Prospectus
GOLDMAN
SACHS ETF TRUST
THE SECURITIES AND
EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED
UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
|
AN
INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE
FEDERAL DEPOSIT
INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND
INVOLVES
INVESTMENT RISKS, AND YOU MAY LOSE MONEY IN THE
FUND. |
◼
Goldman Sachs Nasdaq-100
Premium Income ETF
◼
The NASDAQ
Stock Market LLC: GPIQ
◼
Goldman Sachs S&P 500
Premium Income ETF
◼
The NASDAQ
Stock Market LLC: GPIX
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|
Management
Fee |
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|
Distribution
and Service (12b-1) Fee |
|
|
Other
Expenses |
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|
Total
Annual Fund Operating Expenses |
|
|
Fee
Waiver1
|
( |
|
Total
Annual Fund Operating Expenses After Fee Waiver |
|
1
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
|
|
|
|
1
|
Principal
Risks of the Fund |
2
3
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Year |
Since
Inception |
Inception
Date | |
|
Goldman
Sachs Nasdaq-100 Premium Income ETF |
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|
Returns
Before Taxes |
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|
Returns
After Taxes on Distributions |
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Returns
After Taxes on Distributions and Sale of Fund Shares |
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Nasdaq
100 (Total Return, USD, Unhedged) |
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|
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S&P
500®
Index |
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4
|
Portfolio
Management |
Goldman
Sachs Asset Management, L.P. is the investment adviser for the Fund (the
“Investment Adviser” or “GSAM”).
Portfolio
Managers: Raj
Garigipati, Managing Director, has managed the Fund since October 2023; Aron
Kershner, Managing Director, and John Sienkiewicz, Managing Director, have each
managed the Fund since March 2025.
|
Buying
and Selling Fund Shares |
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at market price. Because Shares trade at
market prices, rather than NAV, Shares of the Fund may trade at a price greater
than NAV (i.e., a
premium) or less than NAV (i.e., a
discount).
You may
incur costs attributable to the difference between the highest price a buyer is
willing to pay for Shares (bid) and the lowest price a seller is willing to
accept for Shares (ask) (the “bid-ask spread”) when buying or selling Shares in
the secondary market.
Recent
information, including information about the Fund’s NAV, market price, premiums
and discounts, and bid-ask spreads, is included on the Fund’s website at
am.gs.com.
|
Tax
Information |
To the extent a Fund's
distributions constitute a return of capital, they are not taxable but will
reduce the shareholder's basis in its shares, which reduces the loss (or
increases the gain) on a subsequent taxable disposition of shares. Any portion
of a Fund's distributions that do not constitute a return of capital is taxable,
and will be taxed as ordinary income or capital gains, unless you are investing
through a tax-deferred arrangement, such as
a
401(k)
plan
or
an
individual
retirement
account. Investments
made through
tax-deferred arrangements may become taxable upon withdrawal from such
arrangements.
|
Payments
to Broker-Dealers and
Other
Financial Intermediaries |
If you purchase Shares of
the Fund through a broker-dealer or other financial intermediary (such as a
bank), GSAM or
other related
companies may pay the intermediary for the sale of Fund Shares or related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to
recommend
the
Fund
over
another
investment. Ask
your
salesperson or visit your financial intermediary’s website for more
information.
5
|
|
|
|
|
Management
Fee |
|
|
Distribution
and Service (12b-1) Fee |
|
|
Other
Expenses |
|
|
Total
Annual Fund Operating Expenses |
|
|
Fee
Waiver1
|
( |
|
Total
Annual Fund Operating Expenses After Fee Waiver |
|
1
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
|
|
|
|
6
|
Principal
Risks of the Fund |
7
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Year |
Since
Inception |
Inception
Date | |
|
Goldman
Sachs S&P 500 Premium Income ETF |
|
|
|
|
Returns
Before Taxes |
|
|
|
|
Returns
After Taxes on Distributions |
|
|
|
|
Returns
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
S&P
500®
Index |
|
|
|
|
Portfolio
Management |
Goldman
Sachs Asset Management, L.P. is the investment adviser for the Fund (the
“Investment Adviser” or “GSAM”).
Portfolio
Managers: Raj
Garigipati, Managing Director; has managed the Fund since October 2023; Aron
Kershner, Managing Director, and John Sienkiewicz, Managing Director, have each
managed the Fund since March 2025.
|
Buying
and Selling Fund Shares |
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at market price. Because Shares trade at
market prices, rather than NAV, Shares of the Fund may trade at a price greater
than NAV (i.e., a
premium) or less than NAV (i.e., a
discount).
You may
incur costs attributable to the difference between the highest price a buyer is
willing to pay for Shares (bid) and the lowest price a seller is willing to
accept for Shares (ask) (the “bid-ask spread”) when buying or selling Shares in
the secondary market.
Recent
information, including information about the Fund’s NAV, market price, premiums
and discounts, and bid-ask spreads, is included on the Fund’s website at
am.gs.com.
|
Tax
Information |
To the extent a Fund's
distributions constitute a return of capital, they are not taxable but will
reduce the shareholder's basis in its shares, which reduces the loss (or
increases the gain) on a subsequent taxable disposition of shares. Any portion
of a Fund's distributions that do not constitute a return of capital is taxable,
and will be taxed as ordinary income or capital gains, unless you are investing
through a tax-deferred arrangement, such as
a
401(k)
plan
or
an
individual
retirement
account. Investments
made through
tax-deferred arrangements may become taxable upon withdrawal from such
arrangements.
9
|
Payments
to Broker-Dealers and
Other
Financial Intermediaries |
If you purchase Shares of
the Fund through a broker-dealer or other financial intermediary (such as a
bank), GSAM or
other related
companies may pay the intermediary for the sale of Fund Shares or related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to
recommend
the
Fund
over
another
investment. Ask
your
salesperson or visit your financial intermediary’s website for more
information.
10
Investment
Management Approach
|
INVESTMENT
OBJECTIVE |
Each Fund
seeks to provide current income while maintaining prospects for capital
appreciation. A Fund’s investment objective may be changed without shareholder
approval.
|
PRINCIPAL
INVESTMENT STRATEGIES |
Each Fund
invests, under normal circumstances, at least 80% of its Net Assets in
investments in companies that are included in the Fund’s benchmark. These
investments may include equity securities such as common stock, preferred stock,
warrants and other rights to acquire stock, options, and derivatives on equity
instruments that generate premium income for the Fund. Shareholders will be
provided with 60 days’ notice in the manner prescribed by the Securities and
Exchange Commission before any change in a Fund’s policy to invest at least 80%
of its assets in investments in companies that are included in the Fund’s
benchmark.
Each Fund seeks to achieve
its objective by investing primarily in a portfolio of stocks comprised
significantly of those included in the Fund’s benchmark and selling call options
with exposure to the benchmark. Each Fund will generally seek to maintain style,
capitalization and industry characteristics similar to its benchmark. The equity
portion of each Fund’s portfolio will generally be invested in the benchmark
components in approximately the same weighting that such components have within
the benchmark at the applicable time. However, under various circumstances,
including when balancing investment and tax considerations, each Fund may not
invest in all of the securities in the benchmark in the approximate benchmark
weight. Each Fund may also invest in pooled investment vehicles, including
exchange-traded funds such as ETFs and UITs for cash management
purposes.
The Investment Adviser
measures the Goldman Sachs Nasdaq-100 Premium Income ETF’s performance against
the Nasdaq 100 (Total Return, USD, Unhedged). The Nasdaq 100 (Total Return, USD,
Unhedged) is a stock market index made up of 101 equity securities issued by 100
of the largest non-financial companies listed on the Nasdaq stock market. It is
a modified capitalization-weighted index. The Goldman Sachs Nasdaq-100 Premium
Income ETF’s broad-based securities market index is the S&P 500® Index. The S&P
500®
Index includes
500 leading companies and captures approximately 80% coverage of available
market capitalization. This index is designed to measure the performance of the
large cap U.S. equities.
The
Investment Adviser measures the Goldman Sachs S&P 500 Premium Income ETF’s
performance against the S&P 500® Index. The
S&P 500® Index
includes 500 leading companies and captures approximately 80% coverage of
available market capitalization. This index is designed to measure the
performance of the large cap U.S. equities.
Each Fund is managed in a
way that seeks, under normal circumstances, to provide monthly distributions at
a relatively stable rate with performance that captures the majority of the
returns (and risk) associated with the benchmark. Each Fund’s investment
strategy may cause a significant portion of the distributions to shareholders to
be treated as a return of capital. Additional sources of distributions may
include but are not limited to income received from investments that provide
exposure to equity securities of companies that pay dividends. No guarantee can
be made regarding the tax characterization of the distributions.
To generate income, each
Fund employs a dynamic options “overwrite” strategy whereby the Fund sells
(writes) on a varying percentage of the market value of the equity investments
in the Fund’s portfolio. Each Fund expects that, under normal circumstances, the
overwrite level (i.e., the ratio of the notional value of call options sold by a
Fund to the market value of the equity investments in the Fund’s portfolio) will
be between 25% and 75% of the value of the equity investments in the Fund’s
portfolio. Each Fund generally expects to sell call options on underliers that
provide economic exposure to the Fund’s benchmark, such as an ETF that seeks to
track such index, and not on securities of issuers included in such index and
held by the Fund. Each Fund is an actively managed ETF, which is a fund that
trades like other publicly-traded securities. Each Fund is not an index fund and
does not seek to replicate the performance of a specified index.
Each Fund
may invest in FLEX Options, other types of listed options and OTC options. FLEX
Options are customized exchange-traded option contracts available through the
Chicago Board Option Exchange. Through FLEX Options, each Fund could customize
key contract terms such as exercise prices and expiration
dates.
During
periods in which the equity markets are generally unchanged or falling, or in a
modestly rising market where the income from premiums exceeds the aggregate
appreciation of the underlying index over its exercise price, a portfolio
receiving premiums from its call option writing strategy may outperform the same
portfolio without such an options strategy. However, in rising markets where the
aggregate appreciation of the underlying index over its exercise price exceeds
the income from premiums, a portfolio with a call writing strategy could
underperform the same portfolio without the options.
Additionally,
each Fund’s investment strategies may involve active and frequent trading
resulting in high portfolio turnover.
11
Each Fund
will rebalance the portion of its portfolio that invests in companies included
in that Fund’s benchmark index in accordance with the rebalance schedule of that
index.
Each Fund
may also invest up to 20% of its Net Assets in securities and other instruments
that are not part of a Fund’s principal investment strategies described above.
Each Fund’s investments in fixed income securities are limited to cash
equivalents (including money market funds) and U.S. Treasury
Securities.
The Funds
may, from time to time, temporarily use a different investment strategy.
When
a Fund does so, the Fund may not be achieving its investment
objective.
GSAM serves
as investment adviser to the Funds. GSAM is referred to in the Prospectus as the
“Investment Adviser.”
Goldman Sachs
Nasdaq-100 Premium Income ETF
The Fund
concentrates its investments (i.e., holds more than 25% of its total assets) in
securities of issuers in the information technology industries. Therefore, under
normal circumstances, the Fund will invest at least 25% of its total assets in
securities of issuers in these industries. The Fund may, however, invest less
than 25% of its total assets in securities of issuers in these industries as a
temporary defensive position.
THE FUND IS
NON-DIVERSIFIED UNDER THE INVESTMENT COMPANY ACT, AND MAY INVEST A LARGER
PERCENTAGE OF ITS ASSETS IN FEWER ISSUERS THAN DIVERSIFIED FUNDS.
|
ADDITIONAL
BENCHMARK INFORMATION |
Note
on Benchmarks. References
in the Prospectus to a Fund's Regulatory or Performance Benchmark (or any other
benchmark) are for informational purposes only, and unless otherwise noted, are
not an indication of how a particular Fund is managed or a particular Fund's
risk characteristics.
|
OTHER
INVESTMENT PRACTICES AND
SECURITIES |
Although
each Fund’s principal investment strategies are described in each Fund’s
Summary—Principal Investment Strategies and Investment Management
Approach—Principal Investment Strategies sections of the Prospectus, the
following tables identify some of the investment techniques that may (but are
not required to) be used by the Funds in seeking to achieve their investment
objectives.
The Funds may be subject to
additional limitations on its investments not shown here. Numbers in these
tables show allowable usage only; for actual usage, consult the Funds’ most
recently filed Form N-CSR. For more information about these and other investment
practices and securities, see Appendix A.
On each
business day, before commencement of trading in Fund Shares on the Exchange,
each Fund will disclose on its website (am.gs.com) the identities and quantities
of the portfolio securities and other assets held by the Fund that will form the
basis for the Funds’ calculation of NAV at the end of the business day. In
addition, a description of the Fund’s policies and procedures with respect to
the disclosure of the Funds’ portfolio holdings is available in the Funds’
Statement of Additional Information (“SAI”).
12
Investment
Management Approach
|
10 Percent
of total assets (including securities lending collateral) (italic
type)
10 Percent
of net assets (excluding borrowings for investment purposes) (roman
type)
• No
specific percentage limitation on usage; limited only by the objective and
strategies of the Fund. |
Nasdaq-100
Premium
Income
ETF |
S&P
500
Premium
Income
ETF |
|
Investment
Practices |
|
|
|
Borrowings |
33 1∕3 |
33 1∕3 |
|
Custodial
Receipts and Trust Certificates |
• |
• |
|
Direct
Equity Investments |
• |
• |
|
Equity
Swaps |
• |
• |
|
Futures
Contracts and Options and Swaps on Futures Contracts |
• |
• |
|
Illiquid
Investments* |
15 |
15 |
|
Investment
Company Securities (including ETFs)1
|
10 |
10 |
|
Options2
|
• |
• |
|
Preferred
Stock, Warrants and Stock Purchase Rights |
• |
• |
|
Repurchase
Agreements |
• |
• |
|
Securities
Lending |
33 1∕3 |
33 1∕3 |
|
Unseasoned
Companies |
• |
• |
|
When-Issued
Securities and Forward Commitments |
• |
• |
*
Illiquid
investments are any investments that the Fund reasonably expects cannot be sold
or disposed of in current market conditions in seven calendar days or less
without the sale or disposition significantly changing the market value of the
investment.
1
This
percentage limitation does not apply to the Fund’s investments in other
investment companies (including ETFs) where a higher percentage limitation is
permitted under the Investment Company Act or rules, regulations or exemptive
relief thereunder.
2
Each
Fund may sell call and put options and purchase call and put options on
securities and other instruments in which a Fund may invest or any index
consisting of securities or other instruments in which it may
invest.
|
10 Percent
of total assets (italic type)
10 Percent
of net assets (including borrowings for investment purposes) (roman
type)
• No
specific percentage limitation on usage; limited only by the objectives
and strategies of the Fund.
—Not
permitted |
Nasdaq-100
Premium
Income
ETF |
S&P
500
Premium
Income
ETF |
|
Investment
Securities |
|
|
|
American,
European and Global Depositary Receipts |
• |
• |
|
Bank
Obligations1
|
• |
• |
|
Convertible
Securities2
|
• |
• |
|
Corporate
Debt Obligations1
|
• |
• |
|
Equity
Investments |
80+ |
80+ |
|
Fixed
Income Securities |
20 |
20 |
|
Foreign
Securities |
• |
• |
|
Real
Estate Investment Trusts (“REITs”) |
|
|
|
Temporary
Investments |
• |
• |
|
U.S.
Government Securities |
• |
• |
1
Limited
by the amount a Fund invests in fixed income securities.
2
The
Funds use the same rating criteria for convertible and non-convertible debt
securities.
13
Risks of
the Funds
Loss of
money is a risk of investing in the Fund (which, for the remainder of this
Prospectus, refers to one or more of the Funds offered in this Prospectus). An
investment in the Fund is not a bank deposit and is not insured or guaranteed by
the FDIC or any other governmental agency. The principal risks of the Fund are
discussed in the Summary sections of the Prospectus. The following section
provides additional information on the risks that apply to the Fund, which may
result in a loss of your investment. The risks applicable to the Fund are
presented below in alphabetical order, and not in the order of importance or
potential exposure. The Fund should not be relied upon as a complete investment
program. There can be no assurance that the Fund will achieve its investment
objective. Investments in the Fund involve substantial risks which prospective
investors should consider carefully before investing.
The Fund is
an actively managed ETF, which is a fund that trades like other publicly-traded
securities. The Fund is not an index fund and does not seek to replicate the
performance of a specified index.
|
✓ Principal
Risk
• Additional
Risk |
Nasdaq-100
Premium
Income
ETF |
S&P
500
Premium
Income
ETF |
|
Absence
of Active Market Risk |
• |
• |
|
Authorized
Participant Concentration Risk |
• |
• |
|
Credit/Default
Risk |
• |
• |
|
Cybersecurity
Risk |
• |
• |
|
Derivatives
Risk |
✓ |
✓ |
|
Foreign
Risk |
• |
• |
|
Industry
Concentration Risk |
✓ |
|
|
Information
Technology Industry Group Risk |
✓ |
|
|
Large
Shareholder Transactions Risk |
✓ |
✓ |
|
Liquidity
Risk |
• |
• |
|
Management
Risk |
✓ |
✓ |
|
Market
Risk |
✓ |
✓ |
|
Market
Trading Risk |
✓ |
✓ |
|
Mid-Cap
and Small-Cap Risk |
• |
• |
|
Non-Diversification
Risk |
✓ |
|
|
Option
Writing Risk |
✓ |
✓ |
|
Other
Investment Companies Risk |
✓ |
✓ |
|
Secondary
Listing Risk |
• |
• |
|
Stock
Risk |
✓ |
✓ |
|
Strategy
Risk |
✓ |
✓ |
|
Tracking
Error/Index Risk |
✓ |
✓ |
|
Trading
Issues Risk |
• |
• |
|
Valuation
Risk |
✓ |
✓ |
◼
Absence
of Active Market Risk—There can
be no assurance that active trading markets for the Shares will develop or be
maintained by market makers or authorized participants, and there are no
obligations of market makers to make a market in the Fund’s Shares or of
authorized participants to submit purchase or redemption orders for Creation
Units. ALPS Distributors, Inc., the distributor of the Shares (the
“Distributor”), does not maintain a secondary market in the Shares.
Although
market makers will generally take advantage of differences between the NAV and
the trading price of Fund Shares through arbitrage opportunities, there is no
guarantee that they will do so. Decisions by market makers or authorized
participants to reduce their role or “step away” from market making or
creation/redemption activities in times of market stress could inhibit the
effectiveness of the arbitrage process in maintaining the relationship between
the underlying value of the Fund’s portfolio securities and the Fund’s market
price. This reduced effectiveness could result in Shares trading at a discount
to NAV and also in greater than normal intraday bid/ask spreads for Shares.
Market makers and authorized participants may be less willing to create or
redeem Fund Shares if there is a lack of an active market for the Shares or its
underlying investments, which may also contribute to the Fund’s Shares trading
at a premium or discount to NAV.
◼
Authorized
Participant Concentration Risk—Only an
authorized participant may engage in creation or redemption transactions
directly with the Fund, and the Fund may have a limited number of financial
institutions that act as authorized participants. None of those authorized
participants is obligated to engage in creation and/or redemption transactions.
To the extent that those authorized participants exit the business or are unable
to or choose not to process creation and/or redemption orders, and no other
authorized
14
Risks
of the Funds
participant
is able to step forward to create and redeem Shares, there may be a
significantly diminished trading market for Shares. As a result, Shares may
trade at a discount (or premium) to NAV and possibly face trading halts and/or
de-listing. Authorized Participant concentration risk may be heightened to the
extent the Fund invests in securities issued by non-U.S. issuers or other
securities or instruments that have lower trading volumes.
◼
Credit/Default
Risk—An issuer
or guarantor of fixed income securities or instruments held by a Fund may
default on its obligation to pay interest and repay principal or default on any
other obligation. The credit quality of the Fund’s portfolio
securities
or instruments
may meet the Fund’s credit quality requirements at the time of purchase but then
deteriorate thereafter, and such a deterioration can occur rapidly. In certain
instances, the downgrading or default of a single holding or guarantor of the
Fund’s holdings may impair the Fund’s liquidity and have the potential to cause
significant NAV deterioration. These risks are heightened in market environments
where interest rates are rising as well as in connection with a Fund's
investments in non-investment grade fixed income securities.
◼
Cybersecurity
Risk—The Fund
may be susceptible to operational and information security risks resulting from
cyber-attacks. Cyber-attacks include, among others, stealing or corrupting
confidential information and other data that is maintained online or digitally
for financial gain, denial-of-service attacks on websites causing operational
disruption, and the unauthorized release of confidential information and other
data. Cyber-attacks have the ability to cause significant disruptions and impact
business operations; to result in financial losses; to prevent shareholders from
transacting business; to interfere with the Fund’s calculation of NAV; and to
lead to violations of applicable privacy and other laws, regulatory fines,
penalties, reputational damage, reimbursement or other compensation costs and/or
additional compliance costs. Cyber-attacks affecting the Fund or its Investment
Adviser, custodian, Transfer Agent, or other third-party service providers may
adversely impact the Fund and its shareholders.
◼
Derivatives
Risk—The Fund’s
use of options, futures, forwards, swaps, options on swaps, structured
securities and others and similar instruments (collectively referred to in this
paragraph as “derivatives”) may result in losses, including due to adverse
market movements. Derivatives, which may pose risks in addition to and greater
than those associated with investing directly in securities, currencies or other
instruments, may increase market exposure and be illiquid or less liquid,
volatile, difficult to price and leveraged so that small changes in the value of
the underlying assets or instruments may produce disproportionate losses to the
Fund. Certain derivatives are also subject to counterparty risk, which is the
risk that the other party in the transaction will not fulfill, or lacks the
capacity or authority to fulfill, its contractual obligations, liquidity risk,
which includes the risk that the Fund will not be able to close its derivatives
position when it is advantageous to do so, and risks arising from margin
requirements, which include the risk that the Fund will be required to pay
additional margin or set aside additional collateral to maintain open derivative
positions. Derivatives may be used for both hedging and non-hedging purposes.
The use of
derivatives is a highly specialized activity that involves investment techniques
and risks different from those associated with investments in more traditional
securities and instruments, and there is no guarantee that the use of
derivatives will achieve their intended result. If the Investment Adviser is
incorrect in its expectation of the timing or level of fluctuation in securities
prices, interest rates, currency prices or other variables, the use of
derivatives could result in losses, which in some cases may be significant. A
lack of correlation between changes in the value of derivatives and the value of
the portfolio assets (if any) being hedged could also result in losses. In
addition, there is a risk that the performance of the derivatives or other
instruments used by the Investment Adviser to replicate the performance of a
particular asset class may not accurately track the performance of that asset
class.
The use of
derivatives is also subject to operational and legal risks. Operational risks
generally refer to risks related to potential operational issues, including
documentation issues, settlement issues, system failures, inadequate controls,
and human error. Legal risks generally refer to risks of loss resulting from
insufficient documentation or legality or enforceability of a
contract.
◼
Foreign
Risk—When the
Fund invests in foreign securities, it may be subject to risk of loss not
typically associated with U.S. issuers. Loss may result because of more or less
foreign government regulation; less public information; less stringent investor
protections; less stringent accounting, corporate governance, financial
reporting and disclosure standards; less liquid, developed or efficient trading
markets; greater volatility; and less economic, political and social stability
in the countries in which the Fund invests. Loss may also result from, among
other things, deteriorating economic and business conditions in other countries,
including the United States, regional and global conflicts, the imposition of
sanctions, exchange controls (including repatriation restrictions), foreign
taxes, confiscation of assets and property, trade restrictions (including
tariffs), expropriations and other government restrictions by the United States
and other governments, higher transaction costs, difficulty enforcing
contractual obligations or from problems in share registration, settlement or
custody. The type and severity of sanctions and other similar measures,
including counter sanctions and other retaliatory actions, that may be imposed
could vary broadly in scope, and their impact is impossible to predict. These
types of measures may include, but are not limited to, banning a sanctioned
country from global payment systems that facilitate cross-border payments,
restricting the settlement of securities transactions by certain investors, and
freezing the assets of particular countries, entities, or persons. The
imposition of sanctions and other similar measures could, among other things,
cause a decline in the value and/or liquidity of securities issued by the
sanctioned country or companies located in or economically tied to the
sanctioned country, downgrades in the credit ratings of the sanctioned country
or
15
companies located in or
economically tied to the sanctioned country, devaluation of the sanctioned
country’s currency, and increased market volatility and disruption in the
sanctioned country and throughout the world. Sanctions and other similar
measures could limit or prevent the Fund from buying and selling securities (in
the sanctioned country and other markets), significantly delay or prevent the
settlement of securities transactions, and significantly impact the Fund’s
liquidity and performance. The Fund or the Investment Adviser may determine not
to invest in, or may limit its overall investment in, a particular issuer,
country or geographic region due to, among other things, heightened risks
regarding sanctions, repatriation restrictions, confiscation of assets and
property, expropriation or nationalization. Geopolitical developments in certain
countries in which the Fund may invest have caused, or may in the future cause,
significant volatility in financial markets
and could
negatively impact the value of a Fund’s investments.
The Fund's
investments in foreign securities may also be subject to foreign currency risk,
as described above, the risk of negative foreign currency rate
fluctuations, which may cause the value of securities denominated in such
foreign currency (or other instruments through which the Fund may have exposure
to foreign currencies) to decline in value. Currency exchange rates may
fluctuate significantly over short periods of time. Foreign risks will
normally be greatest when the Fund invests in securities of issuers located in
emerging countries. For more information about these risks, see Appendix
A.
◼
Industry
Concentration Risk—The Fund
concentrates its investments in specific industries or groups of industries that
have historically experienced substantial price volatility. The Fund is subject
to greater risk of loss as a result of adverse economic, business, political,
environmental or other developments than if its investments were diversified
across different industries or groups of industries. Securities of issuers held
by the Fund may lack sufficient market liquidity to enable the Fund to sell the
securities at an advantageous time or without a substantial drop in
price.
◼
Information
Technology Industry Group Risk—The stock
prices of technology and technology-related companies and therefore the value of
the Fund may experience significant price movements as a result of intense
market volatility, worldwide competition, consumer preferences, product
compatibility, product obsolescence, government regulation, excessive investor
optimism or pessimism, or other factors. Many of the products and services
offered by technology companies are subject to the risk of short product cycles.
Certain technology-related companies may face special risks that their products
or services may not prove to be commercially successful. Such companies also may
be subject to risks relating to research and development costs and the
availability and price of components. As product cycles shorten and
manufacturing capacity increases, these companies could become increasingly
subject to aggressive pricing and competition, which hampers
profitability.
◼
Large
Shareholder Transactions Risk—Certain
large shareholders, including other funds advised by the Investment Adviser, may
from time to time own a substantial amount of the Fund’s Shares. In addition, a
third party investor, the Investment Adviser or an affiliate of the Investment
Adviser, an authorized participant, a lead market maker, or another
entity (i.e., a seed
investor) may invest in the Fund and hold its investment solely to facilitate
commencement of the Fund or to facilitate the Fund’s achieving a specified size
or scale. Any such investment may be held for a limited period of time.
There can be no assurance that any large shareholder would not redeem its
investment. Dispositions of a large number of Shares by these shareholders,
which may occur rapidly or unexpectedly, may adversely affect the Fund’s
liquidity and net assets to the extent such transactions are executed directly
with the Fund in the form of redemptions through an authorized participant,
rather than executed in the secondary market. To the extent effected in cash,
these redemptions may also force the Fund to sell portfolio securities when it
might not otherwise do so, which may negatively impact the Fund’s NAV and
increase the Fund’s brokerage costs. Such cash redemptions may also accelerate
the realization of taxable income to shareholders, which could make investments
in Shares less tax-efficient than an investment in an ETF that is able to effect
redemptions in-kind. Similarly, large Fund share purchases through an authorized
participant may adversely affect the performance of the Fund to the extent that
the Fund is delayed in investing new cash or otherwise maintains a larger cash
position than it ordinarily would. To the extent these large shareholders
transact in Shares on the secondary market, such transactions may account for a
large percentage of the trading volume on the Exchange and may, therefore, have
a material upward or downward effect on the market price of the
Shares.
◼
Liquidity
Risk—The Fund
may invest in securities or instruments that trade in lower volumes, that are
less liquid than other investments and/or that may become illiquid or less
liquid in response to market developments or adverse investor perceptions.
Investments that are illiquid or that trade in lower volumes may be more
difficult to value. The Fund’s transactions in securities that trade in lower
volumes may be executed over a period of time, which could impact the prices at
which the Fund transacts. When there is no willing buyer and investments cannot
be readily sold at the desired time or price, the Fund may have to accept a
lower price or may not be able to sell the security or instrument at all. An
inability to sell one or more portfolio positions can adversely affect the
Fund’s value.
Illiquidity
can be caused by a drop in overall market trading volume, an inability to find a
willing buyer, or legal restrictions on the securities’
resale.
16
Risks
of the Funds
To the
extent the Fund engages in cash redemptions, then liquidity risk may also refer
to the risk that the Fund will not be able to pay redemption proceeds within the
allowable time period or without significant dilution to remaining investors’
interests because of unusual market conditions, an unusually high volume of
redemption requests, a redemption request by a large shareholder (such as a seed
investor) or other reasons. If the Fund is forced to sell securities at an
unfavorable time and/or under unfavorable conditions, such sales may adversely
affect the Fund’s NAV and dilute remaining investors’ interests.
◼
Management
Risk—A strategy
used by the Investment Adviser may fail to produce the intended
results.
◼
Market
Risk—The value
of the securities in which the Fund invests may go up or down in response
to the prospects of individual companies, particular sectors, governments or
countries and/or general economic conditions throughout the world. Price changes
may be temporary or last for extended periods. The Fund's investments may be
overweighted from time to time in one or more sectors, countries or regions,
which will increase the Fund's exposure to risk of loss from adverse
developments affecting those sectors, countries or regions.
Global
economies and financial markets are becoming increasingly interconnected, and
conditions and events in one country, region or financial market may adversely
impact issuers in a different country, region or financial market. Furthermore,
local, regional and global events such as war, military conflict, geopolitical
disputes, acts of terrorism, social or political unrest, natural disasters,
recessions, inflation, rapid interest rate changes, supply chain disruptions,
tariffs and other restrictions on trade, sanctions or the spread of infectious
illness or other public health threats, or the threat or potential of one or
more such events and developments, could also adversely impact issuers, markets
and economies, including in ways that cannot necessarily be foreseen. The Fund
could be negatively impacted if the value of a portfolio holding were harmed by
such political or economic conditions or events. In addition, governmental and
quasi-governmental organizations have taken a number of unprecedented actions
designed to support the markets. Such conditions, events and actions may result
in greater market risk.
◼
Market
Trading Risk—The NAV of
the Fund and the value of your investment may fluctuate. Market prices of Shares
may fluctuate, in some cases significantly, in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The Fund
faces numerous market trading risks, including disruptions to creations and
redemptions, the existence of extreme market volatility or potential lack of an
active trading market for Shares. If a shareholder purchases Shares at a time
when the market price is at a premium to the NAV or sells Shares at a time when
the market price is at a discount to the NAV, the shareholder may pay more for,
or receive less than, the underlying value of the Shares, respectively. The
Investment Adviser cannot predict whether Shares will trade below, at or above
their NAV. Price differences may be due, in large part, to the fact that supply
and demand forces at work in the secondary trading market for Shares will be
closely related to, but not identical to, the same forces influencing the prices
of the securities in the Fund's portfolio trading individually or in the
aggregate at any point in time. While the creation/redemption feature is
designed to make it more likely that the Fund’s Shares normally will trade on
stock exchanges at prices close to the Fund’s next calculated NAV, exchange
prices are not expected to correlate exactly with the Fund’s NAV due to timing
reasons, supply and demand imbalances, perception of unreliability of disclosed
NAV, and other factors. Any of these factors, among others, may result in Shares
trading at a significant premium or discount to NAV, which will be reflected in
the intraday bid/ask spreads and/or the closing price of Shares as compared to
NAV. In addition, because liquidity in certain underlying securities may
fluctuate, Shares may trade at a larger premium or discount to NAV than Shares
of other kinds of ETFs. Additionally, in stressed market conditions, the
market for Shares may become less liquid in response to deteriorating liquidity
in the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares and various orders that
may be placed. Investors should consult their financial intermediary before
purchasing or selling Shares of the Fund.
An investor
that buys or sells Shares through a broker will likely incur a brokerage
commission or other charge imposed by the broker. In addition, the market price
of Shares, like other exchange-traded securities, includes a “bid-ask spread”
(the difference between the price at which investors are willing to buy Shares
and the price at which investors are willing to sell Shares). The bid-ask spread
will vary over time based on the Fund’s trading volume and market liquidity and
may increase as a result of a decrease in the Fund’s trading volume, the spread
of the Fund’s underlying securities, or market liquidity. The bid-ask spread may
increase significantly in times of market disruption, meaning that Shares may
trade at a discount to the Fund’s NAV and that discount is likely to be greatest
during significant market volatility. During such periods, you may be
unable to sell your Shares or may incur significant losses if you sell your
Shares.
Shares of
the Fund, like other publicly-traded securities, may be sold short. Shares are
therefore subject to the risk of price decreases and increased volatility
associated with being sold short.
◼
Mid-Cap
and Small-Cap Risk—The
securities of mid-capitalization and small-capitalization companies involve
greater risks than those associated with larger, more established companies and
may be subject to more abrupt or erratic price movements. Securities of such
issuers may lack sufficient market liquidity to enable the Fund to effect sales
at an advantageous time or without a
17
substantial
drop in price. Both mid-capitalization and small-capitalization companies often
have narrower markets and more limited managerial and financial resources than
larger, more established companies. As a result, their performance can be more
volatile and they face greater risk of business failure, which could increase
the volatility of the Fund's portfolio. Generally, the smaller the company size,
the greater these risks become.
◼
Non-Diversification
Risk—The Fund is
non-diversified, meaning that it is permitted to invest a larger percentage of
its assets in one or more issuers or in fewer issuers than diversified funds.
Thus, the Fund may be more susceptible to adverse developments affecting any
single issuer held in its portfolio, and may be more susceptible to greater
losses because of these developments.
◼
Option
Writing Risk—Writing
(selling) call options limits the opportunity to profit from an increase in the
market value of stocks in exchange for up-front cash (premium) at the time of
selling the call option. When the Fund writes (sells) stock index (or related
ETF) call options, it receives cash but limits its opportunity to profit from an
increase in the market value of the index beyond the exercise price (plus the
premium received) of the option. In a sharp rising market, the Fund could
significantly underperform the market. The premium received from the Fund’s
option strategies may not fully protect it against declines in the value of the
market. Cash received from premiums will enhance return in moderately declining
markets, but the Fund will continue to bear the risk of a decline in the value
of the securities held in its portfolio and in a period of a sharply falling
equity market, the Fund will likely also experience sharp declines in its net
asset value. A put option written by the Fund obligates the Fund to purchase a
specified investment from the option holder at a specified price if the put
option is exercised before the expiration date. If the put option’s specified
price is above the market price of the investment at the time the put option is
exercised, the Fund would incur losses, which may exceed the up-front cash
(premium) received from writing the put option.
◼
Other
Investment Companies Risk—By
investing in other investment companies (including ETFs) indirectly through the
Fund, investors will incur a proportionate share of the expenses of the other
investment companies held by the Fund (including operating costs and investment
management fees) in addition to the fees regularly borne by the Fund. In
addition, the Fund will be affected by the investment policies, practices and
performance of such investment companies in direct proportion to the amount of
assets the Fund invests therein.
◼
Secondary
Listing Risk—The Fund’s
Shares may be listed or traded on U.S. and non-U.S. stock exchanges other than
the U.S. stock exchange where the Fund’s primary listing is maintained. There
can be no assurance that the Fund’s Shares will continue to trade on any such
stock exchange or in any market or that the Fund’s Shares will continue to meet
the requirements for listing or trading on any exchange or in any market. The
Fund’s Shares may be less actively traded in certain markets than in others, and
investors are subject to the execution and settlement risks and market standards
of the market where they or their broker direct their trades for execution.
Certain information available to investors who trade Fund Shares on a U.S. stock
exchange during regular U.S. market hours may not be available to investors who
trade in other markets, which may result in secondary market prices in such
markets being less efficient. Shares of the Fund may trade in the secondary
market outside of the trading hours of the Fund’s primary exchange. At such
times, Shares may trade with more significant premiums or discounts than might
be experienced otherwise.
◼
Stock
Risk—Stock
prices have historically risen and fallen in periodic cycles. U.S. and
foreign stock markets have experienced periods of substantial price volatility
in the past and may do so again in the future. Stock prices may fluctuate from
time to time in response to the activities of individual companies and in
response to general market and economic conditions. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments, and the stock prices of such companies may suffer a decline in
response.
◼
Strategy
Risk—While
each Fund seeks to provide monthly distributions at a relatively stable rate,
there is no guarantee that distributions will always be paid or will be paid at
a relatively stable rate. In addition, each Fund's investment strategy may
result in a significant portion of distributions being paid as a return of
capital for tax purposes. However, the Fund may distribute no return of capital
in certain years or under certain market conditions, such that all of the
distributions paid in such years or market environments may be classified and
taxable as ordinary income. In addition, redemption transactions may affect the
tax character of distributions paid to shareholders. No assurance can be given
regarding the future tax character of the Fund’s distributions. A return of
capital is not taxable, but it reduces the shareholder’s basis in its shares,
which reduces the loss (or increases the gain) on a subsequent taxable
disposition of shares. Each Fund’s option writing strategy is expected to
eliminate the tax holding periods for the Fund’s investment portfolio,
minimizing the likelihood of the Fund distributing long-term capital gains to
shareholders. Dividends from each Fund are not expected to qualify as qualified
dividend income eligible for taxation at the lowest capital gains tax
rates.
◼
Tracking
Error/Index Risk—Tracking
error is the divergence of the Fund’s performance (without regard to the options
overwrite strategy) from that of the benchmark. The performance of the Fund may
diverge from that of the benchmark for a number of reasons. Tracking error may
occur because of transaction costs, the Fund’s holding of cash, differences in
accrual of dividends, changes to its benchmark or the need to meet new or
existing regulatory requirements. Unlike the Fund, the returns of the benchmark
are not reduced by investment and other operating expenses, including the
trading costs associated with implementing changes to its portfolio of
investments. The frequency at which the benchmark is rebalanced may result in
higher trading costs for
18
Risks
of the Funds
the Fund
and, as a result, greater tracking error. Tracking error risk may be heightened
during times of market volatility or other unusual market conditions. To the
extent that the Fund calculates its NAV based on fair value prices and the value
of the benchmark is based on securities’ closing prices (i.e., the value of the
benchmark is not based on fair value prices), the Fund’s ability to track the
benchmark may be adversely affected. The Fund may be required to deviate its
investments from the securities and relative weightings of the benchmark to
comply with the Investment Company Act, to meet the issuer diversification
requirements of the Internal Revenue Code of 1986, as amended (the “Code”)
applicable to regulated investment companies, or as a result of market
restrictions or other legal reasons. The Fund’s investments may vary from the
securities of the benchmark due to the Fund’s inability to invest in certain
securities as a result of legal and compliance restrictions applicable to the
Fund and/or the Investment Adviser and regulatory limits or other restrictions
on securities that may be purchased by the Investment Adviser and its
affiliates. For tax efficiency purposes, the Fund may sell certain securities to
realize losses, which will result in a deviation from the benchmark.
The Fund will be negatively affected by general declines in the securities and asset classes represented in its benchmark. In addition, unless a specific security is removed from the benchmark, the Fund generally would not sell a security because the security’s issuer was in financial trouble. The Fund’s performance could be lower than funds that may shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline or a decline in the value of one or more issuers.
The Fund will be negatively affected by general declines in the securities and asset classes represented in its benchmark. In addition, unless a specific security is removed from the benchmark, the Fund generally would not sell a security because the security’s issuer was in financial trouble. The Fund’s performance could be lower than funds that may shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline or a decline in the value of one or more issuers.
◼
Trading
Issues Risk—Trading in ETF Shares on
the Exchange may be halted due to market conditions or for reasons that, in the
view of the Exchange, make trading in ETF Shares inadvisable. In addition,
trading in ETF Shares on the Exchange is subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's “circuit breaker”
rules. If a trading halt or unanticipated closing of the Exchange occurs, a
shareholder may be unable to purchase or sell ETF Shares. There can be no
assurance that the requirements of the Exchange necessary to maintain the
listing of the Fund, including the required number of shareholders, will
continue to be met or will remain unchanged, which may cause the Fund to be
delisted from the Exchange. If the Fund were delisted from the Exchange, the
value of the Fund may decline and performance may be negatively impacted. Any
resulting liquidation of the Fund may cause the Fund to incur elevated
transaction costs and result in negative tax consequences for its
shareholders.
◼
Valuation
Risk—The sale
price the Fund could receive for a security may differ from the Fund’s valuation
of the security, particularly for securities that trade in low volume or
volatile markets or that are valued using a fair value methodology.Because
non-U.S. exchanges may be open on days when the Fund does not price its Shares,
the value of foreign securities or assets in the Fund's portfolio may change on
days when investors will not be able to purchase or sell the Fund's Shares. The
Fund relies on various sources to calculate its NAV. The information may be
provided by third parties that are believed to be reliable, but the information
may not be accurate due to errors by such pricing sources, technological issues
or otherwise. NAV calculation may also be impacted by operational risks arising
from factors such as failures in systems and technology.
More
information about the Fund’s portfolio securities and investment techniques, and
their associated risks, is provided in Appendix A. You should consider the
investment risks discussed in this section and in Appendix A. Both are important
to your investment choice.
19
Tax
Advantaged Product Structure
Unlike many conventional
mutual funds which are only bought and sold at closing NAVs, the Shares of the
Fund, like Shares of certain other ETFs, have been designed to be redeemed
principally in-kind in Creation Units at each day’s market close. These in-kind
arrangements are designed to mitigate adverse effects on the Fund’s portfolio
that could arise from frequent cash redemption transactions that affect the NAV
of the Fund. Moreover, in contrast to conventional mutual funds, where frequent
redemptions can have an adverse tax impact on taxable shareholders because of
the need to sell portfolio securities which, in turn, may generate taxable gain,
the in-kind redemption mechanism of the Fund to the extent used, generally is
not expected to lead to a tax event for shareholders whose Shares are not being
redeemed, although such transactions may affect the characterization of the
distributions paid to shareholders. There is no guarantee that these tax
advantages will be realized or will materially reduce the amount of taxable
capital gains distributed by the Fund to shareholders.
20
Service
Providers
|
INVESTMENT
ADVISER |
|
Investment
Adviser |
Fund |
|
Goldman
Sachs Asset Management, L.P. (“GSAM”)
200
West Street
New
York, NY 10282 |
Goldman
Sachs Nasdaq-100 Premium Income ETF
Goldman
Sachs S&P 500 Premium Income
ETF |
GSAM has been registered as
an investment adviser with the SEC since 1990 and is an indirect, wholly-owned
subsidiary of The Goldman Sachs Group, Inc. and an affiliate of Goldman
Sachs & Co. LLC (“Goldman Sachs”). Founded in 1869, The Goldman Sachs
Group, Inc. is a publicly-held financial holding company and a leading global
investment banking, securities and investment management firm. As of December
31, 2025, GSAM, including its investment advisory affiliates, had assets under
supervision of approximately $3.35 trillion.
The
Investment Adviser is responsible for the day-to-day management of the Fund and
places purchase and sale orders for the Fund’s portfolio transactions in U.S.
and foreign markets. As permitted by applicable law, these orders may be
directed to any executing brokers, dealers, futures commission merchants
(“FCMs”) or other counterparties, including Goldman Sachs and its affiliates.
While the Investment Adviser is ultimately responsible for the management of the
Fund, it is able to draw upon the research and expertise of its asset management
affiliates with respect to managing certain portfolio securities. In addition,
the Investment Adviser has access to proprietary tools developed by Goldman
Sachs (subject to legal, internal, regulatory and Chinese wall restrictions),
and will apply quantitative and qualitative analysis in determining the
appropriate allocations among categories of issuers and types of
securities.
The
Investment Adviser also performs the following additional services for the
Funds, to the extent such services are not required to be performed by others
pursuant to the fund administration and accounting agreement, the custodian
agreement, the transfer agency agreement, distribution agreement or such other
agreements with service providers to the Funds that the Board has
approved:
◼
Supervises
non-advisory operations of the Funds, including oversight of vendors hired by
the Funds, oversight of Fund liquidity and risk management, oversight of
regulatory inquiries and requests with respect to the Funds made to the
Investment Adviser, valuation and accounting oversight and oversight of ongoing
compliance with federal and state securities laws, tax regulations, and other
applicable law
◼
Provides
personnel to perform such executive, administrative and clerical services as are
reasonably necessary to provide effective administration of the
Funds
◼
Arranges
for: (a) the preparation of all required tax returns, (b) the preparation and
submission of reports to existing shareholders, (c) the periodic updating of
prospectuses and statements of additional information and (d) the preparation of
reports to be filed with the SEC and other regulatory authorities
◼
Maintains
the records of the Funds
◼
Provides
office space and necessary office equipment and services for the Investment
Adviser
◼
Markets the
Funds
An
investment in the Fund may be negatively impacted because of the operational
risks arising from factors such as processing errors and human errors,
inadequate or failed internal or external processes, failures in systems and
technology, changes in personnel, and errors caused by third-party service
providers or trading counterparties. Although the Fund attempts to minimize such
failures through controls and oversight, it is not possible to identify all of
the operational risks that may affect the Fund or to develop processes and
controls that completely eliminate or mitigate the occurrence of such failures.
The Fund and its shareholders could be negatively impacted as a
result.
GSAM may
manage other funds, accounts, additional pooled vehicles and/or separate
accounts that have similar investment strategies to those of the Funds. These
funds, pooled vehicles or accounts may perform differently than the Funds
despite their similar strategies. Because the pooled vehicles may not be
registered under the Investment Company Act, they are subject to fewer
regulatory restraints than the Funds (e.g., fewer trading constraints) and may
employ strategies that are not subject to the same constraints as the
Funds.
21
GSAM and/or
its affiliates expect to make payments to one or more investors that contribute
seed capital to the Fund for so long as such capital remains invested in the
Fund. Such payments will be made from the assets of GSAM and/or such affiliates
and will be based on revenues generated by GSAM in providing services to one or
more ETFs for which it serves as investment adviser. Seed investors may
contribute all or a majority of the assets in the Fund. There is a risk that
such seed investors may redeem their investments in the Fund. As with
redemptions by other large shareholders, such redemptions could have a
significant negative impact on the Fund.
From time
to time, Goldman Sachs or any of its affiliates may purchase and hold Shares of
the Funds. Goldman Sachs and its affiliates reserve the right to redeem or sell
at any time some or all of the Shares acquired for their own
accounts.
|
MANAGEMENT
FEE AND OTHER EXPENSES |
Pursuant to
the Fund’s Management Agreement, as compensation for its services to the Fund,
the Investment Adviser is entitled to a management fee, computed daily and
payable monthly, at an annual rate listed below (as a percentage of the Fund’s
average daily net assets). Under the Management Agreement, the Investment
Adviser is responsible for substantially all the expenses of the Fund, excluding
payments under the Fund’s 12b-1 plan (if any), interest expenses, taxes,
acquired fund fees and expenses, brokerage fees, costs of holding shareholder
meetings and litigation, indemnification and extraordinary expenses.
|
Fund |
Fee
as a
Percentage
of
Average
Daily
Net
Assets |
|
Goldman
Sachs Nasdaq-100 Premium Income ETF |
0.35% |
|
Goldman
Sachs S&P 500 Premium Income ETF |
0.35% |
For the fiscal year ended
December 31, 2025, the effective net unitary management fee rate (as a
percentage of the Fund's average daily net assets) was 0.29% for each
Fund.
The Investment Adviser has
agreed to waive a portion of its management fee in order to achieve an effective
net management fee rate of 0.29% for each of the Funds through at least April
30, 2027, and prior to such date the Investment Adviser may not terminate the
arrangement without the approval of the Board of Trustees. In addition to the
management fee waivers described above, the Investment Adviser may waive a
portion of its management fee, including fees earned as the Investment Adviser
to any of the affiliated funds in which the Fund invests, except those
management fees it earns from the Fund’s investments of cash collateral received
in connection with securities lending transactions in affiliated funds, from
time to time, and may discontinue or modify any such waivers in the future,
consistent with the terms of any fee waiver arrangements that may be in
place.
A discussion regarding the
basis for the Board of Trustees’ approval of the Management Agreement for the
Funds in 2025 is available in the Funds' Form N-CSRS dated June
30,
2025.
|
FUND
MANAGERS |
The
individuals jointly and primarily responsible for the day-to-day management of
the Fund are listed below. The Fund's portfolio managers' individual
responsibilities may differ and may include, among other things, security
selection, asset allocation, risk budgeting, selecting the composition of
creation and redemption baskets, general oversight of the implementation
processes and management of the Fund’s portfolio.
|
Name
and Title |
Fund
Responsibility |
Years
Primarily
Responsible |
Five
Year
Employment
History |
|
Raj
Garigipati
Managing
Director |
Co-Portfolio
Manager—
Nasdaq-100
Premium Income
ETF
S&P
500 Premium Income ETF |
Since
2023
2023
|
Mr.
Garigipati joined the ETF Portfolio Management team in 2015.
He
is the global head of the ETF Portfolio Management team within
the
Quantitative Equity Solutions team. |
|
Aaron
Kershner
Managing
Director |
Co-Portfolio
Manager—
Nasdaq-100
Premium Income
ETF
S&P
500 Premium Income ETF |
Since
2025
2025
|
Mr.
Kershner joined the Investment Adviser in 2005. He is co-head
of
portfolio management within the Quantitative Equity Solutions
team.
|
22
Service
Providers
|
Name
and Title |
Fund
Responsibility |
Years
Primarily
Responsible |
Five
Year
Employment
History |
|
John
Sienkiewicz
Managing
Director |
Co-Portfolio
Manager—
Nasdaq-100
Premium Income
ETF
S&P
500 Premium Income ETF |
Since
2025
2025
|
Mr.
Sienkiewicz joined the Investment Adviser in 2009. He is
co-head
of portfolio management within the Quantitative Equity
Solutions
team. |
For
information about portfolio manager compensation, other accounts managed by a
portfolio manager and portfolio manager ownership of securities in the Fund, see
the SAI.
|
DISTRIBUTOR |
ALPS
Distributors, Inc., 1290 Broadway, Suite 1000, Denver, Colorado 80203, serves as
the exclusive distributor of Creation Units of Shares of the Funds pursuant to a
“best efforts” arrangement as provided by a distribution agreement with the
Trust on behalf of the Funds. Shares of the Funds are offered and sold on a
continuous basis by the Distributor, acting as agent. The Distributor does not
maintain a secondary market in the Fund’s Shares.
|
TRANSFER
AGENT, CUSTODIAN AND
PROVIDER
OF ADMINISTRATIVE SERVICES |
The Bank of New York
(“BNY”), 240 Greenwich Street, New York, New York 10286, serves as the Trust’s
transfer and dividend disbursing agent. Under its transfer agency agreement with
the Trust, BNY has undertaken with the Trust to provide the following services
with respect to the Fund: (i) perform and facilitate the performance of
purchases and redemptions of Creation Units, (ii) prepare and transmit by means
of Depository Trust Company’s (“DTC”) book-entry system payments for dividends
and distributions on or with respect to the Shares declared by the Trust on
behalf of the Fund, (iii) prepare and deliver reports, information and documents
as specified in the transfer agency agreement, (iv) perform the customary
services of a transfer agent and dividend disbursing agent, and (v) render
certain other miscellaneous services as specified in the transfer agency
agreement or as otherwise agreed upon.
BNY
is the
custodian of the Trust’s portfolio securities and cash. The custodian of the
Trust may change from time to time. BNY also maintains the Trust’s accounting
records. BNY may appoint domestic and foreign sub-custodians and use
depositories from time to time to hold securities and other instruments
purchased by the Trust in foreign countries and to hold cash and currencies for
the Trust.
BNY
provides
administrative services pursuant to a fund administration agreement with the
Trust (the “Fund Administration and Accounting Agreement”) pursuant to which BNY
provides certain services, including, among others, (i) preparation of certain
shareholder reports and communications; (ii) preparation of certain reports and
filings with the SEC; (iii) certain NAV computation services; and (iv) such
other services for the Trust as may be mutually agreed upon between the Trust
and BNY. For its services under the Fund Administration and Accounting
Agreement, BNY receives such fees based on a stated percentage of net assets as
are agreed upon from time to time between the parties. In addition, BNY is
reimbursed for reasonable out-of-pocket expenses incurred in connection with the
Fund Administration and Accounting Agreement. In addition, an affiliate of BNY
will also provide certain other services for the Trust, including, (i) providing
foreign exchange transaction services and (ii) executing trades in connection
with certain creation and redemption transactions effected partially in cash.
For these services, the BNY affiliate will receive compensation based on levels
that are negotiated with the Trust and/or the Investment Adviser. BNY also
provides certain middle office services to GSAM pursuant to a service
agreement.
|
ACTIVITIES
OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER
ACCOUNTS
MANAGED BY GOLDMAN SACHS |
The involvement of the
Investment Adviser, Goldman Sachs and their affiliates in the management of, or
their interest in, other accounts and other activities of Goldman Sachs will
present conflicts of interest with respect to the Fund and will, under certain
circumstances, limit the Fund’s investment activities. Goldman Sachs is a
worldwide, full service investment banking, broker dealer, asset management and
financial services organization and a major participant in global financial
markets that provides a wide range of financial services to a substantial and
diversified client base that includes corporations, financial institutions,
governments and individuals. As such, it acts as a broker-dealer, investment
adviser, investment banker, underwriter, research provider, administrator,
financier, adviser, market maker, trader, prime broker, derivatives dealer,
clearing agent, lender, custodian, counterparty, agent, principal, distributor,
investor or in other commercial capacities for accounts or companies (including
Fund portfolio companies) or affiliated or unaffiliated investment funds
(including pooled investment vehicles and private funds) in which one or more
accounts, including the Fund, invest. In those and other capacities, Goldman
Sachs and its affiliates advise and deal with clients and third parties
23
in all markets and
transactions and purchase, sell, hold and recommend a broad array of
investments, including securities, derivatives, loans, commodities, currencies,
credit default swaps, indices, baskets and other financial instruments and
products for their own accounts or for the accounts of their customers and have
other direct and indirect interests in the global fixed income, currency,
commodity, equities, bank loans and other markets in which the Fund directly and
indirectly invests. Thus, it is expected that the Fund will have multiple
business relationships with and will invest in, engage in transactions with,
make voting decisions with respect to, or obtain services from entities for
which Goldman Sachs and its affiliates perform or seek to perform investment
banking or other services. The Investment Adviser and/or certain of its
affiliates are the managers of the Goldman Sachs Funds. The Investment Adviser
and its affiliates earn fees from this and other relationships with the Fund.
Although management fees paid by the Fund to the Investment Adviser and certain
other fees paid to the Investment Adviser’s affiliates are based on asset
levels, the fees are not directly contingent on Fund performance, and the
Investment Adviser and its affiliates will still receive significant
compensation from the Fund even if shareholders lose money. Goldman Sachs and
its affiliates engage in proprietary trading and advise accounts and funds which
have investment objectives, principal investment strategies and/or policies
similar or substantially similar to those of the Fund and/or engage in and
compete for transactions in the same types of securities, currencies and
instruments as the Fund. Due to differences in tax management considerations and
implementation techniques, trades of the Fund’s portfolio holdings may be
executed on a delayed basis relative to such accounts and funds advised by
Goldman Sachs and its affiliates with investment objectives, principal
investment strategies and/or policies substantially similar to those of the
Fund. This may cause trades of the Fund’s portfolio holdings to be executed at
inopportune times and/or prices. In addition, Goldman Sachs and its affiliates
will not have any obligation to make available any information regarding their
proprietary activities or strategies, or the activities or strategies used for
other accounts managed by them, for the benefit of the management of the Fund.
The results of the Fund’s investment activities, therefore, will likely differ
from those of Goldman Sachs, its affiliates and other accounts managed by
Goldman Sachs, and it is possible that the Fund could sustain losses during
periods in which Goldman Sachs and its affiliates and other accounts achieve
significant profits on their trading for proprietary or other accounts. In
addition, the Fund may enter into transactions in which Goldman Sachs and its
affiliates or their other clients have an adverse interest. For example, the
Fund may take a long position in a security at the same time that Goldman Sachs
and its affiliates or other accounts managed by the Investment Adviser or its
affiliates take a short position in the same security (or vice versa). These and
other transactions undertaken by Goldman Sachs, its affiliates or Goldman
Sachs-advised clients may, individually or in the aggregate, adversely impact
the Fund. In some cases, such adverse impacts may result from differences in the
timing of transactions by Accounts relative to when the Fund executes
transactions in the same securities. Transactions by one or more Goldman
Sachs-advised clients or the Investment Adviser may have the effect of diluting
or otherwise disadvantaging the values, prices or investment strategies of the
Fund. The Fund’s activities will, under certain circumstances, be limited
because of regulatory restrictions applicable to Goldman Sachs and its
affiliates, and/or their internal policies designed to comply with such
restrictions. As a global financial services firm, Goldman Sachs and its
affiliates also provide a wide range of investment banking and financial
services to issuers of securities and investors in securities. Goldman Sachs,
its affiliates and others associated with it are expected to create markets or
specialize in, have positions in and/or effect transactions in, securities of
issuers held by the Fund, and will likely also perform or seek to perform
investment banking and financial services for one or more of those issuers.
Goldman Sachs and its affiliates are expected to have business relationships
with and purchase or distribute or sell services or products from or to
distributors, consultants or others who recommend the Fund or who engage in
transactions with or for the Fund.
For more
information about conflicts of interest, see the section titled “Potential
Conflicts of Interest” in the SAI.
The Fund
will, from time to time, make brokerage and other payments to Goldman Sachs and
its affiliates in connection with the Fund’s portfolio investment transactions,
in accordance with applicable law.
The Fund’s
Board of Trustees may approve a securities lending program where an affiliate of
the Investment Adviser is retained to serve as the securities lending agent for
the Fund to the extent that the Fund engages in the securities lending program.
For these services, the lending agent would receive a fee from the Fund,
including a fee based on the returns earned on the Fund’s investment of the cash
received as collateral for the loaned securities.
24
Distributions
Each Fund
pays distributions from its investment income and from net realized capital
gains.
Distributions
from net investment income and income from options premium, if any, are
normally declared and paid monthly. Distributions from net long-term capital
gains, if any, are normally declared and paid annually.
In addition
to the net investment income dividends paid monthly, the Fund may also earn
additional net investment income throughout the year. Any additional net
investment income will be distributed annually as a declared event and paid to
shareholders of record for such events.
A
significant portion of the Fund’s distributions may constitute a return of
capital for tax purposes, and/or may include amounts in excess of the Fund’s net
investment income for the period calculated in accordance with generally
accepted accounting principles (“GAAP”). Although the Fund expects that a
significant portion of its distributions will be treated as nontaxable return of
capital, no assurance can be given in this regard.
Dividends
and other distributions on Shares of the Fund are distributed on a pro rata
basis to beneficial owners of such Shares. Dividend payments are made through
Depository Trust Company (“DTC”) Participants and Indirect Participants (each as
described in the Book Entry section below) to beneficial owners then of record
with proceeds received from the Fund.
No dividend
reinvestment service is provided by the Fund. Broker-dealers may make available
the DTC book-entry dividend reinvestment service for use by beneficial owners of
the Fund for reinvestment of their dividend distributions. Beneficial owners
should contact their broker to determine the availability and costs of the
service and the details of participation therein. Brokers may require beneficial
owners to adhere to specific procedures and timetables. If this service is
available and used, dividend distributions of both income and realized gains
will be automatically reinvested in additional whole Shares of the Fund
purchased in the secondary market.
25
Shareholder
Guide
|
Buying
and Selling Shares |
Shares of
the Fund may be acquired or redeemed directly from the Fund at NAV only in
Creation Units or multiples thereof, as discussed in the Creations and
Redemptions section of the Prospectus. Only an Authorized Participant (as
defined in the Creations and Redemptions section below) may engage in creation
or redemption transactions directly with the Fund. Once created, Shares of the
Fund generally trade in the secondary market in amounts less than a Creation
Unit.
Shares of
the Fund are listed for trading on a national securities exchange during the
trading day. Shares can be bought and sold throughout the trading day at market
price like shares of other publicly traded companies. However, there can be no
guarantee that an active trading market will develop or be maintained, or that
the Fund Shares listing will continue or remain unchanged. The Trust does not
impose any minimum investment for Shares of the Fund purchased on an exchange.
Buying or selling the Fund’s Shares involves certain costs that apply to all
securities transactions. When buying or selling Shares of the Fund through a
financial intermediary, you may incur a brokerage commission or other charges
determined by your financial intermediary. Due to these brokerage costs, if any,
frequent trading may detract significantly from investment returns. In addition,
you may also incur the cost of the spread (the difference between the bid price
and the ask price). The commission is frequently a fixed amount and may be a
significant cost for investors seeking to buy or sell small amounts of Shares.
The spread varies over time for Shares of the Fund based on its trading volume
and market liquidity, and is generally less if the Fund has more trading volume
and market liquidity and more if the Fund has less trading volume and market
liquidity.
The Fund’s
primary listing exchange is The NASDAQ Stock Market LLC. The Exchange is open
for trading Monday through Friday and is closed on the following holidays: New
Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial
Day, Juneteenth National Independence Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
A “business
day” with respect to the Fund is each day the New York Stock Exchange, the
Exchange, and the Trust are open and includes any day that the Fund is required
to be open under Section 22(e) of the Investment Company Act. Orders from
Authorized Participants to create or redeem Creation Units will only be accepted
on a business day. On days when the Exchange closes earlier than normal, the
Fund may require orders to create or redeem Creation Units to be placed earlier
in the day. See the SAI for more information.
The Trust’s
Board of Trustees has not adopted a policy of monitoring for frequent purchases
and redemptions of Fund Shares (“frequent trading”) that appear to attempt to
take advantage of potential arbitrage opportunities presented by a lag between a
change in the value of the Fund’s portfolio securities after the close of the
primary markets for the Fund’s portfolio securities and the reflection of that
change in the Fund’s NAV (“market timing”). The Trust believes this is
appropriate because ETFs, such as the Fund, are intended to be attractive to
arbitrageurs, as trading activity is critical to ensuring that the market price
of Fund Shares remains at or close to NAV. Since the Fund issues and redeems
Creation Units at NAV plus applicable transaction fees, and the Fund’s Shares
may be purchased and sold on the Exchange at prevailing market prices, the risks
of frequent trading are limited.
Section
12(d)(1) of the Investment Company Act restricts investments by registered
investment companies and companies relying on Sections 3(c)(1) or 3(c)(7) of the
Investment Company Act in the securities of other investment companies.
Registered investment companies are permitted to invest in the Fund beyond the
limits set forth in Section 12(d)(1), subject to certain terms and conditions,
including that such investment companies enter into an agreement with the
Trust.
The Fund
and the Distributor will have the sole right to accept orders to purchase Shares
and reserve the right to reject any purchase order in whole or in
part.
|
Payments
to Broker-Dealers and Other Financial
Intermediaries |
GSAM and/or the Distributor
(upon direction of the Fund) may make payments to broker-dealers, registered
investment advisers or other financial intermediaries (each, a “Financial
Intermediary”) related to activities that are designed to make registered
representatives, other professionals and individual investors more knowledgeable
about the Fund or for other activities, such as participation in marketing
activities and presentations, educational training programs, and the support or
purchase of technology platforms/software and/or reporting systems. GSAM and/or
the Distributor (upon direction of the Fund) may also make payments to Financial
Intermediaries for certain printing, publishing and mailing costs associated
with the Fund or materials relating to exchange-traded funds in general and/or
for the provision of analytical or other data to GSAM or its affiliates relating
to marketing of the Fund mailing costs associated with the Fund or
materials relating to exchange-traded funds in general and/or for the provision
of analytical or other data to GSAM or its affiliates relating to the sales
of Fund Shares. In addition, GSAM and/or the Distributor may make payments to
Financial Intermediaries that make Fund Shares available to their clients or for
otherwise promoting the Fund, including through the inclusion of the Fund on the
Financial Intermediary’s platform or provision of consultative services to GSAM
or
26
Shareholder
Guide
its
affiliates relating to marketing of the Fund and/or sale of Fund Shares. Such
payments, which may be significant to the Financial Intermediary, are not made
by the Fund. Rather, such payments are made by GSAM and/or the Distributor from
their own resources, which may come directly or indirectly in part from
management fees paid by the Fund. Payments of this type are sometimes referred
to as marketing support or revenue-sharing payments. A Financial Intermediary
may make decisions about which investment options it recommends or makes
available, or the level of services provided, to its customers based on the
marketing support payments it is eligible to receive. Therefore, such payments
to a Financial Intermediary create conflicts of interest between the Financial
Intermediary and its customers and may cause the Financial Intermediary to
recommend the Fund over another investment. More information regarding these
payments is contained in the SAI. A shareholder should contact his or her
Financial Intermediary’s salesperson or other investment professional for more
information regarding any such payments the Financial Intermediary firm may
receive from GSAM and/or the Distributor.
|
Net
Asset Value |
The Fund
generally calculates its NAV as follows:
|
NAV
= |
(Value
of Assets of the Fund)
–
(Liabilities of the Fund) |
|
|
Number
of Outstanding Shares of the
Fund |
The Fund’s
NAV per share is generally calculated by the Fund’s provider of administrative
services on each business day as of the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m. Eastern time) or such other times as the New
York Stock Exchange or NASDAQ market may officially close. The Fund’s
investments for which market quotations are readily available are valued at
market value on the basis of quotations provided by pricing sources. If accurate
quotations are not readily available, if the Fund’s provider of administrative
services is unable for other reasons to facilitate pricing of individual
securities or calculate the Fund’s NAV, or if the Investment Adviser believes
that such quotations do not accurately reflect fair value, the fair value of the
Fund’s investments may be determined in good faith under valuation procedures
approved by the Board of Trustees. Thus, such pricing may be based on subjective
judgments and it is possible that the prices resulting from such valuation
procedures may differ materially from the value realized on a sale. Cases where
there is no clear indication of the value of the Fund’s investments include,
among others, situations where a security or other asset or liability does not
have a price source or a price is unavailable.
Equity
securities listed on an exchange are generally valued at the last available sale
price on the exchange on which they are principally traded.
Fixed
income securities are generally valued on the basis of prices (including
evaluated prices) and quotations provided by pricing services or securities
dealers. Pricing services may use matrix pricing or valuation models, which
utilize certain inputs and assumptions, including, but not limited to, yield or
price with respect to comparable fixed income securities, to determine current
value. Pricing services generally value fixed income securities assuming orderly
transactions of an institutional round lot size, but the Fund may hold or
transact in such securities in smaller odd lot sizes. Odd lots may trade at
lower prices than institutional round lots.
Investments
in other open-end registered investment companies (if any), excluding
investments in ETFs, are valued based on the NAV of those open-end registered
investment companies (which may use fair value pricing as discussed in their
prospectuses). Investments in ETFs will generally be valued at the last sale
price or official closing price on the exchange on which they are principally
traded.
In
addition, the Investment Adviser, consistent with its procedures and applicable
regulatory guidance, may (but need not) determine to make an adjustment to the
previous closing prices of securities in light of significant events, to reflect
what it believes to be the fair value of the securities at the time of
determining the Fund’s NAV. Significant events that could affect a large number
of securities in a particular market may include, but are not limited to:
situations relating to one or more single issuers in a market sector;
significant fluctuations in U.S. or foreign markets; market dislocations; market
disruptions or unscheduled market closings; equipment failures; natural or
man-made disasters or acts of God; armed conflicts; governmental actions or
other developments; as well as the same or similar events which may affect
specific issuers or the securities markets even though not tied directly to the
securities markets. Other significant events that could relate to a single
issuer may include, but are not limited to: corporate actions such as
reorganizations, mergers and buy-outs; corporate announcements, including those
relating to earnings, products and regulatory news; significant litigation;
ratings downgrades; bankruptcies; and trading limits or suspensions.
Fair
valuation involves the risk that the values used by the Fund to price its
investments may be different from those used by other investment companies and
investors to price the same investments.
Foreign
securities may trade in their local markets on days the Fund is closed. As a
result, if the Fund holds foreign securities, its NAV may be impacted on days
when investors may not purchase or sell Fund Shares on the secondary market or
purchase or redeem Creation Units through the Fund.
27
The Fund
relies on various sources to calculate its NAV. The ability of the Fund’s
provider of administrative services to calculate the NAV per share of the Fund
is subject to operational risks associated with processing or human errors,
systems or technology failures, cyber attacks and errors caused by third party
service providers, data sources, or trading counterparties. Such failures may
result in delays in the calculation of the Fund’s NAV and/or the inability to
calculate NAV over extended time periods. The Fund may be unable to recover any
losses associated with such failures. In addition, if the third party service
providers and/or data sources upon which the Fund directly or indirectly relies
to calculate its NAV or price individual securities are unavailable or otherwise
unable to calculate the NAV correctly, it may be necessary for alternative
procedures to be utilized to price the securities at the time of determining the
Fund’s NAV.
|
Book
Entry |
DTC serves
as securities depository for the Shares. (The Shares may be held only in
book-entry form; stock certificates will not be issued.) DTC, or its nominee, is
the record or registered owner of all outstanding Shares. Beneficial ownership
of Shares will be shown on the records of DTC or its participants (described
below). Beneficial owners of Shares are not entitled to have Shares registered
in their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and are not considered the registered holder
thereof. Accordingly, to exercise any rights of a holder of Shares, each
beneficial owner must rely on the procedures of: (i) DTC; (ii) “DTC
Participants,” i.e.,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, some of whom (and/or their representatives) own
DTC; and (iii) “Indirect Participants,” i.e., brokers,
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a DTC Participant, either directly or indirectly, through
which such beneficial owner holds its interests. The Trust understands that
under existing industry practice, in the event the Trust requests any action of
holders of Shares, or a beneficial owner desires to take any action that DTC, as
the record owner of all outstanding Shares, is entitled to take, DTC would
authorize the DTC Participants to take such action and that the DTC Participants
would authorize the Indirect Participants and beneficial owners acting through
such DTC Participants to take such action and would otherwise act upon the
instructions of beneficial owners owning through them. As described above, the
Trust recognizes DTC or its nominee as the owner of all Shares for all
purposes.
|
Creations
and Redemptions |
Prior to
trading in the secondary market, Shares of the Fund are “created” at NAV by
market makers, large investors and institutions only in block-size Creation
Units or multiples thereof. Each “creator” or “Authorized Participant” enters
into an authorized participant agreement with the Fund’s
Distributor.
A creation transaction,
which is subject to acceptance by BNY, as the Trust’s transfer agent, generally
takes place when an Authorized Participant deposits into the Fund a designated
portfolio of securities (including any portion of such securities for which cash
may be substituted) and a specified amount of cash in exchange for a specified
number of Creation Units.
Similarly,
Shares can be redeemed only in Creation Units, generally for a designated
portfolio of securities (including any portion of such securities for which cash
may be substituted) held by the Fund and a specified amount of cash. Except when
aggregated in Creation Units, Shares are not redeemable by the Fund.
The prices
at which creations and redemptions occur are based on the next calculation of
NAV after a creation or redemption order is received in an acceptable form under
the authorized participant agreement.
Please note
the following with respect to the price at which transactions are
processed:
◼
NAV per
Share is generally calculated by the Fund's fund accounting agent on each
business day as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time) or such other times as the New York Stock
Exchange or NASDAQ market may officially close. Fund Shares will generally not
be priced on any day the New York Stock Exchange is closed.
◼
The Trust
reserves the right to reprocess creation and redemption transactions that were
processed at a NAV that is subsequently adjusted, and to recover amounts from
(or distribute amounts to) Authorized Participants accordingly based on the
official closing NAV, as adjusted.
◼
The Trust reserves the
right to advance the time by which creation and redemption orders must be
received for same business day credit as otherwise permitted by the
SEC.
◼
Consistent
with industry practice, investment transactions not settling on the same day are
recorded and factored into the Fund’s NAV on the business day following trade
date (T+1). The use of T+1 accounting generally does not, but may, result in a
NAV that differs materially from the NAV that would result if all transactions
were reflected on their trade dates.
28
Shareholder
Guide
Note:
The time at which transactions and Shares are priced and the time by which
orders must be received may be changed in case of an emergency or if regular
trading on the New York Stock Exchange is stopped at a time other than its
regularly scheduled closing time. In the event the New York Stock Exchange does
not open for business, the Trust may, but is not required to, open the Fund for
creation and redemption transactions if the Federal Reserve wire payment system
is open. To learn whether the Fund is open for business during this situation,
please call the appropriate phone number located on the back cover of the
Prospectus.
Only an
Authorized Participant may create or redeem Creation Units directly with the
Fund.
In the
event of a system failure or other interruption, including disruptions at market
makers or Authorized Participants, orders to purchase or redeem Creation Units
either may not be executed according to the Fund’s instructions or may not be
executed at all, or the Fund may not be able to place or change
orders.
To the
extent the Fund engages in in-kind transactions, the Fund intends to comply with
the U.S. federal securities laws in accepting securities for deposit and
satisfying redemptions with redemption securities by, among other means,
assuring that any securities accepted for deposit and any securities used to
satisfy redemption requests will be sold in transactions that would be exempt
from registration under the Securities Act of 1933, as amended (the “Securities
Act”). Further, an Authorized Participant that is not a “qualified institutional
buyer,” as such term is defined under Rule 144A of the Securities Act, will not
be able to receive restricted securities eligible for resale under Rule
144A.
Creations
and redemptions must be made through a firm that is either a member of the
Continuous Net Settlement System of the National Securities Clearing Corporation
or a DTC Participant and has executed an agreement with the Distributor with
respect to creations and redemptions of Creation Unit aggregations. Information
about the procedures regarding creation and redemption of Creation Units
(including the cut-off times for receipt of creation and redemption orders) and
the applicable transaction fees is included in the Fund’s
SAI.
29
Taxation
As
with any
investment, you should consider how your investment in the Fund will be taxed.
The tax information below is provided as general information. More tax
information is available in the SAI.
You should
consult your tax adviser about the federal, state, local or foreign tax
consequences of your investment in the Fund. Except
as otherwise
noted,
the tax
information provided assumes that you are a U.S.
citizen
or
resident.
Unless your investment is
through an IRA or other tax-advantaged account, you should carefully consider
the possible tax consequences of Fund distributions and the sale of your
Fund Shares.
|
DISTRIBUTIONS |
The Fund
contemplates declaring as dividends each year all or substantially all of its
taxable income. Distributions you receive from the Fund are generally subject to
federal income tax and may also be subject to state or local taxes. This is true
whether you reinvest your distributions in additional Fund Shares or receive
them in cash. For federal tax purposes, the Fund’s distributions attributable to
net investment income and short-term capital gains are taxable to you as
ordinary income while distributions of long-term capital gains are taxable to
you as long-term capital gains, no matter how long you have owned your Fund
Shares.
The Fund’s
transactions in derivatives (such as options, straddles, futures contracts and
swaps) will be subject to special tax rules, the effect of which is expected to
accelerate income to the Fund, defer losses to the Fund, cause adjustments in
the holding periods of the Fund’s securities, convert long-term capital gain
into short-term capital gain, and convert short-term capital losses into
long-term capital losses. These rules could therefore affect the amount, timing
and character of distributions to you. The Fund’s use of derivatives is expected
to result in the Fund realizing more short-term capital gains and ordinary
income subject to tax at ordinary income tax rates than it would if it did not
use derivatives.
Because the
Fund seeks to provide monthly distributions at a relatively stable rate,
shareholders may receive distributions which constitute a return of capital for
tax purposes. A return of capital is not taxable, but it reduces the
shareholder’s basis in its shares, which reduces the loss (or increases the
gain) on a subsequent taxable disposition by such shareholder of the
shares.
Under current provisions of
the Code, the maximum individual rate applicable to long-term capital gains is
generally either 15% or 20%, depending on whether the individual’s income
exceeds certain threshold amounts. Fund distributions to non-corporate
shareholders attributable to dividends received by the Fund from U.S. and
certain qualified foreign corporations will be reported as subject to the
long-term capital gain rate as long as certain holding period and other
requirements are met. For these lower rates to apply, if any such dividends are
so reported, the non-corporate shareholder must own their Fund Shares for at
least 61 days during the 121-day period beginning 60 days before the Fund’s
ex-dividend date. Fund
distributions
are not expected to qualify for the lower tax rates applicable to qualified
dividend income or for the corporate dividends
received
deduction.
Distributions
in excess of the Fund’s current and accumulated earnings and profits are treated
as a tax-free return of your investment to the extent of your basis in the
Shares, and generally as capital gain thereafter. The Fund expects that a
significant portion of its distributions will be treated as nontaxable return of
capital. A return of capital, which for tax purposes is treated as a return of
your investment, reduces your basis in Shares, thus reducing any loss or
increasing any gain on a subsequent taxable disposition of Shares. If your basis
in the Shares is reduced to zero, future returns of capital would be taxable to
you as capital gain. A distribution will reduce the Fund’s NAV per share and may
be taxable to you as ordinary income or capital gain even though, from an
economic standpoint, the distribution may constitute a return of
capital.
An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from the
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
Although distributions are
generally treated as taxable to you in the year they are paid, distributions
declared in October, November or December but paid in January are taxable as if
they were paid in December. The character and tax status of all distributions
will be available to shareholders after the close of each calendar
year.
The Fund
may be subject to foreign withholding or other foreign taxes on income or gain
from certain foreign securities. In general, the Fund may deduct these taxes in
computing its taxable income.
If you buy
Shares of the Fund before it makes a distribution, the distribution will be
taxable to you even though it may actually be a return of a portion of your
investment. This is known as “buying into a dividend.”
30
Taxation
|
TAXES
ON CREATIONS AND REDEMPTIONS OF CREATION
UNITS |
A person
who exchanges securities for Creation Units generally will recognize a gain or
loss. The gain or loss will be equal to the difference between the market value
of the Creation Units at the time of exchange and the sum of the exchanger’s
aggregate basis in the securities surrendered and the amount of any cash paid
for such Creation Units. A person who exchanges Creation Units for securities
will generally recognize a gain or loss equal to the difference between the
exchanger’s basis in the Creation Units and the sum of the aggregate market
value of the securities received. The Internal Revenue Service (the “IRS”),
however, may assert that a loss realized upon an exchange of primarily
securities for Creation Units cannot be deducted currently under the rules
governing “wash sales,” or on the basis that there has been no significant
change in economic position. Persons exchanging securities for Creation Units or
redeeming Creation Units should consult their own tax adviser with respect to
whether wash sale rules apply and when a loss might be deductible and the tax
treatment of any creation or redemption transaction.
Under
current U.S. federal income tax laws, any capital gain or loss realized upon a
redemption (or creation) of Creation Units is generally treated as long-term
capital gain or loss if the Shares (or securities surrendered) have been held
for more than one year and as a short-term capital gain or loss if the Shares
(or securities surrendered) have been held for one year or less.
|
SALES
OF FUND SHARES |
Your sale
of Fund Shares is a taxable transaction for federal income tax purposes, and may
also be subject to state and local taxes. When you sell your Shares, you will
generally recognize a capital gain or loss in an amount equal to the difference
between your adjusted tax basis in the Shares and the amount received.
Generally, this capital gain or loss is long-term or short-term depending on
whether your holding period exceeds one year, except that any loss realized on
Shares held for six months or less will be treated as a long-term capital loss
to the extent of any long-term capital gain dividends that were received on the
Shares. Additionally, any loss realized on a sale, exchange or redemption of
Shares of the Fund may be disallowed under “wash sale” rules to the extent the
Shares disposed of are replaced with other Shares of that Fund within a period
of 61 days beginning 30 days before and ending 30 days after the date of
disposition (such as pursuant to a dividend reinvestment in Shares of the Fund).
If disallowed, the loss will be reflected in an adjustment to the basis of the
Shares acquired.
|
OTHER
INFORMATION |
You may be
subject to backup withholding at a rate of 24% with respect to taxable
distributions if you do not provide your correct taxpayer identification number,
or certify that it is correct, or if you have been notified by the IRS that you
are subject to backup withholding.
Non-U.S. investors are
generally subject to U.S. withholding tax and may be subject to estate tax with
respect to their Fund Shares. However, withholding is generally not required on
properly reported distributions to non-U.S. investors of long-term capital
gains. Non-U.S. investors generally are not subject to U.S. federal income tax
withholding on distributions of certain qualified interest income and/or
short-term capital gains that are reported by the Fund. It is expected that the
Fund will generally make reports of short-term gains, to the extent permitted,
but the Fund does not intend to report any distributions attributable to
qualified interest income. Therefore, all distributions of interest income will
be subject to withholding when paid to non-U.S. investors.
Withholding
of U.S. tax (at a 30% rate) is required with respect to payments of taxable
dividends made to certain non-U.S. entities that fail to comply (or be deemed
compliant) with extensive reporting and withholding requirements designed to
inform the U.S. Department of the Treasury of U.S.-owned foreign investment
accounts. Shareholders may be requested to provide additional information to
enable the applicable withholding agent to determine whether withholding is
required.
Reporting
to you and the IRS is required annually on Form 1099-B not only with respect to
the gross proceeds of Fund Shares you sell or redeem but also their cost basis.
Shareholders should contact their intermediaries with respect to reporting of
cost basis and available elections with respect to their accounts. You should
carefully review the cost basis information provided by the applicable
intermediary and make any additional basis, holding period or other adjustments
that are required when reporting these amounts on your federal income tax
returns.
31
Other
Information
|
PREMIUM/DISCOUNT
INFORMATION |
Information
regarding how often Shares of a Fund traded on the Exchange at a premium or
discount during the most recently completed calendar year and the most recently
completed calendar quarter(s) since that year (or the life of the Fund, if
shorter), can be found at am.gs.com.
|
CONTINUOUS
OFFERING |
The method
by which Creation Units are created and traded may raise certain issues under
applicable securities laws. Because new Creation Units are issued and sold by
the Trust on an ongoing basis, a “distribution,” as such term is used in the
Securities Act, may occur at any point. Broker dealers and other persons are
cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner which could render them statutory underwriters and subject them to the
prospectus delivery and liability provisions of the Securities Act.
For
example, a broker dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into constituent Shares, and sells such Shares
directly to customers, or if it chooses to couple the creation of a supply of
new Shares with an active selling effort involving solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a categorization
as an underwriter.
Broker
dealers who are not “underwriters” but are participating in a distribution (as
contrasted to ordinary secondary trading transactions), and thus dealing with
Shares that are part of an “unsold allotment” within the meaning of Section
4(a)(3)(C) of the Securities Act, would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
This is because the prospectus delivery exemption in Section 4(a)(3) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the Investment Company Act. As a result, broker dealer firms
should note that dealers who are not underwriters but are participating in a
distribution (as contrasted with ordinary secondary market transactions) and
thus dealing with the Shares that are part of an overallotment within the
meaning of Section 4(a)(3)(A) of the Securities Act would be unable to take
advantage of the prospectus delivery exemption provided by Section 4(a)(3) of
the Securities Act. Firms that incur a prospectus delivery obligation with
respect to Shares are reminded that, under Rule 153 of the Securities Act, a
prospectus delivery obligation under Section 5(b)(2) of the Securities Act owed
to an exchange member in connection with a sale on the Exchange is satisfied by
the fact that the prospectus is available at the Exchange upon request. The
prospectus delivery mechanism provided in Rule 153 is only available with
respect to transactions on an exchange.
In
addition, certain affiliates of the Fund and the Investment Adviser may purchase
and resell Fund Shares pursuant to the Prospectus.
|
DISTRIBUTION
AND SERVICE PLAN |
The Board
of Trustees of the Trust has adopted a distribution and service plan (“Plan”)
pursuant to Rule 12b-1 under the Investment Company Act. Under the Plan, the
Fund is authorized to pay distribution fees in connection with the sale and
distribution of its Shares and pay service fees in connection with the provision
of ongoing services to shareholders of the Fund and the maintenance of
shareholder accounts in an amount up to 0.25% of its average daily net assets
each year.
No Rule
12b-1 fees are currently paid by the Fund, and there are no current plans to
impose these fees. However, in the event Rule 12b-1 fees are charged in the
future, because these fees are paid out of the Fund’s assets on an ongoing
basis, these fees will increase the cost of your investment in the Fund. By
purchasing Shares subject to distribution fees and service fees, you may pay
more over time than you would by purchasing Shares with other types of sales
charge arrangements. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the rules of
FINRA. The net income attributable to Shares will be reduced by the amount of
distribution fees and service fees and other expenses of the
Fund.
32
Index
Providers
Goldman Sachs
Nasdaq-100 Premium Income ETF
The Goldman
Sachs Nasdaq-100 Premium Income ETF (the “Product”) is not sponsored, endorsed,
sold or promoted by Nasdaq, Inc. or its affiliates (Nasdaq, with its affiliates,
are referred to as the “Corporations”). The Corporations have not passed on the
legality or suitability of, or the accuracy or adequacy of descriptions and
disclosures relating to, the Product. The Corporations make no representation or
warranty, express or implied to the owners of the Product or any member of the
public regarding the advisability of investing in securities generally or in the
Product particularly, or the ability of the Nasdaq-100 Index to track general
stock market performance. The Corporations' only relationship to Goldman Sachs
Asset Management, L.P. (“Licensee”) is in the licensing of the
Nasdaq®, and
certain trade names of the Corporations and the use of the Nasdaq-100 Index
which is determined, composed and calculated by Nasdaq without regard to
Licensee or the Product. Nasdaq has no obligation to take the needs of the
Licensee or the owners of the Product into consideration in determining,
composing or calculating the Nasdaq-100 Index. The Corporations are not
responsible for and have not participated in the determination of the timing of,
prices at, or quantities of the Product to be issued or in the determination or
calculation of the equation by which the Product is to be converted into cash.
The Corporations have no liability in connection with the administration,
marketing or trading of the Product.
THE
CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF
THE NASDAQ-100 INDEX OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS
OF THE PRODUCT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100
INDEX OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100 INDEX OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE
CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
Goldman Sachs S&P
500 Premium Income ETF
The
“S&P 500®” Index is
a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has
been licensed for use by Goldman Sachs Asset Management, L.P. Standard &
Poor’s® and
S&P® are
registered trademarks of Standard & Poor’s Financial Services LLC
(“S&P”) and Dow Jones® is a
registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The
trademarks have been licensed to SPDJI and have been sublicensed for use for
certain purposes by Goldman Sachs Asset Management, L.P. The Goldman Sachs
S&P 500 Premium Income ETF is not sponsored, endorsed, sold or promoted by
SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively,
“S&P Dow Jones Indices”). S&P Dow Jones Indices does not make any
representation or warranty, express or implied, to the owners of the Goldman
Sachs S&P 500 Premium Income ETF or any member of the public regarding the
advisability of investing in securities generally or in the Goldman Sachs
S&P 500 Premium Income ETF particularly or the ability of the S&P
500® Index to
track general market performance. S&P Dow Jones Indices’ only relationship
to Goldman Sachs Asset Management, L.P. with respect to the S&P
500® Index is
the licensing of the Index and certain trademarks, service marks and/or trade
names of S&P Dow Jones Indices and/or its licensors. The S&P
500® Index is
determined, composed and calculated by S&P Dow Jones Indices without regard
to Goldman Sachs Asset Management, L.P. or the Goldman Sachs S&P 500 Premium
Income ETF. S&P Dow Jones Indices has no obligation to take the needs of
Goldman Sachs Asset Management, L.P. or the owners of the Goldman Sachs S&P
500 Premium Income ETF into consideration in determining, composing or
calculating the S&P 500® Index.
S&P Dow Jones Indices is not responsible for and have not participated in
the determination of the prices, and amount of the Goldman Sachs S&P 500
Premium Income ETF or the timing of the issuance or sale of the Goldman Sachs
S&P 500 Premium Income ETF or in the determination or calculation of the
equation by which the Goldman Sachs S&P 500 Premium Income ETF is to be
converted into cash, surrendered or redeemed, as the case may be. S&P Dow
Jones Indices has no obligation or liability in connection with the
administration, marketing or trading of the Goldman Sachs S&P 500 Premium
Income ETF. There is no assurance that investment products based on the S&P
500® Index will
accurately track index performance or provide positive investment returns.
S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a
security within an index is not a recommendation by S&P Dow Jones Indices to
buy, sell, or hold such security, nor is it considered to be investment
advice.
S&P DOW
JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE
COMPLETENESS OF THE S&P 500® INDEX OR
ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO,
ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT
THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR
LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES
INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES, OF MERCHANTABILITY
33
OR FITNESS
FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY GOLDMAN SACHS
ASSET MANAGEMENT, L.P., OWNERS OF THE GOLDMAN SACHS S&P 500 PREMIUM INCOME
ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500® INDEX OR
WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING,
IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT
NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF
THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT,
TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF
ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND GOLDMAN
SACHS ASSET MANAGEMENT, L.P., OTHER THAN THE LICENSORS OF S&P DOW JONES
INDICES.
34
Appendix
A
Additional
Information on Portfolio Risks, Securities and
Techniques
|
A. General
Portfolio Risks |
The Fund
will be subject to the risks associated with equity investments. “Equity
investments” may include common stocks, preferred stocks, interests in REITs,
convertible debt obligations, convertible preferred stocks, equity interests in
trusts, partnerships, joint ventures, limited liability companies and similar
enterprises, other investment companies (including ETFs), warrants, stock
purchase rights and synthetic and derivative instruments (such as swaps and
futures contracts) that have economic characteristics similar to equity
securities.
In general,
the values of equity investments fluctuate in response to the activities of
individual companies and in response to general market and economic conditions.
Accordingly, the values of the equity investments that the Fund holds may
decline over short or extended periods. The stock markets tend to be cyclical,
with periods when stock prices generally rise and periods when prices generally
decline. This volatility means that the value of your investment in the Fund may
increase or decrease. In recent years, certain stock markets have experienced
substantial price volatility. To the extent the Fund’s net assets decrease or
increase in the future due to price volatility or share redemption or purchase
activity, the Fund’s expense ratio may correspondingly increase or decrease from
the expense ratio disclosed in the Prospectus.
To the
extent the Fund invests in pooled investment vehicles (including investment
companies and ETFs), partnerships and REITs, the Fund will be affected by the
investment policies, practices and performance of such entities in direct
proportion to the amount of assets the Fund invests therein.
To the
extent that the Fund invests in fixed income securities, the Fund will also be
subject to the risks associated with its fixed income securities. These risks
include interest rate risk, credit/default risk and call/extension risk. In
general, interest rate risk involves the risk that when interest rates decline,
the market value of fixed income securities tends to increase (although many
mortgage-related securities will have less potential than other debt securities
for capital appreciation during periods of declining rates). Conversely, when
interest rates increase, the market value of fixed income securities tends to
decline. Credit/default risk involves the risk that an issuer or guarantor could
default on its obligations, and the Fund will not recover its investment. A
rising interest rate environment could cause the value of the Fund’s fixed
income securities, if any, to decrease, and fixed income markets to experience
increased volatility in addition to heightened levels of liquidity risk.
Additionally, decreases in the value of fixed income securities could lead to
increased shareholder redemptions, which could impair the Fund’s ability to
achieve its investment objective. The risks associated with increasing rates are
heightened given that interest rates are near historic lows, but may be expected
to increase in the future with unpredictable effects on the markets and the
Fund’s investments. Call risk and extension risk are normally present in
mortgage-backed securities and asset-backed securities. For example, homeowners
have the option to prepay their mortgages. Therefore, the duration of a security
backed by home mortgages can either shorten (call risk) or lengthen (extension
risk). In general, if interest rates on new mortgage loans fall sufficiently
below the interest rates on existing outstanding mortgage loans, the rate of
prepayment would be expected to increase. Conversely, if mortgage loan interest
rates rise above the interest rates on existing outstanding mortgage loans, the
rate of prepayment would be expected to decrease. In either case, a change in
the prepayment rate can result in losses to investors. The same would be true of
asset-backed securities such as securities backed by car loans.
The
Investment Adviser will not consider the portfolio turnover rate a limiting
factor in making investment decisions for the Fund. A high rate of portfolio
turnover (100% or more) involves correspondingly greater expenses which must be
borne by the Fund and its shareholders and is also likely to result in higher
short-term capital gains for taxable shareholders. The portfolio turnover rate
is calculated by dividing the lesser of the dollar amount of sales or purchases
of portfolio securities by the average monthly value of the Fund’s portfolio
securities, excluding securities having a maturity at the date of purchase of
one year or less. See “Financial Highlights” in Appendix B for a statement of
the Fund’s historical portfolio turnover rates.
The Fund
may, from time to time, enter into arrangements with certain brokers or other
counterparties that require the segregation of collateral. For operational, cost
or other reasons, when setting up arrangements relating to the
execution/clearing of trades, the Fund may choose to select a segregation model
which may not be the most protective option available in the case of a default
by a broker or counterparty.
The
following sections provide further information on certain types of securities
and investment techniques that may be used by the Fund, including their
associated risks. Additional information is provided in the SAI, which is
available upon request. Among other things, the SAI describes certain
fundamental investment restrictions that cannot be changed without shareholder
approval. You should
35
note,
however, that all investment objectives and all investment policies not
specifically designated as fundamental are non-fundamental, and may be changed
without shareholder approval. If there is a change in the Fund’s investment
objective, you should consider whether the Fund remains an appropriate
investment in light of your then current financial position and
needs.
|
B.
Other Portfolio Risks |
Risks
of Writing Index Call Options. When the
Funds write (sell) index or related ETF call options, respectively, they forego
the opportunity to benefit from an increase in the value of the relevant index
above the exercise price (plus the premium received) of the option, but each
Fund continues to bear the risk of a decline in the value of the relevant index.
As the seller of the index call options, the Funds receive cash (the “premium”)
from the purchaser. Depending upon the type of call option, the purchaser of an
index call option either (i) has the right to any appreciation in the value of
the index over a fixed price (the “exercise price”) on a certain date in the
future (the “expiration date”) or (ii) has the right to any appreciation in the
value of the index over the exercise price at any time prior to the expiration
of the option. If the purchaser does not exercise the option, the Fund retains
the premium and makes no payments to the purchaser. If the purchaser exercises
the option, the Fund pays the purchaser the difference between the price of the
index and the exercise price of the option. The premium, the exercise price and
the market value of the index determine the gain or loss realized by a Fund as
the seller of the index call option. The Funds can also repurchase the call
option prior to the expiration date, ending its obligation. In this case, the
cost of entering into closing purchase transactions will determine the gain or
loss realized by a Fund.
There is no
assurance that a liquid market will be available at all times for the Fund to
write call options or to enter into closing purchase transactions. In addition,
the premiums the Funds receive for writing call options may decrease as a result
of a number of factors, including a reduction in interest rates generally, a
decline in stock market volumes or a decrease in the price volatility of the
underlying securities. For more information see “Portfolio Securities and
Techniques—Options on Securities, Securities Indices and Foreign
Currencies.”
Risks
of Investing in Mid-Capitalization and Small-Capitalization
Companies. The Fund
may, to the extent consistent with its investment policies, invest in mid- and
small-capitalization companies. Investments in mid- and small-capitalization
companies involve greater risk and portfolio price volatility than investments
in larger capitalization stocks. Among the reasons for the greater price
volatility of these investments are the less certain growth prospects of smaller
firms and the lower degree of liquidity in the markets for such securities. Mid-
and small-capitalization companies may be thinly traded and may have to be sold
at a discount from current market prices or in small lots over an extended
period of time. In addition, these securities are subject to the risk that
during certain periods the liquidity of particular issuers or industries, or all
securities in particular investment categories, will shrink or disappear
suddenly and without warning as a result of adverse economic or market
conditions, or adverse investor perceptions whether or not accurate. Because of
the lack of sufficient market liquidity, the Fund may incur losses because it
will be required to effect sales at a disadvantageous time and only then at a
substantial drop in price. Mid- and small-capitalization companies include
“unseasoned” issuers that do not have an established financial history; often
have limited product lines, markets or financial resources; may depend on or use
a few key personnel for management; and may be susceptible to losses and risks
of bankruptcy. Mid- and small-capitalization companies may be operating at a
loss or have significant variations in operating results; may be engaged in a
rapidly changing business with products subject to a substantial risk of
obsolescence; may require substantial additional capital to support their
operations, to finance expansion or to maintain their competitive position; and
may have substantial borrowings or may otherwise have a weak financial
condition. In addition, these companies may face intense competition, including
competition from companies with greater financial resources, more extensive
development, manufacturing, marketing, and other capabilities, and a larger
number of qualified managerial and technical personnel. Transaction costs for
these investments are often higher than those of larger capitalization
companies. Investments in mid- and small-capitalization companies may be more
difficult to price precisely than other types of securities because of their
characteristics and lower trading volumes.
Risks
of Foreign Investments. The Funds
may make foreign investments. Foreign investments involve special risks that are
not typically associated with U.S. dollar denominated or quoted securities of
U.S. issuers. Foreign investments may be affected by changes in currency rates,
changes in foreign or U.S. laws or restrictions applicable to such investments
and changes in exchange control regulations (e.g., currency blockage). A decline
in the exchange rate of the currency (i.e., weakening of the currency against
the U.S. dollar) in which a portfolio security is quoted or denominated relative
to the U.S. dollar would reduce the value of the portfolio security. In
addition, if the currency in which a Fund receives dividends, interest or other
payments declines in value against the U.S. dollar before such income is
distributed as dividends to shareholders or converted to U.S. dollars, the Fund
may have to sell portfolio securities to obtain sufficient cash to pay such
dividends.
Certain
foreign markets may rely heavily on particular industries or foreign capital and
are more vulnerable to diplomatic developments, the imposition of economic
sanctions against a particular country or countries, organizations, entities
and/or individuals, changes in international trading patterns, trade barriers,
and other protectionist or retaliatory measures. International trade barriers or
economic sanctions against foreign countries, organizations, entities and/or
individuals may adversely affect a Fund’s foreign holdings or exposures. The
type and severity of sanctions and other similar measures, including counter
sanctions and other
36
Appendix
A
retaliatory
actions, that may be imposed could vary broadly in scope, and their impact is
impossible to predict. These types of measures may include, but are not limited
to, banning a sanctioned country from global payment systems that facilitate
cross-border payments, restricting the settlement of securities transactions by
certain investors, and freezing the assets of particular countries, entities, or
persons. The imposition of sanctions and other similar measures could, among
other things, cause a decline in the value and/or liquidity of securities issued
by the sanctioned country or companies located in or economically tied to the
sanctioned country, downgrades in the credit ratings of the sanctioned country
or companies located in or economically tied to the sanctioned country,
devaluation of the sanctioned country’s currency, and increased market
volatility and disruption in the sanctioned country and throughout the world.
Sanctions and other similar measures could limit or prevent the Fund from buying
and selling securities (in the sanctioned country and other markets),
significantly delay or prevent the settlement of securities transactions, and
significantly impact the Fund’s liquidity and performance.
Brokerage
commissions, custodial services and other costs relating to investment in
international securities markets generally are more expensive than in the United
States. In addition, clearance and settlement procedures may be different in
foreign countries and, in certain markets, such procedures have been unable to
keep pace with the volume of securities transactions, thus making it difficult
to conduct such transactions.
Foreign
issuers are not generally subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to U.S. issuers. There may be
less publicly available information about a foreign issuer than about a U.S.
issuer. In addition, there is generally less government regulation of foreign
markets, companies and securities dealers than in the United States and the
legal remedies for investors may be more limited than the remedies available in
the United States. Foreign securities markets may have substantially less volume
than U.S. securities markets and securities of many foreign issuers are less
liquid and more volatile than securities of comparable domestic issuers.
Furthermore, with respect to certain foreign countries, there is a possibility
of nationalization, expropriation or confiscatory taxation, imposition of
withholding or other taxes on dividend or interest payments (or, in some cases,
capital gains distributions), limitations on the removal of funds or other
assets from such countries, and risks of political or social instability or
diplomatic developments which could adversely affect investments in those
countries.
Certain
foreign investments may become less liquid in response to social, political or
market developments or adverse investor perceptions, or become illiquid after
purchase by a Fund, particularly during periods of market turmoil. Certain
foreign investments may become illiquid when, for instance, there are few, if
any, interested buyers and sellers or when dealers are unwilling to make a
market for certain securities. When a Fund holds illiquid investments, its
portfolio may be harder to value, especially in changing markets.
If a Fund
focuses its investments in one or a few countries and currencies, the Fund may
be subjected to greater risks than if a Fund’s assets were not geographically
focused.
Investments
in foreign securities may take the form of sponsored and unsponsored American
Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), European
Depositary Receipts (“EDRs”) or other similar instruments representing
securities of foreign issuers. ADRs, GDRs and EDRs represent the right to
receive securities of foreign issuers deposited in a bank or other depository.
ADRs and certain GDRs are traded in the United States. GDRs may be traded in
either the United States or in foreign markets. EDRs are traded primarily
outside the United States. Prices of ADRs are quoted in U.S. dollars. EDRs and
GDRs are not necessarily quoted in the same currency as the underlying
security.
Foreign
Custody Risk. The Fund
may hold foreign securities and cash with foreign banks, agents and securities
depositories appointed by the Fund’s custodian (each a “Foreign Custodian”).
Some Foreign Custodians may be recently organized or new to the foreign custody
business. In some countries, Foreign Custodians may be subject to little or no
regulatory oversight over or independent evaluation of their operations.
Further, the laws of certain countries may place limitations on the Fund’s
ability to recover its assets if a Foreign Custodian enters bankruptcy.
Investments in emerging markets may be subject to even greater custody risks
than investments in more developed markets. Custody services in emerging market
countries are very often undeveloped and may be considerably less well regulated
than in more developed countries, and thus may not afford the same level of
investor protection as would apply in developed countries.
Risks
of Derivative Investments. The Fund
may, to the extent consistent with its investment policy, invest in derivative
instruments, including without limitation, options, futures, options on futures,
swaps, structured securities and forward contracts and other derivatives
relating to foreign currency transactions. Derivatives may be used for both
hedging and non-hedging purposes (that is, to seek to increase total return),
although suitable derivative instruments may not always be available to the
Investment Adviser for these purposes. Losses from derivative instruments can
result from a lack of correlation between changes in the value of derivative
instruments and the portfolio assets (if any) being hedged, the potential
illiquidity of the markets for derivative instruments, the failure of the
counterparty to perform its contractual obligations, or the risks related to
leverage factors associated with such transactions. Derivatives are also subject
to risks arising from margin requirements, which include the risk that the Fund
will be required to pay additional margin or set aside additional collateral to
maintain open derivative positions and the risk of loss by the Fund of margin
deposits in the event of the bankruptcy or other similar insolvency with respect
to a broker or counterparty with whom the Fund has an
37
open
derivative position. Losses may also arise if the Fund receives cash collateral
under the transactions and some or all of that collateral is invested in the
market. To the extent that cash collateral is so invested, such collateral will
be subject to market depreciation or appreciation, and the Fund may be
responsible for any loss that might result from its investment of the
counterparty’s cash collateral. If cash collateral is not invested, the Fund may
be exposed to additional risk of loss in the event of the insolvency of its
custodian holding such collateral. The use of these management techniques also
involves the risk of loss if the Investment Adviser is incorrect in its
expectation of the timing or level of fluctuations in securities prices,
interest rates, currency prices or other variables.
Derivative
instruments may be harder to value, subject to greater volatility and more
likely subject to changes in tax treatment than other investments. For these
reasons, the Investment Adviser’s attempts to hedge portfolio risks through the
use of derivative instruments may not be successful, and the Investment Adviser
may choose not to hedge portfolio risks. Using derivatives for non-hedging
purposes is considered a speculative practice and presents greater risk of loss
than derivatives used for hedging purposes.
Risks
of Illiquid Investments. The Fund
may not acquire any “illiquid investment” if, immediately after the acquisition,
the Fund would have invested more than 15% of its net assets in illiquid
investments that are assets. An “illiquid investment” is any investment that the
Fund reasonably expects cannot be sold or disposed of in current market
conditions in seven calendar days or less without the sale or disposition
significantly changing the market value of the investment. In determining
whether an investment is an illiquid investment, the Investment Adviser will
take into account actual or estimated daily transaction volume of an investment,
group of related investments or asset class and other relevant market, trading,
and investment-specific considerations. In addition, in determining the
liquidity of an investment, the Investment Adviser must determine whether
trading varying portions of a position in a particular portfolio investment or
asset class, in sizes that the Fund would reasonably anticipate trading, is
reasonably expected to significantly affect its liquidity, and if so, the Fund
must take this determination into account when classifying the liquidity of that
investment or asset class.
Investments
purchased by the Fund that are liquid at the time of purchase may subsequently
become illiquid. If one or more investments in the Fund’s portfolio become
illiquid, the Fund may exceed the 15 percent limitation in illiquid investments.
In the event that changes in the portfolio or other external events cause the
Fund to exceed this limit, the Fund must take steps to bring its illiquid
investments that are assets to or below 15% of its net assets within a
reasonable period of time. This requirement would not force the Fund to
liquidate any portfolio instrument where the Fund would suffer a loss on the
sale of that instrument.
In cases
where no clear indication of the value of the Fund’s portfolio instruments is
available, the portfolio instruments may be valued at their fair value according
to the valuation procedures approved by the Fund’s Board of Trustees. These
cases include, among others, situations where a security or other asset or
liability does not have a price source, or the secondary markets on which an
investment has previously been traded are no longer viable, due to its lack of
liquidity. For more information on fair valuation, please see “Shareholder
Guide—Net Asset Value.”
Credit/Default
Risks. Debt
securities purchased by the Fund may include securities issued or guaranteed by
the U.S. government, its agencies, instrumentalities or sponsored enterprises
(“U.S. Government Securities”) (including zero coupon bonds) and securities
issued by foreign governments, domestic and foreign corporations, banks and
other issuers. Some of these fixed income securities are described in the next
section below. Further information is provided in the SAI.
Debt
securities rated BBB— or higher by Standard & Poor’s or Baa3 or higher by
Moody’s or having a comparable credit rating by another NRSRO are considered
“investment grade.” Securities rated BBB— or Baa3 are considered medium-grade
obligations with speculative characteristics, and adverse economic conditions or
changing circumstances may weaken their issuers’ capacity to pay interest and
repay principal. For the purpose of determining compliance with any credit
rating requirement, the Fund assigns a security, at the time of purchase, the
highest rating by an NRSRO if the security is rated by more than one NRSRO.
Therefore, a security will be deemed to have met a rating requirement if it
receives the minimum required rating from at least one such rating organization
even though it has been rated below the minimum rating by one or more other
rating organizations, or if unrated by such rating organizations, the security
is determined by the Investment Adviser to be of comparable credit
quality.
A security
satisfies the Fund’s minimum rating requirement regardless of its relative
ranking (for example, plus or minus) within a designated major rating category
(for example, BBB or Baa). If a security satisfies the Fund’s minimum rating
requirement at the time of purchase and is subsequently downgraded below that
rating, the Fund will not be required to dispose of the security. If a downgrade
occurs, the Investment Adviser will consider which action, including the sale of
the security, is in the best interest of the Fund and its
shareholders.
In some
cases, junk bonds may be highly speculative, have poor prospects for reaching
investment grade standing and be in default. As a result, investment in such
bonds will present greater speculative risks than those associated with
investment in investment grade bonds. Also, to the extent that the rating
assigned to a security in the Fund’s portfolio is downgraded by a rating
organization, the market price and liquidity of such security may be adversely
affected.
Temporary
Investment Risks. The
Fund may, for temporary defensive purposes, invest up to 100% of its
total assets in:
◼
U.S.
Government Securities
38
Appendix
A
◼
Commercial
paper rated at least A-2 by Standard & Poor’s Global Ratings, P-2 by Moody’s
or having a comparable credit rating by another NRSRO (or, if unrated,
determined by the Investment Adviser to be of comparable credit
quality)
◼
Certificates
of deposit
◼
Bankers’
acceptances
◼
Repurchase
agreements
◼
Non-convertible
preferred stocks and non-convertible corporate bonds with a remaining maturity
of less than one year
◼
ETFs
◼
Other
investment companies
◼
Cash
items
When the
Fund’s assets are invested in such instruments, the Fund may not be achieving
its investment objective.
|
C.
Portfolio Securities and
Techniques |
This
section provides further information on certain types of securities and
investment techniques that may be used by the Fund, including their associated
risks.
The Fund
may purchase other types of securities or instruments similar to those described
in this section if otherwise consistent with the Fund’s investment objective and
policies. Further information is provided in the SAI, which is available upon
request.
Convertible
Securities. The
Fund may invest in convertible securities. Convertible securities are preferred
stock or debt obligations that are convertible into common stock.
Convertible securities generally offer lower interest or dividend yields than
nonconvertible securities of similar quality. Convertible securities have
both equity and fixed income risk characteristics. Like all fixed
income securities, the value of convertible securities is susceptible to
the risk of market losses attributable to changes in interest
rates. Generally, the market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as
interest rates decline. However, when the market price of the common stock
underlying a convertible security exceeds the conversion price of the
convertible security, the convertible security tends to reflect the market price
of the underlying common stock. As the market price of the underlying
common stock declines, the convertible security, like a fixed income security,
tends to trade increasingly on a yield basis, and thus may not decline in
price to the same extent as the underlying common stock.
REITs. The
Fund may invest in REITs. REITs are pooled investment vehicles that invest
primarily in either real estate or real estate related loans. The value of
a REIT is affected by changes in the value of the properties owned by the REIT
or securing mortgage loans held by the REIT. REITs are dependent upon the
ability of the REITs’ managers, and are subject to heavy cash flow
dependency, default by borrowers and the qualification of the REITs under
applicable regulatory requirements for favorable income tax
treatment. REITs are also subject to risks generally associated with
investments in real estate including possible declines in the value of
real estate, general and local economic conditions, environmental problems
and changes in interest rates. To the extent that assets underlying a REIT
are concentrated geographically, by property type or in certain other respects,
these risks may be heightened. The Fund will indirectly bear its
proportionate share of any expenses, including management fees, paid by a REIT
in which it invests.
Options
on Securities, Securities Indices and Foreign Currencies. A
put option gives the purchaser of the option the right to sell, and the writer
(seller) of the option the obligation to buy, the underlying instrument during
the option period. A call option gives the purchaser of the option the right to
buy, and the writer (seller) of the option the obligation to sell, the
underlying instrument during the option period. The Fund may write (sell) call
and put options and purchase put and call options on any securities and other
instruments in which the Fund may invest or any index consisting of securities
or other instruments in which it may invest. The Fund may also, to the extent
consistent with its investment policies, purchase and write (sell) put and call
options on foreign currencies.
The writing
and purchase of options is a highly specialized activity which involves special
investment risks. Options may be used for either hedging or cross-hedging
purposes, or to seek to increase total return (which presents additional risk).
The successful use of options depends in part on the ability of the Investment
Adviser to anticipate future price fluctuations and the degree of correlation
between the options and securities (or currency) markets. If the Investment
Adviser is incorrect in its expectation of changes in market prices or
determination of the correlation between the instruments or indices on which
options are written and purchased and the instruments in the Fund’s investment
portfolio, the Fund may incur losses that it would not otherwise incur. The use
of options can also increase the Fund’s transaction costs. Options written or
purchased by the Fund may be traded on either U.S. or foreign exchanges or
over-the-counter. Foreign and over-the-counter options will present greater
possibility of loss because of their greater illiquidity and credit
risks.
39
Futures
Contracts and Options and Swaps on Futures Contracts. Futures
contracts are standardized, exchange-traded contracts that provide for the sale
or purchase of a specified financial instrument or currency at a future time at
a specified price. An option on a futures contract gives the purchaser the right
(and the writer of the option the obligation) to assume a position in a futures
contract at a specified exercise price within a specified period of time. A swap
on a futures contract provides an investor with the ability to gain economic
exposure to a particular futures market. A futures contract may be based on
particular securities, foreign currencies, securities indices and other
financial instruments and indices. The Fund may engage in futures transactions
on both U.S. and foreign exchanges.
The Fund
may purchase and sell futures contracts, purchase and write call and put options
on futures contracts, and enter into swaps on futures contracts, in order to
seek to increase total return or to hedge against changes in interest rates,
securities prices or currency exchange rates, or to otherwise manage its term
structure, sector selections and duration in accordance with its investment
objective and policies. The Fund may also enter into closing purchase and sale
transactions with respect to such contracts and options.
Futures
contracts and related options and swaps present the following risks:
◼
While the
Fund may benefit from the use of futures and options and swaps on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in poorer overall performance than if the Fund had not entered
into any futures contracts, options transactions or swaps.
◼
Because
perfect correlation between a futures position and a portfolio position that is
intended to be protected is impossible to achieve, the desired protection may
not be obtained and the Fund may be exposed to additional risk of
loss.
◼
The loss
incurred by the Fund in entering into futures contracts and in writing call
options and entering into swaps on futures is potentially unlimited and may
exceed the amount of the premium received.
◼
Futures
markets are highly volatile and the use of futures may increase the volatility
of the Fund’s NAV.
◼
As a result
of the low margin deposits normally required in futures trading, a relatively
small price movement in a futures contract may result in substantial losses to
the Fund.
◼
Futures
contracts and options and swaps on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
◼
Foreign
exchanges may not provide the same protection as U.S. exchanges.
Equity
Swaps and Index Swaps. The Fund
may invest in equity swaps and index swaps. Equity swaps allow the parties to a
swap agreement to exchange the dividend income or other components of return on
an equity investment (for example, a group of equity securities or an index) for
another payment stream. An equity swap may be used by the Fund to invest in a
market without owning or taking physical custody of securities in circumstances
in which direct investment may be restricted for legal reasons or is otherwise
deemed impractical or disadvantageous. Index swaps allow one party or both
parties to a swap agreement to receive one or more payments based off of the
return, performance or volatility of an index or of certain securities which
comprise the index. Under an equity swap, payments may be made at the conclusion
of the equity swap or periodically during its term. Sometimes, however, the
Investment Adviser may be able to terminate a swap contract prior to its term,
subject to any potential termination fee that is in addition to the Fund’s
accrued obligations under the swap.
Equity
swaps may be structured in different ways. For example, when the Fund takes a
long position, a counterparty may agree to pay the Fund the amount, if any, by
which the notional amount of the equity swap would have increased in value had
it been invested in a particular stock (or group of stocks), plus the dividends
that would have been received on the stock. In these cases, the Fund may agree
to pay to the counterparty interest on the notional amount of the equity swap
plus the amount, if any, by which that notional amount would have decreased in
value had it been invested in such stock (or group of stocks). Therefore, in
this case the return to the Fund on the equity swap should be the gain or loss
on the notional amount plus dividends on the stock less the interest paid by the
Fund on the notional amount. In other cases, when the Fund takes a short
position, a counterparty may agree to pay the Fund the amount, if any, by which
the notional amount of the equity swap would have decreased in value had the
Fund sold a particular stock (or group of stocks) short, less the dividend
expense that the Fund would have paid on the stock (or group of stocks), as
adjusted for interest payments or other economic factors.
The value
of swaps can be very volatile. To the extent that the Investment Adviser does
not accurately analyze and predict the potential relative fluctuation of the
components swapped with another party, future market trends, the values of
assets or economic factors, or the creditworthiness of the counterparty, the
Fund may suffer a loss, which may be substantial. The value of some components
of a swap (such as the dividends on a common stock) may also be sensitive to
changes in interest rates. Furthermore, swaps may be illiquid, and the Fund may
be unable to terminate its obligations when desired.
40
Appendix
A
Currently,
certain standardized swap transactions are subject to mandatory central clearing
and exchange trading. Although central clearing and exchange trading is expected
to decrease counterparty risk and increase liquidity compared to bilaterally
negotiated swaps, central clearing and exchange trading does not eliminate
counterparty risk or illiquidity risk entirely. Depending on the size of the
Fund and other factors, the margin required under the rules of a clearinghouse
and by a clearing member may be in excess of the collateral required to be
posted by the Fund to support its obligations under a similar bilateral,
uncleared swap. However, certain applicable regulators have adopted rules
imposing certain margin requirements, including minimums, on uncleared swaps
which may result in the Fund and its counterparties posting higher amounts for
uncleared swaps.
When-Issued
Securities and Forward Commitments. The
Fund may purchase when-issued securities and make contracts to purchase or sell
securities for a fixed price at a future date beyond customary settlement time.
When-issued securities are securities that have been authorized, but not yet
issued. When-issued securities are purchased in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
entering into the transaction. A forward commitment involves the entering into a
contract to purchase or sell securities for a fixed price at a future date
beyond the customary settlement period.
The
purchase of securities on a when-issued or forward commitment basis involves a
risk of loss if the value of the security to be purchased declines before the
settlement date. Conversely, the sale of securities on a forward commitment
basis involves the risk that the value of the securities sold may increase
before the settlement date. Although the Fund will generally purchase securities
on a when-issued or forward commitment basis with the intention of acquiring the
securities for its portfolio, the Fund may dispose of when-issued securities or
forward commitments prior to settlement if the Investment Adviser deems it
appropriate.
Repurchase
Agreements. Repurchase
agreements involve the purchase of securities subject to the seller’s agreement
to repurchase them at a mutually agreed upon date and price. The Fund may enter
into repurchase agreements with counterparties approved by the Investment
Adviser pursuant to procedures approved by the Board of Trustees that furnish
collateral at least equal in value or market price to the amount of their
repurchase obligation. The collateral may consist of any type of security
(government or corporate) of any or no credit rating. Repurchase agreements
involving obligations other than U.S. Government Securities may be subject to
additional risks.
If the
other party or “seller” defaults, the Fund might suffer a loss to the extent
that the proceeds from the sale of the underlying securities and other
collateral held by the Fund are less than the repurchase price and the Fund’s
costs associated with delay and enforcement of the repurchase agreement. In
addition, in the event of bankruptcy of the seller, the Fund could suffer
additional losses if a court determines that the Fund’s interest in the
collateral is not enforceable.
The Fund,
together with other registered investment companies having advisory agreements
with the Investment Adviser or any of its affiliates, may transfer uninvested
cash balances into a single joint account, the daily aggregate balance of which
will be invested in one or more repurchase agreements.
Short
Sales Against-the-Box. The
Fund may make short sales against-the-box. A short sale against-the-box means
that at all times when a short position is open the Fund will own an equal
amount of securities sold short, or securities convertible into or exchangeable
for, without payment of any further consideration, an equal amount of the
securities of the same issuer as the securities sold short.
Preferred
Stock, Warrants and Stock Purchase Rights. The Fund
may invest in preferred stock, warrants and stock purchase rights (or “rights”).
Preferred stocks are securities that represent an ownership interest providing
the holder with claims on the issuer’s earnings and assets before common stock
owners but after bond owners. Unlike debt securities, the obligations of an
issuer of preferred stock, including dividend and other payment obligations, may
not typically be accelerated by the holders of such preferred stock on the
occurrence of an event of default or other non-compliance by the issuer of the
preferred stock.
Warrants
and other rights are options to buy a stated number of shares of common stock at
a specified price at any time during the life of the warrant or right. The
holders of warrants and rights have no voting rights, receive no dividends and
have no rights with respect to the assets of the issuer.
Other
Investment Companies. The Fund
may invest in securities of other investment companies, including ETFs and money
market funds, subject to statutory limitations prescribed by the Investment
Company Act or rules, regulations or exemptive relief thereunder. These
statutory limitations include in certain circumstances a prohibition on the Fund
acquiring more than 3% of the voting shares of any other investment company, and
a prohibition on investing more than 5% of the Fund’s total assets in securities
of any one investment company or more than 10% of total assets in securities of
all investment companies.
Subject to
applicable law and/or pursuant to an exemptive order obtained from the SEC or
under an exemptive rule adopted by the SEC, the Fund may invest in certain other
investment companies (including ETFs and money market funds) and business
development companies beyond the statutory limits described above or otherwise
provided that certain conditions are met. Some of those investment companies may
be funds for which the Investment Adviser or any of its affiliates serves as
investment adviser, administrator or distributor.
41
Additionally,
to the extent that any Fund serves as an “acquired fund” to another Goldman
Sachs Fund or unaffiliated investment company, the Fund’s ability to invest in
other investment companies and private funds may be limited and, under these
circumstances, the Fund’s investments in other investment companies and private
funds will be consistent with applicable law and/or exemptive rules adopted by
or exemptive orders obtained from the SEC. For example, to the extent the Fund
serves as an acquired fund in a fund of funds arrangement in reliance on Rule
12d1-4 under the Investment Company Act, the Fund would be prohibited from
purchasing or otherwise acquiring the securities of an investment company or
private fund if, after such purchase or acquisition, the aggregate value of the
Fund’s investments in such investment companies and private funds would exceed
10% of the value of the Fund’s total assets, subject to limited exceptions
(including for investments in money market funds).
The use of
ETFs is generally intended to help a Fund match the total return of the
particular market segments or indices represented by those ETFs, although that
may not be the result. Most ETFs are passively managed investment companies
whose shares are purchased and sold on a securities exchange. An ETF generally
represents a portfolio of securities designed to track a particular market
segment or index. An investment in an ETF generally presents the same primary
risks as an investment in a conventional fund (i.e., one that is not
exchange-traded) that has the same investment objectives, strategies and
policies. In addition, an ETF may fail to accurately track the market segment or
index that underlies its investment objective. The price of an ETF can
fluctuate, and a Fund could lose money investing in an ETF. Moreover, ETFs are
subject to the following risks that do not apply to conventional funds: (i) the
market price of the ETF’s shares may trade at a premium or a discount to their
NAV; (ii) an active trading market for an ETF’s shares may not develop or be
maintained; and (iii) there is no assurance that the requirements of the
exchange necessary to maintain the listing of an ETF will continue to be met or
remain unchanged.
The Fund
will indirectly bear its proportionate share of any management fees and other
expenses paid by such other investment companies, in addition to the fees and
expenses regularly borne by the Fund. Although the Fund do not expect to do so
in the foreseeable future, the Fund is authorized to invest substantially all of
its assets in a single open-end investment company or series thereof that has
substantially the same investment objective, policies and fundamental
restrictions as the Fund.
Unseasoned
Companies. The
Fund may invest in companies which (together with their predecessors) have
operated less than three years. The securities of such companies may have
limited liquidity, which can result in their being priced higher or lower than
might otherwise be the case. In addition, investments in unseasoned
companies are more speculative and entail greater risk than investments in
companies with an established operating record.
Corporate
Debt Obligations. Corporate
debt obligations include bonds, notes, debentures, commercial paper and other
obligations of corporations to pay interest and repay principal. The Fund
may invest in corporate debt obligations issued by U.S. and certain
non-U.S. issuers which issue securities denominated in the U.S. dollar
(including Yankee and Euro obligations). In addition to obligations
of corporations, corporate debt obligations include securities issued by
banks and other financial institutions and supranational entities (i.e.,
the World Bank, the International Monetary Fund, etc.).
Bank
Obligations. The
Fund may invest in obligations issued or guaranteed by U.S. or foreign banks.
Bank obligations, including without limitation, time deposits, bankers’
acceptances and certificates of deposit, may be general obligations of the
parent bank or may be limited to the issuing branch by the terms of the
specific obligations or by government regulations. Banks are subject
to extensive but different governmental regulations which may limit both
the amount and types of loans which may be made and interest rates which
may be charged. In addition, the profitability of the banking industry is
largely dependent upon the availability and cost of funds for the purpose
of financing lending operations under prevailing money market conditions.
General economic conditions as well as exposure to credit losses arising
from possible financial difficulties of borrowers play an important part in the
operation of this industry.
U.S.
Government Securities. The
Fund may invest in U.S. Government Securities. U.S. Government Securities
include U.S. Treasury obligations and obligations issued or guaranteed by U.S.
government agencies, instrumentalities or sponsored enterprises.
U.S.
Government Securities may be supported by (i) the full faith and credit of the
U.S. Treasury; (ii) the right of the issuer to borrow from the U.S. Treasury;
(iii) the discretionary authority of the U.S. government to purchase certain
obligations of the issuer; or (iv) only the credit of the issuer. U.S.
Government Securities also include Treasury receipts, zero coupon bonds and
other stripped U.S. Government Securities, where the interest and principal
components are traded independently.
U.S.
Government Securities may also include Treasury inflation-protected securities
whose principal value is periodically adjusted according to the rate of
inflation.
U.S.
Government Securities are deemed to include (i) securities for which the payment
of principal and interest is backed by an irrevocable letter of credit issued by
the U.S. government, its agencies, authorities or instrumentalities; and (ii)
participations in loans made to foreign governments or their agencies that are
so guaranteed. Certain of these participations may be regarded as
illiquid.
U.S.
Government Securities have historically involved little risk of loss of
principal if held to maturity. However, no assurance can be given that the U.S.
government will be able or willing to repay the principal or interest when due,
or provide financial support to U.S. government agencies, authorities,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law.
42
Appendix
A
Custodial
Receipts and Trust Certificates. The
Fund may invest in custodial receipts and trust certificates representing
interests in securities held by a custodian or trustee. The securities so
held may include U.S. Government Securities or other types of securities
in which the Fund may invest. The custodial receipts or trust certificates
may evidence ownership of future interest payments, principal payments or
both on the underlying securities, or, in some cases, the payment obligation of
a third party that has entered into an interest rate swap or other
arrangement with the custodian or trustee. For certain securities laws purposes,
custodial receipts and trust certificates may not be considered obligations
of the U.S. government or other issuer of the securities held by the custodian
or trustee. If for tax purposes the Fund is not considered to be the owner
of the underlying securities held in the custodial or trust account,
the Fund may suffer adverse tax consequences. As a holder of custodial
receipts and trust certificates, the Fund will bear its proportionate share
of the fees and expenses charged to the custodial account or trust. The Fund may
also invest in separately issued interests in custodial receipts
and trust certificates.
Borrowings. The
Fund can borrow money from banks and other financial institutions in amounts not
exceeding one-third of its total assets (including the amount borrowed
or received), for temporary or emergency purposes.
Mortgage
Dollar Rolls. The
Fund may enter into mortgage dollar rolls. A mortgage dollar roll involves the
sale by the Fund of securities for delivery in the current month. The Fund
simultaneously contracts with the same counterparty to repurchase
substantially similar (same type, coupon and maturity) but not identical
securities on a specified future date. During the roll period, the Fund
loses the right to receive principal and interest paid on the securities
sold. However, the Fund benefits to the extent of any difference
between (a) the price received for the securities sold and (b) the lower
forward price for the future purchase and/or fee income plus the
interest earned on the cash proceeds of the securities sold. Unless the
benefits of a mortgage dollar roll exceed the income, capital
appreciation and gain or loss due to mortgage prepayments that would have
been realized on the securities sold as part of the roll, the use of
this technique will diminish the Fund’s performance.
Successful
use of mortgage dollar rolls depends upon the Investment Adviser’s ability to
predict correctly interest rates and mortgage prepayments. If the
Investment Adviser is incorrect in its prediction, the Fund may experience a
loss. The Fund does not currently intend to enter into mortgage dollar
rolls for financing and does not treat them as borrowings.
Lending
of Portfolio Securities. The Fund
may engage in securities lending. Securities lending involves the lending of
securities owned by the Fund to financial institutions such as certain
broker-dealers. The borrowers are required to secure their loans continuously
with cash, cash equivalents, U.S. government securities or letters of credit in
an amount at least equal to the market value of the securities loaned. Cash
collateral may be invested by the Fund in short-term investments, including
registered and unregistered investment pools managed by the Investment Adviser
or its affiliates and from which the Investment Adviser or its affiliates may
receive fees. To the extent that cash collateral is so invested, such collateral
will be subject to market depreciation or appreciation, and the Fund will be
responsible for any loss that might result from its investment of the borrowers’
collateral. If the Investment Adviser determines to make securities loans, the
value of the securities loaned may not exceed 331/3% of the value of the total
assets of the Fund (including the loan collateral). Loan collateral (including
any investment of that collateral) is not subject to the percentage limitations
regarding the Fund’s investments described in its prospectus. The Fund may lend
its securities to increase its income. The Fund may, however, experience delay
in the recovery of its securities or incur a loss if the institution with which
it has engaged in a portfolio loan transaction breaches its agreement with the
Fund or its agent, or becomes insolvent.
Foreign
Currency Transactions. The
Fund may, to the extent consistent with its investment policies, purchase or
sell foreign currencies on a cash basis or through forward contracts. A forward
contract involves an obligation to purchase or sell a specific currency at a
future date at a price set at the time of the contract. The Fund may engage in
foreign currency transactions for hedging purposes and to seek to protect
against anticipated changes in future foreign currency exchange rates. In
addition, the Fund may enter into foreign currency transactions to seek a closer
correlation between the Fund’s overall currency exposures and the currency
exposures of the Fund’s performance benchmark. The Fund may also enter into such
transactions to seek to increase total return, which presents additional
risk.
The Fund
may also engage in cross-hedging by using forward contracts in a currency
different from that in which the hedged security is denominated or quoted. The
Fund may hold foreign currency received in connection with investments in
foreign securities when, in the judgment of the Investment Adviser, it would be
beneficial to convert such currency into U.S. dollars at a later date (e.g., the
Investment Adviser may anticipate the foreign currency to appreciate against the
U.S. dollar).
The Fund
may, from time to time, engage in non-deliverable forward transactions to manage
currency risk or to gain exposure to a currency without purchasing securities
denominated in that currency. A non-deliverable forward is a transaction that
represents an agreement between the Fund and a counterparty (usually a
commercial bank) to pay the other party the amount that it would cost based on
current market rates as of the termination date to buy or sell a specified
(notional) amount of a particular currency at an agreed upon foreign exchange
rate on an agreed upon future date. If the counterparty defaults, the Fund will
have contractual remedies pursuant to the agreement related to the transaction,
but the Fund may be delayed or prevented from obtaining payments owed to it
pursuant to non-deliverable forward transactions. Such non-deliverable forward
transactions will be settled in cash.
43
Currency
exchange rates may fluctuate significantly over short periods of time, causing,
along with other factors, the Fund’s NAV to fluctuate (when the Fund’s NAV
fluctuates, the value of your shares may go up or down). Currency exchange rates
also can be affected unpredictably by the intervention of U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the United States or abroad.
Certain
forward foreign currency exchange contracts and other currency transactions are
not exchange-traded or cleared. The market in such forward foreign currency
exchange contracts, currency swaps and other privately negotiated currency
instruments offers less protection against defaults by the other party to such
instruments than is available for currency instruments traded on an exchange.
Such contracts are subject to the risk that the counterparty to the contract
will default on its obligations. Because these contracts are not guaranteed by
an exchange or clearinghouse, a default on a contract would deprive the Fund of
unrealized profits, transaction costs or the benefits of a currency hedge or
could force the Fund to cover its purchase or sale commitments, if any, at the
current market price.
The Fund is
not required to post cash collateral with its counterparties in certain foreign
currency transactions. Accordingly, the Fund may remain more fully invested (and
more of the Fund’s assets may be subject to investment and market risk) than if
it were required to post collateral with its counterparties (which is the case
with certain transactions). Where the Fund’s counterparties are not required to
post cash collateral with the Fund, the Fund will be subject to additional
counterparty risk.
44
Appendix
B
Financial
Highlights
The financial highlights
tables are intended to help you understand the Fund’s financial performance for
the past five years (or less if the Fund has been in operation for less
than five years). Certain information reflects financial results for a single
Fund Share. The total returns in the table represent the rate that an investor
would have earned or lost on an investment in the Fund (assuming reinvestment of
all dividends and distributions). The information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund’s financial
statements, is included in the Fund’s Form N-CSR dated December 31,
2025.
|
|
Nasdaq-100
Premium Income ETF | ||
|
|
For
the Fiscal
Year
Ended
December
31, 2025 |
For
the Period
September
1, 2024
to
December
31, 2024† |
For
the Period
October
24, 2023*
to
August
31, 2024 |
|
Per
Share Operating Performance: | |||
|
Net
asset value, beginning of period |
$48.97 |
$47.04 |
$40.39 |
|
Net
investment income(a) |
0.22 |
0.09 |
0.23 |
|
Net
realized and unrealized gain |
8.82 |
3.51 |
10.01 |
|
Total
from investment operations |
9.04 |
3.60 |
10.24 |
|
Distributions
to shareholders from net investment income |
(0.23
) |
(0.37
) |
(0.23
) |
|
Distributions
to shareholders from return of capital |
(4.96
) |
(1.30
) |
(3.36
) |
|
Total
distributions |
(5.19
) |
(1.67
) |
(3.59
) |
|
Net
asset value, end of period |
$52.82 |
$48.97 |
$47.04 |
|
Market
price, end of period |
$49.03 |
$49.03 |
$47.20 |
|
Total
Return at Net Asset Value(b) |
19.83
% |
7.89
% |
26.00
% |
|
Net
assets, end of period (in 000’s) |
$2,602,534 |
$339,871 |
$210,254 |
|
Ratio
of net expenses to average net assets |
0.29
% |
0.29
%(c) |
0.29
%(c) |
|
Ratio
of total expenses to average net assets |
0.35
% |
0.35
%(c) |
0.35
%(c) |
|
Ratio
of net investment income to average net assets |
0.43
% |
0.55
%(c) |
0.58
%(c) |
|
Portfolio
turnover rate(d) |
19
% |
4
% |
14
% |
†
The
Fund changed its fiscal year end from August 31 to December 31 on December 31,
2024.
*
Commencement
of operations.
(a)
Calculated
based on the average shares outstanding methodology.
(b)
Assumes
investment at the net asset value at the beginning of the period, reinvestment
of all distributions and a complete sale of the investment at the net asset
value at the end of the period. Returns do not reflect the impact of taxes to
shareholders relating to Fund distributions or the sale of Fund shares. Total
returns for periods less than one full year are not annualized.
(c)
Annualized.
(d)
The
Fund’s portfolio turnover rate is calculated in accordance with regulatory
requirements and excludes portfolio securities received or delivered as a result
of in-kind transactions and short-term transactions. If such transactions were
included, the Fund’s portfolio turnover rate may be higher.
45
|
|
S&P
500 Premium Income ETF | ||
|
|
For
the Fiscal
Year
Ended
December
31, 2025 |
For
the Period
September
1, 2024
to
December
31, 2024† |
For
the Period
October
24, 2023*
to
August
31, 2024* |
|
Per
Share Operating Performance: | |||
|
Net
asset value, beginning of period |
$49.36 |
$48.32 |
$40.30 |
|
Net
investment income(a) |
0.49 |
0.18 |
0.46 |
|
Net
realized and unrealized gain |
7.14 |
2.25 |
10.47 |
|
Total
from investment operations |
7.63 |
2.43 |
10.93 |
|
Distributions
to shareholders from net investment income |
(0.52
) |
(0.24
) |
(0.45
) |
|
Distributions
to shareholders from return of capital |
(3.71
) |
(1.15
) |
(2.46
) |
|
Total
distributions |
(4.23
) |
(1.39
) |
(2.91
) |
|
Net
asset value, end of period |
$52.76 |
$49.36 |
$48.32 |
|
Market
price, end of period |
$49.45 |
$49.45 |
$48.52 |
|
Total
Return at Net Asset Value(b) |
16.39
% |
5.14
% |
27.79
% |
|
Net
assets, end of period (in 000’s) |
$2,674,588 |
$362,309 |
$198,100 |
|
Ratio
of net expenses to average net assets |
0.29
% |
0.29
%(c) |
0.29
%(c) |
|
Ratio
of total expenses to average net assets |
0.35
% |
0.35
%(c) |
0.35
%(c) |
|
Ratio
of net investment income to average net assets |
0.97
% |
1.08
%(c) |
1.15
%(c) |
|
Portfolio
turnover rate(d) |
27
% |
1
% |
10
% |
†
The
Fund changed its fiscal year end from August 31 to December 31 on December 31,
2024.
*
Commencement
of operations.
(a)
Calculated
based on the average shares outstanding methodology.
(b)
Assumes
investment at the net asset value at the beginning of the period, reinvestment
of all distributions and a complete sale of the investment at the net asset
value at the end of the period. Returns do not reflect the impact of taxes to
shareholders relating to Fund distributions or the sale of Fund shares. Total
returns for periods less than one full year are not annualized.
(c)
Annualized.
(d)
The
Fund’s portfolio turnover rate is calculated in accordance with regulatory
requirements and excludes portfolio securities received or delivered as a result
of in-kind transactions and short-term transactions. If such transactions were
included, the Fund’s portfolio turnover rate may be higher.
46
Goldman
Sachs Premium Income ETFs Prospectus
|
FOR
MORE INFORMATION |
Annual/Semi-Annual
Report
Additional
information about the Fund’s investments is or will be available in the Fund’s
annual and semi-annual reports to shareholders and in Form N-CSR. In the Fund’s
annual report you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund’s performance during the last
fiscal year. In Form N-CSR, you will find the Fund’s annual and semi-annual
financial statements.
Statement of
Additional Information
Additional
information about the Fund and its policies is also available in the Fund’s SAI.
The SAI is incorporated by reference into the Prospectus (i.e., is
legally considered part of the Prospectus).
The Fund’s
annual and semi-annual reports to shareholders, SAI and other information such
as the Fund’s financial statements are available free upon request by calling
Goldman Sachs Funds at 1-800-621-2550. You can also access and download the
annual and semi-annual reports, SAI and other information such as the Fund’s
financial statements, free of charge, at the Fund’s website:
dfinview.com/GoldmanSachs.
From time
to time, certain announcements and other information regarding the Fund may be
found at am.gs.com for individual investors and advisers.
To request
other information and for shareholder inquiries:
|
|
Shareholders/Authorized
Participants |
Financial
Advisers |
|
◼ By
telephone: |
1-800-621-2550 |
1-800-292-4726 |
|
◼ By
mail: |
Goldman
Sachs Funds
71
South Wacker Drive, Suite 1200
Chicago,
IL 60606 |
|
|
◼ On
the Internet: |
SEC
EDGAR database – http://www.sec.gov |
|
Other
information about the Fund is available on the EDGAR Database on the SEC’s
website at http://www.sec.gov. You may obtain copies of this information, after
paying a duplicating fee, by electronic request at the following e-mail address:
[email protected].
The
Trust's investment company registration number is 811-23013.
GSAM®
is a registered service mark of Goldman Sachs & Co. LLC.
USEQPREETFPRO-26