UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-23214
GraniteShares ETF Trust
(Exact name of registrant as specified in charter)
205 Hudson Street, 7th floor
New York, New York 10013
(Address of principal executive offices) (Zip code)
William Rhind
GraniteShares ETF Trust
205 Hudson Street, 7th floor
New York, New York 10013
(Name and address of agent for service)
Copy to:
W. Thomas Conner, Esq.
Vedder Price
1633 Broadway, 31st Floor
New York, NY 10019
Registrant’s telephone number, including area code: 1-800-422-3554
Date of fiscal year end: November 30
Date of reporting period: May 31, 2018
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
GraniteShares ETF Trust
Semi-Annual Report
May 31, 2018
GraniteShares HIPS US High Income ETF
GraniteShares ETF Trust
Table of Contents
1 |
May 31, 2018 (Unaudited)
As a shareholder of the Fund you incur two types of costs: (1) transaction costs, including brokerage commissions paid on purchases and sales of Fund shares; and (2) ongoing costs, including management fees and other fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars and cents) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds.
The expense examples are based on an investment of $1,000 invested at December 1, 2017 and held for the entire period ended May 31, 2018.
ACTUAL EXPENSES
The first line under the Fund in the table below provides information about actual account values 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 for the Fund under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line under the Fund in the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account 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 under the Fund in the table is useful in comparing ongoing Fund costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 12/01/2017 | Ending Account Value 5/31/2018 | Annualized Expense Ratio for the Period | Expenses Paid During the Period(1) | |||||||||||||
GraniteShares HIPS US High Income ETF | ||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,016.60 | 0.71 | % | $ | 3.57 | ||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.39 | 0.71 | % | $ | 3.58 |
(1) | Expenses are calculated using the Fund’s annualized expense ratio, multiplied by the average account value for the period, multiplied by 182/365 (to reflect the six month period). |
2 |
Schedule of Investments |
GraniteShares HIPS US High Income ETF
May 31, 2018 (Unaudited)
Investments | Shares | Value | ||||||
COMMON STOCKS – 91.7% | ||||||||
Capital Markets – 17.9% | ||||||||
AllianceBernstein Holding LP(a) | 990 | $ | 28,066 | |||||
Apollo Global Management LLC, Class A(a) | 4,456 | 139,562 | ||||||
Apollo Investment Corp. | 2,440 | 13,884 | ||||||
Ares Capital Corp. | 4,650 | 78,492 | ||||||
Ares Management LP(a) | 2,462 | 54,533 | ||||||
Arlington Asset Investment Corp., Class A | 260 | 2,974 | ||||||
Artisan Partners Asset Management, Inc., Class A | 780 | 25,194 | ||||||
BlackRock Capital Investment Corp. | 800 | 4,992 | ||||||
Blackstone Group LP (The)(a) | 13,122 | 418,985 | ||||||
Carlyle Group LP (The)(a) | 3,726 | 81,599 | ||||||
Cohen & Steers, Inc. | 220 | 8,565 | ||||||
Diamond Hill Investment Group, Inc. | 35 | 6,858 | ||||||
Ellington Financial LLC(a) | 330 | 5,260 | ||||||
Federated Investors, Inc., Class B | 1,020 | 24,755 | ||||||
Fidus Investment Corp. | 260 | 3,752 | ||||||
FS Investment Corp. | 2,650 | 20,405 | ||||||
Gladstone Capital Corp. | 260 | 2,363 | ||||||
Gladstone Investment Corp. | 350 | 4,015 | ||||||
Goldman Sachs BDC, Inc. | 430 | 8,811 | ||||||
Golub Capital BDC, Inc. | 650 | 12,032 | ||||||
Hercules Capital, Inc. | 910 | 11,275 | ||||||
Invesco Ltd. | 4,475 | 122,257 | ||||||
KKR & Co. LP | 9,102 | 202,337 | ||||||
Main Street Capital Corp. | 570 | 21,899 | ||||||
Medley Capital Corp. | 589 | 2,085 | ||||||
Monroe Capital Corp. | 220 | 3,102 | ||||||
New Mountain Finance Corp. | 750 | 10,425 | ||||||
Newtek Business Services Corp. | 164 | 3,308 | ||||||
Oaktree Capital Group LLC(a) | 1,871 | 76,617 | ||||||
Oaktree Specialty Lending Corp. | 1,330 | 6,544 | ||||||
Oaktree Strategic Income Corp. | 300 | 2,508 | ||||||
Oxford Square Capital Corp. | 560 | 3,998 | ||||||
PennantPark Floating Rate Capital Ltd. | 350 | 4,771 | ||||||
PennantPark Investment Corp. | 790 | 5,743 | ||||||
Prospect Capital Corp. | 3,778 | 25,539 | ||||||
Pzena Investment Management, Inc., Class A | 710 | 6,383 | ||||||
Solar Capital Ltd. | 460 | 9,941 | ||||||
Solar Senior Capital Ltd. | 150 | 2,495 | ||||||
Stellus Capital Investment Corp. | 170 | 2,183 | ||||||
TCG BDC, Inc. | 695 | 12,635 | ||||||
TCP Capital Corp. | 640 | 9,427 | ||||||
THL Credit, Inc. | 360 | 2,830 | ||||||
TPG Specialty Lending, Inc. | 535 | 9,983 | ||||||
Triangle Capital Corp. | 520 | 5,892 | ||||||
TriplePoint Venture Growth BDC Corp. | 170 | 2,137 | ||||||
Waddell & Reed Financial, Inc., Class A | 910 | 17,654 | ||||||
Westwood Holdings Group, Inc. | 80 | 4,642 | ||||||
WhiteHorse Finance, Inc. | 61 | 874 | ||||||
Total Capital Markets | 1,534,581 |
See accompanying notes to the financial statements.
3 |
GraniteShares ETF Trust
Schedule of Investments |
GraniteShares HIPS US High Income ETF (continued)
May 31, 2018 (Unaudited)
Investments | Shares | Value | ||||||
COMMON STOCKS (continued) | ||||||||
Energy Equipment & Services – 0.0%** | ||||||||
USA Compression Partners LP(a) | 177 | $ | 3,287 | |||||
Equity Real Estate Investment – 42.5%(b) | ||||||||
Acadia Realty Trust(c) | 846 | 21,785 | ||||||
Agree Realty Corp.(c) | 292 | 15,459 | ||||||
Alexander’s, Inc.(c) | 37 | 14,338 | ||||||
American Campus Communities, Inc.(c) | 1,514 | 60,711 | ||||||
Apple Hospitality REIT, Inc.(c) | 2,097 | 39,906 | ||||||
Armada Hoffler Properties, Inc.(c) | 510 | 7,344 | ||||||
Bluerock Residential Growth REIT, Inc.(c) | 271 | 2,407 | ||||||
Brixmor Property Group, Inc.(c) | 3,095 | 49,149 | ||||||
CatchMark Timber Trust, Inc., Class A(c) | 530 | 6,731 | ||||||
Chatham Lodging Trust(c) | 454 | 9,439 | ||||||
Chesapeake Lodging Trust(c) | 595 | 19,177 | ||||||
Colony NorthStar, Inc., Class A(c) | 5,632 | 33,172 | ||||||
Columbia Property Trust, Inc.(c) | 1,205 | 26,655 | ||||||
CoreCivic, Inc.(c) | 1,237 | 26,620 | ||||||
CorEnergy Infrastructure Trust, Inc.(c) | 120 | 4,343 | ||||||
Corporate Office Properties Trust(c) | 1,089 | 30,383 | ||||||
CubeSmart(c) | 1,980 | 60,390 | ||||||
DDR Corp.(c) | 1,528 | 23,210 | ||||||
DiamondRock Hospitality Co.(c) | 2,004 | 25,511 | ||||||
Education Realty Trust, Inc.(c) | 835 | 30,511 | ||||||
EPR Properties(c) | 714 | 43,832 | ||||||
Farmland Partners, Inc.(c) | 320 | 2,723 | ||||||
Four Corners Property Trust, Inc.(c) | 674 | 15,428 | ||||||
Franklin Street Properties Corp.(c) | 1,170 | 9,056 | ||||||
Front Yard Residential Corp.(c) | 591 | 6,217 | ||||||
Gaming and Leisure Properties, Inc.(c) | 2,207 | 77,466 | ||||||
GEO Group, Inc. (The)(c) | 1,350 | 33,480 | ||||||
Getty Realty Corp.(c) | 331 | 8,642 | ||||||
GGP, Inc.(c) | 6,243 | 126,608 | ||||||
Gladstone Commercial Corp.(c) | 279 | 5,245 | ||||||
Global Net Lease, Inc.(c) | 742 | 14,647 | ||||||
Government Properties Income Trust(c) | 995 | 14,457 | ||||||
Gramercy Property Trust(c) | 1,767 | 48,716 | ||||||
Highwoods Properties, Inc.(c) | 1,035 | 49,504 | ||||||
Hospitality Properties Trust(c) | 1,649 | 47,739 | ||||||
Host Hotels & Resorts, Inc.(c) | 7,386 | 159,759 | ||||||
Independence Realty Trust, Inc.(c) | 916 | 8,885 | ||||||
Investors Real Estate Trust(c) | 1,330 | 7,408 | ||||||
Iron Mountain, Inc.(c) | 3,116 | 103,732 | ||||||
Jernigan Capital, Inc.(c) | 100 | 1,975 | ||||||
Kimco Realty Corp.(c) | 4,328 | 66,911 | ||||||
Kite Realty Group Trust(c) | 840 | 13,180 | ||||||
Lamar Advertising Co., Class A(c) | 1,084 | 75,034 | ||||||
LaSalle Hotel Properties(c) | 1,134 | 38,896 |
See accompanying notes to the financial statements.
4 |
GraniteShares ETF Trust
Schedule of Investments |
GraniteShares HIPS US High Income ETF (continued)
May 31, 2018 (Unaudited)
Investments | Shares | Value | ||||||
COMMON STOCKS (continued) | ||||||||
Equity Real Estate Investment (continued) | ||||||||
Lexington Realty Trust(c) | 2,360 | $ | 20,367 | |||||
Liberty Property Trust(c) | 1,615 | 71,399 | ||||||
Life Storage, Inc.(c) | 500 | 46,260 | ||||||
Macerich Co. (The)(c) | 1,098 | 61,082 | ||||||
MGM Growth Properties LLC, Class A(c) | 2,568 | 76,218 | ||||||
National Retail Properties, Inc.(c) | 1,529 | 63,346 | ||||||
One Liberty Properties, Inc.(c) | 170 | 4,338 | ||||||
Outfront Media, Inc.(c) | 1,530 | 30,355 | ||||||
Park Hotels & Resorts, Inc.(c) | 2,001 | 64,472 | ||||||
Pebblebrook Hotel Trust(c) | 692 | 28,247 | ||||||
Piedmont Office Realty Trust, Inc., Class A(c) | 1,375 | 26,428 | ||||||
Preferred Apartment Communities, Inc., Class A(c) | 404 | 5,927 | ||||||
Public Storage(c) | 1,655 | 350,595 | ||||||
Ramco-Gershenson Properties Trust(c) | 809 | 9,951 | ||||||
Realty Income Corp.(c) | 2,819 | 150,253 | ||||||
Retail Opportunity Investments Corp.(c) | 1,110 | 20,113 | ||||||
Retail Properties of America, Inc., Class A(c) | 2,285 | 28,014 | ||||||
RLJ Lodging Trust(c) | 1,743 | 40,786 | ||||||
Ryman Hospitality Properties, Inc.(c) | 510 | 42,779 | ||||||
Select Income REIT(c) | 700 | 15,120 | ||||||
Simon Property Group, Inc.(c) | 3,137 | 502,610 | ||||||
Spirit Realty Capital, Inc.(c) | 4,804 | 42,083 | ||||||
STAG Industrial, Inc.(c) | 985 | 26,240 | ||||||
STORE Capital Corp.(c) | 1,830 | 49,044 | ||||||
Summit Hotel Properties, Inc.(c) | 1,040 | 15,902 | ||||||
Sunstone Hotel Investors, Inc.(c) | 2,252 | 39,162 | ||||||
Tanger Factory Outlet Centers, Inc.(c) | 967 | 20,781 | ||||||
Taubman Centers, Inc.(c) | 615 | 33,573 | ||||||
UMH Properties, Inc.(c) | 355 | 5,222 | ||||||
VEREIT, Inc.(c) | 10,675 | 76,433 | ||||||
Washington Prime Group, Inc.(c) | 1,950 | 14,177 | ||||||
Washington Real Estate Investment Trust(c) | 868 | 24,894 | ||||||
Weingarten Realty Investors(c) | 1,208 | 35,419 | ||||||
WP Carey, Inc.(c) | 1,181 | 79,375 | ||||||
Xenia Hotels & Resorts, Inc.(c) | 1,072 | 26,982 | ||||||
Total Equity Real Estate Investment | 3,634,728 | |||||||
Mortgage Real Estate Investment – 7.5% | ||||||||
AG Mortgage Investment Trust, Inc.(c) | 300 | 5,664 | ||||||
AGNC Investment Corp.(c) | 4,303 | 80,982 | ||||||
Annaly Capital Management, Inc.(c) | 12,788 | 133,379 | ||||||
Anworth Mortgage Asset Corp.(c) | 1,040 | 5,273 | ||||||
Apollo Commercial Real Estate Finance, Inc.(c) | 1,205 | 22,401 | ||||||
Arbor Realty Trust, Inc.(c) | 710 | 6,788 | ||||||
ARMOUR Residential REIT, Inc.(c) | 400 | 9,268 |
See accompanying notes to the financial statements.
5 |
GraniteShares ETF Trust
Schedule of Investments |
GraniteShares HIPS US High Income ETF (continued)
May 31, 2018 (Unaudited)
Investments | Shares | Value | ||||||
COMMON STOCKS (continued) | ||||||||
Mortgage Real Estate Investment (continued) | ||||||||
Blackstone Mortgage Trust, Inc., Class A(c) | 1,186 | $ | 37,466 | |||||
Capstead Mortgage Corp.(c) | 1,050 | 9,607 | ||||||
Chimera Investment Corp.(c) | 2,081 | 38,311 | ||||||
CYS Investments, Inc.(c) | 1,660 | 12,151 | ||||||
Hannon Armstrong Sustainable Infrastructure Capital, Inc.(c) | 520 | 9,537 | ||||||
Invesco Mortgage Capital, Inc.(c) | 1,260 | 20,450 | ||||||
Ladder Capital Corp.(c) | 1,321 | 20,502 | ||||||
MFA Financial, Inc.(c) | 4,324 | 33,641 | ||||||
MTGE Investment Corp.(c) | 509 | 10,154 | ||||||
New Residential Investment Corp.(c) | 3,651 | 65,280 | ||||||
New York Mortgage Trust, Inc.(c) | 1,250 | 7,700 | ||||||
PennyMac Mortgage Investment Trust(c) | 668 | 12,505 | ||||||
Redwood Trust, Inc.(c) | 830 | 13,579 | ||||||
Starwood Property Trust, Inc.(c) | 2,844 | 61,743 | ||||||
Two Harbors Investment Corp.(c) | 1,915 | 29,778 | ||||||
Total Mortgage Real Estate Investment | 646,159 | |||||||
Oil, Gas & Consumable Fuels – 23.8% | ||||||||
Alliance Holdings GP LP(a) | 250 | 7,092 | ||||||
Alliance Resource Partners LP(a) | 808 | 15,554 | ||||||
Andeavor Logistics LP(a) | 972 | 41,699 | ||||||
Black Stone Minerals LP(a) | 1,784 | 32,469 | ||||||
Buckeye Partners LP(a) | 1,605 | 57,860 | ||||||
Cheniere Energy Partners LP(a) | 646 | 23,243 | ||||||
CNX Midstream Partners LP(a) | 400 | 7,496 | ||||||
Crestwood Equity Partners LP(a) | 500 | 16,800 | ||||||
CVR Refining LP(a) | 588 | 13,318 | ||||||
DCP Midstream LP(a) | 991 | 41,533 | ||||||
Enable Midstream Partners LP(a) | 905 | 14,969 | ||||||
Enbridge Energy Partners LP(a) | 3,801 | 37,440 | ||||||
Energy Transfer Equity LP(a) | 9,645 | 166,666 | ||||||
Energy Transfer Partners LP(a) | 11,960 | 227,120 | ||||||
EnLink Midstream LLC | 610 | 10,675 | ||||||
EnLink Midstream Partners LP(a) | 1,811 | 30,968 | ||||||
Enterprise Products Partners LP(a) | 16,142 | 466,504 | ||||||
Genesis Energy LP(a) | 1,155 | 25,364 | ||||||
Golar LNG Partners LP (United Kingdom) | 540 | 9,056 | ||||||
Holly Energy Partners LP(a) | 718 | 21,095 | ||||||
MPLX LP(a) | 3,133 | 112,506 | ||||||
NGL Energy Partners LP(a) | 1,317 | 14,092 | ||||||
NuStar Energy LP(a) | 829 | 20,261 | ||||||
PBF Logistics LP(a) | 350 | 7,017 | ||||||
Plains All American Pipeline LP(a) | 4,725 | 111,037 | ||||||
Plains GP Holdings LP, Class A* | 3,210 | 78,870 | ||||||
SemGroup Corp., Class A | 738 | 18,671 | ||||||
Ship Finance International Ltd. (Norway) | 640 | 9,120 | ||||||
Spectra Energy Partners LP(a) | 975 | 29,386 | ||||||
Summit Midstream Partners LP(a) | 510 | 8,288 | ||||||
Sunoco LP(a) | 505 | 13,433 | ||||||
Tallgrass Energy Partners LP(a) | 521 | 22,752 |
See accompanying notes to the financial statements.
6 |
GraniteShares ETF Trust
Schedule of Investments |
GraniteShares HIPS US High Income ETF (continued)
May 31, 2018 (Unaudited)
Investments | Shares | Value | ||||||
COMMON STOCKS (continued) | ||||||||
Oil, Gas & Consumable Fuels (continued) | ||||||||
Targa Resources Corp. | 2,378 | $ | 115,642 | |||||
TC PipeLines LP(a) | 575 | 13,984 | ||||||
Teekay LNG Partners LP (Bermuda) | 593 | 10,259 | ||||||
Viper Energy Partners LP(a) | 430 | 14,009 | ||||||
Western Gas Partners LP(a) | 1,160 | 59,937 | ||||||
Williams Partners LP(a) | 2,686 | 106,903 | ||||||
Total Oil, Gas & Consumable Fuels | 2,033,088 | |||||||
Total Common Stocks | ||||||||
(Cost $7,743,159) | 7,851,843 | |||||||
INVESTMENT COMPANIES – 7.9% | ||||||||
Aberdeen Asia-Pacific Income Fund, Inc. | 2,820 | 12,690 | ||||||
Aberdeen Income Credit Strategies Fund | 140 | 1,942 | ||||||
AllianceBernstein Global High Income Fund, Inc. | 950 | 11,048 | ||||||
Apollo Senior Floating Rate Fund, Inc. | 170 | 2,819 | ||||||
Apollo Tactical Income Fund, Inc. | 160 | 2,536 | ||||||
Ares Dynamic Credit Allocation Fund, Inc. | 260 | 4,272 | ||||||
Barings Global Short Duration High Yield Fund | 220 | 4,103 | ||||||
BlackRock 2022 Global Income Opportunity Trust | 230 | 2,111 | ||||||
BlackRock Core Bond Trust | 595 | 7,675 | ||||||
BlackRock Corporate High Yield Fund, Inc. | 1,400 | 14,700 | ||||||
BlackRock Credit Allocation Income Trust | 1,180 | 14,608 | ||||||
BlackRock Debt Strategies Fund, Inc. | 670 | 7,551 | ||||||
BlackRock Floating Rate Income Strategies Fund, Inc. | 410 | 5,806 | ||||||
BlackRock Floating Rate Income Trust | 260 | 3,505 | ||||||
BlackRock Income Trust, Inc. | 704 | 4,090 | ||||||
BlackRock Limited Duration Income Trust | 410 | 6,138 | ||||||
BlackRock Multi-Sector Income Trust | 420 | 7,211 | ||||||
BlackRock Taxable Municipal Bond Trust | 622 | 13,584 | ||||||
Blackstone/GSO Senior Floating Rate Term Fund | 160 | 2,878 | ||||||
Blackstone/GSO Strategic Credit Fund | 490 | 7,747 | ||||||
Blackstone/GSO Long-Short Credit Income Fund | 140 | 2,345 | ||||||
Brandywine Global Income Opportunities Fund, Inc. | 230 | 2,705 | ||||||
Brookfield Real Assets Income Fund, Inc. | 400 | 9,128 | ||||||
Cohen & Steers Limited Duration Preferred and Income Fund, Inc. | 315 | 7,906 |
See accompanying notes to the financial statements.
7 |
GraniteShares ETF Trust
Schedule of Investments |
GraniteShares HIPS US High Income ETF (continued)
May 31, 2018 (Unaudited)
Investments | Shares | Value | ||||||
INVESTMENT COMPANIES (continued) | ||||||||
Cohen & Steers Select Preferred and Income Fund, Inc. | 131 | $ | 3,418 | |||||
Credit Suisse High Yield Bond Fund | 1,100 | 2,877 | ||||||
DoubleLine Funds Trust - DoubleLine Opportunistic Credit Fund | 160 | 3,381 | ||||||
DoubleLine Income Solutions Fund | 1,120 | 22,411 | ||||||
Dreyfus High Yield Strategies Fund | 800 | 2,512 | ||||||
Eagle Point Credit Co., Inc. | 190 | 3,437 | ||||||
Eaton Vance Floating-Rate Income Trust | 440 | 6,534 | ||||||
Eaton Vance Limited Duration Income Fund | 1,265 | 16,129 | ||||||
Eaton Vance Senior Floating-Rate Trust | 410 | 5,998 | ||||||
Eaton Vance Senior Income Trust | 415 | 2,735 | ||||||
Eaton Vance Short Duration Diversified Income Fund | 196 | 2,589 | ||||||
First Trust High Income Long/Short Fund | 390 | 5,753 | ||||||
First Trust Intermediate Duration Preferred & Income Fund | 664 | 14,542 | ||||||
First Trust Senior Floating Rate 2022 Target Term Fund | 390 | 3,654 | ||||||
First Trust Senior Floating Rate Income Fund II | 290 | 3,767 | ||||||
Flaherty & Crumrine Dynamic Preferred and Income Fund, Inc. | 211 | 4,838 | ||||||
Flaherty & Crumrine Preferred Securities Income Fund, Inc. | 480 | 8,957 | ||||||
Flaherty & Crumrine Total Return Fund, Inc. | 108 | 2,094 | ||||||
Franklin Limited Duration Income Trust | 240 | 2,652 | ||||||
Guggenheim Credit Allocation Fund | 80 | 1,816 | ||||||
Guggenheim Strategic Opportunities Fund | 260 | 5,535 | ||||||
Guggenheim Taxable Municipal Managed Duration Trust | 190 | 4,074 | ||||||
Invesco Bond Fund | 125 | 2,206 | ||||||
Invesco Dynamic Credit Opportunities Fund | 820 | 9,619 | ||||||
Invesco High Income 2023 Target Term Fund | 260 | 2,577 | ||||||
Invesco Senior Income Trust | 1,980 | 8,692 | ||||||
Ivy High Income Opportunities Fund | 180 | 2,576 | ||||||
John Hancock Preferred Income Fund | 285 | 6,071 | ||||||
John Hancock Preferred Income Fund II | 233 | 4,818 | ||||||
John Hancock Preferred Income Fund III | 346 | 6,280 |
See accompanying notes to the financial statements.
8 |
GraniteShares ETF Trust
Schedule of Investments |
GraniteShares HIPS US High Income ETF (continued)
May 31, 2018 (Unaudited)
Investments | Shares | Value | ||||||
INVESTMENT COMPANIES (continued) | ||||||||
John Hancock Premium Dividend Fund | 542 | $ | 8,542 | |||||
KKR Income Opportunities Fund | 160 | 2,586 | ||||||
MFS Charter Income Trust | 590 | 4,679 | ||||||
MFS Intermediate Income Trust | 1,300 | 5,057 | ||||||
MFS Multimarket Income Trust | 850 | 4,811 | ||||||
Morgan Stanley Emerging Markets Debt Fund, Inc. | 220 | 1,989 | ||||||
Morgan Stanley Emerging Markets Domestic Debt Fund, Inc. | 740 | 5,210 | ||||||
Neuberger Berman High Yield Strategies Fund, Inc. | 210 | 2,289 | ||||||
New America High Income Fund, Inc. (The) | 256 | 2,232 | ||||||
Nuveen Build America Bond Fund | 290 | 5,928 | ||||||
Nuveen Credit Strategies Income Fund | 1,490 | 12,054 | ||||||
Nuveen Floating Rate Income Fund | 620 | 6,715 | ||||||
Nuveen Floating Rate Income Opportunity Fund | 440 | 4,668 | ||||||
Nuveen Global High Income Fund, Class I | 250 | 3,920 | ||||||
Nuveen High Income December 2018 Target Term Fund | 320 | 3,139 | ||||||
Nuveen High Income December 2019 Target Term Fund | 298 | 2,935 | ||||||
Nuveen High Income November 2021 Target Term Fund | 610 | 5,801 | ||||||
Nuveen Mortgage Opportunity Term Fund | 170 | 3,963 | ||||||
Nuveen Preferred & Income Opportunities Fund | 1,125 | 11,036 | ||||||
Nuveen Preferred & Income Securities Fund | 2,223 | 20,918 | ||||||
Nuveen Preferred & Income Term Fund | 249 | 5,941 | ||||||
Nuveen Senior Income Fund | 415 | 2,702 | ||||||
Nuveen Short Duration Credit Opportunities Fund | 110 | 1,881 | ||||||
Oxford Lane Capital Corp. | 200 | 2,106 | ||||||
PIMCO Corporate & Income Opportunity Fund | 850 | 15,632 | ||||||
PIMCO Corporate & Income Strategy Fund | 430 | 7,620 | ||||||
PIMCO Dynamic Credit and Mortgage Income Fund | 1,484 | 35,008 | ||||||
PIMCO Dynamic Income Fund | 530 | 16,801 | ||||||
PIMCO High Income Fund | 1,400 | 11,410 | ||||||
PIMCO Income Opportunity Fund | 160 | 4,414 | ||||||
PIMCO Income Strategy Fund | 270 | 3,294 | ||||||
PIMCO Income Strategy Fund II | 650 | 6,916 | ||||||
PIMCO Strategic Income Fund, Inc. | 460 | 4,425 |
See accompanying notes to the financial statements.
9 |
GraniteShares ETF Trust
Schedule of Investments |
GraniteShares HIPS US High Income ETF (continued)
May 31, 2018 (Unaudited)
Investments | Shares | Value | ||||||
INVESTMENT COMPANIES (continued) | ||||||||
Pioneer Floating Rate Trust | 270 | $ | 3,078 | |||||
Pioneer High Income Trust | 320 | 3,014 | ||||||
Prudential Global Short Duration High Yield Fund, Inc. | 450 | 6,197 | ||||||
Prudential Short Duration High Yield Fund, Inc. | 360 | 5,065 | ||||||
Putnam Master Intermediate Income Trust | 630 | 2,948 | ||||||
Putnam Premier Income Trust | 1,291 | 6,816 | ||||||
Stone Harbor Emerging Markets Income Fund | 180 | 2,518 | ||||||
Templeton Emerging Markets Income Fund | 525 | 5,518 | ||||||
Templeton Global Income Fund | 1,470 | 9,143 | ||||||
Virtus Global Multi-Sector Income Fund | 120 | 1,688 | ||||||
Voya Prime Rate Trust | 1,640 | 8,397 | ||||||
Wells Fargo Income Opportunities Fund | 780 | 6,240 | ||||||
Wells Fargo Multi-Sector Income Fund | 380 | 4,853 | ||||||
Western Asset Emerging Markets Debt Fund, Inc. | 669 | 9,078 | ||||||
Western Asset Global Corporate Defined Opportunity Fund, Inc. | 160 | 2,669 | ||||||
Western Asset Global High Income Fund, Inc. | 500 | 4,590 | ||||||
Western Asset High Income Fund II, Inc. | 960 | 6,182 | ||||||
Western Asset High Income Opportunity Fund, Inc. | 1,430 | 6,807 | ||||||
Western Asset High Yield Defined Opportunity Fund, Inc. | 250 | 3,638 | ||||||
Western Asset Inflation-Linked Opportunities & Income Fund | 670 | 7,464 | ||||||
Western Asset Inflation-Linked Securities & Income Fund | 320 | 3,638 | ||||||
Western Asset Mortgage Defined Opportunity Fund, Inc. | 110 | 2,686 | ||||||
Total Investment Companies | ||||||||
(Cost $703,349) | 680,489 | |||||||
MONEY MARKET FUND – 0.5% | ||||||||
BlackRock Liquidity Funds Treasury Trust Portfolio, 1.62%(d) (Cost $39,625) | 39,625 | 39,625 | ||||||
Total Investments – 100.1% | ||||||||
(Cost $8,486,133) | 8,571,957 | |||||||
Liabilities in Excess of Other Assets – (0.1)% | (11,677 | ) | ||||||
Net Assets – 100.0% | $ | 8,560,280 |
See accompanying notes to the financial statements.
10 |
GraniteShares ETF Trust
Schedule of Investments |
GraniteShares HIPS US High Income ETF (continued)
May 31, 2018 (Unaudited)
* | Non-income producing security. |
** | Less than 0.05% |
(a) | Master Limited Partnership (“MLP”) |
(b) | To the extent the Fund invests more heavily in particular sectors of the economy its performance will be especially sensitive to developments that significantly affect those sectors. |
(c) | Real Estate Investment Trust (“REIT”) |
(d) | Rate shown reflects the 7-day yield as of May 31, 2018. |
The following table summarizes valuation of the Fund’s investments under the fair value hierarchy levels as of May 31, 2018:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Asset Valuation Inputs | ||||||||||||||||
Investments in Securities | ||||||||||||||||
Common Stocks | $ | 7,851,843 | $ | – | $ | – | $ | 7,851,843 | ||||||||
Investment Companies | 680,489 | – | – | 680,489 | ||||||||||||
Money Market Fund | 39,625 | – | – | 39,625 | ||||||||||||
Total Investment in Securities | $ | 8,571,957 | $ | – | $ | – | $ | 8,571,957 |
For the period ended May 31, 2018, there were no transfers between any levels. As of May 31, 2018 there were no Level 3 investments held in the Fund.
See accompanying notes to the financial statements.
11 |
Statement of Assets and Liabilities |
May 31, 2018 (Unaudited)
GraniteShares HIPS US High Income ETF | ||||
Assets: | ||||
Investments at cost | $ | 8,486,133 | ||
Investments at value | $ | 8,571,957 | ||
Securities sold receivable | 135 | |||
Dividends and interest receivable | 7,964 | |||
Total Assets | 8,580,056 | |||
Liabilities: | ||||
Payable to custodian | 17 | |||
Advisory fees payable | 14,129 | |||
Trustee fees payable | 842 | |||
CCO fees payable | 4,788 | |||
Total Liabilities | 19,776 | |||
Net Assets | $ | 8,560,280 | ||
Net Assets Consist of: | ||||
Paid-in capital | $ | 8,928,621 | ||
Accumulated net investment loss | (286,523 | ) | ||
Accumulated net realized gain (loss) | (167,642 | ) | ||
Net unrealized appreciation (depreciation) | 85,824 | |||
Net Assets | $ | 8,560,280 | ||
Shares Outstanding | 500,000 | |||
Net Asset Value per share: | $ | 17.12 |
See accompanying notes to the financial statements.
12 |
Statement of Operations |
GraniteShares HIPS US High Income ETF | ||||
Six Months Ended May 31, 2018 (Unaudited) | ||||
Investment Income: | ||||
Dividends | $ | 158,859 | ||
Total Investment Income | 158,859 | |||
Expenses: | ||||
Advisory fees | 31,840 | |||
Trustees’ fees | 2,821 | |||
CCO fees | 9,784 | |||
Total Expenses | 44,445 | |||
Expense Reimbursement | (12,605 | ) | ||
Net Expenses | 31,840 | |||
Net Investment Income | 127,019 | |||
Net Realized and Unrealized Gain (Loss) on: | ||||
Net realized gain (loss) on: | ||||
Investments | (120,818 | ) | ||
Distributions from investments in other investment companies | 342 | |||
In-kind redemptions | 103,778 | |||
Net realized loss | (16,698 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 11,046 | |||
Net change in unrealized appreciation (depreciation) | 11,046 | |||
Net Realized and Unrealized Loss | (5,652 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 121,367 |
See accompanying notes to the financial statements.
13 |
Statements of Changes in Net Assets |
GraniteShares HIPS US High Income ETF | ||||||||
Six Months Ended May 31, 2018 (Unaudited) | Year Ended November 30, 2017 | |||||||
Operations: | ||||||||
Net investment income | $ | 127,019 | $ | 299,789 | ||||
Net realized gain (loss) | (16,698 | ) | 181,484 | |||||
Net change in unrealized gain | 11,046 | 168,598 | ||||||
Net Increase in Net Assets Resulting from Operations | 121,367 | 649,871 | ||||||
Distributions to shareholders: | ||||||||
From net investment income | (338,625 | ) | (250,280 | ) | ||||
Tax return of capital to shareholders | — | (426,970 | ) | |||||
Total distributions to shareholders | (338,625 | ) | (677,250 | ) | ||||
From share transactions: | ||||||||
Proceeds from sales of shares | — | 4,489,725 | ||||||
Cost of shares redeemed | (1,716,180 | ) | (934,185 | ) | ||||
Net increase (decrease) in net assets resulting from share transactions | (1,716,180 | ) | 3,555,540 | |||||
Total Increase (Decrease) in net assets | (1,933,438 | ) | 3,528,161 | |||||
Net Assets: | ||||||||
Beginning of period | 10,493,718 | 6,965,557 | ||||||
End of period | $ | 8,560,280 | $ | 10,493,718 | ||||
Accumulated net investment loss | $ | (286,523 | ) | $ | (74,917 | ) | ||
Changes in Shares Outstanding: | ||||||||
Shares outstanding, beginning of period | 600,000 | 400,000 | ||||||
Shares sold | — | 250,000 | ||||||
Shares redeemed | (100,000 | ) | (50,000 | ) | ||||
Shares outstanding, end of period | 500,000 | 600,000 |
See accompanying notes to the financial statements.
14 |
Financial Highlights |
GraniteShares HIPS US High Income ETF | Six Months Ended May 31, 2018 (Unaudited) | Year Ended November 30, 2017 | Year Ended November 30, 2016 | For the Period from January 6, 2015(a) to November 30, 2015 | ||||||||||||
Operating Performance: | ||||||||||||||||
Net asset value, beginning of period | $ | 17 .49 | $ | 17 .41 | $ | 16 .54 | $ | 20 .00 | ||||||||
Net investment income(b) | 0 .24 | 0 .57 | 0 .74 | 0 .63 | ||||||||||||
Distributions of net realized gains from investments in other investment companies | — | (d) | — | — | ||||||||||||
Net realized and unrealized gain (loss)(c) | 0 .04 | 0 .80 | 1 .42 | (3 .01) | ||||||||||||
Total gain (loss) from investment operations | 0 .28 | 1 .37 | 2 .16 | (2 .38) | ||||||||||||
Less distributions from: | ||||||||||||||||
Net investment income | (0 .65) | (0 .48) | (0 .85) | (0 .59) | ||||||||||||
Tax return of capital to shareholders | — | (0 .81) | (0 .44) | (0 .49) | ||||||||||||
Total distributions | (0 .65) | (1 .29) | (1 .29) | (1 .08) | ||||||||||||
Net asset value, end of period | $ | 17 .12 | $ | 17 .49 | $ | 17 .41 | $ | 16 .54 | ||||||||
Total Return(e) | 1.66 | %(f) | 7 .87 | % | 14 .02 | % | (12 .39) | %(f) | ||||||||
Ratios to Average Net Assets and Supplemental Data: | ||||||||||||||||
Net assets, end of period (in 000’s) | $ | 8,560 | $ | 10,494 | $ | 6,966 | $ | 4,962 | ||||||||
Ratio of net investment income to average net assets | 2 .81 | %(g) | 3 .18 | % | 4 .49 | % | 3 .72 | %(g) | ||||||||
Ratio of investment income (loss) excluding tax expense to average net assets | 2 .81 | %(g) | 3 .18 | % | 4 .50 | % | 3 .72 | %(g) | ||||||||
Ratio of operating expenses before waivers/reimbursements | 0 .98 | %(g) | 0 .75 | % | 0 .76 | % | 0 .75 | %(g) | ||||||||
Ratio of net operating expenses net of waivers/reimbursements | 0 .71 | %(g) | 0 .75 | % | 0 .75 | % | 0 .75 | %(g) | ||||||||
Portfolio turnover rate(h) | 18 | %(f) | 88 | % | 54 | % | 23 | %(f) |
(a) | Commencement of operations. |
(b) | Per share data is calculated using the average daily shares outstanding method. |
(c) | The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund. |
(d) | Amount represents less than $0.005. |
(e) | Total return would have been lower if certain fees had not been reimbursed by the Advisor. |
(f) | Not Annualized. |
(g) | Annualized. |
(h) | Excludes the impact of in-kind transactions. |
See accompanying notes to the financial statements.
15 |
May 31, 2018 (unaudited)
ORGANIZATION
GraniteShares HIPS US High Income ETF (the “Fund”) is a diversified series of GraniteShares ETF Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on November 7, 2016. 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 is registered under the Securities Act of 1933, as amended (the “Securities Act”). The investment objective of the Fund is to track the performance, before fees and expenses, of the TFMS HIPS 300 Index (the “Index”). The Fund commenced operations on January 6, 2015.
On December 13, 2017, the shareholders of the Master Income ETF (the “Reorganizing Fund”), a series of the ETF Series Solutions Trust, approved an Agreement and Plan of Reorganization providing for the transfer of all assets and liabilities of the Reorganizing Fund to the GraniteShares ETF Trust. The GraniteShares HIPS US High Income ETF, a new series of the Trust, assumed the financial and performance history of the Master Income ETF. The tax-free merger took place on December 15, 2017.
SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The Fund follows the accounting and reporting guidance in the Accounting Standards Codifications 946, “Financial Services—Investment Companies” issued by the U.S. Financial Accounting Standards Board.
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
Investment Transactions and Investment Income: Investment transactions are recorded on the trade date. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income, if any, is recorded on the ex-dividend date or, in the case of foreign securities, as soon as the Fund is informed of the ex-dividend dates. Interest income, including accretion of discounts and amortization of premiums, is recorded on the accrual basis. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable tax rules and regulations.
Distributions received from the Fund’s investments in master limited partnerships (“MLPs”) generally are comprised of ordinary income and return of capital from the MLPs. The Fund allocates distributions between investment income and return of capital based on estimates. Such estimates are based on information provided by each MLP and other industry sources. These estimates may subsequently be revised based on actual allocations received from MLPs after their tax reporting periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Fund.
Distributions received from the Fund’s investments in real estate investment trusts (“REITs”) may be characterized as ordinary income, net capital gain, or a return of capital. The proper characterization of REIT distributions is generally not known until after the end of each calendar year. As such, the Fund must use estimates in reporting the character of its income and distributions for financial statement purposes. The actual character of distributions to the Fund’s shareholders will be reflected on the Form 1099 received by shareholders after the end of the calendar year. Due to the nature of REIT investments, a portion of the distributions received by the Fund’s shareholders may represent a return of capital.
Distributions received from the Fund’s investments in closed-end funds (“CEFs”) are recorded as ordinary income, net realized capital gain or return of capital based on information reported by the CEFs and management’s estimates of such amounts based on historical information. These estimates are adjusted with the tax returns after the actual source of distributions has been disclosed by the CEFs and may differ from the estimated amounts.
Dividend Distributions: Distributions to shareholders are recorded on the ex-dividend date and are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. The Fund distributes all or substantially all of its net investment income to shareholders in the form of dividends.
SECURITIES VALUATION
The NAV per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on the days on which the New York Stock Exchange Arca, Inc. (“NYSE Arca”) is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
16 |
Notes To Financial Statements (continued)
May 31, 2018 (unaudited)
Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Board or its delegate at fair value. These securities generally include but are not limited to, restricted securities (securities which may not be publicly sold without registration under the 1933 Act) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market price is not available from a pre- established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of the Fund net asset value (as may be the case in foreign markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, does not reflect the security’s “fair value.” A variety of factors may be considered in determining the fair value of such securities.
Valuing the Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations.
The Financial Accounting Standards Board established a framework for measuring fair value in accordance with U.S. GAAP. Under Fair Value Measurements and Disclosures, various inputs are used in determining the value of the exchange traded fund’s investments. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three Levels of inputs of the fair value hierarchy are defined as follows:
Level 1 - | Unadjusted quoted prices in active markets for identical assets or liabilities. |
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 securities, 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. |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
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 hierarchy classification of inputs used to value the Fund’s investments at May 31, 2018, is disclosed at the end of the Fund’s Schedule of Investments.
ADVISORY AND OTHER AGREEMENTS
GraniteShares Advisors LLC, the investment adviser to Fund, is a Delaware limited Liability Company located at 205 Hudson Street, 7th Floor, New York, NY 10013. The Adviser provides investment advisory services to exchange-traded funds. The Adviser serves as investment adviser to the Fund with overall responsibility for the portfolio management of the Fund, subject to the supervision of the Board of Trustees (the “Board”) of the Trust. For its services, the Adviser receives a fee that is equal to 0.70% per annum of the average daily net assets of the Fund.
The Bank of New York Mellon (in each capacity, the “Administrator”, “Custodian,” “Accounting Agent” or “Transfer Agent”) serves as the Funds’ Administrator, Custodian, Accounting Agent and Transfer Agent pursuant to the Funds Administration and Accounting Agreement. The Bank of New York Mellon is a subsidiary of The Bank of New York Mellon Corporation, a financial holding company.
Foreside Fund Services, LLC. (“Distributor”) serves as the Funds’ distributor. The Trust has adopted a distribution and service plan (“Rule 12b-1 Plan”) pursuant to Rule 12b-1 under the 1940 Act. Under the Rule 12b-1 Plan, the Fund is authorized to pay an amount up to a maximum annual rate of 0.25% of its average net assets in connection with the sale and distribution of its shares and pay service fees in connection with the provision of ongoing services to shareholders. No distribution fees are currently charged to the Funds; there are no plans to impose these fees.
17 |
Notes To Financial Statements (continued)
May 31, 2018 (unaudited)
SHARE TRANSACTIONS
Shares of the Fund are listed and traded on NYSE Arca. Market prices for the shares may be different from their 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 universe. Once created, shares generally trade in the secondary market at market prices that change throughout the day. Except when aggregated in Creation Units, shares are not redeemable securities of the Fund. Creation Units 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 Depository Trust Company 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 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.
The Fund currently offers one class of shares, which has no front-end sales load, no deferred sales charge, and no redemption fee. A fixed transaction fee is imposed for the transfer and other transaction costs associated with the purchase or sale of a Creation Unit. The standard fixed transaction fee for the Fund is $750, payable to the Custodian. In addition, a variable fee may be charged on all cash transactions or substitutes for Creation Units of up to a maximum of 2% of the value of the Creation Units subject to the transaction. Variable fees are imposed to compensate the Fund for the transaction costs associated with the cash transactions. There were no variable fees received during the year. 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.
INVESTMENT TRANSACTIONS
During the period ended May 31, 2018, purchases and sales of securities by the Fund, excluding short-term securities and in-kind transactions, were $1,636,586 and $1,681,206, respectively.
During the period ended May 31, 2018, in-kind transactions associated with creations and redemptions were $- and $1,702,678, respectively.
FEDERAL INCOME TAX MATTERS
The Fund intends to qualify as a ’‘regulated investment company’’ under Subchapter M of the Internal Revenue Code of 1986, as amended. If so qualified, the Fund will not be subject to a Federal income tax to the extent it distributes substantially all of its net investment income and net capital gains to its shareholders. Accounting for Uncertainty in Income Taxes provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the consolidated financial statements, and requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are ’‘more-likely-than-not’’ of being sustained by the applicable tax authority. Tax positions not deemed to meet the more than- likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Interest and penalty related to income taxes would be recorded as income tax expense. Management of the Fund is required to analyze all open tax years, as defined by IRS statute of limitations, for all major jurisdictions, including federal tax authorities and certain state tax authorities. As of November 30, 2017, the Fund did not have a liability for any unrecognized tax benefits. The Fund has no examination in progress and are not aware of any tax positions for which it is reasonably possible that the amounts of unrecognized tax benefits will significantly change in the next twelve months.
At May 31, 2018, the cost of investments and net unrealized appreciation (depreciation) for federal income tax purposes were as follows:
Federal Tax Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||||||
$8,486,133 | $642,105 | $(556,281) | $85,824 |
The differences between book and tax basis cost of investments and net unrealized appreciation (depreciation) are primarily attributable to wash sales.
18 |
Notes To Financial Statements (continued)
May 31, 2018 (unaudited)
INDEMNIFICATION
In the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnities. 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. Management expects this risk of loss due to be remote
PRINCIPAL RISKS
In the normal course of business, the Fund makes investments in financial instruments where the risk of potential loss exists due to changes in the market. The following is a description of select risks of investing in the Fund.
REIT Investment Risk: Investments in REITs involve unique risks. REITs may have limited financial resources, may trade less frequently and in limited volume, and may be more volatile than other securities. The risks of investing in REITs include certain risks associated with the direct ownership of real estate and the real estate industry in general. REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation.
MLP Risk: MLP investment returns are enhanced during periods of declining or low interest rates and tend to be negatively influenced when interest rates are rising. In addition, most MLPs are fairly leveraged and typically carry a portion of a “floating” rate debt. As such, a significant upward swing in interest rates would also drive interest expense higher. Furthermore, most MLPs grow by acquisitions partly financed by debt, and higher interest rates could make it more difficult to make acquisitions. MLP investments also entail many of the general tax risks of investing in a partnership. Limited partners in an MLP typically have limited control and limited rights to vote on matters affecting the partnership. Additionally, there is always the risk that an MLP will fail to qualify for favorable tax treatment.
Business Development Company (“BDC”) Risk: BDC’s may carry risks similar to those of a private equity or venture capital fund. BDC company securities are not redeemable at the option of the shareholder and they may trade in the market at a discount to their net asset value. BDCs usually trade at a discount to their NAV because they invest in unlisted securities and have limited access to capital markets. BDC’s are subject to management and other expenses, which will be indirectly paid by the Fund.
Investment Company Risk: The risks of investment in investment companies typically reflect the risks of the types of instruments in which the investment companies invest in. By investing in another investment company, the Fund becomes a shareholder of that investment company and bears its proportionate share of the fees and expenses of the other investment company. The Fund may be subject to statutory limits with respect to the amount it can invest in other investment companies, which may adversely affect the Fund’s ability to achieve its investment objective.
Sector Risk: To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors.
SUBSEQUENT EVENTS
The Funds have evaluated subsequent events through the issuance of the consolidated financial statements and determined that no events have occurred that require disclosure.
19 |
Supplemental Information
Quarterly Portfolio Holdings Information
The Fund will be required to file its complete schedule of portfolio holdings with the SEC for their first and third quarters on Form N-Q. Copies of the filings will be available without charge on the SEC’s website at www.sec.gov. You will also be able obtain copies of Form N-Q by visiting the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Proxy Voting Information
A description of the Fund proxy voting policies and procedures, as well as a record of how the Fund voted proxies during the most recent 12-month period ended June 30, is available without charge upon request by calling 1-844-476-8747. This information will also be available on the SEC’s website at www.sec.gov.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of a Fund and the Fund’s net asset value may be found on the Fund’s website at www.graniteshares.com.
20 |
GraniteShares ETF Trust
205 Hudson Street, 7th Floor
New York, NY 10013
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period 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.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s Board of Trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). | |
(b) | There have been no changes in the registrant’s internal controls over financial reporting that occurred during the registrant’s last fiscal quarter that has materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
[Note that until the date that the registrant has filed its first report on Form N-PORT (17 CFR 270.150), the registrant’s disclosures required by this Item are limited to any change in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting.]
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) | Not applicable. | |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
[Note that until the date that the registrant has filed its first report on Form N-PORT (17 CFR 270.150), in the certification required by Item 13(a)(2), the registrant’s certifying officers must certify that they have disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting.]
(a)(3) | Not applicable. | |
(a)(4) | Not applicable. | |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto. |
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) | GraniteShares ETF Trust |
By (Signature and Title)* | /s/ William Rhind |
William Rhind, Trustee, President and Chief Financial Officer | |
(principal executive officer and principal financial officer) |
Date | 7/25/2018 |
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/ William Rhind |
William Rhind, Trustee, President and Chief Financial Officer | |
(principal executive officer and principal financial officer) |
Date | 7/25/2018 |
* Print the name and title of each signing officer under his or her signature.