,799 | |||||
France - 13.9% | ||||||||
Aerospace & Defense - 4.1% | ||||||||
Dassault Aviation SA | 176 | 223,788 | ||||||
Thales SA | 2,472 | 239,083 | ||||||
Total Aerospace & Defense | 462,871 | |||||||
Communications Equipment - 9.8% | ||||||||
Parrot SA (a) | 115,273 | 1,094,465 | ||||||
Total France | 1,557,336 | |||||||
Germany - 1.6% | ||||||||
Industrial Conglomerates - 1.6% | ||||||||
Rheinmetall AG | 2,112 | 177,160 | ||||||
Israel - 1.5% | ||||||||
Aerospace & Defense - 1.5% | ||||||||
Elbit Systems Ltd. | 1,417 | 162,178 | ||||||
Italy - 1.9% | ||||||||
Aerospace & Defense - 1.9% | ||||||||
Leonardo-finmeccanica Spa | 15,224 | 215,843 | ||||||
Japan - 7.2% | ||||||||
Automobiles - 2.7% | ||||||||
Fuji Heavy Industries Ltd. | 4,000 | 146,699 | ||||||
Yamaha Motor Co. Ltd. | 6,400 | 154,122 | ||||||
Total Automobiles | 300,821 | |||||||
Electronic Equipment, Instruments & Components - 1.5% | ||||||||
Hitachi Ltd. | 32,000 | 173,179 | ||||||
Household Durables - 1.6% | ||||||||
Sony Corporation - ADR | 5,352 | 180,523 | ||||||
Technology Hardware, Storage & Peripherals - 1.4% | ||||||||
NEC Corp. | 64,000 | 154,064 | ||||||
Total Japan | 808,587 | |||||||
Netherlands - 2.0% | ||||||||
Aerospace & Defense - 2.0% | ||||||||
Airbus SE | 2,968 | 225,850 | ||||||
Republic of Korea - 1.6% | ||||||||
Aerospace & Defense - 1.6% | ||||||||
Korea Aerospace Industries Ltd | 3,472 | 178,831 |
The accompanying notes are an integral part of these financial statement.
37
PureFunds™ ETFs
PureFundsTM Drone Economy Strategy ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Spain - 1.9% | ||||||||
IT Services - 1.9% | ||||||||
Indra Sistemas SA (a) | 17,048 | $ | 217,697 | |||||
Sweden - 3.2% | ||||||||
Aerospace & Defense - 1.4% | ||||||||
Saab AB | 3,640 | 153,673 | ||||||
Electronic Equipment, Instruments & Components - 1.8% | ||||||||
Hexagon AB | 4,984 | 200,235 | ||||||
Total Sweden | 353,908 | |||||||
Turkey - 3.4% | ||||||||
Aerospace & Defense - 1.8% | ||||||||
Aselsan Elektronik Sanayi Ve Ticaret AS | 43,904 | 205,238 | ||||||
Household Durables - 1.6% | ||||||||
Vestel Elektronik Sanayi ve Ticaret AS (a) | 93,632 | 179,048 | ||||||
Total Turkey | 384,286 | |||||||
United Kingdom - 5.5% | ||||||||
Aerospace & Defense - 5.5% | ||||||||
BAE Systems PLC | 30,136 | 242,591 | ||||||
Cobham PLC | 55,553 | 92,571 | ||||||
Meggitt PLC | 22,376 | 124,839 | ||||||
QinetiQ Group PLC | 45,152 | 157,833 | ||||||
Total Aerospace & Defense | 617,834 | |||||||
United States - 52.0% | ||||||||
Aerospace & Defense - 34.1% | ||||||||
Aerovironment, Inc. (a) ^ | 40,377 | 1,131,768 | ||||||
Boeing Co. ^ | 3,000 | 530,581 | ||||||
General Dynamics Corp. | 1,081 | 202,363 | ||||||
Kratos Defense & Security Solutions, Inc. (a) | 28,544 | 222,072 | ||||||
L3 Technologies, Inc. | 1,392 | 230,084 | ||||||
Lockheed Martin Corp. | 721 | 192,940 | ||||||
Northrop Grumman Corp. | 785 | 186,704 | ||||||
Orbital ATK, Inc. | 1,672 | 163,856 | ||||||
Raytheon Co. | 1,184 | 180,560 | ||||||
Rockwell Collins, Inc. | 1,424 | 138,356 | ||||||
Teledyne Technologies, Inc. (a) | 872 | 110,273 | ||||||
Textron, Inc. | 4,368 | 207,873 | ||||||
TransDigm Group, Inc. | 528 | 116,244 | ||||||
United Technologies Corp. | 1,696 | 190,308 | ||||||
Total Aerospace & Defense | 3,803,982 | |||||||
Electronic Equipment, Instruments & Components - 6.3% | ||||||||
FLIR Systems, Inc. | 3,208 | 116,386 | ||||||
InvenSense, Inc. (a) | 14,760 | 186,419 |
The accompanying notes are an integral part of these financial statement
38
PureFunds™ ETFs
PureFundsTM Drone Economy Strategy ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Jabil Circuit, Inc. ^ | 8,304 | $ | 240,152 | |||||
Trimble, Inc. (a) | 5,032 | 161,074 | ||||||
Total Electronic Equipment, Instruments & Components | 704,031 | |||||||
Household Durables - 3.5% | ||||||||
GoPro, Inc. (a) ^ | 45,345 | 394,502 | ||||||
Industrial Conglomerates - 2.1% | ||||||||
Honeywell International, Inc. | 1,872 | 233,757 | ||||||
Semiconductors & Semiconductor Equipment - 6.0% | ||||||||
Intel Corporation | 4,584 | 165,345 | ||||||
IXYS Corp. | 12,376 | 180,071 | ||||||
NVIDIA Corporation | 1,784 | 194,331 | ||||||
QUALCOMM, Inc. | 2,368 | 135,780 | ||||||
Total Semiconductors & Semiconductor Equipment | 675,527 | |||||||
Total United States | 5,811,799 | |||||||
TOTAL COMMON STOCKS (Cost $10,451,152) | 11,134,108 | |||||||
SHORT-TERM INVESTMENTS - 0.3% | ||||||||
Money Market Funds - 0.3% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 38,018 | 38,018 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $38,018) | 38,018 | |||||||
INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL - 18.4% | ||||||||
Investment Companies - 18.4% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 1.17% (b) + | 2,051,849 | 2,051,849 | ||||||
TOTAL INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL (Cost $2,051,849) | 2,051,849 | |||||||
Total Investments (Cost $12,541,019) - 118.3% | 13,223,975 | |||||||
Other Assets in Excess of Liabilities - (18.3)% | (2,039,570 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 11,184,405 |
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
+ Investments purchased with cash proceeds from securities lending. Total cash collateral has a value of $2,051,849 as of March 31, 2017.
^ All or a portion of this security is out on loan as of March 31, 2017. Total value of securities out on loan is $2,005,701.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statement.
39
PureFunds™ ETFs
PureFundsTM Video Game Tech ETF
Schedule of Investments
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 99.5% | ||||||||
Cayman Islands - 7.5% | ||||||||
Internet Software & Services - 2.0% | ||||||||
NetEase, Inc. - ADR | 331 | $ | 94,004 | |||||
SINA Corporation (a) | 1,026 | 73,995 | ||||||
Total Internet Software & Services | 167,999 | |||||||
Software - 5.5% | ||||||||
Changyou.com Ltd. - ADR (a) | 16,735 | 469,249 | ||||||
Total Cayman Islands | 637,248 | |||||||
France - 5.7% | ||||||||
Software - 5.7% | ||||||||
Ubisoft Entertainment SA (a) | 11,407 | 487,309 | ||||||
Hong Kong - 1.0% | ||||||||
Internet Software & Services - 1.0% | ||||||||
Tencent Hldgs Ltd | 3,000 | 86,007 | ||||||
Japan - 34.1% | ||||||||
Household Durables - 1.5% | ||||||||
Sony Corporation - ADR | 3,827 | 129,085 | ||||||
Internet Software & Services - 5.7% | ||||||||
DeNa Co. Ltd. | 3,000 | 60,873 | ||||||
Gree, Inc. | 67,000 | 421,872 | ||||||
Total Internet Software & Services | 482,745 | |||||||
Leisure Products - 1.8% | ||||||||
Bandai Namco Holdings, Inc. | 3,000 | 89,733 | ||||||
Sega Sammy Holdings, Inc. | 5,000 | 67,008 | ||||||
Total Leisure Products | 156,741 | |||||||
Software - 25.1% | ||||||||
Capcom Co. Ltd. | 18,000 | 351,011 | ||||||
GungHo Online Entertainment, Inc. | 34,800 | 77,521 | ||||||
Koei Tecmo Holdings Co. Ltd. | 4,500 | 85,408 | ||||||
Konami Holdings Corporation | 11,112 | 471,609 | ||||||
Nexon Co Ltd | 26,500 | 421,077 | ||||||
Nintendo Co. Ltd. | 1,500 | 348,087 | ||||||
Square Enix Holdings Co. Ltd. | 13,200 | 373,484 | ||||||
Total Software | 2,128,197 | |||||||
Total Japan | 2,896,768 | |||||||
Republic of Korea - 8.1% | ||||||||
Software - 8.1% | ||||||||
NCSoft Corp. | 1,820 | 496,378 | ||||||
Neowiz Games Corporation (a) | 18,465 | 194,838 | ||||||
Total Software | 691,216 |
The accompanying notes are an integral part of these financial statement.
40
PureFunds™ ETFs
PureFundsTM Video Game Tech ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Switzerland - 1.7% | ||||||||
Technology Hardware, Storage & Peripherals - 1.7% | ||||||||
Logitech International SA | 4,713 | $ | 150,204 | |||||
United States - 41.4% | ||||||||
Household Durables - 0.8% | ||||||||
Vuzix Corporation (a) ^ | 10,281 | 63,742 | ||||||
Leisure Products - 2.5% | ||||||||
Hasbro, Inc. ^ | 861 | 85,945 | ||||||
JAKKS Pacific, Inc. (a) | 10,070 | 55,385 | ||||||
Mattel, Inc. | 2,510 | 64,281 | ||||||
Total Leisure Products | 205,611 | |||||||
Semiconductors & Semiconductor Equipment - 4.8% | ||||||||
Advanced Micro Devices, Inc. (a) ^ | 10,880 | 158,304 | ||||||
Intel Corporation | 3,146 | 113,476 | ||||||
NVIDIA Corporation | 1,225 | 133,439 | ||||||
Total Semiconductors & Semiconductor Equipment | 405,219 | |||||||
Software - 27.0% | ||||||||
Activision Blizzard, Inc. | 10,512 | 524,127 | ||||||
Electronic Arts, Inc. (a) ^ | 4,911 | 439,633 | ||||||
Glu Mobile, Inc. (a) | 165,266 | 375,154 | ||||||
Microsoft Corporation | 1,815 | 119,536 | ||||||
Take-Two Interactive Software, Inc. (a) | 7,769 | 460,469 | ||||||
Zynga, Inc. (a) | 131,992 | 376,177 | ||||||
Total Software | 2,295,096 | |||||||
Specialty Retail - 3.9% | ||||||||
GameStop Corporation ^ | 14,862 | 335,138 | ||||||
Technology Hardware, Storage & Peripherals - 2.4% | ||||||||
Apple, Inc. | 987 | 141,792 | ||||||
Immersion Corporation (a) | 6,591 | 57,079 | ||||||
Total Technology Hardware, Storage & Peripherals | 198,871 | |||||||
Total United States | 3,503,677 | |||||||
TOTAL COMMON STOCKS (Cost $7,191,574) | 8,452,429 | |||||||
SHORT-TERM INVESTMENTS - 0.2% | ||||||||
Money Market Funds - 0.2% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 15,121 | 15,121 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $15,121) | 15,121 | |||||||
INVESTMENTS PURCHASED WITH SECURITIES | ||||||||
LENDING COLLATERAL - 11.8% | ||||||||
Investment Companies - 11.8% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 1.17% (b) + | 1,002,072 | 1,002,072 | ||||||
TOTAL INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL (Cost $1,002,072) | 1,002,072 |
The accompanying notes are an integral part of these financial statement.
41
PureFunds™ ETFs
PureFundsTM Video Game Tech ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Total Investments (Cost $8,208,767) - 111.5% | $ | 9,469,622 | ||
Liabilities in Excess of Other Assets - (11.5)% | (977,596 | ) | ||
TOTAL NET ASSETS - 100.0% | $ | 8,492,026 |
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
+ Investments purchased with cash proceeds from securities lending. Total cash collateral has a value of $1,002,072 as of March 31, 2017.
^ All or a portion of this security is out on loan as of March 31, 2017. Total value of securities out on loan is $980,627.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statement.
42
PureFunds™ ETFs
PureFundsTM Solactive FinTech ETF
Schedule of Investments
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 99.9% | ||||||||
Australia - 3.2% | ||||||||
Capital Markets - 3.2% | ||||||||
IRESS Ltd. | 4,547 | $ | 40,679 | |||||
Bermuda - 3.2% | ||||||||
Professional Services - 3.2% | ||||||||
IHS Markit Ltd. (a) | 967 | 40,566 | ||||||
Canada - 3.1% | ||||||||
IT Services - 3.1% | ||||||||
DH Corporation (a) | 2,098 | 39,819 | ||||||
Denmark - 3.2% | ||||||||
Software - 3.2% | ||||||||
SimCorp AS | 676 | 40,714 | ||||||
Germany - 3.1% | ||||||||
IT Services - 3.1% | ||||||||
GFT Technologies SE | 2,074 | 39,538 | ||||||
Jersey - 3.2% | ||||||||
Professional Services - 3.2% | ||||||||
Experian PLC | 1,972 | 40,223 | ||||||
New Zealand - 3.3% | ||||||||
Software - 3.3% | ||||||||
Xero Ltd. (a) | 2,981 | 41,355 | ||||||
Switzerland - 3.2% | ||||||||
Software - 3.2% | ||||||||
Temenos Group AG | 504 | 40,052 | ||||||
United Kingdom - 3.1% | ||||||||
Software - 3.1% | ||||||||
Fidessa Group PLC | 1,259 | 39,309 | ||||||
United States - 71.3% | ||||||||
Consumer Finance - 3.2% | ||||||||
LendingClub Corporation (a) | 7,442 | 40,857 | ||||||
Diversified Financial Services - 3.3% | ||||||||
On Deck Capital, Inc. (a) | 8,258 | 41,620 | ||||||
Internet Software & Services - 11.8% | ||||||||
CoStar Group, Inc. (a) | 181 | 37,507 | ||||||
Envestnet, Inc. (a) | 1,109 | 35,821 | ||||||
Q2 Holdings, Inc. (a) | 1,114 | 38,823 |
The accompanying notes are an integral part of these financial statement.
43
PureFunds™ ETFs
PureFundsTM Solactive FinTech ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Zillow Group, Inc. (a) | 1,090 | $ | 36,700 | |||||
Total Internet Software & Services | 148,851 | |||||||
IT Services - 21.9% | ||||||||
Black Knight Financial Services, Inc. (a) | 1,021 | 39,104 | ||||||
Broadridge Financial Solutions, Inc. | 569 | 38,664 | ||||||
CoreLogic, Inc. (a) | 983 | 40,028 | ||||||
DST Systems, Inc. | 331 | 40,547 | ||||||
PayPal Holdings, Inc. (a) | 930 | 40,009 | ||||||
Square, Inc. (a) | 2,334 | 40,332 | ||||||
Syntel, Inc. | 2,217 | 37,312 | ||||||
Total IT Services | 275,996 | |||||||
Professional Services - 6.4% | ||||||||
Equifax, Inc. | 293 | 40,065 | ||||||
Verisk Analytics, Inc. (a) | 494 | 40,083 | ||||||
Total Professional Services | 80,148 | |||||||
Software - 24.7% | ||||||||
Blackline, Inc. (a) | 1,432 | 42,617 | ||||||
Bottomline Technologies, Inc. (a) | 1,616 | 38,218 | ||||||
Ellie Mae, Inc. (a) | 401 | 40,208 | ||||||
Fair Isaac Corporation | 302 | 38,943 | ||||||
Guidewire Software, Inc. (a) | 683 | 38,473 | ||||||
Intuit, Inc. | 315 | 36,537 | ||||||
Pegasystems, Inc. | 886 | 38,850 | ||||||
SS&C Technologies Holdings, Inc. | 1,087 | 38,479 | ||||||
Total Software | 312,325 | |||||||
Total United States | 899,797 | |||||||
TOTAL COMMON STOCKS (Cost $1,244,113) | 1,262,052 | |||||||
SHORT-TERM INVESTMENTS - 0.2% | ||||||||
Money Market Funds - 0.2% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 2,786 | 2,786 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $2,786) | 2,786 | |||||||
Total Investments (Cost $1,246,899) - 100.1% | 1,264,838 | |||||||
Liabilities in Excess of Other Assets - (0.1)% | (659 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 1,264,181 |
Percentages are stated as a percent of net assets.
(a) Non-income producing security.
(b) The rate quoted is the annualized seven-day yield at March 31, 2017.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statement.
44
PureFunds™ ETFs
PureFundsTM ETFx HealthTech ETF
Schedule of Investments
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 95.9% | ||||||||
Denmark - 2.0% | ||||||||
Health Care Equipment & Supplies - 2.0% | ||||||||
William Demant Holding AS (a) | 1,220 | $ | 25,490 | |||||
Germany - 4.5% | ||||||||
Health Care Equipment & Supplies - 2.0% | ||||||||
Carl Zeiss Meditec AG | 595 | 25,377 | ||||||
Health Care Technology - 2.5% | ||||||||
CompuGroup Medical SE | 738 | 32,846 | ||||||
Total Germany | 58,223 | |||||||
Hong Kong - 2.4% | ||||||||
Health Care Technology - 2.4% | ||||||||
Alibaba Health Information Technology Ltd. (a) | 70,600 | 31,796 | ||||||
Japan - 9.5% | ||||||||
Health Care Equipment & Supplies - 9.5% | ||||||||
Asahi Intecc Co Ltd. | 600 | 24,980 | ||||||
CYBERDYNE, Inc. | 1,700 | 24,401 | ||||||
Nihon Kohden Corporation | 1,100 | 24,593 | ||||||
Sysmex Corporation | 400 | 24,252 | ||||||
Terumo Corporation | 700 | 24,302 | ||||||
Total Health Care Equipment & Supplies | 122,528 | |||||||
Netherlands - 3.9% | ||||||||
Health Care Equipment & Supplies - 2.0% | ||||||||
Wright Medical Group NV (a) ^ | 845 | 26,296 | ||||||
Life Sciences Tools & Services - 1.9% | ||||||||
QIAGEN NV | 863 | 25,001 | ||||||
Total Netherlands | 51,297 | |||||||
New Zealand - 2.0% | ||||||||
Health Care Equipment & Supplies - 2.0% | ||||||||
Fisher & Paykel Healthcare Corporation Ltd. | 3,749 | 25,492 | ||||||
Spain - 1.9% | ||||||||
Biotechnology - 1.9% | ||||||||
Grifols SA | 1,030 | 25,262 | ||||||
Sweden - 4.0% | ||||||||
Health Care Equipment & Supplies - 4.0% | ||||||||
Elekta AB | 2,612 | 25,550 | ||||||
Getinge AB | 1,450 | 25,438 | ||||||
Total Health Care Equipment & Supplies | 50,988 |
The accompanying notes are an integral part of these financial statement.
45
PureFunds™ ETFs
PureFundsTM ETFx HealthTech ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Switzerland - 8.0% | ||||||||
Health Care Equipment & Supplies - 6.0% | ||||||||
Sonova Holding AG | 188 | $ | 26,070 | |||||
Straumann Holding AG | 56 | 25,983 | ||||||
Ypsomed Holding AG | 134 | 25,485 | ||||||
Total Health Care Equipment & Supplies | 77,538 | |||||||
Life Sciences Tools & Services - 2.0% | ||||||||
Tecan Group AG | 164 | 26,213 | ||||||
Total Switzerland | 103,751 | |||||||
United Kingdom - 4.0% | ||||||||
Health Care Equipment & Supplies - 2.0% | ||||||||
ConvaTec Group PLC (a) | 7,731 | 27,024 | ||||||
Life Sciences Tools & Services - 2.0% | ||||||||
ICON PLC (a) | 318 | 25,351 | ||||||
Total United Kingdom | 52,375 | |||||||
United States - 53.7% | ||||||||
Health Care Equipment & Supplies - 25.5% | ||||||||
ABIOMED, Inc. (a) ^ | 200 | 25,040 | ||||||
Becton Dickinson and Co. | 137 | 25,131 | ||||||
CONMED Corporation | 602 | 26,735 | ||||||
Edwards Lifesciences Corporation (a) | 269 | 25,305 | ||||||
ICU Medical, Inc. (a) | 162 | 24,737 | ||||||
Intuitive Surgical, Inc. (a) ^ | 34 | 26,060 | ||||||
Merit Medical Systems, Inc. (a) | 879 | 25,403 | ||||||
Neogen Corp. (a) | 385 | 25,237 | ||||||
Nevro Corp. (a) | 271 | 25,393 | ||||||
NuVasive, Inc. (a) | 335 | 25,018 | ||||||
ResMed, Inc. | 360 | 25,909 | ||||||
Varex Imaging Corp. (a) | 818 | 27,484 | ||||||
Varian Medical Systems, Inc. (a) | 281 | 25,608 | ||||||
Total Health Care Equipment & Supplies | 333,060 | |||||||
Health Care Providers & Services - 2.4% | ||||||||
Teladoc, Inc. (a) ^ | 1,258 | 31,450 | ||||||
Health Care Technology - 17.8% | ||||||||
Allscripts Healthcare Solutions, Inc. (a) ^ | 2,516 | 31,903 | ||||||
athenahealth, Inc. (a) | 289 | 32,567 | ||||||
Cerner Corporation (a) | 544 | 32,014 | ||||||
Evolent Health, Inc. (a) | 1,514 | 33,762 | ||||||
Inovalon Holdings, Inc. (a) | 2,660 | 33,516 | ||||||
Medidata Solutions, Inc. (a) | 572 | 32,999 | ||||||
Veeva Systems, Inc. (a) | 631 | 32,358 | ||||||
Total Health Care Technology | 229,119 | |||||||
Life Sciences Tools & Services - 8.0% | ||||||||
Cambrex Corp. (a) | 496 | 27,304 |
The accompanying notes are an integral part of these financial statement.
46
PureFunds™ ETFs
PureFundsTM ETFx HealthTech ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
INC Research Holdings, Inc. (a) | 576 | $ | 26,410 | |||||
VWR Corp. (a) | 908 | 25,606 | ||||||
Waters Corporation (a) | 161 | 25,166 | ||||||
Total Life Sciences Tools & Services | 104,486 | |||||||
Total United States | 698,115 | |||||||
PREFERRED STOCKS - 2.0% | ||||||||
Germany - 2.0% | ||||||||
Health Care Equipment & Supplies - 2.0% | ||||||||
Sartorius AG | 301 | 26,411 | ||||||
TOTAL COMMON STOCKS (Cost $1,234,251) | 1,271,728 | |||||||
SHORT-TERM INVESTMENTS - 0.3% | ||||||||
Money Market Funds - 0.3% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 4,549 | 4,549 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $4,549) | 4,549 | |||||||
INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL - 10.0% | ||||||||
LENDING COLLATERAL - 10.0% | ||||||||
Investment Companies - 10.0% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 1.17% (b) + | 130,633 | 130,633 | ||||||
TOTAL INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL (Cost $130,633) | 130,633 | |||||||
Total Investments (Cost $1,369,433) - 108.2% | 1,406,910 | |||||||
Liabilities in Excess of Other Assets - (8.2)% | (107,054 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 1,299,856 |
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
+ Investments purchased with cash proceeds from securities lending. Total cash collateral has a value of $130,633 as of March 31, 2017.
^ All or a portion of this security is out on loan as of March 31, 2017. Total value of securities out on loan is $127,376.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statement.
47
PureFunds™ ETFs
STATEMENTS OF ASSETS AND LIABILITIES
As of March 31, 2017 (Unaudited)
PureFundsTM ISE Junior Silver (Small Cap Miners/ Explorers) ETF | PureFundsTM ISE Cyber Security ETF | PureFundsT M ISE Big Data ETF | ||||||||||
ASSETS | ||||||||||||
Investments in securities, at fair value* | $ | 67,383,915 | $ | 1,246,014,493 | $ | 2,858,257 | ||||||
Cash | — | — | — | |||||||||
Foreign currency | 359 | — | — | |||||||||
Dividends and interest receivable | 24 | 205,408 | 288 | |||||||||
Securities lending income receivable | — | 45,012 | 129 | |||||||||
Receivable for investments sold | 1,965,378 | — | — | |||||||||
Total Assets | 69,349,676 | 1,246,264,913 | 2,858,674 | |||||||||
LIABILITIES | ||||||||||||
Collateral received for securities loaned (Note 7) | $ | — | $ | 275,119,283 | $ | 347,708 | ||||||
Payable for investments purchased | 2,603,686 | — | — | |||||||||
Payable for fund shares redeemed | — | — | — | |||||||||
Management fees payable | 38,690 | 605,382 | 1,752 | |||||||||
Total Liabilities | 2,642,376 | 275,724,665 | 349,460 | |||||||||
Net Assets | $ | 66,707,300 | $ | 970,540,248 | $ | 2,509,214 | ||||||
NET ASSETS CONSIST OF: | ||||||||||||
Paid-in Capital | $ | 85,321,972 | $ | 1,077,398,338 | $ | 2,496,104 | ||||||
Undistributed (accumulated) net investment income (loss) | (536,417 | ) | (204,755 | ) | (2,285 | ) | ||||||
Accumulated net realized gain (loss) on investments | (7,615,266 | ) | (121,000,611 | ) | (59,610 | ) | ||||||
Net unrealized appreciation (depreciation) on: | ||||||||||||
Investments in securities | (10,462,923 | ) | 14,332,127 | 75,005 | ||||||||
Foreign currency and translation of other assets and liabilities in foreign currency | (66 | ) | 15,149 | — | ||||||||
Net Assets | $ | 66,707,300 | $ | 970,540,248 | $ | 2,509,214 | ||||||
*Identified Cost: | ||||||||||||
Investments in unaffiliated securities | $ | 77,846,838 | $ | 1,231,682,366 | $ | 2,783,252 | ||||||
Foreign currency | — | — | — | |||||||||
Shares Outstanding^ | 5,150,000 | 32,900,000 | 100,000 | |||||||||
Net Asset Value, Offering and Redemption Price per Share | $ | 12.95 | $ | 29.50 | $ | 25.09 |
^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
48
PureFunds™ ETFs
STATEMENTS OF ASSETS AND LIABILITIES
As of March 31, 2017 (Unaudited) (Continued)
As of March 31, 2017 (Unaudited) (Continued)
PureFundsTM ISE Mobile Payments ETF | PureFundsTM Drone Economy Strategy ETF | PureFundsTM Video Game Tech ETF | PureFundsTM Solative FinTech ETF | PureFundsTM ETFx HealthTech ETF | |||||||||||||||
$ | 114,883,122 | $ | 13,223,975 | $ | 9,469,622 | $ | 1,264,838 | $ | 1,406,910 | ||||||||||
13 | — | — | — | — | |||||||||||||||
866 | — | — | — | — | |||||||||||||||
18,259 | 11,491 | 27,708 | 1,464 | 1,696 | |||||||||||||||
5,285 | 7,415 | 2,122 | 45 | 135 | |||||||||||||||
71,655 | — | — | 1,259,656 | 553,637 | |||||||||||||||
114,979,200 | 13,242,881 | 9,499,452 | 2,526,003 | 1,962,378 | |||||||||||||||
$ | 26,825,845 | $ | 2,051,849 | $ | 1,002,072 | $ | — | $ | 130,633 | ||||||||||
1,208 | — | — | — | 531,080 | |||||||||||||||
— | — | — | 1,260,345 | — | |||||||||||||||
51,188 | 6,627 | 5,354 | 1,477 | 809 | |||||||||||||||
26,878,241 | 2,058,476 | 1,007,426 | 1,261,822 | 662,522 | |||||||||||||||
$ | 88,100,959 | $ | 11,184,405 | $ | 8,492,026 | $ | 1,264,181 | $ | 1,299,856 | ||||||||||
$ | 81,334,051 | $ | 10,334,201 | $ | 7,166,406 | $ | 1,239,370 | $ | 1,331,370 | ||||||||||
21,368 | 36,678 | (10,194 | ) | 310 | (1,713 | ) | |||||||||||||
493,135 | 130,474 | 74,599 | 6,571 | (66,990 | ) | ||||||||||||||
6,252,448 | 682,956 | 1,260,855 | 17,939 | 37,477 | |||||||||||||||
(43 | ) | 96 | 360 | (9 | ) | (288 | ) | ||||||||||||
$ | 88,100,959 | $ | 11,184,405 | $ | 8,492,026 | $ | 1,264,181 | $ | 1,299,856 | ||||||||||
$ | 108,630,674 | $ | 12,541,019 | $ | 8,208,767 | $ | 1,246,899 | $ | 1,369,433 | ||||||||||
872 | — | — | 2,786 | — | |||||||||||||||
3,150,000 | 400,000 | 250,000 | 50,000 | 50,000 | |||||||||||||||
$ | 27.97 | $ | 27.96 | $ | 33.97 | $ | 25.28 | $ | 26.00 |
^ | No par value, unlimited number of shares authorized. |
The accompanying notes are an integral part of these financial statements.
49
PureFunds™ ETFs
STATEMENTS OF OPERATIONS
For the six months ended March 31, 2017 (Unaudited)
PureFundsTM ISE Junior Silver (Small Cap Miners/ Explorers) ETF | PureFundsTM ISE Cyber Security ETF | PureFundsTM ISE Big Data ETF | ||||||||||
INVESTMENT INCOME | ||||||||||||
Income: | ||||||||||||
Dividends from unaffiliated securities (net of foreign withholdings tax of $10,806, $142,477, $170, $0, $1,427, $3,327, $484, $264) | $ | 61,081 | $ | 3,117,142 | $ | 5,683 | ||||||
Interest | 28 | 1,100 | 3 | |||||||||
Securities lending income | — | 312,995 | 932 | |||||||||
Total Investment Income | 61,109 | 3,431,237 | 6,618 | |||||||||
Expenses: | ||||||||||||
Management fees | 218,420 | 3,082,360 | 7,829 | |||||||||
Total Expenses | 218,420 | 3,082,360 | 7,829 | |||||||||
Net Investment Income (Loss) | (157,311) | 348,877 | (1,211) | |||||||||
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||||||
Net Realized Gain (Loss) on: | ||||||||||||
Investments | (4,722,041) | (14,853,491) | 10,363 | |||||||||
In-Kind redemptions | 2,098,187 | 10,357,886 | — | |||||||||
Foreign currency and foreign currency translation | (13,298 | ) | (156,424) | (157) | ||||||||
Net Realized Gain (Loss) on Investments and In-Kind redemptions | (2,637,152 | ) | (4,652,029) | 10,206 | ||||||||
Net Change in Unrealized Appreciation of: | ||||||||||||
Investments | (12,264,718) | 56,348,367 | 58,869 | |||||||||
Foreign currency and foreign currency translation | 2,941 | 5,885 | — | |||||||||
Net change in Unrealized Appreciation of Investments | (12,261,777) | 56,354,252 | 58,869 | |||||||||
Net Realized and Unrealized Gain (Loss) on Investments | (14,898,929) | 51,702,223 | 69,075 | |||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | (15,056,240) | $ | 52,051,100 | $ | 67,864 |
The accompanying notes are an integral part of these financial statements.
50
PureFunds™ ETFs
STATEMENTS OF OPERATIONS
For the six months ended March 31, 2017 (Unaudited) (Continued)
PureFundsTM ISE Mobile Payments ETF | PureFundsTM Drone Economy Strategy ETF | PureFundsTM Video Game Tech ETF | PureFundsTM Solactive FinTech ETF | PureFundsTM ETFx HealthTech ETF | |||||||||||||
$ | 196,678 | $ | 41,930 | $ | 54,221 | $ | 36,085 | $ | 4,745 | ||||||||
92 | 14 | 3 | 2 | 2 | |||||||||||||
26,923 | 29,665 | 3,991 | 148 | 273 | |||||||||||||
223,693 | 71,609 | 58,215 | 36,235 | 5,020 | |||||||||||||
180,090 | 31,185 | 29,501 | 8,205 | 6,733 | |||||||||||||
180,090 | 31,185 | 29,501 | 8,205 | 6,733 | |||||||||||||
43,603 | 40,424 | 28,714 | 28,030 | (1,713) | |||||||||||||
(464,453) | 144,655 | 76,662 | (84,046) | 12,647 | |||||||||||||
1,113,385 | — | — | 93,394 | (79,057) | |||||||||||||
(4,305) | (2,740) | (2,038) | (1,499) | (528) | |||||||||||||
644,627 | 141,915 | 74,624 | 7,849 | (66,938) | |||||||||||||
6,067,780 | 385,904 | 314,650 | 11,710 | (1,439) | |||||||||||||
(26) | 160 | 409 | (10) | 53 | |||||||||||||
6,067,754 | 386,064 | 315,059 | 11,700 | (1,386) | |||||||||||||
6,712,381 | 527,979 | 389,683 | 19,549 | (68,324) | |||||||||||||
$ | 6,755,984 | $ | 568,403 | $ | 418,397 | $ | 47,579 | $ | (70,037) |
The accompanying notes are an integral part of these financial statements.
51
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | |||||||
OPERATIONS | ||||||||
Net investment loss | $ | (157,311 | ) | $ | (134,867 | ) | ||
Net realized gain (loss) on investments and In-Kind Redemptions | (2,637,152 | ) | 7,115,839 | |||||
Net change in unrealized appreciation (depreciation) of investments | (12,261,777 | ) | 4,713,347 | |||||
Net increase (decrease) in net assets resulting from operations | (15,056,240 | ) | 11,694,319 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (258,169 | ) | (87,131 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares (a) | 4,956,675 | 62,026,105 | ||||||
Net increase (decrease) in net assets | $ | (10,357,734 | ) | $ | 73,633,293 | |||
NET ASSETS | ||||||||
Beginning of Period | 77,065,034 | 3,431,741 | ||||||
End of Period | $ | 66,707,300 | $ | 77,065,034 | ||||
Accumulated net investment loss | $ | (536,417 | ) | $ | (120,937 | ) |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 1,250,000 | $ | 18,454,695 | 5,400,000 | $ | 79,061,830 | ||||||||||
Shares Redeemed | (1,050,000 | ) | (13,498,020 | ) | (1,100,000 | ) | (17,035,725 | ) | ||||||||
200,000 | $ | 4,956,675 | 4,300,000 | $ | 62,026,105 | |||||||||||
Beginning Shares | 4,950,000 | 650,000 | ||||||||||||||
Ending Shares | 5,150,000 | 4,950,000 |
The accompanying notes are an integral part of these financial statements.
52
PureFunds™ ISE Cyber Security ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | |||||||
OPERATIONS | ||||||||
Net investment income (loss) | $ | 348,877 | $ | 10,006,317 | ||||
Net realized gain (loss) on investments and In-Kind Redemptions | (4,652,029 | ) | (123,324,117 | ) | ||||
Net change in unrealized appreciation (depreciation) of investments | 56,354,252 | 170,473,814 | ||||||
Net increase in net assets resulting from operations | 52,051,100 | 57,156,014 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (3,740,625 | ) | (5,498,499 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares (a) | 118,432,850 | (306,990,660 | ) | |||||
Transaction fees (See Note 1) | 2,999 | 2,025 | ||||||
Net increase (decrease) in net assets from capital share transactions | 118,435,849 | (306,988,635 | ) | |||||
Total increase (decrease) in net assets | $ | 166,746,324 | $ | (255,331,120 | ) | |||
NET ASSETS | ||||||||
Beginning of Period | 803,793,924 | 1,059,125,044 | ||||||
End of Period | $ | 970,540,248 | $ | 803,793,924 | ||||
Undistributed net investment income (accumulated loss) | $ | (204,755 | ) | $ | 3,186,993 |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 5,900,000 | $ | 166,905,295 | 2,200,000 | $ | 57,823,125 | ||||||||||
Transaction Fees | — | 2,999 | — | 2,025 | ||||||||||||
Shares Redeemed | (1,800,000 | ) | (48,472,445 | ) | (15,300,000 | ) | (364,813,785 | ) | ||||||||
4,100,000 | $ | 118,435,849 | (13,100,000 | ) | $ | (306,988,635 | ) | |||||||||
Beginning Shares | 28,800,000 | 41,900,000 | ||||||||||||||
Ending Shares | 32,900,000 | 28,800,000 |
The accompanying notes are an integral part of these financial statements.
53
PureFunds™ ISE Big Data ETF
STATEMENTs OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | |||||||
OPERATIONS | ||||||||
Net investment loss | $ | (1,211 | ) | $ | (1,536 | ) | ||
Net realized gain (loss) on investments and In-Kind Redemptions | 10,206 | (204,988 | ) | |||||
Net change in unrealized appreciation of investments | 58,869 | 268,077 | ||||||
Net increase in net assets resulting from operations | 67,864 | 61,553 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | — | — | ||||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares (a) | 1,200,425 | (1,048,315 | ) | |||||
Net increase (decrease) in net assets | $ | 1,268,289 | $ | (986,762 | ) | |||
NET ASSETS | ||||||||
Beginning of Period | 1,240,925 | 2,227,687 | ||||||
End of Period | $ | 2,509,214 | $ | 1,240,925 | ||||
Accumulated net investment loss | $ | (2,285 | ) | $ | (1,074 | ) |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 50,000 | $ | 1,200,425 | — | $ | — | ||||||||||
Transaction Fees | — | — | — | — | ||||||||||||
Shares Redeemed | — | — | (50,000 | ) | (1,048,315 | ) | ||||||||||
50,000 | $ | 1,200,425 | (50,000 | ) | $ | (1,048,315 | ) | |||||||||
Beginning Shares | 50,000 | 100,000 | ||||||||||||||
Ending Shares | 100,000 | 50,000 |
The accompanying notes are an integral part of these financial statements.
54
PureFunds™ ISE Mobile Payments ETF
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | |||||||
OPERATIONS | ||||||||
Net investment income | $ | 43,603 | $ | 50,012 | ||||
Net realized gain on investments and In-Kind Redemptions | 644,627 | 13,529 | ||||||
Net change in unrealized appreciation of investments | 6,067,754 | 385,037 | ||||||
Net increase in net assets resulting from operations | 6,755,984 | 448,578 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (31,641 | ) | (40,000 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares (a) | 72,642,165 | 3,618,915 | ||||||
Transaction fees (See Note 1) | 21 | — | ||||||
Net increase in net assets from capital share transactions | 72,642,186 | 3,618,915 | ||||||
Total increase in net assets | $ | 79,366,529 | $ | 4,027,493 | ||||
NET ASSETS | ||||||||
Beginning of Period | 8,734,430 | 4,706,937 | ||||||
End of Period | $ | 88,100,959 | $ | 8,734,430 | ||||
Undistributed net investment income | $ | 21,368 | $ | 9,406 |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 2,950,000 | $ | 76,874,490 | 200,000 | $ | 4,842,235 | ||||||||||
Transaction Fees | — | 21 | — | — | ||||||||||||
Shares Redeemed | (150,000 | ) | (4,232,325 | ) | (5,000 | ) | (1,223,320 | ) | ||||||||
2,800,000 | $ | 72,642,186 | 150,000 | $ | 3,618,915 | |||||||||||
Beginning Shares | 350,000 | 200,000 | ||||||||||||||
Ending Shares | 3,150,000 | 350,000 |
The accompanying notes are an integral part of these financial statements.
55
PureFunds™ Drone Economy Strategy ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||
OPERATIONS | ||||||||
Net investment income (loss) | $ | 40,424 | $ | 14,519 | ||||
Net realized gain (loss) on investments and In-Kind Redemptions | 141,915 | 14,147 | ||||||
Net change in unrealized appreciation (depreciation) of investments | 386,064 | 296,988 | ||||||
Net increase in net assets resulting from operations | 568,403 | 325,654 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (11,055 | ) | (4,000 | ) | ||||
From net realized gain | (28,851 | ) | — | |||||
Total Distributions to Shareholders | (39,906 | ) | (4,000 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares (a) | 3,969,360 | 6,364,770 | ||||||
Transaction Fees (Note 1) | 71 | 53 | ||||||
Net increase in net assets from capital share transactions | 3,969,431 | 6,364,823 | ||||||
Total increase in net assets | $ | 4,497,928 | $ | 6,686,477 | ||||
NET ASSETS | ||||||||
Beginning of Period | 6,686,477 | — | ||||||
End of Period | $ | 11,184,405 | $ | 6,686,477 | ||||
Undistributed net investment income | $ | 36,678 | $ | 7,309 |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 150,000 | $ | 3,969,360 | 250,000 | $ | 6,364,770 | ||||||||||
Transaction Fees | — | 71 | — | 53 | ||||||||||||
Shares Redeemed | — | — | — | — | ||||||||||||
150,000 | $ | 3,969,431 | 250,000 | $ | 6,364,823 | |||||||||||
Beginning Shares | 250,000 | — | ||||||||||||||
Ending Shares | 400,000 | 250,000 |
*Fund commenced operations on March 8, 2016. The information presented is for the period from March 8, 2016 to September 30, 2016.
The accompanying notes are an integral part of these financial statements.
56
PureFunds™ Video Game Tech ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||
OPERATIONS | ||||||||
Net investment income (loss) | $ | 28,714 | $ | 9,076 | ||||
Net realized gain (loss) on investments and In-Kind Redemptions | 74,624 | 94,118 | ||||||
Net change in unrealized appreciation (depreciation) of investments | 315,059 | 946,156 | ||||||
Net increase in net assets resulting from operations | 418,397 | 1,049,350 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (45,780 | ) | — | |||||
From net realized gain | (96,540 | ) | — | |||||
Total Distributions to Shareholders | (142,320 | ) | — | |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares (a) | 1,634,950 | 5,531,370 | ||||||
Transaction Fees (Note 1) | 86 | 193 | ||||||
Net increase in net assets from capital share transactions | 1,635,036 | 5,531,563 | ||||||
Net increase in net assets | $ | 1,911,113 | $ | 6,580,913 | ||||
NET ASSETS | ||||||||
Beginning of Period | 6,580,913 | — | ||||||
End of Period | $ | 8,492,026 | $ | 6,580,913 | ||||
Undistributed net investment income (loss) | $ | (10,194 | ) | $ | 6,872 |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 50,000 | $ | 1,634,950 | 200,000 | $ | 5,531,370 | ||||||||||
Transaction Fees | — | 86 | — | 193 | ||||||||||||
Shares Redeemed | — | — | — | — | ||||||||||||
50,000 | $ | 1,635,036 | 200,000 | $ | 5,531,563 | |||||||||||
Beginning Shares | 200,000 | — | ||||||||||||||
Ending Shares | 250,000 | 200,000 |
*Fund commenced operations on March 8, 2016. The information presented is for the period from March 8, 2016 to September 30, 2016.
The accompanying notes are an integral part of these financial statements.
57
PureFunds™ Solactive FinTech ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||
OPERATIONS | ||||||||
Net investment income | $ | 28,030 | $ | 585 | ||||
Net realized gain on investments and In-Kind Redemptions | 7,849 | 1,940 | ||||||
Net change in unrealized appreciation of investments | 11,700 | 6,230 | ||||||
Net increase in net assets resulting from operations | 47,579 | 8,755 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (27,720 | ) | — | |||||
From net realized gain | (3,803 | ) | — | |||||
Total Distributions to Shareholders | (31,523 | ) | — | |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares (a) | (1,260,630 | ) | 2,500,000 | |||||
Net increase (decrease) in net assets | $ | (1,244,574 | ) | $ | 2,508,755 | |||
NET ASSETS | ||||||||
Beginning of Period | 2,508,755 | — | ||||||
End of Period | $ | 1,264,181 | $ | 2,508,755 | ||||
Undistributed net investment income | $ | 310 | $ | — |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 50,000 | $ | 1,271,870 | 100,000 | $ | 2,500,000 | ||||||||||
Transaction Fees | — | — | — | — | ||||||||||||
Shares Redeemed | (100,000 | ) | (2,532,500 | ) | — | — | ||||||||||
(50,000 | ) | $ | (1,260,630 | ) | 100,000 | $ | 2,500,000 | |||||||||
Beginning Shares | 100,000 | — | ||||||||||||||
Ending Shares | 50,000 | 100,000 |
* Fund commenced operations on August 30, 2016. The information presented is for the period from August 30, 2016 to September 30, 2016.
The accompanying notes are an integral part of these financial statements.
58
PureFunds™ ETFx HealthTech ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||
OPERATIONS | ||||||||
Net investment income (loss) | $ | (1,713 | ) | $ | 583 | |||
Net realized gain (loss) on investments and In-Kind Redemptions | (66,938 | ) | 6,867 | |||||
Net change in unrealized appreciation (depreciation) of investments | (1,386 | ) | 38,575 | |||||
Net increase (decrease) in net assets resulting from operations | (70,037 | ) | 46,025 | |||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (593 | ) | — | |||||
From net realized gain | (6,909 | ) | — | |||||
Total Distributions to Shareholders | (7,502 | ) | — | |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase (decrease) in net assets derived from net change in outstanding shares (a) | (1,168,630 | ) | 2,500,000 | |||||
Net increase (decrease) in net assets | $ | (1,246,169 | ) | $ | 2,546,025 | |||
NET ASSETS | ||||||||
Beginning of Period | 2,546,025 | — | ||||||
End of Period | $ | 1,299,856 | $ | 2,546,025 | ||||
Undistributed net investment income (loss) | $ | (1,713 | ) | $ | 593 |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | — | $ | — | 100,000 | $ | 2,500,000 | ||||||||||
Transaction Fees | — | — | — | — | ||||||||||||
Shares Redeemed | (50,000 | ) | (1,168,630 | ) | — | — | ||||||||||
(50,000 | ) | $ | (1,168,630 | ) | 100,000 | $ | 2,500,000 | |||||||||
Beginning Shares | 100,000 | — | ||||||||||||||
Ending Shares | 50,000 | 100,000 |
*Fund commenced operations on August 30, 2016. The information presented is for the period from August 30, 2016 to September 30, 2016.
The accompanying notes are an integral part of these financial statements.
59
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | Year Ended September 30, 2015 | Year Ended September 30, 2014 | Period Ended September 30, 20131 | ||||||||||||||||
Net Asset Value, Beginning of Period | $ | 15.57 | $ | 5.28 | $ | 10.00 | $ | 11.71 | $ | 20.00 | ||||||||||
Income (Loss) from Investment Operations: | ||||||||||||||||||||
Net investment income loss2 | (0.03) | (0.06) | (0.03) | (0.06) | (0.02) | |||||||||||||||
Net realized and unrealized gain (loss) on investments | (2.53) | 10.47 | (4.69) | (1.64) | (8.27) | |||||||||||||||
Total from investment operations | (2.56) | 10.41 | (4.72) | (1.70) | (8.29) | |||||||||||||||
Less Distributions: | ||||||||||||||||||||
Distributions from net investment income | (0.06) | (0.12) | — | (0.01) | — | |||||||||||||||
Total distributions | (0.06) | (0.12) | — | (0.01) | — | |||||||||||||||
Net asset value, end of period | $ | 12.95 | $ | 15.57 | $ | 5.28 | $ | 10.00 | $ | 11.71 | ||||||||||
Total Return | -16.37% | 201.99% | -47.20% | -14.52% | -41.45% | 3 | ||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets at end of period (000’s) | $ | 66,707 | $ | 77,065 | $ | 3,432 | $ | 6,997 | $ | 1,757 | ||||||||||
Expenses to Average Net Assets | 0.69% | 0.69% | 0.69% | 0.69% | 0.69% | 4 | ||||||||||||||
Net Investment Income (Loss) to Average Net Assets | -0.50% | -0.45% | -0.39% | -0.52% | -0.21% | 4 | ||||||||||||||
Portfolio Turnover Rate | 1% | 33% | 55% | 44% | 69% | 3 |
1Commencement of operations on November 29, 2012.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
The accompanying notes are an integral part of these financial statements.
60
PureFundsTM ISE Cyber Security ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | Period Ended September 30,1 2015 | ||||||||||
Net Asset Value, Beginning of Period | $ | 27.91 | $ | 25.28 | $ | 25.00 | ||||||
Income (Loss) from Investment Operations: | ||||||||||||
Net investment income (loss)2 | 0.01 | 0.30 | (0.05) | |||||||||
Net realized and unrealized gain (loss) on investments | 1.71 | 2.52 | 0.33 | |||||||||
Total from investment operations | 1.72 | 2.82 | 0.28 | |||||||||
Less Distributions: | ||||||||||||
Distributions from net investment income | (0.13) | (0.19) | — | |||||||||
Total distributions | (0.13) | (0.19) | — | |||||||||
Net asset value, end of period | $ | 29.50 | $ | 27.91 | $ | 25.28 | ||||||
Total Return | 6.23% | 11.23% | 1.11% | 3 | ||||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets at end of period (000’s) | $ | 970,540 | $ | 803,794 | $ | 1,059,125 | ||||||
Expenses to Average Net Assets | 0.75% | 0.75% | 0.75% | 4 | ||||||||
Net Investment Income (Loss) to Average Net Assets | 0.09% | 1.21% | -0.19% | 4 | ||||||||
Portfolio Turnover Rate | 26% | 34% | 31% | 3 |
1Commencement of operations on November 11, 2014.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
The accompanying notes are an integral part of these financial statements.
61
PureFundsTM ISE Big Data ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | Period Ended September 30,1 2015 | ||||||||||
Net Asset Value, Beginning of Period | $ | 24.82 | $ | 22.28 | $ | 25.00 | ||||||
Income (Loss) from Investment Operations: | ||||||||||||
Net investment income (loss)2 | (0.01) | (0.02) | — | 5 | ||||||||
Net realized and unrealized gain (loss) on investments | 0.28 | 2.56 | (2.72) | |||||||||
Total from investment operations | 0.27 | 2.54 | (2.72) | |||||||||
Less Distributions: | ||||||||||||
Distributions from net investment income | — | — | — | |||||||||
Total distributions | — | — | — | |||||||||
Net asset value, end of period | $ | 25.09 | $ | 24.82 | $ | 22.28 | ||||||
Total Return | 1.10% | 11.41% | -10.89% | 3 | ||||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets at end of period (000’s) | $ | 2,509 | $ | 1,241 | $ | 2,228 | ||||||
Expenses to Average Net Assets | 0.75% | 0.75% | 0.75% | 4 | ||||||||
Net Investment Loss to Average Net Assets | -0.12% | -0.10% | -0.08% | 4 | ||||||||
Portfolio Turnover Rate | 14% | 50% | 25% | 3 |
1Commencement of operations on July 15, 2015.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
5Amount is less than $0.005 per share.
The accompanying notes are an integral part of these financial statements.
62
PureFundsTM ISE Mobile Payments ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Year Ended September 30, 2016 | Period Ended September 30,1 2015 | ||||||||||
Net Asset Value, Beginning of Period | $ | 24.96 | $ | 23.53 | $ | 25.00 | ||||||
Income (Loss) from Investment Operations: | ||||||||||||
Net investment income (loss)2 | 0.02 | 0.15 | (0.01) | |||||||||
Net realized and unrealized gain (loss) on investments | 3.01 | 1.39 | (1.46) | |||||||||
Total from investment operations | 3.03 | 1.54 | (1.47) | |||||||||
Less Distributions: | ||||||||||||
Distributions from net investment income | (0.02) | (0.11) | — | |||||||||
Total distributions | (0.02) | (0.11) | — | |||||||||
Net asset value, end of period | $ | 27.97 | $ | 24.96 | $ | 23.53 | ||||||
Total Return | 12.14% | 6.51% | -5.86% | 3 | ||||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets at end of period (000’s) | $ | 88,101 | $ | 8,734 | $ | 4,707 | ||||||
Expenses to Average Net Assets | 0.75% | 0.75% | 0.75% | 4 | ||||||||
Net Investment Income (Loss) to Average Net Assets | 0.18% | 0.63% | -0.23% | 4 | ||||||||
Portfolio Turnover Rate | 13% | 32% | 8% | 3 |
1Commencement of operations on July 15, 2015.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
The accompanying notes are an integral part of these financial statements.
63
PureFundsTM Drone Economy Strategy ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30,1 2016 | |||||||
Net Asset Value, Beginning of Period | $ | 26.75 | $ | 25.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment income (loss)2 | 0.13 | 0.11 | ||||||
Net realized and unrealized gain (loss) on investments | 1.22 | 1.68 | ||||||
Total from investment operations | 1.35 | 1.79 | ||||||
Less Distributions: | ||||||||
Distributions from net investment income | (0.04) | (0.04) | ||||||
Distributions from net realized gain | (0.10) | — | ||||||
Total distributions | (0.14) | (0.04) | ||||||
Net asset value, end of period | $ | 27.96 | $ | 26.75 | ||||
Total Return | 5.06% | 3 | 7.15% | 3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period (000’s) | $ | 11,184 | $ | 6,686 | ||||
Expenses to Average Net Assets | 0.75% | 4 | 0.75% | 4 | ||||
Net Investment Income (Loss) to Average Net Assets | 0.97% | 4 | 0.68% | 4 | ||||
Portfolio Turnover Rate | 15% | 3 | 13% | 3 |
1Commencement of operations on March 8, 2016.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
The accompanying notes are an integral part of these financial statements.
64
PureFundsTM Video Game Tech ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30,1 2016 | |||||||
Net Asset Value, Beginning of Period | $ | 32.90 | $ | 25.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment income (loss)2 | 0.12 | 0.08 | ||||||
Net realized and unrealized gain (loss) on investments | 1.52 | 7.82 | ||||||
Total from investment operations | 1.64 | 7.90 | ||||||
Less Distributions: | ||||||||
Distributions from net investment income | (0.18) | — | ||||||
Distributions from net realized gain | (0.39) | — | ||||||
Total distributions | (0.57) | — | ||||||
Net asset value, end of period | $ | 33.97 | $ | 32.90 | ||||
Total Return | 5.19% | 3 | 31.62% | 3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period (000’s) | $ | 8,492 | $ | 6,581 | ||||
Expenses to Average Net Assets | 0.75% | 4 | 0.74% | 4 | ||||
Net Investment Income (Loss) to Average Net Assets | 0.73% | 4 | 0.44% | 4 | ||||
Portfolio Turnover Rate | 15% | 3 | 10% | 3 |
1Commencement of operations on March 8, 2016.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
The accompanying notes are an integral part of these financial statements.
65
PureFundsTM Solactive FinTech ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30,1 2016 | |||||||
Net Asset Value, Beginning of Period | $ | 25.09 | $ | 25.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment income (loss)2 | 0.28 | 0.01 | ||||||
Net realized and unrealized gain (loss) on investments | 0.23 | 0.08 | ||||||
Total from investment operations | 0.51 | 0.09 | ||||||
Less Distributions: | ||||||||
Distributions from net investment income | (0.28) | — | ||||||
Distributions from net realized gain | (0.04) | — | ||||||
Total distributions | (0.32) | — | ||||||
Net asset value, end of period | $ | 25.28 | $ | 25.09 | ||||
Total Return | 2.14% | 3 | 0.36% | 3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period (000’s) | $ | 1,264 | $ | 2,509 | ||||
Expenses to Average Net Assets | 0.68% | 4 | 0.68% | 4 | ||||
Net Investment Income (Loss) to Average Net Assets | 2.31% | 4 | 0.27% | 4 | ||||
Portfolio Turnover Rate | 12% | 3 | 6% | 3 |
1Commencement of operations on August 30, 2016.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
The accompanying notes are an integral part of these financial statements.
66
PureFundsTM ETFx HealthTech ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30,1 2016 | |||||||
Net Asset Value, Beginning of Period | $ | 25.46 | $ | 25.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment income (loss)2 | (0.02) | 0.01 | ||||||
Net realized and unrealized gain (loss) on investments | 0.71 | 0.45 | ||||||
Total from investment operations | 0.69 | 0.46 | ||||||
Less Distributions: | ||||||||
Distributions from net investment income | (0.01) | — | ||||||
Distributions from net realized gain | (0.14) | — | ||||||
Total distributions | (0.15) | — | ||||||
Net asset value, end of period | $ | 26.00 | $ | 25.46 | ||||
Total Return | 2.76% | 3 | 1.86% | 3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period (000’s) | $ | 1,300 | $ | 2,546 | ||||
Expenses to Average Net Assets | 0.75% | 4 | 0.75% | 4 | ||||
Net Investment Income (Loss) to Average Net Assets | -0.19% | 4 | 0.28% | 4 | ||||
Portfolio Turnover Rate | 36% | 3 | 12% | 3 |
1Commencement of operations on August 30, 2016.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
The accompanying notes are an integral part of these financial statements.
67
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
NOTE 1 – ORGANIZATION
PureFunds™ ISE Junior Silver “Silver” (Small Cap Miners/Explorers) ETF, PureFunds™ ISE Cyber Security “Cyber Security” ETF, PureFunds™ ISE Big Data “Big Data” ETF, PureFunds™ ISE Mobile Payments “Mobile” ETF, PureFunds™ ISE Drone Economy Strategy “Drone” ETF, PureFunds™ ISE Video Game Tech “Video Game” ETF, PureFunds™ Solactive FinTech “FinTech” ETF and PureFunds™ ETFX HealthTech “HealthTech” ETF (each a “Fund”, or collectively the “Funds”) are series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Funds’ shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”).
The following table is a summary of the Commencement Date and Strategy of the Funds:
Fund Name | Commencement Date | Strategy | |
Silver | 11/29/2012 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Junior Silver (Small Cap Miners/Explorers)™ Index. | |
Cyber Security | 11/11/2014 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield of the ISE Cyber Security™ Index. | |
Big Data | 7/15/2015 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Big Data™ Index. | |
Mobile | 7/15/2015 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Mobile Payments™ Index. | |
Drone | 3/8/2016 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Reality Shares Drone™ Index. | |
Video Game | 3/8/2016 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the EEFund Video Game Tech™ Index. | |
FinTech | 8/30/2016 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Solactive FinTech Index. | |
HealthTech | 8/30/2016 | Seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ETFx HealthTech Index. |
The Funds each currently offer one class of shares, which have no front end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of each Fund have equal rights and privileges.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). Each Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from a Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
68
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
Authorized Participants transacting in Creation Units for cash may pay an additional variable charge to compensate the relevant Fund for certain transaction costs (i.e., brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in “Transaction Fees” in the Statements of Changes in net assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of March 31, 2017, the Funds did not hold any fair valued securities.
As described above, the Funds utilize various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
69
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following table presents a summary of the Funds’ assets measured at fair value:
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 66,754,039 | $ | — | $ | — | $ | 66,754,039 | ||||||||
Short Term Investments | 629,876 | — | — | 629,876 | ||||||||||||
Total Investments in Securities | $ | 67,383,916 | $ | — | $ | — | $ | 67,383,915 | ||||||||
PureFunds™ ISE Cyber Security ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 966,893,710 | $ | — | $ | — | $ | 966,893,710 | ||||||||
Short Term Investments | 4,001,500 | — | — | 4,001,500 | ||||||||||||
Investments Purchased with Securities | ||||||||||||||||
Lending Collateral* | — | — | — | 275,119,283 | ||||||||||||
Total Investments in Securities | $ | 970,895,210 | $ | — | $ | — | $ | 1,246,014,493 | ||||||||
PureFunds™ ISE Big Data ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 2,503,149 | $ | — | $ | — | $ | 2,503,149 | ||||||||
Short Term Investments | 7,400 | — | — | 7,400 | ||||||||||||
Investments Purchased with Securities | ||||||||||||||||
Lending Collateral* | — | — | — | 347,708 | ||||||||||||
Total Investments in Securities | $ | 2,510,549 | $ | — | $ | — | $ | 2,858,257 |
70
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
PureFunds™ ISE Mobile Payments ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 88,028,052 | $ | — | $ | — | $ | 88,028,052 | ||||||||
Short Term Investments | 29,225 | — | — | 29,225 | ||||||||||||
Investments Purchased with Securities | ||||||||||||||||
Lending Collateral* | — | — | — | 26,825,845 | ||||||||||||
Total Investments in Securities | $ | 88,057,277 | $ | — | $ | — | $ | 114,883,122 | ||||||||
PureFunds™ Drone Economy Strategy ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 11,134,108 | $ | — | $ | — | $ | 11,134,108 | ||||||||
Short Term Investments | 38,018 | — | — | 38,018 | ||||||||||||
Investments Purchased with Securities | ||||||||||||||||
Lending Collateral* | — | — | — | 2,051,849 | ||||||||||||
Total Investments in Securities | $ | 11,172,126 | $ | — | $ | — | $ | 13,223,975 | ||||||||
PureFunds™ Video Game Tech ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 8,452,429 | $ | — | $ | — | $ | 8,452,429 | ||||||||
Short Term Investments | 15,121 | — | — | 15,121 | ||||||||||||
Investments Purchased with Securities | ||||||||||||||||
Lending Collateral* | — | — | — | 1,002,072 | ||||||||||||
Total Investments in Securities | $ | 8,467,550 | $ | — | $ | — | $ | 9,469,622 | ||||||||
PureFunds™ Solactive FinTech ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 1,262,052 | $ | — | $ | — | $ | 1,262,052 | ||||||||
Short Term Investments | 2,786 | — | — | 2,786 | ||||||||||||
Total Investments in Securities | $ | 1,264,838 | $ | — | $ | — | $ | 1,264,838 | ||||||||
PureFunds™ ETX HealthTech ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 1,271,728 | $ | — | $ | — | $ | 1,271,728 | ||||||||
Short Term Investments | 4,549 | — | — | 4,549 | ||||||||||||
Investments Purchased with Securities | ||||||||||||||||
Lending Collateral* | — | — | — | 130,633 | ||||||||||||
Total Investments in Securities | $ | 1,276,277 | $ | — | $ | — | $ | 1,406,910 |
^ See Schedule of Investments for classifications by country and industry.
71
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
* | 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 Statement of Assets and Liabilities. |
Below are the transfers into or out of Levels 1 and 2 during the period ended March 31, 2017:
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF | ||||
Transfers into Level 1 | $ | 665,565 | ||
Transfers out of Level 1 | — | |||
Net Transfers in and/(out) of Level 1 | $ | 665,565 | ||
Transfers into Level 2 | $ | — | ||
Transfers out of Level 2 | (665,565 | ) | ||
Net Transfers in and/(out) of Level 2 | $ | (665,565 | ) |
The transfers from Level 1 to Level 2 are due to an increase in trading activity on March 31, 2017. Transfers between levels are recognized at the end of the reporting period.
Each of PureFunds™ ISE Cyber Security ETF, PureFunds™ ISE Big Data ETF, PureFunds™ ISE Mobile Payments ETF, PureFunds™ Drone Economy Strategy ETF, PureFunds™ Video Game Tech ETF, PureFunds™ Solactive FinTech ETF and PureFunds™ ETX HealthTech ETF did not have any transfers between Levels 1 and 2 during the six months ended March 31, 2017.
The Funds did not have any transfers into or out of Level 3 during the six months ended March 31, 2017.
72
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
B. | Federal Income Taxes. The Funds have each elected to be taxed as a “regulated investment company” and intend to distribute substantially all taxable income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provisions for federal income taxes or excise taxes have been made. |
To avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of each Fund’s next taxable year.
Each Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Each Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2017 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal, the State of New Jersey, and the State of Delaware; however the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Funds may be subject to income, withholding or other taxes imposed by foreign countries. |
D. | Foreign Currency Translations and Transactions. The Funds may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Funds do not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Funds do isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income are generally declared and paid by each of the Funds on a quarterly basis. Distributions to shareholders from realized gains on securities for each Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
73
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
G. | Share Valuation. The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. For Authorized Participants, the offering and redemption price per share for the Funds are equal to the Funds’ respective net asset value per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. |
NOTE 3 – COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Funds. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Funds, and the Advisor, the Advisor provides investment advice to the Funds and oversees the day-to-day operations of the Funds, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Funds to operate.
Under the Investment Advisory Agreement. the Advisor has overall responsibility for the general management and administration of the Funds and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Funds to operate. The Advisor bears the costs of all advisory and non-advisory services required to operate the Funds, in exchange for a single unitary fee at the following annual rates:
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF | 0.69% |
PureFunds™ ISE Cyber Security ETF | 0.75% |
PureFunds™ ISE Big Data ETF | 0.75% |
PureFunds™ ISE Mobile Payments ETF | 0.75% |
PureFunds™ Drone Economy Strategy ETF | 0.75% |
PureFunds™ Video Game Tech ETF | 0.75% |
PureFunds™ Solactive FinTech ETF | 0.68% |
PureFunds™ ETX HealthTech ETF | 0.75% |
The Advisor has an agreement with, and is dependent on, a third party to pay the Funds’ expenses in excess of the annual expense rates of each Funds’ average daily net assets. Additionally, under the Investment Advisory Agreement, the Advisor has agreed to pay all expenses of the Funds, except for: the fee paid to the Advisor pursuant to the Investment Advisory Agreement, interest charges on any borrowings, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution (12b-1) fees and expenses (collectively, “Excluded Expenses”). The Advisor has entered into an Agreement with PureShares, LLC (the “Sponsor”), under which the Sponsor agrees to sublicense the use of the Underlying Index to the Advisor. The Sponsor also provides marketing support for the Funds, including distributing marketing materials related to the Funds. PureShares, LLC is a privately held business focused on bringing exchange-traded investment products to investors in the U.S. The Sponsor does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Funds. Additionally, the Sponsor is not involved in the maintenance of the Underlying Index of each Fund and does not otherwise act in the capacity of an index provider.
74
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
U.S. Bancorp Fund Services, LLC (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Funds. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Funds. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 4 – DISTRIBUTION PLAN
The Funds have each adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to each Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. During the six months ended March 31, 2017, the Funds did not incur any 12b-1 expenses.
NOTE 5 – PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, during the six months ended March 31, 2017:
Purchases | Sales | |||||||
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF | $ | 10,258,882 | $ | 8,700,771 | ||||
PureFunds™ ISE Cyber Security ETF | 281,729,625 | 212,940,484 | ||||||
PureFunds™ ISE Big Data ETF | 333,178 | 335,813 | ||||||
PureFunds™ ISE Mobile Payments ETF | 6,524,678 | 6,291,952 | ||||||
PureFunds™ Drone Economy Strategy ETF | 1,343,352 | 1,284,816 | ||||||
PureFunds™ Video Game Tech ETF | 1,154,761 | 1,198,891 | ||||||
PureFunds™ Solactive FinTech ETF | 278,809 | 1,447,536 | ||||||
PureFunds™ ETX HealthTech ETF | 621,231 | 656,385 |
75
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
The costs of purchases and sales of in-kind transactions associated with creations and redemptions during the six months ended March 31, 2017:
Purchases | Sales | |||||||
In-Kind | In-Kind | |||||||
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF | $ | 18,477,852 | $ | 13,489,680 | ||||
PureFunds™ ISE Cyber Security ETF | 145,734,989 | 47,105,811 | ||||||
PureFunds™ ISE Big Data ETF | 1,198,033 | — | ||||||
PureFunds™ ISE Mobile Payments ETF | 76,401,046 | 4,015,552 | ||||||
PureFunds™ Drone Economy Strategy ETF | 3,871,458 | — | ||||||
PureFunds™ Video Game Tech ETF | 1,544,093 | — | ||||||
PureFunds™ Solactive FinTech ETF | 1,267,504 | 1,361,043 | ||||||
PureFunds™ ETX HealthTech ETF | — | 1,167,806 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Funds’ determination of taxable gains and are not distributed to shareholders.
During the six months ended March 31, 2017, the Funds paid broker commissions to Penserra Securities, LLC, an affiliated broker to the sub-advisor Penserra Capital Management, LLC, in the amount of $34,718.
There were no purchases or sales of U.S. Government obligations during the six months ended March 31, 2017.
NOTE 6 – SECURITIES LENDING
The Funds, except for Pure FundsTM ISE Junior Silver (Small Cap Miners/Explorers) ETF, may lend up to 33 1/3% of the value of the securities in their portfolios to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Funds receive compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Funds continue to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss on the fair value of securities loaned that may occur during the term of the loan will be for the account of the Funds. The Funds have the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. During the six months ended March 31, 2017, Funds had loaned securities and received cash collateral for the loans. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations; however, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. The Funds could also experience delays in recovering their securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
76
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
As of the period ended March 31, 2017, the value of the securities on loan and payable for collateral due to broker were as follows:
Value of Securities on Loan Collateral Received
Values of | Fund | ||||||
Securities on | Collateral | ||||||
Fund | Loan | Received* | |||||
PureFunds™ ISE Cyber Security ETF | $ | 267,499,200 | $ | 275,119,283 | |||
PureFunds™ ISE Big Data ETF | 399,792 | 347,708 | |||||
PureFunds™ ISE Mobile Payments ETF | 26,047,739 | 26,825,845 | |||||
PureFunds™ Drone Economy Strategy ETF | 2,005,701 | 2,051,849 | |||||
PureFunds™ Video Game Tech ETF | 980,627 | 1,002,072 | |||||
PureFunds™ ETX HealthTech ETF | 127,376 | 130,633 |
* The cash collateral received was invested in the Mount Vernon Prime Portfolio as shown on the Schedule of Investments, a money market fund with an overnight and continuous maturity.
Net interest income earned on collateral investments and recognized by the Funds during the six months ended March 31, 2017, were as follows:
Fees and Interest Income Earned
Interest | ||||
income earned | ||||
net of | ||||
Fund | applicable fees | |||
PureFunds™ ISE Cyber Security ETF | $ | 312,995 | ||
PureFunds™ ISE Big Data ETF | 932 | |||
PureFunds™ ISE Mobile Payments ETF | 26,923 | |||
PureFunds™ Drone Economy Strategy ETF | 29,665 | |||
PureFunds™ Video Game Tech ETF | 3,991 | |||
PureFunds™ Solactive FinTech ETF | 148 | |||
PureFunds™ ETX HealthTech ETF | 273 |
77
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
Offsetting Assets and Liabilities
The Funds are subject to various netting arrangements, which govern the terms of certain transactions with counterparties. The arrangements allow the Funds to close out and net their total exposure to a counterparty in the event of a default with respect to all transactions governed under a single agreement with a counterparty. The following is a summary of the arrangements subject to offsetting as of March 31, 2017.
Fund | Description | Gross Amount of Recognized Liabilities | Gross Amount in the Statement of Assets & Liabilities | Net Amount Presented in the Statement of Assets & Liabilities | Collateral Received | Net Amount | ||||||||||||||||
PureFunds™ ISE Cyber Security ETF | Securities Lending | $ | 275,119,283 | $ | 275,119,283 | $ | — | $ | 275,119,283 | $ | — | |||||||||||
PureFunds™ ISE Big Data ETF | Securities Lending | 347,708 | 347,708 | — | 347,708 | — | ||||||||||||||||
PureFunds™ ISE Mobile Payments ETF | Securities Lending | 26,825,845 | 26,825,845 | — | 26,825,845 | — | ||||||||||||||||
PureFunds™ Drone Economy Strategy ETF | Securities Lending | 2,051,849 | 2,051,849 | — | 2,051,849 | — | ||||||||||||||||
PureFunds™ Video Game Tech ETF | Securities Lending | 1,002,072 | 1,002,072 | — | 1,002,072 | — | ||||||||||||||||
PureFunds™ ETX HealthTech ETF | Securities Lending | 130,633 | 130,633 | — | 130,633 | — |
NOTE 7 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2016 were as follows:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||||||||||||
Silver | $ | 73,950,503 | $ | 9,194,782 | $ | (8,048,952 | ) | $ | 1,145,830 | |||||||
Cyber Security | 946,012,840 | 60,320,100 | (105,202,406 | ) | (44,882,306 | ) | ||||||||||
Big Data | 1,536,736 | 141,440 | (128,722 | ) | 12,718 | |||||||||||
Mobile | 9,219,122 | 781,450 | (701,500 | ) | 79,950 | |||||||||||
Drone | 6,387,943 | 652,397 | (366,785 | ) | 285,612 | |||||||||||
Video Game | 5,652,670 | 1,047,644 | (139,158 | ) | 908,486 | |||||||||||
FinTech | 2,498,067 | 61,103 | (55,909 | ) | 5,194 | |||||||||||
Health Tech | 2,503,673 | 56,802 | (17,938 | ) | 38,864 |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
78
PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
As of September 30, 2016, the components of distributable earnings (loss) on a tax basis were as follows:
Undistributed Ordinary Income | Undistributed Long-term Gain | Total Distributable Earnings | Other Accumulated (Loss) | Undistributed Long-term Gain | Total Accumulated (Loss) | |||||||||||||||||||
Silver | $ | 258,169 | $ | — | $ | 258,169 | $ | (4,704,262 | ) | $ | — | $ | (3,300,263 | ) | ||||||||||
Cyber Security | 3,186,993 | — | 3,186,993 | (113,473,252 | ) | — | (155,168,565 | ) | ||||||||||||||||
Big Data | — | — | — | (67,472 | ) | — | (54,754 | ) | ||||||||||||||||
Mobile | 9,406 | — | — | (46,791 | ) | — | 42,565 | |||||||||||||||||
Drone | 36,159 | — | 36,159 | (64 | ) | — | 321,707 | |||||||||||||||||
Video Game | 141,106 | — | — | (49 | ) | — | 1,049,543 | |||||||||||||||||
FinTech | 3,803 | — | — | (242 | ) | — | 8,755 | |||||||||||||||||
Health Tech | 7,502 | — | — | (341 | ) | — | 46,025 |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2016, the Funds had accumulated capital loss carryovers of:
Capital | |||||
Loss | |||||
Carryover | Expires | ||||
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF | $ | 3,167,052 | Indefinite | ||
PureFunds™ ISE Cyber Security ETF | 25,785,007 | Indefinite | |||
PureFunds™ ISE Big Data ETF | 66,398 | Indefinite | |||
PureFunds™ ISE Mobile Payments ETF | 44,321 | Indefinite | |||
PureFunds™ Drone Economy Strategy ETF | — | Indefinite | |||
PureFunds™ Video Game Tech ETF | — | Indefinite | |||
PureFunds™ Solactive FinTech ETF | — | Indefinite | |||
PureFunds™ ETX HealthTech ETF | — | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ending September 30, 2017.
Late Year Ordinary Loss | Post- October Capital Loss | |||||||
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF | $ | — | $ | 1,450,008 | ||||
PureFunds™ ISE Cyber Security ETF | — | 87,697,509 | ||||||
PureFunds™ ISE Big Data ETF | 1,074 | — | ||||||
PureFunds™ ISE Mobile Payments ETF | — | — | ||||||
PureFunds™ Drone Economy Strategy ETF | — | — | ||||||
PureFunds™ Video Game Tech ETF | — | — | ||||||
PureFunds™ Solactive FinTech ETF | — | — | ||||||
PureFunds™ ETX HealthTech ETF | — | — |
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PureFunds™ ETFs
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
NOTE 8 – DISTRIBUTIONS TO SHAREHOLDERS
The components of the distributions to shareholders during the six months ended March 31, 2017, and the year ended September 30, 2016 were as follows:
Six Months Ended March 31, 2017 | Year Ended September 30, 2016 | |||||||||||||||
From Ordinary Income | From Capital Gains | From Ordinary Income | From Capital Gains | |||||||||||||
Silver | $ | 258,169 | $ | — | $ | 87,131 | — | |||||||||
Cyber Security | 3,740,625 | — | 5,498,499 | — | ||||||||||||
Big Data | — | — | — | — | ||||||||||||
Mobile | 31,641 | — | 40,000 | — | ||||||||||||
Drone | 11,055 | 28,851 | 4,000 | — | ||||||||||||
Video Game | 45,780 | 96,540 | — | — | ||||||||||||
FinTech | 27,720 | 3,803 | — | — | ||||||||||||
Health Tech | 593 | 6,909 | — | — |
NOTE 9 – INVESTMENTS IN AFFILIATES
PureFundsTM ISE Junior Silver (Small Cap Miners/Explorers) ETF
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF owned 5% or more of the voting securities of the following companies during the six months ended March 31, 2017. After PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF sold some of their holdings in each company, each company was no longer deemed an affiliate of the Fund as defined by the Investment Company Act of 1940. Transactions during the period in these securities were as follows:
Share Activity | ||||||||||||||||||||||||||||
Security Name | Balance September 30, 2016 | Purchases | Sales | Balance March 31, 2017 | Realized Gains (Losses)1 | Dividend Income | Value March 31, 2017 | |||||||||||||||||||||
Excellon Resources, Inc. | 362,439 | 2,578,243 | (503,024 | ) | 2,437,658 | (31,252 | ) | — | 2,932,852 |
1 Realized Gains (Losses) include transactions in affiliated investments and affiliated in-kind redemptions.
NOTE 10 – SUBSEQUENT EVENTS
In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.
Effective April 1, 2017, the Funds changed their distributor from ALPS Distributors, Inc. to ETFMG Financial, LLC.
Effective May 1, 2017, PureFunds™ ISE Cyber Security ETF made permanent a reduction in unitary fees to ensure that total expenses do not exceed 0.60% of the Fund’s annual average net assets, from a previous unitary fee of 0.75%.
80
PureFunds™ ETFs
APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS
For the Period Ended March 31, 2017 (Unaudited)
Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on March 22, 2017, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the renewal of the Investment Advisory Agreement (“Advisory Agreement”) between ETF Managers Group LLC (the “Adviser”) and the Trust, on behalf of PureFundsTM ISE Big Data ETF (“BIGD”), PureFundsTM ISE Mobile Payments ETF (“IPAY”), and PureFundsTM Junior Silver ETF (“SILJ”) (each a “Fund” and collectively the “Funds”).
Pursuant to Section 15(c) of the 1940 Act, the Board must annually review and approve the Advisory Agreement after its initial two-year term: (i) by the vote of the Trustees or by a vote of the shareholders of the Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Advisory Agreement or “interested persons” of any party thereto, as defined in the 1940 Act (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. Each year, the Board calls and holds a meeting to decide whether to renew the Advisory Agreement for an additional one-year term. In preparation for such meetings, the Board requests and reviews a wide variety of information from the Adviser.
In reaching this decision, the Board, including the Independent Trustees, considered all factors it believed relevant, including: (i) the nature, extent and quality of the services to be provided to the Funds’ shareholders by the Adviser; (ii) the investment performance of the Funds; (iii) the Adviser’s cost and profits they realize in providing their services, including any fall-out benefits enjoyed by the Adviser; (iv) comparative fee and expense data for the Funds and other similar investment companies; (v) the extent to which economies of scale would be realized as the Funds grow and whether the proposed advisory fee for the Funds reflects these economies of scale for the benefit of the Funds; and (vi) other financial benefits to the Adviser and their affiliates resulting from services rendered to the Funds. The Board’s review included written and oral information furnished to the Board prior to and at the meeting held on March 22, 2017, and throughout the year. Among other things, the Adviser provided overviews of its advisory business, including its personnel. The information provided discussed the services provided by the Adviser. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentations and any other information that the Board received at the meeting, and deliberated on the renewal of the Advisory Agreement in light of this information. In its deliberations, the Board did not identify any single piece of information discussed below that was all-important or controlling.
Nature, Extent and Quality of Services Provided by the Adviser
The Trustees considered the scope of services provided under the Advisory Agreement, noting that the Adviser will be providing investment management services to the Funds. The Board discussed the responsibilities of the Adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Funds; determining the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; responsibility for daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Funds. In considering the nature, extent and quality of the services to be provided by the Adviser, the Board considered the quality of the Adviser’s compliance program. The Board also considered the Adviser’s experience managing ETFs, including other series of the Trust.
The Board also considered other services to be provided to the Funds, such as overseeing the Funds’ service providers, monitoring adherence to Funds’ investment restrictions, and monitoring compliance with various policies and procedures and with applicable securities laws.
Based on the factors above, as well as those discussed below, the Board concluded that it was satisfied with the nature, extent and quality of the services to be provided to the Funds by the Adviser.
81
PureFunds™ ETFs
APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS
For the Period Ended March 31, 2017 (Unaudited)
Historical Performance
The Board then considered the past performance of the Funds. The Board reviewed information regarding the performance history of the Funds over various time periods, including the year-to-date period, the most recent one-year period and the periods since each Fund’s inception. The Board noted that the index-based investment objective of SILJ, BIGD and IPAY made analysis of investment performance, in absolute terms, less of a priority than that which normally attaches to the performance of actively managed funds. Instead, the Board focused on the extent to which SILJ, BIGD and IPAY each tracked its underlying index. The Board noted that the Adviser began managing BIGD and IPAY on January 1, 2017 and SILJ on September 1, 2016. The Board reviewed information regarding each Fund’s index tracking during the time it was managed by the Adviser, discussing, as applicable, factors which contributed to each Fund’s tracking error over certain periods of time. The Board noted that each of SILJ, BIGD and IPAY satisfactorily tracked its underlying index. The Board further noted that it received regular reports regarding each Fund’s performance at its quarterly meetings. The Board concluded that, given the capabilities and experience of the Adviser’s personnel in managing ETFs, the Adviser would be able to keep the Funds’ tracking error within acceptable ranges.
Cost of Services Provided and Economies of Scale
The Board reviewed the Funds’ expense ratio and the advisory fee to be paid by the Funds, and considered the expense ratios of comparable Funds. The Board took into consideration management’s discussion of the fees, including that the Funds use a niche investment strategy. The Board noted that the Adviser was responsible for compensating the Trust’s other service providers and paying the Funds’ other expenses out of its own fee and resources. The Board concluded that the advisory fee was reasonable and the result of arm’s length negotiations. The Board also evaluated the compensation and benefits expected to be received by the Adviser from its relationship with the Funds, taking into account an analysis of the Adviser’s profitability provided at the meeting.
In addition, the Board considered for the Funds whether economies of scale had been realized. The Trustees noted that any reduction in fixed costs associated with the management of the Funds would be enjoyed by the Adviser, but a unitary fee provides a level of certainty in expenses for the Funds. The Trustees considered whether the advisory fee rate for the Funds was reasonable in relation to the asset size of the Funds, and concluded that the flat advisory fee was reasonable and appropriate.
Based on the Board’s deliberations and its evaluation of the information described above, the Board, including the Independent Trustees, unanimously: (a) concluded that the terms of the Advisory Agreement are fair and reasonable; (b) concluded that the Adviser’s fees are reasonable in light of the services that the Adviser provide to the Funds; and (c) agreed to renew the Advisory Agreement for another year.
82
PureFunds™ ETFs
EXPENSE EXAMPLES
For the Period October 1, 2016 to March 31, 2017 (Unaudited)
As a shareholder of PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF, PureFunds™ ISE Cyber Security ETF, PureFunds™ ISE Big Data ETF, PureFunds™ ISE Mobile Payments ETF, PureFunds™ Drone Economy Strategy ETF, PureFunds™ Video Game Tech ETF, PureFunds™ Solactive FinTech ETF and PureFunds™ ETX HealthTech ETF (the “Funds”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 1, 2016 to March 31, 2017) for PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF, PureFunds™ ISE Cyber Security ETF, PureFunds™ ISE Big Data ETF, PureFunds™ ISE Mobile Payments ETF, PureFunds™ Drone Economy Strategy ETF and PureFunds™ Video Game Tech ETF, PureFunds™ Solactive FinTech ETF and PureFunds™ ETX HealthTech ETF.
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.
83
PureFunds™ ETFs
EXPENSE EXAMPLES
For the Period October 1, 2016 to March 31, 2017 (Unaudited) (Continued)
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF
Beginning | Ending | Expenses | ||||||||||
Account | Account | Paid | ||||||||||
Value | Value | During | ||||||||||
October | March | the | ||||||||||
1, 2016 | 31, 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 836.30 | $ | 3.16 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.49 | $ | 3.48 | ||||||
PureFunds™ ISE Cyber Security ETF |
Beginning | Ending | Expenses | ||||||||||
Account | Account | Paid | ||||||||||
Value | Value | During | ||||||||||
October | March | the | ||||||||||
1, 2016 | 31, 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,062.30 | $ | 3.86 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.78 | ||||||
PureFunds™ ISE Big Data ETF |
Beginning | Ending | Expenses | ||||||||||
Account | Account | Paid | ||||||||||
Value | Value | During | ||||||||||
October | March | the | ||||||||||
1, 2016 | 31, 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,011.00 | $ | 3.76 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.78 | ||||||
PureFunds™ ISE Mobile Payments ETF |
Beginning | Ending | Expenses | ||||||||||
Account | Account | Paid | ||||||||||
Value | Value | During | ||||||||||
October | March | the | ||||||||||
1, 2016 | 31, 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,121.40 | $ | 3.97 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.78 |
84
PureFunds™ ETFs
EXPENSE EXAMPLES
For the Period October 1, 2016 to March 31, 2017 (Unaudited) (Continued)
PureFunds™ Drone Economy Strategy ETF
Beginning | Ending | Expenses | ||||||||||
Account | Account | Paid | ||||||||||
Value | Value | During | ||||||||||
October | March | the | ||||||||||
1, 2016 | 31, 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,050.60 | $ | 3.83 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.78 | ||||||
PureFunds™ Video Game Tech ETF |
Beginning | Ending | Expenses | ||||||||||
Account | Account | Paid | ||||||||||
Value | Value | During | ||||||||||
October | March | the | ||||||||||
1, 2016 | 31, 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,051.90 | $ | 3.84 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.78 | ||||||
PureFunds™ Solactive FinTech ETF |
Beginning | Ending | Expenses | ||||||||||
Account | Account | Paid | ||||||||||
Value | Value | During | ||||||||||
October | March | the | ||||||||||
1, 2016 | 31, 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,021.40 | $ | 3.43 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.54 | $ | 3.43 | ||||||
PureFunds™ ETFx HealthTech ETF |
Beginning | Ending | Expenses | ||||||||||
Account | Account | Paid | ||||||||||
Value | Value | During | ||||||||||
October | March | the | ||||||||||
1, 2016 | 31, 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,027.60 | $ | 3.79 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,021.19 | $ | 3.79 |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 182/365 (to reflect the one-half year period in the case of PureFundsTM ISE Junior Silver (Small Cap Miners/Explorers) ETF, PureFundsTM ISE Cyber Security ETF, PureFundsTM ISE Big Data ETF, PureFundsTM ISE Mobile Payments ETF, PureFunds™ Drone Economy Strategy ETF, PureFunds™ Video Game Tech ETF, PureFunds™ Solactive FinTech ETF and PureFunds™ ETX HealthTech ETF).
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PureFunds™ ETFs
SUPPLEMENTARY INFORMATION
March 31, 2017 (Unaudited)
INFORMATION ABOUT PORTFOLIO HOLDINGS
(Unaudited)
Each Fund files its Form N-Q with the Securities and Exchange Commission (the ‘‘SEC’’) no more than sixty days after the Funds’ first and third fiscal quarters. For each Fund, this would be for the fiscal quarters ending June 30 and December 31. Form N-Q includes a complete schedule of the Funds’ portfolio holdings as of the end of those fiscal quarters. The Funds’ N-Q filings can be found free of charge on the SEC’s website at http://www.sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (call 800-SEC-0330 for information on the operation of the Public Reference Room). The Funds’ portfolio holdings are posted on the Funds’ website at www.ETFMG.com daily.
INFORMATION ABOUT PROXY VOTING
(Unaudited)
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at (877) 756-7873, by accessing the SEC’s website at www.sec.gov, or by accessing the Funds’ website at www.pureetfs.com.
Information regarding how the Funds voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at (877) 756-7873 or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.pureetfs.com. Read the prospectus carefully before investing.
86
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC
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
87
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/lare001.jpg)
Semi-Annual Report
March 31, 2017
Tierra XP Latin America Real Estate ETF
Ticker: LARE
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/lare002.jpg)
The Fund is a series of ETF Managers Trust.
TierraXPTM Latin America Real Estate ETF
TABLE OF CONTENTS
March 31, 2017
March 31, 2017
Page | |
Shareholders’ Letter | 3 |
Growth of a $10,000 Investment | 4 |
Top 10 Holdings | 5 |
Important Disclosures and Key Risk Factors | 6 |
Portfolio Allocations | 7 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 11 |
Statement of Operations | 12 |
Statements of Changes in Net Assets | 13 |
Financial Highlights | 14 |
Notes to the Financial Statements | 15 |
Supplementary Information | 22 |
Expense Example | 23 |
2
Dear Shareholder,
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the Tierra XPTM Latin America Real Estate Exchange-Traded Fund (“LARE” or the “Fund”). The following information pertains to the six month period from October 1, 2016 to March 31, 2017.
The Fund saw positive performance during the six month period ended on March 31, 2017. The NAV price for LARE rose 8.83%, while the Solactive Latin America Real Estate Index (“Index”), the Fund’s benchmark, rose 10.12% over the same period. The primary difference between the Fund return and the Index return was attributable to Fund expenses, which are not a part of the Index.
For the six month period ended March 31, 2017, the best performing securities in the Fund were JHSF Participacoes SA (up 58.00%), Cyrela Brazil Realty SA EMP (up 32.46%), and Gafisa SA-RTS (up 31.90%). The worst performing securities in the Fund were Corporacion GEO SAB-SER B (down 71.36%), Desarrolladora HOMEX SAB DE (down 55.30%), and Corpovael SAB DE CV (down 34.36%).
You can find further details about LARE by visiting www.tierrafunds.com, or by calling 1-844-ETF-MGRS (1-844-383-6477).
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/lare003.jpg)
Samuel Masucci III
Chairman of the Board
Chairman of the Board
Samuel Masucci III is a registered representative of ETFMG Financial, LLC.
3
TierraXPTM Latin America Real Estate ETF
Growth of $10,000 (Unaudited)
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/lare004.jpg)
Cumulative Returns | 6 Months | 1 Year | Since Inception | |||
Period Ended March 31, 2017 | Return | Return | (12/2/2015) | |||
TierraXPTM Latin America Real Estate ETF (NAV) | 8.83% | 21.13% | 24.26% | |||
TierraXPTM Latin America Real Estate ETF (Market) | 6.29% | 17.85% | 24.23% | |||
S&P 500 Index | 10.12% | 17.17% | 12.46% | |||
Solactive Latin America Real Estate Index | 10.12% | 23.36% | 26.57% | |||
Total Fund Operating Expenses1 | 0.79% |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
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 December 2, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends.
The unmanaged indices do not reflect fees and are not available for direct investment.
4
TierraXPTM Latin America Real Estate ETF
Top Ten Holdings*
% of Total | ||
Security | Investments† | |
1 | Fibra Uno Administracion SA de CV | 3.68% |
2 | Prologis Property Mexico SA de CV | 3.51% |
3 | Macquarie Mexico Real Estate Management SA de CV | 3.33% |
4 | Grupo Aeroportuario del Pacifico SAB de CV | 3.16% |
5 | Grupo Aeroportuario del Centro Norte SAB de CV | 3.07% |
6 | Concentradora Hipotecaria SAPI de CV | 3.06% |
7 | Concentradora Fibra Danhos SA de CV | 2.96% |
8 | FII BTG Pactual Corporate Office Fund | 2.82% |
9 | Kinea Rendimentos Imobiliarios FII | 2.81% |
10 | PLA Administradora Industrial S de RL de CV | 2.72% |
Top Ten Holdings =31.12% of Total Investments†
* Current Fund holdings may not be indicative of future Fund holdings.
† Percentage of total investments less cash.
5
TierraXPTM Latin America Real Estate ETF
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
The TierraXPTM Latin America Real Estate ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Solactive Latin America Real Estate Index (the “Index”).
Foreign investing involves special risks such as currency fluctuations and political uncertainty. Investments in emerging markets accentuate these risks. The Fund is subject to the risks associated with investing in real estate, which may include possible declines in the value of real estate. Funds focusing on a single country or sector may experience greater price volatility. The Fund’s return may not match or achieve a high degree of correlation with the return of the Solactive Latin America Real Estate 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.
Real estate risk factors include, but are not limited to, the fact that direct ownership of real estate is subject to fluctuations in the value of underlying properties, the impact of economic conditions on real estate values, the strength of specific industries renting properties and defaults by borrowers or tenants. Real estate is a cyclical business, highly sensitive to general and local economic conditions and developments, and characterized by intense competition and periodic overbuilding. Changing interest rates and credit quality requirements may affect the cash flow of real estate companies and their ability to borrow or lend money or to meet capital needs.
LAREPR: The Solactive Latin America Real Estate Index screens for all listed equities with primary listings in the Latin America region and which derive substantially most of their income from real estate and real estate services.
S&P 500: The S&P 500 Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices.
6
TierraXPTM Latin America Real Estate ETF
PORTFOLIO ALLOCATIONS
As of March 31, 2017 (Unaudited)
TierraXPTM Latin America Real Estate ETF | ||||
As a percent of Net Assets: | ||||
Argentina | 2.3 | % | ||
Brazil | 41.9 | |||
Chile | 5.2 | |||
Mexico | 40.9 | |||
Peru | 0.9 | |||
United States | 7.7 | |||
Short-Term and other Net Assets (Liabilities) | 1.1 | |||
100.0 | % |
7
TierraXPTM Latin America Real Estate ETF
Schedule of Investments
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 98.9% | ||||||||
Argentina - 2.3% | ||||||||
Real Estate Management & Development - 2.3% | ||||||||
Cresud SACIF y A - ADR (a) | 1,802 | $ | 36,166 | |||||
IRSA Inversiones y Representaciones SA - ADR (a) | 1,212 | 29,706 | ||||||
Total Real Estate Management & Development | 65,872 | |||||||
Brazil - 41.9% | ||||||||
Capital Markets - 0.1% | ||||||||
GP Investments Ltd. (a) | 2,000 | 4,216 | ||||||
Household Durables - 12.0% | ||||||||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | 16,400 | 69,831 | ||||||
Direcional Engenharia SA | 22,600 | 40,788 | ||||||
Even Construtora e Incorporadora SA | 10,400 | 15,115 | ||||||
Ez Tec Empreendimentos e Participacoes SA | 12,232 | 74,706 | ||||||
Gafisa SA | 4,272 | 37,349 | ||||||
MRV Engenharia e Participacoes SA | 16,400 | 75,489 | ||||||
Tecnisa SA | 35,187 | 30,235 | ||||||
Total Household Durables | 343,513 | |||||||
Real Estate Investment Trusts (REITs) - 18.4% | ||||||||
BB Progressivo II FII | 1,653 | 72,360 | ||||||
CSHG Brasil Shopping Investimento Imobiliario | 60 | 42,088 | ||||||
CSHG Logistica FI Imobiliario | 74 | 28,204 | ||||||
CSHG Real Estate FI Imobiliario | 128 | 54,747 | ||||||
FII BTG Pactual Corporate Office Fund | 2,390 | 80,351 | ||||||
FII TB Office | 440 | 9,726 | ||||||
JS Real Estate Multigestao FII | 1,899 | 58,840 | ||||||
Kinea Renda Imobiliaria FII | 1,210 | 59,518 | ||||||
Kinea Rendimentos Imobiliarios FII | 2,344 | 80,265 | ||||||
Santander Agencias FII | 980 | 41,024 | ||||||
Total Real Estate Investment Trusts (REITs) | 527,123 | |||||||
Real Estate Management & Development - 11.4% | ||||||||
Aliansce Shopping Centers SA | 9,897 | 48,685 | ||||||
BR Malls Participacoes SA (a) | 12,780 | 58,989 | ||||||
BR Properties SA (a) | 12,600 | 36,988 | ||||||
Brasil Brokers Participacoes SA (a) | 9,200 | 5,055 | ||||||
Helbor Empreendimentos SA | 30,000 | 22,807 | ||||||
Iguatemi Empresa de Shopping Centers SA | 5,600 | 58,798 | ||||||
JHSF Participacoes SA (a) | 17,300 | 13,318 | ||||||
Multiplan Empreendimentos Imobiliarios SA | 3,190 | 68,016 | ||||||
Sao Carlos Empreendimentos e Participacoes SA | 1,100 | 10,959 |
The accompanying notes are an integral part of these financial statements.
8
TierraXPTM Latin America Real Estate ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Total Real Estate Management & Development | $ | 323,615 | ||||||
Total Brazil | 1,198,467 | |||||||
Chile - 5.2% | ||||||||
Household Durables - 1.0% | ||||||||
Socovesa SA | 66,603 | 27,252 | ||||||
Real Estate Management & Development - 4.2% | ||||||||
Parque Arauco SA | 25,325 | 67,086 | ||||||
PAZ Corporacion SA | 52,383 | 51,123 | ||||||
Total Real Estate Management & Development | 118,209 | |||||||
Total Chile | 145,461 | |||||||
Mexico - 40.9% | ||||||||
Construction & Engineering - 1.2% | ||||||||
Empresas ICA SAB de CV (a) | 64,190 | 6,377 | ||||||
Impulsora del Desarrollo y el Empleo en America Latina SAB | 17,416 | 29,293 | ||||||
Total Construction & Engineering | 35,670 | |||||||
Real Estate Investment Trusts (REITs) - 25.3% | ||||||||
Asesor de Activos Prisma SAPI de CV | 90,131 | 52,955 | ||||||
Concentradora Fibra Danhos SA de CV | 51,044 | 84,518 | ||||||
Concentradora Fibra Hotelera Mexicana SA de CV | 41,635 | 33,913 | ||||||
Concentradora Hipotecaria SAPI de CV | 72,697 | 87,288 | ||||||
Fibra MTY SAPI de CV | 35,153 | 21,179 | ||||||
Fibra Shop Portafolios Inmobiliarios SAPI de CV | 81,936 | 57,812 | ||||||
Fibra Uno Administracion SA de CV | 61,394 | 104,968 | ||||||
Macquarie Mexico Real Estate Management SA de CV | 84,679 | 94,981 | ||||||
PLA Administradora Industrial S de RL de CV | 47,621 | 77,705 | ||||||
Prologis Property Mexico SA de CV | 58,493 | 100,288 | ||||||
Total Real Estate Investment Trusts (REITs) | 715,607 | |||||||
Hotels, Restaurants & Leisure - 0.8% | ||||||||
Grupo Hotelero Santa Fe SAB de CV (a) | 16,806 | 9,470 | ||||||
Hoteles City Express SAB de CV (a) | 14,035 | 14,543 | ||||||
Total Hotels, Restaurants & Leisure | 24,013 | |||||||
Household Durables - 1.7% | ||||||||
Consorcio ARA SAB de CV | 51,123 | 16,165 | ||||||
Corporacion GEO SAB De CV (a) | 10,697 | 1,211 | ||||||
Corpovael SA de CV | 59,444 | 28,417 | ||||||
Desarrolladora Homex SAB de CV (a) | 60,044 | 2,681 | ||||||
Total Household Durables | 48,474 | |||||||
Real Estate Management & Development - 3.0% | ||||||||
Corporacion Inmobiliaria Vesta SAB de CV | 44,789 | 62,152 | ||||||
Grupo GICSA SA de CV (a) | 33,078 | 22,350 |
The accompanying notes are an integral part of these financial statements.
9
TierraXPTM Latin America Real Estate ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Total Real Estate Management & Development | $ | 84,502 | ||||||
Transportation Infrastructure - 8.9% | ||||||||
Grupo Aeroportuario del Centro Norte SAB de CV | 16,181 | 87,645 | ||||||
Grupo Aeroportuario del Pacifico SAB de CV | 9,293 | 90,249 | ||||||
Grupo Aeroportuario del Sureste SAB de CV | 4,372 | 75,744 | ||||||
Total Transportation Infrastructure | 253,638 | |||||||
Total Mexico | 1,161,904 | |||||||
Peru - 0.9% | ||||||||
Construction & Engineering - 0.9% | ||||||||
Grana y Montero SAA - ADR | 7,814 | 24,458 | ||||||
United States - 7.7% | ||||||||
Real Estate Investment Trusts (REITs) - 2.3% | ||||||||
Prologis, Inc. | 1,274 | 66,095 | ||||||
Real Estate Management & Development - 5.4% | ||||||||
Brookfield Property Partners LP | 3,235 | 72,010 | ||||||
CBRE Group, Inc. (a) | 1,468 | 51,072 | ||||||
Jones Lang LaSalle, Inc. | 307 | 34,215 | ||||||
Total Real Estate Management & Development | 157,297 | |||||||
Total United States | 223,392 | |||||||
TOTAL COMMON STOCKS (Cost $2,314,634) | 2,819,554 | |||||||
RIGHTS - 0.0% | ||||||||
Tecnisa SA | 154 | 546 | ||||||
TOTAL RIGHTS (Cost $154) | 546 | |||||||
SHORT-TERM INVESTMENTS - 0.7% | ||||||||
Money Market Funds - 0.7% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 20,612 | 20,612 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $20,612) | 20,612 | |||||||
Total Investments (Cost $2,335,400) - 99.6% | 2,840,712 | |||||||
Other Assets in Excess of Liabilities - 0.4% | 11,068 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 2,851,780 |
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
(a) Non-income producing security.
(b) The rate quoted is the annualized seven-day yield at March 31, 2017.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
10
TierraXPTM Latin America Real Estate ETF
STATEMENT OF ASSETS AND LIABILITIES
As of March 31, 2017 (Unaudited)
As of March 31, 2017 (Unaudited)
ASSETS | TierraXPTM Latin America Real Estate ETF | |||
Investments in securities, at fair value* | $ | 2,840,712 | ||
Cash | 814 | |||
Foreign currency | 11,577 | |||
Dividends and interest receivable | 526 | |||
Securities lending income receivable | 12 | |||
Total Assets | $ | 2,853,641 | ||
LIABILITIES | ||||
Management fees payable | 1,861 | |||
Total Liabilities | 1,861 | |||
Net Assets | $ | 2,851,780 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in Capital | $ | 2,502,056 | ||
Undistributed (accumulated) net investment income | (216,857) | |||
Accumulated net realized gain on investments | 61,268 | |||
Net unrealized appreciation on: | ||||
Investments in securities | 505,312 | |||
Foreign currency and translation of other assets and liabilities in foreign currency | 1 | |||
Net Assets | $ | 2,851,780 | ||
*Identified Cost: | ||||
Investments in unaffiliated securities | $ | 2,335,400 | ||
Foreign currency | 813 | |||
Shares Outstanding^ | 100,000 | |||
Net Asset Value, Offering and Redemption Price per Share | $ | 28.52 |
^ No par value, unlimited number of shares authorized
The accompanying notes are an integral part of these financial statements.
11
TierraXPTM Latin America Real Estate ETF
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 2017 (Unaudited)
For the Six Months Ended March 31, 2017 (Unaudited)
TierraXPTM Latin America Real Estate ETF | ||||
INVESTMENT INCOME | ||||
Income: | ||||
Dividends from unaffiliated securities (net of foreign withholdings tax of $5,990) | $ | 36,037 | ||
Interest | 4 | |||
Securities lending Income | 268 | |||
Total Investment Income | 36,309 | |||
Expenses: | ||||
Management fees | 10,784 | |||
Total Expenses | 10,784 | |||
Net Investment Income | 25,525 | |||
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
Net Realized Gain (Loss) on: | ||||
Unaffiliated investments | 48,946 | |||
Foreign currency | (5,665) | |||
Net Realized Gain on Investments and Foreign Currency | 43,281 | |||
Net Change in Unrealized Appreciation of: | ||||
Unaffiliated investments in securities | 132,240 | |||
Foreign currency and foreign currency translation | (188) | |||
Net Change in unrealized appreciation of investments | 132,052 | |||
Net Realized and Unrealized Gain on Investments | 175,333 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 200,858 |
The accompanying notes are an integral part of these financial statements.
12
TierraXPTM Latin America Real Estate ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||
OPERATIONS | ||||||||
Net investment income | $ | 25,525 | $ | 95,904 | ||||
Net realized gain on investments | 43,281 | 54,830 | ||||||
Net change in unrealized appreciation of investments | 132,052 | 373,261 | ||||||
Net increase in net assets resulting from operations | 200,858 | 523,995 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (242,218) | (93,090) | ||||||
From Net Realized Gain | (70,581) | — | ||||||
Total Distributions to Shareholders | (312,799) | (93,090) | ||||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets derived from net change in outstanding | — | 2,500,000 | ||||||
shares (a) | ||||||||
Transaction Fees (Note 1) | — | 32,816 | ||||||
Net increase in net assets from capital share transactions | — | 2,532,816 | ||||||
Net increase (decrease) in net assets | $ | (111,941) | $ | 2,963,721 | ||||
NET ASSETS | ||||||||
Beginning of Period | 2,963,721 | — | ||||||
End of Period | $ | 2,851,780 | $ | 2,963,721 | ||||
Undistributed net investment loss | $ | (216,857) | $ | (164) |
(a) Summary of share transactions is as follows:
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 2016* | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | — | — | 100,000 | $ | 2,500,000 | |||||||||||
Transaction Fees | — | — | — | 32,816 | ||||||||||||
Shares Redeemed | — | — | — | — | ||||||||||||
— | $ | — | 100,000 | $ | 2,532,816 | |||||||||||
Beginning Shares | 100,000 | — | ||||||||||||||
Ending Shares | 100,000 | 100,000 |
*Fund commenced operations on December 2, 2015. The information presented is for the period from December 2, 2015 to September 30, 2016.
The accompanying notes are an integral part of these financial statements.
13
TierraXPTM Latin America Real Estate ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
For a capital share outstanding throughout the period
Six Months Ended March 31, 2017 (Unaudited) | Period Ended September 30, 20161 | |||||||
Net Asset Value, Beginning of Period | $ | 29.64 | $ | 25.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment income (loss) 2 | 0.26 | 0.98 | ||||||
Net realized and unrealized gain (loss) on investments | 1.75 | 4.59 | ||||||
Total from investment operations | 2.01 | 5.57 | ||||||
Less Distributions: | ||||||||
Distributions from net investment income | (2.42 | ) | (0.93 | ) | ||||
Distributions from net realized gain | (0.71 | ) | — | |||||
Total distributions | (3.13 | ) | (0.93 | ) | ||||
Net asset value, end of period | $ | 28.52 | $ | 29.64 | ||||
Total Return | 8.83 | %3 | 22.63 | %3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period (000’s) | $ | 2,852 | $ | 2,964 | ||||
Expenses to Average Net Assets | 0.79 | %4 | 0.79 | %4 | ||||
Net Investment Income (Loss) to Average Net Assets | 1.87 | %4 | 5.88 | %4 | ||||
Portfolio Turnover Rate | 20 | %3 | 44 | %3 |
1 | Commencement of operations on December 2, 2015. |
2 | Calculated based on average shares outstanding during the period. |
3 | Not annualized. |
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
14
TierraXPTM Latin America Real Estate ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
NOTE 1 – ORGANIZATION
TierraXPTM Latin America Real Estate ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Solactive Latin America Real Estate Index (“The Index”). The Fund commenced operations on December 2, 2015.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and 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, are included in “Transaction Fees” in the Statement 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”).
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. |
15
TierraXPTM Latin America Real Estate ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of March 31, 2017, the Fund did not hold any fair valued securities.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following table presents a summary of the Fund’s assets measured at fair value:
TierraXPTM Latin America Real Estate ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 2,819,554 | $ | — | $ | — | $ | 2,819,554 | ||||||||
Rights | 546 | — | — | 546 | ||||||||||||
Short-Term Investments | 20,612 | — | — | 20,612 | ||||||||||||
Total Investments in Securities | $ | 2,840,712 | $ | — | $ | — | $ | 2,840,712 |
There were no transfers between Levels 1, 2 and 3 during the period ended March 31, 2017. Transfers between levels are recognized at the end of the reporting period.
16
TierraXPTM Latin America Real Estate ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
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 2017 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.
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 by the Fund on a monthly basis. Distributions to Shareholders from net realized gains on securities of the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
17
TierraXPTM Latin America Real Estate ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
G. | Share Valuation. The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The “Derivatives and Hedging” Topic of the Codification (Accounting Standards Codification 815, formerly Statement of Financial Accounting Standards (“SFAS”) 133 and SFAS 161) requires enhanced disclosures about the Fund’s derivative and hedging activities, including how such activities are accounted for and their effect on the Fund’s financial position, performance and cash flows. The Fund did not use derivatives during the period ended March 31, 2017.
NOTE 4 – COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Fund to operate.
Under the Investment Advisory Agreement with the Fund, the Advisor has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Advisor bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Advisor at an annual rate of 0.79% of the Fund’s average daily net assets. The Advisor has an agreement with, and is dependent on, a third party to pay the Fund’s expenses in excess of 0.79% of the Fund’s average daily net assets. Additionally, 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 Tierra Funds, LLC (the “Sponsor”), under which the Sponsor agrees to sublicense the use of the Underlying Index to the Advisor. The Sponsor also provides marketing support for the Fund, including distributing marketing materials related to the Fund. Tierra Funds, LLC is a privately held business focused on bringing exchange-traded investment products to investors in the U.S. The Sponsor does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Fund.
18
TierraXPTM Latin America Real Estate ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
Additionally, the Sponsor is not involved in the maintenance of the Underlying Index and does not otherwise act in the capacity of an index provider.
U.S. Bancorp Fund Services, LLC (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Fund. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the period ended March 31, 2017, the Fund did not incur any 12b-1 expenses.
NOTE 6 – PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the period ended March 31, 2017:
Purchases | Sales | ||||||
TierraXPTM Latin America Real Estate ETF | $ | 555,422 | $ | 855,930 |
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the period ended March 31, 2017:
Purchases In-Kind | Sales In-Kind | |||||||
TierraXPTM Latin America Real Estate ETF | $ | — | $ | — |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the determination of the Fund’s taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations for the period ended March 31, 2017.
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; however, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. 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.
19
TierraXPTM Latin America Real Estate ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
As of March 31, 2017, the Fund did not have any securities on loan.
Interest income earned on collateral investments and recognized by the Fund during the period ended March 31, 2017, were as follows:
Interest Income Earned
Fund | Interest Income Earned net of applicable Fees | |||
TierraXPTM Latin America Real Estate ETF | $ | 268 |
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2016 were as follows:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||||||||||||
TierraXPTM Latin America Real Estate ETF | $ | 2,642,639 | $ | 472,811 | $ | (102,273 | ) | $ | 307,538 |
Undistributed Ordinary Income | Undistributed Long-term Gain | Total Distributable Earnings | Other Accumulated (Loss) | Total Accumulated Gain | ||||||||||||||||
TierraXPTM Latin America Real Estate ETF | $ | 89,615 | $ | 1,436 | $ | 91,051 | $ | 76 | $ | 461,665 |
As of September 30, 2016, the Fund had accumulated capital loss carryovers of:
Capital Loss Carryover | Expires | ||
TierraXPTM Latin America Real Estate ETF | None | Indefinite |
20
TierraXPTM Latin America Real Estate ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The Fund had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2017.
Late Year | |||
Ordinary | Post-October | ||
Loss | Capital Loss | ||
TierraXPTM Latin America Real Estate ETF | None | None |
NOTE 9 – DISTRIBUTIONS TO SHAREHOLDERS
The Fund paid $242,218 from ordinary income and $70,581 from capital gains during the period ended March 31, 2017 and paid $93,090 from ordinary income during the period ended September 30, 2016.
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.
Effective April 1, 2017, the Fund changed its distributor from ALPS Distributors, Inc. to ETFMG Financial, LLC.
21
TierraXPTM Latin America Real Estate ETF
SUPPLEMENTARY INFORMATION
March 31, 2017 (Unaudited)
INFORMATION ABOUT PORTFOLIO HOLDINGS
(Unaudited)
The Fund files a Form N-Q with the Securities and Exchange Commission (the ‘‘SEC’’) no more than sixty days after the Fund’s first and third fiscal quarters. For the Fund, this would be for the fiscal quarters ending June 30 and December 31. Form N-Q includes a complete schedule of the Funds’ portfolio holdings as of the end of those fiscal quarters. The Fund’s N-Q filings can be found free of charge on the SEC’s website at http://www.sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (call 800-SEC-0330 for information on the operation of the Public Reference Room). The Fund’s portfolio holdings are posted on the Fund’s website at www.tierrafunds.com daily.
INFORMATION ABOUT PROXY VOTING
(Unaudited)
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.tierrafunds.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.tierrafunds.com. Read the prospectus carefully before investing.
22
TierraXPTM Latin America Real Estate ETF
EXPENSE EXAMPLE
For the Period October 1, 2016 to March 31, 2017 (Unaudited)
As a shareholder of TierraXPTM Latin America Real Estate ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 1, 2016 to March 31, 2017).
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.
TierraXPTM Latin America Real Estate ETF
Beginning | Ending | |||||||||||
Account | Account | Expenses | ||||||||||
Value | Value | Paid | ||||||||||
October 1, | March 31, | During the | ||||||||||
2016 | 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,088.30 | $ | 4.11 | ||||||
Hypothetical (5% annual) | $ | 1,000.00 | $ | 1,020.99 | $ | 3.98 |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 182/365 (to reflect the period from October 1, 2016 to March 31, 2017).
23
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC
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
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/iteq001.jpg)
Semi-Annual Report
March 31, 2017
March 31, 2017
BlueStar TA-BIGITechTM Israel Technology ETF
Ticker: ITEQ
Ticker: ITEQ
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/iteq002.jpg)
The Fund is a series of ETF Managers Trust.
BlueStar TA-BIGITechTM Israel Technology ETF
TABLE OF CONTENTS
March 31, 2017
March 31, 2017
Page | |
Shareholders’ Letter | 2 |
Growth of a $10,000 Investment | 3 |
Top 10 Holdings | 4 |
Important Disclosures and Key Risk Factors | 5 |
Portfolio Allocations | 6 |
Schedules of Investments | 7 |
Statements of Assets and Liabilities | 11 |
Statements of Operations | 12 |
Statements of Changes in Net Assets | 13 |
Financial Highlights | 14 |
Notes to the Financial Statements | 15 |
Supplementary Information | 22 |
Expense Example | 23 |
Dear Shareholder,
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the BlueStar TA-BIGITechTM Israel Technology Exchange-Traded Fund (“ITEQ” or the “Fund”). The following information pertains to the six month period from October 1, 2016 to March 31, 2017.
The Fund saw positive performance during the six month period ended March 31, 2017. The NAV price for ITEQ rose 11.45% while the TASE-Bluestar Israel Global Technology Index (“Index”), the Fund’s benchmark, rose 11.81% over the same period. The difference was primarily attributable to Fund expenses that are not a part of the Index.
For the six month period ended March 31, 2017, the best performing securities in the Fund were Kornit Digital (up 103.62%), Wix.com (up 56.34%), and Tower Semiconductor (up 54.52%). The worst performing securities in the Fund were Aevi Genomic Medicine Inc. (down 66.61%), Alcobra (down 53.85%), and ReWalk Robotics (down 51.39%).
We believe Israeli companies play an essential role in the global high technology value chain. Most technology users, from online shoppers to Fortune 500 companies, use Israeli technology applications and solutions every day without ever being aware of it. From cybersecurity and defense to clean energy and agriculture, Israeli innovations power some of the biggest names in the tech industry today.
Even in industries where Israeli companies do not have dominant individual market share, the collective footprint of Israeli companies is significant in many key technology subsectors, and Israel-based Research & Development and non-public companies are usually significant contributors to that same sub-industry’s ecosystem.
There is much ahead for Israeli Technology companies and we are thankful you have joined us. You can find further details about ITEQ by visiting www.iteqetf.com, or by calling 1-844-ETF-MGRS. (1- 844-383-6477).
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/iteq003.jpg)
Samuel Masucci III
Chairman of the Board
Chairman of the Board
Samuel Masucci III is a registered representative of ETFMG Financial, LLC.
2
BlueStar TA‐BIGITechTM Israel Technology ETF
Growth of $10,000 (Unaudited)
Growth of $10,000 (Unaudited)
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/iteq004.jpg)
Cumulative Returns | 6 Months | 1 Year | Since Inception | |||||||||
Period Ended March 31, 2017 | Return | Return | (11/2/2015) | |||||||||
BlueStar TA-BIGITechTM Israel Technology ETF (NAV) | 11.45 | % | 19.31 | % | 9.75 | % | ||||||
BlueStar TA-BIGITechTM Israel Technology ETF (Market) | 11.56 | % | 19.03 | % | 10.04 | % | ||||||
S&P 500 Index | 10.12 | % | 17.17 | % | 10.99 | % | ||||||
TASE-BlueStar Israel Global Technology IndexTM | 11.81 | % | 20.09 | % | 10.50 | % | ||||||
Total Fund Operating Expenses1 | 0.75 | % |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
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’s may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF- MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 2, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends.
The unmanaged indices do not reflect fees and are not available for direct investment.
3
BlueStar TA-BIGITechTM Israel Technology ETF
Top Ten Holdings*
% of Total | ||
Security | Investments† | |
1 | Mobileye NV | 13.36% |
2 | Check Point Software Technologies, Ltd. | 9.92% |
3 | Amdocs Ltd. | 8.34% |
4 | NICE-Systems Ltd. | 5.59% |
5 | Verint Systems, Inc. | 3.82% |
6 | OPKO Health, Inc. | 3.78% |
7 | Elbit Systems Ltd. | 3.76% |
8 | Ormat Technologies, Inc. | 3.25% |
9 | Wix.com Ltd. | 3.10% |
10 | Tower Semiconductor Ltd. | 3.05% |
Top Ten Holdings =57.97% of Total Investments† | ||
* Current Fund holdings may not be indicative of future Fund holdings. | ||
† Percentage of total investments less cash. |
4
BlueStar TA-BIGITechTM Israel Technology ETF
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
The BlueStar TA-BIGITechTM Israel Technology ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the TASE-BlueStar Israel Global Technology IndexTM (“TA-BIGITechTM” or the “Index”).
Investment in securities of Israeli companies involves risks that may negatively affect the value of your investment in the Fund. Among other things, Israel’s economy depends on imports of certain key items, such as crude oil, coal, grains, raw materials and military equipment. Foreign investing involves special risks such as currency fluctuations and political uncertainty. Funds that invest in smaller companies may experience greater volatility. Funds that emphasize investments in technology generally will experience greater price volatility. The Fund’s return may not match or achieve a high degree of correlation with the return of the TA-BIGITech™ Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
The TASE- BlueStar Israel Technology Index™ (TA-BIGITech™) is an index of more than 60 Israeli technology companies listed on global stock exchanges in Tel Aviv, New York, London and elsewhere.
S&P 500: The S&P 500 Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices.
5
BlueStar TA-BIGITechTM Israel Technology ETF
PORTFOLIO ALLOCATIONS
As of March 31, 2017 (Unaudited)
As of March 31, 2017 (Unaudited)
BlueStar TA- BIGITechTM Israel Technology ETF | ||||
As a percent of Net Assets: | ||||
Guernsey | 9.5 | % | ||
Israel | 53.3 | |||
Jersey | 0.5 | |||
Netherlands | 14.4 | |||
Netherlands Antilles | 0.6 | |||
United Kingdom | 2.6 | |||
United States | 18.9 | |||
Short-Term and other Net Assets (Liabilities) | 0.2 | |||
100.0 | % |
6
BlueStar TA-BIGITechTM Israel Technology ETF
Schedule of Investments
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 99.8% | ||||||||
Guernsey - 9.5% | ||||||||
IT Services - 9.5% | ||||||||
Amdocs Ltd. | 14,616 | $ | 891,429 | |||||
SafeCharge International Group Ltd. | 13,951 | 45,184 | ||||||
Total IT Services | 936,613 | |||||||
Israel - 53.3% | ||||||||
Aerospace & Defense - 4.0% | ||||||||
Elbit Systems Ltd. | 3,514 | 402,182 | ||||||
Biotechnology - 1.4% | ||||||||
Enzymotec Ltd. (a) | 5,558 | 48,910 | ||||||
Evogene Ltd. (a) | 6,874 | 36,566 | ||||||
Kamada Ltd. (a) | 7,693 | 53,517 | ||||||
Total Biotechnology | 138,993 | |||||||
Communications Equipment - 4.5% | ||||||||
AudioCodes Ltd (a) | 7,245 | 50,787 | ||||||
Ceragon Networks Ltd. (a) | 17,185 | 56,195 | ||||||
Ituran Location and Control Ltd. | 3,668 | 113,158 | ||||||
RADCOM Ltd. (a) | 2,226 | 47,859 | ||||||
Radware Ltd. (a) | 6,720 | 108,595 | ||||||
Silicom Ltd. | 1,309 | 65,018 | ||||||
Total Communications Equipment | 441,612 | |||||||
Electronic Equipment, Instruments & Components - 2.2% | ||||||||
Orbotech Ltd. (a) | 6,783 | 218,752 | ||||||
Health Care Equipment & Supplies - 1.9% | ||||||||
Mazor Robotics Ltd. (a) | 7,539 | 111,321 | ||||||
Syneron Medical Ltd. (a) | 7,035 | 74,219 | ||||||
Total Health Care Equipment & Supplies | 185,540 | |||||||
Household Durables - 0.4% | ||||||||
Maytronics Ltd. | 10,234 | 41,755 | ||||||
Internet Software & Services - 3.4% | ||||||||
Wix.com Ltd. (a) | 4,886 | 331,760 | ||||||
IT Services - 1.2% | ||||||||
Formula Systems (1985) Ltd. | 1,477 | 58,795 | ||||||
Matrix IT Ltd. | 6,790 | 64,029 | ||||||
Total IT Services | 122,824 | |||||||
Life Sciences Tools & Services - 0.4% | ||||||||
Compugen Ltd. (a) | 10,171 | 43,211 | ||||||
Machinery - 1.3% | ||||||||
Kornit Digital Ltd. (a) | 3,486 | 66,582 |
The accompanying notes are an integral part of these financial statements.
7
BlueStar TA-BIGITechTM Israel Technology ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Sarine Technologies Ltd. | 44,800 | $ | 61,651 | |||||
Total Machinery | 128,233 | |||||||
Pharmaceuticals - 2.9% | ||||||||
Alcobra Ltd. (a) | 13,587 | 15,489 | ||||||
Foamix Pharmaceuticals Ltd. (a) | 7,217 | 35,724 | ||||||
Neuroderm Ltd. (a) | 2,590 | 68,765 | ||||||
Redhill Biopharma Ltd - ADR (a) ^ | 17,843 | 171,114 | ||||||
Total Pharmaceuticals | 291,092 | |||||||
Semiconductors & Semiconductor Equipment - 7.5% | ||||||||
Mellanox Technologies Ltd. (a) | 6,258 | 318,845 | ||||||
Nova Measuring Instruments Ltd. (a) | 5,327 | 95,702 | ||||||
Tower Semiconductor Ltd. (a) | 14,112 | 326,495 | ||||||
Total Semiconductors & Semiconductor Equipment | 741,042 | |||||||
Software - 20.7% | ||||||||
Allot Communications Ltd. (a) | 8,449 | 40,093 | ||||||
Attunity Ltd. (a) | 5,089 | 40,305 | ||||||
Check Point Software Technologies, Ltd. (a) | 10,332 | 1,060,683 | ||||||
CyberArk Software Ltd. (a) ^ | 4,172 | 212,230 | ||||||
Hilan Ltd. | 3,213 | 56,765 | ||||||
Magic Software Enterprises Ltd. | 5,985 | 46,683 | ||||||
NICE-Systems Ltd. | 8,890 | 597,329 | ||||||
Total Software | 2,054,088 | |||||||
Technology Hardware, Storage & Peripherals - 1.5% | ||||||||
Stratasys Ltd. (a) ^ | 7,476 | 153,183 | ||||||
Total Israel | 5,294,267 | |||||||
Jersey - 0.5% | ||||||||
Internet Software & Services - 0.5% | ||||||||
XLMedia PLC | 39,270 | 51,907 | ||||||
Netherlands - 14.4% | ||||||||
Software - 14.4% | ||||||||
Mobileye NV (a) | 23,261 | 1,428,226 | ||||||
Netherlands Antilles - 0.6% | ||||||||
Software - 0.6% | ||||||||
Sapiens International Corporation NV | 4,788 | 62,796 | ||||||
United Kingdom - 2.6% | ||||||||
Communications Equipment - 0.8% | ||||||||
Telit Communications PLC | 18,466 | 81,150 | ||||||
Diversified Financial Services - 0.7% |
The accompanying notes are an integral part of these financial statements.
8
BlueStar TA-BIGITechTM Israel Technology ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Plus500 Ltd. | 13,181 | $ | 69,361 | |||||
Hotels, Restaurants & Leisure - 1.1% | ||||||||
888 Holdings PLC | 32,375 | 108,302 | ||||||
Total United Kingdom | 258,813 | |||||||
United States - 18.9% | ||||||||
Biotechnology - 4.5% | ||||||||
Aevi Genomic Medicine, Inc. (a) | 8,267 | 15,377 | ||||||
OPKO Health, Inc. (a) | 49,987 | 404,588 | ||||||
Pluristem Therapeutics, Inc. (a) | 23,401 | 28,424 | ||||||
Total Biotechnology | 448,389 | |||||||
Communications Equipment - 0.4% | ||||||||
Gilat Satellite Networks Ltd. (a) | 7,869 | 39,426 | ||||||
Electric Utilities - 3.5% | ||||||||
Ormat Technologies, Inc. | 6,125 | 347,633 | ||||||
Internet Software & Services - 0.7% | ||||||||
LivePerson, Inc. (a) | 10,052 | 69,788 | ||||||
Pharmaceuticals - 0.3% | ||||||||
Oramed Pharmaceuticals, Inc. (a) ^ | 4,095 | 25,184 | ||||||
Semiconductors & Semiconductor Equipment - 2.6% | ||||||||
CEVA, Inc. (a) | 3,612 | 128,226 | ||||||
DSP Group, Inc. (a) | 4,403 | 52,836 | ||||||
SolarEdge Technologies, Inc. (a) | 5,264 | $ | 82,118 | |||||
Total Semiconductors & Semiconductor Equipment | 263,180 | |||||||
Software - 6.9% | ||||||||
Imperva, Inc. (a) ^ | 4,711 | 193,387 | ||||||
Varonis Systems, Inc. (a) | 2,772 | 88,150 | ||||||
Verint Systems, Inc. (a) | 9,422 | 408,679 | ||||||
Total Software | 690,216 | |||||||
Total United States | 1,883,816 | |||||||
TOTAL COMMON STOCKS (Cost $8,789,379) | 9,916,438 | |||||||
SHORT-TERM INVESTMENTS - 0.1% | ||||||||
Money Market Funds - 0.1% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 11,327 | 11,327 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $11,327) | 11,327 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 9,940,253 |
The accompanying notes are an integral part of these financial statements.
9
BlueStar TA-BIGITechTM Israel Technology ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL - 7.7% | ||||||||
Investment Companies - 7.7% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 1.17% (b) + | 762,876 | $ | 762,876 | |||||
TOTAL INVESTMENTS PURCHASED WITH SECURITIES LENDING COLLATERAL (Cost $762,876) | 762,876 | |||||||
Total Investments (Cost $9,563,582) - 107.6% | 10,690,641 | |||||||
Liabilities in Excess of Other Assets - (7.6)% | (750,388 | ) | ||||||
TOTAL NET ASSETS | $ | 9,940,253 |
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
^ | All or a portion of this security is out on loan as of March 31, 2017. Total value of securities out on loan is $746,540. |
+ | Investments purchased with cash proceeds from securities lending. Total cash collateral has a value of $762,876 as of March 31, 2017. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
10
BlueStar TA-BIGITechTM Israel Technology ETF
STATEMENT OF ASSETS AND LIABILITIES
As of March 31, 2017 (Unaudited)
As of March 31, 2017 (Unaudited)
BlueStar TA- BIGITechTM Israel Technology ETF | ||||
ASSETS | ||||
Investments in securities, at fair value* | $ | 10,690,641 | ||
Cash | 1,042 | |||
Foreign currency | 106 | |||
Dividends and interest receivable | 15,775 | |||
Securities lending income receivable | 1,665 | |||
Total Assets | $ | 10,709,229 | ||
LIABILITIES | ||||
Collateral received for securities loaned (Note 7) | 762,876 | |||
Management fees payable | 6,100 | |||
Total Liabilities | 768,976 | |||
Net Assets | $ | 9,940,253 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in Capital | $ | 8,895,685 | ||
Undistributed (accumulated) net investment income (loss) | (5,116 | ) | ||
Accumulated net realized gain (loss) on investments | (77,376 | ) | ||
Net unrealized appreciation (depreciation) on: | ||||
Investments in securities | 1,127,059 | |||
Foreign currency and translation of other assets and liabilities in foreign currency | 1 | |||
Net Assets | $ | 9,940,253 | ||
*Identified Cost: | ||||
Investments in securities | $ | 9,563,582 | ||
Foreign currency | 105 | |||
Shares Outstanding^ | 350,000 | |||
Net Asset Value, Offering and Redemption Price per Share | $ | 28.40 |
^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
11
BlueStar TA-BIGITechTM Israel Technology ETF
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 2017 (Unaudited)
BlueStar TA- | ||||
BIGITechTM Israel | ||||
Technology ETF | ||||
INVESTMENT INCOME | ||||
Income: | ||||
Dividends from unaffiliated securities (net of foreign withholdings tax of $1,929) | $ | 22,999 | ||
Interest | 5 | |||
Securities lending income | 5,328 | |||
Total Investment Income | 28,332 | |||
Expenses: | ||||
Management fees | 22,213 | |||
Total Expenses | 22,213 | |||
Net Investment Income | 6,119 | |||
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
Net Realized Gain (Loss) on: | ||||
Unaffiliated investments | (56,217 | ) | ||
Foreign currency | (117 | ) | ||
Net Realized Gain (Loss) on Investments and Foreign Currency | (56,334 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) of: | ||||
Unaffiliated investments | 899,505 | |||
Foreign currency and foreign currency translation | 4 | |||
Net Change in Unrealized Appreciation of Investments and Foreign Currency | 899,509 | |||
Net Realized and Unrealized Gain on Investments | 843,175 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 849,294 |
The accompanying notes are an integral part of these financial statements.
12
BlueStar TA-BIGITechTM Israel Technology ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended | Period Ended | |||||||
March 31, 2017 | September 30, | |||||||
(Unaudited) | 2016* | |||||||
OPERATIONS | ||||||||
Net investment income | $ | 6,119 | $ | 7,025 | ||||
Net realized loss on investments | (56,334 | ) | (20,932 | ) | ||||
Net change in unrealized appreciation of investments | 899,509 | 227,551 | ||||||
Net increase in net assets resulting from operations | 849,294 | 213,644 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (18,370 | ) | — | |||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets derived from net change in outstanding shares (a) | 3,993,780 | 4,901,905 | ||||||
Net increase in net assets | $ | 4,824,704 | $ | 5,115,549 | ||||
NET ASSETS | ||||||||
Beginning of Period | 5,115,549 | — | ||||||
End of Period | $ | 9,940,253 | $ | 5,115,549 | ||||
Undistributed net investment income (loss) | $ | (5,116 | ) | $ | 7,135 |
(a) Summary of share transactions is as follows:
Six Months Ended | Period Ended | |||||||||||||||
March 31, 2017 (Unaudited) | September 30, 2016* | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 150,000 | $ | 3,993,780 | 200,000 | $ | 4,901,905 | ||||||||||
Reinvested Dividends | — | — | — | — | ||||||||||||
Shares Redeemed | — | — | — | — | ||||||||||||
150,000 | $ | 3,993,780 | 200,000 | $ | 4,901,905 | |||||||||||
Beginning Shares | 200,000 | — | ||||||||||||||
Ending Shares | 350,000 | 200,000 |
*Fund commenced operations on November 2, 2015. The information presented is for the period from November 2, 2015 to September 30, 2016.
The accompanying notes are an integral part of these financial statements.
13
BlueStar TA-BIGITechTM Israel Technology ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
Six Months Ended | Period Ended | |||||||
March 31, 2017 | September 30, | |||||||
(Unaudited) | 20161 | |||||||
Net Asset Value, Beginning of Period | $ | 25.58 | $ | 25.00 | ||||
Income (Loss) from Investment Operations: | ||||||||
Net investment income (loss) 2 | 0.03 | 0.05 | ||||||
Net realized and unrealized gain (loss) on investments | 2.88 | 0.53 | ||||||
Total from investment operations | 2.91 | 0.58 | ||||||
Less Distributions: | ||||||||
Distributions from net investment income | (0.09 | ) | — | |||||
Total distributions | (0.09 | ) | — | |||||
Net asset value, end of period | $ | 28.40 | $ | 25.58 | ||||
Total Return | 11.45 | %3 | 2.31 | %3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period (000’s) | $ | 9,940 | $ | 5,116 | ||||
Expenses to Average Net Assets | 0.75 | %4 | 0.75 | %4 | ||||
Net Investment Income (Loss) to Average Net Assets | 0.21 | %4 | 0.23 | %4 | ||||
Portfolio Turnover Rate | 7 | %3 | 14 | %3 |
1 | Commencement of operations on November 2, 2015. |
2 | Calculated based on average shares outstanding during the period. |
3 | Not annualized. |
4 | Annualized. |
The accompanying notes are an integral part of these financial statements.
14
BlueStar TA-BIGITechTM Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
NOTE 1 – ORGANIZATION
BlueStar TA-BIGITechTM Israel Technology ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the TASE-BlueStar Israel Technology Index™. The Fund commenced operations on November 2, 2015.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NASDAQ Stock Market, LLC. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
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”).
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of March 31, 2017, the Fund did not hold any fair valued securities.
15
BlueStar TA-BIGITechTM Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
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.
The following table presents a summary of the Funds’ assets measured at fair value:
BlueStar TA-BIGITechTM Israel Technology ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 9,916,438 | $ | — | $ | — | $ | 9,916,438 | |||||
Short-Term Investments | 11,327 | — | — | 11,327 | |||||||||
Investments Purchased with Securities Lending Collateral* | — | — | — | 762,876 | |||||||||
Total Investments in Securities | $ | 9,927,765 | $ | — | $ | — | $ | 10,690,641 |
^ See Schedule of Investments for classifications by country and industry.
* | Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Statement of Assets and Liabilities. |
There were no transfers between Levels 1, 2 and 3 during the period ended March 31, 2017. Transfers between levels are recognized at the end of the reporting period.
16
BlueStar TA-BIGITechTM Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
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 2017 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.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries. |
D. | Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income, if any are generally declared and paid by the Fund on a quarterly basis. Net realized gains on securities of the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
F. | Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
17
BlueStar TA-BIGITechTM Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
G. | Share Valuation. The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The “Derivatives and Hedging” Topic of the Codification (Accounting Standards Codification 815, formerly Statement of Financial Accounting Standards (“SFAS”) 133 and SFAS 161) requires enhanced disclosures about the Fund’s derivative and hedging activities, including how such activities are accounted for and their effect on the Fund’s financial position, performance and cash flows. The Fund did not use derivatives during the period ended March 31, 2017.
NOTE 4 – COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-today operations of the Fund, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Fund to operate.
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. The Advisor has an agreement with, and is dependent on, a third party to pay the Fund’s expenses in excess of 0.75% of the Fund’s average daily net assets. Additionally, 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 ITEQ ETF Partners, LLC (the “Sponsor”), under which the Sponsor agrees to sublicense the use of the Underlying Index to the Advisor. The Sponsor also provides marketing support for the Fund, including distributing marketing materials related to the Fund. ITEQ ETF Partners, LLC is a privately held business focused on bringing exchange-traded investment products to investors in the U.S. The Sponsor does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Fund. Additionally, the Sponsor is not involved in the maintenance of the Underlying Index and does not otherwise act in the capacity of an index provider.
18
BlueStar TA-BIGITechTM Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
US Bancorp Fund Services, LLC (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Fund. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the period ended March 31, 2017, the Fund did not incur any 12b-1 expenses.
NOTE 6 – PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the period ended March 31, 2017:
Purchases | Sales | ||||||
BlueStar TA-BIGITechTM Israel Technology ETF | $ | 441,622 | $ | 427,109 | |||
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the period ended March 31, 2017:
Purchases In-Kind | Sales In-Kind | ||||||
BlueStar TA-BIGITechTM Israel Technology ETF | $ | 3,989,084 | $ | — |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the determination of the Fund’s taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations for the period ended March 31, 2017.
NOTE 7 – SECURITIES LENDING
The Fund may lend up to 331/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. As of March 31, 2017, the Fund had loaned securities and received cash collateral for the loans. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations; however, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. 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.
19
BlueStar TA-BIGITechTM Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
As of March 31, 2017, 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* | |||||
BlueStar TA-BIGITechTM Israel Technology ETF | $ | 746,540 | $ | 762,876 |
* The cash collateral received was invested in the Mount Vernon Securities Lending Prime Portfolio as shown on the Schedule of Investments, a money market fund with an overnight and continuous maturity.
Fees and interest income earned on collateral investments and recognized by the Fund during the period ended March 31, 2017, were as follows:
Fees and Interest Income Earned
Fund | Interest income earned net of applicable fees | |||
BlueStar TA-BIGITechTM Israel Technology ETF | $ | 5,328 |
Offsetting Assets and Liabilities
The Fund is subject to various netting arrangements, which govern the terms of certain transactions with counterparties. The arrangements allow the Fund to close out and net its total exposure to a counterparty in the event of a default with respect to all transactions governed under a single agreement with a counterparty. The following is a summary of the arrangements subject to offsetting as of March 31, 2017.
Fund | Description | Gross Amount of Recognized Liabilities | Gross Amount in the Statement of Assets and Liabilities | Net Amount Presented in the Statement of Assets and Liabilities | Collateral Received | Net Amount | ||||||||||||
BlueStar TA- | Securities Lending | $ | 762,876 | $ | 762,876 | — | $ | 762,876 | — | |||||||||
BIGITechTM Israel | ||||||||||||||||||
Technology ETF |
20
BlueStar TA-BIGITechTM Israel Technology ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2016 were as follows:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||||||||||||
BlueStar TA-BIGITechTM Israel | $ | 5,954,417 | $ | 505,791 | $ | (294,478 | )$ | 211,313 | ||||||||
Technology ETF | ||||||||||||||||
Undistributed Ordinary Income | Undistributed Long-term Gain | Total Distributable Earnings | Other Accumulated (Loss) | Total Accumulated Gain | ||||||||||||||||
BlueStar TA- | $ | 18,370 | $ | — | $ | 18,370 | $ | (16,039 | ) | $ | 213,644 | |||||||||
BIGITechTM | ||||||||||||||||||||
Israel | ||||||||||||||||||||
Technology ETF |
As of September 30, 2016, the Fund had accumulated capital loss carryovers of:
Capital Loss | |||
Carryover | Expires | ||
BlueStar TA-BIGITechTM Israel Technology ETF | None | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The following Funds had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2017.
Late Year | ||||
Ordinary | Post-October | |||
Loss | Capital Loss | |||
BlueStar TA-BIGITechTM Israel Technology ETF | None | $ | 16,036 |
NOTE 9 – DISTRIBUTIONS TO SHAREHOLDERS
The Fund paid $18,370 from ordinary income during the period ended March 31, 2017 and did not pay any distributions from ordinary or capital gains during the period ended September 30, 2016.
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.
Effective April 1, 2017, the Fund changed its distributor from ALPS Distributors, Inc. to ETFMG Financial, LLC.
21
BlueStar TA-BIGITechTM Israel Technology ETF
SUPPLEMENTARY INFORMATION
March 31, 2017 (Unaudited)
INFORMATION ABOUT PORTFOLIO HOLDINGS
(Unaudited)
The Fund files a Form N-Q with the Securities and Exchange Commission (the ‘‘SEC’’) no more than sixty days after the Fund’s first and third fiscal quarters. For the Fund, this would be for the fiscal quarters ending June 30 and December 31. Form N-Q includes a complete schedule of the Funds’ portfolio holdings as of the end of those fiscal quarters. The Fund’s N-Q filings can be found free of charge on the SEC’s website at http://www.sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (call 800-SEC-0330 for information on the operation of the Public Reference Room). The Fund’s portfolio holdings are posted on the Fund’s website at www.iteqetf.com daily.
INFORMATION ABOUT PROXY VOTING
(Unaudited)
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.iteqetf.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.iteqetf.com. Read the prospectus carefully before investing.
22
BlueStar TA-BIGITechTM Israel Technology ETF
Expense Example
For the Period October 1, 2016 to March 31, 2017 (Unaudited)
As a shareholder of BlueStar TA-BIGITechTM Israel Technology ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 1, 2016 to March 31, 2017).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
BlueStar TA-BIGITechTM Israel Technology ETF
Beginning | Ending | ||||||
Account Value | Account Value | Expenses Paid | |||||
October 1, 2016 | March 31, 2017 | During the Period^ | |||||
Actual | $1,000.00 | $1,114.50 | $3.95 | ||||
Hypothetical | |||||||
(5% annual) | $1,000.00 | $1,021.19 | $3.78 |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 182/365 (to reflect the period from October 1, 2016 to March 31, 2017).
23
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC
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
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/etcho001.jpg)
Semi-Annual Report
March 31, 2017
March 31, 2017
Etho Climate Leadership U.S. ETF
Ticker: ETHO
Ticker: ETHO
![](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/etcho002.jpg)
The Fund is a series of ETF Managers Trust.
Etho Climate Leadership U.S. ETF
TABLE OF CONTENTS
March 31, 2017
March 31, 2017
Page | |
Shareholders’ Letter | 3 |
Growth of a $10,000 Investment | 4 |
Top 10 Holdings | 5 |
Important Disclosures and Key Risk Factors | 6 |
Portfolio Allocations | 7 |
Schedules of Investments | 8 |
Statements of Assets and Liabilities | 22 |
Statements of Operations | 23 |
Statements of Changes in Net Assets | 24 |
Financial Highlights | 25 |
Notes to the Financial Statements | 26 |
Supplementary Information | 34 |
Expense Example | 35 |
2
Dear Shareholder,
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the Etho Climate Leadership U.S. Exchange-Traded Fund (“ETHO” or the “Fund”). The following information pertains to the 6-month period from October 1, 2016 to March 31, 2017.
The Fund saw positive performance during the 6 months period ended March 31, 2017. The NAV price for ETHO rose 9.73% while the Etho Climate Leadership Index – U.S. (“Index”), the Fund’s benchmark, rose 9.27% over the same period. The difference was primarily attributable to Fund expenses that are not a part of the Index.
For the 6 months ended March 31, 2017, the best performing securities in the Fund were SVB Financial Group (up 68.35%), SLM Corp (up 61.98%), and Nvidia Corp (up 59.41%). The worst performing securities in the Fund were Hertz (down 56.32%), Under Armour (down 48.86%), and Energy Recovery Inc. (down 47.93%).
As you may know, the Etho Climate Leadership U.S. ETF offers broad diversification across companies that have demonstrated efficiency and leadership with their use of resources and their supply chains when compared to industry peers. The Fund holds roughly 340 equities equally weighted and results in a carbon emissions profile that is, on average, 50-70% lower per dollar invested than conventional U.S. benchmark indices.1 ETHO avoids investment in any direct fossil fuel companies, as well as enablers of that industry, along with a series of other unsustainable industries such as Tobacco/Weapons/Gambling, etc. Equal weighting of the Fund allows for the elimination of equities that do not meet ETHO’S standards without there being a significant impact on the diversification or performance of the Fund. It also creates broad exposure to both the sectors and factors that potentially make for greater stability and higher performance.
There is much ahead for environmentally sustainable and socially responsible investing. We are thankful you have joined us by investing in the Etho Climate Leadership U.S. ETF.
You can find further details about ETHO by visiting www.ethoetf.com, or by calling 1- 844-ETF- MGRS (1-844-383-6477).
Sincerely,
![-s- Samuel Masucci III](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/etcho003.jpg)
Samuel Masucci III
Chairman of the Board
Chairman of the Board
Samuel Masucci III is a registered representative of ETFMG Financial, LLC.
1 | Etho Capital. www.ethocapital.com |
3
Etho Climate Leadership U.S. ETF
Growth of $10,000 (Unaudited)
Growth of $10,000 (Unaudited)
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/etcho004.jpg)
Cumulative Returns | 6 Months | 1 Year | Since Inception | |||||||||
Period Ended March 31, 2017 | Return | Return | (11/18/2015) | |||||||||
Etho Climate Leadership U.S. ETF (NAV) | 9.73 | % | 18.44 | % | 13.56 | % | ||||||
Etho Climate Leadership U.S. ETF (Market) | 10.36 | % | 18.68 | % | 13.91 | % | ||||||
S&P 500 Index | 10.12 | % | 17.17 | % | 12.01 | % | ||||||
Etho Climate Leadership Index - U.S. | 9.27 | % | 17.51 | % | 12.73 | % | ||||||
Total Fund Operating Expenses1 | 0.45 | % |
1. The expense ratio is taken from the Fund’s most recent prospectus dated January 31, 2017.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more of less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. All performance is historical and includes reinvestment of dividends and capital gains. Performance data current to the most recent month end may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477).
The chart illustrates the performance of a hypothetical $10,000 investment made on November 18, 2015, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends.
The unmanaged indices do not reflect fees and are not available for direct investment.
4
Etho Climate Leadership U.S. ETF
Top Ten Holdings*
% of Total | |||
Security | Investments† | ||
1 | NVIDIA Corporation | 0.67% | |
2 | Charter Communications, Inc. | 0.48% | |
3 | GenMark Diagnostics, Inc. | 0.42% | |
4 | United Rentals, Inc. | 0.41% | |
5 | Applied Materials, Inc. | 0.40% | |
6 | Newell Brands, Inc. | 0.39% | |
7 | SLM Corporation | 0.38% | |
8 | Centene Corporation | 0.38% | |
9 | Incyte Corporation | 0.36% | |
10 | Albemarle Corporation | 0.36% | |
Top Ten Holdings = 4.25% of Total Investments† | |||
* Current Fund holdings may not be indicative of future Fund holdings. | |||
† Percentage of total investments less cash. |
5
Etho Climate Leadership U.S. ETF
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility.
The Etho Climate Leadership U.S. ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Etho Climate Leadership Index – US (the “Index”).
Funds that invest in smaller companies may experience greater volatility. The Fund’s return may not match or achieve a high degree of correlation with the return of the Etho Climate Leadership Index – US (ticker: ETHO 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.
The Etho Climate Leadership Index™ (ECLI™) is an index of more than 350 companies listed on the NYSE Arca stock exchange that have the smallest carbon footprint in their industries.
S&P 500: The S&P 500 Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices.
6
Etho Climate Leadership U.S. ETF
PORTFOLIO ALLOCATIONS
As of March 31, 2017 (Unaudited)
As of March 31, 2017 (Unaudited)
Etho Climate | ||||
Leadership | ||||
U.S. ETF | ||||
As a percent of Net Assets: | ||||
Bermuda | 2.3 | % | ||
Ireland | 2.1 | |||
Jersey | 0.3 | |||
Netherlands | 0.3 | |||
Switzerland | 0.9 | |||
United Kingdom | 0.3 | |||
United States | 92.9 | |||
Virgin Islands (UK) | 0.2 | |||
Mutual Funds | 0.2 | |||
Short-Term and other Net Assets (Liabilities) | 0.5 | |||
100.0 | % |
7
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited)
March 31, 2017 (Unaudited)
Shares | Market Value | |||||||
COMMON STOCKS - 99.3% | ||||||||
Bermuda - 2.3% | ||||||||
Insurance - 1.7% | ||||||||
Arch Capital Group Ltd. (a) | 394 | $ | 37,339 | |||||
Axis Capital Holdings Ltd. | 504 | 33,783 | ||||||
Everest Re Group Ltd. | 143 | 33,435 | ||||||
RenaissanceRe Holdings Ltd. | 240 | 34,716 | ||||||
Validus Holdings Ltd. | 611 | 34,454 | ||||||
White Mountains Insurance Group Ltd. | 35 | 30,796 | ||||||
Total Insurance | 204,523 | |||||||
IT Services - 0.2% | ||||||||
Genpact Ltd. | 1,013 | 25,082 | ||||||
Professional Services - 0.3% | ||||||||
IHS Markit Ltd. (a) | 871 | 36,538 | ||||||
Specialty Retail - 0.1% | ||||||||
Signet Jewelers Ltd. | 244 | 16,902 | ||||||
Total Bermuda | 283,045 | |||||||
Ireland - 2.1% | ||||||||
Auto Components - 0.0% | ||||||||
Adient PLC - ADR | 72 | 5,232 | ||||||
Biotechnology - 0.4% | ||||||||
Alkermes PLC (a) | 798 | 46,683 | ||||||
Building Products - 0.3% | ||||||||
Allegion PLC | 429 | 32,475 | ||||||
Health Care Equipment & Supplies - 0.2% | ||||||||
Medtronic PLC | 362 | 29,163 | ||||||
IT Services - 0.3% | ||||||||
Accenture PLC | 269 | 32,248 | ||||||
Machinery - 0.3% | ||||||||
Pentair PLC | 531 | 33,336 | ||||||
Pharmaceuticals - 0.6% | ||||||||
Allergan PLC | 94 | 22,458 | ||||||
Endo International PLC (a) | 607 | 6,774 | ||||||
Jazz Pharmaceuticals PLC (a) | 212 | 30,768 | ||||||
Total Pharmaceuticals | 60,000 | |||||||
Total Ireland | 239,137 | |||||||
Jersey - 0.3% | ||||||||
Auto Components - 0.3% | ||||||||
Delphi Automotive PLC | 390 | 31,391 |
The accompanying notes are an integral part of these financial statements.
8
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Netherlands - 0.3% | ||||||||
Electrical Equipment - 0.3% | ||||||||
Sensata Technologies Holding NV (a) | 747 | $ | 32,621 | |||||
Switzerland - 0.9% | ||||||||
Electronic Equipment, Instruments & Components - 0.3% | ||||||||
TE Connectivity Ltd. | 453 | 33,771 | ||||||
Household Durables - 0.3% | ||||||||
Garmin Ltd. | 693 | 35,419 | ||||||
Insurance - 0.3% | ||||||||
Allied World Assurance Co. Holdings AG | 795 | 42,215 | ||||||
Total Switzerland | 111,405 | |||||||
United Kingdom - 0.3% | ||||||||
Insurance - 0.3% | ||||||||
Aon PLC | 276 | 32,758 | ||||||
United States - 92.9% | ||||||||
Air Freight & Logistics - 0.3% | ||||||||
CH Robinson Worldwide, Inc. | 384 | 29,679 | ||||||
Airlines - 0.5% | ||||||||
JetBlue Airways Corporation (a) | 1,236 | 25,474 | ||||||
Southwest Airlines Co. | 657 | 35,320 | ||||||
Total Airlines | 60,794 | |||||||
Auto Components - 0.8% | ||||||||
Autoliv, Inc. | 245 | 25,054 | ||||||
BorgWarner, Inc. | 771 | 32,220 | ||||||
Gentex Corporation | 1,747 | 37,264 | ||||||
Total Auto Components | 94,538 | |||||||
Automobiles - 0.3% | ||||||||
Tesla, Inc. (a) | 132 | 36,736 | ||||||
Banks - 4.2% | ||||||||
Associated Banc-Corp | 1,474 | 35,966 | ||||||
BancorpSouth, Inc. | 1,255 | 37,964 | ||||||
Bank of Hawaii Corporation | 405 | 33,356 | ||||||
Citizens Financial Group, Inc. | 1,274 | 44,016 | ||||||
Commerce Bancshares, Inc. | 632 | 35,493 | ||||||
First Citizens BancShares, Inc. | 107 | 35,885 | ||||||
First Republic Bank | 408 | 38,274 | ||||||
Fulton Financial Corporation | 2,060 | 36,771 | ||||||
M&T Bank Corporation | 250 | 38,683 |
The accompanying notes are an integral part of these financial statements.
9
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
People’s United Financial, Inc. | 1,782 | $ | 32,432 | |||||
SVB Financial Group (a) | 263 | 48,941 | ||||||
Synovus Financial Corporation | 946 | 38,805 | ||||||
Valley National Bancorp | 2,881 | 33,996 | ||||||
Total Banks | 490,582 | |||||||
Beverages - 0.5% | ||||||||
Dr Pepper Snapple Group, Inc. | 305 | 29,865 | ||||||
Monster Beverage Corporation (a) | 634 | 29,272 | ||||||
Total Beverages | 59,137 | |||||||
Biotechnology - 2.3% | ||||||||
Agios Pharmaceuticals, Inc. (a) ^ | 567 | 33,113 | ||||||
Alexion Pharmaceuticals, Inc. (a) | 181 | 21,944 | ||||||
Alnylam Pharmaceuticals, Inc. (a) | 450 | 23,063 | ||||||
BioMarin Pharmaceutical, Inc. (a) | 307 | 26,948 | ||||||
Celgene Corporation (a) | 260 | 32,352 | ||||||
Incyte Corporation (a) | 369 | 49,325 | ||||||
Ionis Pharmaceuticals, Inc. (a) | 652 | 26,210 | ||||||
Regeneron Pharmaceuticals, Inc. (a) | 66 | 25,576 | ||||||
Vertex Pharmaceuticals, Inc. (a) | 298 | 32,586 | ||||||
Total Biotechnology | 271,117 | |||||||
Building Products - 2.6% | ||||||||
Advanced Drainage Systems, Inc. | 1,245 | 27,266 | ||||||
AO Smith Corporation | 748 | 38,268 | ||||||
Apogee Enterprises, Inc. | 665 | 39,640 | ||||||
Fortune Brands Home & Security, Inc. | 531 | 32,311 | ||||||
Johnson Controls International plc | 724 | 30,495 | ||||||
Lennox International, Inc. | 212 | 35,468 | ||||||
Masco Corporation | 943 | 32,053 | ||||||
Simpson Manufacturing Co., Inc. | 753 | 32,447 | ||||||
Trex Co., Inc. (a) | 603 | 41,841 | ||||||
Total Building Products | 309,789 | |||||||
Capital Markets - 4.2% | ||||||||
BlackRock, Inc. | 84 | 32,215 | ||||||
Charles Schwab Corporation | 989 | 40,362 | ||||||
CME Group, Inc. | 299 | 35,521 | ||||||
E*TRADE Financial Corporation (a) | 1,065 | 37,158 | ||||||
FactSet Research Systems, Inc. | 173 | 28,529 | ||||||
Interactive Brokers Group, Inc. | 703 | 24,408 | ||||||
Intercontinental Exchange, Inc. | 584 | 34,964 | ||||||
Moody’s Corporation | 289 | 32,380 | ||||||
Morningstar, Inc. | 342 | 26,881 | ||||||
MSCI, Inc. | 390 | 37,904 |
The accompanying notes are an integral part of these financial statements.
10
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Nasdaq, Inc. | 425 | $ | 29,516 | |||||
S&P Global, Inc. | 290 | 37,915 | ||||||
SEI Investments Co. | 671 | 33,845 | ||||||
T Rowe Price Group, Inc. | 383 | 26,101 | ||||||
TD Ameritrade Holding Corporation | 871 | 33,847 | ||||||
Total Capital Markets | 491,546 | |||||||
Chemicals - 2.8% | ||||||||
Albemarle Corporation | 466 | 49,229 | ||||||
Celanese Corporation | 428 | 38,456 | ||||||
Ecolab, Inc. | 257 | 32,212 | ||||||
International Flavors & Fragrances, Inc. | 258 | 34,193 | ||||||
PPG Industries, Inc. | 265 | 27,846 | ||||||
RPM International, Inc. | 643 | 35,384 | ||||||
Sherwin-Williams Co. | 99 | 30,709 | ||||||
Valspar Corporation | 342 | 37,941 | ||||||
Westlake Chemical Corporation | 600 | 39,630 | ||||||
Total Chemicals | 325,600 | |||||||
Commercial Services & Supplies - 1.3% | ||||||||
Brink’s Co. | 904 | 48,318 | ||||||
Cintas Corporation | 311 | 39,354 | ||||||
Copart, Inc. (a) | 678 | 41,989 | ||||||
Stericycle, Inc. (a) | 236 | 19,562 | ||||||
Total Commercial Services & Supplies | 149,223 | |||||||
Communications Equipment - 1.0% | ||||||||
Cisco Systems, Inc. | 1,022 | 34,544 | ||||||
F5 Networks, Inc. (a) | 268 | 38,209 | ||||||
Juniper Networks, Inc. | 1,086 | 30,223 | ||||||
Palo Alto Networks, Inc. (a) | 175 | 19,719 | ||||||
Total Communications Equipment | 122,695 | |||||||
Construction & Engineering - 0.9% | ||||||||
AECOM (a) | 913 | 32,494 | ||||||
EMCOR Group, Inc. | 563 | 35,441 | ||||||
Jacobs Engineering Group, Inc. | 649 | 35,876 | ||||||
Total Construction & Engineering | 103,811 | |||||||
Construction Materials - 0.6% | ||||||||
Martin Marietta Materials, Inc. | 176 | 38,412 | ||||||
Vulcan Materials Co. | 264 | 31,807 | ||||||
Total Construction Materials | 70,219 | |||||||
Consumer Finance - 0.4% | ||||||||
SLM Corporation (a) | 4,309 | 52,139 | ||||||
Containers & Packaging - 0.7% | ||||||||
AptarGroup, Inc. | 361 | 27,793 |
The accompanying notes are an integral part of these financial statements.
11
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Avery Dennison Corporation | 404 | $ | 32,563 | |||||
Sealed Air Corporation | 593 | 25,843 | ||||||
Total Containers & Packaging | 86,199 | |||||||
Distributors - 0.5% | ||||||||
Genuine Parts Co. | 292 | 26,984 | ||||||
LKQ Corporation (a) | 889 | 26,021 | ||||||
Total Distributors | 53,005 | |||||||
Diversified Consumer Services - 0.2% | ||||||||
H&R Block, Inc. | 989 | 22,994 | ||||||
Diversified Financial Services - 0.3% | ||||||||
Voya Financial, Inc. | 864 | 32,797 | ||||||
Diversified Telecommunication Services - 0.3% | ||||||||
Zayo Group Holdings, Inc. (a) | 1,094 | 35,993 | ||||||
Electric Utilities - 0.8% | ||||||||
Eversource Energy | 493 | 28,979 | ||||||
Hawaiian Electric Industries, Inc. | 907 | 30,212 | ||||||
NextEra Energy, Inc. | 241 | 30,937 | ||||||
Total Electric Utilities | 90,128 | |||||||
Electrical Equipment - 1.6% | ||||||||
Acuity Brands, Inc. | 126 | 25,704 | ||||||
AMETEK, Inc. | 565 | 30,555 | ||||||
Emerson Electric Co. | 534 | 31,965 | ||||||
FuelCell Energy, Inc. (a) | 3,979 | 5,471 | ||||||
Generac Holdings, Inc. (a) | 753 | 28,072 | ||||||
Hubbell, Inc. | 270 | 32,414 | ||||||
Rockwell Automation, Inc. | 253 | 39,395 | ||||||
Total Electrical Equipment | 193,576 | |||||||
Electronic Equipment, Instruments & Components - 4.1% | ||||||||
Amphenol Corporation | 479 | 34,090 | ||||||
Badger Meter, Inc. | 801 | 29,437 | ||||||
Corning, Inc. | 1,406 | 37,962 | ||||||
Dolby Laboratories, Inc. | 674 | 35,324 | ||||||
IPG Photonics Corporation (a) | 302 | 36,451 | ||||||
Itron, Inc. (a) | 644 | 39,091 | ||||||
Keysight Technologies, Inc. (a) | 997 | 36,032 | ||||||
Littelfuse, Inc. | 233 | 37,259 | ||||||
National Instruments Corporation | 920 | 29,955 | ||||||
OSI Systems, Inc. (a) | 431 | 31,459 | ||||||
Trimble, Inc. (a) | 1,076 | 34,443 | ||||||
Universal Display Corporation | 522 | 44,944 | ||||||
VeriFone Systems, Inc. (a) | 1,028 | 19,254 | ||||||
Zebra Technologies Corporation (a) | 401 | 36,591 |
The accompanying notes are an integral part of these financial statements.
12
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Total Electronic Equipment, Instruments & Components | $ | 482,292 | ||||||
Food & Staples Retailing - 1.2% | ||||||||
Costco Wholesale Corporation | 184 | 30,855 | ||||||
CVS Health Corporation | 279 | 21,902 | ||||||
PriceSmart, Inc. | 346 | 31,901 | ||||||
Walgreens Boots Alliance, Inc. | 346 | 28,735 | ||||||
Whole Foods Market, Inc. | 815 | 24,222 | ||||||
Total Food & Staples Retailing | 137,615 | |||||||
Food Products - 1.3% | ||||||||
Hain Celestial Group, Inc. (a) | 689 | 25,631 | ||||||
Kraft Heinz Co. | 362 | 32,873 | ||||||
McCormick & Co., Inc. | 294 | 28,680 | ||||||
Mead Johnson Nutrition Co. | 362 | 32,247 | ||||||
Pinnacle Foods, Inc. | 613 | 35,475 | ||||||
Total Food Products | 154,906 | |||||||
Health Care Equipment & Supplies - 1.3% | ||||||||
Danaher Corporation | 301 | 25,745 | ||||||
Edwards Lifesciences Corporation (a) | 310 | 29,162 | ||||||
GenMark Diagnostics, Inc. (a) | 4,429 | 56,779 | ||||||
Intuitive Surgical, Inc. (a) | 47 | 36,024 | ||||||
Total Health Care Equipment & Supplies | 147,710 | |||||||
Health Care Providers & Services - 3.6% | ||||||||
Aetna, Inc. ^ | 248 | 31,632 | ||||||
AMN Healthcare Services, Inc. (a) | 850 | 34,510 | ||||||
Anthem, Inc. | 206 | 34,068 | ||||||
Centene Corporation (a) | 728 | 51,877 | ||||||
Cigna Corporation | 193 | 28,273 | ||||||
Henry Schein, Inc. (a) | 162 | 27,535 | ||||||
Humana, Inc. | 148 | 30,509 | ||||||
Laboratory Corporation of America Holdings (a) | 242 | 34,720 | ||||||
MEDNAX, Inc. (a) | 408 | 28,307 | ||||||
Quest Diagnostics, Inc. | 394 | 38,687 | ||||||
UnitedHealth Group, Inc. | 225 | 36,902 | ||||||
VCA, Inc. (a) | 500 | 45,750 | ||||||
Total Health Care Providers & Services | 422,770 | |||||||
Health Care Technology - 0.5% | ||||||||
Allscripts Healthcare Solutions, Inc. (a) | 2,061 | 26,133 | ||||||
Cerner Corporation (a) | 514 | 30,249 | ||||||
Total Health Care Technology | 56,382 | |||||||
Hotels, Restaurants & Leisure - 0.9% | ||||||||
Chipotle Mexican Grill, Inc. (a) | 51 | 22,722 | ||||||
Choice Hotels International, Inc. | 520 | 32,552 |
The accompanying notes are an integral part of these financial statements.
13
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
International Speedway Corporation | 755 | $ | 27,897 | |||||
Starbucks Corporation | 472 | 27,560 | ||||||
Total Hotels, Restaurants & Leisure | 110,731 | |||||||
Household Durables - 2.5% | ||||||||
DR Horton, Inc. | 970 | 32,311 | ||||||
KB Home | 2,017 | 40,098 | ||||||
Lennar Corporation | 593 | 30,356 | ||||||
Newell Brands, Inc. | 1,125 | 53,066 | ||||||
NVR, Inc. (a) | 17 | 35,817 | ||||||
Tempur Sealy International, Inc. (a) | 433 | 20,117 | ||||||
Toll Brothers, Inc. (a) | 949 | 34,268 | ||||||
TopBuild Corporation (a) | 947 | 44,509 | ||||||
Total Household Durables | 290,542 | |||||||
Household Products - 0.8% | ||||||||
Church & Dwight Co., Inc. | 603 | 30,072 | ||||||
Colgate-Palmolive Co. | 407 | 29,788 | ||||||
Procter & Gamble Co. | 333 | 29,920 | ||||||
Total Household Products | 89,780 | |||||||
Independent Power and Renewable Electricity Producers - | ||||||||
NextEra Energy Partners LP | 30,504 | 35,946 | ||||||
NRG Yield, Inc. | 2,161 | 37,580 | ||||||
Ormat Technologies, Inc. | 689 | 39,327 | ||||||
Pattern Energy Group, Inc. | 1,523 | 30,658 | ||||||
Total Independent Power and Renewable Electricity Producers | 143,511 | |||||||
Industrial Conglomerates - 1.1% | ||||||||
3M Co. | 172 | 32,909 | ||||||
Carlisle Cos, Inc. | 291 | 30,965 | ||||||
General Electric Co. | 913 | 27,207 | ||||||
Roper Technologies, Inc. | 157 | 32,419 | ||||||
Total Industrial Conglomerates | 123,500 | |||||||
Insurance - 2.5% | ||||||||
Alleghany Corporation (a) | 56 | 34,421 | ||||||
Brown & Brown, Inc. | 809 | 33,751 | ||||||
Cincinnati Financial Corporation | 430 | 31,076 | ||||||
Markel Corporation (a) | 31 | 30,252 | ||||||
Marsh & McLennan Cos, Inc. | 476 | 35,172 | ||||||
MBIA, Inc. (a) | 3,031 | 25,673 | ||||||
Torchmark Corporation | 507 | 39,059 | ||||||
Travelers Cos, Inc. | 249 | 30,014 | ||||||
XL Group Ltd | 781 | 31,131 | ||||||
Total Insurance | 290,549 | |||||||
Internet & Direct Marketing Retail - 1.7% |
The accompanying notes are an integral part of these financial statements.
14
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Amazon.com, Inc. (a) | 48 | $ | 42,554 | |||||
Expedia, Inc. | 258 | 32,552 | ||||||
Liberty Expedia Holdings, Inc. (a) | 285 | 12,962 | ||||||
Liberty Ventures (a) | 427 | 18,993 | ||||||
Netflix, Inc. (a) | 283 | 41,830 | ||||||
Priceline Group, Inc. (a) | 21 | 37,379 | ||||||
TripAdvisor, Inc. (a) | 413 | 17,825 | ||||||
Total Internet & Direct Marketing Retail | 204,095 | |||||||
Internet Software & Services - 1.4% | ||||||||
Alphabet, Inc. (a) | 39 | 32,353 | ||||||
CommerceHub, Inc. - Series A (a) | 71 | 1,099 | ||||||
CommerceHub, Inc. - Series C (a) | 142 | 2,205 | ||||||
Facebook, Inc. (a) | 256 | 36,365 | ||||||
Twitter, Inc. (a) | 1,412 | 21,109 | ||||||
VeriSign, Inc. (a) | 308 | 26,830 | ||||||
Zillow Group, Inc. (a) | 1,149 | 38,687 | ||||||
Total Internet Software & Services | 158,648 | |||||||
IT Services - 3.9% | ||||||||
Alliance Data Systems Corporation | 123 | 30,627 | ||||||
Automatic Data Processing, Inc. | 320 | 32,765 | ||||||
Broadridge Financial Solutions, Inc. | 479 | 32,548 | ||||||
Cognizant Technology Solutions Corporation (a) | 475 | 28,272 | ||||||
CoreLogic, Inc. (a) | 792 | 32,250 | ||||||
Fidelity National Information Services, Inc. | 455 | 36,227 | ||||||
Fiserv, Inc. (a) | 280 | 32,287 | ||||||
FleetCor Technologies, Inc. (a) | 191 | 28,923 | ||||||
Global Payments, Inc. | 447 | 36,064 | ||||||
MasterCard, Inc. | 308 | 34,641 | ||||||
Paychex, Inc. | 526 | 30,981 | ||||||
Total System Services, Inc. | 607 | 32,450 | ||||||
Vantiv, Inc. (a) | 514 | 32,958 | ||||||
Visa, Inc. | 378 | 33,593 | ||||||
Total IT Services | 454,586 | |||||||
Leisure Products - 0.3% | ||||||||
Hasbro, Inc. | 350 | 34,937 | ||||||
Life Sciences Tools & Services - 0.8% | ||||||||
Bio-Techne Corporation | 293 | 29,783 | ||||||
Illumina, Inc. (a) | 167 | 28,497 | ||||||
Waters Corporation (a) | 211 | 32,982 | ||||||
Total Life Sciences Tools & Services | 91,262 | |||||||
Machinery - 4.8% | ||||||||
Donaldson Co., Inc. | 833 | 37,918 |
The accompanying notes are an integral part of these financial statements.
15
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Energy Recovery, Inc. (a) | 3,157 | $ | 26,266 | |||||
Flowserve Corporation | 600 | 29,052 | ||||||
Fortive Corp. | 151 | 9,093 | ||||||
Graco, Inc. | 331 | 31,160 | ||||||
IDEX Corporation | 349 | 32,635 | ||||||
Illinois Tool Works, Inc. | 281 | 37,224 | ||||||
ITT, Inc. | 727 | 29,822 | ||||||
Lincoln Electric Holdings, Inc. | 474 | 41,173 | ||||||
Lindsay Corporation | 367 | 32,340 | ||||||
Snap-on, Inc. | 178 | 30,023 | ||||||
Stanley Black & Decker, Inc. | 277 | 36,805 | ||||||
Tennant Co. | 528 | 38,359 | ||||||
Toro Co. | 665 | 41,537 | ||||||
WABCO Holdings, Inc. (a) | 271 | 31,821 | ||||||
Wabtec Corporation | 352 | 27,456 | ||||||
Watts Water Technologies, Inc. | 509 | 31,736 | ||||||
Xylem, Inc. | 709 | 35,606 | ||||||
Total Machinery | 580,026 | |||||||
Media - 2.7% | ||||||||
Charter Communications, Inc. (a) | 200 | 65,464 | ||||||
DISH Network Corporation (a) | 543 | 34,475 | ||||||
Liberty Braves Group (a) | 71 | 1,700 | ||||||
Liberty Broadband Corporation (a) | 513 | 44,323 | ||||||
Liberty Media Corporation (a) | 178 | 5,821 | ||||||
Liberty SiriusXM Group (a) | 712 | 27,711 | ||||||
Scripps Networks Interactive, Inc. | 425 | 33,307 | ||||||
Time Warner, Inc. | 394 | 38,498 | ||||||
Twenty-First Century Fox, Inc. | 971 | 30,858 | ||||||
Walt Disney Co. | 275 | 31,182 | ||||||
Total Media | 313,339 | |||||||
Metals & Mining - 1.4% | ||||||||
Carpenter Technology Corporation | 801 | 29,877 | ||||||
Commercial Metals Co. | 1,689 | 32,311 | ||||||
Compass Minerals International, Inc. | 382 | 25,919 | ||||||
Nucor Corporation | 617 | 36,847 | ||||||
Reliance Steel & Aluminum Co. | 419 | 33,528 | ||||||
Total Metals & Mining | 158,482 | |||||||
Multiline Retail - 0.5% | ||||||||
Dollar General Corporation | 366 | 25,521 | ||||||
Dollar Tree, Inc. (a) | 352 | 27,618 | ||||||
Total Multiline Retail | 53,139 | |||||||
Multi-Utilities - 0.6% |
The accompanying notes are an integral part of these financial statements.
16
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
CenterPoint Energy, Inc. | 1,418 | $ | 39,095 | |||||
Consolidated Edison, Inc. | 387 | 30,054 | ||||||
Total Multi-Utilities | 69,149 | |||||||
Personal Products - 0.2% | ||||||||
Estee Lauder Cos, Inc. | 298 | 25,267 | ||||||
Pharmaceuticals - 0.4% | ||||||||
Bristol-Myers Squibb Co. | 414 | 22,513 | ||||||
Zoetis, Inc. | 661 | 35,278 | ||||||
Total Pharmaceuticals | 57,791 | |||||||
Professional Services - 1.0% | ||||||||
Dun & Bradstreet Corporation | 275 | 29,684 | ||||||
Equifax, Inc. | 257 | 35,142 | ||||||
Nielsen Holdings PLC | 535 | 22,101 | ||||||
Verisk Analytics, Inc. (a) | 355 | 28,805 | ||||||
Total Professional Services | 115,732 | |||||||
Real Estate Investment Trusts (REITs) - 4.2% | ||||||||
AvalonBay Communities, Inc. | 153 | 28,091 | ||||||
Colony NorthStar, Inc. | 2,622 | 33,850 | ||||||
Crown Castle International Corporation | 323 | 30,507 | ||||||
Digital Realty Trust, Inc. | 336 | 35,747 | ||||||
Equinix, Inc. | 92 | 36,834 | ||||||
Equity Residential | 398 | 24,764 | ||||||
Essex Property Trust, Inc. | 124 | 28,710 | ||||||
Extra Space Storage, Inc. | 333 | 24,772 | ||||||
Federal Realty Investment Trust | 186 | 24,831 | ||||||
Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 1,543 | 31,169 | ||||||
Kimco Realty Corporation | 1,012 | 22,355 | ||||||
Prologis, Inc. | 671 | 34,811 | ||||||
Realty Income Corporation | 482 | 28,693 | ||||||
Regency Centers Corporation | 378 | 25,095 | ||||||
SBA Communications Corp. (a) | 281 | 33,824 | ||||||
Simon Property Group, Inc. | 139 | 23,912 | ||||||
UDR, Inc. | 772 | 27,993 | ||||||
Total Real Estate Investment Trusts (REITs) | 495,958 | |||||||
Real Estate Management & Development - 0.8% | ||||||||
CBRE Group, Inc. (a) | 968 | 33,677 | ||||||
Jones Lang LaSalle, Inc. | 239 | 26,637 | ||||||
St. Joe Co. (a) | 1,665 | 28,388 | ||||||
Total Real Estate Management & Development | 88,702 | |||||||
Road & Rail - 0.3% | ||||||||
Avis Budget Group, Inc. (a) | 961 | 28,427 | ||||||
Hertz Global Holdings, Inc. (a) | 506 | 8,875 |
The accompanying notes are an integral part of these financial statements.
17
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Total Road & Rail | $ | 37,302 | ||||||
Semiconductors & Semiconductor Equipment - 6.5% | ||||||||
Analog Devices, Inc. | 487 | 39,910 | ||||||
Applied Materials, Inc. | 1,406 | 54,692 | ||||||
Cypress Semiconductor Corporation | 3,219 | 44,293 | ||||||
First Solar, Inc. (a) | 391 | 10,596 | ||||||
Integrated Device Technology, Inc. (a) | 1,305 | 30,889 | ||||||
Intel Corporation | 894 | 32,247 | ||||||
KLA-Tencor Corporation | 401 | 38,123 | ||||||
Lam Research Corporation | 364 | 46,722 | ||||||
Maxim Integrated Products, Inc. | 812 | 36,508 | ||||||
Microchip Technology, Inc. | 577 | 42,571 | ||||||
NVIDIA Corporation | 841 | 91,609 | ||||||
ON Semiconductor Corporation (a) | 3,004 | 46,532 | ||||||
Power Integrations, Inc. | 562 | 36,952 | ||||||
QUALCOMM, Inc. | 520 | 29,817 | ||||||
Rambus, Inc. (a) | 2,072 | 27,226 | ||||||
Skyworks Solutions, Inc. | 375 | 36,743 | ||||||
SunPower Corporation (a) | 1,117 | 6,814 | ||||||
Teradyne, Inc. | 1,365 | 42,452 | ||||||
Texas Instruments, Inc. | 496 | 39,958 | ||||||
Xilinx, Inc. | 585 | 33,866 | ||||||
Total Semiconductors & Semiconductor Equipment | 768,520 | |||||||
Software - 3.5% | ||||||||
Activision Blizzard, Inc. | 879 | 43,828 | ||||||
Adobe Systems, Inc. (a) | 318 | 41,381 | ||||||
ANSYS, Inc. (a) | 309 | 33,023 | ||||||
Autodesk, Inc. (a) | 465 | 40,209 | ||||||
FireEye, Inc. (a) | 1,448 | 18,259 | ||||||
Intuit, Inc. | 275 | 31,897 | ||||||
Red Hat, Inc. (a) | 404 | 34,946 | ||||||
salesforce.com, Inc. (a) | 384 | 31,676 | ||||||
ServiceNow, Inc. (a) | 465 | 40,674 | ||||||
Splunk, Inc. (a) | 580 | 36,128 | ||||||
Tableau Software, Inc. (a) | 611 | 30,275 | ||||||
Workday, Inc. (a) | 373 | 31,063 | ||||||
Total Software | 413,359 | |||||||
Specialty Retail - 3.3% | ||||||||
Advance Auto Parts, Inc. ^ | 179 | 26,539 | ||||||
AutoZone, Inc. (a) | 35 | 25,307 | ||||||
Foot Locker, Inc. | 439 | 32,842 | ||||||
L Brands, Inc. | 323 | 15,213 |
The accompanying notes are an integral part of these financial statements.
18
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
Lowe’s Cos, Inc. | 387 | $ | 31,815 | |||||
O’Reilly Automotive, Inc. (a) | 103 | 27,794 | ||||||
Ross Stores, Inc. | 473 | 31,157 | ||||||
The Home Depot, Inc. | 218 | 32,009 | ||||||
Tiffany & Co. | 389 | 37,072 | ||||||
TJX Cos, Inc. | 362 | 28,627 | ||||||
Tractor Supply Co. | 318 | 21,932 | ||||||
Ulta Beauty, Inc. (a) | 164 | 46,777 | ||||||
Williams-Sonoma, Inc. | 481 | 25,791 | ||||||
Total Specialty Retail | 382,875 | |||||||
Technology Hardware, Storage & Peripherals - 1.4% | ||||||||
3D Systems Corporation (a) | 2,121 | 31,730 | ||||||
Apple, Inc. | 270 | 38,788 | ||||||
NetApp, Inc. | 1,025 | 42,896 | ||||||
Western Digital Corporation | 561 | 46,300 | ||||||
Total Technology Hardware, Storage & Peripherals | 159,714 | |||||||
Textiles, Apparel & Luxury Goods - 1.0% | ||||||||
Hanesbrands, Inc. | 934 | 19,390 | ||||||
Lululemon Athletica, Inc. (a) | 436 | 22,615 | ||||||
NIKE, Inc. | 461 | 25,692 | ||||||
Ralph Lauren Corporation | 278 | 22,690 | ||||||
Under Armour, Inc. (a) | 328 | 6,002 | ||||||
Under Armour, Inc. (a) | 325 | 6,429 | ||||||
VF Corporation | 419 | 23,032 | ||||||
Total Textiles, Apparel & Luxury Goods | 125,850 | |||||||
Thrifts & Mortgage Finance - 1.1% | ||||||||
Capitol Federal Financial, Inc. | 2,175 | 31,820 | ||||||
New York Community Bancorp, Inc. | 1,753 | 24,489 | ||||||
TFS Financial Corporation | 1,626 | 27,024 | ||||||
Washington Federal, Inc. | 1,221 | 40,416 | ||||||
Total Thrifts & Mortgage Finance | 123,749 | |||||||
Trading Companies & Distributors - 2.3% | ||||||||
Air Lease Corporation ^ | 869 | 33,674 | ||||||
Fastenal Co. | 596 | 30,694 | ||||||
GATX Corporation | 546 | 33,284 | ||||||
Herc Holdings, Inc. (a) | 169 | 8,262 | ||||||
MSC Industrial Direct Co., Inc. | 389 | 39,974 | ||||||
United Rentals, Inc. (a) | 452 | 56,522 | ||||||
WESCO International, Inc. (a) | 541 | 37,627 | ||||||
WW Grainger, Inc. | 122 | 28,397 | ||||||
Total Trading Companies & Distributors | 268,434 | |||||||
Water Utilities - 0.8% |
The accompanying notes are an integral part of these financial statements.
19
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
American States Water Co. | 664 | $ | 29,415 | |||||
American Water Works Co., Inc. | 408 | 31,731 | ||||||
Aqua America, Inc. | 876 | 28,163 | ||||||
Total Water Utilities | 89,309 | |||||||
Total United States | 10,902,810 | |||||||
Virgin Islands (UK) - 0.2% | ||||||||
Textiles, Apparel & Luxury Goods - 0.2% | ||||||||
Michael Kors Holdings Ltd. (a) | 471 | 17,950 | ||||||
TOTAL COMMON STOCKS (Cost $10,731,373) | 11,651,117 | |||||||
MUTUAL FUNDS - 0.2% | ||||||||
Fifth Street Finance Corporation | 5,729 | 26,468 | ||||||
TOTAL MUTUAL FUNDS (Cost $29,494) | 26,468 | |||||||
SHORT-TERM INVESTMENTS - 0.5% | ||||||||
Money Market Funds - 0.5% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 54,986 | 54,986 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $54,986) | 54,986 | |||||||
INVESTMENTS PURCHASED WITH SECURITIES | ||||||||
LENDING COLLATERAL - 16.6% | ||||||||
Investment Companies - 16.6% | ||||||||
Mount Vernon Liquid Assets Portfolio, LLC, 1.17% (b) + | 1,945,140 | 1,945,140 | ||||||
TOTAL INVESTMENTS PURCHASED WITH SECURITIES | ||||||||
LENDING COLLATERAL (Cost $1,945,140) | 1,945,140 | |||||||
Total Investments (Cost $12,760,993) - 116.6% | 13,677,711 | |||||||
Liabilities in Excess of Other Assets - (16.6)% | (1,940,213 | ) | ||||||
TOTAL NET ASSETS - 100.0% | $ | 11,737,498 |
The accompanying notes are an integral part of these financial statements.
20
Etho Climate Leadership U.S. ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Percentages are stated as a percent of net assets.
ADR American Depositary Receipt
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
^ | All or a portion of this security is out on loan as of March 31, 2017. Total value of securities out on loan is $1,900,711. |
+ | Investments purchased with cash proceeds from securities lending. Total cash collateral has a value of $1,945,140 as of March 31, 2017. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
21
Etho Climate Leadership U.S. ETF
STATEMENT OF ASSETS AND LIABILITIES
As of March 31, 2017 (Unaudited)
Etho Climate | ||||
Leadership | ||||
U.S. ETF | ||||
ASSETS | ||||
Investments in securities, at fair value* | $ | 13,677,711 | ||
Cash | 8 | |||
Dividends and interest receivable | 8,678 | |||
Securities lending income receivable | 574 | |||
Total Assets | 13,686,971 | |||
LIABILITIES | ||||
Collateral received for securities loaned (Note 7) | 1,945,140 | |||
Management fees payable | 4,333 | |||
Total Liabilities | 1,949,473 | |||
Net Assets | $ | 11,737,498 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in Capital | $ | 10,779,940 | ||
Undistributed (accumulated) net investment income | 7,768 | |||
Accumulated net realized gain on investments | 33,072 | |||
Net unrealized appreciation on: | ||||
Investments in securities | 916,718 | |||
Net Assets | $ | 11,737,498 | ||
*Identified Cost: | ||||
Investments in unaffiliated securities | $ | 12,760,993 | ||
Shares Outstanding^ | 400,000 | |||
Net Asset Value, Offering and Redemption Price per Share | $ | 29.34 | ||
^ No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
22
Etho Climate Leadership U.S. ETF
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 2017 (Unaudited)
Etho Climate | ||||
Leadership | ||||
U.S. ETF | ||||
INVESTMENT INCOME | ||||
Income: | ||||
Dividends from unaffiliated securities | $ | 62,879 | ||
Interest | 30 | |||
Securities lending income | 3,349 | |||
Total Investment Income | 66,258 | |||
Expenses: | ||||
Management fees | 19,047 | |||
Total Expenses | �� | 19,047 | ||
Net Investment Income | 47,211 | |||
REALIZED & UNREALIZED GAIN ON INVESTMENTS | ||||
Net Realized Gain on: | ||||
Unaffiliated investments | 42,901 | |||
Net Change in Unrealized Appreciation of: | ||||
Unaffiliated investments | 702,492 | |||
Net Realized and Unrealized Gain on Investments | 745,393 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 792,604 |
The accompanying notes are an integral part of these financial statements.
23
Etho Climate Leadership U.S. ETF
STATEMENTS OF CHANGES IN NET ASSETS
Six Months | ||||||||
Ended March | Period Ended | |||||||
31, 2017 | September 30, | |||||||
(Unaudited) | 2016* | |||||||
OPERATIONS | ||||||||
Net investment income | $ | 47,211 | $ | 28,916 | ||||
Net realized gain on investments and In-Kind Redemptions | 42,901 | 84,401 | ||||||
Net change in unrealized appreciation of investments | 702,492 | 214,226 | ||||||
Net increase in net assets resulting from operations | 792,604 | 327,543 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
From net investment income | (46,359) | (22,000) | ||||||
From Net Realized Gain | (40,845) | — | ||||||
Total Distributions to Shareholders | (87,204) | (22,000) | ||||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net increase in net assets derived from net change in outstanding shares (a) | 4,281,275 | 6,445,280 | ||||||
Net increase in net assets | $ | 4,986,675 | $ | 6,750,823 | ||||
NET ASSETS | ||||||||
Beginning of Period | 6,750,823 | — | ||||||
End of Period | $ | 11,737,498 | $ | 6,750,823 | ||||
Undistributed net investment income | $ | 7,768 | $ | 6,916 |
(a) Summary of share transactions is as follows:
Six Months Ended | ||||||||||||||||
March 31, 2017 | Period Ended | |||||||||||||||
(Unaudited) | September 30, 2016* | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares Sold | 150,000 | $ | 4,281,275 | 300,000 | $ | 7,688,910 | ||||||||||
Shares Redeemed | — | — | (50,000 | ) | (1,243,630) | |||||||||||
150,000 | $ | 4,281,275 | 250,000 | $ | 6,445,280 | |||||||||||
Beginning Shares | 250,000 | — | ||||||||||||||
Ending Shares | 400,000 | 250,000 |
*Fund commenced operations on November 18, 2015. The information presented is for the period from November 18, 2015 to September 30, 2016.
The accompanying notes are an integral part of these financial statements.
24
Etho Climate Leadership U.S. ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
Six Months Ended | Period Ended | |||||||
March 31, 2017 | September 30, | |||||||
(Unaudited) | 20161 | |||||||
Net Asset Value, Beginning of Period | $27.00 | $25.00 | ||||||
Income (Loss) from Investment Operations: | ||||||||
Net investment income 2 | 0.16 | 0.23 | ||||||
Net realized and unrealized gain on investments | 2.46 | 1.87 | ||||||
Total from investment operations | 2.62 | 2.10 | ||||||
Less Distributions: | ||||||||
Distributions from net investment income | (0.14) | (0.10) | ||||||
Distributions from net realized gain | (0.14) | — | ||||||
Total distributions | (0.28) | (0.10) | ||||||
Net asset value, end of period | $29.34 | $27.00 | ||||||
Total Return | 9.73 | %3 | 8.43 | %3 | ||||
Ratios/Supplemental Data: | ||||||||
Net assets at end of period (000’s) | $11,737 | $6,751 | ||||||
Expenses to Average Net Assets | 0.45 | %4 | 0.50 | %4 | ||||
Net Investment Income (Loss) to Average Net Assets | 1.12 | %4 | 1.04 | %4 | ||||
Portfolio Turnover Rate | 4 | %3 | 25 | %3 |
1 Commencement of operations on November 18, 2015.
2 Calculated based on average shares outstanding during the period.
3 Not annualized.
4 Annualized.
The accompanying notes are an integral part of these financial statements.
25
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
NOTE 1 – ORGANIZATION
Etho Climate Leadership U.S. ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Etho Climate Leadership Index™ (“the Index”). The Fund commenced operations on November 18, 2015.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in the Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from the Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and may be subject to customary brokerage commissions or fees.
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”).
A. | Security Valuation. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded on the valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. |
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of March 31, 2017, the Fund did not hold any fair valued securities. |
26
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
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.
The following table presents a summary of the Funds’ assets measured at fair value:
Etho Climate Leadership U.S. ETF | ||||||||||||||||
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 11,651,117 | $ | — | $ | — | $ | 11,651,117 | ||||||||
Mutual Funds | 26,468 | — | — | 26,468 | ||||||||||||
Short-Term Investments | 54,986 | — | — | 54,986 | ||||||||||||
Investments Purchased as Securities Lending Collateral* | — | — | — | 1,945,140 | ||||||||||||
Total Investments in Securities | $ | 11,732,571 | $ | — | $ | — | $ | 13,677,711 |
^ See Schedule of Investments for classifications by sector or country.
* | Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Statement of Assets and Liabilities. |
27
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
There were no transfers between Levels 1, 2 and 3 during the period ended March 31, 2017. Transfers between levels are recognized at the end of the reporting period.
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 2017 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.
C. | Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Income, including gains, from investments in foreign securities received by the Fund may be subject to income, withholding or other taxes imposed by foreign countries. |
D. | Foreign Currency Translations and Transactions. The Fund may engage in foreign currency transactions. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. For financial reporting purposes, the Fund does not isolate changes in the exchange rate of investment securities from the fluctuations arising from changes in the market prices of securities for unrealized gains and losses. However, for federal income tax purposes, the Fund does isolate and treat as ordinary income the effect of changes in foreign exchange rates on realized gains or losses from the sale of investment securities and payables and receivables arising from trade-date and settlement-date differences. |
E. | Distributions to Shareholders. Distributions to shareholders from net investment income, if any, are declared and paid by the Fund on a quarterly basis. Distributions to shareholders from net realized gains on securities of the Fund normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date. |
28
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
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 expense during the period. Actual results could differ from those estimates. |
G. | Share Valuation. The net asset value (“NAV”) per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding by the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share. |
H. | Guarantees and Indemnifications. In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. |
NOTE 3 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The “Derivatives and Hedging” Topic of the Codification (Accounting Standards Codification 815, formerly Statement of Financial Accounting Standards (“SFAS”) 133 and SFAS 161) requires enhanced disclosures about the Fund’s derivative and hedging activities, including how such activities are accounted for and their effect on the Fund’s financial position, performance and cash flows. The Fund did not use derivatives during the period ended March 31, 2017.
NOTE 4 – COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Fund to operate.
Under the Investment Advisory Agreement with the Fund, the Advisor has overall responsibility for the general management and administration of the Fund and arranges for sub-advisory, transfer agency, custody, fund administration, securities lending, and all other non-distribution related services necessary for the Fund to operate. The Advisor bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided the Fund pays the Advisor at an annual rate of 0.45% of the Fund’s average daily net assets. The Advisor has an agreement with, and is dependent on, a third party to pay the Fund’s expenses in excess of 0.45% of the Fund’s average daily net assets. Additionally, 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 Etho Climate Leadership U.S. (the “Sponsor”), under which the Sponsor agrees to sublicense the use of the Underlying Index to the Advisor. The Sponsor also provides marketing support for the Fund, including distributing marketing materials related to the Fund. Etho Climate Leadership U.S. is a privately held business focused on bringing exchange-traded investment products to investors in the U.S. The Sponsor does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Fund. Additionally, the Sponsor is not involved in the maintenance of the Underlying Index and does not otherwise act in the capacity of an index provider.
29
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
U.S. Bancorp Fund Services, LLC (the “Administrator”) provides fund accounting, fund administration, and transfer agency services to the Fund. The Advisor compensates the Administrator for these services under an administration agreement between the two parties.
The Advisor pays each independent Trustee a quarterly fee for service to the Fund. Each Trustee is also reimbursed by the Advisor for all reasonable out-of-pocket expenses incurred in connection with his duties as Trustee, including travel and related expenses incurred in attending Board meetings.
NOTE 5 – DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may pay compensation to the Distributor or any other distributor or financial institution with which the Trust has an agreement with respect to the Fund, with the amount of such compensation not to exceed an annual rate of 0.25% of each Fund’s average daily net assets. For the period ended March 31, 2017, the Fund did not incur any 12b-1 expenses.
NOTE 6 – PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the period ended March 31, 2017:
Purchases | Sales | |||||||
Etho Climate Leadership U.S. ETF | $ | 528,356 | $ | 375,494 |
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the period ended March 31, 2017:
Purchases In-Kind | Sales In-Kind | |||||||
Etho Climate Leadership U.S. ETF | $ | 4,220,707 | $ | — |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the determination of the Fund’s taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations for the period ended March 31, 2017.
30
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
NOTE 7 – SECURITIES LENDING
The Fund may lend up to 33 1/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and earn interest on the cash collateral. The amount of fees depends on a number of factors including the type of security and length of the loan. The Fund continues to receive interest payments or dividends on the securities loaned during the borrowing period. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the terms of the securities lending agreement to recall the securities from the borrower on demand. As of March 31, 2017, the Fund had loaned securities and received cash collateral for the loans. The cash collateral is invested by the Custodian in accordance with approved investment guidelines. Those guidelines require the cash collateral to be invested in readily marketable, high quality, short-term obligations; however, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. The Fund could also experience delays in recovering its securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Fund is indemnified from this risk by contract with the securities lending agent.
As of March 31, 2017, 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* | ||||||
Etho Climate Leadership U.S. ETF | $ | 1,900,711 | $ | 1,945,140 |
* The cash collateral received was invested in the Mount Vernon Securities Lending Prime Portfolio as shown on the Schedule of Investments, a money market fund with an overnight and continuous maturity.
Fees and interest income earned on collateral investments and recognized by the Fund during the period ended March 31, 2017, were as follows:
Fees and Interest Income Earned
Fund | Interest income earned net of applicable fees | |||
Etho Climate Leadership U.S. ETF | $ | 3,349 |
Offsetting Assets and Liabilities
The Fund is subject to various netting arrangements, which govern the terms of certain transactions with counterparties. The arrangements allow the Fund to close out and net its total exposure to a counterparty in the event of a default with respect to all transactions governed under a single agreement with a counterparty. The following is a summary of the arrangements subject to offsetting as of March 31, 2017.
31
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
Fund | Description | Gross Amounts of Recognized Liabilities | Gross Amounts in the Statement of Assets and Liabilities | Net Amounts Presented in the Statement of Assets and Liabilities | Collateral Received | Net Amount | |||||||||||||||
Etho Climate Leadership U.S. ETF | Securities Lending | $ | 1,945,140 | $ | 1,945,140 | $ | — | $ | 1,945,140 | $ | — |
NOTE 8 – FEDERAL INCOME TAXES
The components of distributable earnings (losses) and cost basis of investments for federal income tax purposes at September 30, 2016 were as follows:
Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||||||||||||
Etho Climate Leadership U.S. ETF | $ | 7,735,765 | $ | 434,113 | $ | (228,384 | ) | $ | 205,729 |
Undistributed Ordinary Income | Undistributed Long-term Gain | Total Distributable Earnings | Other Accumulated (Loss) | Total Accumulated Gain | ||||||||||||||||
Etho Climate Leadership U.S. ETF | $ | 45,279 | $ | 1,178 | $ | 46,457 | $ | (28 | ) | $ | 252,158 |
The difference between the tax cost of investments and the cost of investments for GAAP purposes is primarily due to the tax treatment of wash sale losses.
As of September 30, 2016, the Fund had accumulated capital loss carryovers of:
Capital Loss Carryover | Expires | ||
Etho Climate Leadership U.S. ETF | None | Indefinite |
Under current tax law, capital and currency losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The Fund had deferred post-October capital and currency losses, which will be treated as arising on the first business day of the year ended September 30, 2016.
32
Etho Climate Leadership U.S. ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
Late Year | |||
Ordinary | Post-October | ||
Loss | Capital Loss | ||
Etho Climate Leadership U.S. ETF | None | None |
NOTE 9 – DISTRIBUTIONS TO SHAREHOLDERS
The Fund paid $46,359 from ordinary income and $40,845 from capital gains during the period ended March 31, 2017 and paid $22,000 from ordinary income during the period ended September 30, 2016.
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.
Effective April 1, 2017, the Fund changed its distributor from ALPS Distributors, Inc. to ETFMG Financial, LLC.
33
Etho Climate Leadership U.S. ETF
SUPPLEMENTARY INFORMATION
March 31, 2017 (Unaudited)
INFORMATION ABOUT PORTFOLIO HOLDINGS
(Unaudited)
The Fund files a Form N-Q with the Securities and Exchange Commission (the ‘‘SEC’’) no more than sixty days after the Fund’s first and third fiscal quarters. For the Fund, this would be for the fiscal quarters ending June 30 and December 31. Form N-Q includes a complete schedule of the Funds’ portfolio holdings as of the end of those fiscal quarters. The Fund’s N-Q filings can be found free of charge on the SEC’s website at http://www.sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (call 800-SEC-0330 for information on the operation of the Public Reference Room). The Fund’s portfolio holdings are posted on the Fund’s website at www.ethoetf.com daily.
INFORMATION ABOUT PROXY VOTING
(Unaudited)
A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477), by accessing the SEC’s website at www.sec.gov, or by accessing the Fund’s website at www.ethoetf.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at 1-844-ETF-MGRS (1-844-383-6477) or by accessing the SEC’s website at www.sec.gov.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477) or by visiting www.ethoetf.com. Read the prospectus carefully before investing.
34
Etho Climate Leadership U.S. ETF
EXPENSE EXAMPLES
For the Period October 1, 2016 to March 31, 2017 (Unaudited)
As a shareholder of Etho Climate Leadership U.S. ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 1, 2016 to March 31, 2017).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
Etho Climate Leadership U.S. ETF
Beginning | Ending | |||||||||||
Account | Account | Expenses | ||||||||||
Value | Value | Paid | ||||||||||
October 1, | March 31, | During the | ||||||||||
2016 | 2017 | Period^ | ||||||||||
Actual | $ | 1,000.00 | $ | 1,097.30 | $ | 2.35 | ||||||
Hypothetical | ||||||||||||
(5% annual) | $ | 1,000.00 | $ | 1,022.69 | $ | 2.27 |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized six-month expense ratio multiplied by the average account value during the period, multiplied by 182/365 (to reflect the period from October 1, 2016 to March 31, 2017).
35
Advisor
ETF Managers Group, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, LLC
30 Maple Street, Suite 2, Summit, NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC
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
36
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Semi-Annual Report
March 31, 2017
March 31, 2017
The Spirited Funds/ETFMG Whiskey & Spirits ETF
Ticker: WSKY
Ticker: WSKY
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The Fund is a series of ETF Managers Trust.
Spirited Funds/ETFMG Whiskey & Spirits ETF
TABLE OF CONTENTS
March 31, 2017
March 31, 2017
Page | |
Shareholders’ Letter | 2 |
Growth of a $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 | 9 |
Statement of Operations | 10 |
Statement of Changes in Net Assets | 11 |
Financial Highlights | 12 |
Notes to the Financial Statements | 13 |
Supplementary Information | 19 |
Approval of Advisory Agreement and Board Considerations | 20 |
Expense Example | 22 |
Dear Shareholder,
On behalf of the entire team, we want to express our appreciation for the confidence you have placed in the Spirited Funds/ETFMG Whiskey & Spirits Exchange-Traded Fund (“WSKY” or the “Fund”). The following information pertains to the period since inception from October 11, 2016 to March 31, 2017.
The Fund saw positive performance during the period since inception ended March 31, 2017. The NAV price for WSKY rose 5.15% while the Spirited Funds/ETFMG Whiskey & Spirits Index (“Index”), the Fund’s benchmark, rose 5.06% over the same period. The difference was primarily attributable to Fund expenses that are not a part of the Index.
For the period since inception March 31, 2017, the best performing securities in the Fund were MGP Ingredients Inc. (up 30.42%), Stock Spirits Group (up 29.15%), and CIA Cervecerias Unidas S.A. (up 26.73%). The worst performing securities in the Fund were, Emperador (down 17.34%), Distell Group Ltd. (down 11.27%),and Constellation Brands (down 4.17%).
You can find further details about WSKY by visiting www.spiritedfunds.com, or by calling 1-844-ETF-MGRS (1-844-383-6477).
Sincerely,
![-s- Samuel Masucci III](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/wsky003.jpg)
Samuel Masucci III
Chairman of the Board
Chairman of the Board
Samuel Masucci III is a registered representative of ETFMG Financial, LLC.
2
Spirited Funds/ ETFMG Whiskey & Spirits ETF
Growth of $10,000 (Unaudited)
Growth of $10,000 (Unaudited)
![(LINE GRAPH)](https://capedge.com/proxy/N-CSRS/0000894189-17-002936/wsky004.jpg)
Average Annual Returns | Since Inception | |||
Period Ended March 31, 2017 | (10/11/2016) | |||
Spirited Funds/ ETFMG Whiskey & Spirits ETF (NAV) | 5.15 | % | ||
Spirited Funds/ ETFMG Whiskey & Spirits ETF (Market) | 5.62 | % | ||
S&P 500 Index | 11.67 | % | ||
The WSKY Index | 5.06 | % | ||
Total Fund Operating Expenses1 | 0.60 | % |
1. The expense ratio is taken from the Fund’s most recent prospectus dated May 1, 2017. Effective May 1, 2017, the Fund’s unitary fees went from 0.75% to 0.60%.
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 11, 2016, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions from the sale of Fund shares. The chart assumes reinvestment of capital gains and dividends, if any.
The unmanaged indices do not reflect fees and are not available for direct investment.
3
Spirited Funds/ETFMG Whiskey & Spirits ETF
Top Ten Holdings* | ||||||
Security | % of Total Investments† | |||||
1 | Diageo PLC | 22.93 | % | |||
2 | Pernod Ricard SA | 12.53 | % | |||
3 | Thai Beverage PLC | 6.08 | % | |||
4 | Brown-Forman Corporation | 5.71 | % | |||
5 | Remy Cointreau SA | 5.01 | % | |||
6 | Davide Campari-Milano SpA | 4.91 | % | |||
7 | LVMH Moet Hennessy Louis Vuitton SE | 4.75 | % | |||
8 | Corby Spirit and Wine Ltd. | 4.68 | % | |||
9 | MGP Ingredients, Inc. | 4.66 | % | |||
10 | Marie Brizard Wine & Spirits SA | 4.48 | % | |||
Top Ten Holdings = 75.74% of Total Investments† * Current Fund holdings may not be indicative of future Fund holdings. † Percentage of total investments less cash. |
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Spirited Funds/ETFMG Whiskey & Spirits ETF
Important Disclosures and Key Risk Factors
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The Fund is new with limited operating history.
The Spirited Funds/ETFMG Whiskey & Spirits ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Spirited Funds/ETFMG Whiskey & Spirits Index (the “Index”). The Index is comprised of core companies that are principally engaged in the production, distillation, storage, or aging of whiskey and non-core companies that derive a portion of their revenue from whiskey and spirits.
The industries in which Bourbon and Whiskey Economy Companies operate are very competitive and companies in such industries are subject to a number of risks. Demographic and product trends, changing consumer preferences, nutritional and health-related concerns, competitive pricing, marketing campaigns, environmental factors, adverse changes in general economic conditions, government regulation, food inspection and processing control, consumer boycotts, risks of product tampering, product liability claims, and the availability and expense of liability insurance can affect the demand for, and success of, such companies’ products in the marketplace. Such companies also face risks associated with changing market prices as a result of, among other things, changes in government support and trading policies and agricultural conditions influencing the growth and harvest seasons.
ETF shares are not individually redeemable and owners of the shares may acquire those shares from the Fund and tender those shares for redemption to the Fund in Creation Units only, typically consisting of aggregations of 50,000 shares.
5
Spirited Funds/ETFMG Whiskey & Spirits ETF
PORTFOLIO ALLOCATIONS
As of March 31, 2017 (Unaudited)
As of March 31, 2017 (Unaudited)
Spirited Funds/ETFMG Whiskey & Spirits | ||||
As a percent of Net Assets: | ||||
Canada | 4.7 | % | ||
Chile | 1.3 | |||
France | 26.7 | |||
Ireland | 1.4 | |||
Italy | 4.9 | |||
Japan | 6.7 | |||
Mexico | 3.0 | |||
Philippines | 1.5 | |||
South Africa | 4.1 | |||
Thailand | 6.1 | |||
United Kingdom | 24.6 | |||
United States | 14.6 | |||
Short-Term and other Net Assets (Liabilities) | 0.4 | |||
100.0 | % |
6
Spirited Funds/ETFMG Whiskey & Spirits ETF |
Schedule of Investments |
March 31, 2017 (Unaudited) |
Shares | Market Value | |||||||
COMMON STOCKS - 99.6% | ||||||||
Canada - 4.7% | ||||||||
Beverages - 4.7% | ||||||||
Corby Spirit and Wine Ltd. (a) | 7,361 | $ | 122,494 | |||||
Chile - 1.3% | ||||||||
Beverages - 1.3% | ||||||||
Cia Cervecerias Unidas SA - ADR | 1,303 | 32,927 | ||||||
France - 26.7% | ||||||||
Beverages - 22.0% | ||||||||
Marie Brizard Wine & Spirits SA (a) | 6,960 | 117,388 | ||||||
Pernod Ricard SA | 2,774 | 328,188 | ||||||
Remy Cointreau SA | 1,339 | 131,089 | ||||||
Total Beverages | 576,665 | |||||||
Textiles, Apparel & Luxury Goods - 4.7% | ||||||||
LVMH Moet Hennessy Louis Vuitton SE | 566 | 124,294 | ||||||
Total France | 700,959 | |||||||
Ireland - 1.4% | ||||||||
Beverages - 1.4% | ||||||||
C&C Group PLC | 9,625 | 37,324 | ||||||
Italy - 4.9% | ||||||||
Beverages - 4.9% | ||||||||
Davide Campari-Milano SpA | 11,089 | 128,590 | ||||||
Japan - 6.7% | ||||||||
Beverages - 6.7% | ||||||||
Asahi Group Holdings Ltd. | 2,000 | 75,595 | ||||||
Kirin Holdings Co Ltd. | 2,800 | 52,829 | ||||||
Takara Holdings, Inc. | 4,400 | 47,466 | ||||||
Total Beverages | 175,890 | |||||||
Mexico - 3.0% | ||||||||
Beverages - 3.0% | ||||||||
Becle SAB de CV (a) | 45,000 | 79,774 | ||||||
Philippines - 1.5% | ||||||||
Beverages - 1.5% | ||||||||
Emperador, Inc. | 335,000 | 40,327 |
The accompanying notes are an integral part of these financial statements.
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Spirited Funds/ETFMG Whiskey & Spirits ETF
Schedule of Investments
March 31, 2017 (Unaudited) (Continued)
Shares | Market Value | |||||||
South Africa - 4.1% | ||||||||
Beverages - 4.1% | ||||||||
Distell Group Ltd. | 10,382 | $ | 106,790 | |||||
Thailand - 6.1% | ||||||||
Beverages - 6.1% | ||||||||
Thai Beverage PLC | 236,800 | 159,125 | ||||||
United Kingdom - 24.6% | ||||||||
Beverages - 24.6% | ||||||||
Diageo PLC | 20,993 | 600,607 | ||||||
Stock Spirits Group PLC | 20,017 | 46,898 | ||||||
Total Beverages | 647,505 | |||||||
United States - 14.6% | ||||||||
Beverages - 14.6% | ||||||||
Brown-Forman Corporation | 3,238 | 149,531 | ||||||
Constellation Brands, Inc. | 693 | 112,315 | ||||||
MGP Ingredients, Inc. | 2,251 | 122,072 | ||||||
Total Beverages | 383,918 | |||||||
TOTAL COMMON STOCKS (Cost $2,489,512) | 2,615,623 | |||||||
SHORT-TERM INVESTMENTS - 0.1% | ||||||||
Money Market Funds - 0.1% | ||||||||
Invesco Advisers, Inc. STIT - Treasury Portfolio - Institutional Class, 0.59% (b) | 3,435 | 3,435 | ||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $3,435) | 3,435 | |||||||
Total Investments (Cost $2,492,947) - 99.7% | 2,619,058 | |||||||
Other Assets in Excess of Liabilities - 0.3% | 7,728 | |||||||
TOTAL NET ASSETS - 100.0% | $ | 2,626,786 |
Percentages are stated as a percent of net assets.
ADR | American Depositary Receipt |
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield at March 31, 2017. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor’s Financial Services LLC (“S&P”). GICS® is a service mark of MSCI, Inc. and S&P and has been licensed for use by the Fund’s Administrator, U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
8
Spirited Funds/ETFMG Whiskey & Spirits ETF
STATEMENT OF ASSETS AND LIABILITIES
As of March 31, 2017 (Unaudited)
Spirited Funds/ ETFMG Whiskey & Spirits ETF | ||||
ASSETS | ||||
Investments in securities, at fair value* | $ | 2,619,058 | ||
Foreign currency | 73 | |||
Dividends and interest receivable | 9,325 | |||
Total Assets | $ | 2,628,456 | ||
LIABILITIES | ||||
Management fees payable | 1,670 | |||
Total Liabilities | 1,670 | |||
Net Assets | $ | 2,626,786 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in Capital | $ | 2,491,302 | ||
Undistributed (accumulated) net investment income (loss) | 9,688 | |||
Accumulated net realized gain (loss) on investments | (353 | ) | ||
Net unrealized appreciation (depreciation) on: | ||||
Investments in securities | 126,111 | |||
Foreign currency and translation of other assets and liabilities in foreign currency | 38 | |||
Net Assets | $ | 2,626,786 | ||
*Identified Cost: | ||||
Investments in securities | $ | 2,492,947 | ||
Foreign currency | 79 | |||
Shares Outstanding^ | 100,000 | |||
Net Asset Value, Offering and Redemption Price per Share | $ | 26.27 |
^ | No par value, unlimited number of shares authorized |
The accompanying notes are an integral part of these financial statements.
9
Spirited Funds/ETFMG Whiskey & Spirits ETF
STATEMENT OF OPERATIONS
For the period ended March 31, 2017 (Unaudited)
Spirited Funds/ ETFMG Whiskey & Spirits ETF1 | ||||
INVESTMENT INCOME | ||||
Income: | ||||
Dividends from unaffiliated securities (net of foreign withholdings tax of $1,969) | $ | 20,188 | ||
Interest | 1 | |||
Securities lending income | 2 | |||
Total Investment Income | 20,191 | |||
Expenses: | ||||
Management fees | 8,702 | |||
Total Expenses | 8,702 | |||
Net Investment Income | 11,489 | |||
REALIZED & UNREALIZED GAIN ON INVESTMENTS | ||||
Net Realized Gain (Loss) on: | ||||
Unaffiliated investments | (24,207 | ) | ||
In-Kind redemptions | 28,191 | |||
Foreign currency and foreign currency translation | (4,337 | ) | ||
Net Realized Gain (Loss) on Investments and Foreign Currency | (353 | ) | ||
Net Change in Unrealized Appreciation (Depreciation) of: | ||||
Unaffiliated investments | 126,111 | |||
Foreign currency and foreign currency translation | 38 | |||
Net Change in Unrealized Appreciation of Investments and Foreign Currency | 126,149 | |||
Net Realized and Unrealized Gain on Investments | 125,796 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 137,285 |
1Fund commenced operations on October 11, 2016. The information presented is for the period from October 12, 2016 to March 31, 2017.
The accompanying notes are an integral part of these financial statements.
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Spirited Funds/ETFMG Whiskey & Spirits ETF
STATEMENT OF CHANGES IN NET ASSETS
Period Ended March 31, 2017 (Unaudited)* | |||||
OPERATIONS | |||||
Net investment income | $ | 11,489 | |||
Net realized loss on investments | (353) | ||||
Net change in unrealized appreciation of investments | 126,149 | ||||
Net increase in net assets resulting from operations | 137,285 | ||||
DISTRIBUTIONS TO SHAREHOLDERS | |||||
From net investment income | (1,801) | ||||
Total Distributions to Shareholders | (1,801) | ||||
CAPITAL SHARE TRANSACTIONS | |||||
Net increase in net assets derived from net change in outstanding shares (a) | 2,491,230 | ||||
Transaction Fees (Note 1) | 72 | ||||
Net increase in net assets from capital chare transactions | 2,491,302 | ||||
Net increase in net assets | 2,626,786 | ||||
NET ASSETS | |||||
Beginning of Period | — | ||||
End of Period | $ | 2,626,786 | |||
Undistributed net investment income | $ | 9,688 |
(a) Summary of share transactions is as follows:
Period Ended March 31, 2017 (Unaudited)* | ||||||||
Shares | Amount | |||||||
Shares Sold | 150,000 | $ | 3,802,625 | |||||
Transaction Fees | — | 72 | ||||||
Shares Redeemed | (50,000) | (1,311,395) | ||||||
100,000 | $ | 2,491,302 | ||||||
Beginning Shares | — | |||||||
Ending Shares | 100,000 |
*Fund commenced operations on October 11, 2016. The information presented is for the period from October 11, 2016 to March 31, 2017.
The accompanying notes are an integral part of these financial statements.
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Spirited Funds/ETFMG Whiskey & Spirits ETF
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout the period
Period Ended March 31, 2017 (Unaudited)1 | ||||
Net Asset Value, Beginning of Period | $ | 25.00 | ||
Income (Loss) from Investment Operations: | ||||
Net investment income (loss)2 | 0.11 | |||
Net realized and unrealized gain (loss) on investments | 1.18 | |||
Total from investment operations | 1.29 | |||
Less Distributions: | ||||
Distributions from net investment income | (0.02 | ) | ||
Total distributions | (0.02 | ) | ||
Net asset value, end of period | $ | 26.27 | ||
Total Return | 5.15 | %3 | ||
Ratios/Supplemental Data: | ||||
Net assets at end of period (000’s) | $ | 2,627 | ||
Expenses to Average Net Assets | 0.75 | %4 | ||
Net Investment Income (Loss) to Average Net Assets | 1.00 | %4 | ||
Portfolio Turnover Rate | 35 | %3 |
1Commencement of operations on October 11, 2016.
2Calculated based on average shares outstanding during the period.
3Not annualized.
4Annualized.
The accompanying notes are an integral part of these financial statements.
12
Spirited Funds/ETFMG Whiskey & Spirits ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited)
NOTE 1 – ORGANIZATION
Spirited Funds/ETFMG Whiskey & Spirits ETF (the “Fund”) is a series of ETF Managers Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Fund’s shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Spirited Funds/ETFMG Whiskey & Spirits Index. The Fund commenced operations on October 11, 2016.
The Fund currently offers one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges.
Shares of the Fund are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). The Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified Index. Once created, Shares generally trade in the secondary market at market prices that change throughout the day in quantities less than a Creation Unit. Except when aggregated in Creation Units, Shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the Shares directly from a Fund. Rather, most retail investors may purchase Shares in the secondary market with the assistance of a broker and 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”).
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. |
13
Spirited Funds/ETFMG Whiskey & Spirits ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees (the “Board”). When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board. The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of March 31, 2017, the Fund did not hold any fair valued securities.
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. |
Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following is a summary of the inputs used to value the Fund’s investments as of March 31, 2017:
Spirited Funds/ETFMG Whiskey & Spirits ETF
Assets^ | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 2,615,623 | $ | — | $ | — | $ | 2,615,623 | ||||||||
Short-Term Investments | 3,435 | — | — | 3,435 | ||||||||||||
Total Investments in Securities | $ | 2,619,058 | $ | — | $ | — | $ | 2,619,058 |
^ See Schedule of Investments for classifications by sector or country.
There were no transfers between Levels 1, 2 and 3 during the period ended March 31, 2017. Transfers between levels are recognized at the end of the reporting period.
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Spirited Funds/ETFMG Whiskey & Spirits ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
March 31, 2017 (Unaudited) (Continued)
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 2017 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.
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. |
15
Spirited Funds/ETFMG Whiskey & Spirits ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
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 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The “Derivatives and Hedging” Topic of the Codification (Accounting Standards Codification 815, formerly Statement of Financial Accounting Standards (“SFAS”) 133 and SFAS 161) requires enhanced disclosures about the Fund’s derivative and hedging activities, including how such activities are accounted for and their effect on the Fund’s financial position, performance and cash flows. The Fund did not use derivatives during the period ended March 31, 2017.
NOTE 4 – COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
ETF Managers Group, LLC (the “Advisor”), serves as the investment advisor to the Fund. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Fund, and the Advisor, the Advisor provides investment advice to the Fund and oversees the day-today operations of the Fund, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Fund to operate.
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 (See Note 9). The Advisor has an agreement with, and is dependent on, a third party to pay the Fund’s expenses in excess of 0.75% of the Fund’s average daily net assets. Additionally, 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 Spirited Funds, LLC (the “Sponsor”), under which the Sponsor agrees to sublicense the use of the Underlying Index to the Advisor. The Sponsor also provides marketing support for the Fund, including distributing marketing materials related to the Fund. Spirited Funds, LLC is a privately held business focused on bringing exchange-traded investment products to investors in the U.S. The Sponsor does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the Fund. Additionally, the Sponsor is not involved in the maintenance of the Underlying Index and does not otherwise act in the capacity of an index provider.
16
Spirited Funds/ETFMG Whiskey & Spirits ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
US Bancorp Fund Services, LLC (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 period ended March 31, 2017, the Fund did not incur any 12b-1 expenses.
NOTE 6 – PURCHASES AND SALES OF SECURITIES
The costs of purchases and sales of securities, excluding short-term securities and in-kind transactions, for the period ended March 31, 2017:
Purchases | Sales | |||||||
Spirited Funds/ETFMG Whiskey & Spirits ETF | $ | 869,687 | $ | 1,655,573 |
The costs of purchases and sales of in-kind transactions associated with creations and redemptions for the period ended March 31, 2017:
Purchases | Sales | |||||||
In-Kind | In-Kind | |||||||
Spirited Funds/ETFMG Whiskey & Spirits ETF | $ | 3,484,389 | $ | 212,976 |
Purchases in-kind are the aggregate of all in-kind purchases and sales in-kind are the aggregate of all proceeds from in-kind sales. Net capital gains or losses resulting from in-kind redemptions are excluded from the Fund’s taxable gains and are not distributed to shareholders.
There were no purchases or sales of U.S. Government obligations for the period ended March 31, 2017.
NOTE 7 – SECURITIES LENDING
The Fund may lend up to 331/3% of the value of the securities in its portfolio to brokers, dealers and financial institutions (but not individuals) under terms of participation in a securities lending program administered by U.S. Bank N.A. (“the Custodian”). The securities lending agreement requires that loans are collateralized at all times in an amount equal to at least 102% of the value of any loaned securities at the time of the loan, plus accrued interest. The Fund receives compensation in the form of fees and 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; however, such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. 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.
17
Spirited Funds/ETFMG Whiskey & Spirits ETF
NOTES TO FINANCIAL STATEMENTS
March 31, 2017 (Unaudited) (Continued)
As of March 31, 2017, the Fund did not have any securities on loan.
Interest income earned on collateral investments and recognized by the Fund during the period ended March 31, 2017, were as follows:
Interest Income Earned | ||||
Fund | Interest Income Earned net of applicable Fees | |||
Spirited Funds/ETFMG Whiskey & Spirits ETF | $ | 2 |
NOTE 8 – DISTRIBUTIONS TO SHAREHOLDERS
The Fund paid $1,801 from ordinary income during the period ended March 31, 2017.
NOTE 9 – 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.
Effective April 1, 2017, the Fund changed its distributor from ALPS Distributors, Inc. to ETFMG Financial, LLC.
Effective May 1, 2017, the Fund made permanent a reduction in unitary fees to ensure that total expenses do not exceed 0.60% of the Fund’s annual average net assets, from a previous unitary fee of 0.75%.
18
Spirited Funds/ETFMG Whiskey & Spirits ETF
SUPPLEMENTARY INFORMATION
March 31, 2017 (Unaudited)
INFORMATION ABOUT PORTFOLIO HOLDINGS
(Unaudited)
(Unaudited)
The Fund files a Form N-Q with the Securities and Exchange Commission (the ‘‘SEC’’) no more than sixty days after the Fund’s first and third fiscal quarters. For the Fund, this would be for the fiscal quarters ending June 30 and December 31. Form N-Q includes a complete schedule of the Funds’ portfolio holdings as of the end of those fiscal quarters. The Fund’s N-Q filings can be found free of charge on the SEC’s website at http://www.sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (call 800-SEC-0330 for information on the operation of the Public Reference Room). The Fund’s portfolio holdings are posted on the Fund’s website at www.spiritedfunds.com daily.
INFORMATION ABOUT PROXY VOTING
(Unaudited)
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.spiritedfunds.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.spiritedfunds.com. Read the prospectus carefully before investing.
19
Spirited Funds/ETFMG Whiskey & Spirits ETF
APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS
For the Period Ended March 31, 2017 (Unaudited)
Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), at a meeting held on June 22, 2016, the Board of Trustees (the “Board”) of ETF Managers Trust (the “Trust”) considered the approval of the Investment Advisory Agreement between ETF Managers Group, LLC (the “Adviser”) and the Trust, on behalf of Spirited Funds/ETFMG Whiskey & Spirits ETF (the “Fund”) (the “Agreement”).
The Agreement must be approved: (i) by the vote of the Trustees or by a vote of the shareholders of the Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Agreement or “interested persons” of any party thereto, as defined in the 1940 Act (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. Each year after the initial two-year term, the Board will call and hold a meeting to decide whether to renew the Agreement for an additional one-year term. In preparation for such meetings, the Board requests and reviews a wide variety of information from the Adviser.
In reaching this decision, the Board, including the Independent Trustees, considered all factors it believed relevant, including: (i) the nature, extent and quality of the services to be provided to the Fund’s shareholders by the Adviser; (ii) the Adviser’s cost and profits it will realize in providing its services, including any fall-out benefits enjoyed by the Adviser; (iii) comparative fee and expense data for the Fund and other similar investment companies; (iv) the extent to which economies of scale would be realized as the Fund grows and whether the proposed advisory fees for the Fund reflects these economies of scale for the benefit of the Fund; and (v) other financial benefits to the Adviser and its affiliates resulting from services rendered to the Fund. The Board’s review included written and oral information furnished to the Board prior to and at the meeting held on June 22, 2016, and throughout the year. Among other things, the information provided by the Adviser provided an overview of its advisory business, including its personnel. Representatives of the Adviser discussed the services to be provided by the Adviser. Representatives also discussed the rationale for launching the Fund, the Fund’s fees and fee structures of comparable investment companies. The Board then discussed the written and oral information that it received before the meeting and throughout the year, and the Adviser’s oral presentations and any other information that the Board received at the meeting, and deliberated on the approval of the Agreement in light of this information. In its deliberations, the Board did not identify any single piece of information discussed below that was all-important or controlling.
Nature, Extent and Quality of Services Provided by the Adviser
The Trustees considered the scope of services provided under the Agreement, noting that the Adviser will be providing investment management services to the Fund. The Board discussed the responsibilities of the Adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of the Fund; determining the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; responsibility for daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Fund. In considering the nature, extent and quality of the services to be provided by the Adviser, the Board considered the quality of the Adviser’s compliance program. The Board also considered the Adviser’s experience managing ETFs, including other series of the Trust.
The Board also considered other services to be provided to the Fund’s, such as overseeing the Fund’s service providers, monitoring adherence to the Fund’s investment restrictions, and monitoring compliance with various policies and procedures and with applicable securities regulations.
Based on the factors above, as well as those discussed below, the Board concluded that it was satisfied with the nature, extent and quality of the services to be provided to the Fund’s by the Adviser.
20
Spirited Funds/ETFMG Whiskey & Spirits ETF
APPROVAL OF ADVISORY AGREEMENT AND BOARD CONSIDERATIONS
For the Period Ended March 31, 2017 (Unaudited)
Cost of Services Provided and Economies of Scale
The Board reviewed the Fund’s estimated expense ratio and the advisory fee to be paid by the Fund, and considered the expense ratios of comparable funds. The Board took into consideration management’s discussion of the fees, including that the Fund uses a niche investment strategy. The Board concluded that the advisory fee was reasonable and the result of arm’s length negotiations. Additionally, the Board took into consideration that the Fund’s operating expenses would be paid by the Adviser. The Board also evaluated compensation and benefits expected to be received by the Adviser from its relationship with the Fund. The Board noted, however, that because the Fund was new, it was difficult to estimate the profitability of the Fund to the Adviser at this time. The Board also noted that because the Fund was new, it was difficult to estimate whether the Fund would experience economies of scale. The Board determined to evaluate economies of scale on an ongoing basis in the event of asset growth of the Fund.
Based on the Board’s deliberations and its evaluation of the information described above, the Board, including the Independent Trustees, unanimously: (a) concluded that the terms of the Agreement are fair and reasonable; (b) concluded that the Adviser’s fees are reasonable in light of the services that the Adviser will provide to the Fund; and (c) agreed to approve the Agreement for an initial term of two years.
21
Spirited Funds/ETFMG Whiskey & Spirits ETF
Expense Example
For the Period October 11, 2016 to March 31, 2017 (Unaudited)
As a shareholder of Spirited Funds/ETFMG Whiskey & Spirits ETF (the “Fund”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 11, 2016 to March 31, 2017).
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.
Spirited Funds/ETFMG Whiskey & Spirits ETF
Beginning | Ending | |||||
Account Value | Account Value | Expenses Paid | ||||
October 11, | March 31, | During the | ||||
2016 | 2017 | Period^ | ||||
Actual | $1,000.00 | $1,051.50 | $3.84 | |||
Hypothetical | ||||||
(5% annual) | $1,000.00 | $1,021.19 | $3.78 |
^ The dollar amounts shown as expenses paid during the period are equal to the annualized expense ratio for the period since inception multiplied by the average account value during the period, multiplied by 171/365 (to reflect the period from October 11, 2016 to March 31, 2017).
22
Advisor
ETF Managers Group, LLC
30 Maple Street Suite 2, Summit, NJ 07901
30 Maple Street Suite 2, Summit, NJ 07901
Distributor
ETFMG Financial, LLC
30 Maple Street Suite 2, Summit NJ 07901
Custodian
U.S. Bank National Association
Custody Operations
Custody Operations
1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
Transfer Agent
U.S. Bancorp Fund Services, LLC
615 East Michigan Street, Milwaukee, Wisconsin 53202
Securities Lending Agent
U.S Bank, National Association
Securities Lending
800 Nicolet Mall
Minneapolis, MN 55402-7020
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
1666 K Street NW, Washington, DC 20006
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Investments.
(a) | Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed‑End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer/Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider. |
(b) | There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
Item 12. Exhibits.
(a) | (1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not applicable for semi-annual reports. |
(2) A separate certification for each principal executive and Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c‑1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.
(b) | Certifications pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002. Furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) ETF Managers Trust
By (Signature and Title) /s/ Samuel Masucci III
Samuel Masucci III, Principal Executive Officer
Date June 1, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* /s/ Samuel Masucci III
Samuel Masucci III, Principal Executive Officer
Date June 1, 2017
By (Signature and Title)* /s/ John A. Flanagan
John A. Flanagan, Principal Financial Officer/Treasurer
Date June 1, 2017
* Print the name and title of each signing officer under his or her signature.