CUSIP | TICKER SYMBOL | |
19762B202 | XCEM |
CUSIP | TICKER SYMBOL | |
19762B509 | ECON |
CUSIP | TICKER SYMBOL | |
19762B707 | INCO |
2 | Prospectus 2022 |
Management fees(a) | |
Distribution and/or service (12b-1) fees | |
Other expenses | |
Total annual Fund operating expenses |
(a) |
■ | you invest $10,000 in the Fund for the periods indicated, |
■ | your investment has a 5% return each year, and |
■ | the Fund’s total annual operating expenses remain the same as shown in the Annual Fund Operating Expenses table above. |
1 year | 3 years | 5 years | 10 years | |
$ |
$ |
$ |
$ |
Prospectus 2022 | 3 |
4 | Prospectus 2022 |
Prospectus 2022 | 5 |
■ | Asia Pacific Region. Many of the countries in the Asia Pacific region are considered underdeveloped or developing, including from a political, economic and/or social perspective, and may have relatively unstable governments and economies based on limited business, industries and/or natural resources or commodities. Events in any one country within the region may impact other countries in the region or the region as a whole. As a result, events in the region will generally have a greater effect on the Fund than if the Fund were more geographically diversified. This could result in increased volatility in the value of the Fund’s investments and losses for the Fund. Also, securities of some companies in the region can be less liquid than U.S. or other foreign securities, potentially making it difficult for the Fund to sell such securities at a desirable time and price. |
■ | Small- and Mid-Cap Stock Risk. Investments in small- and mid-capitalization companies (small- and mid-cap companies) often involve greater risks than investments in larger, more established companies (larger companies) |
6 | Prospectus 2022 |
because small- and mid-cap companies tend to have less predictable earnings and may lack the management experience, financial resources, product diversification and competitive strengths of larger companies. Securities of small- and mid-cap companies may be less liquid and more volatile than the securities of larger companies. |
■ | Large-Cap Stock Risk. Investments in larger companies may involve certain risks associated with their larger size. For instance, larger companies may be less able to respond quickly to new competitive challenges, such as changes in consumer tastes or innovation from smaller competitors. Also, larger companies are sometimes less able to achieve as high growth rates as successful smaller companies, especially during extended periods of economic expansion. |
Prospectus 2022 | 7 |
8 | Prospectus 2022 |
■ | Financial Services Sector. The Fund is more susceptible to the particular risks that may affect companies in the financial services sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the financial services sector are subject to certain risks, including the risk of regulatory change, decreased liquidity in credit markets and unstable interest rates. Such companies may have concentrated portfolios, such as a high level of loans to one or more industries or sectors, which makes them vulnerable to economic conditions that affect such industries or sectors. Performance of such companies may be affected by competitive pressures and exposure to investments, agreements and counterparties, including credit products that, under certain circumstances, may lead to losses (e.g., subprime loans). Companies in the financial services sector are subject to extensive governmental regulation that may limit the amount and types of loans and other financial commitments they can make, and the interest rates and fees they may charge. In addition, profitability of such companies is largely dependent upon the availability and the cost of capital. |
■ | Information Technology Sector. The Fund is more susceptible to the particular risks that may affect companies in the information technology sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the information technology sector are subject to certain risks, including the risk that new services, equipment or technologies will not be accepted by consumers and businesses or will become rapidly obsolete. Performance of such companies may be affected by factors including obtaining and protecting patents (or the failure to do so) and significant competitive pressures, including aggressive pricing of their products or services, new market entrants, competition for market share and short product cycles due to an accelerated rate of technological developments. Such competitive pressures may lead to limited earnings and/or falling profit margins. As a result, the value of their securities may fall or fail to rise. In addition, many information technology sector companies have limited operating histories and prices of these companies’ securities historically have been more volatile than other securities, especially over the short term. Some companies in the information technology sector are facing increased government and regulatory scrutiny and may be subject to adverse government or regulatory action, which could negatively impact the value of their securities. |
Prospectus 2022 | 9 |
as of December 31 Each Year* |
Best and Worst Quarterly Returns During the Period Shown in the Bar Chart | ||
|
|||
- |
* |
Inception Date | 1 Year | 5 Years | Life of Fund | |
returns before taxes | ||||
returns after taxes on distributions | ||||
returns after taxes on distributions and sale of Fund shares | ||||
Beta Thematic Emerging Markets ex-China Index (reflects no deductions for fees, expenses or taxes) | ||||
MSCI Emerging Markets Index (Net) (reflects reinvested dividends net of withholding taxes but reflects no deductions for fees, expenses or other taxes) | - |
Portfolio Management | Title | Role with Fund | Managed Fund Since | |||
Christopher Lo, CFA | Senior Portfolio Manager | Lead Portfolio Manager | 2016 | |||
Henry Hom, CFA | Portfolio Manager | Portfolio Manager | October 2021 |
10 | Prospectus 2022 |
Prospectus 2022 | 11 |
Management fees(a)(b) | |
Distribution and/or service (12b-1) fees | |
Other expenses | |
Total annual Fund operating expenses |
(a) | |
(b) |
■ | you invest $10,000 in the Fund for the periods indicated, |
■ | your investment has a 5% return each year, and |
■ | the Fund’s total annual operating expenses remain the same as shown in the Annual Fund Operating Expenses table above. |
1 year | 3 years | 5 years | 10 years | |
$ |
$ |
$ |
$ |
12 | Prospectus 2022 |
Prospectus 2022 | 13 |
14 | Prospectus 2022 |
■ | Greater China. The Greater China region consists of Hong Kong, The People's Republic of China and Taiwan, among other countries, and the Fund's investments in the region are particularly susceptible to risks in that region. These economies can be significantly affected by currency fluctuations and increasing competition from other emerging economies. Adverse events in the region will generally have a greater effect on the Fund than if the Fund were more geographically diversified, which could result in greater volatility in the Fund’s NAV and losses. Markets in the Greater China region can experience significant volatility due to social, economic, regulatory and political uncertainties. Many Chinese companies to which the Fund seeks investment exposure use a structure known as a variable interest entity (a VIE) to address Chinese restrictions on direct foreign investment in Chinese companies operating in certain sectors. The Fund’s investment exposure to VIEs may pose additional risks because the Fund’s investment is in a holding company domiciled outside of China (a Holding Company) whose interests in the business of the underlying Chinese operating company (the VIE) are established through contracts rather than equity ownership. The VIE structure is a longstanding practice in China but, until recently, was not acknowledged by the Chinese government, creating uncertainty over the possibility that the Chinese government might cease to tolerate VIE structures at any time or impose new restrictions on the structure. In such a scenario, the Chinese operating company could be subject to penalties, including revocation of its business and operating license, or the Holding Company could forfeit its interest in the business of the Chinese operating company. Further, in case of a dispute, the remedies and rights of the Fund may be limited, and legal uncertainty may be exploited against the interests of the Fund. Control over a VIE may also be jeopardized if a natural person who holds the equity interest in the VIE breaches the terms of the contractual arrangements, is subject to legal proceedings, or if any physical instruments or property of the VIE, such as seals, business registration certificates, financial data and licensing arrangements (sometimes referred to as “chops”), are used without authorization. In the event of such an occurrence, the Fund, as a foreign investor, may have little or no legal recourse. In addition to the risk of government intervention, investments through a VIE structure are subject to the risk that the China-based company (or its officers, directors, or Chinese equity owners) may breach the contractual arrangements, that Chinese law |
Prospectus 2022 | 15 |
changes in a way that adversely affects the enforceability of the arrangements, or that the contracts are otherwise not enforceable under Chinese law. In any of these cases a Fund may suffer significant losses on its investments through a VIE structure with little or no recourse available. Further, the Fund is not a VIE owner/shareholder and cannot exert influence through proxy voting or other means. Foreign companies listed on stock exchanges in the United States, including companies using the VIE structure, could also face delisting or other ramifications for failure to meet the expectations and/or requirements of U.S. regulators. Recently, China has proposed the adoption of rules which would affirm that VIEs are legally permissible, though there remains significant uncertainty over how these rules will operate. Any of these risks could reduce the liquidity and value of the Fund’s investments in Holding Companies or render them valueless. |
■ | Mid-Cap Stock Risk. Investments in mid-capitalization companies (mid-cap companies) often involve greater risks than investments in larger, more established companies (larger companies) because mid-cap companies tend to have less predictable earnings and may lack the management experience, financial resources, product diversification and competitive strengths of larger companies, and may be less liquid than the securities of larger companies. |
■ | Large-Cap Stock Risk. Investments in larger companies may involve certain risks associated with their larger size. For instance, larger companies may be less able to respond quickly to new competitive challenges, such as changes in consumer tastes or innovation from smaller competitors. Also, larger companies are sometimes less able to achieve as high growth rates as successful smaller companies, especially during extended periods of economic expansion. |
16 | Prospectus 2022 |
Prospectus 2022 | 17 |
■ | Communication Services Sector. The Fund is more susceptible to the particular risks that may affect companies in the communication services sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the communication services sector are subject to certain risks, including the risk that new services, equipment or technologies will not be accepted by consumers and businesses or will become rapidly obsolete. Performance of such companies may be affected by factors including obtaining and protecting patents (or the failure to do so) and significant competitive pressures, including aggressive pricing of their products or services, new market entrants, competition for market share and short product cycles due to an accelerated rate of technological developments. Such competitive pressures may lead to limited earnings and/or falling profit margins. As a result, the value of their securities may fall or fail to rise. In addition, many communication services sector companies have limited operating histories and prices of these companies’ securities historically have been more volatile than other securities, especially over the short term. |
■ | Consumer Discretionary/Staples Sectors. The Fund is more susceptible to the particular risks that may affect companies in the consumer discretionary/staples sectors than if it were invested in a wider variety of companies in unrelated sectors. Companies in the consumer discretionary/staples sectors are subject to certain risks, including fluctuations in the performance of the overall domestic and international economy, interest rate changes, currency exchange rates, increased competition and consumer confidence. Performance of such companies may be affected by factors including reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes. |
18 | Prospectus 2022 |
as of December 31 Each Year* |
Best and Worst Quarterly Returns During the Period Shown in the Bar Chart | ||
|
|||
- |
* |
Inception Date | 1 Year | 5 Years | 10 Years | |
returns before taxes | - |
|||
returns after taxes on distributions | - |
|||
returns after taxes on distributions and sale of Fund shares | - |
|||
Dow Jones Emerging Markets Consumer TitansTM Index (reflects no deductions for fees, expenses or taxes) | - |
|||
MSCI Emerging Markets Index (Net) (reflects reinvested dividends net of withholding taxes but reflects no deductions for fees, expenses or other taxes) | - |
Prospectus 2022 | 19 |
Portfolio Management | Title | Role with Fund | Managed Fund Since | |||
Christopher Lo, CFA | Senior Portfolio Manager | Lead Portfolio Manager | 2016 | |||
Henry Hom, CFA | Portfolio Manager | Portfolio Manager | October 2021 |
20 | Prospectus 2022 |
Management fees(a) | |
Distribution and/or service (12b-1) fees | |
Other expenses | |
Total annual Fund operating expenses | |
Less: Fee waivers and/or expense reimbursements(b) | ( |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements |
(a) |
(b) |
■ | you invest $10,000 in the Fund for the periods indicated, |
■ | your investment has a 5% return each year, and |
■ | the Fund’s total annual operating expenses remain the same as shown in the Annual Fund Operating Expenses table above. |
1 year | 3 years | 5 years | 10 years | |
$ |
$ |
$ |
$ |
Prospectus 2022 | 21 |
22 | Prospectus 2022 |
Prospectus 2022 | 23 |
■ | India. The Fund is particularly susceptible to risks related to economic, political, regulatory or other events or conditions affecting issuers in India. Because the Fund invests predominantly in Indian securities, its NAV will be much more sensitive to changes in economic, political and other factors within India than would a fund that invested in a variety of countries. Special risks include, among others, political and legal uncertainty, persistent religious, ethnic and border disputes, greater government control over the economy, currency fluctuations or blockage and the risk of nationalization or expropriation of assets. Uncertainty regarding inflation and currency exchange rates, fiscal policy, credit ratings and the possibility that future harmful political actions will be taken by the Indian government, could negatively impact the Indian economy and securities markets, and thus adversely affect the Fund’s performance. |
24 | Prospectus 2022 |
■ | Small- and Mid-Cap Stock Risk. Investments in small- and mid-capitalization companies (small- and mid-cap companies) often involve greater risks than investments in larger, more established companies (larger companies) because small- and mid-cap companies tend to have less predictable earnings and may lack the management experience, financial resources, product diversification and competitive strengths of larger companies. Securities of small- and mid-cap companies may be less liquid and more volatile than the securities of larger companies. |
■ | Large-Cap Stock Risk. Investments in larger companies may involve certain risks associated with their larger size. For instance, larger companies may be less able to respond quickly to new competitive challenges, such as changes in consumer tastes or innovation from smaller competitors. Also, larger companies are sometimes less able to achieve as high growth rates as successful smaller companies, especially during extended periods of economic expansion. |
Prospectus 2022 | 25 |
26 | Prospectus 2022 |
■ | Consumer Discretionary/Staples Sectors. The Fund is more susceptible to the particular risks that may affect companies in the consumer discretionary/staples sectors than if it were invested in a wider variety of companies in unrelated sectors. Companies in the consumer discretionary/staples sectors are subject to certain risks, including fluctuations in the performance of the overall domestic and international economy, interest rate changes, currency exchange rates, increased competition and consumer confidence. Performance of such companies may be affected by factors including reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes. |
Prospectus 2022 | 27 |
Best and Worst Quarterly Returns During the Period Shown in the Bar Chart | |||
|
|||
- |
* |
Inception Date | 1 Year | 5 Years | 10 Years | |
returns before taxes | ||||
returns after taxes on distributions | ||||
returns after taxes on distributions and sale of Fund shares | ||||
Indxx India Consumer Index (reflects no deductions for fees, expenses or taxes) | ||||
MSCI India Index (Net) (reflects reinvested dividends net of withholding taxes but reflects no deductions for fees, expenses or other taxes) |
Portfolio Management | Title | Role with Fund | Managed Fund Since | |||
Christopher Lo, CFA | Senior Portfolio Manager | Lead Portfolio Manager | 2016 | |||
Henry Hom, CFA | Portfolio Manager | Portfolio Manager | October 2021 |
28 | Prospectus 2022 |
Prospectus 2022 | 29 |
30 | Prospectus 2022 |
Prospectus 2022 | 31 |
32 | Prospectus 2022 |
Prospectus 2022 | 33 |
■ | Asia Pacific Region. A number of countries in the Asia Pacific region are considered underdeveloped or developing, including from a political, economic and/or social perspective, and may have relatively unstable governments and economies based on limited business, industries and/or natural resources or commodities. Events in any one country within the region may impact that country, other countries in the region or the region as a whole. As a result, events in the region will generally have a greater effect on the Fund than if the Fund were more geographically diversified in a region with more developed countries and economies. This could result in increased volatility in the value of the Fund’s investments and losses for the Fund. Continued growth of economies |
34 | Prospectus 2022 |
and securities markets in the region will require sustained economic and fiscal discipline, as well as continued commitment to governmental and regulatory reforms. Development also may be influenced by international economic conditions, including those in the United States and Japan, and by world demand for goods or natural resources produced in countries in the Asia Pacific region. Securities markets in the region are generally smaller and have a lower trading volume than those in the United States, which may result in the securities of some companies in the region being less liquid than U.S. or other foreign securities. Some currencies, inflation rates or interest rates in the Asia Pacific region are or can be volatile, and some countries in the region may restrict the flow of money in and out of the country. The risks described under “Emerging Market Securities Risk” and “Foreign Securities Risk” may be more pronounced due to the Fund’s focus on investments in the region. |
■ | Small- and Mid-Cap Stock Risk. Securities of small- and mid-cap companies can, in certain circumstances, have a higher potential for gains than securities of larger companies but are more likely to have more risk than larger companies. For example, small- and mid-cap companies may be more vulnerable to market downturns and adverse business or economic events than larger companies because they may have more limited financial resources and business operations. Small- and mid-cap companies are also more likely than larger companies to have more limited product lines and operating histories and to depend on smaller and generally less experienced management teams. Securities of small- and mid-cap companies may trade less frequently and in smaller volumes and may be less liquid and fluctuate more sharply in value than securities of larger companies. When the Fund takes significant positions in small- and mid-cap companies with limited trading volumes, the liquidation of those positions, particularly in a distressed market, could be prolonged and result in Fund investment losses that would affect the value of your investment in the Fund. In addition, some small- and mid-cap companies may not be widely followed by the investment community, which can lower the demand for their stocks. |
■ | Large-Cap Stock Risk. Investments in larger companies may involve certain risks associated with their larger size. For instance, larger companies may be less able to respond quickly to new competitive challenges, such as changes in consumer tastes or innovation from smaller competitors. Also, larger companies are sometimes less able to achieve as high growth rates as successful smaller companies, especially during extended periods of economic expansion. |
Prospectus 2022 | 35 |
36 | Prospectus 2022 |
■ | Financial Services Sector. The Fund is more susceptible to the particular risks that may affect companies in the financial services sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the financial services sector are subject to certain risks, including the risk of regulatory change, decreased liquidity in credit markets and unstable interest rates. Such companies may have concentrated portfolios, such as a high level of loans to one or more industries or sectors, which makes them vulnerable to economic conditions that affect such industries or sectors. Performance of such companies may be affected by competitive pressures and exposure to investments, agreements and counterparties, including credit products that, under certain circumstances, may lead to losses (e.g., subprime loans). Companies in the financial services sector are subject to extensive governmental regulation that may limit the amount and types of loans and other financial commitments they can make, and the interest rates and fees they may charge. In addition, profitability of such companies is largely dependent upon the availability and the cost of capital. |
■ | Information Technology Sector. The Fund is more susceptible to the particular risks that may affect companies in the information technology sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the information technology sector are subject to certain risks, including the risk that new services, |
Prospectus 2022 | 37 |
38 | Prospectus 2022 |
Prospectus 2022 | 39 |
40 | Prospectus 2022 |
Prospectus 2022 | 41 |
42 | Prospectus 2022 |
■ | Greater China. The Greater China region consists of Hong Kong, The People's Republic of China and Taiwan, among other countries, and the Fund's investments in the region are particularly susceptible to risks in that region. The Hong Kong, Taiwanese, and Chinese economies are dependent on the economies of other countries and can be significantly affected by currency fluctuations and increasing competition from other emerging economies in Asia with lower costs. Adverse events in any one country within the region may impact the other countries in the region or Asia as a whole. As a result, adverse events in the region will generally have a greater effect on the Fund than if the Fund were more geographically diversified, which could result in greater volatility in the Fund’s NAV and losses. Markets in the Greater China region can experience significant volatility due to social, economic, regulatory and political uncertainties. Changes in Chinese government policy and economic growth rates could significantly affect local markets and the entire Greater China region. China has yet to develop comprehensive securities, corporate, or commercial laws, its market is relatively new and less developed, and its economy is experiencing a relative slowdown. Export growth continues to be a major driver of China’s economic growth. As a result, a reduction in spending on Chinese products and services, the institution of additional tariffs or other trade barriers, |
Prospectus 2022 | 43 |
including as a result of heightened trade tensions between China and the United States, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy. Many Chinese companies to which the Fund seeks investment exposure use a structure known as a variable interest entity (a VIE) to address Chinese restrictions on direct foreign investment in Chinese companies operating in certain sectors. The Fund’s investment exposure to VIEs may pose additional risks because the Fund’s investment is not made directly in the VIE (the actual Chinese operating company), but rather in a holding company domiciled outside of China (a Holding Company) whose interests in the business of the underlying Chinese operating company (the VIE) are established through contracts rather than through equity ownership. The VIE (which the Fund is restricted from owning under Chinese law) is generally owned by Chinese nationals, and the Holding Company (in which the Fund invests) holds only contractual rights (rather than equity ownership) relating to the VIE, typically including a contractual claim on the VIE's profits. Shares of the Holding Company, in turn, are traded on exchanges outside of China and are available to non-Chinese investors such as the Fund. The VIE structure is a longstanding practice in China but, until recently, was not acknowledged by the Chinese government, creating uncertainty over the possibility that the Chinese government might cease to tolerate VIE structures at any time or impose new restrictions on the structure. In such a scenario, the Chinese operating company could be subject to penalties, including revocation of its business and operating license, or the Holding Company could forfeit its interest in the business of the Chinese operating company. Further, in case of a dispute, the remedies and rights of the Fund may be limited, and such legal uncertainty may be exploited against the interests of the Fund. Control over a VIE may also be jeopardized if a natural person who holds the equity interest in the VIE breaches the terms of the contractual arrangements, is subject to legal proceedings, or if any physical instruments or property of the VIE, such as seals, business registration certificates, financial data and licensing arrangements (sometimes referred to as “chops”), are used without authorization. In the event of such an occurrence, the Fund, as a foreign investor, may have little or no legal recourse. In addition to the risk of government intervention, investments through a VIE structure are subject to the risk that the China-based company (or its officers, directors, or Chinese equity owners) may breach the contractual arrangements, or Chinese law changes in a way that adversely affects the enforceability of the arrangements, or that the contracts are otherwise not enforceable under Chinese law. In any of these cases, a Fund may suffer significant losses on its investments through a VIE structure with little or no recourse available. The Fund will typically have little or no ability to influence the VIE through proxy voting or other means because it is not a VIE owner/shareholder. Foreign companies listed on stock exchanges in the United States, including companies using the VIE structure, could also face delisting or other ramifications for failure to meet the expectations and/or requirements of the SEC, the Public Company Accounting Oversight Board, or other U.S. regulators. Recently, China has proposed the adoption of rules which would affirm that VIEs are legally permissible, though there remains significant uncertainty over how these rules will operate. Any of these risks could reduce the liquidity and value of the Fund’s investments in Holding Companies or render them valueless. |
■ | Mid-Cap Stock Risk. Securities of mid-cap companies can, in certain circumstances, have more risk than securities of larger companies. For example, mid-cap companies may be more vulnerable to market downturns and |
44 | Prospectus 2022 |
adverse business or economic events than larger companies because they may have more limited financial resources and business operations. Mid-cap companies are also more likely than larger companies to have more limited product lines and operating histories and to depend on smaller and generally less experienced management teams. Securities of mid-cap companies may trade less frequently and in smaller volumes and may fluctuate more sharply in value than securities of larger companies. When the Fund takes significant positions in mid-cap companies with limited trading volumes, the liquidation of those positions, particularly in a distressed market, could be difficult and result in Fund investment losses that would affect the value of your investment in the Fund. In addition, some mid-cap companies may not be widely followed by the investment community, which can lower the demand for their stocks. |
■ | Large-Cap Stock Risk. Investments in larger companies may involve certain risks associated with their larger size. For instance, larger companies may be less able to respond quickly to new competitive challenges, such as changes in consumer tastes or innovation from smaller competitors. Also, larger companies are sometimes less able to achieve as high growth rates as successful smaller companies, especially during extended periods of economic expansion. |
Prospectus 2022 | 45 |
46 | Prospectus 2022 |
■ | Communication Services Sector. The Fund is more susceptible to the particular risks that may affect companies in the communication services sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the communication services sector are subject to certain risks, including the risk that new services, equipment or technologies will not be accepted by consumers and businesses or will become rapidly obsolete. Performance of such companies may be affected by factors including obtaining and protecting patents (or the failure to do so) and significant competitive pressures, including aggressive pricing of their products or services, new market entrants, competition for market share and short product cycles due to an accelerated rate of technological developments. Such competitive pressures may lead to limited earnings and/or falling profit margins. As a result, the value of their securities may fall or fail to rise. In addition, many communication services sector companies have limited operating histories and prices of these companies’ securities historically have been more volatile than other securities, especially over the short term. |
■ | Consumer Discretionary/Staples Sectors. The Fund is more susceptible to the particular risks that may affect companies in the consumer discretionary/staples sectors than if it were invested in a wider variety of companies in unrelated sectors. Companies in the consumer discretionary/staples sectors are subject to certain risks, including fluctuations in the performance of the overall domestic and international economy, interest rate changes, currency exchange rates, increased competition and consumer confidence. Performance of such companies may be affected by factors including reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes. |
Prospectus 2022 | 47 |
48 | Prospectus 2022 |
Prospectus 2022 | 49 |
50 | Prospectus 2022 |
Prospectus 2022 | 51 |
■ | India. The Fund is particularly susceptible to risks related to economic, political, regulatory or other events or conditions affecting issuers in India. Because the Fund invests predominantly in Indian securities, its NAV will be much more sensitive to changes in economic, political and other factors within India than would a fund that invested in a variety of countries. Special risks include, among others, political and legal uncertainty, persistent religious, ethnic and border disputes, greater government control over the economy, currency fluctuations or blockage and the risk of nationalization or expropriation of assets. Uncertainty regarding inflation and currency exchange rates, fiscal policy, credit ratings and the possibility that future harmful political actions will be taken by the Indian government, could negatively impact the Indian economy and securities markets, and thus adversely affect the Fund’s performance. |
52 | Prospectus 2022 |
■ | Small- and Mid-Cap Stock Risk. Securities of small- and mid-cap companies can, in certain circumstances, have a higher potential for gains than securities of larger companies but are more likely to have more risk than larger companies. For example, small- and mid-cap companies may be more vulnerable to market downturns and adverse business or economic events than larger companies because they may have more limited financial resources and business operations. Small- and mid-cap companies are also more likely than larger companies to have more limited product lines and operating histories and to depend on smaller and generally less experienced management teams. Securities of small- and mid-cap companies may trade less frequently and in smaller volumes and may be less liquid and fluctuate more sharply in value than securities of larger companies. When the Fund takes significant positions in small- and mid-cap companies with limited trading volumes, the liquidation of those positions, particularly in a distressed market, could be prolonged and result in Fund investment losses that would affect the value of your investment in the Fund. In addition, some small- and mid-cap companies may not be widely followed by the investment community, which can lower the demand for their stocks. |
■ | Large-Cap Stock Risk. Investments in larger companies may involve certain risks associated with their larger size. For instance, larger companies may be less able to respond quickly to new competitive challenges, such as changes in consumer tastes or innovation from smaller competitors. Also, larger companies are sometimes less able to achieve as high growth rates as successful smaller companies, especially during extended periods of economic expansion. |
Prospectus 2022 | 53 |
54 | Prospectus 2022 |
■ | Consumer Discretionary/Staples Sectors. The Fund is more susceptible to the particular risks that may affect companies in the consumer discretionary/staples sectors than if it were invested in a wider variety of companies in unrelated sectors. Companies in the consumer discretionary/staples sectors are subject to certain risks, including fluctuations in the performance of the overall domestic and international economy, interest rate changes, currency exchange rates, increased competition and consumer confidence. Performance of such companies may be affected by factors including reduced disposable household income, reduced consumer spending, and changing demographics and consumer tastes. |
Prospectus 2022 | 55 |
56 | Prospectus 2022 |
Prospectus 2022 | 57 |
58 | Prospectus 2022 |
Prospectus 2022 | 59 |
Columbia Emerging Markets Consumer ETF | 0.49% |
Columbia India Consumer ETF | 0.75% |
60 | Prospectus 2022 |
Investment
advisory services fee for the fiscal year ended March 31, 2022 | |
Columbia EM Core ex-China ETF | 0.16% |
Columbia Emerging Markets Consumer ETF | 0.53% |
Columbia India Consumer ETF | 0.75% |
Portfolio Management | Title | Role with Fund | Managed Fund Since | |||
Christopher Lo, CFA | Senior Portfolio Manager | Lead Portfolio Manager | 2016 | |||
Henry Hom, CFA | Portfolio Manager | Portfolio Manager | October 2021 |
Prospectus 2022 | 61 |
Fund | Index | Index Provider or Sponsor |
Columbia Emerging Markets Consumer ETF | Dow Jones Emerging Markets Consumer TitansTM Index | S&P DJI |
Columbia India Consumer ETF | Indxx India Consumer Index | Indxx |
■ | compensation and other benefits received by the Investment Manager and other Ameriprise Financial affiliates related to the management/administration of a Columbia Fund and the sale of its shares; |
■ | the allocation of, and competition for, investment opportunities among the Fund, other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates, or Ameriprise Financial itself and its affiliates; |
■ | separate and potentially divergent management of a Columbia Fund and other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates; |
■ | regulatory and other investment restrictions on investment activities of the Investment Manager and other Ameriprise Financial affiliates and accounts advised/managed by them; |
■ | insurance and other relationships of Ameriprise Financial affiliates with companies and other entities in which a Columbia Fund invests; and |
■ | regulatory and other restrictions relating to the sharing of information between Ameriprise Financial and its affiliates, including the Investment Manager, and a Columbia Fund. |
62 | Prospectus 2022 |
Prospectus 2022 | 63 |
Creation Unit Value | |
Columbia EM Core ex-China ETF | $1,259,404.30 |
Columbia Emerging Markets Consumer ETF | $1,072,158.33 |
Columbia India Consumer ETF | $2,407,279.55 |
Columbia EM Core ex-China ETF | XCEM |
Columbia Emerging Markets Consumer ETF | ECON |
Columbia India Consumer ETF | INCO |
64 | Prospectus 2022 |
Prospectus 2022 | 65 |
66 | Prospectus 2022 |
Prospectus 2022 | 67 |
■ | It can earn income on its investments. Examples of fund income are interest paid on money market instruments and dividends paid on common stocks. |
■ | A fund can also have capital gains if the value of its investments increases. While a fund continues to hold an investment, any gain is generally unrealized. If the fund sells an investment, it generally will realize a capital gain if it sells that investment for a higher price than its adjusted cost basis, and will generally realize a capital loss if it sells that investment for a lower price than its adjusted cost basis. Capital gains and losses are either short-term or long-term, depending on whether the fund holds the securities for one year or less (short-term) or more than one year (long-term). |
Declarations | Distributions | |
Columbia EM Core ex-China ETF | Annually | Annually |
Columbia Emerging Markets Consumer ETF | Annually | Annually |
Columbia India Consumer ETF | Annually | Annually |
68 | Prospectus 2022 |
■ | The Fund intends to qualify and to be eligible for treatment each year as a regulated investment company. A regulated investment company generally is not subject to tax at the fund level on income and gains from investments that are distributed to shareholders. However, the Fund's failure to qualify for treatment as a regulated investment company would result in Fund-level taxation, and consequently, a reduction in income available for distribution to you and in the NAV of your shares. Even if the Fund qualifies for treatment as a regulated investment company, the Fund may be subject to federal excise tax on certain undistributed income or gains. |
■ | Otherwise taxable distributions generally are taxable to you when paid, whether they are paid in cash or automatically reinvested in additional Fund shares. Dividends paid in January are deemed paid on December 31 of the prior year if the dividend was declared and payable to shareholders of record in October, November, or December of such prior year. |
■ | Distributions of the Fund's ordinary income and net short-term capital gain, if any, generally are taxable to you as ordinary income. Distributions of the Fund's net long-term capital gain, if any, generally are taxable to you as long-term capital gain. Whether capital gains are long-term or short-term is determined by how long the Fund has owned the investments that generated them, rather than how long you have owned your shares. Certain events may require the Fund to sell significant amounts of appreciated securities and make large capital gain dividends relative to the Fund’s NAV. Such events may include portfolio rebalancing or fund mergers. The Fund generally provides estimates of expected capital gain dividends (if any) prior to the distribution on columbiathreadneedleus.com/etfs. |
■ | From time to time, a distribution from the Fund could constitute a return of capital. A return of capital is a return of an amount of your original investment and is not a distribution of income or capital gain from the Fund. Therefore, a return of capital is not taxable to you so long as the amount of the distribution does not exceed your tax basis in your Fund shares. A return of capital reduces your tax basis in your Fund shares, with any amounts exceeding such basis generally taxable as capital gain. |
■ | If you are an individual and you meet certain holding period and other requirements for your Fund shares, a portion of your distributions may be treated as “qualified dividend income” taxable at the lower net long-term capital gain rates instead of the higher ordinary income rates. Qualified dividend income is income attributable to the Fund's dividends received from certain U.S. and foreign corporations, as long as the Fund meets certain holding period and other requirements for the stock producing such dividends. |
■ | Certain high-income individuals (as well as estates and trusts) are subject to a 3.8% tax on net investment income. For individuals, the 3.8% tax applies to the lesser of (1) the amount (if any) by which the taxpayer's modified adjusted gross income exceeds certain threshold amounts or (2) the taxpayer's “net investment income.” |
Net investment income generally includes for this purpose dividends, including any capital gain dividends, paid by the Fund, and net gains recognized on the sale, redemption or exchange of shares of the Fund. |
■ | Certain derivative instruments when held in the Fund's portfolio subject the Fund to special tax rules, the effect of which may be to, among other things, accelerate income to the Fund, defer Fund losses, cause adjustments in the holding periods of Fund portfolio securities, or convert capital gains into ordinary income, short-term capital losses into long-term capital losses or long-term capital gains into short-term capital gains. These rules could therefore affect the amount, timing and/or character of distributions to shareholders. |
■ | Generally, a Fund realizes a capital gain or loss on an option when the option expires, or when it is exercised, sold or otherwise terminated. However, if an option is a “section 1256 contract,” which includes most traded options on a broad-based index, and the Fund holds such option at the end of its taxable year, the Fund is deemed to sell such option at fair market value at such time and recognize any gain or loss thereon, which is generally deemed to be 60% long-term and 40% short-term capital gain or loss, as described further in the SAI. |
■ | Income and proceeds received by the Fund from sources within foreign countries may be subject to foreign taxes. If at the end of the taxable year more than 50% of the value of the Fund's assets consists of securities of foreign |
Prospectus 2022 | 69 |
corporations, and the Fund makes a special election, you will generally be required to include in your income for U.S. federal income tax purposes your share of the qualifying foreign income taxes paid by the Fund in respect of its foreign portfolio securities. You may be able to claim a foreign tax credit or deduction in respect of this amount, subject to certain limitations. There is no assurance that the Fund will make this election for a taxable year, even if it is eligible to do so. |
■ | A sale, redemption or exchange of Fund shares is a taxable event. This includes redemptions where you are paid in securities. Your sales, redemptions and exchanges of Fund shares, including those paid in securities or other instruments, usually will result in a taxable capital gain or loss to you, equal to the difference between the amount you receive for your shares (or are deemed to have received in the case of exchanges) and your adjusted tax basis in the shares, which is generally the amount you paid (or are deemed to have paid in the case of exchanges) for them. Any such capital gain or loss generally will be long-term capital gain or loss if you have held your Fund shares for more than one year at the time of sale or exchange. In certain circumstances, capital losses may be converted from short-term to long-term; in other circumstances, capital losses may be disallowed under the “wash sale” rules. |
■ | Your broker will be responsible for furnishing tax reporting information for Fund shares held in a nonqualified account, shareholder reports, and other communications from the Fund. For sales or exchanges of Fund shares acquired in a nonqualified account after 2011, your broker is required to report basis and holding period information to you and the IRS. Your broker may offer a choice of basis calculation methods. Contact your broker to determine which basis methods are available for your account. |
■ | The Fund or, in the case of sales of Fund shares in the secondary market, your broker, will generally be required by federal law to withhold tax on any distributions and proceeds paid to you if you have not provided a correct TIN or have not certified to the Fund or its agent, or your broker, as the case may be, that withholding does not apply. |
■ | For Authorized Participants Purchasing and Redeeming in Creation Units: An Authorized Participant that exchanges equity securities for one or more Creation Units will generally recognize a gain or a loss on the exchange. The gain or loss will be equal to the difference between (i) the market value of the Creation Unit(s) at the time and, (ii) the exchanger’s aggregate basis in the securities surrendered plus (or minus) the Cash Component paid (or received). A person who redeems one or more Creation Units for equity securities will generally recognize a gain or loss equal to the difference between (i) the exchanger’s basis in the Creation Unit(s) and, (ii) the aggregate market value of the securities received plus (or minus) the Cash Component received (or paid). The IRS, however, may assert that a loss realized upon an exchange of securities for Creation Unit(s) 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 should consult their own tax advisors with respect to whether wash sale rules apply and when a loss might be deductible. Any capital gain or loss realized upon a redemption of one or more Creation Units is generally treated as long-term capital gain or loss if the Creation Unit(s) have been held for more than one year and as short-term capital gain or loss if they have been held for one year or less. If you purchase or redeem Creation Units, you will be sent a confirmation statement showing how many shares you purchased or sold and at what price. |
70 | Prospectus 2022 |
Prospectus 2022 | 71 |
72 | Prospectus 2022 |
Web site information | |
Fund | Internet address |
Columbia EM Core ex-China ETF | https://www.columbiathreadneedleus.com/investment-products/details/?cusip=19762B202 |
Columbia Emerging Markets Consumer ETF | https://www.columbiathreadneedleus.com/investment-products/details/?cusip=19762B509 |
Columbia India Consumer ETF | https://www.columbiathreadneedleus.com/investment-products/details/?cusip=19762B707 |
Prospectus 2022 | 73 |
Year Ended March 31, | |||||
2022 | 2021 | 2020 | 2019 | 2018 | |
Per share data | |||||
Net asset value, beginning of year | $31.65 | $19.09 | $25.40 | $28.03 | $24.91 |
Income (loss) from investment operations: | |||||
Net investment income | 0.80 | 0.68 | 0.69 | 0.65 | 0.66 |
Net realized and unrealized gain (loss) | (1.10) | 12.37 | (6.41) | (2.51) | 4.83 |
Total from investment operations | (0.30) | 13.05 | (5.72) | (1.86) | 5.49 |
Less distributions to shareholders: | |||||
Net investment income | (0.58) | (0.49) | (0.59) | (0.62) | (0.61) |
Net realized gains | (0.04) | — | — | (0.15) | (1.76) |
Total distribution to shareholders | (0.62) | (0.49) | (0.59) | (0.77) | (2.37) |
Net asset value, end of year | $30.73 | $31.65 | $19.09 | $25.40 | $28.03 |
Total Return at NAV | (0.96)% | 68.56% | (23.25)% | (6.38)% | 22.76% |
Total Return at Market | (1.94)% | 69.09% | (23.43)% | (7.37)% | 20.45% |
Ratios to average net assets: | |||||
Total gross expenses(a) | 0.16%(b) | 0.16% | 0.19%(c) | 0.47%(d) | 0.70%(e) |
Total net expenses(a)(f) | 0.16%(b) | 0.16% | 0.19%(c) | 0.35%(d) | 0.35%(e) |
Net Investment income | 2.53% | 2.61% | 2.70% | 2.54% | 2.40% |
Supplemental data | |||||
Net assets, end of year (in thousands) | $95,264 | $30,070 | $14,321 | $11,431 | $9,811 |
Portfolio turnover | 13% | 19% | 14% | 24% | 37% |
(a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund's reported expense ratios. |
(b) | The ratio includes less than 0.01% for the year ended March 31, 2022 attributed to overdraft expense, which is outside the Unitary Fee (as defined in Note 3). |
(c) | The ratio includes less than 0.01% for the year ended March 31, 2020 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). |
(d) | The ratio includes less than 0.01% for the year ended March 31, 2019 attributed to overdraft expense, which is outside the Unitary Fee (as defined in Note 3). |
(e) | The ratio includes less than 0.01% for the year ended March 31, 2018 attributed to line of credit interest expense, overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). |
(f) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
74 | Prospectus 2022 |
Year Ended March 31, | |||||
2022 | 2021 | 2020 | 2019(a)(b) | 2018(a) | |
Per share data | |||||
Net asset value, beginning of year | $27.73 | $19.65 | $22.67 | $26.34 | $24.75 |
Income (loss) from investment operations: | |||||
Net investment income | 0.33 | 0.29 | 0.27 | 0.25 | 0.10 |
Net realized and unrealized gain (loss) | (6.47) | 7.97 | (2.90) | (3.72) | 1.59 |
Total from investment operations | (6.14) | 8.26 | (2.63) | (3.47) | 1.69 |
Less distributions to shareholders: | |||||
Net investment income | (0.26) | (0.18) | (0.39) | (0.20) | (0.10) |
Net asset value, end of year | $21.33 | $27.73 | $19.65 | $22.67 | $26.34 |
Total Return at NAV | (22.22)% | 42.02% | (11.87)% | (13.08)% | 6.81% |
Total Return at Market | (23.46)% | 43.27% | (11.95)% | (13.90)% | 7.16% |
Ratios to average net assets: | |||||
Total gross expenses(c) | 0.53%(d) | 0.59%(e) | 0.60%(f) | 0.61%(g) | 0.81%(h) |
Total net expenses(c)(i) | 0.53%(d) | 0.59%(e) | 0.60%(f) | 0.61%(g) | 0.81%(h) |
Net Investment income | 1.28% | 1.14% | 1.20% | 1.07% | 0.37% |
Supplemental data | |||||
Net assets, end of year (in thousands) | $117,297 | $182,999 | $174,921 | $290,119 | $809,911 |
Portfolio turnover | 31% | 40% | 37% | 61% | 27% |
(a) | Consolidated. |
(b) | EG Shares Consumer Mauritius, the Fund's Subsidiary, was liquidated on November 30, 2018. |
(c) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund's reported expense ratios. |
(d) | The total gross expense ratio includes less than 0.01% for the year ended March 31, 2022 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). There is no impact to the total net expense ratio attributed to overdraft expense, and tax expense, as the entire overdraft expense and tax expense were waived for the year ended March 31, 2022. |
(e) | The total gross expense ratio includes less than 0.01% for the year ended March 31, 2021 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). There is no impact to the total net expense ratio attributed to overdraft expense and tax expense, as the entire overdraft expense and tax expense were waived for the year ended March 31, 2021. |
(f) | The ratio includes 0.01% for the year ended March 31, 2020 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). |
(g) | The ratio includes 0.02% for the year ended March 31, 2019 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). |
(h) | The ratio includes less than 0.01% for the year ended March 31, 2018 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). |
(i) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
Prospectus 2022 | 75 |
Year Ended March 31, | |||||
2022 | 2021 | 2020 | 2019 | 2018 | |
Per share data | |||||
Net asset value, beginning of year | $50.85 | $30.80 | $42.08 | $45.81 | $38.31 |
Income (loss) from investment operations: | |||||
Net investment income | 0.38 | 0.09 | 0.29 | 0.12 | 0.01 |
Net realized and unrealized gain (loss) | 2.27 | 20.12 | (11.45) | (3.80) | 7.52 |
Total from investment operations | 2.65 | 20.21 | (11.16) | (3.68) | 7.53 |
Less distributions to shareholders: | |||||
Net investment income | (0.08) | (0.16) | (0.12) | (0.05) | (0.03) |
Net realized gains | (3.29) | — | — | — | — |
Total distribution to shareholders | (3.37) | (0.16) | (0.12) | (0.05) | (0.03) |
Net asset value, end of year | $50.13 | $50.85 | $30.80 | $42.08 | $45.81 |
Total Return at NAV | 5.22% | 65.67% | (26.60)% | (8.03)% | 19.64% |
Total Return at Market | 3.17% | 69.58% | (28.00)% | (8.44)% | 19.98% |
Ratios to average net assets: | |||||
Total gross expenses(a) | 0.77%(b) | 0.80%(c) | 0.81%(d) | 0.77%(e) | 0.87%(f) |
Total net expenses(a)(g) | 0.75%(b) | 0.75%(c) | 0.81%(d) | 0.77%(e) | 0.87%(f) |
Net Investment income | 0.70% | 0.22% | 0.70% | 0.26% | 0.01% |
Supplemental data | |||||
Net assets, end of year (in thousands) | $77,709 | $91,532 | $67,764 | $130,436 | $144,289 |
Portfolio turnover | 31% | 16% | 11% | 15% | 28% |
(a) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund's reported expense ratios. |
(b) | The total gross expense ratio includes 0.02% for the year ended March 31, 2022 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). There is no impact to the total net expense ratio attributed to overdraft expense, and tax expense, as the entire overdraft expense and tax expense were waived for the year ended March 31, 2022. |
(c) | The total gross expense ratio includes 0.05% for the year ended March 31, 2021 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). The total net expense ratio includes less than 0.01% for the year ended March 31, 2021 attributed to overdraft expense. |
(d) | The ratio includes 0.06% for the year ended March 31, 2020 attributed to overdraft expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). |
(e) | The ratio includes 0.02% for the year ended March 31, 2019 attributed to tax expense, which is outside the Unitary Fee (as defined in Note 3). |
(f) | The ratio includes 0.01% for the year ended March 31, 2018 attributed to line of credit interest expense and tax expense, which is outside the Unitary Fee (as defined in Note 3). |
(g) | Total net expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
76 | Prospectus 2022 |
Prospectus 2022 | A-1 |
A-2 | Prospectus 2022 |
Prospectus 2022 | A-3 |