Annual Report - U.S. Global ETFs

Annual ReportDecember 31, 2020U.S. Global Jets ETFTicker: JETSU.S. Global GO GOLD andPrecious Metal Miners ETFTicker: GOAU

U.S. Global ETFsTABLE OF CONTENTSPageManagement Discussion of Fund Performance 1Performance Summary 5Portfolio Allocations 7Schedules of Investments 8Statements of Assets and Liabilities 13Statements of Operations 14Statements of Changes in Net Assets 15Financial Highlights 17Notes to Financial Statements 19Report of Independent Registered Public Accounting Firm 31Trustees and Officers 33Expense Example 35Review of Liquidity Risk Management Program 37Approval of Advisory Agreement & Board Consideration 38Federal Tax Information 42Federal Tax Credit Pass Through 43Information About Portfolio Holdings 43Information About Proxy Voting 44Frequency Distribution of Premiums and Discounts 44

U.S. Global Jets ETFMANAGEMENT DISCUSSION OF FUND PERFORMANCE(Unaudited)The U.S. Global Jets ETF (JETS) market price fell 28.93% and its NAV fell 28.99% in the 12months ended December 31, 2020, outperforming the NYSE Arca Global Airlines Index,down 31.33%. The U.S. Global Jets Index (JETSX) lost 28.11%. The Fund’s benchmarkindex, the S&P 500 , gained 18.40%.There’s no doubt 2020 was a rough 12 months for the airline industry. The worldwideCOVID-19 outbreak decimated commercial air travel, bringing it to a near-halt fromFebruary to April as countries grappled with strategies to stem the virus’ spread.According to aviation data firm Cirium’s annual airline insights review, passenger flightsflown in 2020 were down 49% from 2019. The International Air Transport Association(IATA) forecasts the industry is unlikely to fully recover before 2024.The U.S. government came to domestic carriers’ aid twice in 2020. Congress providedairlines with payroll relief in March of 50 billion and again in December with 15billion. With significantly reduced demand for air travel, carriers were forced to lay offand furlough tens of thousands of workers.Boeing finished 2020 with a win by returning its 737 MAX jet to the skies in the U.S.After two deadly crashes and a global grounding in March 2019, the aircraft wasapproved by the Federal Aviation Administration (FAA) after extensive fixes and newpilot training. The plane maker had suffered the dual hit of its troubled new aircraft andthe pain of reduced jet orders due to lower travel demand.Budget carriers fared better than their larger peers due to their low-cost structure andincreased market share. Morgan Stanley said it is bullish on the recovery of air traveldemand in 2021 and raised its price targets for Hungary’s Wizz Air and Ireland’s Ryanair,up 20.60% and 25.53%, respectively, for the year.One of the worst performing airline stocks for 2020 was Air Canada, down 52.29%.This massive slump for Canada’s flagship carrier is a prime example of carriers with biginternational exposure suffering worse than domestic-focused carriers. A large portionof Air Canada’s revenue was from long-haul international routes, which disappearedwith the pandemic and strict lockdowns.Certain regions fared better than others. The Asia-Pacific region was the first to seea bounce back in air travel due to strong containments of the virus and an emphasison domestic routes. Domestic travel in China, which has effectively recovered fromthe virus, was back above 2019 levels by October. Chinese carriers that emphasizeddomestic routes fared better than global airlines altogether since domestic air travelresumed much faster than international routes. Australia’s domestic airline industryalso recovered as the nation largely kept the pandemic controlled and never faced abig outbreak.1

U.S. Global Jets ETFMANAGEMENT DISCUSSION OF FUND PERFORMANCE(Unaudited) (Continued)Unfortunately, business travel may take longer to recover than leisure travel. Businesstravelers account for just 12% of passengers but are typically twice as profitable.Corporate travel often means last-minute bookings, cancellations, upgrades and moreexpensive non-stop flights. Now in the age of remote work and video conferencing,companies could curb travel altogether to reduce risks and save money.By the end of 2020, multiple vaccines were approved in major markets and the globaldistribution began at warp speed. Airlines were tasked with the “mission of thecentury” for air transport in distributing the vaccine to the world. IATA CEO Alexandrede Juniac said that “this will be the largest and most complex logistical exercise ever,”as 30% of passenger aircraft were in storage as of early December.2

U.S. Global GO GOLD and Precious Metal Miners ETFMANAGEMENT DISCUSSION OF FUND PERFORMANCE(Unaudited) (Continued)The U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU) market pricerose 20.34% and its NAV rose 20.85% in the 12 months ended December 31, 2020,underperforming the U.S. Global GO GOLD and Precious Metal Miners Index (GOAUX),up 21.64%. The Fund’s benchmark index, the S&P 500 , gained 18.40%.The best performing precious metal for 2020 was silver, up 47.86% as investmentdemand and the outlook for more solar power improved. Gold had its biggest annualadvance since 2010, up 25.11%, after a tumultuous year that included four straightmonths of declines before snapping back in December. Bullion hit a new record high inAugust above 2,000 an ounce as investors feared unprecedented stimulus by centralbanks globally. The yellow metal finished 2020 up, aided by the U.S dollar’s decline tothe lowest since April 2018.Platinum and palladium saw gains. Palladium hit an all-time high above 2,700 anounce and ended the year up 26.08%. Demand should continue to remain firm but thepush for electric vehicles could be a headwind at some point perhaps.The rally in bullion helped miners expand margins and generate record levels of freecash flow, allowing companies to pass on profits to shareholders already.Gold demand in the world’s second-largest consuming nation was a major weaknessin 2020. Due to the coronavirus and weak economic growth, India’s gold jewelry salesfell below 2019’s 194 tons to the lowest quarterly numbers since 2008, according toMetals Focus.A rising threat for gold, and other “safe-haven assets”, is the mainstream adoption ofcryptocurrencies. Money has poured into Bitcoin funds and out of gold-backed funds.JPMorgan expects this trend to continue as more institutional investors take positionsin cryptocurrencies. The Grayscale Bitcoin Trust has seen inflows of almost 2 billionsince October, compared with outflows of 7 billion for ETFs backed by gold, accordingto JPMorgan. Many investors view bitcoin and cryptos as an alternative to gold as ahedge in their portfolio against equities and other currencies.3

U.S. Global ETFsMANAGEMENT DISCUSSION OF FUND PERFORMANCE(Unaudited) (Continued)This report is to be preceded or accompanied by a prospectus.Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold atmarket price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed fromthe fund. Brokerage commissions will reduce returns. Because the funds concentrate their investments inspecific industries, the funds may be subject to greater risks and fluctuations than a portfolio representinga broader range of industries. The funds are non-diversified, meaning they may concentrate more oftheir assets in a smaller number of issuers than diversified funds. The funds invest in foreign securitieswhich involve greater volatility and political, economic and currency risks and differences in accountingmethods. These risks are greater for investments in emerging markets. The funds may invest in thesecurities of smaller-capitalization companies, which may be more volatile than funds that invest in larger,more established companies. The performance of the funds may diverge from that of the index. Becausethe funds may employ a representative sampling strategy and may also invest in securities that are notincluded in the index, the funds may experience tracking error to a greater extent than funds that seek toreplicate an index. The funds are not actively managed and may be affected by a general decline in marketsegments related to the index. Airline Companies may be adversely affected by a downturn in economicconditions that can result in decreased demand for air travel and may also be significantly affected bychanges in fuel prices, labor relations and insurance costs. Gold, precious metals, and precious mineralsfunds may be susceptible to adverse economic, political or regulatory developments due to concentratingin a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial pricefluctuations over short periods of time and may be affected by unpredicted international monetary andpolitical policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.Cryptocurrency involve unique risks that deserve time to research and understand before investing. Anyfuture regulatory developments could affect the viability and expansion of the use of cryptocurrency.Cryptocurrencies are extremely new and nontraditional assets and a potential shareholder’s ability toevaluate the performance of cryptocurrencies be limited.Distributed by Quasar Distributors, LLC. U.S. Global Investors Inc. is the investment adviser to JETS and GOAU.No other products mentioned are distributed by Quasar Distributors, LLC.Past performance does not guarantee future results.The NYSE Arca Global Airline Index is a modified equal- dollar weighted index designed to measure theperformance of highly capitalized and liquid international airline companies. The U.S. Global Jets Index seeks toprovide access to the global airline industry. The index uses various fundamental screens to determine the mostefficient airline companies in the world, and also provides diversification through exposure to global aircraftmanufacturers and airport companies. The index consists of common stocks listed on well-developed exchangesacross the globe. It is not possible to invest directly in an index. It is not possible to invest directly in an index. TheU.S. Global GO GOLD and Precious Metal Miners Index uses a robust, dynamic, rules-based smart-factor model toselect precious minerals companies that earn over 50% of their aggregate revenue from precious minerals throughactive (mining or production) or passive (royalties or streams) means. The index uses fundamental screens toidentify companies with favorable valuation, profitability, quality and operating efficiency. The index consists of 28common stocks or related ADRs. It is not possible to invest directly in an index.Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to supportoperations and maintain its capital assets.All opinions expressed and data provided are subject to change without notice. Opinions are not guaranteedand should not be considered investment advice.It is not possible to invest directly in an index.The sections labelled Schedule of Investments contain a more complete list of each fund’s holdings.Fund holdings and sector allocations are subject to change at any time and should not be consideredrecommendations to buy or sell any security.4