It is our intention that beginning on January 1, 2021, paper copies
of the Funds annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary. Instead, the reports will be made available on a website, and
you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already
elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. At any time, you may elect to receive reports and certain communications from a Fund electronically by contacting your
financial intermediary.
You may elect to receive all future shareholder reports in paper free of charge. You can inform your
financial intermediary that you wish to receive paper copies of reports by contacting your financial intermediary. Your election to receive reports in paper will apply to all Goldman Sachs Funds held in your account.
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.
The Goldman
Sachs Access Treasury 0-1 Year ETF (the Fund) seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE US Treasury 0-1 Year Composite Select Index (the Index).
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 27, 2019
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FUND
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PRINCIPAL U.S.
LISTING
EXCHANGE
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TICKER
SYMBOL
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GOLDMAN SACHS ACCESS TREASURY 0-1 YEAR ETF
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NYSE Arca, Inc.
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GBIL
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GOLDMAN SACHS ACCESS INFLATION PROTECTED USD BOND ETF
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Cboe BZX Exchange, Inc.
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GTIP
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GOLDMAN SACHS ACCESS HIGH YIELD CORPORATE BOND ETF
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NYSE Arca, Inc.
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GHYB
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GOLDMAN SACHS ACCESS INVESTMENT GRADE CORPORATE BOND ETF
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NYSE Arca, Inc.
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GIGB
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GOLDMAN SACHS ACCESS EMERGING MARKETS LOCAL CURRENCY BOND ETF
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NYSE Arca, Inc.
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GEMB
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GOLDMAN SACHS ACCESS EMERGING MARKETS USD BOND ETF
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Cboe BZX Exchange, Inc.
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GEMD
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GOLDMAN SACHS ACCESS ULTRA SHORT BOND ETF
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Cboe BZX Exchange, Inc.
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GSST
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(Portfolios of Goldman Sachs ETF Trust)
Goldman Sachs ETF Trust
200 West
Street
New York, New York 10282
This Statement of Additional Information (the SAI) is not a Prospectus. This SAI should be read in conjunction with the prospectus
for the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF, Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF, Goldman Sachs Access Emerging
Markets Local Currency Bond ETF, Goldman Sachs Access Emerging Markets USD Bond ETF and Goldman Sachs Access Ultra Short Bond ETF (each, a Fund, and together, the Funds), dated December 27, 2019, as it may be further amended
and/or supplemented from time to time (the Prospectus). The Prospectus may be obtained without charge from Goldman Sachs & Co. LLC by calling 1-800-621-2550 or writing to Goldman Sachs Funds, P.O. Box 06050, Chicago, Illinois
60606.
The audited financial statements and related report of PricewaterhouseCoopers LLP, independent registered public accounting firm
for the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF, Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF and the Goldman Sachs Access
Ultra Short Bond ETF contained in the Funds 2019 Annual Report are incorporated herein by reference in the section FINANCIAL STATEMENTS. No other portions of each Funds Semi-Annual or Annual Report is incorporated by
reference herein. Each Funds Annual Report (when available) may be obtained upon request and without charge by calling Goldman Sachs & Co. LLC toll free at 1-800-621-2550.
GSAM® is a registered service mark of Goldman Sachs & Co. LLC.
TABLE OF CONTENTS
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GOLDMAN SACHS ASSET MANAGEMENT, L.P.
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ALPS DISTRIBUTORS, INC.
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Investment Adviser
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Distributor
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200 West Street
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1290 Broadway, Suite 1000
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New York, New York 10282
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Denver, Colorado 80203
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THE BANK OF NEW YORK MELLON
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Transfer Agent
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240 Greenwich Street
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New York, New York 10286
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Toll-free (in U.S.) 1-800-621-2550 (for Shareholders/Authorized Participants) or 1-800-292-4726 (for Financial Advisors).
ii
INTRODUCTION
Goldman Sachs ETF Trust (the Trust) is an open-end management investment company. The Trust is organized as a Delaware statutory
trust and was established by an Agreement and Declaration of Trust dated December 16, 2009. The following series of the Trust are described in this SAI: the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation
Protected USD Bond ETF, Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF, Goldman Sachs Access Emerging Markets Local Currency Bond ETF, Goldman Sachs Access Emerging Markets USD Bond ETF
and Goldman Sachs Access Ultra Short Bond ETF. Except for the Goldman Sachs Access Ultra Short Bond ETF, each Fund is passively-managed and seeks to track a specified index: FTSE US Treasury 0-1 Year Composite Select Index, FTSE Goldman Sachs
Treasury Inflation Protected USD Bond Index, FTSE Goldman Sachs High Yield Corporate Bond Index, FTSE Goldman Sachs Investment Grade Corporate Bond Index, FTSE Goldman Sachs Emerging Markets Local Currency Government Bond Index and FTSE Goldman
Sachs Emerging Markets USD Bond Index, respectively (each, an Index and collectively, the Indexes). The Goldman Sachs Access Ultra Short Bond is actively-managed and does not seek to track a specified index.
The Trustees of the Trust have authority under the Declaration of Trust to create and classify Shares of the Trust into separate series.
Pursuant thereto, the Trustees have created the Funds and other series. Additional series may be added in the future from time to time. See SHARES OF THE TRUST.
Goldman Sachs Asset Management, L.P. (GSAM or the Investment Adviser), an affiliate of Goldman Sachs & Co.
LLC (Goldman Sachs), serves as the Investment Adviser to the Funds. In addition, ALPS Distributors, Inc. (ALPS or the Distributor) serves as the Funds distributor, and The Bank of New York Mellon
(BNYM or the Transfer Agent) serves as the Funds transfer agent. The Funds custodian is BNYM, which also provides administrative services to the Funds.
The Funds have been developed solely by GSAM. The Funds are not in any way connected to or sponsored, endorsed, sold or promoted by the London
Stock Exchange Group plc and its group undertakings (collectively, the LSE Group). FTSE Russell is a trading name of certain of the LSE Group companies.
All rights in the Indexes vest in the relevant LSE Group company which owns the Indexes.
FTSE® is a trademark of the relevant LSE Group company and is used by any other LSE Group company under license.
The Indexes are calculated by or on behalf of FTSE Fixed Income, LLC or its affiliate, agent or partner. The LSE Group does not accept any
liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Indexes or (b) investment in or operation of the Funds. The LSE Group makes no claim, prediction, warranty or representation either as to the
results to be obtained from the Funds or the suitability of the Indexes for the purpose to which it is being put by GSAM.
The following
information relates to and supplements the description of each Funds investment policies contained in the Prospectus. See the Prospectus for a more complete description of the Funds investment objectives and policies. Investing in a Fund
entails certain risks, and there is no assurance that a Fund will achieve its investment objective. Capitalized terms used but not defined herein have the same meaning as in the Prospectus.
B-1
EXCHANGE LISTING AND TRADING
A discussion of exchange listing and trading matters associated with an investment in the Funds is contained in the Shareholder
Guide section of the Prospectus. The discussion below supplements, and should be read in conjunction with, such section of the Prospectus.
Shares of the Goldman Sachs Access Inflation Protected USD Bond ETF and Goldman Sachs Access Ultra Short Bond ETF are listed and traded on the
Cboe BZX Exchange, Inc. (Cboe) and Shares of the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access High Yield Corporate Bond ETF and Goldman Sachs Access Investment Grade Corporate Bond ETF are listed and traded on the
NYSE Arca, Inc. (NYSE Arca) (each, an Exchange and together, the Exchanges). Shares of the Goldman Sachs Access Emerging Markets Local Currency Bond ETF and Goldman Sachs Access Emerging Markets USD Bond ETF are
anticipated to be approved for listing and trading on NYSE Arca and Cboe, respectively, subject to notice of issuance. Shares trade on the Exchanges at prices that may differ from their net asset value (NAV). There can be no assurance
that a Fund will continue to meet the requirements of an Exchange necessary to maintain the listing of Shares.
An Exchange may, but is
not required to, remove the Shares of a Fund (except for Goldman Sachs Access Ultra Short Bond ETF) from listing if: (1) following the initial twelve-month period beginning upon the commencement of trading of a Fund, there are fewer than 50
beneficial holders of the Shares for 30 or more consecutive trading days; (2) the value of its underlying index or portfolio of securities on which a Fund is based is no longer calculated or available; (3) the intra-day indicative
value (IIV) of a Fund is no longer calculated or available; (4) certain continued listing standards relating to index composition set forth in an Exchange rules are not continuously maintained; or (5) such other event
shall occur or condition exists that, in the opinion of such Exchange, makes further dealings on such Exchange inadvisable. In addition, an Exchange will remove the Shares of a Fund from listing and trading upon termination of the Trust or the Fund.
For Goldman Sachs Access Ultra Short Bond, Cboe may, but is not required to, remove the Shares of the Fund from listing if:
(1) following the initial twelve-month period beginning upon the commencement of trading of the Fund, there are fewer than 50 beneficial holders of the Shares; (2) the intra-day indicative value (IIV) of the Fund is
no longer calculated or available or the Funds portfolio holdings information is not made available to all market participants at the same time; (3) certain continued listing standards relating to index composition set forth in the
Exchange rules are not continuously maintained; (4) the Fund has failed to file any filings required by the Securities and Exchange Commission (SEC) or the Exchange is aware that the Fund is not in compliance with the conditions of
any exemptive order or no-action relief granted by the SEC to the Fund; or (5) such other event shall occur or condition exists that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. In addition, the Exchange
will remove the Shares of the Fund from listing and trading upon termination of the Trust or the Fund.
As in the case of other
publicly-traded securities, when you buy or sell shares through a broker, you will incur a brokerage commission determined by that broker.
In order to provide additional information regarding the indicative value of Shares of each Fund, an Exchange or a market data vendor
disseminates every 15 seconds through the facilities of the Consolidated Tape Association, or through other widely disseminated means, an IIV for each Fund as calculated by an information provider or market data vendor. The Trust, GSAM, and their
affiliates, are not responsible for any aspect of the calculation or dissemination of the IIVs and make no representation or warranty as to the accuracy of the IIVs.
Except for the Goldman Sachs Access Ultra Short Bond ETF, each Funds IIV is based on a securities component and a cash component which
comprises that days Fund Deposit (as defined below), as disseminated prior to that Business Days (as defined below) commencement of trading. The Goldman Sachs Access Ultra Short Bond ETFs IIV is based on the current market value of
the Funds portfolio holdings that will form the basis for the Funds calculation of NAV at the end of the Business Day, as disclosed on the Funds website prior to that Business Days commencement of trading. The IIV does not
necessarily reflect the precise composition of the current portfolio of securities held by a Fund at a particular point in time or the best possible valuation of the current portfolio. Therefore, the IIV should not be viewed as a
real-time update of a Funds NAV, which is computed only once a day, except with respect to the Goldman Sachs Access Treasury 0-1 Year ETF, for which the NAV is computed twice a day. The IIV is generally determined by using both
current market quotations and/or price quotations obtained from broker-dealers that may trade in the portfolio securities held by a Fund. The quotations of certain Fund holdings may not be updated during U.S. trading hours if such holdings do not
trade in the United States.
The cash component included in an IIV consists of estimated accrued interest, dividends and other income,
less expenses. If applicable, each IIV also reflects changes in currency exchange rates between the U.S. dollar and the applicable currency.
B-2
The Trust reserves the right to adjust the Share prices of a Fund in the future to maintain
convenient trading ranges for investors. Any adjustments would be accomplished through stock splits or reverse stock splits, which would have no effect on the net assets of a Fund or an investors equity interest in a Fund.
The base and trading currencies of the Funds are the U.S. dollar. The base currency is the currency in which a Funds NAV per Share is
calculated and the trading currency is the currency in which Shares of a Fund are listed and traded on an Exchange.
B-3
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has a distinct investment objective and policies. The investment objective of each Fund, except the Goldman Sachs Access Ultra Short
Bond ETF, is to provide investment results that closely correspond, before fees and expenses, to the performance of its respective Index. The investment objective of the Goldman Sachs Access Ultra Short Bond ETF is to seek to provide current income
with preservation of capital. The Funds generally issue shares for cash or in exchange for in-kind securities or instruments as set forth below. The Funds generally redeem shares in exchange for in-kind securities or instruments. There can be
no assurance that a Funds investment objective will be achieved. Each Fund except the Goldman Sachs Access Emerging Markets Local Currency Bond ETF is a diversified series of an open-end management company as defined in the Investment Company
Act of 1940, as amended (the Investment Company Act or the Act). The Goldman Sachs Access Emerging Markets Local Currency Bond ETF is a non-diversified series of an open-end management company as defined in the Act. The
investment objective and policies of each Fund, and the associated risks of each Fund, are discussed in the Prospectus, which should be read carefully before an investment is made. All investment objectives and investment policies not specifically
designated as fundamental may be changed without shareholder approval. However, shareholders will be provided with sixty (60) days notice in the manner prescribed by the SEC before any change in a Funds policy (1) (with respect
to each Fund except the Goldman Sachs Access Ultra Short Bond ETF) to invest at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index or (2) (with respect to the Goldman
Sachs Access Ultra Short Bond ETF) to invest at least 80% of its net assets plus any borrowings for investment purposes (measured at the time of purchase) in a broad range of U.S. dollar denominated bonds.
Each Fund offers and issues Shares at its NAV per Share only in aggregations of a specified number of shares (Creation Units),
generally in exchange for (i) cash (with respect to the Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF, Goldman Sachs Access Emerging Markets Local Currency Bond ETF and Goldman
Sachs Access Emerging Markets USD Bond ETF), or (ii) in exchange for a basket of in-kind securities and/or instruments (with respect to the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF and
Goldman Sachs Access Ultra Short Bond ETF). When permitted or required by the Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF, Goldman Sachs Access Emerging Markets Local Currency Bond ETF
or Goldman Sachs Access Emerging Markets USD Bond ETF, the consideration for a Creation Unit may consist of a basket of securities and/or instruments (the Deposit Securities) together with a deposit of a specified cash payment (the
Cash Component), if any. Shares are redeemable by the Fund only in Creation Units and, generally, in exchange for securities and instruments and/or a specified cash payment. Shares trade in the secondary market and elsewhere at market
prices that may be at, above or below NAV. Creation Units typically are a specified number of Shares.
The Goldman Sachs Access Ultra
Short Bond ETF is an active ETF, which is a fund that trades like other publicly-traded securities and is actively managed and does not seek to replicate the performance of a specified index.
The investment objective and policies of the Goldman Sachs Access Ultra Short Bond ETF are similar to other funds advised by the adviser or
its affiliates. However, the investment results of the Fund may be higher or lower than other similar funds, and there is no guarantee that the investment results of the Fund will be comparable to, any other of these funds. A new fund or a fund with
fewer assets under management may be more significantly affected by purchases and redemptions of its Creation Units than a fund with relatively greater assets under management would be affected by purchases and redemptions of its shares. As compared
to a larger fund, a new or smaller fund is more likely to sell a comparatively large portion of its portfolio to meet significant Creation Unit redemptions, or invest a comparatively large amount of cash to facilitate Creation Unit purchases, in
each case when the fund otherwise would not seek to do so. Such transactions may cause funds to make investment decisions at inopportune times or prices or miss attractive investment opportunities. Such transactions may also accelerate the
realization of taxable income if sales of securities resulted in gains and the fund redeems Creation Units for cash, or otherwise cause a fund to perform differently than intended. While such risks may apply to funds of any size, such risks are
heightened in funds with fewer assets under management. In addition, new funds may not be able to fully implement their investment strategy immediately upon commencing investment operations, which could reduce investment performance.
A Fund may charge creation/redemption transaction fees for each creation and redemption. In all cases, transaction fees will be limited in
accordance with the requirements of the SEC applicable to management investment companies offering redeemable securities. See the CREATIONS AND REDEMPTIONS section below.
To the extent a Fund invests in commodity interests, it intends to do in reliance on an exclusion from the definition of the term
commodity pool operator (CPO) under the Commodity Exchange Act (CEA) and therefore would not be subject to registration or regulation as a CPO under the CEA.
B-4
DESCRIPTION OF INVESTMENT SECURITIES AND PRACTICES
Asset-Backed Securities
Asset-backed
securities represent participations in, or are secured by and payable from, assets such as motor vehicle installment sales, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (credit
card) agreements and other categories of receivables. Such assets are securitized through the use of trusts and special purpose corporations. Payments or distributions of principal and interest may be guaranteed up to certain amounts and for a
certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation, or other credit enhancements may be present.
The Goldman Sachs Access Ultra Short Bond ETF may invest in asset-backed securities. Such securities are often subject to more rapid repayment
than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the underlying loans. During periods of declining interest rates, prepayment of loans underlying asset-backed securities can be expected to
accelerate. Accordingly, the Funds ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at
comparable yields is subject to generally prevailing interest rates at that time. To the extent that the Fund invests in asset-backed securities, the values of the Funds portfolio securities will vary with changes in market interest rates
generally and the differentials in yields among various kinds of asset-backed securities.
Asset-backed securities present certain
additional risks because asset-backed securities generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. Credit card receivables are generally unsecured and the debtors on such receivables are
entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set-off certain amounts owed on the credit cards, thereby reducing the balance due. Automobile receivables generally are
secured, but by automobiles rather than residential real property. Most issuers of automobile receivables permit the loan servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that of the holders of the asset-backed securities. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have a proper security interest in the underlying automobiles. Therefore, if the issuer of an asset-backed security defaults on its payment obligations, there is the possibility
that, in some cases, the Goldman Sachs Access Ultra Short Bond ETF will be unable to possess and sell the underlying collateral and that the Funds recoveries on repossessed collateral may not be available to support payments on these
securities.
Asset Segregation
As
investment companies registered with the SEC, the Funds must identify on their books (often referred to as asset segregation) liquid assets, or engage in other SEC- or SEC staff-approved or other appropriate measures, to
cover open positions with respect to certain kinds of derivative instruments. In the case of swaps, futures contracts, options, forward contracts and other derivative instruments that do not cash settle, for example, a Fund must identify
on its books liquid assets equal to the full notional amount of the instrument while the positions are open, to the extent there is not a permissible offsetting position or a contractual netting agreement with respect to swaps (other
than credit default swaps where the Fund is the protection seller). However, with respect to certain swaps, futures contracts, options, forward contracts and other derivative instruments that are required to cash settle, a Fund may identify liquid
assets in an amount equal to the Funds daily marked-to-market net obligations (i.e., the Funds daily net liability) under the instrument, if any, rather than its full notional amount. Forwards and futures contracts that do not
cash settle may be treated as cash settled for asset segregation purposes when the Funds have entered into contractual arrangements with a third party futures commission merchant or other counterparty to off-set the Funds exposure under the
contract, and, failing that, to assign their delivery obligations under the contract to the counterparty. The Funds reserve the right to modify their asset segregation policies in the future in their discretion, consistent with the Investment
Company Act and SEC or SEC staff guidance. By identifying assets equal to only its net obligations under certain instruments, a Fund will have the ability to employ leverage to a greater extent than if the Fund were required to identify assets equal
to the full notional amount of the instrument.
In November 2019, the SEC published a proposed rulemaking related to the use of
derivatives and certain other transactions by registered investment companies that would, if adopted, for the most part rescind the guidance of the SEC and its staff regarding asset segregation and cover transactions. Instead of complying with
current guidance, the Funds would need to trade derivatives and other transactions that create future payment or delivery obligations (except reverse repurchase agreements and similar financing transactions) subject to a value-at-risk
(VaR) leverage limit, certain other derivatives risk management program and testing requirements and requirements related to board and SEC reporting. These new requirements would apply unless the Funds qualified as a limited
derivatives user, as defined in the SECs proposal. If the Funds trade reverse repurchase agreements or similar financing transactions, they would need to aggregate the amount of indebtedness associated with the reverse repurchase
agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the Funds asset coverage ratio. Reverse repurchase agreements or similar financing transactions
would not be included in the calculation of whether the Funds are a limited derivatives user. Any new requirements, if adopted, may increase the cost of the Funds investments and cost of doing business, which could adversely affect investors.
Bank Obligations
The Goldman Sachs
Access Investment Grade Corporate Bond ETF and Goldman Sachs Access Ultra Short Bond ETF 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 obligations only of the issuing branch pursuant to the terms of the specific obligations or government regulation. 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. Foreign
B-5
banks are subject to different regulations and are generally permitted to engage in a wider variety of activities than U.S. banks. 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 operations of this industry.
Certificates of deposit are certificates evidencing
the obligation of a bank to repay funds deposited with it for a specified period of time at a specified rate. Certificates of deposit are negotiable instruments and are similar to saving deposits but have a definite maturity and are evidenced by a
certificate instead of a passbook entry. Banks are required to keep reserves against all certificates of deposit. Fixed time deposits are bank obligations payable at a stated maturity date and bearing interest at a fixed rate. Fixed time deposits
may be withdrawn on the demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. The Funds may invest in deposits in U.S. and European banks
which satisfy the standards set forth above.
Collateralized Loan Obligations and Other Collateralized Debt Obligations
The Goldman Sachs Access Ultra Short Bond ETF may invest in collateralized loan obligations (CLOs) and other similarly structured
investments. A CLO is an asset-backed security whose underlying collateral is a pool of loans, which may include, among others, domestic and foreign floating rate and fixed rate senior secured loans, senior unsecured loans, and subordinate corporate
loans, including loans that may be rated below investment grade or equivalent unrated loans. In addition to the normal risks associated with loan- and credit-related securities discussed elsewhere in the Prospectus (e.g., loan-related investments
risk, interest rate risk and default risk), investments in CLOs carry additional risks including, but not limited to, the risk that: (i) distributions from the collateral may not be adequate to make interest or other payments; (ii) the
quality of the collateral may decline in value or default; (iii) the Fund may invest in tranches of CLOs that are subordinate to other tranches; (iv) the structure and complexity of the transaction and the legal documents could lead to
disputes among investors regarding the characterization of proceeds; and (v) the CLOs manager may perform poorly. CLOs may charge management and other administrative fees, which are in addition to those of the Fund.
CLOs issue classes or tranches that offer various maturity, risk and yield characteristics. Losses caused by defaults on
underlying assets are borne first by the holders of subordinate tranches. Tranches are categorized as senior, mezzanine and subordinated/equity, according to their degree of risk. If there are defaults or the CLOs collateral otherwise
underperforms, scheduled payments to senior tranches take precedence over those of mezzanine tranches, and scheduled payments to mezzanine tranches take precedence over those of subordinated/equity tranches. The riskiest portion is the
equity tranche which bears the bulk of defaults from the collateral and serves to protect the other, more senior tranches from default in all but the most severe circumstances. Because it is partially protected from defaults, a senior
tranche from a CLO trust typically has higher ratings and lower yields than its underlying collateral and may be rated investment grade. Despite the protection from the equity and mezzanine tranches, more senior tranches of CLOs can experience
losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of more subordinate tranches, market anticipation of defaults, as well as aversion to CLO securities as a class. The Funds investments
in CLOs principally consist of senior tranches and, to a lesser extent, mezzanine tranches.
Typically, CLOs are privately offered and
sold, and thus, are not registered under the securities laws. As a result, investments in CLOs have limited independent pricing transparency. However, an active dealer market may exist for CLOs that qualify under the Rule 144A safe
harbor from the registration requirements of the Securities Act for resales of certain securities to qualified institutional buyers. These and other factors discussed in the section below, entitled Illiquid Investments, may impact
the liquidity of investments in CLOs.
The Fund may also invest in collateralized debt obligations (CDOs), which are
structured similarly to CLOs, but are backed by pools of assets that are debt securities (rather than being limited only to loans), typically including bonds, other structured finance securities (including other asset-backed securities and other
CDOs) and/or synthetic instruments. Like CLOs, the risks of an investment in a CDO depend largely on the type and quality of the collateral securities and the tranche of the CDO in which the Fund invests. CDOs collateralized by pools of asset-backed
securities carry the same risks as investments in asset-backed securities directly, including losses with respect to the collateral underlying those asset-backed securities. In addition, certain CDOs may not hold their underlying collateral
directly, but rather, use derivatives such as swaps to create synthetic exposure to the collateral pool. Such CDOs entail the risks associated with derivative instruments.
Commercial Paper and Other Short-Term Corporate Obligations
The Funds may invest in commercial paper and other short-term obligations issued or guaranteed by U.S. corporations, non-U.S. corporations or
other entities. Commercial paper represents short-term unsecured promissory notes issued in bearer form by banks or bank holding companies, corporations and finance companies.
B-6
Convertible Securities
The Funds may invest in convertible securities. Convertible securities are bonds, debentures, notes, preferred stocks or other securities that
may be converted into or exchanged for a specified amount of common stock (or other securities) of the same or different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive
interest that is generally paid or accrued on debt or a dividend that is paid or accrued on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Convertible securities have unique investment characteristics,
in that they generally (i) have higher yields than common stocks, but lower yields than comparable non-convertible securities, (ii) are less subject to fluctuation in value than the underlying common stock due to their fixed-income
characteristics and (iii) provide the potential for capital appreciation if the market price of the underlying common stock increases.
The value of a convertible security is a function of its investment value (determined by its yield in comparison with the yields
of other securities of comparable maturity and quality that do not have a conversion privilege) and its conversion value (the securitys worth, at market value, if converted into the underlying common stock). The investment value of
a convertible security is influenced by changes in interest rates, with investment value normally declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors may also have an
effect on the convertible securitys investment value. The conversion value of a convertible security is determined by the market price of the underlying common stock. If the conversion value is low relative to the investment value, the price
of the convertible security is governed principally by its investment value. To the extent the market price of the underlying common stock approaches or exceeds the conversion price, the price of the convertible security will be increasingly
influenced by its conversion value. A convertible security generally will sell at a premium over its conversion value by the extent to which investors place value on the right to acquire the underlying common stock while holding a fixed income
security.
A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible
securitys governing instrument. If a convertible security held by a Fund is called for redemption, the Fund will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party
or permit the issuer to redeem the security. Any of these actions could have an adverse effect on a Funds ability to achieve its investment objective, which, in turn, could result in losses to the Fund. To the extent that a Fund holds a
convertible security, or a security that is otherwise converted or exchanged for common stock (e.g., as a result of a restructuring), the Fund may, consistent with its investment objective, hold such common stock in its portfolio.
Corporate Debt Obligations
A Fund may
invest in corporate debt obligations, including obligations of industrial, utility and financial issuers. Corporate debt obligations include bonds, notes, debentures and other obligations of corporations to pay interest and repay principal.
Corporate debt obligations are subject to the risk of an issuers inability to meet principal and interest payments on the obligations and may also be subject to price volatility due to such factors as market interest rates, market perception
of the creditworthiness of the issuer and general market liquidity.
Corporate debt obligations rated BBB or Baa 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. Medium to lower rated and comparable non-rated securities tend to offer higher yields than higher rated securities with the same maturities because the historical financial condition of the issuers of such securities may not have been as strong as that
of other issuers. The price of corporate debt obligations will generally fluctuate in response to fluctuations in supply and demand for similarly rated securities. In addition, the price of corporate debt obligations will generally fluctuate in
response to interest rate levels. Fluctuations in the prices of portfolio securities subsequent to their acquisition will not affect cash income from such securities but will be reflected in a Funds NAV. Because medium to lower rated
securities generally involve greater risks of loss of income and principal than higher rated securities, investors should consider carefully the relative risks associated with investment in securities which carry medium to lower ratings and in
comparable unrated securities. In addition to the risk of default, there are the related costs of recovery on defaulted issues.
Custodial Receipts and
Trust Certificates
The Funds may invest in custodial receipts and trust certificates, which may be underwritten by securities dealers
or banks, representing interests in securities held by a custodian or trustee. The securities so held may include obligations issued or guaranteed by the U.S. Government, its agencies, instrumentalities or sponsored enterprises (U.S.
Government Securities), municipal securities or other types of securities in which a Fund may invest. The custodial receipts or trust certificates are underwritten by securities dealers or banks and 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 purposes of certain
securities laws, 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. As a holder of custodial receipts and trust certificates, a
B-7
Fund will bear its proportionate share of the fees and expenses charged to the custodial account or trust. Each Fund may also invest in separately issued interests in custodial receipts and trust
certificates.
Although under the terms of a custodial receipt or trust certificate a Fund would typically be authorized to assert its
rights directly against the issuer of the underlying obligation, the Fund could be required to assert through the custodian bank or trustee those rights as may exist against the underlying issuers. Thus, in the event an underlying issuer fails to
pay principal and/or interest when due, a Fund may be subject to delays, expenses and risks that are greater than those that would have been involved if the Fund had purchased a direct obligation of the issuer. In addition, in the event that the
trust or custodial account in which the underlying securities have been deposited is determined to be an association taxable as a corporation, instead of a non-taxable entity, the yield on the underlying securities would be reduced in recognition of
any taxes paid.
Certain custodial receipts and trust certificates may be synthetic or derivative instruments that have interest rates
that reset inversely to changing short-term rates and/or have embedded interest rate floors and caps that require the issuer to pay an adjusted interest rate if market rates fall below or rise above a specified rate. Because some of these
instruments represent relatively recent innovations, and the trading market for these instruments is less developed than the markets for traditional types of instruments, it is uncertain how these instruments will perform under different economic
and interest-rate scenarios. Also, because these instruments may be leveraged, their market values may be more volatile than other types of fixed income instruments and may present greater potential for capital gain or loss. The possibility of
default by an issuer or the issuers credit provider may be greater for these derivative instruments than for other types of instruments. In some cases, it may be difficult to determine the fair value of a derivative instrument because of a
lack of reliable objective information and an established secondary market for some instruments may not exist. In many cases, the Internal Revenue Service (the IRS) has not ruled on the tax treatment of the interest or payments received
on the derivative instruments and, accordingly, purchases of such instruments are based on the opinion of counsel to the sponsors of the instruments.
Events Relating to the Mortgage- and Asset-Backed Securities Markets and the Overall Economy
The unprecedented disruption in the residential mortgage-backed securities market (and in particular, the subprime residential
mortgage market), the broader mortgage-backed securities market and the asset-backed securities market in 2008 and 2009 resulted in downward price pressures and increasing foreclosures and defaults in residential and commercial real estate. Concerns
over inflation, energy costs, geopolitical issues, the availability and cost of credit, the mortgage market and a depressed real estate market contributed to increased volatility and diminished expectations for the economy and markets going forward,
and contributed to dramatic declines in the housing market, with falling home prices and increasing foreclosures and unemployment, and significant asset write-downs by financial institutions. These conditions prompted a number of financial
institutions to seek additional capital, to merge with other institutions and, in some cases, to fail or seek bankruptcy protection. Between 2008 and 2009, the market for Mortgage-Backed Securities (as well as other asset-backed securities) was
particularly adversely impacted by, among other factors, the failure and subsequent sale of Bear, Stearns & Co. Inc. to J.P. Morgan Chase, the merger of Bank of America Corporation and Merrill Lynch & Co., the insolvency of
Washington Mutual Inc., the failure and subsequent bankruptcy of Lehman Brothers Holdings, Inc., the extension of approximately $152 billion in emergency credit by the U.S. Department of the Treasury (U.S. Treasury) to American
International Group Inc., and, as described above, the conservatorship and the control by the U.S. Government of the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie
Mae). The global markets also saw an increase in volatility due to uncertainty surrounding the level and sustainability of sovereign debt of certain countries that are part of the European Union (EU), including Greece, Spain,
Portugal, Ireland and Italy, as well as the sustainability of the EU itself. Concerns over the level and sustainability of the sovereign debt of the United States have aggravated this volatility. No assurance can be made that this uncertainty will
not lead to further disruption of the credit markets in the United States or around the globe. These events, coupled with the general global economic downturn, have resulted in a substantial level of uncertainty in the financial markets,
particularly with respect to mortgage-related investments.
These events may lead to further declines in income from, or the value of,
real estate, including the real estate which secures the Mortgage-Backed Securities which may be held by the Goldman Sachs Access Ultra Short Bond ETF. Additionally, a lack of credit liquidity, adjustments of mortgages to higher rates and decreases
in the value of real property have occurred and may reoccur, and potentially prevent borrowers from refinancing their mortgages, which may increase the likelihood of default on their mortgage loans. These economic conditions, coupled with high
levels of real estate inventory and elevated incidence of underwater mortgages, may also adversely affect the amount of proceeds the holder of a mortgage loan or mortgage-backed securities (including the Mortgage-Backed Securities in which the Fund
may invest) would realize in the event of a foreclosure or other exercise of remedies. Moreover, even if such Mortgage-Backed Securities are performing as anticipated, the value of such securities in the secondary market may nevertheless fall or
continue to fall as a result of deterioration in general market conditions for such Mortgage-Backed Securities or other asset-backed or structured products. Trading activity associated with market indices may also drive spreads on those indices
wider than spreads on Mortgage-Backed Securities, thereby resulting in a decrease in value of such Mortgage-Backed Securities, including the Mortgage-Backed Securities which may be owned by the Fund.
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The U.S. Government, the Federal Reserve, the Treasury, the SEC, the Federal Deposit Insurance
Corporation (the FDIC) and other governmental and regulatory bodies have taken or are considering taking actions to address the financial crisis. These actions include, but are not limited to, the enactment by the U.S. Congress of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which was signed into law on July 21, 2010 and imposes a new regulatory framework over the U.S. financial services industry and the consumer credit
markets in general, and the promulgation of additional regulations in this area which could affect these securities. Given the broad scope, sweeping nature, and relatively recent enactment of some of these regulatory measures, the potential impact
they could have on any of the asset-backed or Mortgage-Backed Securities which may be held by the Fund is unknown. There can be no assurance that these measures will not have an adverse effect on the value or marketability of any asset-backed or
Mortgage-Backed Securities which may be held by the Goldman Sachs Access Ultra Short Bond ETF. Furthermore, no assurance can be made that the U.S. Government or any U.S. regulatory body (or other authority or regulatory body) will not continue to
take further legislative or regulatory action in response to the economic crisis or otherwise, and the effect of such actions, if taken, cannot be known.
Among its other provisions, the Dodd-Frank Act creates a liquidation framework under which the FDIC, may be appointed as receiver following a
systemic risk determination by the Secretary of Treasury (in consultation with the President) for the resolution of certain nonbank financial companies and other entities, defined as covered financial companies, and commonly
referred to as systemically important entities, in the event such a company is in default or in danger of default and the resolution of such a company under other applicable law would have serious adverse effects on financial stability
in the United States, and also for the resolution of certain of their subsidiaries. No assurances can be given that this new liquidation framework would not apply to the originators of asset-backed securities, including Mortgage-Backed Securities,
or their respective subsidiaries, including the issuers and depositors of such securities, although the expectation embedded in the Dodd-Frank Act is that the framework will be invoked only very rarely. Guidance from the FDIC indicates that such new
framework will largely be exercised in a manner consistent with the existing bankruptcy laws, which is the insolvency regime that would otherwise apply to the sponsors, depositors and issuing entities with respect to asset-backed securities,
including Mortgage-Backed Securities. The application of such liquidation framework to such entities could result in decreases or delays in amounts paid on, and hence the market value of, the Mortgage-Backed or asset-backed securities that may be
owned by the Fund.
Delinquencies, defaults and losses on residential mortgage loans may increase substantially over certain periods,
which may affect the performance of the Mortgage-Backed Securities in which the Fund may invest. Mortgage loans backing non-agency Mortgage-Backed Securities are more sensitive to economic factors that could affect the ability of borrowers to pay
their obligations under the mortgage loans backing these securities. In addition, housing prices and appraisal values in many states and localities over certain periods have declined or stopped appreciating. A continued decline or an extended
flattening of those values may result in additional increases in delinquencies and losses on Mortgage-Backed Securities generally (including the Mortgage-Backed Securities that the Fund may invest in as described above).
The foregoing adverse changes in market conditions and regulatory climate may reduce the cash flow which the Goldman Sachs Access Ultra Short
Bond ETF, to the extent it invests in Mortgage-Backed Securities or other asset-backed securities, receives from such securities and increase the incidence and severity of credit events and losses in respect of such securities. In addition, interest
rate spreads for Mortgage-Backed Securities and other asset-backed securities are subject to widening and increased volatility due to these adverse changes in market conditions. In the event that interest rate spreads for Mortgage-Backed Securities
and other asset-backed securities widen following the purchase of such assets by the Fund, the market value of such securities is likely to decline and, in the case of a substantial spread widening, could decline by a substantial amount.
Furthermore, adverse changes in market conditions may result in reduced liquidity in the market for Mortgage-Backed Securities and other asset-backed securities (including the Mortgage-Backed Securities and other asset-backed securities in which the
Fund may invest) and increased unwillingness by banks, financial institutions and investors to extend credit to servicers, originators and other participants in the market for Mortgage-Backed and other asset-backed securities. As a result, the
liquidity and/or the market value of any Mortgage-Backed or asset-backed securities that are owned by the Fund may experience further declines after they are purchased by the Fund.
Floating Rate Loans and Other Variable and Floating Rate Securities
The interest rates payable on certain securities in which the Funds may invest are not fixed and may fluctuate based upon changes in market
rates. Variable and floating rate obligations are debt instruments issued by companies or other entities with interest rates that reset periodically (typically, daily, monthly, quarterly, or semi-annually) in response to changes in the market rate
of interest on which the interest rate is based. Moreover, such obligations may fluctuate in value in response to interest rate changes if there is a delay between changes in market interest rates and the interest reset date for the obligation. The
value of these obligations is generally more stable than that of a fixed rate obligation in response to changes in interest rate levels, but they may decline in value if their interest rates do not rise as much, or as quickly, as interest rates in
general. Conversely, floating rate securities will not generally increase in value if interest rates decline.
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Floating rate loans consist generally of obligations of companies or other entities
(e.g., a U.S. or foreign bank, insurance company or finance company) (collectively, borrowers) incurred for a variety of purposes. Floating rate loans may be acquired by direct investment as a lender or as an assignment of
the portion of a floating rate loan previously attributable to a different lender.
Floating rate loans may be obligations of borrowers
who are highly leveraged. Floating rate loans may be structured to include both term loans, which are generally fully funded at the time of the making of the loan, and revolving credit facilities, which would require additional investments upon the
borrowers demand. A revolving credit facility may require a purchaser to increase its investment in a floating rate loan at a time when it would not otherwise have done so, even if the borrowers condition makes it unlikely that the
amount will ever be repaid.
A floating rate loan offered as part of the original lending syndicate typically is purchased at par value.
As part of the original lending syndicate, a purchaser generally earns a yield equal to the stated interest rate. In addition, members of the original syndicate typically are paid a commitment fee. In secondary market trading, floating rate loans
may be purchased or sold above, at, or below par, which can result in a yield that is below, equal to, or above the stated interest rate, respectively. At certain times when reduced opportunities exist for investing in new syndicated floating rate
loans, floating rate loans may be available only through the secondary market. There can be no assurance that an adequate supply of floating rate loans will be available for purchase.
Historically, floating rate loans have not been registered with the SEC or any state securities commission or listed on any securities
exchange. As a result, the amount of public information available about a specific floating rate loan historically has been less extensive than if the floating rate loan were registered or exchange-traded. As a result, no active market may exist for
some floating rate loans.
Purchasers of floating rate loans and other forms of debt obligations depend primarily upon the
creditworthiness of the borrower for payment of interest and repayment of principal. If scheduled interest or principal payments are not made, the value of the obligation may be adversely affected. Floating rate loans and other debt obligations that
are fully secured provide more protections than unsecured obligations in the event of failure to make scheduled interest or principal payments. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks and may be
highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Some floating rate loans and other debt obligations are not rated by any nationally
recognized statistical rating organization. In connection with the restructuring of a floating rate loan or other debt obligation outside of bankruptcy court in a negotiated work-out or in the context of bankruptcy proceedings, equity securities or
junior debt obligations may be received in exchange for all or a portion of an interest in the obligation.
From time to time, Goldman
Sachs and its affiliates may borrow money from various banks in connection with their business activities. These banks also may sell floating rate loans to the Funds or acquire floating rate loans from the Funds, or may be intermediate participants
with respect to floating rate loans owned by the Funds. These banks also may act as agents for floating rate loans that the Funds own.
Agents. Floating rate loans typically are originated, negotiated, and structured by a bank, insurance company, finance company, or
other financial institution (the agent) for a lending syndicate of financial institutions. The borrower and the lender or lending syndicate enter into a loan agreement. In addition, an institution (typically, but not always, the agent)
holds any collateral on behalf of the lenders.
In a typical floating rate loan, the agent administers the terms of the loan agreement and
is responsible for the collection of principal and interest and fee payments from the borrower and the apportionment of these payments to all lenders that are parties to the loan agreement. Purchasers will rely on the agent to use appropriate
creditor remedies against the borrower. Typically, under loan agreements, the agent is given broad discretion in monitoring the borrowers performance and is obligated to use the same care it would use in the management of its own property.
Upon an event of default, the agent typically will enforce the loan agreement after instruction from the lenders. The borrower compensates the agent for these services. This compensation may include special fees paid on structuring and funding the
floating rate loan and other fees paid on a continuing basis. The typical practice of an agent or a lender in relying exclusively or primarily on reports from the borrower may involve a risk of fraud by the borrower.
If an agent becomes insolvent, or has a receiver, conservator, or similar official appointed for it by the appropriate bank or other
regulatory authority, or becomes a debtor in a bankruptcy proceeding, the agents appointment may be terminated, and a successor agent would be appointed. If an appropriate regulator or court determines that assets held by the agent for the
benefit of the purchasers of floating rate loans are subject to the claims of the agents general or secured creditors, the purchasers might incur certain costs and
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delays in realizing payment on a floating rate loan or suffer a loss of principal and/or interest. Furthermore, in the event of the borrowers bankruptcy or insolvency, the borrowers
obligation to repay a floating rate loan may be subject to certain defenses that the borrower can assert as a result of improper conduct by the agent.
Liquidity. Floating rate loans may be transferable among financial institutions, but may not have the liquidity of conventional debt
securities and are often subject to legal or contractual restrictions on resale. Floating rate loans are not currently listed on any securities exchange or automatic quotation system. As a result, no active market may exist for some floating rate
loans. To the extent a secondary market exists for other floating rate loans, such market may be subject to irregular trading activity, wide bid/ask spreads, and extended trade settlement periods. The lack of a highly liquid secondary market for
floating rate loans may have an adverse effect on the value of such loans and may make it more difficult to value the loans for purposes of calculating their respective NAV. These and other factors discussed in the section below, entitled
Illiquid Investments, may impact the liquidity of investments in floating rate loans and other variable and floating rate securities.
Extended Trade Settlement Periods. Because transactions in many floating rate loans are subject to extended trade settlement periods,
the Funds may not receive the proceeds from the sale of a loan for a period after the sale. As a result, sale proceeds related to the sale of floating rate loans may not be available to make additional investments or to meet the Funds
redemption obligations for a period after the sale of the loans, and, as a result, the Funds may have to sell other investments or engage in borrowing transactions, if necessary to raise cash to meet their obligations.
Collateral. Most floating rate loans are secured by specific collateral of the borrower and are senior to most other securities or
obligations of the borrower. The collateral typically has a market value, at the time the floating rate loan is made, that equals or exceeds the principal amount of the floating rate loan. The value of the collateral may decline, be insufficient to
meet the obligations of the borrower, or be difficult to liquidate. As a result, a floating rate loan may not be fully collateralized and can decline significantly in value.
Floating rate loan collateral may consist of various types of assets or interests, including working capital assets, such as accounts
receivable or inventory; tangible or intangible assets; or assets or other types of guarantees of affiliates of the borrower.
Generally,
floating rate loans are secured unless (i) the purchasers security interest in the collateral is invalidated for any reason by a court, or (ii) the collateral is fully released with the consent of the agent bank and lenders or under
the terms of a loan agreement as the creditworthiness of the borrower improves. Collateral impairment is the risk that the value of the collateral for a floating rate loan will be insufficient in the event that a borrower defaults. Although the
terms of a floating rate loan generally require that the collateral at issuance have a value at least equal to 100% of the amount of such floating rate loan, the value of the collateral may decline subsequent to the purchase of a floating rate loan.
In most loan agreements there is no formal requirement to pledge additional collateral. There is no guarantee that the sale of collateral would allow a borrower to meet its obligations should the borrower be unable to repay principal or pay interest
or that the collateral could be sold quickly or easily.
In addition, most borrowers pay their debts from the cash flow they generate. If
the borrowers cash flow is insufficient to pay its debts as they come due, the borrower may seek to restructure its debts rather than sell collateral.
Borrowers may try to restructure their debts by filing for protection under the federal bankruptcy laws or negotiating a work-out. If a
borrower becomes involved in bankruptcy proceedings, access to the collateral may be limited by bankruptcy and other laws. In the event that a court decides that access to the collateral is limited or void, it is unlikely that purchasers could
recover the full amount of the principal and interest due.
There may be temporary periods when the principal asset held by a borrower is
the stock of a related company, which may not legally be pledged to secure a floating rate loan. On occasions when such stock cannot be pledged, the floating rate loan will be temporarily unsecured until the stock can be pledged or is exchanged for,
or replaced by, other assets.
Some floating rate loans are unsecured. The claims of holders under unsecured loans are subordinated to
claims of creditors holding secured indebtedness and possibly also to claims of other creditors holding unsecured debt. Unsecured loans have a greater risk of default than secured loans, particularly during periods of deteriorating economic
conditions. If the borrower defaults on an unsecured floating rate loan, there is no specific collateral on which the purchaser can foreclose.
Floating Interest Rates. The rate of interest payable on floating rate loans and other floating or variable rate obligations is the sum
of a base lending rate plus a specified spread. Base lending rates are generally London Interbank Offered Rate (LIBOR), the Prime Rate of a designated U.S. bank, the Federal Funds Rate, or another base lending rate used by commercial
lenders. A borrower usually
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has the right to select the base lending rate and to change the base lending rate at specified intervals. The applicable spread may be fixed at time of issuance or may adjust upward or downward
to reflect changes in credit quality of the borrower.
The interest rate on LIBOR-based floating rate loans/obligations is reset
periodically at intervals ranging from 30 to 180 days, while the interest rate on Prime Rate- or Federal Funds Rate-based floating rate loans/obligations floats daily as those rates change. Investment in floating rate loans/obligations with longer
interest rate reset periods can increase fluctuations in the floating rate loans values when interest rates change.
The yield on a
floating rate loan/obligation will primarily depend on the terms of the underlying floating rate loan/obligation and the base lending rate chosen by the borrower. The relationship between LIBOR, the Prime Rate, and the Federal Funds Rate will vary
as market conditions change.
Maturity. Floating rate loans typically will have a stated term of five to nine years. However,
because floating rate loans are frequently prepaid, their average maturity is expected to be two to three years. The degree to which borrowers prepay floating rate loans, whether as a contractual requirement or at their election, may be affected by
general business conditions, the borrowers financial condition, and competitive conditions among lenders. Prepayments cannot be predicted with accuracy. Prepayments of principal to the purchaser of a floating rate loan may result in the
principals being reinvested in floating rate loans with lower yields.
Supply of Floating Rate Loans. The legislation of
state or federal regulators that regulate certain financial institutions may impose additional requirements or restrictions on the ability of such institutions to make loans, particularly with respect to highly leveraged transactions. The supply of
floating rate loans may be limited from time to time due to a lack of sellers in the market for existing floating rate loans or the number of new floating rate loans currently being issued. As a result, the floating rate loans available for purchase
may be lower quality or higher priced.
Restrictive Covenants. A borrower must comply with various restrictive covenants contained
in the loan agreement. In addition to requiring the scheduled payment of interest and principal, these covenants may include restrictions on dividend payments and other distributions to stockholders, provisions requiring the borrower to maintain
specific financial ratios, and limits on total debt. The loan agreement may also contain a covenant requiring the borrower to prepay the floating rate loan with any free cash flow. A breach of a covenant that is not waived by the agent (or by the
lenders directly) is normally an event of default, which provides the agent or the lenders the right to call the outstanding floating rate loan.
Fees. Purchasers of floating rate loans may receive and/or pay certain fees. These fees are in addition to interest payments received
and may include facility fees, commitment fees, commissions, and prepayment penalty fees. When a purchaser buys a floating rate loan, it may receive a facility fee; and when it sells a floating rate loan, it may pay a facility fee. A purchaser may
receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a floating rate loan or a prepayment penalty fee on the prepayment of a floating rate loan. A purchaser may also receive other fees, including covenant
waiver fees and covenant modification fees.
Other Types of Floating Rate Debt Obligations. Floating rate debt obligations include
other forms of indebtedness of borrowers such as notes and bonds, obligations with fixed rate interest payments in conjunction with a right to receive floating rate interest payments, and shares of other investment companies. These instruments are
generally subject to the same risks as floating rate loans but are often more widely issued and traded.
Foreign Investments
Each Fund (except the Goldman Sachs Access Treasury 0-1 Year ETF and Goldman Sachs Access Inflation Protected USD Bond ETF) may invest in
securities of foreign issuers, including securities quoted or denominated in a currency other than U.S. dollars. Investments in foreign securities may offer potential benefits not available from investments solely in U.S. dollar-denominated or
quoted securities of domestic issuers. Such benefits may include the opportunity to invest in foreign issuers that appear, in the opinion of the Investment Adviser, to offer the potential for better long term growth of capital and income than
investments in U.S. securities, the opportunity to invest in foreign countries with economic policies or business cycles different from those of the United States and the opportunity to reduce fluctuations in portfolio value by taking advantage of
foreign securities markets that do not necessarily move in a manner parallel to U.S. markets. Investing in the securities of foreign issuers also involves, however, certain special risks, including those discussed in the Funds Prospectus and
those set forth below, which are not typically associated with investing in U.S. dollar-denominated securities or quoted securities of U.S. issuers. Many of these risks are more pronounced for investments in emerging economies.
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With respect to investments in certain foreign countries, there exist certain economic, political
and social risks, including the risk of adverse political developments, nationalization, military unrest, social instability, war and terrorism, confiscation without fair compensation, expropriation or confiscatory taxation, limitations on the
movement of funds and other assets between different countries, or diplomatic developments, any of which could adversely affect a Funds investments in those countries. Governments in certain foreign countries continue to participate to a
significant degree, through ownership interest or regulation, in their respective economies. Action by these governments could have a significant effect on market prices of securities and dividend payments.
As described more fully below, the Goldman Sachs Access Investment Grade Corporate Bond ETF, Goldman Sachs Access Emerging Markets Local
Currency Bond ETF and Goldman Sachs Access Emerging Markets USD Bond ETF may invest in countries with emerging economies or securities markets. Political and economic structures in many of such countries may be undergoing significant evolution and
rapid development, and such countries may lack the social, political and economic stability characteristic of more developed countries. Certain of such countries have in the past failed to recognize private property rights and have at times
nationalized or expropriated the assets of, or ignored internationally accepted standards of due process against, private companies. In addition, a country may take these and other retaliatory actions against a specific private company, including a
Fund or the Investment Adviser. There may not be legal recourse against these actions, which could arise in connection with the commercial activities of Goldman Sachs or its affiliates or otherwise, and a Fund could be subject to substantial losses.
In addition, a Fund or its 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 repatriation restrictions,
confiscation of assets and property, expropriation or nationalization. See Investing in Emerging Countries, below.
Many
countries throughout the world are dependent on a healthy U.S. economy and are adversely affected when the U.S. economy weakens or its markets decline. Additionally, many foreign country economies are heavily dependent on international trade and are
adversely affected by protective trade barriers and economic conditions of their trading partners. Protectionist trade legislation enacted by those trading partners could have a significant adverse effect on the securities markets of those
countries. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments
position.
From time to time, certain of the companies in which a Fund may invest may operate in, or have dealings with, countries subject
to sanctions or embargos imposed by the U.S. Government and the United Nations and/or countries identified by the U.S. Government as state sponsors of terrorism. A company may suffer damage to its reputation if it is identified as a company which
operates in, or has dealings with, countries subject to sanctions or embargoes imposed by the U.S. Government as state sponsors of terrorism. As an investor in such companies, a Fund will be indirectly subject to those risks. Iran is subject to
several United Nations sanctions and is an embargoed country by the Office of Foreign Assets Control (OFAC) of the U.S. Treasury.
In addition, from time to time, certain of the companies in which a Fund may invest may engage in, or have dealings with countries or
companies that engage in, activities that may not be considered socially and/or environmentally responsible. Such activities may relate to human rights issues (such as patterns of human rights abuses or violations, persecution or discrimination),
impacts to local communities in which companies operate and environmental sustainability. For a description of the Investment Advisers approach to responsible and sustainable investing, please see GSAMs Statement on Responsible and
Sustainable Investing at https://www.gsam.com/content/dam/gsam/pdfs/common/en/public/miscellaneous/GSAM_statement_on_respon_sustainable_investing.pdf.
As a result, a company may suffer damage to its reputation if it is identified as a company which engages in, or has dealings with countries
or companies that engage in, the above referenced activities. As an investor in such companies, a Fund would be indirectly subject to those risks.
The Investment Adviser is committed to complying fully with sanctions in effect as of the date of this Statement of Additional Information and
any other applicable sanctions that may be enacted in the future with respect to Sudan or any other country.
Investments in foreign
securities often involve currencies of foreign countries. Accordingly, a Fund may be affected favorably or unfavorably by changes in currency rates and in exchange control regulations and may incur costs in connection with conversions between
various currencies. A Fund may be subject to currency exposure independent of its securities positions. To the extent that a Fund is fully invested in foreign securities while also maintaining net currency positions, it may be exposed to greater
combined risk.
Currency exchange rates may fluctuate significantly over short periods of time. They generally are determined by the
forces of supply and demand in the foreign exchange markets and the relative merits of investments in different countries, actual or anticipated changes in interest rates and other complex factors, as seen from an international perspective. Currency
exchange rates also can be
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affected unpredictably by intervention (or the failure to intervene) by U.S. or foreign governments or central banks or by currency controls or political developments in the United States or
abroad. To the extent that a portion of a Funds total assets, adjusted to reflect the Funds net position after giving effect to currency transactions, is denominated or quoted in the currencies of foreign countries, the Fund will be more
susceptible to the risk of adverse economic and political developments within those countries. A Funds net currency positions may expose it to risks independent of its securities positions.
These and other factors discussed in the section below, entitled Illiquid Investments, may impact the liquidity of investments in
issuers of emerging country securities.
Because foreign issuers generally are not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable to U.S. companies, there may be less publicly available information about a foreign company than about a U.S. company. Volume and liquidity in most foreign securities
markets are less than in the United States and securities of many foreign companies are less liquid and more volatile than securities of comparable U.S. companies. The securities of foreign issuers may be listed on foreign securities exchanges or
traded in foreign over-the-counter markets. Fixed commissions on foreign securities exchanges are generally higher than negotiated commissions on U.S. exchanges, although a Fund endeavors to achieve the most favorable net results on its portfolio
transactions. There is generally less government supervision and regulation of foreign securities exchanges, brokers, dealers and listed and unlisted companies than in the United States, and the legal remedies for investors may be more limited than
the remedies available in the United States. For example, there may be no comparable provisions under certain foreign laws to insider trading and similar investor protections that apply with respect to securities transactions consummated in the
United States. Mail service between the United States and foreign countries may be slower or less reliable than within the United States, thus increasing the risk of delayed settlement of portfolio transactions or loss of certificates for portfolio
securities.
Foreign markets also have different clearance and settlement procedures, and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such delays in settlement could result in temporary periods when some of a Funds assets are uninvested and
no return is earned on such assets. The inability of a Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to a Fund due to subsequent declines in value of the portfolio securities, or, if the Fund has entered into a contract to sell the securities, in possible liability to the purchaser.
These and other factors discussed in the section below, entitled Illiquid Investments, may impact the liquidity of investments in
securities of foreign issuers.
The Funds may invest in foreign securities which take the form of sponsored and unsponsored American
Depositary Receipts (ADRs), Global Depositary Receipts (GDRs), European Depositary Receipts (EDRs), Global Depositary Notes (GDNs) (except the Goldman Sachs Access Ultra Short Bond ETF) or other
similar instruments representing securities of foreign issuers) (together, Depositary Receipts). ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. ADRs are traded on
domestic exchanges or in the U.S. over-the-counter market and, generally, are in registered form. EDRs and GDRs are receipts evidencing an arrangement with a non-U.S. bank similar to that for ADRs and are designed for use in the non-U.S. securities
markets. EDRs and GDRs are not necessarily quoted in the same currency as the underlying security. GDNs are issued by a bank or other depository and evidence ownership of a debt security denominated in local currency. GDNs generally mirror the terms
(e.g., interest rate, maturity date, credit rating, etc.) of particular local currency-denominated bonds, though they are traded, settled and paid in U.S. dollars.
To the extent a Fund acquires Depositary Receipts through banks which do not have a contractual relationship with the foreign issuer of the
security underlying the Depositary Receipts to issue and service such unsponsored Depositary Receipts, there is an increased possibility that the Fund will not become aware of and be able to respond to corporate actions such as stock splits or
rights offerings involving the foreign issuer in a timely manner. In addition, the lack of information may result in inefficiencies in the valuation of such instruments. Investment in Depositary Receipts does not eliminate all the risks inherent in
investing in securities of non-U.S. issuers. The market value of Depositary Receipts is dependent upon the market value of the underlying securities and fluctuations in the relative value of the currencies in which the Depositary Receipts and the
underlying securities are quoted. However, by investing in Depositary Receipts, such as ADRs and GDNs, which are quoted in U.S. dollars, a Fund may avoid currency risks during the settlement period for purchases and sales.
Foreign Government Obligations. Foreign government obligations include securities, instruments and obligations issued or guaranteed by
a foreign government, its agencies, instrumentalities or sponsored enterprises. Investment in foreign government obligations can involve a high degree of risk. The governmental entity that controls the repayment of foreign government obligations
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may not be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt. A governmental entitys willingness or ability to repay principal and
interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service
burden to the economy as a whole, the governmental entitys policy towards the International Monetary Fund and the political constraints to which a governmental entity may be subject. Governmental entities may also be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on a
governmental entitys implementation of economic reforms and/or economic performance and the timely service of such debtors obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or
interest when due may result in the cancellation of such third parties commitments to lend funds to the governmental entity, which may further impair such debtors ability or willingness to service its debts in a timely manner.
Consequently, governmental entities may default on their debt. Holders of foreign government obligations (including a Fund) may be requested to participate in the rescheduling of such debt and to extend further loans to governmental agencies.
Illiquid Investments
Pursuant to Rule
22e-4 under the 1940 Act, a Fund may not acquire any illiquid investment if, immediately after the acquisition, a Fund would have invested more than 15% of its net assets in illiquid investments that are assets. An illiquid
investment is any investment that a 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.
Illiquid investments include repurchase agreements with a notice or demand period of more than seven days, certain stripped mortgage-backed securities, certain municipal leases, certain over-the-counter derivative instruments, securities and other
financial instruments that are not readily marketable, and Restricted Securities unless, based upon a review of the relevant market, trading and investment-specific considerations, those investments are determined not to be illiquid. The Trust has
implemented a liquidity risk management program and related procedures to identify illiquid investments pursuant to Rule 22e-4, and the Trustees have approved the designation of the Investment Adviser to administer the Trusts liquidity risk
management program and related procedures. 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 a Fund would reasonably anticipate trading, is reasonably expected to significantly affect its liquidity, and if so, a Fund must take this determination into account when classifying the liquidity
of that investment or asset class.
In addition to 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, the following factors, among others, will generally impact the classification of an investment as an illiquid investment: (i) any
investment that is placed on the Investment Advisers restricted trading list; and (ii) any investment that is delisted or for which there is a trading halt at the close of the trading day on the primary listing exchange at the time of
classification (and in respect of which no active secondary market exists). Investments purchased by a Fund that are liquid at the time of purchase may subsequently become illiquid due to these and other events and circumstances. If one or more
investments in a Funds portfolio become illiquid, a Fund may exceed the 15% limitation in illiquid investments. In the event that changes in the portfolio or other external events cause a Fund to exceed this limit, a 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 a Fund to liquidate any portfolio instrument where the Fund would suffer a loss on the sale of that
instrument.
Mortgage Loans and Mortgage-Backed Securities
The Goldman Sachs Access Ultra Short Bond ETF may invest in mortgage loans, mortgage pass-through securities and other securities representing
an interest in or collateralized by adjustable and fixed-rate mortgage loans, including collateralized mortgage obligations, real estate mortgage investment conduits (REMICs) and stripped mortgage-backed securities, as described below
(Mortgage-Backed Securities).
Mortgage-Backed Securities are subject to both call risk and extension risk. Because of these
risks, these securities can have significantly greater price and yield volatility than traditional fixed income securities.
General Characteristics of
Mortgage Backed Securities.
In general, each mortgage pool underlying Mortgage-Backed Securities consists of mortgage loans evidenced
by promissory notes secured by first mortgages or first deeds of trust or other similar security instruments creating a first lien on owner occupied and non-owner
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occupied one-unit to four-unit residential properties, multi-family (i.e., five-units or more) properties, agricultural properties, commercial properties and mixed use properties (the
Mortgaged Properties). The Mortgaged Properties may consist of detached individual dwelling units, multi-family dwelling units, individual condominiums, townhouses, duplexes, triplexes, fourplexes, row houses, individual units in planned
unit developments, other attached dwelling units (Residential Mortgaged Properties) or commercial properties, such as office properties, retail properties, hospitality properties, industrial properties, healthcare related properties or
other types of income producing real property (Commercial Mortgaged Properties). Residential Mortgaged Properties may also include residential investment properties and second homes. In addition, the Mortgage-Backed Securities which are
residential mortgage-backed securities may also consist of mortgage loans evidenced by promissory notes secured entirely or in part by second priority mortgage liens on Residential Mortgaged Properties.
The investment characteristics of adjustable and fixed rate Mortgage-Backed Securities differ from those of traditional fixed income
securities. The major differences include the payment of interest and principal on Mortgage-Backed Securities on a more frequent (usually monthly) schedule, and the possibility that principal may be prepaid at any time due to prepayments on the
underlying mortgage loans or other assets. These differences can result in significantly greater price and yield volatility than is the case with traditional fixed income securities. As a result, if the Fund purchases Mortgage-Backed Securities at a
premium, a faster than expected prepayment rate will reduce both the market value and the yield to maturity from their anticipated levels. A prepayment rate that is slower than expected will have the opposite effect, increasing yield to maturity and
market value. Conversely, if the Fund purchases Mortgage-Backed Securities at a discount, faster than expected prepayments will increase, while slower than expected prepayments will reduce yield to maturity and market value. To the extent that the
Fund invests in Mortgage-Backed Securities, the Investment Adviser may seek to manage these potential risks by investing in a variety of Mortgage-Backed Securities and by using certain hedging techniques.
Prepayments on a pool of mortgage loans are influenced by changes in current interest rates and a variety of economic, geographic, social and
other factors (such as changes in mortgagor housing needs, job transfers, unemployment, mortgagor equity in the mortgage properties and servicing decisions). The timing and level of prepayments cannot be predicted. A predominant factor affecting the
prepayment rate on a pool of mortgage loans is the difference between the interest rates on outstanding mortgage loans and prevailing mortgage loan interest rates (giving consideration to the cost of any refinancing). Generally, prepayments on
mortgage loans will increase during a period of falling mortgage interest rates and decrease during a period of rising mortgage interest rates. Accordingly, the amounts of prepayments available for reinvestment by the Fund are likely to be greater
during a period of declining mortgage interest rates. If general interest rates decline, such prepayments are likely to be reinvested at lower interest rates than the Fund was earning on the Mortgage-Backed Securities that were prepaid. Due to these
factors, Mortgage-Backed Securities may be less effective than U.S. Treasury and other types of debt securities of similar maturity at maintaining yields during periods of declining interest rates. Because the Funds investments in
Mortgage-Backed Securities are interest-rate sensitive, the Funds performance will depend in part upon the ability of the Fund to anticipate and respond to fluctuations in market interest rates and to utilize appropriate strategies to maximize
returns to the Fund, while attempting to minimize the associated risks to its investment capital. Prepayments may have a disproportionate effect on certain Mortgage-Backed Securities and other multiple class pass-through securities, which are
discussed below.
The rate of interest paid on Mortgage-Backed Securities is normally lower than the rate of interest paid on the
mortgages included in the underlying pool due to (among other things) the fees paid to any servicer, special servicer and trustee for the trust fund which holds the mortgage pool, other costs and expenses of such trust fund, fees paid to any
guarantor such as Ginnie Mae (as defined below) or to any credit enhancers, mortgage pool insurers, bond insurers and/or hedge providers, and due to any yield retained by the issuer. Actual yield to the holder may vary from the coupon rate, even if
adjustable, if the Mortgage-Backed Securities are purchased or traded in the secondary market at a premium or discount. In addition, there is normally some delay between the time the issuer receives mortgage payments from the servicer and the time
the issuer (or the trustee of the trust fund which holds the mortgage pool) makes the payments on the Mortgage-Backed Securities, and this delay reduces the effective yield to the holder of such securities.
The issuers of certain mortgage-backed obligations may elect to have the pool of mortgage loans (or indirect interests in mortgage loans)
underlying the securities treated as a REMIC, which is subject to special federal income tax rules. A description of the types of mortgage loans and Mortgage-Backed Securities in which the Fund may invest is provided below. The descriptions are
general and summary in nature, and do not detail every possible variation of the types of securities that are permissible investments for the Fund.
Certain General Characteristics of Mortgage Loans
Adjustable Rate Mortgage Loans (ARMs). A Fund may invest in ARMs. ARMs generally provide for a fixed initial mortgage interest rate
for a specified period of time. Thereafter, the interest rates (the Mortgage Interest Rates) may be subject to periodic adjustment based on changes in the applicable index rate (the Index Rate). The adjusted rate would be
equal to the Index Rate plus a fixed percentage spread over the Index Rate established for each ARM at the time of its origination. ARMs allow the Fund to participate
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in increases in interest rates through periodic increases in the securities coupon rates. During periods of declining interest rates, coupon rates may readjust downward resulting in lower yields
to the Fund.
Adjustable interest rates can cause payment increases that some mortgagors may find difficult to make. However, certain ARMs
may provide that the Mortgage Interest Rate may not be adjusted to a rate above an applicable lifetime maximum rate or below an applicable lifetime minimum rate for such ARM. Certain ARMs may also be subject to limitations on the maximum amount by
which the Mortgage Interest Rate may adjust for any single adjustment period (the Maximum Adjustment). Other ARMs (Negatively Amortizing ARMs) may provide instead or as well for limitations on changes in the monthly payment
on such ARMs. Limitations on monthly payments can result in monthly payments which are greater or less than the amount necessary to amortize a Negatively Amortizing ARM by its maturity at the Mortgage Interest Rate in effect in any particular month.
In the event that a monthly payment is not sufficient to pay the interest accruing on a Negatively Amortizing ARM, any such excess interest is added to the principal balance of the loan, causing negative amortization, and will be repaid through
future monthly payments. It may take borrowers under Negatively Amortizing ARMs longer periods of time to build up equity and may increase the likelihood of default by such borrowers. In the event that a monthly payment exceeds the sum of the
interest accrued at the applicable Mortgage Interest Rate and the principal payment which would have been necessary to amortize the outstanding principal balance over the remaining term of the loan, the excess (or accelerated
amortization) further reduces the principal balance of the ARM. Negatively Amortizing ARMs do not provide for the extension of their original maturity to accommodate changes in their Mortgage Interest Rate. As a result, unless there is a
periodic recalculation of the payment amount (which there generally is), the final payment may be substantially larger than the other payments. After the expiration of the initial fixed rate period and upon the periodic recalculation of the payment
to cause timely amortization of the related mortgage loan, the monthly payment on such mortgage loan may increase substantially which may, in turn, increase the risk of the borrower defaulting in respect of such mortgage loan. These limitations on
periodic increases in interest rates and on changes in monthly payments protect borrowers from unlimited interest rate and payment increases, but may result in increased credit exposure and prepayment risks for lenders. When interest due on a
mortgage loan is added to the principal balance of such mortgage loan, the related mortgaged property provides proportionately less security for the repayment of such mortgage loan. Therefore, if the related borrower defaults on such mortgage loan,
there is a greater likelihood that a loss will be incurred upon any liquidation of the mortgaged property which secures such mortgage loan.
ARMs also have the risk of prepayment. The rate of principal prepayments with respect to ARMs has fluctuated in recent years. The value of
Mortgage-Backed Securities collateralized by ARMs is less likely to rise during periods of declining interest rates than the value of fixed-rate securities during such periods. Accordingly, ARMs may be subject to a greater rate of principal
repayments in a declining interest rate environment resulting in lower yields to the Fund. For example, if prevailing interest rates fall significantly, ARMs could be subject to higher prepayment rates (than if prevailing interest rates remain
constant or increase) because the availability of low fixed-rate mortgages may encourage mortgagors to refinance their ARMs to lock-in a fixed-rate mortgage. On the other hand, during periods of rising interest rates, the value of ARMs
will lag behind changes in the market rate. ARMs are also typically subject to maximum increases and decreases in the interest rate adjustment which can be made on any one adjustment date, in any one year, or during the life of the security. In the
event of dramatic increases or decreases in prevailing market interest rates, the value of the Funds investment in ARMs may fluctuate more substantially because these limits may prevent the security from fully adjusting its interest rate to
the prevailing market rates. As with fixed-rate mortgages, ARM prepayment rates vary in both stable and changing interest rate environments.
There are two main categories of indices which provide the basis for rate adjustments on ARMs: those based on U.S. Treasury securities and
those derived from a calculated measure, such as a cost of funds index or a moving average of mortgage rates. Indices commonly used for this purpose include the one-year, three-year and five-year constant maturity Treasury rates, the three-month
Treasury bill rate, the 180-day Treasury bill rate, rates on longer-term Treasury securities, the 11th District Federal Home Loan Bank Cost of Funds, the National Median Cost of Funds, the one-month, three-month, six-month or one-year London LIBOR,
the prime rate of a specific bank, or commercial paper rates. Some indices, such as the one-year constant maturity Treasury rate, closely mirror changes in market interest rate levels. Others, such as the 11th District Federal Home Loan Bank Cost of
Funds index, tend to lag behind changes in market rate levels and tend to be somewhat less volatile. The degree of volatility in the market value of ARMs in the Funds portfolio and, therefore, in the NAV of the Funds shares, will be a
function of the length of the interest rate reset periods and the degree of volatility in the applicable indices.
Fixed-Rate Mortgage
Loans. Generally, fixed-rate mortgage loans included in mortgage pools (the Fixed-Rate Mortgage Loans) will bear simple interest at fixed annual rates and have original terms to maturity ranging from 5 to 40 years. Fixed-Rate
Mortgage Loans generally provide for monthly payments of principal and interest in substantially equal installments for the term of the mortgage note in sufficient amounts to fully amortize principal by maturity, although certain Fixed-Rate Mortgage
Loans provide for a large final balloon payment upon maturity.
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Certain Legal Considerations of Mortgage Loans. The following is a discussion of certain
legal and regulatory aspects of the mortgage loans in which the Fund may invest. This discussion is not exhaustive, and does not address all of the legal or regulatory aspects affecting mortgage loans. These regulations may impair the ability of a
mortgage lender to enforce its rights under the mortgage documents. These regulations may also adversely affect the Funds investments in Mortgage-Backed Securities (including those issued or guaranteed by the U.S. Government, its agencies or
instrumentalities) by delaying the Funds receipt of payments derived from principal or interest on mortgage loans affected by such regulations.
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Foreclosure. A foreclosure of a defaulted mortgage loan may be delayed due to compliance with statutory
notice or service of process provisions, difficulties in locating necessary parties or legal challenges to the mortgagees right to foreclose. Depending upon market conditions, the ultimate proceeds of the sale of foreclosed property may not
equal the amounts owed on the Mortgage-Backed Securities. Furthermore, courts in some cases have imposed general equitable principles upon foreclosure generally designed to relieve the borrower from the legal effect of default and have required
lenders to undertake affirmative and expensive actions to determine the causes for the default and the likelihood of loan reinstatement.
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Rights of Redemption. In some states, after foreclosure of a mortgage loan, the borrower and foreclosed
junior lienors are given a statutory period in which to redeem the property, which right may diminish the mortgagees ability to sell the property.
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Legislative Limitations. In addition to anti-deficiency and related legislation, numerous other federal
and state statutory provisions, including the federal bankruptcy laws and state laws affording relief to debtors, may interfere with or affect the ability of a secured mortgage lender to enforce its security interest. For example, a bankruptcy court
may grant the debtor a reasonable time to cure a default on a mortgage loan, including a payment default. The court in certain instances may also reduce the monthly payments due under such mortgage loan, change the rate of interest, reduce the
principal balance of the loan to the then-current appraised value of the related mortgaged property, alter the mortgage loan repayment schedule and grant priority of certain liens over the lien of the mortgage loan. If a court relieves a
borrowers obligation to repay amounts otherwise due on a mortgage loan, the mortgage loan servicer will not be required to advance such amounts, and any loss may be borne by the holders of securities backed by such loans. In addition, numerous
federal and state consumer protection laws impose penalties for failure to comply with specific requirements in connection with origination and servicing of mortgage loans.
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Due-on-Sale Provisions. Fixed-rate mortgage loans may contain a so-called
due-on-sale clause permitting acceleration of the maturity of the mortgage loan if the borrower transfers the property. The Garn-St. Germain Depository Institutions Act of 1982 sets forth nine specific instances in which no mortgage
lender covered by that Act may exercise a due-on-sale clause upon a transfer of property. The inability to enforce a due-on-sale clause or the lack of such a clause in mortgage loan documents may result in a mortgage loan
being assumed by a purchaser of the property that bears an interest rate below the current market rate.
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Usury Laws. Some states prohibit charging interest on mortgage loans in excess of statutory limits. If
such limits are exceeded, substantial penalties may be incurred and, in some cases, enforceability of the obligation to pay principal and interest may be affected.
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Recent Governmental Action, Legislation and Regulation. The rise in the rate of foreclosures of
properties in certain states or localities has resulted in legislative, regulatory and enforcement action in such states or localities seeking to prevent or restrict foreclosures, particularly in respect of residential mortgage loans. Actions have
also been brought against issuers and underwriters of residential Mortgage-Backed Securities collateralized by such residential mortgage loans and investors in such residential Mortgage-Backed Securities. Legislative or regulatory initiatives by
federal, state or local legislative bodies or administrative agencies, if enacted or adopted, could delay foreclosure or the exercise of other remedies, provide new defenses to foreclosure, or otherwise impair the ability of the loan servicer to
foreclose or realize on a defaulted residential mortgage loan included in a pool of residential mortgage loans backing such residential Mortgage-Backed Securities. While the nature or extent of limitations on foreclosure or exercise of other
remedies that may be enacted cannot be predicted, any such governmental actions that interfere with the foreclosure process could increase the costs of such foreclosures or exercise of other remedies in respect of residential mortgage loans which
collateralize Mortgage-Backed Securities held by the Fund, delay the timing or reduce the amount of recoveries on defaulted residential mortgage loans which collateralize Mortgage-Backed Securities held by the Fund, and consequently, could adversely
impact the yields and distributions the Fund may receive in respect of its ownership of Mortgage-Backed Securities collateralized by residential mortgage loans. For example, the Helping Families Save Their Homes Act of 2009 authorized bankruptcy
courts to assist bankrupt borrowers by restructuring residential mortgage loans secured by a lien on the borrowers primary residence. Bankruptcy judges are permitted to reduce the interest rate of the bankrupt borrowers residential
mortgage loan, extend its term to maturity to up to 40 years or take other actions to reduce the borrowers monthly payment. As a result, the value of, and the cash flows in respect of, the Mortgage-Backed Securities collateralized by these
residential mortgage loans may be adversely impacted, and, as a consequence, the Funds investment in such Mortgage-Backed Securities could be adversely impacted. Other federal legislation, including the Home Affordability Modification Program
(HAMP), encourages servicers to modify residential mortgage loans that are either already in default or are at risk of imminent default. Furthermore,
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HAMP provides incentives for servicers to modify residential mortgage loans that are contractually current. This program, as well other legislation and/or governmental intervention designed to
protect consumers, may have an adverse impact on servicers of residential mortgage loans by increasing costs and expenses of these servicers while at the same time decreasing servicing cash flows. Such increased financial pressures may have a
negative effect on the ability of servicers to pursue collection on residential mortgage loans that are experiencing increased delinquencies and defaults and to maximize recoveries on the sale of underlying residential mortgaged properties following
foreclosure. Other legislative or regulatory actions include insulation of servicers from liability for modification of residential mortgage loans without regard to the terms of the applicable servicing agreements. The foregoing legislation and
current and future governmental regulation activities may have the effect of reducing returns to the Fund to the extent it has invested in Mortgage-Backed Securities collateralized by these residential mortgage loans.
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Government Guaranteed Mortgage-Backed Securities. There are several types of government guaranteed Mortgage-Backed Securities currently
available, including guaranteed mortgage pass-through certificates and multiple class securities, which include guaranteed Real Estate Mortgage Investment Conduit Certificates (REMIC Certificates), other collateralized mortgage
obligations and stripped Mortgage-Backed Securities. The Fund is permitted to invest in other types of Mortgage-Backed Securities that may be available in the future to the extent consistent with its investment policies and objective.
The Funds investments in Mortgage-Backed Securities may include securities issued or guaranteed by the U.S. Government or one of its
agencies, authorities, instrumentalities or sponsored enterprises, such as the Government National Mortgage Association (Ginnie Mae), Fannie Mae and Freddie Mac. Ginnie Mae securities are backed by the full faith and credit of the U.S.
Government, which means that the U.S. Government guarantees that the interest and principal will be paid when due. Fannie Mae and Freddie Mac securities are not backed by the full faith and credit of the U.S. Government. Fannie Mae and Freddie Mac
have the ability to borrow from the U.S. Treasury, and as a result, they have historically been viewed by the market as high quality securities with low credit risks. From time to time, proposals have been introduced before Congress for the purpose
of restricting or eliminating federal sponsorship of Fannie Mae and Freddie Mac. The Trust cannot predict what legislation, if any, may be proposed in the future in Congress as regards such sponsorship or which proposals, if any, might be enacted.
Such proposals, if enacted, might materially and adversely affect the availability of government guaranteed Mortgage-Backed Securities and the liquidity and value of the Funds portfolio.
There is risk that the U.S. Government will not provide financial support to its agencies, authorities, instrumentalities or sponsored
enterprises. The Fund may purchase U.S. Government Securities that are not backed by the full faith and credit of the U.S. Government, such as those issued by Fannie Mae and Freddie Mac. The maximum potential liability of the issuers of some U.S.
Government Securities held by the Fund may greatly exceed such issuers current resources, including such issuers legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their
payment obligations in the future.
Below is a general discussion of certain types of guaranteed Mortgage-Backed Securities in which the
Fund may invest.
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Ginnie Mae Certificates. Ginnie Mae is a wholly-owned corporate instrumentality of the United States.
Ginnie Mae is authorized to guarantee the timely payment of the principal of and interest on certificates that are based on and backed by a pool of mortgage loans insured by the Federal Housing Administration (FHA), or guaranteed by the
Veterans Administration (VA), or by pools of other eligible mortgage loans. In order to meet its obligations under any guaranty, Ginnie Mae is authorized to borrow from the U.S. Treasury in an unlimited amount. The National Housing Act
provides that the full faith and credit of the U.S. Government is pledged to the timely payment of principal and interest by Ginnie Mae of amounts due on Ginnie Mae certificates.
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Fannie Mae Certificates. Fannie Mae is a stockholder-owned corporation chartered under an act of the U.S.
Congress. Generally, Fannie Mae Certificates are issued and guaranteed by Fannie Mae and represent an undivided interest in a pool of mortgage loans (a Pool) formed by Fannie Mae. A Pool consists of residential mortgage loans either
previously owned by Fannie Mae or purchased by it in connection with the formation of the Pool. The mortgage loans may be either conventional mortgage loans (i.e., not insured or guaranteed by any U.S. Government agency) or mortgage loans that are
either insured by the FHA or guaranteed by the VA. However, the mortgage loans in Fannie Mae Pools are primarily conventional mortgage loans. The lenders originating and servicing the mortgage loans are subject to certain eligibility requirements
established by Fannie Mae. Fannie Mae has certain contractual responsibilities. With respect to each Pool, Fannie Mae is obligated to distribute scheduled installments of principal and interest after Fannie Maes servicing and guaranty fee,
whether or not received, to Certificate holders. Fannie Mae also is obligated to distribute to holders of Certificates an amount equal to the full principal balance of any foreclosed mortgage loan, whether or not such principal balance is actually
recovered. The obligations of Fannie Mae under its
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guaranty of the Fannie Mae Certificates are obligations solely of Fannie Mae. See Certain Additional Information with Respect to Freddie Mac and Fannie Mae below.
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Freddie Mac Certificates. Freddie Mac is a publicly held U.S. Government sponsored enterprise. A principal
activity of Freddie Mac currently is the purchase of first lien, conventional, residential and multifamily mortgage loans and participation interests in such mortgage loans and their resale in the form of mortgage securities, primarily Freddie Mac
Certificates. A Freddie Mac Certificate represents a pro rata interest in a group of mortgage loans or participations in mortgage loans (a Freddie Mac Certificate group) purchased by Freddie Mac. Freddie Mac guarantees to each registered
holder of a Freddie Mac Certificate the timely payment of interest at the rate provided for by such Freddie Mac Certificate (whether or not received on the underlying loans). Freddie Mac also guarantees to each registered Certificate holder ultimate
collection of all principal of the related mortgage loans, without any offset or deduction, but does not, generally, guarantee the timely payment of scheduled principal. The obligations of Freddie Mac under its guaranty of Freddie Mac Certificates
are obligations solely of Freddie Mac. See Certain Additional Information with Respect to Freddie Mac and Fannie Mae below.
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The mortgage loans underlying the Freddie Mac and Fannie Mae Certificates consist of adjustable rate or fixed-rate mortgage loans with
original terms to maturity of up to forty years. These mortgage loans are usually secured by first liens on one-to-four-family residential properties or multi-family projects. Each mortgage loan must meet the applicable standards set forth in the
law creating Freddie Mac or Fannie Mae. A Freddie Mac Certificate group may include whole loans, participation interests in whole loans, undivided interests in whole loans and participations comprising another Freddie Mac Certificate group.
Conventional Mortgage Loans. The conventional mortgage loans underlying the Freddie Mac and Fannie Mae Certificates consist of
adjustable rate or fixed-rate mortgage loans normally with original terms to maturity of between five and thirty years. Substantially all of these mortgage loans are secured by first liens on one- to four-family residential properties or
multi-family projects. Each mortgage loan must meet the applicable standards set forth in the law creating Freddie Mac or Fannie Mae. A Freddie Mac Certificate group may include whole loans, participation interests in whole loans, undivided
interests in whole loans and participations comprising another Freddie Mac Certificate group.
Certain Additional Information with
Respect to Freddie Mac and Fannie Mae. The volatility and disruption that impacted the capital and credit markets during late 2008 and into 2009 have led to increased market concerns about Freddie Macs and Fannie Maes ability to
withstand future credit losses associated with securities held in their investment portfolios, and on which they provide guarantees, without the direct support of the federal government. On September 6, 2008, both Freddie Mac and Fannie Mae
were placed under the conservatorship of the Federal Housing Finance Agency (FHFA). Under the plan of conservatorship, the FHFA has assumed control of, and generally has the power to direct, the operations of Freddie Mac and Fannie Mae,
and is empowered to exercise all powers collectively held by their respective shareholders, directors and officers, including the power to (1) take over the assets of and operate Freddie Mac and Fannie Mae with all the powers of the
shareholders, the directors, and the officers of Freddie Mac and Fannie Mae and conduct all business of Freddie Mac and Fannie Mae; (2) collect all obligations and money due to Freddie Mac and Fannie Mae; (3) perform all functions of
Freddie Mac and Fannie Mae which are consistent with the conservators appointment; (4) preserve and conserve the assets and property of Freddie Mac and Fannie Mae; and (5) contract for assistance in fulfilling any function, activity,
action or duty of the conservator. In addition, in connection with the actions taken by the FHFA, the Treasury entered into certain preferred stock purchase agreements with each of Freddie Mac and Fannie Mae which established the Treasury as the
holder of a new class of senior preferred stock in each of Freddie Mac and Fannie Mae, which stock was issued in connection with financial contributions from the Treasury to Freddie Mac and Fannie Mae. The conditions attached to the financial
contribution made by the Treasury to Freddie Mac and Fannie Mae and the issuance of this senior preferred stock placed significant restrictions on the activities of Freddie Mac and Fannie Mae. Freddie Mac and Fannie Mae must obtain the consent of
the Treasury to, among other things, (i) make any payment to purchase or redeem its capital stock or pay any dividend other than in respect of the senior preferred stock issued to the Treasury, (ii) issue capital stock of any kind,
(iii) terminate the conservatorship of the FHFA except in connection with a receivership, or (iv) increase its debt beyond certain specified levels. In addition, significant restrictions were placed on the maximum size of each of Freddie
Macs and Fannie Maes respective portfolios of mortgages and Mortgage-Backed Securities, and the purchase agreements entered into by Freddie Mac and Fannie Mae provide that the maximum size of their portfolios of these assets must
decrease by a specified percentage each year. On June 16, 2010, FHFA ordered Fannie Mae and Freddie Macs stock de-listed from the New York Stock Exchange (NYSE) after the price of common stock in Fannie Mae fell below the NYSE
minimum average closing price of $1 for more than 30 days.
The future status and role of Freddie Mac and Fannie Mae could be impacted by
(among other things) the actions taken and restrictions placed on Freddie Mac and Fannie Mae by the FHFA in its role as conservator, the restrictions placed on Freddie Macs and Fannie Maes operations and activities as a result of the
senior preferred stock investment made by the Treasury, market responses to
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developments at Freddie Mac and Fannie Mae, and future legislative and regulatory action that alters the operations, ownership, structure and/or mission of these institutions, each of which may,
in turn, impact the value of, and cash flows on, any Mortgage-Backed Securities guaranteed by Freddie Mac and Fannie Mae, including any such Mortgage-Backed Securities held by the Fund.
Privately Issued Mortgage-Backed Securities. The Fund may each invest in privately issued Mortgage-Backed Securities. Privately issued
Mortgage-Backed Securities are generally backed by pools of conventional (i.e., non-government guaranteed or insured) mortgage loans. The seller or servicer of the underlying mortgage obligations will generally make representations and warranties to
certificate-holders as to certain characteristics of the mortgage loans and as to the accuracy of certain information furnished to the trustee in respect of each such mortgage loan. Upon a breach of any representation or warranty that materially and
adversely affects the interests of the related certificate-holders in a mortgage loan, the seller or servicer generally will be obligated either to cure the breach in all material respects, to repurchase the mortgage loan or, if the related
agreement so provides, to substitute in its place a mortgage loan pursuant to the conditions set forth therein. Such a repurchase or substitution obligation may constitute the sole remedy available to the related certificate-holders or the trustee
for the material breach of any such representation or warranty by the seller or servicer.
Mortgage Pass-Through Securities
To the extent consistent with its investment policies, the Goldman Sachs Access Ultra Short Bond ETF may invest in both government guaranteed
and privately issued mortgage pass-through securities (Mortgage Pass-Throughs) that are fixed or adjustable rate Mortgage-Backed Securities which provide for monthly payments that are a pass-through of the monthly interest
and principal payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees or other amounts paid to any guarantor, administrator and/or servicer of the underlying mortgage loans. The seller or
servicer of the underlying mortgage obligations will generally make representations and warranties to certificate-holders as to certain characteristics of the mortgage loans and as to the accuracy of certain information furnished to the trustee in
respect of each such mortgage loan. Upon a breach of any representation or warranty that materially and adversely affects the interests of the related certificate-holders in a mortgage loan, the seller or servicer generally may be obligated either
to cure the breach in all material respects, to repurchase the mortgage loan or, if the related agreement so provides, to substitute in its place a mortgage loan pursuant to the conditions set forth therein. Such a repurchase or substitution
obligation may constitute the sole remedy available to the related certificate-holders or the trustee for the material breach of any such representation or warranty by the seller or servicer.
The following discussion describes certain aspects of only a few of the wide variety of structures of Mortgage Pass-Throughs that are
available or may be issued.
General Description of Certificates. Mortgage Pass-Throughs may be issued in one or more classes of
senior certificates and one or more classes of subordinate certificates. Each such class may bear a different pass-through rate. Generally, each certificate will evidence the specified interest of the holder thereof in the payments of principal or
interest or both in respect of the mortgage pool comprising part of the trust fund for such certificates.
Any class of certificates may
also be divided into subclasses entitled to varying amounts of principal and interest. If a REMIC election has been made, certificates of such subclasses may be entitled to payments on the basis of a stated principal balance and stated interest
rate, and payments among different subclasses may be made on a sequential, concurrent, pro rata or disproportionate basis, or any combination thereof. The stated interest rate on any such subclass of certificates may be a fixed rate or one which
varies in direct or inverse relationship to an objective interest index.
Generally, each registered holder of a certificate will be
entitled to receive its pro rata share of monthly distributions of all or a portion of principal of the underlying mortgage loans or of interest on the principal balances thereof, which accrues at the applicable mortgage pass-through rate, or both.
The difference between the mortgage interest rate and the related mortgage pass-through rate (less the amount, if any, of retained yield) with respect to each mortgage loan will generally be paid to the servicer as a servicing fee. Because certain
adjustable rate mortgage loans included in a mortgage pool may provide for deferred interest (i.e., negative amortization), the amount of interest actually paid by a mortgagor in any month may be less than the amount of interest accrued on the
outstanding principal balance of the related mortgage loan during the relevant period at the applicable mortgage interest rate. In such event, the amount of interest that is treated as deferred interest will generally be added to the principal
balance of the related mortgage loan and will be distributed pro rata to certificate-holders as principal of such mortgage loan when paid by the mortgagor in subsequent monthly payments or at maturity.
Ratings. The ratings assigned by a rating organization to Mortgage Pass-Throughs generally address the likelihood of the receipt of
distributions on the underlying mortgage loans by the related certificate-holders under the agreements pursuant to which such certificates are issued. A rating organizations ratings normally take into consideration the credit quality of the
related mortgage pool,
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including any credit support providers, structural and legal aspects associated with such certificates, and the extent to which the payment stream on such mortgage pool is adequate to make
payments required by such certificates. A rating organizations ratings on such certificates do not, however, constitute a statement regarding frequency of prepayments on the related mortgage loans. In addition, the rating assigned by a rating
organization to a certificate may not address the possibility that, in the event of the insolvency of the issuer of certificates where a subordinated interest was retained, the issuance and sale of the senior certificates may be recharacterized as a
financing and, as a result of such recharacterization, payments on such certificates may be affected. A rating organization may downgrade or withdraw a rating assigned by it to any Mortgage Pass-Through at any time, and no assurance can be made that
any ratings on any Mortgage Pass-Throughs included in the Fund will be maintained, or that if such ratings are assigned, they will not be downgraded or withdrawn by the assigning rating organization.
In the past, rating agencies have placed on credit watch or downgraded the ratings previously assigned to a large number of mortgage-backed
securities (which may include certain of the Mortgage-Backed Securities in which the Fund may have invested or may in the future be invested), and may continue to do so in the future. In the event that any Mortgage-Backed Security held by the Fund
is placed on credit watch or downgraded, the value of such Mortgage-Backed Security may decline and the Fund may consequently experience losses in respect of such Mortgage-Backed Security.
Credit Enhancement. Mortgage pools created by non-governmental issuers generally offer a higher yield than government and
government-related pools because of the absence of direct or indirect government or agency payment guarantees. To lessen the effect of failures by obligors on underlying assets to make payments, Mortgage Pass-Throughs may contain elements of credit
support. Credit support falls generally into two categories: (i) liquidity protection and (ii) protection against losses resulting from default by an obligor on the underlying assets. Liquidity protection refers to the provision of
advances, generally by the entity administering the pools of mortgages, the provision of a reserve fund, or a combination thereof, to ensure, subject to certain limitations, that scheduled payments on the underlying pool are made in a timely
fashion. Protection against losses resulting from default ensures ultimate payment of the obligations on at least a portion of the assets in the pool. Such credit support can be provided by, among other things, payment guarantees, letters of credit,
pool insurance, subordination, or any combination thereof.
Subordination; Shifting of Interest; Reserve Fund. In order to achieve
ratings on one or more classes of Mortgage Pass-Throughs, one or more classes of certificates may be subordinate certificates which provide that the rights of the subordinate certificate-holders to receive any or a specified portion of distributions
with respect to the underlying mortgage loans may be subordinated to the rights of the senior certificate holders. If so structured, the subordination feature may be enhanced by distributing to the senior certificate-holders on certain distribution
dates, as payment of principal, a specified percentage (which generally declines over time) of all principal payments received during the preceding prepayment period (shifting interest credit enhancement). This will have the effect of
accelerating the amortization of the senior certificates while increasing the interest in the trust fund evidenced by the subordinate certificates. Increasing the interest of the subordinate certificates relative to that of the senior certificates
is intended to preserve the availability of the subordination provided by the subordinate certificates. In addition, because the senior certificate-holders in a shifting interest credit enhancement structure are entitled to receive a percentage of
principal prepayments which is greater than their proportionate interest in the trust fund, the rate of principal prepayments on the mortgage loans may have an even greater effect on the rate of principal payments and the amount of interest payments
on, and the yield to maturity of, the senior certificates.
In addition to providing for a preferential right of the senior
certificate-holders to receive current distributions from the mortgage pool, a reserve fund may be established relating to such certificates (the Reserve Fund). The Reserve Fund may be created with an initial cash deposit by the
originator or servicer and augmented by the retention of distributions otherwise available to the subordinate certificate-holders or by excess servicing fees until the Reserve Fund reaches a specified amount.
The subordination feature, and any Reserve Fund, are intended to enhance the likelihood of timely receipt by senior certificate-holders of the
full amount of scheduled monthly payments of principal and interest due to them and will protect the senior certificate-holders against certain losses; however, in certain circumstances the Reserve Fund could be depleted and temporary shortfalls
could result. In the event that the Reserve Fund is depleted before the subordinated amount is reduced to zero, senior certificate-holders will nevertheless have a preferential right to receive current distributions from the mortgage pool to the
extent of the then outstanding subordinated amount. Unless otherwise specified, until the subordinated amount is reduced to zero, on any distribution date any amount otherwise distributable to the subordinate certificates or, to the extent
specified, in the Reserve Fund will generally be used to offset the amount of any losses realized with respect to the mortgage loans (Realized Losses). Realized Losses remaining after application of such amounts will generally be applied
to reduce the ownership interest of the subordinate certificates in the mortgage pool. If the subordinated amount has been reduced to zero, Realized Losses generally will be allocated pro rata among all certificate-holders in proportion to their
respective outstanding interests in the mortgage pool.
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Alternative Credit Enhancement. As an alternative, or in addition to the credit
enhancement afforded by subordination, credit enhancement for Mortgage Pass-Throughs may be provided through bond insurers, or at the mortgage loan-level through mortgage insurance, hazard insurance, or through the deposit of cash, certificates of
deposit, letters of credit, a limited guaranty or by such other methods as are acceptable to a rating agency. In certain circumstances, such as where credit enhancement is provided by bond insurers, guarantees or letters of credit, the security is
subject to credit risk because of its exposure to the credit risk of an external credit enhancement provider.
Voluntary Advances.
Generally, in the event of delinquencies in payments on the mortgage loans underlying the Mortgage Pass-Throughs, the servicer may agree to make advances of cash for the benefit of certificate-holders, but generally will do so only to the extent
that it determines such voluntary advances will be recoverable from future payments and collections on the mortgage loans or otherwise.
Optional Termination. Generally, the servicer may, at its option with respect to any certificates, repurchase all of the underlying
mortgage loans remaining outstanding at such time if the aggregate outstanding principal balance of such mortgage loans is less than a specified percentage (generally 5-10%) of the aggregate outstanding principal balance of the mortgage loans as of
the cut-off date specified with respect to such series.
Multiple Class Mortgage-Backed Securities and Collateralized Mortgage
Obligations. The Fund may invest in multiple class securities including collateralized mortgage obligations (CMOs) and REMIC Certificates. These securities may be issued by U.S. Government agencies, instrumentalities or sponsored
enterprises such as Fannie Mae or Freddie Mac or by trusts formed by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage bankers, commercial banks, insurance companies, investment banks and
special purpose subsidiaries of the foregoing. In general, CMOs are debt obligations of a legal entity that are collateralized by, and multiple class Mortgage-Backed Securities represent direct ownership interests in, a pool of mortgage loans or
Mortgage-Backed Securities the payments on which are used to make payments on the CMOs or multiple class Mortgage-Backed Securities.
Fannie Mae REMIC Certificates are issued and guaranteed as to timely distribution of principal and interest by Fannie Mae. In addition, Fannie
Mae will be obligated to distribute the principal balance of each class of REMIC Certificates in full, whether or not sufficient funds are otherwise available.
Freddie Mac guarantees the timely payment of interest on Freddie Mac REMIC Certificates and also guarantees the payment of principal as
payments are required to be made on the underlying mortgage participation certificates (PCs). PCs represent undivided interests in specified level payment, residential mortgages or participations therein purchased by Freddie Mac and
placed in a PC pool. With respect to principal payments on PCs, Freddie Mac generally guarantees ultimate collection of all principal of the related mortgage loans without offset or deduction but the receipt of the required payments may be delayed.
Freddie Mac also guarantees timely payment of principal of certain PCs.
CMOs and guaranteed REMIC Certificates issued by Fannie Mae and
Freddie Mac are types of multiple class Mortgage-Backed Securities. The REMIC Certificates represent beneficial ownership interests in a REMIC trust, generally consisting of mortgage loans or Fannie Mae, Freddie Mac or Ginnie Mae guaranteed
Mortgage-Backed Securities (the Mortgage Assets). The obligations of Fannie Mae or Freddie Mac under their respective guaranty of the REMIC Certificates are obligations solely of Fannie Mae or Freddie Mac, respectively. See Certain
Additional Information with Respect to Freddie Mac and Fannie Mae.
CMOs and REMIC Certificates are issued in multiple classes. Each
class of CMOs or REMIC Certificates, often referred to as a tranche, is issued at a specific adjustable or fixed interest rate and must be fully retired no later than its final distribution date. Principal prepayments on the mortgage
loans or the Mortgage Assets underlying the CMOs or REMIC Certificates may cause some or all of the classes of CMOs or REMIC Certificates to be retired substantially earlier than their final distribution dates. Generally, interest is paid or accrues
on all classes of CMOs or REMIC Certificates on a monthly basis.
The principal of and interest on the Mortgage Assets may be allocated
among the several classes of CMOs or REMIC Certificates in various ways. In certain structures (known as sequential pay CMOs or REMIC Certificates), payments of principal, including any principal prepayments, on the Mortgage Assets
generally are applied to the classes of CMOs or REMIC Certificates in the order of their respective final distribution dates. Thus, no payment of principal will be made on any class of sequential pay CMOs or REMIC Certificates until all other
classes having an earlier final distribution date have been paid in full.
Additional structures of CMOs and REMIC Certificates include,
among others, parallel pay CMOs and REMIC Certificates. Parallel pay CMOs or REMIC Certificates are those which are structured to apply principal payments and prepayments of the Mortgage
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Assets to two or more classes concurrently on a proportionate or disproportionate basis. These simultaneous payments are taken into account in calculating the final distribution date of each
class.
A wide variety of REMIC Certificates may be issued in parallel pay or sequential pay structures. These securities include accrual
certificates (also known as Z-Bonds), which only accrue interest at a specified rate until all other certificates having an earlier final distribution date have been retired and are converted thereafter to an interest-paying security,
and planned amortization class (PAC) certificates, which are parallel pay REMIC Certificates that generally require that specified amounts of principal be applied on each payment date to one or more classes or REMIC Certificates (the
PAC Certificates), even though all other principal payments and prepayments of the Mortgage Assets are then required to be applied to one or more other classes of the PAC Certificates. The scheduled principal payments for the PAC
Certificates generally have the highest priority on each payment date after interest due has been paid to all classes entitled to receive interest currently. Shortfalls, if any, are added to the amount payable on the next payment date. The PAC
Certificate payment schedule is taken into account in calculating the final distribution date of each class of PAC. In order to create PAC tranches, one or more tranches generally must be created that absorb most of the volatility in the underlying
mortgage assets. These tranches tend to have market prices and yields that are much more volatile than other PAC classes.
Commercial
Mortgage-Backed Securities. Commercial mortgage-backed securities (CMBS) are a type of Mortgage Pass-Through that are primarily backed by a pool of commercial mortgage loans. The commercial mortgage loans are, in turn, generally
secured by commercial mortgaged properties (such as office properties, retail properties, hospitality properties, industrial properties, healthcare related properties or other types of income producing real property). CMBS generally entitle the
holders thereof to receive payments that depend primarily on the cash flow from a specified pool of commercial or multifamily mortgage loans. CMBS will be affected by payments, defaults, delinquencies and losses on the underlying mortgage loans. The
underlying mortgage loans generally are secured by income producing properties such as office properties, retail properties, multifamily properties, manufactured housing, hospitality properties, industrial properties and self-storage properties.
Because issuers of CMBS have no significant assets other than the underlying commercial real estate loans and because of the significant credit risks inherent in the underlying collateral, credit risk is a correspondingly important consideration
with respect to the related CMBS. Certain of the mortgage loans underlying CMBS constituting part of the collateral interests may be delinquent, in default or in foreclosure.
Commercial real estate lending may expose a lender (and the related Mortgage-Backed Security) to a greater risk of loss than certain other
forms of lending because it typically involves making larger loans to single borrowers or groups of related borrowers. In addition, in the case of certain commercial mortgage loans, repayment of loans secured by commercial and multifamily properties
depends upon the ability of the related real estate project to generate income sufficient to pay debt service, operating expenses and leasing commissions and to make necessary repairs, tenant improvements and capital improvements, and in the case of
loans that do not fully amortize over their terms, to retain sufficient value to permit the borrower to pay off the loan at maturity through a sale or refinancing of the mortgaged property. The net operating income from and value of any commercial
property is subject to various risks, including changes in general or local economic conditions and/or specific industry segments; declines in real estate values; declines in rental or occupancy rates; increases in interest rates, real estate tax
rates and other operating expenses; changes in governmental rules, regulations and fiscal policies; acts of God; terrorist threats and attacks; and social unrest and civil disturbances. In addition, certain of the mortgaged properties securing the
pools of commercial mortgage loans underlying CMBS may have a higher degree of geographic concentration in a few states or regions. Any deterioration in the real estate market or economy, or adverse events in such states or regions, may increase the
rate of delinquency and default experience (and as a consequence, losses) with respect to mortgage loans related to properties in such state or region. Pools of mortgaged properties securing the commercial mortgage loans underlying CMBS may also
have a higher degree of concentration in certain types of commercial properties. Accordingly, such pools of mortgage loans represent higher exposure to risks particular to those types of commercial properties. Certain pools of commercial mortgage
loans underlying CMBS consist of a fewer number of mortgage loans with outstanding balances that are larger than average. If a mortgage pool includes mortgage loans with larger than average balances, any realized losses on such mortgage loans could
be more severe, relative to the size of the pool, than would be the case if the aggregate balance of the pool were distributed among a larger number of mortgage loans. Certain borrowers or affiliates thereof relating to certain of the commercial
mortgage loans underlying CMBS may have had a history of bankruptcy. Certain mortgaged properties securing the commercial mortgage loans underlying CMBS may have been exposed to environmental conditions or circumstances. The ratings in respect of
certain of the CMBS comprising the Mortgage-Backed Securities may have been withdrawn, reduced or placed on credit watch since issuance. In addition, losses and/or appraisal reductions may be allocated to certain of such CMBS and certain of the
collateral or the assets underlying such collateral may be delinquent and/or may default from time to time.
CMBS held by the Fund may be
subordinated to one or more other classes of securities of the same series for purposes of, among other things, establishing payment priorities and offsetting losses and other shortfalls with respect to the related underlying mortgage loans.
Realized losses in respect of the mortgage loans included in the CMBS pool and trust expenses generally will be allocated to the most subordinated class of securities of the related series. Accordingly, to the extent any CMBS is or becomes the most
subordinated
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class of securities of the related series, any delinquency or default on any underlying mortgage loan may result in shortfalls, realized loss allocations or extensions of its weighted average
life and will have a more immediate and disproportionate effect on the related CMBS than on a related more senior class of CMBS of the same series. Further, even if a class is not the most subordinate class of securities, there can be no assurance
that the subordination offered to such class will be sufficient on any date to offset all losses or expenses incurred by the underlying trust. CMBS are typically not guaranteed or insured, and distributions on such CMBS generally will depend solely
upon the amount and timing of payments and other collections on the related underlying commercial mortgage loans.
Stripped
Mortgage-Backed Securities. The Fund may invest in stripped mortgage-backed securities (SMBS), which are derivative multiclass mortgage securities, issued or guaranteed by the U.S. Government, its agencies or instrumentalities or
non-governmental originators. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments (the interest-only, or IO and/or the high coupon rate with relatively low principal
amount, or IOette), and the other that receives substantially all of the principal payments (the principal-only, or PO), from a pool of mortgage loans.
Certain SMBS may not be readily marketable. The market value of POs generally is unusually volatile in response to changes in interest rates.
The yields on IOs and IOettes are generally higher than prevailing market yields on other Mortgage-Backed Securities because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully
recouped. The Funds investments in SMBS may require the Fund to sell certain of its portfolio securities to generate sufficient cash to satisfy certain income distribution requirements. These and other factors discussed in the section above,
entitled Illiquid Investments, may impact the liquidity of investments in SMBS.
Municipal Obligations
The Goldman Sachs Access Ultra Short Bond ETF may invest in municipal obligations. Municipal obligations are issued by or on behalf of states,
territories and possessions of the United States and their political subdivisions, agencies, authorities and instrumentalities and the District of Columbia to obtain funds for various public purposes. The interest on most of these obligations is
generally exempt from regular federal income tax. Two principal classifications of municipal obligations are notes and bonds. The Fund may invest in municipal obligations when yields on such securities are attractive compared
to those of other taxable investments.
Dividends paid by the Fund that are derived from interest paid on both tax exempt and taxable
Municipal Securities will be taxable to the Funds shareholders.
Notes. Municipal notes are generally used to provide for
short-term capital needs and generally have maturities of one year or less. Municipal notes include tax anticipation notes, revenue anticipation notes, bond anticipation notes, tax and revenue anticipation notes, construction loan notes, tax-exempt
commercial paper and certain receipts for municipal obligations.
Tax anticipation notes are sold to finance working capital needs of
municipalities. They are generally payable from specific tax revenues expected to be received at a future date. They are frequently general obligations of the issuer, secured by the taxing power for payment of principal and interest. Revenue
anticipation notes are issued in expectation of receipt of other types of revenue such as federal or state aid. Tax anticipation notes and revenue anticipation notes are generally issued in anticipation of various seasonal revenues such as income,
sales, use, and business taxes. Bond anticipation notes are sold to provide interim financing in anticipation of long-term financing in the market. In most cases, these monies provide for the repayment of the notes. Tax-exempt commercial paper
consists of short-term unsecured promissory notes issued by a state or local government or an authority or agency thereof. The Fund may also acquire securities in the form of custodial receipts which evidence ownership of future interest payments,
principal payments or both on certain state and local governmental and authority obligations when, in the opinion of bond counsel, if any, interest payments with respect to such custodial receipts are excluded from gross income for federal income
tax purposes. Such obligations are held in custody by a bank on behalf of the holders of the receipts. These custodial receipts are known by various names, including Municipal Receipts (MRs) and Municipal Certificates
of Accrual on Tax-Exempt Securities (MCATS). There are a number of other types of notes issued for different purposes and secured differently from those described above.
Bonds. Municipal bonds, which generally meet longer term capital needs and have maturities of more than one year when issued, have two
principal classifications, general obligation bonds and revenue bonds.
General obligation bonds are issued by
entities such as states, counties, cities, towns and regional districts and are used to fund a wide range of public projects including the construction or improvement of schools, highways and roads, water and sewer systems and a variety of other
public purposes. The basic security of general obligation bonds is the issuers pledge of its faith, credit, and taxing power for the payment of principal and interest. The taxes that can be levied for the payment of debt service may be limited
or unlimited as to rate or amount or special assessments.
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Revenue bonds have been issued to fund a wide variety of capital projects including: electric,
gas, water and sewer systems; highways, bridges and tunnels; port and airport facilities; colleges and universities; and hospitals. The principal security for a revenue bond is generally the net revenues derived from a particular facility or group
of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Although the principal security behind these bonds varies widely, many provide additional security in the form of a debt service reserve fund
whose monies may also be used to make principal and interest payments on the issuers obligations. Housing finance authorities have a wide range of security including partially or fully insured, rent subsidized and/or collateralized mortgages,
and/or the net revenues from housing or other public projects. In addition to a debt service reserve fund, some authorities provide further security in the form of a states ability (without obligation) to make up deficiencies in the debt
service reserve fund. Lease rental revenue bonds issued by a state or local authority for capital projects are secured by annual lease rental payments from the state or locality to the authority sufficient to cover debt service on the
authoritys obligations.
The Fund may also invest in private activity bonds. Private activity bonds (a term that includes certain
types of bonds the proceeds of which are used to a specified extent for the benefit of persons other than governmental units), although nominally issued by municipal authorities, are generally not secured by the taxing power of the municipality but
are secured by the revenues of the authority derived from payments by the industrial user.
Municipal bonds with a series of maturity
dates are called serial bonds. The serial bonds that the Fund may purchase are limited to short-term serial bondsthose with original or remaining maturities of two years or less (or three years or less with respect to floating rate or variable
rate securities). The Fund may purchase long-term bonds provided that have a remaining maturity of two years or less (or three years or less with respect to floating rate or variable rate securities), or, in the case of bonds called for redemption,
the date on which the redemption payment must be made is within two years or three years, as applicable. The Fund may also purchase long-term bonds (sometimes referred to as Put Bonds), which are subject to the Funds commitment to
put the bond back to the issuer at par at a designated time within two years (or three years with respect to floating rate or variable rate securities), and the issuers commitment to so purchase the bond at such price and time.
The Fund may invest in municipal leases, certificates of participation and moral obligation bonds. A municipal lease is an
obligation issued by a state or local government to acquire equipment or facilities.
Certificates of participation represent interests in
municipal leases or other instruments, such as installment contracts. Moral obligations bonds are supported by the moral commitment but not the legal obligation of a state or municipality. In particular, these instruments permit governmental issuers
to acquire property and equipment without meeting constitutional and statutory requirements for the issuance of debt. If, however, the governmental issuer does not periodically appropriate money to enable it to meet its payment obligations under
these instruments, it cannot be legally compelled to do so. If a default occurs, it is likely that the Fund would be unable to obtain another acceptable source of payment. Some municipal leases, certificates of participation and moral obligation
bonds may be illiquid.
The Fund may also invest in tender option bonds. A tender option bond is a municipal obligation (generally held
pursuant to a custodial arrangement) having a relatively long maturity and bearing interest at a fixed rate substantially higher than prevailing short-term tax-exempt rates. The bond is typically issued in conjunction with the agreement of a third
party, such as a bank, broker-dealer or other financial institution, pursuant to which such institution grants the security holder the option, at periodic intervals, to tender its securities to the institution and receive the face value thereof. As
consideration for providing the option, the financial institution receives periodic fees equal to the difference between the bonds fixed coupon rate and the rate, as determined by a remarketing or similar agent at or near the commencement of
such period, that would cause the bond, coupled with the tender option, to trade at par on the date of such determination. Thus, after payment of this fee, the security holder effectively holds a demand obligation that bears interest at the
prevailing short-term, tax- exempt rate. However, an institution will not be obligated to accept tendered bonds in the event of certain defaults by, or a significant downgrading in the credit rating assigned to, the issuer of the bond.
The tender option will be taken into consideration in determining the maturity of tender option bonds and the average portfolio maturity and
the average portfolio life of the Fund. The liquidity of a tender option bond is a function of, among other things, the credit quality of both the bond issuer and the financial institution providing liquidity.
In addition to general obligation bonds, revenue bonds and serial bonds, there are a variety of hybrid and special types of municipal
obligations as well as numerous differences in the security of municipal obligations both within and between the two principal classifications above.
The Fund may purchase municipal instruments that are backed by letters of credit issued by foreign banks that have a branch, agency or
subsidiary in the United States. Such letters of credit, like other obligations of foreign banks, may involve credit risks in
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addition to those of domestic obligations, including risks relating to future political and economic developments, nationalization, foreign governmental restrictions such as exchange controls and
difficulties in obtaining or enforcing a judgment against a foreign bank (including branches).
For the purpose of investment restrictions
of the Fund, the identification of the issuer of municipal obligations that are not general obligation bonds is made by the Investment Adviser on the basis of the characteristics of the obligations as described above, the most
significant of which is the source of funds for the payment of principal of and interest on such obligations.
An entire issue of
municipal obligations may be purchased by one or a small number of institutional investors such the Fund. Thus, the issue may not be said to be publicly offered. Unlike securities which must be registered under the 1933 Act prior to offer and sale,
municipal obligations that are not publicly offered may nevertheless be readily marketable. A secondary market may exist for municipal obligations that were not publicly offered initially.
Municipal obligations purchased for the Fund may be subject to the Funds policy on holdings of illiquid investments. The Investment
Adviser determines whether a municipal obligation is illiquid in accordance with the funds liquidity risk management program (discussed below). The Investment Adviser believes that the quality standards applicable to the Funds
investments enhance liquidity. In addition, stand-by commitments and demand obligations also enhance liquidity.
Yields on
municipal obligations depend on a variety of factors, including money market conditions, municipal bond market conditions, the size of a particular offering, the maturity of the obligation and the quality of the issue. High quality municipal
obligations tend to have a lower yield than lower rated obligations. Municipal obligations are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Code,
and laws, if any, which may be enacted by Congress or state legislatures extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations or municipalities to levy taxes. There is
also the possibility that as a result of litigation or other conditions the power or ability of any one or more issuers to pay when due principal of and interest on its or their municipal obligations may be materially affected.
Futures Contracts and Options on Futures Contracts
The Funds (except the Goldman Sachs Access Treasury 0-1 Year ETF and Goldman Sachs Access Ultra Short Bond ETF) may purchase and sell futures
contracts and may also purchase and write call and put options on futures contracts. Each Fund may purchase and sell futures contracts based on various securities, securities indices, foreign currencies and other financial instruments and indices.
Financial futures contracts used by a Fund include interest rate futures contracts including, among others, Eurodollar futures contracts. Eurodollar futures contracts are U.S. dollar-denominated futures contracts that are based on the implied
forward LIBOR of a three-month deposit. A Fund will engage in futures and related options transactions in order to seek to increase total return or to hedge against changes in interest rates, securities prices or, to the extent the Fund invests in
foreign securities, currency exchange rates, or to otherwise manage its term structure, sector selection and duration in accordance with its investment objective and policies. Each Fund may also enter into closing purchase and sale transactions with
respect to such contracts and options.
Futures contracts utilized by funds have historically been traded on U.S. exchanges or boards of
trade that are licensed and regulated by the U.S. Commodity Futures Trading Commission (CFTC) or with respect to certain funds on foreign exchanges. More recently, certain futures may also be traded either over-the-counter or on trading
facilities such as derivatives transaction execution facilities, exempt boards of trade or electronic trading facilities that are licensed and/or regulated to varying degrees by the CFTC. Also, certain single stock futures and narrow based security
index futures may be traded either over-the-counter or on trading facilities such as contract markets, derivatives transaction execution facilities and electronic trading facilities that are licensed and/or regulated to varying degrees by both the
CFTC and the SEC or on foreign exchanges.
Neither the CFTC, National Futures Association (NFA), SEC nor any domestic exchange
regulates activities of any foreign exchange or boards of trade, including the execution, delivery and clearing of transactions, or has the power to compel enforcement of the rules of a foreign exchange or board of trade or any applicable foreign
law. This is true even if the exchange is formally linked to a domestic market so that a position taken on the market may be liquidated by a transaction on another market. Moreover, such laws or regulations will vary depending on the foreign country
in which the foreign futures or foreign options transaction occurs. For these reasons, a Funds investments in foreign futures or foreign options transactions may not be provided the same protections in respect of transactions on United States
exchanges. In particular, persons who trade foreign futures or foreign options contracts may not be afforded certain of the protective measures provided by the CEA, the CFTCs regulations and the rules of the NFA and any domestic exchange,
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including the right to use reparations proceedings before the CFTC and arbitration proceedings provided by the NFA or any domestic futures exchange. Similarly, those persons may not have the
protection of the United States securities laws.
Futures Contracts. A futures contract may generally be described as an agreement
between two parties to buy and sell particular financial instruments or currencies for an agreed price during a designated month (or to deliver the final cash settlement price, in the case of a contract relating to an index or otherwise not calling
for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, a Fund can
seek through the sale of futures contracts to offset a decline in the value of its current portfolio securities. When interest rates are falling or securities prices are rising, a Fund, through the purchase of futures contracts, can attempt to
secure better rates or prices than might later be available in the market when it effects anticipated purchases. Similarly, each Fund can purchase and sell futures contracts on a specified currency in order to seek to increase total return or to
protect against changes in currency exchange rates. For example, each Fund may seek to offset anticipated changes in the value of a currency in which its portfolio securities, or securities that it intends to purchase, are quoted or denominated by
purchasing and selling futures contracts on such currencies. As another example, a Fund may enter into futures transactions to seek a closer correlation between the Funds overall currency exposures and the currency exposures of the Funds
performance benchmark.
Positions taken in the futures market are not normally held to maturity, but are instead liquidated through
offsetting transactions which may result in a profit or a loss. While a Fund will usually liquidate futures contracts on securities or currency in this manner, the Fund may instead make or take delivery of the underlying securities or currency
whenever it appears economically advantageous for the Fund to do so. A clearing corporation associated with the exchange on which futures on securities or currency are traded guarantees that, if still open, the sale or purchase will be performed on
the settlement date.
Hedging Strategies Using Futures Contracts. Hedging, by use of futures contracts, seeks to establish with
more certainty than would otherwise be possible the effective price, rate of return or currency exchange rate on portfolio securities or securities that a Fund owns or proposes to acquire. A Fund may, for example, take a short position
in the futures market by selling futures contracts to seek to hedge against an anticipated rise in interest rates or a decline in market prices or foreign currency rates that would adversely affect the dollar value of the Funds portfolio
securities. Similarly, a Fund may sell futures contracts on a currency in which its portfolio securities are quoted or denominated, or sell futures contracts on one currency to seek to hedge against fluctuations in the value of securities quoted or
denominated in a different currency if there is an established historical pattern of correlation between the two currencies. If, in the opinion of the Investment Adviser, there is a sufficient degree of correlation between price trends for a
Funds portfolio securities and futures contracts based on other financial instruments, securities indices or other indices, the Fund may also enter into such futures contracts as part of a hedging strategy. Although under some circumstances
prices of securities in a Funds portfolio may be more or less volatile than prices of such futures contracts, the Investment Adviser may attempt to estimate the extent of this volatility difference based on historical patterns and compensate
for any such differential by having the Fund enter into a greater or lesser number of futures contracts or by attempting to achieve only a partial hedge against price changes affecting the Funds portfolio securities. When hedging of this
character is successful, any depreciation in the value of portfolio securities will be substantially offset by appreciation in the value of the futures position. On the other hand, any unanticipated appreciation in the value of a Funds
portfolio securities would be substantially offset by a decline in the value of the futures position.
On other occasions, a Fund may take
a long position by purchasing such futures contracts. This may be done, for example, when a Fund anticipates the subsequent purchase of particular securities when it has the necessary cash, but expects the prices or currency exchange
rates then available in the applicable market to be less favorable than prices or rates that are currently available.
Options on
Futures Contracts. The acquisition of put and call options on futures contracts will give a Fund the right (but not the obligation), for a specified price, to sell or to purchase, respectively, the underlying futures contract at any time during
the option period. As the purchaser of an option on a futures contract, a Fund obtains the benefit of the futures position if prices move in a favorable direction but limits its risk of loss in the event of an unfavorable price movement to the loss
of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium which may partially offset a
decline in the value of a Funds assets. By writing a call option, a Fund becomes obligated, in exchange for the premium, to sell a futures contract if the option is exercised, which may have a value higher than the exercise price. The writing
of a put option on a futures contract generates a premium, which may partially offset an increase in the price of securities that a Fund intends to purchase. However, a Fund becomes obligated (upon the exercise of the option) to purchase a futures
contract if the option is exercised, which may have a value lower than the exercise
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price. Thus, the loss incurred by a Fund in writing options on futures is potentially unlimited and may exceed the amount of the premium received. A Fund will incur transaction costs in
connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its position by
selling or purchasing an offsetting option on the same financial instrument. There is no guarantee that such closing transactions can be effected. A Funds ability to establish and close out positions on such options will be subject to the
development and maintenance of a liquid market.
Other Considerations. Each Fund will engage in transactions in futures contracts
and related options transactions only to the extent such transactions are consistent with the requirements of the Internal Revenue Code of 1986, as amended (the Code), for maintaining its qualification as a regulated investment company
for federal income tax purposes. Transactions in futures contracts and options on futures involve brokerage costs, require margin deposits and, in certain cases, require a Fund to identify on its books cash or liquid assets. A Fund may cover its
transactions in futures contracts and related options by identifying on its books cash or liquid assets or by other means, in any manner permitted by applicable law. For more information about these practices, see Description of Investment
Securities and PracticesAsset Segregation.
While transactions in futures contracts and options on futures may reduce certain
risks, such transactions themselves entail certain other risks. Thus, unanticipated changes in interest rates, securities prices or currency exchange rates may result in a poorer overall performance for a Fund than if it had not entered into any
futures contracts or options transactions. When futures contracts and options are used for hedging purposes, perfect correlation between a Funds futures positions and portfolio positions may be impossible to achieve, particularly where futures
contracts based on individual equity or corporate fixed income securities are currently not available. In the event of imperfect correlation between a futures position and a portfolio position which is intended to be protected, the desired
protection may not be obtained and a Fund may be exposed to risk of loss. In addition, it is not possible for a Fund to hedge fully or perfectly against currency fluctuations affecting the value of securities quoted or denominated in foreign
currencies because the value of such securities is likely to fluctuate as a result of independent factors unrelated to currency fluctuations. The profitability of a Funds trading in futures depends upon the ability of the Investment Adviser to
analyze correctly the futures markets.
High Yield Securities
The Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Emerging Markets Local Currency Bond ETF and Goldman Sachs Access
Emerging Markets USD Bond ETF may invest in bonds rated BB+ or below by Standard & Poors Ratings Group (Standard & Poors) or Ba1 or below by Moodys Investors Service, Inc. (Moodys)
(or comparable rated and unrated securities). These bonds are commonly referred to as junk bonds and are considered speculative. The ability of issuers of high yield securities to make principal and interest payments may be questionable
because such issuers are often less creditworthy or are highly leveraged and generally less able than more established or less leveraged entities to make scheduled payments of principal and interest. High yield securities are also issued by
governmental issuers that may have difficulty in making all scheduled interest and principal payments. In some cases, high yield securities may be highly speculative, have poor prospects for reaching investment grade standing and be in default. As a
result, investment in such bonds will entail greater risks than those associated with investments in investment grade bonds (i.e., bonds rated AAA, AA, A or BBB by Standard & Poors or Aaa, Aa, A or Baa by Moodys).
Analysis of the creditworthiness of issuers of high yield securities may be more complex than for issuers of higher quality debt securities, and the ability of a Fund to achieve its investment objective may, to the extent of its investments in high
yield securities, be more dependent upon such creditworthiness analysis than would be the case if a Fund were investing in higher quality securities. See Appendix A for a description of the corporate bond and preferred stock ratings by
Standard & Poors, Moodys, Fitch, Inc. and Dominion Bond Rating Service Limited.
The market values of high yield
securities tend to reflect individual corporate or municipal developments to a greater extent than do those of higher rated securities, which react primarily to fluctuations in the general level of interest rates. Issuers of high yield securities
that are highly leveraged may not be able to make use of more traditional methods of financing. Their ability to service debt obligations may be more adversely affected by economic downturns or their inability to meet specific projected business
forecasts than would be the case for issuers of higher-rated securities. Negative publicity about the junk bond market and investor perceptions regarding lower-rated securities, whether or not based on fundamental analysis, may depress the prices
for such high yield securities. In the lower quality segments of the fixed income securities market, changes in perceptions of issuers creditworthiness tend to occur more frequently and in a more pronounced manner than do changes in higher
quality segments of the fixed income securities market, resulting in greater yield and price volatility. Another factor which causes fluctuations in the prices of high yield securities is the supply and demand for similarly rated securities. In
addition, the prices of investments fluctuate in response to the general level of interest rates. Fluctuations
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in the prices of portfolio securities subsequent to their acquisition will not affect cash income from such securities but will be reflected in a Funds NAV.
The risk of loss from default for the holders of high yield securities is significantly greater than is the case for holders of other debt
securities because such high yield securities are generally unsecured and are often subordinated to the rights of other creditors of the issuers of such securities. Investment by a Fund in already defaulted securities poses an additional risk of
loss should nonpayment of principal and interest continue in respect of such securities. Even if such securities are held to maturity, recovery by a Fund of its initial investment and any anticipated income or appreciation is uncertain. In addition,
a Fund may incur additional expenses to the extent that it is required to seek recovery relating to the default in the payment of principal or interest on such securities or otherwise protect its interests. A Fund may be required to liquidate other
portfolio securities to satisfy annual distribution obligations of the Fund in respect of accrued interest income on securities which are subsequently written off, even though the Fund has not received any cash payments of such interest.
The secondary market for high yield securities is concentrated in relatively few markets and is dominated by institutional investors,
including mutual funds, insurance companies and other financial institutions. Accordingly, the secondary market for such securities may not be as liquid as and may be more volatile than the secondary market for higher-rated securities. In addition,
the trading volume for high yield securities is generally lower than that of higher rated securities. The secondary market for high yield securities could contract under adverse market or economic conditions independent of any specific adverse
changes in the condition of a particular issuer. These factors may have an adverse effect on the ability of a Fund to dispose of particular portfolio investments when needed to meet its redemption requests or other liquidity needs. The Investment
Adviser could find it difficult to sell these investments or may be able to sell the investments only at prices lower than if such investments were widely traded. Prices realized upon the sale of such lower rated or unrated securities, under these
circumstances, may be less than the prices used in calculating the NAVs of a Fund. A less liquid secondary market also may make it more difficult for a Fund to obtain precise valuations of the high yield securities in its portfolio.
The adoption of new legislation could adversely affect the secondary market for high yield securities and the financial condition of issuers
of these securities. The form of any future legislation, and the probability of such legislation being enacted, is uncertain.
Non-investment grade or high yield securities also present risks based on payment expectations. High yield securities frequently contain
call or buy-back features which permit the issuer to call or repurchase the security from its holder. If an issuer exercises such a call option and redeems the security, a Fund may have to replace such security with a
lower-yielding security, resulting in a decreased return for investors. In addition, if a Fund experiences net redemptions of its shares and redeems shares in cash, it may be forced to sell its higher-rated securities, resulting in a decline in the
overall credit quality of its portfolio and increasing its exposure to the risks of high yield securities.
Credit ratings issued by
credit rating agencies are designed to evaluate the safety of principal and interest payments of rated securities. They do not, however, evaluate the market value risk of high yield securities and, therefore, may not fully reflect the true risks of
an investment. In addition, credit rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the conditions of the issuer that affect the market value of the security. Consequently, credit ratings may not
accurately reflect credit quality.
An economic downturn could severely affect the ability of highly leveraged issuers of junk bond
investments to service their debt obligations or to repay their obligations upon maturity. Factors having an adverse impact on the market value of junk bonds will have an adverse effect on a Funds NAV to the extent it invests in such
investments. In addition, a Fund may incur additional expenses to the extent it is required to seek recovery upon a default in payment of principal or interest on its portfolio holdings.
These and other factors discussed in the section above, entitled Illiquid Investments, may impact the liquidity of investments in
high yield securities.
Index Swaps, Interest Rate Swaps, Mortgage Swaps, Credit Swaps, Currency Swaps, Total Return Swaps, Options on Swaps and
Interest Rate Swaps, Caps, Floors and Collars
The Funds (except the Goldman Sachs Access Treasury 0-1 Year ETF and Goldman Sachs
Access Ultra Short Bond ETF) may enter into interest rate, credit, total return, mortgage and currency swaps. The Funds may also purchase and write (sell) options contracts on swaps, commonly referred to as swaptions. The Funds may enter into index
swaps. The Goldman Sachs Access High Yield Corporate Bond ETF may also enter into interest rate swaps, caps, floors and collars.
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The Funds may enter into swap transactions for hedging purposes or to seek to increase total
return. As examples, a Fund may enter into swap transactions for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other
markets, to protect against currency fluctuations, as a duration management technique, to protect against any increase in the price of securities the Fund anticipates purchasing at a later date, or to gain exposure to certain markets in an
economical way.
In a standard swap transaction, two parties agree to exchange the returns, differentials in rates of return
or some other amount earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or swapped between the parties are generally calculated with
respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency or security, or in a basket of securities
representing a particular index. Bilateral swap agreements are two party contracts entered into primarily by institutional investors. Cleared swaps are transacted through futures commission merchants (FCMs) that are members of central
clearinghouses with the clearinghouse serving as a central counterparty similar to transactions in futures contracts. Each Fund posts initial and variation margin by making payments to their clearing member FCMs.
Index swaps involve the exchange by a Fund with another party of payments based on a notional principal amount of a specified index or
indices. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive payments for floating rate payments based on interest rates at specified intervals in the future. Two types of interest
rate swaps include fixed-for-floating rate swaps and basis swaps. Fixed-for-floating rate swaps involve the exchange of payments based on a fixed interest rate for payments based on a floating interest rate index. By
contrast, basis swaps involve the exchange of payments based on two different floating interest rate indices. Mortgage swaps are similar to interest rate swaps in that they represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages.
Credit default swaps involve the exchange of a floating or fixed rate
payment in return for assuming potential credit losses of an underlying security or pool of securities. Loan credit default swaps are similar to credit default swaps on bonds, except that the underlying protection is sold on secured loans of a
reference entity rather than a broader category of bonds or loans. Loan credit default swaps may be on single names or on baskets of loans, both tranched and untranched. Currency swaps involve the exchange of the parties respective rights to
make or receive payments in specified currencies. Total return swaps are contracts that obligate a party to pay or receive interest in exchange for payment by the other party of the total return generated by a security, a basket of securities, an
index, or an index component.
A swaption is an option to enter into a swap agreement. Like other types of options, the buyer of a
swaption pays a non-refundable premium for the option and obtains the right, but not the obligation, to enter into or modify an underlying swap or to modify the terms of an existing swap on agreed-upon terms. The seller of a swaption, in exchange
for the premium, becomes obligated (if the option is exercised) to enter into or modify an underlying swap on agreed-upon terms, which generally entails a greater risk of loss than incurred in buying a swaption. The purchase of an interest rate cap
entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor
entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor. An interest rate collar is the
combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates.
A great deal of
flexibility may be possible in the way swap transactions are structured. However, generally a Fund will enter into interest rate, total return, credit and mortgage swaps on a net basis, which means that the two payment streams are netted out, with a
Fund receiving or paying, as the case may be, only the net amount of the two payments. Interest rate, total return, credit and mortgage swaps do not normally involve the delivery of securities, other underlying assets or principal. Accordingly, the
risk of loss with respect to interest rate, total return, credit and mortgage swaps is normally limited to the net amount of payments that a Fund is contractually obligated to make. If the other party to an interest rate, total return, credit or
mortgage swap defaults, a Funds risk of loss consists of the net amount of interest payments that the Fund is contractually entitled to receive, if any.
In contrast, currency swaps usually involve the delivery of a gross payment stream in one designated currency in exchange for a gross payment
stream in another designated currency. Therefore, the entire payment stream under a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations. A credit swap may have as reference
obligations one or more securities that may, or may not, be currently held by a Fund. The protection buyer in a credit swap is generally obligated to pay the protection seller an upfront or a periodic stream of payments over
the term of the swap provided that no credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the par value (full notional value) of the swap in exchange
for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. Each Fund may be either the protection
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buyer or seller in the transaction. If a Fund is a buyer and no credit event occurs, the Fund may recover nothing if the swap is held through its termination date. However, if a credit event
occurs, the buyer generally may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. As a seller, a Fund generally
receives an upfront payment or a rate of income throughout the term of the swap provided that there is no credit event. As the seller, a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund
would be subject to investment exposure on the notional amount of the swap. If a credit event occurs, the value of any deliverable obligation received by a Fund as seller, coupled with the upfront or periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting in a loss of value to the Fund.
As a result of recent regulatory
developments, certain standardized swaps are currently subject to mandatory central clearing and some of these cleared swaps must be traded on an exchange or swap execution facility (SEF). A SEF is a trading platform in which multiple
market participants can execute swap transactions by accepting bids and offers made by multiple other participants on the platform. Transactions executed on a SEF may increase market transparency and liquidity but may cause a Fund to incur increased
expenses to execute swaps. Central clearing should decrease counterparty risk and increase liquidity compared to bilateral swaps because central clearing interposes the central clearinghouse as the counterparty to each participants swap.
However, central clearing does not eliminate counterparty risk or liquidity risk entirely. In addition, depending on the size of a 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 a Fund to support its obligations under a similar bilateral swap. However, the CFTC and other applicable regulators have adopted rules imposing certain margin requirements, including minimums, on
uncleared swaps which may result in a Fund and its counterparties posting higher margin amounts for uncleared swaps. Requiring margin on uncleared swaps may reduce, but not eliminate, counterparty credit risk.
To the extent that a Funds exposure in a transaction involving a swap, swaption or an interest rate floor, cap or collar is covered by
identifying cash or liquid assets on a Funds books or is covered by other means in accordance with SEC- or SEC staff-approved guidance or other appropriate measures, the Fund and the Investment Adviser believe that the transactions do not
constitute senior securities under the Act and, accordingly, will not treat them as being subject to the Funds borrowing restrictions. For more information about these practices, see Description of Investment Securities and Practices
Asset Segregation.
The use of swaps and swaptions, as well as interest rate caps, floors and collars, is a highly
specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The use of a swap requires an understanding not only of the referenced asset, reference rate, or
index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions.
In
addition, these transactions can involve greater risks than if a Fund had invested in the reference obligation directly because, in addition to general market risks, swaps are subject to liquidity risk, counterparty risk, credit risk and pricing
risk. Regulators also may impose limits on an entitys or group of entities positions in certain swaps. However, certain risks are reduced (but not eliminated) if a Fund invests in cleared swaps. Bilateral swap agreements are two party
contracts that may have terms of greater than seven days. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap counterparty. Many swaps are complex
and often valued subjectively. Swaps and other derivatives may also be subject to pricing or basis risk, which exists when the price of a particular derivative diverges from the price of corresponding cash market instruments. Under
certain market conditions it may not be economically feasible to imitate a transaction or liquidate a position in time to avoid a loss or take advantage of an opportunity. If a swap transaction is particularly large or if the relevant market is
illiquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses.
Certain rules also require centralized reporting of detailed information about many types of cleared and uncleared swaps. This information is
available to regulators and, to a more limited extent and on an anonymous basis, to the public. Reporting of swap data may result in greater market transparency, which may be beneficial to funds that use swaps to implement trading strategies.
However, these rules place potential additional administrative obligations on these funds, and the safeguards established to protect anonymity may not function as expected.
The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid in comparison with the markets for other similar instruments which are traded in the interbank market. These and other factors
discussed in the section above, entitled Illiquid Investments, may impact the liquidity of investments in swaps.
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Investing in Asia
Although many countries in Asia have experienced a relatively stable political environment over the last decade, there is no guarantee that
such stability will be maintained in the future. As an emerging region, many factors may affect such stability on a country-by-country as well as on a regional basisincreasing gaps between the rich and poor, agrarian unrest and stability of
existing coalitions in politically-fractionated countriesand may result in adverse consequences to a Fund. The political history of some Asian countries has been characterized by political uncertainty, intervention by the military in civilian
and economic spheres, and political corruption. Such developments, if they continue to occur, could reverse favorable trends toward market and economic reform, privatization, and removal of trade barriers, and could result in significant disruption
to securities markets.
The legal infrastructure in each of the countries in Asia is unique and often undeveloped. In most cases,
securities laws are evolving and far from adequate for the protection of the public from serious fraud. Investment in Asian securities involves considerations and possible risks not typically involved with investment in other issuers, including
changes in governmental administration or economic or monetary policy or changed circumstances in dealings between nations. The application of tax laws (e.g., the imposition of withholding taxes on dividend or interest payments) or
confiscatory taxation may also affect investment in Asian securities. Higher expenses may result from investments in Asian securities than would from investments in other securities because of the costs that must be incurred in connection with
conversions between various currencies and brokerage commissions that may be higher than more established markets. Asian securities markets also may be less liquid, more volatile and less subject to governmental supervision than elsewhere.
Investments in countries in the region could be affected by other factors not present elsewhere, including lack of uniform accounting, auditing and financial reporting standards, inadequate settlement procedures and potential difficulties in
enforcing contractual obligations.
Certain countries in Asia are especially prone to natural disasters, such as flooding, drought and
earthquakes. Combined with the possibility of man-made disasters, the occurrence of such disasters may adversely affect companies in which a Fund is invested and, as a result, may result in adverse consequences to the Fund.
Many of the countries in Asia periodically have experienced significant inflation. Should the governments and central banks of the countries
in Asia fail to control inflation, this may have an adverse effect on the performance of a Funds investments in Asian securities.
Several of the countries in Asia remain dependent on the U.S. economy as their largest export customer, and future barriers to entry into the
U.S. market or other important markets could adversely affect a Funds performance. Intraregional trade is becoming an increasingly significant percentage of total trade for the countries in Asia. Consequently, the intertwined economies are
becoming increasingly dependent on each other, and any barriers to entry to markets in Asia in the future may adversely affect a Funds performance.
Certain Asian countries may have managed currencies which are maintained at artificial levels to the U.S. dollar rather than at levels
determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. Certain Asian countries also may restrict the free conversion of
their currency into foreign currencies, including the U.S. dollar. There is no significant foreign exchange market for certain currencies, and it would, as a result, be difficult to engage in foreign currency transactions designed to protect the
value of a Funds interests in securities denominated in such currencies.
Although a Fund will generally attempt to invest in those markets which
provide the greatest freedom of movement of foreign capital, there is no assurance that this will be possible or that certain countries in Asia will not restrict the movement of foreign capital in the future. Changes in securities laws and foreign
ownership laws may have an adverse effect on a Fund.
Investing in Brazil
In addition to the risks listed under Foreign Investments and Investing in Emerging Countries investing in Brazil presents additional
risks.
Under current Brazilian law, a Fund may repatriate income received from dividends and interest earned on its investments in
Brazilian securities. A Fund may also repatriate net realized capital gains from its investments in Brazilian securities. Additionally, whenever there occurs a serious imbalance in Brazils balance of payments or serious reasons to foresee the
imminence of such an imbalance, under current Brazilian law the Monetary Council may, for a limited period, impose restrictions on foreign capital remittances abroad. Exchange control regulations may restrict repatriation of investment income,
capital or the proceeds of securities sales by foreign investors.
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Brazil suffers from chronic structural public sector deficits. In addition, disparities of
wealth, the pace and success of democratization and capital market development, and ethnic and racial hostilities have led to social and labor unrest and violence in the past, and may do so again in the future.
Additionally, the Brazilian securities markets are smaller, less liquid and more volatile than domestic markets. The market for Brazilian
securities is influenced by economic and market conditions of certain countries, especially emerging market countries in Central and South America. Brazil has historically experienced high rates of inflation and may continue to do so in the future.
Appreciation of the Brazilian currency (the real) relative to the U.S. dollar may lead to a deterioration of Brazils current account and balance of payments as well as limit the growth of exports. Inflationary pressures may lead to
further government intervention in the economy, including the introduction of government policies that may adversely affect the overall performance of the Brazilian economy, which in turn could adversely affect a Funds investments.
Investing in Central and South American Countries
A Fund (except the Goldman Sachs Access Ultra Short Bond ETF) may invest in issuers located in Central and South American countries. Securities
markets in Central and South American countries may experience greater volatility than in other emerging countries. In addition, a number of Central and South American countries are among the largest emerging country debtors. There have been
moratoria on, and reschedulings of, repayment with respect to these debts. Such events can restrict the flexibility of these debtor nations in the international markets and result in the imposition of onerous conditions on their economies.
Many of the currencies of Central and South American countries have experienced steady devaluation relative to the U.S. dollar, and major
devaluations have historically occurred in certain countries. Any devaluations in the currencies in which a Funds portfolio securities are denominated may have a detrimental impact on the Fund. There is also a risk that certain Central and
South American countries may restrict the free conversion of their currencies into other currencies. Some Central and South American countries may have managed currencies which are not free floating against the U.S. dollar. This type of system can
lead to sudden and large adjustments in the currency that, in turn, can have a disruptive and negative effect on foreign investors. Certain Central and South American currencies may not be internationally traded and it would be difficult for a Fund
to engage in foreign currency transactions designed to protect the value of the Funds interests in securities denominated in such currencies.
The emergence of the Central and South American economies and securities markets will require continued economic and fiscal discipline that
has been lacking at times in the past, as well as stable political and social conditions. Governments of many Central and South American countries have exercised and continue to exercise substantial influence over many aspects of the private sector.
The political history of certain Central and South American countries has been characterized by political uncertainty, intervention by the military in civilian and economic spheres and political corruption. Such developments, if they were to recur,
could reverse favorable trends toward market and economic reform, privatization and removal of trade barriers.
International economic
conditions, particularly those in the United States, as well as world prices for oil and other commodities may also influence the recovery of the Central and South American economies. Because commodities such as oil, gas, minerals and metals
represent a significant percentage of the regions exports, the economies of Central and South American countries are particularly sensitive to fluctuations in commodity prices. As a result, the economies in many of these countries can
experience significant volatility.
Certain Central and South American countries have entered into regional trade agreements that would, among other
things, reduce barriers among countries, increase competition among companies and reduce government subsidies in certain industries. No assurance can be given that these changes will result in the economic stability intended. There is a possibility
that these trade arrangements will not be implemented, will be implemented but not completed or will be completed but then partially or completely unwound. It is also possible that a significant participant could choose to abandon a trade agreement,
which could diminish its credibility and influence. Any of these occurrences could have adverse effects on the markets of both participating and non-participating countries, including share appreciation or depreciation of participants national
currencies and a significant increase in exchange rate volatility, a resurgence in economic protectionism, an undermining of confidence in the Central and South American markets, an undermining of Central and South American economic stability, the
collapse or slowdown of the drive toward Central and South American economic unity, and/or reversion of the attempts to lower government debt and inflation rates that were introduced in anticipation of such trade agreements. Such developments could
have an adverse impact on a Funds investments in Central and South America generally or in specific countries participating in such trade agreements.
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Investing in Eastern Europe
A Fund (except the Goldman Sachs Access Ultra Short Bond ETF) may invest in issuers located in Eastern Europe. Most Eastern European countries
had a centrally planned, socialist economy for a substantial period of time. The governments of many Eastern European countries have more recently been implementing reforms directed at political and economic liberalization, including efforts to
decentralize the economic decision-making process and move towards a market economy. However, business entities in many Eastern European countries do not have an extended history of operating in a market-oriented economy, and the ultimate impact of
Eastern European countries attempts to move toward more market-oriented economies is currently unclear. In addition, any change in the leadership or policies of Eastern European countries may halt the expansion of or reverse the liberalization
of foreign investment policies now occurring and adversely affect existing investment opportunities.
Where a Fund invests in securities
issued by companies incorporated in or whose principal operations are located in Eastern Europe, other risks may also be encountered. Legal, political, economic and fiscal uncertainties in Eastern European markets may affect the value of a Fund
investment in such securities. The currencies in which these investments may be denominated may be unstable, may be subject to significant depreciation and may not be freely convertible. Existing laws and regulations may not be consistently applied.
The markets of the countries of Eastern Europe are still in the early stages of their development, have less volume, are less highly regulated, are less liquid and experience greater volatility than more established markets. Settlement of
transactions may be subject to delay and administrative uncertainties. Custodians are not able to offer the level of service and safekeeping, settlement and administration services that is customary in more developed markets, and there is a risk
that a Fund will not be recognized as the owner of securities held on its behalf by a sub-custodian.
Investing in Emerging Countries
Emerging Markets Equity Securities. The securities markets of emerging countries are less liquid and subject to greater price
volatility, and have a smaller market capitalization, than the U.S. securities markets. In certain countries, there may be fewer publicly traded securities and the market may be dominated by a few issuers or sectors. Issuers and securities markets
in such countries are not subject to as extensive and frequent accounting, financial and other reporting requirements or as comprehensive government regulations as are issuers and securities markets in the U.S. In particular, the assets and profits
appearing on the financial statements of emerging country issuers may not reflect their financial position or results of operations in the same manner as financial statements for U.S. issuers. Substantially less information may be publicly available
about emerging country issuers than is available about issuers in the United States.
Emerging country securities markets are typically
marked by a high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as a high concentration of ownership of such securities by a limited number of investors.
The markets for securities in certain emerging countries are in the earliest stages of their development. Even the markets for relatively widely traded securities in emerging countries may not be able to absorb, without price disruptions, a
significant increase in trading volume or trades of a size customarily undertaken by institutional investors in the securities markets of developed countries. The limited size of many of these securities markets can cause prices to be erratic for
reasons apart from factors that affect the soundness and competitiveness of the securities issuers. For example, prices may be unduly influenced by traders who control large positions in these markets. Additionally, market making and arbitrage
activities are generally less extensive in such markets, which may contribute to increased volatility and reduced liquidity of such markets. The limited liquidity of emerging country securities may also affect a Funds ability to accurately
value its portfolio securities or to acquire or dispose of securities at the price and time it wishes to do so or in order to meet redemption requests.
Except the Goldman Sachs Access Ultra Short Bond ETF, a Funds purchase and sale of portfolio securities in certain emerging countries
may be constrained by limitations as to daily changes in the prices of listed securities, periodic trading or settlement volume and/or limitations on aggregate holdings of foreign investors. Such limitations may be computed based on the aggregate
trading volume by or holdings of a Fund, the Investment Adviser, its affiliates and their respective clients and other service providers. A Fund may not be able to sell securities in circumstances where price, trading or settlement volume
limitations have been reached.
Market Characteristics. Securities markets of emerging countries may also have less
efficient clearance and settlement procedures than U.S. markets, making it difficult to conduct and complete transactions. Delays in the settlement could result in temporary periods when a portion of a Funds assets is uninvested and no return
is earned thereon. Inability to make intended security purchases could cause the Fund to miss attractive investment opportunities. Inability to dispose of portfolio securities could result either in losses to a Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to sell the security, could result in possible liability of the Fund to the purchaser.
Transaction costs, including brokerage commissions and dealer mark-ups, in emerging countries may be higher than in the U.S. and other
developed securities markets. As legal systems in emerging countries develop, foreign investors may be adversely affected by
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new or amended laws and regulations. In circumstances where adequate laws exist, it may not be possible to obtain swift and equitable enforcement of the law.
Custodial and/or settlement systems in emerging markets countries may not be fully developed. To the extent a Fund invests in emerging
markets, Fund assets that are traded in such markets and will have been entrusted to such sub-custodians in those markets may be exposed to risks for which the sub-custodian will have no liability.
With respect to investments in certain emerging countries, antiquated legal systems may have an adverse impact on a Fund. For example, while
the potential liability of a shareholder of a U.S. corporation with respect to acts of the corporation is generally limited to the amount of the shareholders investment, the notion of limited liability is less clear in certain emerging market
countries. Similarly, the rights of investors in emerging market companies may be more limited than those of investors of U.S. corporations.
Economic, Political and Social Factors. Emerging countries may be subject to a greater degree of economic, political and social
instability than the United States, Japan and most Western European countries, and unanticipated political and social developments may affect the value of a Funds investments in emerging countries and the availability to the Fund of additional
investments in such countries. Moreover, political and economic structures in many emerging countries may be undergoing significant evolution and rapid development. Instability may result from, among other things: (i) authoritarian governments
or military involvement in political and economic decision-making, including changes or attempted changes in government through extra-constitutional means; (ii) popular unrest associated with demands for improved economic, political and social
conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; (v) ethnic, religious and racial disaffection and conflict; and (vi) the absence of developed legal structures governing foreign private
property. Many emerging countries have experienced in the past, and continue to experience, high rates of inflation. In certain countries, inflation has at times accelerated rapidly to hyperinflationary levels, creating a negative interest rate
environment and sharply eroding the value of outstanding financial assets in those countries. The economies of many emerging countries are heavily dependent upon international trade and are accordingly affected by protective trade barriers and the
economic conditions of their trading partners. In addition, the economies of some emerging countries may differ unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, capital reinvestment,
resources, self-sufficiency and balance of payments position.
A Fund may invest in issuers located in former Eastern bloc
countries. Most of these countries had a centrally planned, socialist economy for a substantial period of time. The governments of many of these countries have more recently been implementing reforms directed at political and economic
liberalization, including efforts to decentralize the economic decision-making process and move towards a market economy. However, business entities in many of these countries do not have an extended history of operating in a market-oriented
economy, and the ultimate impact of these countries attempts to move toward more market-oriented economies is currently unclear. In addition, any change in the leadership or policies of these countries may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and adversely affect existing investment opportunities.
Restrictions on
Investment and Repatriation. Certain emerging countries require governmental approval prior to investments by foreign persons or limit investments by foreign persons to only a specified percentage of an issuers outstanding securities or a
specific class of securities which may have less advantageous terms (including price) than securities of the issuer available for purchase by nationals. The repatriation of investment income, capital or the proceeds of securities sales from certain
emerging countries is subject to certain restrictions which require governmental consent or prohibit repatriation entirely for a period of time, which may make it difficult for a Fund to invest in such emerging countries. A Fund could be adversely
affected by delays in, or a refusal to grant, any required governmental approval for such repatriation. Even where there is no outright restriction on repatriation of capital, the mechanics of repatriation may affect the operation of a Fund.
Emerging Country Government Obligations. Emerging country governmental entities are among the largest debtors to commercial banks,
foreign governments, international financial organizations and other financial institutions. Certain emerging country governmental entities have not been able to make payments of interest on or principal of debt obligations as those payments have
come due. Obligations arising from past restructuring agreements may affect the economic performance and political and social stability of those entities.
The ability of emerging country governmental entities to make timely payments on their obligations is likely to be influenced strongly by the
entitys balance of payments, including export performance, and its access to international credits and investments. An emerging country whose exports are concentrated in a few commodities could be vulnerable to a decline in the international
prices of one or more of those commodities. Increased protectionism on the part of an emerging countrys trading partners could also adversely affect the countrys exports and tarnish its trade account surplus, if any. To the extent that
emerging countries receive payment for their exports in currencies other than dollars or non-emerging country currencies, the emerging country governmental entitys ability to make debt payments denominated in dollars or non-emerging market
currencies could be affected.
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To the extent that an emerging country cannot generate a trade surplus, it must depend on
continuing loans from foreign governments, multilateral organizations or private commercial banks, aid payments from foreign governments and on inflows of foreign investment. The access of emerging countries to these forms of external funding may
not be certain, and a withdrawal of external funding could adversely affect the capacity of emerging country governmental entities to make payments on their obligations. In addition, the cost of servicing emerging country debt obligations can be
affected by a change in international interest rates because the majority of these obligations carry interest rates that are adjusted periodically based upon international rates.
Another factor bearing on the ability of emerging countries to repay debt obligations is the level of international reserves of a country.
Fluctuations in the level of these reserves affect the amount of foreign exchange readily available for external debt payments and thus could have a bearing on the capacity of emerging countries to make payments on these debt obligations.
As a result of the foregoing or other factors, a governmental obligor, especially in an emerging country, may default on its obligations. If
such an event occurs, a Fund may have limited legal recourse against the issuer and/or guarantor. Remedies must, in some cases, be pursued in the courts of the defaulting party itself, and the ability of the holder of foreign government obligations
to obtain recourse may be subject to the political climate in the relevant country. In addition, no assurance can be given that the holders of commercial bank debt will not contest payments to the holders of other foreign government obligations in
the event of default under the commercial bank loan agreements.
Investing in Europe
A Fund may operate in euros and/or may hold euros and/or euro-denominated bonds and other obligations. The euro requires participation of
multiple sovereign states forming the Euro zone and is therefore sensitive to the credit, general economic and political position of each such state, including each states actual and intended ongoing engagement with and/or support for the
other sovereign states then forming the EU, in particular those within the Euro zone. Changes in these factors might materially adversely impact the value of securities that a Fund has invested in.
European countries can be significantly affected by the tight fiscal and monetary controls that the European Economic and Monetary Union
(EMU) imposes for membership. Europes economies are diverse, its governments are decentralized, and its cultures vary widely. Several EU countries, including Greece, Ireland, Italy, Spain and Portugal, have faced budget issues,
some of which may have negative long-term effects for the economies of those countries and other EU countries. There is continued concern about national-level support for the euro and the accompanying coordination of fiscal and wage policy among EMU
member countries. Member countries are required to maintain tight control over inflation, public debt, and budget deficit to qualify for membership in the EMU. These requirements can severely limit the ability of EMU member countries to implement
monetary policy to address regional economic conditions.
In a June 2016 referendum, citizens of the United Kingdom voted to leave the EU.
In March 2017, the United Kingdom formally notified the European Council of its intention to withdraw from the EU (commonly known as Brexit) by invoking Article 50 of the Treaty on European Union, which triggered a two-year period of
negotiations on the terms of Brexit. Brexit has resulted in volatility in European and global markets and may also lead to weakening in political, regulatory, consumer, corporate and financial confidence in the markets of the United Kingdom and
throughout Europe. The longer term economic, legal, political, regulatory and social framework to be put in place between the United Kingdom and the EU remains unclear and may lead to ongoing political, regulatory and economic uncertainty and
periods of exacerbated volatility in both the United Kingdom and in wider European markets for some time. Additionally, the decision made in the British referendum may lead to a call for similar referenda in other European jurisdictions, which may
cause increased economic volatility in European and global markets. The mid-to long-term uncertainty may have an adverse effect on the economy generally and on the value of a Funds investments. This may be due to, among other things:
fluctuations in asset values and exchange rates; increased illiquidity of investments located, traded or listed within the United Kingdom, the EU or elsewhere; changes in the willingness or ability of counterparties to enter into transactions at the
price and terms on which a Fund is prepared to transact; and/or changes in legal and regulatory regimes to which certain of a Funds assets are or become subject. Fluctuations in the value of the British Pound and/or the Euro, along with the
potential downgrading of the United Kingdoms sovereign credit rating, may also have an impact on the performance of a Funds assets or investments economically tied to the United Kingdom or Europe.
The effects of Brexit will depend, in part, on agreements the United Kingdom negotiates to retain access to EU markets either during a transitional period or
more permanently including, but not limited to, current trade and finance agreements. Brexit could lead to legal and tax uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which EU laws to replace or
replicate. The extent of the impact of the withdrawal negotiations in the United Kingdom and in global markets as well as any associated adverse consequences remain unclear, and the uncertainty may have a significant negative effect on the value of
a Funds investments.
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The withdrawal agreement between the United Kingdom and the EU, endorsed by the European Council
on November 25, 2018, sets out the basis on which the United Kingdom will withdraw from the EU and includes certain transitional provisions which have the effect of preserving the application of European Union law in the United Kingdom until
December 2020 (or such other later date as may be agreed). The withdrawal agreement, and the associated transitional provisions, will only become effective once approved by the United Kingdom parliament which approval has not yet happened and may
not happen, meaning that the United Kingdom may leave the EU without any transitional period (a so-called hard Brexit). On October 28, 2019, the United Kingdom came to an agreement with the EU to delay the deadline for withdrawal.
Unless the United Kingdom parliament approves the withdrawal agreement by January 31, 2020, it is expected that there will be a hard Brexit on that date absent any further agreements to delay the withdrawal. Consequently, due to this political
uncertainty, it is not possible to anticipate, in the absence of an intervening action, when the United Kingdom will leave the EU and whether such departure will benefit from the terms of the withdrawal agreement and the transitional provisions. In
the event of a hard Brexit, the relationship between the United Kingdom and the EU would be based on the World Trade Organization rules. While it is not currently possible to determine the extent of the impact a hard Brexit may have on a
Funds investments, certain measures are being proposed and/or will be introduced, at the EU level or at the member state level, which are designed to minimize disruption in the financial markets. Notwithstanding the foregoing, the prolonged
and continued uncertainty of the status of the United Kingdoms withdrawal from the EU could negatively impact current and future economic conditions in the United Kingdom which, in turn, could negatively impact a Funds investments.
Other economic challenges facing the region include high levels of public debt, significant rates of unemployment, aging populations, and
heavy regulation in certain economic sectors. European policy makers have taken unprecedented steps to respond to the economic crisis and to boost growth in the region, which has increased the risk that regulatory uncertainty could negatively affect
the value of the Funds investments.
Certain countries have applied to become new member countries of the EU, and these candidate countries
accessions may become more controversial to the existing EU members. Some member states may repudiate certain candidate countries joining the EU upon concerns about the possible economic, immigration and cultural implications. Also, Russia may be
opposed to the expansion of the EU to members of the former Soviet bloc and may, at times, take actions that could negatively impact EU economic activity.
Investing in Greater China
Investing in
Greater China (Mainland China, Hong Kong and Taiwan) involves a high degree of risk and special considerations not typically associated with investing in other more established economies or securities markets. Such risks may include:
(a) greater social, economic and political uncertainty (including the risk of armed conflict); (b) the risk of nationalization or expropriation of assets or confiscatory taxation; (c) dependency on exports and the corresponding
importance of international trade; (d) the imposition of tariffs or other trade barriers by the U.S. or foreign governments on exports from Mainland China; (e) increasing competition from Asias other low-cost emerging economies; (f)
greater price volatility and smaller market capitalization of securities markets; (g) decreased liquidity, particularly of certain share classes of Chinese securities; (h) currency exchange rate fluctuations (with respect to investments in Mainland
China and Taiwan) and the lack of available currency hedging instruments; (i) higher rates of inflation; (j) controls on foreign investment and limitations on repatriation of invested capital and on a Funds ability to exchange local currencies
for U.S. dollars; (k) greater governmental involvement in and control over the economy; (l) uncertainty regarding the Peoples Republic of Chinas commitment to economic reforms; (m) the fact that Chinese companies may be smaller, less
seasoned and newly-organized companies; (n) the differences in, or lack of, auditing and financial reporting standards which may result in unavailability of material information about issuers; (o) the fact that statistical information regarding the
economy of Greater China may be inaccurate or not comparable to statistical information regarding the U.S. or other economies; (p) less extensive, and still developing, legal systems and regulatory frameworks regarding the securities markets,
business entities and commercial transactions; (q) the fact that the settlement period of securities transactions in foreign markets may be longer; (r) the fact that it may be more difficult, or impossible, to obtain and/or enforce a judgment than
in other countries; and (s) the rapid and erratic nature of growth, particularly in the Peoples Republic of China, resulting in inefficiencies and dislocations.
Mainland China. Investments in Mainland China are subject to the risks associated with greater governmental control over the
economy, political and legal uncertainties and currency fluctuations or blockage. In particular, the Chinese Communist Party exercises significant control over economic growth in Mainland China through the allocation of resources, controlling
payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.
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Because the local legal system is still developing, it may be more difficult to obtain or enforce
judgments with respect to investments in Mainland China. Chinese companies may not be subject to the same disclosure, accounting, auditing and financial reporting standards and practices as U.S. companies. Thus, there may be less information
publicly available about Chinese companies than about most U.S. companies. Government supervision and regulation of Chinese stock exchanges, currency markets, trading systems and brokers may be more or less rigorous than that present in the U.S. The
procedures and rules governing transactions and custody in Mainland China also may involve delays in payment, delivery or recovery of money or investments. The imposition of tariffs or other trade barriers by the U.S. or other foreign governments on
exports from Mainland China may also have an adverse impact on Chinese issuers and Chinas economy as a whole.
Foreign investments
in Mainland China are somewhat restricted. Securities listed on the Shanghai and Shenzhen Stock Exchanges are divided into two classes of shares: A shares and B Shares. Ownership of A Shares is restricted to Chinese investors, Qualified Foreign
Institutional Investors (QFIIs) who have obtained a QFII license, and participants in the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs (Stock Connect). B shares may be owned by Chinese and foreign
investors.
As a result of investing in the Peoples Republic of China, a Fund may be subject to withholding and various other taxes
imposed by the Peoples Republic of China. To date, a 10% withholding tax has been levied on cash dividends, distributions and interest payments from companies listed in the Peoples Republic of China to foreign investors, unless the
withholding tax can be reduced by an applicable income tax treaty.
As of November 17, 2014, foreign mutual funds, which qualify as
QFIIs and/or RMB Qualified Foreign Institutional Investors (RQFIIs), are temporarily exempt from enterprise income tax on capital gains arising from securities trading in the Peoples Republic of China. It is currently unclear when
this preferential treatment would end. If the preferential treatment were to end, such capital gains would be subject to a 10% withholding tax in the Peoples Republic of China. Meanwhile, the purchase and sale of publicly traded equities by a
QFII/RQFII is exempt from value-added tax in the Peoples Republic of China.
The tax law and regulations of the Peoples
Republic of China are constantly changing, and they may be changed with retrospective effect to the advantage or disadvantage of shareholders. The interpretation and applicability of the tax law and regulations by tax authorities may not be as
consistent and transparent as those of more developed nations, and may vary from region to region. It should also be noted that any provision for taxation made by the Investment Adviser may be excessive or inadequate to meet final tax liabilities.
Consequently, shareholders may be advantaged or disadvantaged depending upon the final tax liabilities, the level of provision and when they subscribed and/or redeemed their shares of a Fund.
Hong Kong. Hong Kong is a Special Administrative Region of the Peoples Republic of China. Since Hong Kong reverted to
Chinese sovereignty in 1997, it has been governed by the Basic Law, a quasi-constitution. The Basic Law guarantees a high degree of autonomy in certain matters, including economic matters, until 2047. Attempts by the government of the
Peoples Republic of China to exert greater control over Hong Kongs economic, political or legal structures or its existing social policy, could negatively affect investor confidence in Hong Kong, which in turn could negatively affect
markets and business performance.
In addition, the Hong Kong dollar trades within a fixed trading band rate to (or is pegged
to) the U.S. dollar. This fixed exchange rate has contributed to the growth and stability of the economy, but could be discontinued. It is uncertain what affect any discontinuance of the currency peg and the establishment of an alternative exchange
rate system would have on the Hong Kong economy.
Taiwan. The prospect of political reunification of the Peoples
Republic of China and Taiwan has engendered hostility between the two regions governments. This situation poses a significant threat to Taiwans economy, as heightened conflict could potentially lead to distortions in Taiwans
capital accounts and have an adverse impact on the value of investments throughout Greater China.
Investing in Indonesia
Indonesia has experienced currency devaluations, substantial rates of inflation, widespread corruption and economic recessions. The Indonesian
government may exercise substantial influence over many aspects of the private sector and may own or control many companies. Indonesias securities laws are unsettled and judicial enforcement of contracts with foreign entities is inconsistent,
often as a result of pervasive corruption. Indonesia has a history of political and military unrest including acts of terrorism, outbreaks of violence and civil unrest due to territorial disputes, historical animosities and domestic ethnic and
religious conflicts.
The Indonesian securities market is an emerging market characterized by a small number of company listings, high
price volatility and a relatively illiquid secondary trading environment. These factors, coupled with restrictions on investment by foreigners and other factors, limit the supply of securities available for investment by a Fund. This will affect the
rate at which a Fund is able to invest in
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Indonesian securities, the purchase and sale prices for such securities and the timing of purchases and sales. The limited liquidity of the Indonesian securities markets may also affect a
Funds ability to acquire or dispose of securities at a price and time that it wishes to do so. Accordingly, in periods of rising market prices, a Fund may be unable to participate in such price increases fully to the extent that it is unable
to acquire desired portfolio positions quickly; conversely a Funds inability to dispose fully and promptly of positions in declining markets will cause its NAV to decline as the value of unsold positions is marked to lower prices.
The market for Indonesian securities is directly influenced by the flow of international capital, and economic and market conditions of
certain countries. Adverse economic conditions or developments in other emerging market countries, especially in the Southeast Asia region, have at times significantly affected the availability of credit in the Indonesian economy and resulted in
considerable outflows of funds and declines in the amount of foreign currency invested in Indonesia. Adverse conditions or changes in relationships with Indonesias major trading partners, including Japan, China, and the U.S., may also
significantly impact on the Indonesian economy.
Indonesia is located in a part of the world that has historically been prone to natural
disasters such as tsunamis, earthquakes, volcanoes, and typhoons, and is economically sensitive to environmental events. Any such event could result in a significant adverse impact on Indonesias economy.
Investing in Mexico
Since the period of
economic turmoil surrounding the devaluation of the peso in 1994, which triggered the worst recession in over 50 years, Mexico has experienced a period of general economic recovery. Mexicos economic growth continues to attract direct foreign
investment, although at a slower pace than in the past due to the global deceleration. Economic and social concerns persist, however, with respect to low real wages, underemployment for a large segment of the population, inequitable income
distribution and few advancement opportunities for the large impoverished population in the southern states. Although inflation currently remains under control, Mexico has a history of high inflation and substantial devaluations of the peso, causing
currency instabilities. These economic and political issues have caused volatility in the Mexican securities markets.
Mexicos free
market economy contains a mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector. Recent administrations have begun a process of privatization of certain entities and industries including seaports,
railroads, telecommunications, electricity generation, natural gas distribution and airports. In some instances, however, newly privatized entities have suffered losses due to an inability to adjust quickly to a competitive environment or to
changing regulatory and legal standards. Recently, the Mexican government has been aiming to improve competitiveness and economic growth of the Mexican economy through a legislative reform agenda. The Mexican government has passed education, energy,
financial, fiscal and telecommunications reform legislation. However, a Fund cannot predict whether these reforms will result in positive changes in Mexican governmental and economic policy.
The Mexican economy is heavily dependent on trade with, and foreign investment from, the U.S. and Canada, which are Mexicos principal
trading partners. Any changes in the supply, demand, price or other economic components of Mexicos imports or exports, as well as any reductions in foreign investment from, or changes in the economies of, the U.S. or Canada, may have an
adverse impact on the Mexican economy. In particular, Mexicos economy is very dependent on oil exports and susceptible to fluctuations in the price of oil. Mexico and the U.S. entered into the North American Free Trade Agreement (NAFTA) in
1994 as well as a second treaty, the Security and Prosperity Partnership of North America, in 2005. These treaties may impact the trading relationship between Mexico and the U.S. and further Mexicos dependency on the U.S. economy. In an effort
to expand trade with Pacific countries, Mexico formally joined the Trans-Pacific Partnership negotiations in 2012 and formed the Pacific Alliance with Peru, Columbia and Chile. On November 30, 2018, the United States-Mexico-Canada Agreement,
the successor to NAFTA, was signed and must now be ratified by all three countries.
Mexico is subject to social and political instability
as a result of a recent rise in criminal activity, including violent crimes and terrorist actions committed by certain political and drug trade organizations. A general escalation of violent crime has led to uncertainty in the Mexican market and
adversely affected the performance of the Mexican economy. Violence near border areas, as well as border-related political disputes, may lead to strained international relations.
Some recent elections have been contentious and closely-decided, and changes in political parties or other political events may affect the
economy and cause instability. Corruption remains widespread in Mexican institutions and infrastructure is underdeveloped. Mexico has historically been prone to natural disasters such as tsunamis, volcanoes, hurricanes and destructive earthquakes,
which may adversely impact its economy.
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Investing in Russia
Investing in Russian securities is highly speculative and involves significant risks and special considerations not typically associated with
investing in the securities markets of the U.S. and most other developed countries. Over the past century, Russia has experienced political, social and economic turbulence and has endured decades of communist rule under which tens of millions of its
citizens were collectivized into state agricultural and industrial enterprises. Since the collapse of the Soviet Union, Russias government has been faced with the daunting task of stabilizing its domestic economy, while transforming it into a
modern and efficient structure able to compete in international markets and respond to the needs of its citizens. However, to date, many of the countrys economic reform initiatives have floundered as the proceeds of International Monetary Fund
and other economic assistance have been squandered or stolen. In this environment, there is always the risk that the nations government will abandon the current program of economic reform and replace it with radically different political and
economic policies that would be detrimental to the interests of foreign investors. This could entail a return to a centrally planned economy and nationalization of private enterprises similar to what existed under the old Soviet Union.
Poor accounting standards, inept management, pervasive corruption, insider trading and crime, and inadequate regulatory protection for the
rights of investors all pose a significant risk, particularly to foreign investors. In addition, there is the risk that the Russian tax system will not be reformed to prevent inconsistent, retroactive, and/or exorbitant taxation, or, in the
alternative, the risk that a reformed tax system may result in the inconsistent and unpredictable enforcement of the new tax laws.
Compared to most national stock markets, the Russian securities market suffers from a variety of problems not encountered in more developed
markets. There is little long-term historical data on the Russian securities market because it is relatively new and a substantial proportion of securities transactions in Russia are privately negotiated outside of stock exchanges. The inexperience
of the Russian securities market and the limited volume of trading in securities in the market may make obtaining accurate prices on portfolio securities from independent sources more difficult than in more developed markets. Additionally, because
of less stringent auditing and financial reporting standards that apply to U.S. companies, there is little solid corporate information available to investors. As a result, it may be difficult to assess the value or prospects of an investment in
Russian companies. Stocks of Russian companies also may experience greater price volatility than stocks of U.S. companies.
Because of the
relatively recent formation of the Russian securities market as well as the underdeveloped state of the banking and telecommunications systems, settlement, clearing and registration of securities transactions are subject to significant risks. Prior
to 2013, there was no central registration system for share registration in Russia and registration was carried out by the companies themselves or by registrars located throughout Russia. These registrars were not necessarily subject to effective
state supervision nor were they licensed with any governmental entity. In 2013, Russia implemented the National Settlement Depository (NSD) as a recognized central securities depository (CSD). Title to Russian equities is now based on the records of
the NSD rather than the registrars. The implementation of the NSD is expected to enhance the efficiency and transparency of the Russian securities market and decrease risk of loss in connection with recording and transferring title to securities. A
Fund also may experience difficulty in obtaining and/or enforcing judgments in Russia.
The Russian economy is heavily dependent upon the
export of a range of commodities including most industrial metals, forestry products, oil, and gas. Accordingly, it is strongly affected by international commodity prices and is particularly vulnerable to any weakening in global demand for these
products.
Foreign investors also face a high degree of currency risk when investing in Russian securities and a lack of available
currency hedging instruments. In a surprise move in August 1998, Russia devalued the ruble, defaulted on short-term domestic bonds, and imposed a moratorium on the repayment of its international debt and the restructuring of the repayment terms.
These actions negatively affected Russian borrowers ability to access international capital markets and had a damaging impact on the Russian economy. In addition, there is the risk that the government may impose capital controls on foreign
portfolio investments in the event of extreme financial or political crisis. Such capital controls would prevent the sale of a portfolio of foreign assets and the repatriation of investment income and capital.
Russias government has begun to take bolder steps, including use of the military, to re-assert its regional geo-political influence.
These steps may increase tensions between its neighbors and Western countries, which may adversely affect its economic growth. These developments may continue for some time and create uncertainty in the region. Russias actions have induced the
United States and other countries to impose economic sanctions and may result in additional sanctions in the future. Such sanctions, which impact many sectors of the Russian economy, may cause a decline in the value and liquidity of Russian
securities and adversely affect the performance
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of the Fund or make it difficult for the Fund to achieve its investment objectives. In certain instances, sanctions could prohibit the Fund from buying or selling Russian securities, rendering
any such securities held by the Fund unmarketable for an indefinite period of time. In addition, such sanctions, and the Russian governments response, could result in a downgrade in Russias credit rating, devaluation of its currency
and/or increased volatility with respect to Russian securities.
Pooled Investment Vehicles
Each Fund (except the Goldman Sachs Access Ultra Short Bond ETF) may invest in securities of pooled investment vehicles, including ETFs. A Fund
will indirectly bear its proportionate share of any management fees and other expenses paid by pooled investment vehicles in which it invests, in addition to the management fees (and other expenses) paid by the Fund. A Funds investments in
pooled investment vehicles are subject to statutory limitations prescribed by the Act, including 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 Funds total assets in securities of any one investment company or more than 10% of its total assets in the securities of all investment companies. Many ETFs, however, have obtained exemptive relief from the SEC to
permit unaffiliated funds (such as the Funds) to invest in their shares beyond these statutory limits, subject to certain conditions and pursuant to contractual arrangements between the ETFs and the investing funds. The Funds may rely on these
exemptive orders in investing in ETFs. Moreover, 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 Funds may invest in investment companies, including ETFs and
money market funds, for which the Investment Adviser, or any of its affiliates, serves as investment adviser, administrator and/or distributor. With respect to a Funds investments in money market funds, to the extent that the Fund invests in a
money market fund for which the Investment Adviser or any of its affiliates acts as investment adviser, the management fees payable by the Fund to the Investment Adviser will, to the extent required by the SEC, be reduced by an amount equal to the
Funds proportionate share of the management fees paid by such money market fund to its investment adviser. Although the Funds do not expect to do so in the foreseeable future, each 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.
Repurchase Agreements
Each Fund may
enter into repurchase agreements with counterparties that furnish collateral at least equal in value or market price to the amount of their repurchase obligation. The Funds may also enter into repurchase agreements involving obligations other than
U.S. Government Securities (as defined below), which may be subject to additional risks. A repurchase agreement is an arrangement under which a Fund purchases securities and the seller agrees to repurchase the securities within a particular time and
at a specified price. Custody of the securities is maintained by the Funds custodian (or subcustodian). The repurchase price may be higher than the purchase price, the difference being income to a Fund, or the purchase and repurchase prices
may be the same, with interest at a stated rate due to a Fund together with the repurchase price on repurchase. In either case, the income to a Fund is unrelated to the interest rate on the security subject to the repurchase agreement.
For purposes of the Act, and generally for tax purposes, a repurchase agreement is deemed to be a loan from a Fund to the seller of the
security. For other purposes, it is not always clear whether a court would consider the security purchased by a Fund subject to a repurchase agreement as being owned by the Fund or as being collateral for a loan by the Fund to the seller. In the
event of commencement of bankruptcy or insolvency proceedings with respect to the seller of the security before repurchase of the security under a repurchase agreement, a Fund may encounter delay and incur costs before being able to sell the
security. Such a delay may involve loss of interest or a decline in value of the security. If the court characterizes the transaction as a loan and a Fund has not perfected a security interest in the security, the Fund may be required to return the
security to the sellers estate and be treated as an unsecured creditor of the seller. As an unsecured creditor, a Fund would be at risk of losing some or all of the principal and interest involved in the transaction.
Apart from the risk of bankruptcy or insolvency proceedings, there is also the risk that the seller may fail to repurchase the security.
However, if the market value of the security subject to the repurchase agreement becomes less than the repurchase price (including accrued interest), each Fund will direct the seller of the security to deliver additional securities so that the
market value of all securities subject to the repurchase agreement equals or exceeds the repurchase price. Certain repurchase agreements which provide for settlement in more than seven days can be liquidated before the nominal fixed term on seven
days or less notice.
The Funds, together with other registered investment companies having management agreements with the Investment
Adviser or their 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.
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Restricted Securities
Each Fund may purchase securities and other financial instruments that are not registered or that are offered in an exempt non-public offering
(Restricted Securities) under the Securities Act of 1933 (the 1933 Act), including securities eligible for resale to qualified institutional buyers pursuant to Rule 144A under the 1933 Act. The purchase price and
subsequent valuation of Restricted Securities may reflect a discount from the price at which such securities trade when they are not restricted, because the restriction makes them less liquid. The amount of the discount from the prevailing market
price is expected to vary depending upon the type of security, the character of the issuer, the party who will bear the expenses of registering the Restricted Securities and prevailing supply and demand conditions. These and other factors discussed
in the section above, entitled Illiquid Investments, may impact the liquidity of investments in Restricted Securities.
Reverse Repurchase
Agreements
Each Fund may borrow money by entering into transactions called reverse repurchase agreements. Under these arrangements, a
Fund will sell portfolio securities to dealers in U.S. Government Securities or members of the Federal Reserve System, with an agreement to repurchase the security on an agreed date, price and interest payment. Reverse repurchase agreements involve
the possible risk that the value of portfolio securities a Fund relinquishes may decline below the price the Fund must pay when the transaction closes. Borrowings may magnify the potential for gain or loss on amounts invested resulting in an
increase in the speculative character of a Funds outstanding shares.
When a Fund enters into a reverse repurchase agreement, it
identifies on its books cash or liquid assets that have a value equal to or greater than the repurchase price. The amount of cash or liquid assets so identified is then monitored continuously by the Investment Adviser to make sure that an
appropriate value is maintained. Reverse repurchase agreements are considered to be borrowings under the Investment Company Act.
Risks of Qualified
Financial Contracts
Regulations adopted by federal banking regulators under the Dodd-Frank Act which are scheduled to take effect
throughout 2019, require that certain qualified financial contracts (QFCs) with counterparties that are part of U.S. or foreign global systemically important banking organizations be amended to include contractual restrictions on
close-out and cross-default rights. QFCs include, but are not limited to, securities contracts, commodities contracts, forward contracts, repurchase agreements, securities lending agreements and swaps agreements, as well as related master
agreements, security agreements, credit enhancements, and reimbursement obligations. If a covered counterparty of a Fund or certain of the covered counterpartys affiliates were to become subject to certain insolvency proceedings, the Fund may
be temporarily unable to exercise certain default rights, and the QFC may be transferred to another entity. These requirements may impact the Funds credit and counterparty risks.
Special Note Regarding Regulatory Changes and Market Events
Federal, state, and foreign governments, regulatory agencies, and self-regulatory organizations may take actions that affect the regulation of
a Fund or the instruments in which the Fund invests, or the issuers of such instruments, in ways that are unforeseeable. Future legislation or regulation or other governmental actions could limit or preclude a Funds ability to achieve its
investment objective or otherwise adversely impact an investment in the Fund. Furthermore, worsened market conditions, including as a result of U.S. government shutdowns or the perceived creditworthiness of the United States, could have a negative
impact on securities markets.
The Funds investments, payment obligations and financing terms may be based on floating rates, such
as LIBOR, EURIBOR and other similar types of reference rates (each, a Reference Rate). On July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority (FCA) which regulates LIBOR, announced that the FCA will no longer
persuade nor compel banks to submit rates for the calculation of LIBOR and certain other Reference Rates after 2021. Such announcement indicates that the continuation of LIBOR and other Reference Rates on the current basis cannot and will not be
guaranteed after 2021. This announcement and any additional regulatory or market changes may have an adverse impact on a Funds investments, performance or financial condition. Until then, the Funds may continue to invest in instruments that
reference such rates or otherwise use such Reference Rates due to favorable liquidity or pricing.
In advance of 2021, regulators and
market participants will seek to work together to identify or develop successor Reference Rates and how the calculation of associated spreads (if any) should be adjusted. Additionally, prior to 2021, it is expected that industry trade associations
and participants will focus on the transition mechanisms by which the Reference Rates and spreads (if any) in existing
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contracts or instruments may be amended, whether through marketwide protocols, fallback contractual provisions, bespoke negotiations or amendments or otherwise. Nonetheless, the termination of
certain Reference Rates presents risks to the Funds. At this time, it is not possible to exhaustively identify or predict the effect of any such changes, any establishment of alternative Reference Rates or any other reforms to Reference Rates that
may be enacted in the United Kingdom or elsewhere. The elimination of a Reference Rate or any other changes or reforms to the determination or supervision of Reference Rates may affect the value, liquidity or return on certain Fund investments and
may result in costs incurred in connection with closing out positions and entering into new trades, adversely impacting a Funds overall financial condition or results of operations. The impact of any successor or substitute Reference Rate, if
any, will vary on an investment-by-investment basis, and any differences may be material and/or create material economic mismatches, especially if investments are used for hedging or similar purposes. In addition, although certain Fund investments
may provide for a successor or substitute Reference Rate (or terms governing how to determine a successor or substitute Reference Rate) if the Reference Rate becomes unavailable, certain Fund investments may not provide such a successor or
substitute Reference Rate (or terms governing how to determine a successor or substitute Reference Rate). Accordingly, there may be disputes as to: (i) any successor or substitute Reference Rate; or (ii) the enforceability of any Fund
investment that does not provide such a successor or substitute Reference Rate (or terms governing how to determine a successor or substitute Reference Rate). The Investment Adviser, Goldman Sachs and/or their affiliates may have discretion to
determine a successor or substitute Reference Rate, including any price or other adjustments to account for differences between the successor or substitute Reference Rate and the previous rate. The successor or substitute Reference Rate and any
adjustments selected may negatively impact a Funds investments, performance or financial condition, including in ways unforeseen by the Investment Adviser, Goldman Sachs and/or their affiliates. In addition, any successor or substitute
Reference Rate and any pricing adjustments imposed by a regulator or by counterparties or otherwise may adversely affect a Funds performance and/or NAV, and may expose a Fund to additional tax, accounting and regulatory risks. In the aftermath
of the 2007-2008 financial crisis, the financial sector experienced reduced liquidity in credit and other fixed income markets, and an unusually high degree of volatility, both domestically and internationally. While entire markets were impacted,
issuers that had exposure to the real estate, mortgage and credit markets were particularly affected. The instability in the financial markets led the U.S. Government to take a number of unprecedented actions designed to support certain financial
institutions and certain segments of the financial markets. For example, the Dodd-Frank Act, which was enacted in 2010, provides for broad regulation of financial institutions, consumer financial products and services, broker-dealers,
over-the-counter derivatives, investment advisers, credit rating agencies and mortgage lending.
Governments or their agencies may also
acquire distressed assets from financial institutions and acquire ownership interests in those institutions. The implications of government ownership and disposition of these assets are unclear, and such ownership or disposition may have positive or
negative effects on the liquidity, valuation and performance of a Funds portfolio holdings.
Special Note Regarding Operational, Cyber Security
and Litigation Risks
An investment in a 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. The use of certain
investment strategies that involve manual or additional processing, such as over-the-counter derivatives, increases these risks. Although a 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. A Fund and its shareholders could be negatively impacted as a result.
A Fund is also susceptible to operational and information security risks resulting from cyber-attacks. In general, cyber-attacks result from
deliberate attacks, but other events may have effects similar to those caused by 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 affecting a Fund or its investment adviser, sub-adviser, custodian, transfer agent,
intermediary or other third-party service provider may adversely impact the Fund and its shareholders. These 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 a Funds 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. Similar to operational risk in general, a Fund and its service providers, including GSAM, have instituted risk management systems designed to minimize the risks associated with cyber security. However, there is a
risk that these systems will not succeed (or that any remediation efforts will not be successful), especially because a Fund does not directly control the risk management systems of the service providers to the Fund, their trading counterparties or
the issuers in which the Fund may invest. Moreover, there is a risk that cyber-attacks will not be detected.
A Fund may be subject to
third-party litigation, which could give rise to legal liability. These matters involving a Fund may arise from their activities and investments and could have a materially adverse effect on the Fund, including the expense of defending against
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claims and paying any amounts pursuant to settlements or judgments. There can be no guarantee that these matters will not arise in the normal course of business. If a Fund were to be found liable
in any suit or proceeding, any associated damages and/or penalties could have a materially adverse effect on the Funds finances, in addition to being materially damaging to their reputation.
Temporary Investments
Due to adverse
market conditions or the prevailing interest rate environment, or when the Investment Adviser believes there is an insufficient supply of appropriate fixed income instruments in which to invest, the Goldman Sachs Access Ultra Short Bond ETF may hold
uninvested cash in lieu of such instruments. Cash assets are not income-generating and, as a result, the Funds current yield may be adversely affected during periods when such positions are held. Cash positions may also subject the Fund to
additional risks and costs, such as increased exposure to the creditworthiness of the custodian bank holding the assets and any fees imposed for large cash balances.
When the Funds assets are invested in such instruments (or are uninvested), the Fund may not be achieving its investment objective.
U.S. Government Securities
A Fund may
invest in U.S. Government Securities. Some U.S. Government Securities (such as Treasury bills, notes and bonds, which differ only in their interest rates, maturities and times of issuance) are supported by the full faith and credit of the United
States (U.S. Treasury Securities). Others, such as obligations issued or guaranteed by U.S. Government agencies, instrumentalities or sponsored enterprises, are supported either by (i) the right of the issuer to borrow from the U.S.
Treasury, (ii) the discretionary authority of the U.S. government to purchase certain obligations of the issuer or (iii) the credit of the issuer. The U.S. Government is under no legal obligation, in general, to purchase the obligations of
its agencies, instrumentalities or sponsored enterprises. No assurance can be given that the U.S. Government will provide financial support to U.S. government agencies, instrumentalities or sponsored enterprises in the future, and the U.S.
Government may be unable to pay debts when due.
U.S. Government Securities include (to the extent consistent with the Act) securities for
which the payment of principal and interest is backed by an irrevocable letter of credit issued by the U.S. Government, or its agencies, instrumentalities or sponsored enterprises. U.S. Government Securities may also include (to the extent
consistent with the Act) participations in loans made to foreign governments or their agencies that are guaranteed as to principal and interest by the U.S. Government or its agencies, instrumentalities or sponsored enterprises. The secondary market
for certain of these participations is extremely limited. These and other factors discussed in the section above, entitled Illiquid Investments, may impact the liquidity of investments in these participations.
A Fund may also purchase U.S. Government Securities in private placements and may also invest in separately traded principal and interest
components of securities guaranteed or issued by the U.S. Treasury that are traded independently under the separate trading of registered interest and principal of securities program. A Fund may also invest in zero coupon U.S. Treasury Securities
and in zero coupon securities issued by financial institutions which represent a proportionate interest in underlying U.S. Treasury Securities.
Inflation-Protected Securities. The Goldman Sachs Access Emerging Markets USD Bond ETF may invest in inflation protected securities
(IPS) of varying maturities issued by the U.S. Treasury (TIPS) and other U.S. and non-U.S. Government agencies and corporations, which are securities whose principal value is periodically adjusted according to the rate of
inflation. The Goldman Sachs Access Inflation Protected USD Bond ETF invests in TIPS. The interest rate on IPS is fixed at issuance, but over the life of the bond this interest may be paid on an increasing or decreasing principal value that has been
adjusted for inflation. Although repayment of the greater of the adjusted or original bond principal upon maturity is guaranteed, the market value of IPS is not guaranteed, and will fluctuate.
The values of IPS generally fluctuate in response to changes in real interest rates, which are in turn tied to the relationship between
nominal interest rates and the rate of inflation. If inflation were to rise at a faster rate than nominal interest rates, real interest rates will decline, leading to an increase in the value of IPS. In contrast, if nominal interest rates were to
increase at a faster rate than inflation, real interest rates will rise, leading to a decrease in the value of IPS. If inflation is lower than expected during the period the Fund holds IPS, the Fund may earn less on the IPS than on a conventional
bond. If interest rates rise due to reasons other than inflation (for example, due to changes in the currency exchange rates), investors in IPS may not be protected to the extent that the increase is not reflected in the bonds inflation
measure. There can be no assurance that the inflation index for IPS will accurately measure the real rate of inflation in the prices of goods and services.
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Any increase in principal value of IPS caused by an increase in the consumer price index is
taxable in the year the increase occurs, even though the Fund holding IPS will not receive cash representing the increase at that time. As a result, the Fund could be required at times to liquidate other investments, including when it is not
advantageous to do so, in order to satisfy its distribution requirements as a regulated investment company.
If the Fund invests in IPS,
it will be required to treat as original issue discount any increase in the principal amount of the securities that occurs during the course of its taxable year. If the Fund purchases such IPS that are issued in stripped form either as stripped
bonds or coupons, it will be treated as if it had purchased a newly issued debt instrument having original issue discount.
Because the
Fund is required to distribute substantially all of its net investment income (including accrued original issue discount), the Funds investment in either zero coupon bonds or IPS may require the Fund to distribute to shareholders an amount
greater than the total cash income it actually receives. Accordingly, in order to make the required distributions, the Fund may be required to borrow or liquidate securities.
When-Issued Securities and Forward Commitments
A Fund may purchase securities on a when-issued basis or purchase or sell securities on a forward commitment basis beyond the customary
settlement time. These transactions involve a commitment by a Fund to purchase or sell securities at a future date. The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and
paid for (the settlement date) are fixed at the time the transaction is negotiated. In addition, recently finalized rules of the Financial Industry Regulatory Authority (FINRA) include mandatory margin requirements that require a Fund to
post collateral in connection with its to-be-announced (TBA) transactions. There is no similar requirement applicable to a Funds TBA counterparties. The required collateralization of TBA trades could increase the cost of TBA
transactions to a Fund and impose added operational complexity. When-issued purchases and forward commitment transactions are negotiated directly with the other party, and such commitments are not traded on exchanges. The Funs will generally
purchase securities on a when-issued basis or purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of
investment strategy, however, a Fund may dispose of or negotiate a commitment after entering into it. A Fund may also sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. A Fund may
realize capital gains or losses in connection with these transactions. For purposes of determining the Funds duration, the maturity of when-issued or forward commitment securities for fixed-rate obligations will be calculated from the
commitment date. A Fund is generally required to identify on its books cash and liquid assets in an amount sufficient to meet the purchase price unless the Funds obligations are otherwise covered. Alternatively, a Fund may enter into
offsetting contracts for the forward sale of other securities that it owns. Securities purchased or sold on a when-issued or forward commitment basis involve a risk of loss if the value of the security to be purchased declines prior to the
settlement date or if the value of the security to be sold increases prior to the settlement date.
Zero Coupon, Deferred Interest, Pay-In-Kind and
Capital Appreciation Bonds
A Fund (except the Goldman Sachs Access Ultra Short Bond ETF) may invest in zero coupon, deferred interest,
pay-in-kind (PIK) and capital appreciation bonds. Zero coupon, deferred interest and capital appreciation bonds are debt securities issued or sold at a discount from their face value and which do not entitle the holder to any periodic
payment of interest prior to maturity or a specified date. The original issue discount varies depending on the time remaining until maturity or cash payment date, prevailing interest rates, the liquidity of the security and the perceived credit
quality of the issuer. These securities also may take the form of debt securities that have been stripped of their unmatured interest coupons, the coupons themselves or receipts or certificates representing interests in such stripped debt
obligations or coupons.
PIK securities may be debt obligations or preferred shares that provide the issuer with the option of paying
interest or dividends on such obligations in cash or in the form of additional securities rather than cash. Similar to zero coupon bonds and deferred interest bonds, PIK securities are designed to give an issuer flexibility in managing cash flow.
PIK securities that are debt securities can be either senior or subordinated debt and generally trade flat (i.e., without accrued interest). The trading price of PIK debt securities generally reflects the market value of the underlying debt
plus an amount representing accrued interest since the last interest payment.
The market prices of zero coupon, deferred interest,
capital appreciation bonds and PIK securities generally are more volatile than the market prices of interest bearing securities and are likely to respond to a greater degree to changes in interest rates than interest bearing securities having
similar maturities and credit quality. Moreover, zero coupon, deferred interest, capital appreciation and PIK securities involve the additional risk that, unlike securities that periodically pay interest to maturity, a Fund will realize no cash
until a specified future payment date unless a portion of such securities is sold and, if the issuer of such securities defaults, the Fund may obtain no return at all on its investment. The valuation of such investments requires judgment regarding
the collection of future payments. In
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addition, even though such securities do not provide for the payment of current interest in cash, a Fund is nonetheless required to accrue income on such investments for each taxable year and
generally is required to distribute such accrued amounts (net of deductible expenses, if any) to avoid being subject to tax. Because no cash is generally received at the time of the accrual, a Fund may be required to liquidate other portfolio
securities to obtain sufficient cash to satisfy federal tax distribution requirements applicable to the Fund. A portion of the discount with respect to stripped tax exempt securities or their coupons may be taxable. See TAXATION.
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INVESTMENT RESTRICTIONS
The investment restrictions set forth below have been adopted by the Trust as fundamental policies that cannot be changed with respect to a
Fund without the affirmative vote of the holders of a majority of the outstanding voting securities (as defined in the Act) of the Fund. The investment objective of each Fund and all other investment policies or practices of the Fund are considered
by the Trust not to be fundamental and accordingly may be changed without shareholder approval. For purposes of the Act, a majority of the outstanding voting securities means the lesser of (i) 67% or more of the shares of the Trust
or the applicable Fund present at a meeting, if the holders of more than 50% of the outstanding shares of the Trust or the applicable Fund are present or represented by proxy, or (ii) more than 50% of the outstanding shares of the Trust or the
applicable Fund.
For purposes of the following limitations (except for the asset coverage requirement with respect to borrowings, which
is subject to different requirements under the Act), any limitation which involves a maximum percentage shall not be considered violated unless an excess over the percentage occurs immediately after, and is caused by, an acquisition or encumbrance
of securities or assets of, or borrowings by, the Funds. In applying fundamental investment restriction number (1) below to derivative transactions or instruments, including, but not limited to, futures, swaps, forwards, options and structured
notes, the Funds will look to the industry of the reference asset(s) and not to the counterparty or issuer. With respect to the Funds fundamental investment restriction number (2) below, in the event that asset coverage (as defined in the
Act) at any time falls below 300%, the applicable Fund, within three days thereafter (not including Sundays and holidays) or such longer period as the SEC may prescribe by rules and regulations, will reduce the amount of its borrowings to the extent
required so that the asset coverage of such borrowings will be at least 300%.
Fundamental Investment Restrictions
As a matter of fundamental policy, each Fund may not:
|
(1)
|
With respect to each Fund except the Goldman Sachs Access Ultra Short Bond ETF:
|
Invest more than 25% of its total assets in the securities of one or more issuers conducting their principal business activities in the same
industry except that the Fund may invest more than 25% of the value of its total assets in securities of issuers in the same industry if the index that the Fund replicates concentrates in an industry (for the purposes of this restriction, the U.S.
Government, state and municipal governments and their agencies, authorities and instrumentalities are not deemed to be industries).
With respect to the Goldman Sachs Access Ultra Short Bond ETF:
Invest more than 25% of its total assets in the securities of one or more issuers conducting their principal business activities in the same
industry (for the purposes of this restriction, the U.S. Government, state and municipal governments and their agencies, authorities and instrumentalities are not deemed to be industries); provided that during normal market conditions, the Fund will
invest more than 25% of its total assets in the financial services group of industries.
|
(2)
|
Borrow money, except as permitted by the Act, or interpretations or modifications by the SEC, SEC staff or
other authority with appropriate jurisdiction;
|
The following interpretation applies to, but is not part of, this
fundamental policy: In determining whether a particular investment in portfolio instruments or participation in portfolio transactions is subject to this borrowing policy, the accounting treatment of such instrument or participation shall be
considered, but shall not by itself be determinative. Whether a particular instrument or transaction constitutes a borrowing shall be determined by the Board, after consideration of all of the relevant circumstances;
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(3)
|
Make loans, except through (a) the purchase of debt obligations, loan interests and other interests or
obligations in accordance with the Funds investment objective and policies; (b) repurchase agreements with banks, brokers, dealers and other financial institutions; (c) loans of securities as permitted by applicable law or pursuant
to an exemptive order granted under the Act; and (d) loans to affiliates of the Fund to the extent permitted by law;
|
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|
(4)
|
Underwrite securities issued by others, except to the extent that the sale of portfolio securities by the Fund
may be deemed to be an underwriting;
|
|
(5)
|
Purchase, hold or deal in real estate, although the Fund may purchase and sell securities that are secured by
real estate or interests therein or that reflect the return of an index of real estate values, securities of issuers which invest or deal in real estate, securities of real estate investment trusts and mortgage-related securities and may hold and
sell real estate it has acquired as a result of the ownership of securities;
|
|
(6)
|
Invest in physical commodities, except that the Fund may invest in currency and financial instruments and
contracts in accordance with its investment objective and policies, including, without limitation, structured notes, futures contracts, swaps, options on commodities, currencies, swaps and futures, ETFs, investment pools and other instruments,
regardless of whether such instrument is considered to be a commodity; and
|
|
(7)
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Issue senior securities to the extent such issuance would violate applicable law.
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Each Fund may, notwithstanding any other fundamental investment restriction or policy, invest some or all of its assets in a single open-end
investment company or series thereof with substantially the same fundamental investment restrictions and policies as the Fund.
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TRUSTEES AND OFFICERS
The Trusts Leadership Structure
The business and affairs of the Funds are managed under the direction of the Board of Trustees (the Board), subject to the laws of
the State of Delaware and the Trusts Declaration of Trust. The Trustees are responsible for deciding matters of overall policy and reviewing the actions of the Trusts service providers. The officers of the Trust conduct and supervise the
Funds daily business operations. Trustees who are not deemed to be interested persons of the Trust as defined in the Act are referred to as Independent Trustees. Trustees who are deemed to be interested
persons of the Trust are referred to as Interested Trustees. The Board is currently composed of four Independent Trustees and one Interested Trustee. The Board has selected an Independent Trustee to act as Chairman, whose duties
include presiding at meetings of the Board and acting as a focal point to address significant issues that may arise between regularly scheduled Board and Committee meetings. In the performance of the Chairmans duties, the Chairman will consult
with the other Independent Trustees and the Funds officers and legal counsel, as appropriate. The Chairman may perform other functions as requested by the Board from time to time.
The Board meets as often as necessary to discharge its responsibilities. Currently, the Board conducts regular, in-person meetings at least
four times a year, and holds special in-person or telephonic meetings as necessary to address specific issues that require attention prior to the next regularly scheduled meeting. In addition, the Independent Trustees meet at least annually to
review, among other things, investment management agreements, distribution and/or service plans and related agreements, transfer agency agreements and certain other agreements providing for the compensation of Goldman Sachs and/or its affiliates by
the Funds, and to consider such other matters as they deem appropriate.
The Board has established five standing committeesAudit,
Governance and Nominating, Compliance, Valuation and Contract Review Committees. The Board may establish other committees, or nominate one or more Trustees to examine particular issues related to the Boards oversight responsibilities, from
time to time. Each Committee meets periodically to perform its delegated oversight functions and reports its findings and recommendations to the Board. For more information on the Committees, see the section STANDING BOARD COMMITTEES,
below.
The Trustees have determined that the Trusts leadership structure is appropriate because it allows the Trustees to
effectively perform their oversight responsibilities.
B-50
Trustees of the Trust
Information pertaining to the Trustees of the Trust as of December 27, 2019 is set forth below.
Independent Trustees
|
|
|
|
|
|
|
|
|
|
|
Name, Address
and
Age1
|
|
Position(s)
Held with
the Trust
|
|
Term of
Office and
Length
of
Time Served2
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Trustee3
|
|
Other
Directorships
Held by
Trustee4
|
Lawrence W.
Stranghoener
Age: 65
|
|
Chairman of the Board of Trustees
|
|
Trustee since 2015; Chairman since 2017
|
|
Mr. Stranghoener is retired. He is Chairman, Kennametal, Inc. (a global manufacturer and distributor of tooling and industrial materials)
(2003Present); Director, Aleris Corporation and Aleris International, Inc. (a producer of aluminum rolled products) (2011Present); and was formerly Interim Chief Executive Officer (2014); and Executive Vice President and Chief Financial
Officer (20042014), Mosaic Company (a fertilizer manufacturing company).
Chairman of the Board of TrusteesGoldman Sachs ETF Trust; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund;
Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
44
|
|
Kennametal, Inc. (a global manufacturer and distributor of tooling and industrial materials)
|
|
|
|
|
|
|
Caroline Dorsa
Age: 60
|
|
Trustee
|
|
Since 2016
|
|
Ms. Dorsa is retired. She is Director, Biogen Inc. (a biotechnology company) (2010Present); Director, Intellia Therapeutics Inc. (a
gene-editing company) (2015Present); and Director, Illumina, Inc. (a life sciences company) (2017Present). She was formerly Executive Vice President and Chief Financial Officer, Public Service Enterprise Group, Inc. (a generation and
energy services company) (20092015); Senior Vice President, Merck & Co, Inc. (a pharmaceutical company) (20082009 and 19872007); Senior Vice President and Chief Financial Officer, Gilead Sciences, Inc. (a pharmaceutical
company) (20072008); and Senior Vice President and Chief Financial Officer, Avaya, Inc. (a technology company) (2007).
TrusteeGoldman Sachs ETF Trust; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income
Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
44
|
|
Biogen Inc. (a biotechnology company); Intellia Therapeutics Inc. (a gene-editing company); Illumina, Inc. (a life sciences company)
|
B-51
|
|
|
|
|
|
|
|
|
|
|
Name, Address
and
Age1
|
|
Position(s)
Held with
the Trust
|
|
Term of
Office and
Length
of
Time Served2
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Trustee3
|
|
Other
Directorships
Held by
Trustee4
|
Linda A. Lang
Age: 61
|
|
Trustee
|
|
Since 2016
|
|
Ms. Lang is retired. She was formerly Chair of the Board of Directors (20162019); and Member of the Board of Directors, WD-40 Company
(20042019); Chairman and Chief Executive Officer (20052014); and Director, President and Chief Operating Officer, Jack in the Box, Inc. (a restaurant company) (20032005). Previously, Ms. Lang served as an Advisory Board Member
of Goldman Sachs MLP Income Opportunities Fund and Goldman Sachs MLP and Energy Renaissance Fund (February 2016March 2016).
TrusteeGoldman Sachs ETF Trust; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income
Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
44
|
|
None
|
|
|
|
|
|
|
Michael Latham
Age: 54
|
|
Trustee
|
|
Since 2015
|
|
Mr. Latham is retired. Formerly, he held senior management positions with the iShares exchange-traded fund business, including Chairman
(20112014); Global Head (20102011); U.S. Head (20072010); and Chief Operating Officer (20032007).
TrusteeGoldman Sachs ETF Trust; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income
Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
44
|
|
None
|
|
Interested Trustee
|
|
|
|
|
|
|
James A.
McNamara* Age: 57
|
|
President and Trustee
|
|
Since 2014
|
|
Advisory Director, Goldman Sachs (January 2018Present); Managing Director, Goldman Sachs (January 2000December 2017); Director of
Institutional Fund Sales, GSAM (April 1998December 2000); and Senior Vice President and Manager, Dreyfus Institutional Service Corporation (January 1993April 1998).
President and TrusteeGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs
Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
165
|
|
None
|
*
|
Mr. McNamara is considered to be an Interested Trustee because he holds positions with Goldman
Sachs and owns securities issued by The Goldman Sachs Group, Inc. Mr. McNamara holds comparable positions with certain other companies of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser, administrator and/or
distributor.
|
B-52
1
|
Each Trustee may be contacted by writing to the Trustee, c/o Goldman Sachs, 200 West Street, New York, New
York, 10282, Attn: Caroline Kraus.
|
2
|
Subject to such policies as may be adopted by the Board from time-to-time, each Trustee holds office for an
indefinite term, until the earliest of: (a) the election of his or her successor; (b) the date the Trustee resigns or is removed by the Board or shareholders, in accordance with the Trusts Declaration of Trust; or (c) the
termination of the Trust. The Board has adopted policies which provide that (a) no Trustee shall hold office for more than 15 years and (b) a Trustee shall retire as of December 31st of the calendar year in which he or she reaches his
or her 74th birthday, unless a waiver of such requirement shall have been adopted by a majority of the other Trustees. These policies may be changed by the Trustees without shareholder vote.
|
3
|
The Goldman Sachs Fund Complex includes certain other companies listed above for each respective Trustee. As of
December 27, 2019, Goldman Sachs ETF Trust consisted of 40 portfolios (21 of which offered shares to the public); Goldman Sachs Trust consisted of 89 portfolios; Goldman Sachs Variable Insurance Trust consisted of 13 portfolios; Goldman Sachs Trust
II consisted of 19 portfolios (17 of which offered shares to the public); and Goldman Sachs MLP Income Opportunities Fund, Goldman Sachs MLP and Energy Renaissance Fund, Goldman Sachs Credit Income Fund and Goldman Sachs Real Estate Diversified
Income Fund each consisted of one portfolio. Goldman Sachs Credit Income Fund and Goldman Sachs Real Estate Diversified Income Fund did not offer shares to the public.
|
4
|
This column includes only directorships of companies required to report to the SEC under the Securities
Exchange Act of 1934 (i.e., public companies) or other investment companies registered under the Act.
|
The
significance or relevance of a Trustees particular experience, qualifications, attributes and/or skills is considered by the Board on an individual basis. Experience, qualifications, attributes and/or skills common to all Trustees include the
ability to critically review, evaluate and discuss information provided to them and to interact effectively with the other Trustees and with representatives of the Investment Adviser and its affiliates, other service providers, legal counsel and the
Funds independent registered public accounting firm, the capacity to address financial and legal issues and exercise reasonable business judgment, and a commitment to the representation of the interests of the Funds and their shareholders. The
Governance and Nominating Committees charter contains certain other factors that are considered by the Governance and Nominating Committee in identifying and evaluating potential nominees to serve as Independent Trustees. Based on each
Trustees experience, qualifications, attributes and/or skills, considered individually and with respect to the experience, qualifications, attributes and/or skills of other Trustees, the Board has concluded that each Trustee should serve as a
Trustee. Below is a brief discussion of the experience, qualifications, attributes and/or skills of each individual Trustee as of December 27, 2019 that led the Board to conclude that such individual should serve as a Trustee.
Lawrence W. Stranghoener. Mr. Stranghoener has served as a Trustee of the Trust since 2015 and Chairman of the Board of Trustees since 2017.
Mr. Stranghoener is retired. Mr. Stranghoener is Chairman of the Board of Directors of Kennametal, Inc., a global manufacturer and distributor of tooling and industrial materials. He is also a member of the Board of Directors of Aleris
Corporation and Aleris International, Inc., which provides aluminum rolled products and extrusions, aluminum recycling, and specification alloy production, where he chairs the Audit Committee and also serves on the Compensation Committee.
Previously, Mr. Stranghoener held several senior management positions at Mosaic Company, a fertilizer manufacturing company, where he worked for 10 years, most recently as Interim Chief Executive Officer, Executive Vice President and Chief
Financial Officer. As Executive Vice President and Chief Financial Officer at Mosaic Company, Mr. Stranghoener implemented public company processes, policies and performance standards to transition the company from private to public ownership
and oversaw the companys controller, treasury, tax, investor relations, strategy and business development, and internal audit functions. He also led the integration of Mosaic Company with IMC Global, Inc. during their merger. Previously,
Mr. Stranghoener served for three years as Executive Vice President and Chief Financial Officer for Thrivent Financial, a non-profit, financial services organization and Techies.com, an internet-based professional services company.
Mr. Stranghoener also held several senior management positions at Honeywell International, Inc. where he worked for 17 years, most recently as Vice President and Chief Financial Officer. In addition, he serves as Chairman of the Board of
Regents of St. Olaf College. Based on the foregoing, Mr. Stranghoener is experienced with financial and investment matters.
Caroline Dorsa.
Ms. Dorsa has served as a Trustee of the Trust since 2016. Ms. Dorsa is retired. Ms. Dorsa has been designated as the Boards audit committee financial expert given her extensive accounting and finance experience.
Ms. Dorsa is a member of the Board of Directors of Biogen Inc., a biotechnology company, where she chairs the Audit Committee and also serves on the Risk Committee. In addition, Ms. Dorsa also serves as a member of the Board of Directors
of Intellia Therapeutics Inc., a gene-editing company, where she chairs the Audit Committee and serves on the Compensation Committee and Nominating and Corporate Governance Committee. Furthermore, Ms. Dorsa serves as a member of the Board of
Directors of Illumina, Inc., a life sciences company, where she serves on the Audit Committee. Previously, she served as Executive Vice President and Chief Financial Officer of Public Service Enterprise Group, Inc. (PSEG), a generation
and energy services company. As Executive Vice President and Chief Financial Officer, Ms. Dorsa was responsible for finance, accounting and internal audit, risk management and investor relations. Prior to becoming Chief Financial Officer, she
was a member of PSEGs Board of Directors and a member of its Audit, Corporate Governance and Finance committees for six years. Prior to joining PSEG, Ms. Dorsa held various management positions at Merck &Co, Inc., where she
worked for over 20 years, most recently in the position of Senior Vice President of Global Human Health Strategy and Integration.
B-53
As Vice President and Treasurer of Merck from 1994 through 2006, her responsibilities also included the global
tax function, transfer pricing, global entity management and financial planning for both the research and manufacturing divisions. Based on the foregoing, Ms. Dorsa is experienced with financial and investment matters.
Linda A. Lang. Ms. Lang has served as a Trustee of the Trust since 2016. Ms. Lang is retired. Ms. Lang was formerly the Chair of the
Board of Directors of WD-40 Company, a global consumer products company, where she served on the Compensation and Finance Committees. Ms. Lang also previously held several senior management positions at Jack in the Box, Inc., a restaurant
company listed on The NASDAQ Stock Market, where she worked for 30 years, most recently as Chairman and Chief Executive Officer. Over that time, she was involved in the areas of strategic planning, capital structure and deployment, and
enterprise risk management. Ms. Lang previously served on the Board of Directors of the San Diego Regional Economic Development Corporation and as a Trustee of the California State University System. In addition, she also serves as a member of
the Board of Directors of San Diego State Universitys College of Business Administration and is a member of the Corporate Directors Forum. Based on the foregoing, Ms. Lang is experienced with financial and investment matters.
Michael Latham. Mr. Latham has served as a Trustee of the Trust since 2015. Mr. Latham is retired. Previously, he held several senior
management positions for 15 years with the iShares exchange-traded fund business owned by BlackRock, Inc. and previously owned by Barclays Global Investors, most recently as Chairman and Global Head of the business. In that capacity he was one of
the lead executives responsible for the growth of the business. He was also involved in governance of the iShares funds, serving initially as Principal Financial Officer and later as President and Principal Executive Officer and a member of the
Board of Directors. Mr. Latham is a certified public accountant, and before joining Barclays Global Investors, he worked at Ernst and Young for over five years. Based on the foregoing, Mr. Latham is experienced with accounting, financial
and investment matters.
James A. McNamara. Mr. McNamara has served as a Trustee and President of the Trust since 2014. Mr. McNamara is
an Advisory Director to Goldman Sachs. Prior to retiring as Managing Director at Goldman Sachs in 2017, Mr. McNamara was head of Global Third Party Distribution at GSAM and was previously head of U.S. Third Party Distribution. Prior to that
role, Mr. McNamara served as Director of Institutional Fund Sales. Prior to joining Goldman Sachs, Mr. McNamara was Vice President and Manager at Dreyfus Institutional Service Corporation. Based on the foregoing, Mr. McNamara is
experienced with financial and investment matters.
Officers of the Trust
Information pertaining to the Officers of the Trust as of December 27, 2019 is set forth below.
|
|
|
|
|
|
|
Name
|
|
Position(s) Held
with the Trust(s)
|
|
Term of Office and
Length of Time
Served1
|
|
Principal Occupation(s)
During Past 5
Years
|
James A. McNamara
200 West Street
New York, NY
10282
Age: 57
|
|
Trustee and
President
|
|
Since 2014
|
|
Advisory Director, Goldman Sachs (January 2018Present); Managing Director, Goldman Sachs (January 2000December 2017); Director of
Institutional Fund Sales, GSAM (April 1998December 2000); and Senior Vice President and Manager, Dreyfus Institutional Service Corporation (January 1993April 1998).
President and TrusteeGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs
Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income
Fund.
|
B-54
|
|
|
|
|
|
|
Name
|
|
Position(s) Held
with the Trust(s)
|
|
Term of Office and
Length of Time
Served1
|
|
Principal Occupation(s)
During Past 5
Years
|
Joseph F. DiMaria
30 Hudson Street
Jersey City, NJ
07302
Age: 51
|
|
Treasurer, Principal Financial Officer and Principal Accounting Officer
|
|
Since 2017 (Treasurer and Principal Financial Officer since 2019)
|
|
Managing Director, Goldman Sachs (November 2015Present) and Vice PresidentMutual Fund Administration, Columbia Management
Investment Advisers, LLC (May 2010October 2015).
Treasurer, Principal
Financial Officer and Principal Accounting OfficerGoldman Sachs ETF Trust (previously Assistant Treasurer (2017)); Goldman Sachs Trust (previously Assistant Treasurer (2016)); Goldman Sachs Variable Insurance Trust (previously Assistant
Treasurer (2016)); Goldman Sachs Trust II (previously Assistant Treasurer (2017)); Goldman Sachs MLP Income Opportunities Fund (previously Assistant Treasurer (2017)); Goldman Sachs MLP and Energy Renaissance Fund (previously Assistant Treasurer
(2017)); Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
|
|
|
Julien Yoo
200 West Street
New York, NY
10282
Age: 48
|
|
Chief Compliance Officer
|
|
Since 2014
|
|
Managing Director, Goldman Sachs (effective January 2020); Vice President, Goldman Sachs (December 2014December 2019); Contingent
Worker, Goldman Sachs (September 2013May 2014); and Vice President, Morgan Stanley Investment Management (20052010).
Chief Compliance OfficerGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs BDC,
Inc.; Goldman Sachs Private Middle Market Credit LLC; Goldman Sachs Private Middle Market Credit II LLC; Goldman Sachs Middle Market Lending Corp.; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman
Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
|
|
|
Peter W. Fortner
30 Hudson Street
Jersey City, NJ
07302
Age: 61
|
|
Assistant
Treasurer
|
|
Since 2014
|
|
Vice President, Goldman Sachs (July 2000Present); and Principal Accounting Officer, Commerce Bank Mutual Fund Complex
(2008Present).
Assistant TreasurerGoldman Sachs ETF Trust; Goldman Sachs
Trust; Goldman Sachs Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income
Fund.
|
|
|
|
|
Allison Fracchiolla
30 Hudson Street
Jersey City, NJ
07302
Age: 36
|
|
Assistant
Treasurer
|
|
Since 2014
|
|
Vice President, Goldman Sachs (January 2013Present).
Assistant TreasurerGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs Variable Insurance Trust; and Goldman Sachs Trust
II.
|
B-55
|
|
|
|
|
|
|
Name
|
|
Position(s) Held
with the Trust(s)
|
|
Term of Office and
Length of Time
Served1
|
|
Principal Occupation(s)
During Past 5
Years
|
Tyler Hanks
222 S. Main St
Salt Lake City, UT
84101
Age: 37
|
|
Assistant Treasurer
|
|
Since 2019
|
|
Vice President, Goldman Sachs (January 2016Present); and Associate, Goldman Sachs (January 2014January 2016).
Assistant TreasurerGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs
Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
|
|
|
Kirsten Frivold Imohiosen
200 West
Street
New York, NY
10282
Age: 49
|
|
Assistant
Treasurer
|
|
Since 2019
|
|
Managing Director, Goldman Sachs (January 2018Present); and Vice President, Goldman Sachs (May 1999December 2017).
Assistant TreasurerGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs
Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs BDC, Inc.; Goldman Sachs Private Middle Market Credit LLC; Goldman Sachs Private Middle
Market Credit II LLC; Goldman Sachs Middle Market Lending Corp.; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
|
|
|
Steven Z. Indich
30 Hudson Street
Jersey City, NJ
07302
Age: 50
|
|
Assistant
Treasurer
|
|
Since 2019
|
|
Vice President, Goldman Sachs (February 2010Present).
Assistant TreasurerGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income
Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs BDC, Inc.; Goldman Sachs Private Middle Market Credit LLC; Goldman Sachs Private Middle Market Credit II LLC; Goldman Sachs Middle Market Lending Corp.; Goldman Sachs
Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
|
|
|
Carol Liu
30 Hudson Street
Jersey City, NJ
07302
Age: 44
|
|
Assistant
Treasurer
|
|
Since 2019
|
|
Vice President, Goldman Sachs (October 2017Present); Tax Director, The Raine Group LLC (August 2015October 2017); and Tax
Director, Icon Investments LLC (January 2012August 2015).
Assistant
TreasurerGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs BDC, Inc.; Goldman
Sachs Private Middle Market Credit LLC; Goldman Sachs Private Middle Market Credit II LLC; Goldman Sachs Middle Market Lending Corp.; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income
Fund.
|
B-56
|
|
|
|
|
|
|
Name
|
|
Position(s) Held
with the Trust(s)
|
|
Term of Office and
Length of Time
Served1
|
|
Principal Occupation(s)
During Past 5
Years
|
Michael Crinieri
200 West Street
New York, NY
10282
Age: 54
|
|
Vice President
|
|
Since 2014
|
|
Managing Director, Goldman Sachs (January 2002Present); and Vice President, Goldman Sachs (April 2000January 2002).
Vice PresidentGoldman Sachs ETF Trust.
|
|
|
|
|
Levee Brooks
200 West Street
New York, NY
10282
Age: 38
|
|
Vice President
|
|
Since 2019
|
|
Managing Director, Goldman Sachs (2017Present); Vice President, Goldman Sachs (20092017); Associate, Goldman Sachs
(20062009); Analyst, Goldman Sachs (20052006); and Chairman of the Board of Directors, Moogi, Inc. (20082013).
Vice PresidentGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income
Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
|
|
|
Patrick Hyland
200 West Street
New York, NY
10282
Age: 45
|
|
Vice President
|
|
Since 2019
|
|
Vice President, Goldman Sachs (2010Present).
Vice PresidentGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income
Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
|
|
|
Michael Twohig
200 West Street
New York, NY
10282
Age: 54
|
|
Vice President
|
|
Since 2019
|
|
Vice President, Goldman Sachs (2014Present).
Vice PresidentGoldman Sachs ETF Trust; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit
Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
|
|
|
|
Caroline L. Kraus
200 West Street
New York, NY
10282
Age: 42
|
|
Secretary
|
|
Since 2014
|
|
Managing Director, Goldman Sachs (January 2016Present); Vice President, Goldman Sachs (August 2006December 2015); Associate
General Counsel, Goldman Sachs (2012Present); Assistant General Counsel, Goldman Sachs (August 2006December 2011); and Associate, Weil, Gotshal & Manges, LLP (20022006).
SecretaryGoldman Sachs ETF Trust; Goldman Sachs Trust (previously Assistant
Secretary (2012)); Goldman Sachs Variable Insurance Trust (previously Assistant Secretary (2012)); Goldman Sachs Trust II; Goldman Sachs BDC, Inc.; Goldman Sachs Private Middle Market Credit LLC; Goldman Sachs Private Middle Market Credit II LLC;
Goldman Sachs Middle Market Lending Corp.; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income
Fund.
|
B-57
|
|
|
|
|
|
|
Name
|
|
Position(s) Held
with the Trust(s)
|
|
Term of Office and
Length of Time
Served1
|
|
Principal Occupation(s)
During Past 5
Years
|
Robert Griffith
200 West Street
New York, NY
10282
Age: 45
|
|
Assistant
Secretary
|
|
Since 2018
|
|
Vice President, Goldman Sachs (August 2011Present); Associate General Counsel, Goldman Sachs (December 2014Present);
Assistant General Counsel, Goldman Sachs (August 2011December 2014); Vice President and Counsel, Nomura Holding America, Inc. (20102011); and Associate, Simpson Thacher & Bartlett LLP (20052010).
Assistant SecretaryGoldman Sachs ETF Trust; Goldman Sachs Trust; Goldman Sachs
Variable Insurance Trust; Goldman Sachs Trust II; Goldman Sachs MLP Income Opportunities Fund; Goldman Sachs MLP and Energy Renaissance Fund; Goldman Sachs Credit Income Fund; and Goldman Sachs Real Estate Diversified Income Fund.
|
1
|
Officers hold office at the pleasure of the Board of Trustees or until their successors are duly elected and
qualified. Each officer holds comparable positions with certain other companies of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser, administrator and/or distributor.
|
Standing Board Committees
The Audit
Committee oversees the audit process and provides assistance to the Board with respect to fund accounting, tax compliance and financial statement matters. In performing its responsibilities, the Audit Committee selects and recommends annually to the
Board an independent registered public accounting firm to audit the books and records of the Trust for the ensuing year, and reviews with the firm the scope and results of each audit. All of the Independent Trustees serve on the Audit Committee, and
Ms. Dorsa serves as the Chair of the Audit Committee. The Audit Committee met five times during the fiscal year ended August 31, 2019.
The Governance and Nominating Committee has been established to: (i) assist the Board in matters involving fund governance, which
includes making recommendations to the Board with respect to the effectiveness of the Board in carrying out its responsibilities in governing the Funds and overseeing their management; (ii) select and nominate candidates for appointment or
election to serve as Independent Trustees; and (iii) advise the Board on ways to improve its effectiveness. All of the Independent Trustees serve on the Governance and Nominating Committee. As stated above, each Trustee holds office for an
indefinite term until the occurrence of certain events. In filling Board vacancies, the Governance and Nominating Committee will consider nominees recommended by shareholders. Nominee recommendations should be submitted to the Trust at its mailing
address stated in the Funds Prospectus and should be directed to the attention of the Goldman Sachs ETF Trust Governance and Nominating Committee. The Governance and Nominating Committee met three times during the fiscal year ended
August 31, 2019.
The Compliance Committee has been established for the purpose of overseeing the compliance processes: (i) of
the Funds; and (ii) insofar as they relate to services provided to the Funds, of the Funds Investment Adviser, Distributor, administrator (if any), and Transfer Agent, except that compliance processes relating to the accounting and
financial reporting processes, and certain related matters, are overseen by the Audit Committee. In addition, the Compliance Committee provides assistance to the full Board with respect to compliance matters. All of the Independent Trustees serve on
the Compliance Committee. The Compliance Committee met four times during the fiscal year ended August 31, 2019.
The Valuation
Committee is authorized to act for the Board in connection with the valuation of portfolio securities held by the Funds in accordance with the Trusts Valuation Procedures. Messrs. McNamara and DiMaria serve on the Valuation Committee. The
Valuation Committee was established by the Board on September 21, 2018. The Valuation Committee met twelve times during the fiscal year ended August 31, 2019.
The Contract Review Committee has been established for the purpose of overseeing the processes of the Board for reviewing and monitoring
performance under the Funds investment management, distribution, transfer agency, and certain other agreements with the Funds Investment Adviser and its affiliates. The Contract Review Committee is also responsible for overseeing the
Boards processes for considering and reviewing performance under the operation of the Funds distribution, service, shareholder administration and other plans, and any agreements related to the plans. The Contract Review Committee also
provides appropriate assistance to the Board in connection with the Boards approval, oversight and review of the Funds other service providers including, without limitation,
B-58
the Funds custodian/accounting agent, sub-transfer agents, professional (legal and accounting) firms and printing firms. All of the Independent Trustees serve on the Contract Review
Committee. The Contract Review Committee met once during the fiscal year ended August 31, 2019.
Risk Oversight
The Board is responsible for the oversight of the activities of the Funds, including oversight of risk management. Day-to-day risk management
with respect to the Funds is the responsibility of GSAM or other service providers (depending on the nature of the risk), subject to supervision by GSAM. The risks of the Funds include, but are not limited to, liquidity risk, investment risk,
compliance risk, operational risk, reputational risk, credit risk and counterparty risk. Each of GSAM and the other service providers have their own independent interest in risk management and their policies and methods of risk management may differ
from the Funds and each others in the setting of priorities, the resources available or the effectiveness of relevant controls. As a result, the Board recognizes that it is not possible to identify all of the risks that may affect the Funds or
to develop processes and controls to eliminate or mitigate their occurrence or effects, and that some risks are simply beyond the control of the Funds or GSAM, their respective affiliates or other service providers.
The Board effectuates its oversight role primarily through regular and special meetings of the Board and Board committees. In certain cases,
risk management issues are specifically addressed in reports, presentations and discussions. For example, on an annual basis, GSAM will provide the Board with a written report that addresses the operation, adequacy and effectiveness of the
Trusts liquidity risk management program, which is designed to assess and manage the Funds liquidity risk. In addition, investment risk is discussed in the context of regular presentations to the Board on Fund strategy. Other types of
risk are addressed as part of presentations on related topics (e.g., compliance policies) or in the context of presentations focused specifically on one or more risks. The Board also receives reports from GSAM management on operational risks,
reputational risks and counterparty risks relating to the Funds.
Board oversight of risk management is also performed by various Board
committees. For example, the Audit Committee meets with both the Funds independent registered public accounting firm and GSAMs internal audit group to review risk controls in place that support the Funds as well as test results, and the
Compliance Committee meets with the CCO and representatives of GSAMs compliance group to review testing results of the Funds compliance policies and procedures and other compliance issues. Board oversight of risk is also performed as
needed between meetings through communications between the GSAM and the Board. The Board may, at any time and in its discretion, change the manner in which it conducts risk oversight. The Boards oversight role does not make the Board a
guarantor of the Funds investments or activities.
Trustee Ownership of Fund Shares
The following table shows the dollar range of shares beneficially owned by each Trustee in the Funds and other portfolios of the Goldman Sachs
Fund Complex as of December 31, 2018.
|
|
|
|
|
Name of Trustee
|
|
Dollar Range of
Equity Securities in the Funds1
|
|
Aggregate Dollar Range of
Equity Securities in All
Portfolios in Fund Complex
Overseen By Trustee
|
Lawrence W. Stranghoener
|
|
None
|
|
Over $100,000
|
Caroline Dorsa
|
|
None
|
|
Over $100,000
|
Linda A. Lang
|
|
None
|
|
Over $100,000
|
Michael Latham
|
|
None
|
|
Over $100,000
|
James A. McNamara
|
|
None
|
|
Over $100,000
|
1
|
Includes the value of shares beneficially owned by each Trustee in the Funds.
|
As of December 1, 2019, the Trustees and Officers of the Trust as a group owned less than 1% of the outstanding shares of beneficial
interest of the Funds.
Board Compensation
Each Independent Trustee is compensated with a unitary annual fee for his or her services as a Trustee of the Trust and as a member of the
Governance and Nominating Committee, Compliance Committee, Contract Review Committee, and Audit Committee. The Chair and audit committee financial expert receive additional compensation for their services. The Independent Trustees are
also
B-59
reimbursed for reasonable travel expenses incurred in connection with attending such meetings. The Trust may also pay the reasonable incidental costs of a Trustee to attend training or other
types of conferences relating to the investment company industry.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Trust for the fiscal year ended August 31, 2019:
Trustee Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Trustee
|
|
Goldman
Sachs
Access
Treasury
0-1 Year
ETF
|
|
|
Goldman
Sachs
Access
Inflation
Protected
USD
Bond
ETF*
|
|
|
Goldman Sachs Access
High Yield Corporate
Bond ETF
|
|
|
Goldman Sachs Access
Investment Grade
Corporate Bond ETF
|
|
Lawrence W. Stranghoener(1)
|
|
$
|
18,300
|
|
|
$
|
1,141
|
|
|
$
|
1,959
|
|
|
$
|
3,732
|
|
Caroline Dorsa(2)
|
|
$
|
17,284
|
|
|
$
|
1,078
|
|
|
$
|
1,850
|
|
|
$
|
3,525
|
|
Linda A. Lang
|
|
$
|
16,267
|
|
|
$
|
1,014
|
|
|
$
|
1,741
|
|
|
$
|
3,317
|
|
Michael Latham
|
|
$
|
16,267
|
|
|
$
|
1,014
|
|
|
$
|
1,741
|
|
|
$
|
3,317
|
|
James A. McNamara(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Trustee
|
|
Goldman Sachs Access
Emerging Markets Local
Currency Bond ETF**
|
|
|
Goldman Sachs Access
Emerging Markets USD
Bond ETF**
|
|
|
Goldman Sachs Access
Ultra Short Bond
ETF***
|
Lawrence W. Stranghoener(1)
|
|
|
|
|
|
|
|
|
|
$270
|
Caroline Dorsa(2)
|
|
|
|
|
|
|
|
|
|
$255
|
Linda A. Lang
|
|
|
|
|
|
|
|
|
|
$240
|
Michael Latham
|
|
|
|
|
|
|
|
|
|
$240
|
James A. McNamara(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Trustee
|
|
Pension or Retirement
Benefits Accrued as Part
Of the Trusts Expenses
|
|
|
Total Compensation From
the Fund Complex
(including the
Funds)(4)
|
|
Lawrence W. Stranghoener(1)
|
|
$
|
0
|
|
|
$
|
231,964
|
|
Caroline Dorsa(2)
|
|
$
|
0
|
|
|
$
|
190,408
|
|
Linda A. Lang
|
|
$
|
0
|
|
|
$
|
199,642
|
|
Michael Latham
|
|
$
|
0
|
|
|
$
|
201,736
|
|
James A. McNamara(3)
|
|
|
|
|
|
|
|
|
*
|
Includes fees paid to each Trustee following launch of the Fund for services through the fiscal year ended
August 31, 2019. The Fund commenced operations on October 2, 2018.
|
**
|
The Goldman Sachs Access Emerging Markets Local Currency Bond ETF and Goldman Sachs Access Emerging Markets USD
Bond ETF had not commenced operations as of December 27, 2019. Under current compensation arrangements, it is estimated that the Trustees will not receive compensation from these Funds for the period from the expected launch dates of the Funds
through the fiscal year ended August 31, 2020.
|
***
|
Includes fees paid to each Trustee following launch of the Fund for services through the fiscal year ended
August 31, 2019. The Fund commenced operations on April 15, 2019.
|
1
|
Includes compensation as Board Chair.
|
2
|
Includes compensation as audit committee financial expert, as defined in Item 3 of Form N-CSR.
|
3
|
Mr. McNamara is an Interested Trustee, and as such, receives no compensation from the Funds or the Goldman
Sachs Fund Complex.
|
4
|
Represents fees paid to each Trustee during the fiscal year ended August 31, 2019 from the Goldman Sachs
Fund Complex. Includes fees paid with respect to Goldman Sachs Private Markets Fund 2018 LLC, Goldman Sachs Private Markets Fund 2018 (A) LLC and Goldman Sachs Private Markets Fund (B) LLC.
|
Miscellaneous
The Trust, its Investment
Adviser and the Distributor have adopted codes of ethics under Rule 17j-1 of the Act that permit personnel subject to their particular codes of ethics to invest in securities, including securities that may be purchased or held by the Funds.
B-60
MANAGEMENT SERVICES
As stated in the Funds Prospectus, GSAM, 200 West Street, New York, New York 10282, serves as Investment Adviser to the Funds. GSAM is
an indirect, wholly-owned subsidiary of The Goldman Sachs Group, Inc. and an affiliate of Goldman Sachs. See Service Providers in the Funds Prospectus for a description of the Investment Advisers duties to the Funds.
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. Goldman Sachs is a leader in developing portfolio strategies and in many fields of investing and financing, participating in financial markets worldwide and serving individuals, institutions, corporations
and governments. Goldman Sachs is also among the principal market sources for current and thorough information on companies, industrial sectors, markets, economies and currencies, and trades and makes markets in a wide range of equity and debt
securities 24 hours a day. The firm is headquartered in New York with offices in countries throughout the world. It has trading professionals throughout the United States, as well as in London, Frankfurt, Tokyo, Seoul, Sao Paulo and other major
financial centers around the world. The active participation of Goldman Sachs in the worlds financial markets enhances its ability to identify attractive investments. Goldman Sachs has agreed to permit the Funds to use the name Goldman
Sachs or a derivative thereof as part of each Funds name for as long as the Funds management agreements (each, a Management Agreement and collectively, the Management Agreements) are in effect.
Each Management Agreement provides that GSAM, in its capacity as Investment Adviser, may render similar services to others so long as the
services under the Management Agreement are not impaired thereby. With respect to the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF, Goldman Sachs Access High Yield Corporate Bond ETF and Goldman
Sachs Access Investment Grade Corporate Bond ETF, the Funds Management Agreements were most recently approved by the Trustees of the Trust, including a majority of the Trustees of the Trust who are not parties to such agreement or
interested persons (as such term is defined in the Act) of any party thereto (the non-interested Trustees), on September 17-18, 2019. The Goldman Sachs Access Ultra Short Bond ETFs Management Agreement was approved
for an initial two-year period by the Trustees of the Trust, including a majority of the non-interested Trustees, on November 28, 2018. A discussion regarding the basis for the Board of Trustees approval of the Management Agreements for
the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF, Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF and Goldman Sachs Access Ultra Short
Bond ETF is available in the annual report dated August 31, 2019. A discussion regarding the basis for the Board of Trustees approval of the Management Agreements for the Goldman Sachs Access Emerging Markets Local Currency Bond ETF and
Goldman Sachs Access Emerging Markets USD Bond ETF will be available in the Funds first annual or semi-annual report following their launches.
The Management Agreements will remain in effect for an initial two-year period and will continue in effect with respect to each Fund from year
to year thereafter provided such continuance is specifically approved at least annually by (i) the vote of a majority of such Funds outstanding voting securities or a majority of the Trustees of the Trust, and (ii) the vote of a
majority of the non-interested Trustees of the Trust, cast in person at a meeting called for the purpose of voting on such approval.
Each
Management Agreement will terminate automatically if assigned (as defined in the Act). A Management Agreement is also terminable at any time without penalty by the Trustees of the Trust or by vote of a majority of the outstanding voting securities
of a Fund on 60 days written notice to the Investment Adviser or by the Investment Adviser on 60 days written notice to the Trust.
Pursuant to each Management Agreement, the Investment Adviser is entitled to receive the fees set forth below, payable monthly based on each
Funds average daily net assets. Under the Management Agreement for each Fund, the Investment Adviser is responsible for substantially all the expenses of the Fund, excluding payments under the Funds 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
|
|
Contractual Rate
|
|
Goldman Sachs Access Treasury 0-1 Year ETF*
|
|
|
0.14
|
%
|
Goldman Sachs Access Inflation Protected USD Bond ETF
|
|
|
0.12
|
%
|
Goldman Sachs Access High Yield Corporate Bond ETF
|
|
|
0.34
|
%
|
Goldman Sachs Access Investment Grade Corporate Bond ETF
|
|
|
0.14
|
%
|
Goldman Sachs Access Emerging Markets Local Currency Bond ETF
|
|
|
0.45
|
%
|
Goldman Sachs Access Emerging Markets USD Bond ETF*
|
|
|
0.45
|
%
|
Goldman Sachs Access Ultra Short Bond ETF*
|
|
|
0.20
|
%
|
*
|
The Investment Adviser has agreed to waive a portion of its management fee in order to achieve an effective
net management fee rate of 0.12%, 0.39% and 0.16% as annual percentage rates of the average daily net assets of the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Emerging Markets USD Bond ETF and Goldman Sachs Access Ultra Short
Bond ETF, respectively, through at least December 27, 2020, and prior to such date, the Investment Adviser may not terminate the arrangement without the approval of the Board of Trustees.
|
B-61
For the fiscal years ended August 31, 2017, August 31, 2018 and August 31, 2019,
the amounts of the fees incurred by each of the Funds under the Management Agreements were as follows (with and without the fee limitations that were then in effect):
|
|
|
|
|
|
|
|
|
Fund
|
|
2019
With Fee
Limitations
|
|
|
Without Fee
Limitations
|
|
Goldman Sachs Access Treasury 0-1 Year
ETF1
|
|
$
|
3,342,790
|
|
|
$
|
3,913,915
|
|
Goldman Sachs Access Inflation Protected USD Bond
ETF2
|
|
$
|
2,608
|
|
|
$
|
2,608
|
|
Goldman Sachs Access High Yield Corporate Bond ETF
3
|
|
$
|
193,273
|
|
|
$
|
193,273
|
|
Goldman Sachs Access Investment Grade Corporate Bond ETF3
|
|
$
|
488,535
|
|
|
$
|
488,535
|
|
Goldman Sachs Access Ultra Short Bond ETF4 5
|
|
$
|
6,498
|
|
|
$
|
8,413
|
|
1
|
The Investment Adviser agreed to waive a portion of its management fee in order to achieve an effective net
management fee rate of 0.12%.
|
2
|
The Fund commenced operations on October 2, 2018.
|
3
|
The Investment Adviser has agreed to waive a portion of its management fee payable by the Fund in an amount
equal to the management fee it earns as an investment adviser to the affiliated funds in which the Fund invests.
|
4
|
The Fund commenced operations on April 15, 2019.
|
5
|
The Investment Adviser agreed to waive a portion of its management fee in order to achieve an effective net
management fee rate of 0.16%.
|
|
|
|
|
|
|
|
|
|
Fund
|
|
2018
With Fee
Limitations
|
|
|
Without Fee
Limitations
|
|
Goldman Sachs Access Treasury 0-1 Year
ETF1
|
|
$
|
1,200,851
|
|
|
$
|
1,408,414
|
|
Goldman Sachs Access High Yield Corporate Bond ETF2
3
|
|
$
|
140,820
|
|
|
$
|
141,251
|
|
Goldman Sachs Access Investment Grade Corporate Bond ETF3
|
|
$
|
243,172
|
|
|
$
|
244,274
|
|
1
|
The Investment Adviser agreed to waive a portion of its management fee in order to achieve an effective net
management fee rate of 0.12%.
|
2
|
The Fund commenced operations on September 5, 2017.
|
3
|
The Investment Adviser has agreed to waive a portion of its management fee payable by the Fund in an amount
equal to the management fee it earns as an investment adviser to the affiliated funds in which the Fund invests.
|
|
|
|
|
|
|
|
|
|
Fund
|
|
2017
With Fee
Limitations
|
|
|
Without Fee
Limitations
|
|
Goldman Sachs Access Treasury 0-1 Year
ETF1
|
|
$
|
145,895
|
|
|
$
|
165,984
|
|
Goldman Sachs Access Investment Grade Corporate Bond ETF2 3
|
|
$
|
21,905
|
|
|
$
|
23,207
|
|
1
|
Effective July 12, 2017, the Investment Adviser agreed to waive a portion of its management fee in
order to achieve an effective net management fee rate of 0.12%.
|
2
|
The Fund commenced operations on June 6, 2017.
|
3
|
The Investment Adviser has agreed to waive a portion of its management fee payable by the Fund in an amount
equal to the management fee it earns as an investment adviser to the affiliated funds in which the Fund invests.
|
Since the Goldman Sachs Access Emerging Markets Local Currency Bond ETF and Goldman Sachs Access Emerging Markets USD Bond ETF were not in
operation as of August 31, 2019, they did not pay management fees during the last three fiscal years.
The imposition of the
Investment Advisers fees will have the effect of reducing the total return to investors. From time to time, the Investment Adviser may waive receipt of its fees, which would have the effect of lowering each Funds overall expense ratio
and increasing total return to investors at the time such amounts are waived.
In addition to the management fee waivers described above,
the Investment Adviser may waive an additional portion of its management fee, including fees earned as the Investment Adviser to the any of affiliated funds in which a Fund invests, from time to time, and may discontinue or modify any such waiver in
the future, consistent with the terms of any fee waiver arrangements in place. The Investment Adviser may decide to waive a portion of its management fee to the extent necessary to avoid a negative yield on a given day. Any such waiver would be
voluntary and may be terminated at any time.
In addition to providing advisory services, under its Management Agreements, the Investment
Adviser also, 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: (i) supervises all non-advisory operations of each Fund that it advises; (ii) provides personnel to perform such executive, administrative and clerical services as
are reasonably necessary to provide effective administration of each Fund; (iii) 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; (iv) maintains each Funds records; and (v) provides office
space and all necessary office equipment and services.
B-62
Portfolio ManagersOther Accounts Managed by the Portfolio Managers
The following table discloses accounts within each type of category listed below for which the portfolio managers are jointly and primarily
responsible for day to day portfolio management as of August 31, 2019, unless otherwise noted.
For each portfolio manager listed
below, the total number of accounts managed is a reflection of accounts within the strategy they oversee or manage. There are multiple portfolio managers involved with each account.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Other Accounts Managed and Total Assets by Account Type
|
|
|
Number of Accounts and Total Assets for Which Advisory Fee is
Performance Based
|
|
|
|
|
|
|
|
|
Name of
Portfolio
Manager
|
|
Registered
Investment
Companies
|
|
|
Other Pooled
Investment Vehicles
|
|
|
Other
Accounts
|
|
|
Registered
Investment
Companies
|
|
|
Other Pooled
Investment Vehicles
|
|
|
Other
Accounts
|
|
|
|
Number
of
Accounts
|
|
|
Assets
Managed
|
|
|
Number
of
Accounts
|
|
|
Assets
Managed
|
|
|
Number
of
Accounts
|
|
|
Assets
Managed
|
|
|
Number
of
Accounts
|
|
|
Assets
Managed
|
|
|
Number
of
Accounts
|
|
|
Assets
Managed
|
|
|
Number
of
Accounts
|
|
|
Assets
Managed
|
|
Portfolio Management Team
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Fishman
|
|
|
23
|
|
|
$
|
218,637
|
|
|
|
170
|
|
|
$
|
166,207
|
|
|
|
362
|
|
|
$
|
75,380
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
5
|
|
|
$
|
3,755
|
|
Matthew Kaiser
|
|
|
27
|
|
|
$
|
15,110
|
|
|
|
76
|
|
|
$
|
43,927
|
|
|
|
3,511
|
|
|
$
|
211,520
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
6
|
|
|
$
|
2,301
|
|
|
|
10
|
|
|
$
|
8,533
|
|
Jason Singer
|
|
|
6
|
|
|
$
|
3,690
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
6,878
|
|
|
$
|
41,445
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
David Westbrook
|
|
|
6
|
|
|
$
|
3,690
|
|
|
|
9
|
|
|
$
|
11,876
|
|
|
|
42
|
|
|
$
|
10,880
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
Footnotes:
1.
|
Asset information is in USD millions unless otherwise specified.
|
2.
|
Other Pooled Investment Vehicles includes private investment funds and SICAVs (a type of open-end
investment company organized outside the U.S.).
|
3.
|
Other Accounts includes a separately managed account platform, advisory mutual fund platform,
advisory relationships and others. For purposes of the above, a platform is included as a single account.
|
B-63
Conflicts of Interest. The Investment Advisers portfolio managers are often
responsible for managing the Funds as well as other registered funds, accounts, including proprietary accounts, separate accounts and other pooled investment vehicles, such as unregistered private funds. A portfolio manager may manage a separate
account or other pooled investment vehicle which may have materially higher fee arrangements than the Funds and may also have a performance-based fee. The side-by-side management of these funds may raise potential conflicts of interest relating to
cross trading, the allocation of investment opportunities and the aggregation and allocation of trades.
The Investment Adviser has a
fiduciary responsibility to manage all client accounts in a fair and equitable manner. To this end, the Investment Adviser has developed policies and procedures designed to mitigate and manage the potential conflicts of interest that may arise from
side-by-side management. In addition, the Investment Adviser and the Funds have adopted policies limiting the circumstances under which cross-trades may be effected between the Funds and another client account. The Investment Adviser conducts
periodic reviews of trades for consistency with these policies. For more information about conflicts of interests that may arise in connection with the portfolio managers management of the Funds investments and the investments of other
accounts, see POTENTIAL CONFLICTS OF INTEREST.
Portfolio ManagersCompensation
Compensation for portfolio managers of the Investment Adviser is comprised of a base salary and year-end discretionary variable compensation.
The base salary is fixed from year to year. Year-end discretionary variable compensation is primarily a function of each portfolio managers individual performance and his or her contribution to overall team performance; the performance of the
Investment Adviser and Goldman Sachs; the teams net revenues for the past year which is primarily derived from advisory fees; and anticipated compensation levels among competitor firms.
The discretionary variable compensation for portfolio managers is also significantly influenced by various factors, including:
(1) effective participation in team discussions and process; and (2) management of risk in alignment with the targeted risk parameter and investment objective of the applicable Fund. Other factors may also be considered including:
(1) general client/shareholder orientation and (2) teamwork and leadership. Portfolio managers may receive equity-based awards as part of their discretionary variable compensation.
Other CompensationIn addition to base salary and year-end discretionary variable compensation, the Investment Adviser has a number of
additional benefits in place including (1) a 401(k) program that enables employees to direct a percentage of their base salary and bonus income into a tax-qualified retirement plan; and (2) investment opportunity programs in which certain
professionals may participate subject to certain eligibility requirements.
Portfolio ManagersPortfolio Managers Ownership of Securities in
the Funds
The following table shows the portfolio managers ownership of shares of the Funds they manage as of August 31,
2019.
|
|
|
Name of Portfolio Manager
|
|
Dollar Range of Equity Securities Beneficially
Owned by Portfolio Manager
|
Goldman Sachs Access Treasury 0-1 Year ETF
|
David Fishman
|
|
None
|
Jason Singer
|
|
$10,001-$50,000
|
David Westbrook
|
|
None
|
Goldman Sachs Access Inflation Protected USD Bond ETF
|
Jason Singer
|
|
None
|
David Westbrook
|
|
None
|
Goldman Sachs Access High Yield Corporate Bond ETF
|
Jason Singer
|
|
$10,001-$50,000
|
David Westbrook
|
|
None
|
Goldman Sachs Access Investment Grade Corporate Bond ETF
|
Jason Singer
|
|
$10,001-$50,000
|
David Westbrook
|
|
None
|
Goldman Sachs Access Ultra Short Bond ETF
|
David Fishman
|
|
None
|
Matthew Kaiser
|
|
None
|
Jason Singer
|
|
None
|
David Westbrook
|
|
None
|
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The Goldman Sachs Access Emerging Markets Local Currency Bond ETF and Goldman Sachs Access
Emerging Markets USD Bond ETF were not in operation as of August 31, 2019. Consequently, Messrs. Singer and Westbrook owned no securities issued by such Funds as of that date.
Distributor and Transfer Agent
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 ALPS, acting as agent.
The Distributor does not maintain a secondary market in the Funds Shares.
Transfer Agent: The Bank of New York Mellon, 240
Greenwich Street, New York, New York 10286, serves as the Trusts transfer and dividend disbursing agent. Under its transfer agency agreement with the Trust, BNYM has undertaken with the Trust to provide the following services with respect to
each Fund: (i) perform and facilitate the performance of purchases and redemptions of Creation Units, (ii) prepare and transmit by means of Depository Trust Companys (DTC) book-entry system payments for dividends and
distributions on or with respect to the Shares declared by the Trust on behalf of the applicable 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.
The Trusts distribution and transfer agency agreements each provide that BNYM may render similar services to others so long as the
services BNYM provides thereunder are not impaired thereby. Such agreements also provide that the Trust will indemnify BNYM against certain liabilities.
Expenses
The Board of Trustees of the
Trust has approved a unitary management fee structure for the Funds. Under the unitary fee structure, the Investment Adviser is responsible for paying substantially all the expenses of each Fund, excluding payments under each Funds 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.
The imposition of the Investment Advisers fees, as well as any other operating expenses not borne by the Investment Adviser as described
above, will have the effect of reducing the total return to investors. From time to time, the Investment Adviser may waive receipt of its fees, which would have the effect of lowering the Funds overall expense ratio and increasing total return
to investors at the time such amounts are waived or assumed, as the case may be.
Custodian, Sub-Custodians and Provider of Administrative Services
BNYM is the custodian of the Trusts portfolio securities and cash. The custodian of the Trust may change from time to time. BNYM
also maintains the Trusts accounting records. BNYM 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.
BNYM provides administrative services pursuant to a fund administration agreement with the Trust (the
Fund Administration and Accounting Agreement) pursuant to which BNYM provides certain services, including, among others, (i) preparation of certain shareholder reports and communications; (ii) preparation of certain reports and
filings with the Securities and Exchange Commission; (iii) certain net asset value computation services; and (iv) such other services for the Trust as may be mutually agreed upon between the Trust and BNYM. For its services under the Fund
Administration and Accounting Agreement, BNYM receives such fees based on a stated percentage of net assets as are agreed upon from time to time between the parties. In addition, BNYM is reimbursed by the Funds for reasonable out-of-pocket expenses
incurred in connection with the Fund Administration and Accounting Agreement. In addition, an affiliate of BNYM 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 BNYM affiliate will receive compensation based on levels that are negotiated with the Trust and/or the
Investment Adviser. BNYM also provides certain middle office services to GSAM pursuant to a service agreement.
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Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP, 101 Seaport Boulevard, Suite 500, Boston, MA 02210, is the Funds independent registered public accounting
firm. The Funds independent registered public accounting firm may change from time to time. In addition to audit services, PricewaterhouseCoopers LLP provides assistance on certain non-audit matters.
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POTENTIAL CONFLICTS OF INTEREST
General Categories of Conflicts Associated with the Funds
Goldman Sachs (which, for purposes of this POTENTIAL CONFLICTS OF INTEREST section, shall mean, collectively, The Goldman Sachs Group, Inc., the
Investment Adviser and their affiliates, directors, partners, trustees, managers, members, officers and employees) is a worldwide, full-service investment banking, broker-dealer, asset management and financial services organization and a major
participant in global financial markets. As such, it provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high net-worth individuals. Goldman
Sachs acts as an investment banker, research provider, investment adviser, financier, adviser, market maker, prime broker, derivatives dealer, lender, counterparty, agent, principal and investor. In those and other capacities, Goldman Sachs advises
clients in all markets and transactions and purchases, sells, holds and recommends a broad array of investments, including securities, derivatives, loans, commodities, currencies, credit default swaps, indices, baskets and other financial
instruments and products, for its own account and for the accounts of clients and of its personnel, through client accounts and the relationships and products it sponsors, manages and advises. Goldman Sachs has direct and indirect interests in the
global fixed income, currency, commodity, equities, bank loan and other markets, and the securities and issuers, in which the Funds may directly and indirectly invest. As a result, Goldman Sachs activities and dealings may affect the Funds in
ways that may disadvantage or restrict the Funds and/or benefit Goldman Sachs or other Accounts. For purposes of this POTENTIAL CONFLICTS OF INTEREST section, Funds shall mean, collectively, the Fund and any of the other
Goldman Sachs Funds, and Accounts shall mean Goldman Sachs own accounts, accounts in which personnel of Goldman Sachs have an interest, accounts of Goldman Sachs clients, including separately managed accounts (or separate
accounts), and investment vehicles that Goldman Sachs sponsors, manages or advises, including the Funds.
The following are descriptions of certain
conflicts of interest and potential conflicts of interest that may be associated with the financial or other interests that the Investment Adviser and Goldman Sachs may have in transactions effected by, with, or on behalf of the Funds. In addition,
the Investment Advisers activities on behalf of certain other entities that are not investment advisory clients of the Investment Adviser may create conflicts of interest between such entities, on the one hand, and Accounts (including the
Funds), on the other hand, that are the same as or similar to the conflicts that arise between the Funds and other Accounts, as described herein. The conflicts herein do not purport to be a complete list or explanation of the conflicts associated
with the financial or other interests the Investment Adviser Goldman Sachs may have now or in the future. Additional information about potential conflicts of interest regarding the Investment Adviser and Goldman Sachs is set forth in the Investment
Advisers Form ADV. A copy of Part 1 and Part 2A of the Investment Advisers Form ADV is available on the SECs website (www.adviserinfo.sec.gov).
The Sale of Fund Shares and the Allocation of Investment Opportunities
Sales Incentives and Related Conflicts Arising from Goldman Sachs Financial and Other Relationships with Intermediaries
Goldman Sachs and its personnel, including employees of the Investment Adviser, may receive benefits and earn fees and compensation for services provided to
Accounts (including the Funds) and in connection with the distribution of the Funds. Any such fees and compensation may be paid directly or indirectly out of the fees payable to the Investment Adviser in connection with the management of such
Accounts (including the Funds). Moreover, Goldman Sachs and its personnel, including employees of the Investment Adviser, may have relationships (both involving and not involving the Funds, and including without limitation placement, brokerage,
advisory and board relationships) with distributors, consultants and others who recommend, or engage in transactions with or for, the Funds. Such distributors, consultants and other parties may receive compensation from Goldman Sachs or the Funds in
connection with such relationships. As a result of these relationships, distributors, consultants and other parties may have conflicts that create incentives for them to promote the Funds.
To the extent permitted by applicable law, Goldman Sachs and the Funds may make payments to authorized dealers and other financial intermediaries and to
salespersons to promote the Funds. These payments may be made out of Goldman Sachs assets or amounts payable to Goldman Sachs. These payments may create an incentive for such persons to highlight, feature or recommend the Funds.
Allocation of Investment Opportunities Among the Funds and Other Accounts
The Investment Adviser may manage or advise multiple Accounts (including Accounts in which Goldman Sachs and its personnel have an interest) that have
investment objectives that are the same or similar to the Funds and that may seek to make or sell investments in the same securities or other instruments, sectors or strategies as the Funds. This creates potential conflicts, particularly in
circumstances where the availability or liquidity of such investment opportunities is limited (e.g., in local and emerging markets, high yield securities, fixed income securities, regulated industries, small capitalization, direct or indirect
investments in private investment funds, investments in master limited partnerships in the oil and gas industry and initial public offerings/new issues).
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The Investment Adviser does not receive performance-based compensation in respect of its investment management
activities on behalf of the Funds, but may simultaneously manage Accounts for which the Investment Adviser receives greater fees or other compensation (including performance-based fees or allocations) than it receives in respect of the Funds. The
simultaneous management of Accounts that pay greater fees or other compensation and the Funds creates a conflict of interest as the Investment Adviser has an incentive to favor Accounts with the potential to receive greater fees when allocating
resources, services, functions or investment opportunities among Accounts. For instance, the Investment Adviser may be faced with a conflict of interest when allocating scarce investment opportunities given the possibly greater fees from Accounts
that pay performance-based fees. To address these types of conflicts, the Investment Adviser has adopted policies and procedures under which it will allocate investment opportunities in a manner that it believes is consistent with its obligations
and fiduciary duties as an investment adviser. However, the availability, amount, timing, structuring or terms of an investment by the Funds may differ from, and performance may be lower than, the investments and performance of other Accounts.
To address these potential conflicts, the Investment Adviser has developed allocation policies and procedures that provide that the Investment Advisers
personnel making portfolio decisions for Accounts will make investment decisions for, and allocate investment opportunities among, such Accounts consistent with the Investment Advisers fiduciary obligations. These policies and procedures may
result in the pro rata allocation (on a basis determined by the Investment Adviser) of limited opportunities across eligible Accounts managed by a particular portfolio management team, but in other cases such allocation may not be pro rata.
Allocation-related decisions for the Funds and other Accounts may be made by reference to one or more factors. Factors may include: the Accounts
portfolio and its investment horizons, objectives, guidelines and restrictions (including legal and regulatory restrictions affecting certain Accounts or affecting holdings across Accounts); client instructions; strategic fit and other portfolio
management considerations, including different desired levels of exposure to certain strategies; the expected future capacity of the Funds and the applicable Accounts; limits on the Investment Advisers brokerage discretion; cash and liquidity
needs and other considerations; the availability of other appropriate or substantially similar investment opportunities; and differences in benchmark factors and hedging strategies among Accounts. Suitability considerations, reputational matters and
other considerations may also be considered.
In a case in which one or more Accounts are intended to be the Investment Advisers primary investment
vehicles focused on, or to receive priority with respect to, a particular trading strategy, other Accounts (including the Funds) may not have access to such strategy or may have more limited access than would otherwise be the case. To the extent
that such Accounts are managed by areas of Goldman Sachs other than the Investment Adviser, such Accounts will not be subject to the Investment Advisers allocation policies. Investments by such Accounts may reduce or eliminate the availability
of investment opportunities to, or otherwise adversely affect, the Fund. Furthermore, in cases in which one or more Accounts are intended to be the Investment Advisers primary investment vehicles focused on, or receive priority with respect
to, a particular trading strategy or type of investment, such Accounts may have specific policies or guidelines with respect to Accounts or other persons receiving the opportunity to invest alongside such Accounts with respect to one or more
investments (Co-Investment Opportunities). As a result, certain Accounts or other persons will receive allocations to, or rights to invest in, Co-Investment Opportunities that are not available generally to the Funds.
In addition, in some cases the Investment Adviser may make investment recommendations to Accounts that make investment decisions independently of the
Investment Adviser. In circumstances in which there is limited availability of an investment opportunity, if such Accounts invest in the investment opportunity at the same time as, or prior to, a Fund, the availability of the investment opportunity
for the Fund will be reduced irrespective of the Investment Advisers policies regarding allocations of investments.
The Investment Adviser may,
from time to time, develop and implement new trading strategies or seek to participate in new trading strategies and investment opportunities. These strategies and opportunities may not be employed in all Accounts or employed pro rata among Accounts
where they are used, even if the strategy or opportunity is consistent with the objectives of such Accounts. Further, a trading strategy employed for a Fund that is similar to, or the same as, that of another Account may be implemented differently,
sometimes to a material extent. For example, a Fund may invest in different securities or other assets, or invest in the same securities and other assets but in different proportions, than another Account with the same or similar trading strategy.
The implementation of the Funds trading strategy will depend on a variety of factors, including the portfolio managers involved in managing the trading strategy for the Account, the time difference associated with the location of different
portfolio management teams, and the factors described above and in Item 6 (PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENTSide-by-Side Management of Advisory Accounts; Allocation of Opportunities) of the Investment
Advisers Form ADV.
B-68
During periods of unusual market conditions, the Investment Adviser may deviate from its normal trade allocation
practices. For example, this may occur with respect to the management of unlevered and/or long-only Accounts that are typically managed on a side-by-side basis with levered and/or long-short Accounts.
The Investment Adviser and the Funds may receive notice of, or offers to participate in, investment opportunities from third parties for various reasons. The
Investment Adviser in its sole discretion will determine whether a Fund will participate in any such investment opportunities and investors should not expect that the Fund will participate in any such investment opportunities unless the
opportunities are received pursuant to contractual requirements, such as preemptive rights or rights offerings, under the terms of the Funds investments. Moreover, Goldman Sachs businesses outside of the Investment Adviser are under no
obligation or other duty to provide investment opportunities to the Funds, and generally are not expected to do so. Further, opportunities sourced within particular portfolio management teams within the Investment Adviser may not be allocated to
Accounts (including the Funds) managed by such teams or by other teams. Opportunities not allocated (or not fully allocated) to the Funds or other Accounts managed by the Investment Adviser may be undertaken by Goldman Sachs (including the
Investment Adviser), including for Goldman Sachs Accounts, or made available to other Accounts or third parties, and the Funds will not receive any compensation related to such opportunities. Additional information about the Investment
Advisers allocation policies is set forth in Item 6 (PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENTSide-by-Side Management of Advisory Accounts; Allocation of Opportunities) of the Investment Advisers Form ADV.
As a result of the various considerations above, there will be cases in which certain Accounts (including Accounts in which Goldman Sachs and personnel
of Goldman Sachs have an interest) receive an allocation of an investment opportunity at times that the Funds do not, or when the Funds receive an allocation of such opportunities but on different terms than other Accounts (which may be less
favorable). The application of these considerations may cause differences in the performance of different Accounts that employ strategies the same or similar to those of the Funds.
Multiple Accounts (including the Funds) may participate in a particular investment or incur expenses applicable in connection with the operation or management
of the Accounts, or otherwise may be subject to costs or expenses that are allocable to more than one Account (which may include, without limitation, research expenses, technology expenses, expenses relating to participation in bondholder groups,
restructurings, class actions and other litigation, and insurance premiums). The Investment Adviser may allocate investment-related and other expenses on a pro rata or different basis.
Accounts will generally incur expenses with respect to the consideration and pursuit of transactions that are not ultimately consummated (broken-deal
expenses). Examples of broken-deal expenses include (i) research costs, (ii) fees and expenses of legal, financial, accounting, consulting or other advisers (including the Investment Adviser or its affiliates) in connection with
conducting due diligence or otherwise pursuing a particular non-consummated transaction, (iii) fees and expenses in connection with arranging financing for a particular non-consummated transaction, (iv) travel and entertainment costs,
(v) deposits or down payments that are forfeited in connection with, or amounts paid as a penalty for, a particular non-consummated transaction and (vi) other expenses incurred in connection with activities related to a particular
non-consummated transaction.
The Investment Adviser has adopted a policy relating to the allocation of broken-deal expenses among Accounts (including the
Funds) and other potential investors. Pursuant to the policy, broken-deal expenses generally will be allocated among Accounts in the manner that the Investment Adviser determines to be fair and equitable, which may be pro rata or on a different
basis.
Goldman Sachs Financial and Other Interests May Incentivize Goldman Sachs to Promote the Sale of Fund Shares
Goldman Sachs and its personnel have interests in promoting sales of Fund shares, and the compensation from such sales may be greater than the compensation
relating to sales of interests in other Accounts. Therefore, Goldman Sachs and its personnel may have a financial interest in promoting Fund shares over interests in other Accounts.
Management of the Funds by the Investment Adviser
Considerations Relating to Information Held by Goldman Sachs
Goldman Sachs has established certain information barriers and other policies to address the sharing of information between different businesses within Goldman
Sachs. As a result of information barriers, the Investment Adviser generally will not have access, or will have limited access, to certain information and personnel in other areas of Goldman Sachs relating to business transactions for clients
(including transactions in investing, banking, prime brokerage and certain other areas), and generally will not manage the Funds with the benefit of information held by such other areas. Goldman Sachs, due to its access to and knowledge of funds,
markets and securities based on its prime brokerage and other businesses, may make decisions based on information or take (or refrain from taking) actions with respect to interests in investments of the kind held (directly or indirectly) by the
Funds in a manner that may be adverse to the Funds, and will not have any obligation or other duty to share information with the Investment Adviser.
B-69
In limited circumstances, however, including for purposes of managing business and reputational risk, and subject
to policies and procedures, personnel on one side of an information barrier may have access to information and personnel on the other side of the information barrier through wall crossings. The Investment Adviser faces conflicts of
interest in determining whether to engage in such wall crossings. Information obtained in connection with such wall crossings may limit or restrict the ability of the Investment Adviser to engage in or otherwise effect transactions on behalf of the
Funds (including purchasing or selling securities that the Investment Adviser may otherwise have purchased or sold for an Account in the absence of a wall crossing). In managing conflicts of interest that may arise as a result of the foregoing, the
Investment Adviser generally will be subject to fiduciary requirements.
Information barriers also exist between certain businesses within the Investment
Adviser, and the conflicts described herein with respect to information barriers and otherwise with respect to Goldman Sachs and the Investment Adviser will also apply to the businesses within the Investment Adviser. There may also be circumstances
in which, as a result of information held by certain portfolio management teams in the Investment Adviser, the Investment Adviser limits an activity or transaction for a Fund, including if the Fund is managed by a portfolio management team other
than the team holding such information.
In addition, regardless of the existence of information barriers, Goldman Sachs will not have any obligation or
other duty to make available for the benefit of the Funds any information regarding Goldman Sachs trading activities, strategies or views, or the activities, strategies or views used for other Accounts. Furthermore, to the extent that the
Investment Adviser has access to fundamental analysis and proprietary technical models or other information developed by Goldman Sachs and its personnel, or other parts of the Investment Adviser, the Investment Adviser will not be under any
obligation or other duty to effect transactions on behalf of Accounts (including the Funds) in accordance with such analysis and models. In the event Goldman Sachs elects not to share certain information with the Investment Adviser or personnel
involved in decision-making for Accounts (including the Funds), the Funds may make investment decisions that differ from those they would have made if Goldman Sachs had provided such information, which may be disadvantageous to the Funds.
Different areas of the Investment Adviser and Goldman Sachs may take views, and make decisions or recommendations, that are different than other areas of the
Investment Adviser and Goldman Sachs. Different portfolio management teams within the Investment Adviser may make decisions based on information or take (or refrain from taking) actions with respect to Accounts they advise in a manner that may be
different than or adverse to the Funds. Such teams may not share information with the Funds portfolio management teams, including as a result of certain information barriers and other policies, and will not have any obligation or other duty to
do so.
Goldman Sachs operates a business known as Goldman Sachs Securities Services (GSS), which provides prime brokerage, administrative and
other services to clients which may involve investment funds (including pooled investment vehicles and private funds) in which one or more Accounts invest (Underlying Funds) or markets and securities in which Accounts invest. GSS and
other parts of Goldman Sachs have broad access to information regarding the current status of certain markets, investments and funds and detailed information about fund operators that is not available to the Investment Adviser. In addition, Goldman
Sachs may act as a prime broker to one or more Underlying Funds, in which case Goldman Sachs will have information concerning the investments and transactions of such Underlying Funds that is not available to the Investment Adviser. As a result of
these and other activities, parts of Goldman Sachs may be in possession of information in respect of markets, investments, investment advisers that are affiliated or unaffiliated with Goldman Sachs and Underlying Funds, which, if known to the
Investment Adviser, might cause the Investment Adviser to seek to dispose of, retain or increase interests in investments held by Accounts or acquire certain positions on behalf of Accounts, or take other actions. Goldman Sachs will be under no
obligation or other duty to make any such information available to the Investment Adviser or personnel involved in decision-making for Accounts (including the Funds).
Valuation of the Funds Investments
The
Investment Adviser, while not the primary valuation agent of the Funds, performs certain valuation services related to securities and assets held in the Funds. The Investment Adviser performs such valuation services in accordance with its valuation
policies. The Investment Adviser may value an identical asset differently than another division or unit within Goldman Sachs values the asset, including because such other division or unit has information or uses valuation techniques and models that
it does not share with, or that are different than those of, the Investment Adviser. This is particularly the case in respect of difficult-to-value assets. The Investment Adviser may also value an identical asset differently in different Accounts,
including because different Accounts are subject to different valuation guidelines pursuant to their respective governing agreements (e.g., in connection with certain regulatory restrictions applicable to different Accounts), different third -party
vendors are hired to perform valuation functions for the Accounts, the Accounts are managed or advised by different portfolio management teams
B-70
within the Investment Adviser that employ different valuation policies or procedures, or otherwise. The Investment Adviser will face a conflict with respect to valuations generally because of
their effect on the Investment Advisers fees and other compensation. Furthermore, the application of particular valuation policies with respect to the Funds may result in improved performance of the Funds or enable the Investment Adviser to
more easily track the performance of an Index than might have been the case had the Investment Adviser applied different valuation policies.
Goldman Sachs and the Investment Advisers Activities on Behalf of Other Accounts
Goldman Sachs engages in a variety of activities in the global financial markets. The extent of Goldman Sachs activities in the global financial markets,
including without limitation in its capacity as an investment banker, research provider, investment adviser, financier, adviser, market maker, prime broker, derivatives dealer, lender, counterparty, agent, principal and investor, as well as in other
capacities, may have potential adverse effects on the Funds.
The Investment Adviser provides advisory services to the Funds. The Investment
Advisers decisions and actions on behalf of the Funds may differ from those on behalf of other Accounts. Advice given to, or investment or voting decisions made for, one or more Accounts may compete with, affect, differ from, conflict with, or
involve timing different from, advice given to or investment decisions made for the Funds. Goldman Sachs (including the Investment Adviser), the clients it advises, and its personnel have interests in and advise Accounts that have investment
objectives or portfolios similar to, related to or opposed to those of the Funds. Goldman Sachs may receive greater fees or other compensation (including performance-based fees) from such Accounts than it does from the Funds. In addition, Goldman
Sachs (including the Investment Adviser), the clients it advises, and its personnel may engage (or consider engaging) in commercial arrangements or transactions with Accounts, and/or may compete for commercial arrangements or transactions in the
same types of companies, assets securities and other instruments, as the Funds. Decisions and actions of the Investment Adviser on behalf of the Funds may differ from those by Goldman Sachs (including the Investment Adviser) on behalf of other
Accounts, including Accounts sponsored, managed or advised by the Investment Adviser. Advice given to, or investment or voting decisions made for, the Funds may compete with, affect, differ from, conflict with, or involve timing different from,
advice given to, or investment or voting decisions made for, other Accounts, including Accounts sponsored, managed or advised by the Investment Adviser. Additionally, as described below, the Investment Adviser faces conflicts of interest arising out
of Goldman Sachs relationships and business dealings in connection with decisions to take or refrain from taking certain actions on behalf of Accounts when doing so would be adverse to Goldman Sachs relationships or other business
dealings with such parties.
Transactions by, advice to and activities of Accounts (including with respect to investment decisions, voting and the
enforcement of rights) may involve the same or related companies, securities or other assets or instruments as those in which the Funds invest, and such Accounts may engage in a strategy while a Fund is undertaking the same or a differing strategy,
any of which could directly or indirectly disadvantage the Fund (including its ability to engage in a transaction or other activities) or the prices or terms at which the Funds transactions or other activities may be effected.
Moreover, Goldman Sachs may be engaged to provide advice to an Account that is considering entering into a transaction with a Fund, and Goldman Sachs may
advise the Account not to pursue the transaction with the Fund, or otherwise in connection with a potential transaction provide advice to the Account that would be adverse to the Fund. Additionally, a Fund may buy a security and an Account may
establish a short position in that same security or in similar securities. This short position may result in the impairment of the price of the security that the Fund holds or may be designed to profit from a decline in the price of the security. A
Fund could similarly be adversely impacted if it establishes a short position, following which an Account takes a long position in the same security or in similar securities. In addition, Goldman Sachs (including the Investment Adviser) may make
filings in connection with a shareholder class action lawsuit or similar matter involving a particular security on behalf of an Account (including a Fund), but not on behalf of a different Account (including a Fund) that holds or held the same
security, or that is invested in or has extended credit to different parts of the capital structure of the same issuer.
To the extent a Fund engages in
transactions in the same or similar types of securities or other investments as other Accounts, the Fund and other Accounts may compete for such transactions or investments, and transactions or investments by such other Accounts may negatively
affect the transactions of the Fund (including the ability of the Fund to engage in such a transaction or investment or other activities), or the price or terms at which the Funds transactions or investments or other activities may be
effected. In some cases, such adverse impacts may result from differences in the timing of transactions by Accounts relative to when a Fund executes transactions in the same securities. Moreover, a Fund, on the one hand, and Goldman Sachs or other
Accounts, on the other hand, may vote differently on or take or refrain from taking different actions with respect to the same security, which may be disadvantageous to the Fund. Accounts may also have different rights in respect of an investment
with the same issuer, or invest in different classes of the same issuer that have different rights, including, without limitation, with respect to liquidity. The determination to exercise such rights by the Investment Adviser on behalf of such other
Accounts may have an adverse effect on the Funds.
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Goldman Sachs (including, as applicable, the Investment Adviser) and its personnel, when acting as an investment
banker, research provider, investment adviser, financier, adviser, market maker, prime broker, derivatives dealer, lender, counterparty or investor, or in other capacities, may advise on transactions, make investment decisions or recommendations,
provide differing investment views or have views with respect to research or valuations that are inconsistent with, or adverse to, the interests and activities of the Funds. Shareholders may be offered access to advisory services through several
different Goldman Sachs advisory businesses (including Goldman Sachs & Co. LLC and the Investment Adviser). Different advisory businesses within Goldman Sachs manage Accounts according to different strategies and may also apply different
criteria to the same or similar strategies and may have differing investment views in respect of an issuer or a security or other investment. Similarly, within the Investment Adviser, certain investment teams or portfolio managers may have differing
or opposite investment views in respect of an issuer or a security, and the positions a Funds investment team or portfolio managers take in respect of the Fund may be inconsistent with, or adversely affected by, the interests and activities of
the Accounts advised by other investment teams or portfolio managers of the Investment Adviser. Research, analyses or viewpoints may be available to clients or potential clients at different times. Goldman Sachs will not have any obligation or other
duty to make available to the Funds any research or analysis prior to its public dissemination. The Investment Adviser responsible for making investment decisions on behalf of the Funds, and such investment decisions can differ from investment
decisions or recommendations by Goldman Sachs on behalf of other Accounts. Goldman Sachs, on behalf of one or more Accounts, may implement an investment decision or strategy ahead of, or contemporaneously with, or behind similar investment decisions
or strategies made for the Funds (whether or not the investment decisions emanate from the same research analysis or other information). The relative timing for the implementation of investment decisions or strategies for Accounts (including
Accounts sponsored, managed or advised by the Investment Adviser), on the one hand, and the Funds, on the other hand, may disadvantage the Funds. Certain factors, for example, market impact, liquidity constraints, or other circumstances, could
result in the Funds receiving less favorable investment or trading results or incurring increased costs associated with implementing such investment decisions or strategies, or being otherwise disadvantaged.
Subject to applicable law, the Investment Adviser may cause the Funds to invest in securities, bank loans or other obligations of companies affiliated with or
advised by Goldman Sachs or in which Goldman Sachs or Accounts have an equity, debt or other interest, or to engage in investment transactions that may result in other Accounts being relieved of obligations or otherwise divested of investments,
which may enhance the profitability of Goldman Sachs or other Accounts investment in and activities with respect to such companies. Goldman Sachs may, in its discretion, recommend that the Funds have ongoing business dealings,
arrangements or agreements with persons who are (i) former employees of Goldman Sachs, (ii) affiliates or other portfolio companies of Goldman Sachs or other Accounts, (iii) Goldman Sachs employees family members and/or
relatives and/or certain of their portfolio companies or (iv) persons otherwise associated with an investor in an Account or a portfolio company or service provider of Goldman Sachs or an Account. The Funds may bear, directly or indirectly, the
costs of such dealings, arrangements or agreements. These recommendations, and recommendations relating to continuing any such dealings, arrangements or agreements, may pose conflicts of interest and may be based on differing incentives due to
Goldman Sachs relationships with such persons. In particular, when acting on behalf of, and making decisions for, Accounts, the Investment Adviser may take into account Goldman Sachs interests in maintaining its relationships and
business dealings with such persons. As a result, the Investment Adviser faces conflicts of interest arising out of Goldman Sachs relationships and business dealings in connection with decisions to take or refrain from taking certain actions
on behalf of Accounts when doing so would be adverse to Goldman Sachs relationships or other business dealings with such parties.
When the
Investment Adviser wishes to place an order for different types of Accounts (including the Funds) for which aggregation is not practicable, the Investment Adviser may use a trade sequencing and rotation policy to determine which type of Account is
to be traded first. Under this policy, each portfolio management team may determine the length of its trade rotation period and the sequencing schedule for different categories of clients within this period provided that the trading periods and
these sequencing schedules are designed to be fair and equitable over time. The portfolio management teams currently base their trading periods and rotation schedules on the relative amounts of assets managed for different client categories (e.g.,
unconstrained client accounts, wrap program accounts, etc.) and, as a result, the Funds may trade behind other Accounts. Within a given trading period, the sequencing schedule establishes when and how frequently a given client category
will trade first in the order of rotation. The Investment Adviser may deviate from the predetermined sequencing schedule under certain circumstances, and the Investment Advisers trade sequencing and rotation policy may be amended, modified or
supplemented at any time without prior notice to clients.
Potential Conflicts Relating to Follow-On Investments
From time to time, the Investment Adviser may provide opportunities to Accounts (including potentially the Funds) to make investments in companies in which
certain Accounts have already invested. Such follow-on investments can create conflicts of interest, such as the determination of the terms of the new investment and the allocation of such opportunities among Accounts (including the Funds).
Follow-on investment opportunities may be available to the Funds notwithstanding that the Funds have no existing investment in the issuer, resulting in the assets of the Funds potentially providing value to, or otherwise supporting
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the investments of, other Accounts. Accounts (including the Funds) may also participate in releveraging, recapitalization, and similar transactions involving companies in which other Accounts
have invested or will invest. Conflicts of interest in these and other transactions may arise between Accounts (including the Funds) with existing investments in a company and Accounts making subsequent investments in the company, which may have
opposing interests regarding pricing and other terms. The subsequent investments may dilute or otherwise adversely affect the interests of the previously-invested Accounts (including the Funds).
Diverse Interests of Shareholders
The various
types of investors in and beneficiaries of the Funds, including to the extent applicable the Investment Adviser and its affiliates, may have conflicting investment, tax and other interests with respect to their interests in the Funds. When
considering a potential investment for a Fund, the Investment Adviser will generally consider the investment objectives of the Fund, not the investment objectives of any particular investor or beneficiary. The Investment Adviser may make decisions,
including with respect to tax matters, from time to time that may be more beneficial to one type of investor or beneficiary than another, or to the Investment Adviser and its affiliates than to investors or beneficiaries unaffiliated with the
Investment Adviser. In addition, Goldman Sachs may face certain tax risks based on positions taken by the Funds, including as a withholding agent. Goldman Sachs reserves the right on behalf of itself and its affiliates to take actions adverse to the
Funds or other Accounts in these circumstances, including withholding amounts to cover actual or potential tax liabilities.
Selection of Service
Providers
The Funds expect to engage service providers (including attorneys and consultants) that may also provide services to Goldman Sachs and
other Accounts. In addition, certain service providers to the Investment Adviser or Funds may also be portfolio companies or other affiliates of the Investment Adviser or Accounts (for example, a portfolio company of an Account may retain a
portfolio company of another Account). To the extent it is involved in such selection, the Investment Adviser intends to select these service providers based on a number of factors, including expertise and experience, knowledge of related or similar
products, quality of service, reputation in the marketplace, relationships with the Investment Adviser, Goldman Sachs or others, and price. These service providers may have business, financial, or other relationships with Goldman Sachs (including
its personnel), which may influence the Investment Advisers selection of these service providers for the Funds. In such circumstances, there may be a conflict of interest between Goldman Sachs (acting on behalf of the Funds) and the Funds or
between Funds if the Funds determine not to engage or continue to engage these service providers.
The Investment Adviser may, in its sole discretion,
determine to provide, or engage or recommend an affiliate of the Investment Adviser to provide, certain services to the Funds, instead of engaging or recommending one or more third parties to provide such services. Subject to the governance
requirements of a particular Fund and applicable law, the Investment Adviser or its affiliates, as applicable, will receive compensation in connection with the provision of such services. As a result, the Investment Adviser faces a conflict of
interest when selecting service providers for the Funds. Notwithstanding the foregoing, the selection of service providers for the Funds will be conducted in accordance with the Investment Advisers fiduciary obligations to the Funds. The
service providers selected by the Investment Adviser may charge different rates to different recipients based on the specific services provided, the personnel providing the services, the complexity of the services provided or other factors. As a
result, the rates paid with respect to these service providers by a Fund, on the one hand, may be more or less favorable than the rates paid by Goldman Sachs, including the Investment Adviser, on the other hand. In addition, the rates paid by the
Investment Adviser or the Funds, on the one hand, may be more or less favorable than the rates paid by other parts of Goldman Sachs or Accounts managed by other parts of Goldman Sachs, on the other hand. Goldman Sachs (including the Investment
Adviser), its personnel, and/or Accounts may hold investments in companies that provide services to entities in which the Funds invest generally, and, subject to applicable law, the Investment Adviser may refer or introduce such companies
services to entities that have issued securities held by the Funds.
Investments in Goldman Sachs Funds
To the extent permitted by applicable law, the Funds may invest in money market and other funds sponsored, managed or advised by Goldman Sachs. In connection
with any such investments, a Fund, to the extent permitted by the Act, will pay all advisory, administrative or Rule 12b-1 fees applicable to the investment, and certain Funds that invest in other funds sponsored, managed or advised by Goldman Sachs
pay advisory fees to the Investment Adviser that are not reduced by any fees payable by such other funds to Goldman Sachs as manager of such other funds (i.e., there will be double fees involved in making any such investment, which would
not arise in connection with the direct allocation of assets by investors in the Funds to such other funds), other than in certain specified cases, including as may be required by applicable law. In such circumstances, as well as in all other
circumstances in which Goldman Sachs receives any fees or other compensation in any form relating to the provision of services, no accounting or repayment to the Funds will be required.
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Goldman Sachs May In-Source or Outsource
Subject to applicable law, Goldman Sachs, including the Investment Adviser, may from time to time and without notice to investors in-source or outsource
certain processes or functions in connection with a variety of services that it provides to the Funds in its administrative or other capacities. Such in-sourcing or outsourcing may give rise to additional conflicts of interest.
Distributions of Assets Other Than Cash
With
respect to redemptions from the Funds, the Funds may, in certain circumstances, have discretion to decide whether to permit or limit redemptions and whether to make distributions in connection with redemptions in the form of securities or other
assets, and in such case, the composition of such distributions. In making such decisions, the Investment Adviser may have a potentially conflicting division of loyalties and responsibilities to redeeming investors and remaining investors.
Goldman Sachs May Act in a Capacity Other Than Investment Adviser to the Funds
Investments in Different Parts of an Issuers Capital Structure
Goldman Sachs (including the Investment Adviser) or Accounts, on the one hand, and the Funds, on the other hand, may invest in or extend credit to different
parts of the capital structure of a single issuer. As a result, Goldman Sachs (including the Investment Adviser) or Accounts may take actions that adversely affect the Funds. In addition, Goldman Sachs (including the Investment Adviser) may advise
Accounts with respect to different parts of the capital structure of the same issuer, or classes of securities that are subordinate or senior to securities, in which the Funds invest. Goldman Sachs (including the Investment Adviser) may pursue
rights, provide advice or engage in other activities, or refrain from pursuing rights, providing advice or engaging in other activities, on behalf of itself or other Accounts with respect to an issuer in which the Funds have invested, and such
actions (or refraining from action) may have a material adverse effect on the Funds.
For example, in the event that Goldman Sachs (including the
Investment Adviser) or an Account holds loans, securities or other positions in the capital structure of an issuer that ranks senior in preference to the holdings of a Fund in the same issuer, and the issuer experiences financial or operational
challenges, Goldman Sachs (including the Investment Adviser), acting on behalf of itself or the Account, may seek a liquidation, reorganization or restructuring of the issuer, or terms in connection with the foregoing, that may have an adverse
effect on or otherwise conflict with the interests of the Funds holdings in the issuer. In connection with any such liquidation, reorganization or restructuring, the Funds holdings in the issuer may be extinguished or substantially
diluted, while Goldman Sachs (including the Investment Adviser) or another Account may receive a recovery of some or all of the amounts due to them. In addition, in connection with any lending arrangements involving the issuer in which Goldman Sachs
(including the Investment Adviser) or an Account participates, Goldman Sachs (including the Investment Adviser) or the Account may seek to exercise its rights under the applicable loan agreement or other document, which may be detrimental to the
Fund. In situations in which Goldman Sachs (including the Investment Adviser) holds positions in multiple parts of the capital structure of an issuer across Accounts (including the Funds), the Investment Adviser may not pursue actions or remedies
that may be available to the Fund, as a result of legal and regulatory requirements or otherwise.
These potential issues are examples of conflicts that
Goldman Sachs (including the Investment Adviser) will face in situations in which the Funds, and Goldman Sachs (including the Investment Adviser) or other Accounts, invest in or extend credit to different parts of the capital structure of a single
issuer. Goldman Sachs (including the Investment Adviser) addresses these issues based on the circumstances of particular situations. For example, Goldman Sachs (including the Investment Adviser) may determine to rely on information barriers between
different Goldman Sachs (including the Investment Adviser) business units or portfolio management teams. Goldman Sachs (including the Investment Adviser) may determine to rely on the actions of similarly situated holders of loans or securities
rather than, or in connection with, taking such actions itself on behalf of the Funds.
As a result of the various conflicts and related issues described
above and the fact that conflicts will not necessarily be resolved in favor of the interests of the Funds, the Funds could sustain losses during periods in which Goldman Sachs (including the Investment Adviser) and other Accounts (including Accounts
sponsored, managed or advised by the Investment Adviser) achieve profits generally or with respect to particular holdings in the same issuer, or could achieve lower profits or higher losses than would have been the case had the conflicts described
above not existed. The negative effects described above may be more pronounced in connection with transactions in, or the Funds use of, small capitalization, emerging market, distressed or less liquid strategies.
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Principal and Cross Transactions
When permitted by applicable law and the Investment Advisers policies, the Investment Adviser, acting on behalf of the Funds, may enter into transactions
in securities and other instruments with or through Goldman Sachs or in Accounts managed by the Investment Adviser or its affiliates, and may (but is under no obligation or other duty to) cause the Funds to engage in transactions in which the
Investment Adviser acts as principal on its own behalf (principal transactions), advises both sides of a transaction (cross transactions) and acts as broker for, and receives a commission from, the Funds on one side of a transaction and a brokerage
account on the other side of the transaction (agency cross transactions). There may be potential conflicts of interest, regulatory issues or restrictions contained in the Investment Advisers internal policies relating to these transactions
which could limit the Investment Advisers determination to engage in these transactions for Accounts (including the Funds). In certain circumstances such as when Goldman Sachs is the only or one of a few participants in a particular market or
is one of the largest such participants, such limitations may eliminate or reduce the availability of certain investment opportunities to Accounts (including the Funds) or impact the price or terms on which transactions relating to such investment
opportunities may be effected.
Goldman Sachs will have a potentially conflicting division of loyalties and responsibilities to the parties in such
transactions. The Investment Adviser has developed policies and procedures in relation to such transactions and conflicts. Cross transactions may disproportionately benefit some Accounts relative to other Accounts, including the Funds, due to the
relative amount of market savings obtained by the Accounts. Principal, cross or agency cross transactions will be effected in accordance with fiduciary requirements and applicable law (which may include disclosure and consent).
Goldman Sachs May Act in Multiple Commercial Capacities
To the extent permitted by applicable law, Goldman Sachs may act as broker, dealer, agent, counterparty, lender or advisor or in other commercial capacities
for the Funds or issuers of securities held by the Funds, including issuers whose securities are components of one or more indices, such as the Indexes, that are created and operated by Goldman Sachs. Goldman Sachs may be entitled to compensation in
connection with the provision of such services and the operation of the Indexes that are tracked by the Funds, and the Funds will not be entitled to any such compensation. Goldman Sachs will have an interest in obtaining fees and other compensation
in connection with such services that are favorable to Goldman Sachs, and in connection with providing such services may take commercial steps in its own interest, or may advise the parties to which it is providing services, or take other actions,
any of which may have an adverse effect on the Funds. For example, Goldman Sachs may require repayment of all or part of a loan from a company in which an Account (including a Fund) holds an interest, which could cause the company to default or be
required to liquidate its assets more rapidly, which could adversely affect the value of the company and the value of the Funds invested therein. Goldman Sachs may also advise such a company to make changes to its capital structure the result of
which would be a reduction in the value or priority of a security held (directly or indirectly) by one or more Funds. Actions taken or advised to be taken by Goldman Sachs in connection with other types of transactions may also result in adverse
consequences for the Funds. Goldman Sachs may also provide various services to companies in which the Funds have an interest, or to the Funds, which may result in fees, compensation and remuneration as well as other benefits, to Goldman Sachs. Such
fees, compensation and remuneration may be substantial. Providing services to the Funds and companies (or their personnel) in which the Funds invest may enhance Goldman Sachs relationships with various parties, facilitate additional business
development and enable Goldman Sachs to obtain additional business and generate additional revenue.
Goldman Sachs activities on behalf of its
clients may also restrict investment opportunities that may be available to the Funds. For example, Goldman Sachs is often engaged by companies as a financial advisor, or to provide financing or other services, in connection with commercial
transactions that may be potential investment opportunities for the Funds. There may be circumstances in which the Funds are precluded from participating in such transactions as a result of Goldman Sachs engagement by such companies. Goldman
Sachs reserves the right to act for these companies in such circumstances, notwithstanding the potential adverse effect on the Funds. Goldman Sachs may also represent creditor or debtor companies in proceedings under Chapter 11 of the U.S.
Bankruptcy Code (and equivalent non-U.S. bankruptcy laws) or prior to these filings. From time to time, Goldman Sachs may serve on creditor or equity committees. These actions, for which Goldman Sachs may be compensated, may limit or preclude the
flexibility that the Funds may otherwise have to buy or sell securities issued by those companies, as well as certain other assets. Please also see Management of the Funds by the Investment AdviserConsiderations Relating to
Information Held by Goldman Sachs above and Potential Limitations and Restrictions on Investment Opportunities and Activities of Goldman Sachs and the Funds below.
Subject to applicable law, the Investment Adviser may cause the Funds to invest in securities, bank loans or other obligations of companies affiliated with or
advised by Goldman Sachs or in which Goldman Sachs or Accounts have an equity, debt or other interest, or to engage in investment transactions that may result in Goldman Sachs or other Accounts being relieved of obligations or otherwise divested of
investments. For example, subject to applicable law a Fund may acquire securities or indebtedness of a company affiliated with Goldman Sachs directly or indirectly through syndicate or secondary market purchases, or may make a loan to, or purchase
securities from, a company that uses the proceeds to repay loans made by Goldman Sachs. These activities by a Fund may enhance the profitability of Goldman Sachs or other Accounts with respect to their investment in and activities relating to such
companies. The Fund will not be entitled to compensation as a result of this enhanced profitability.
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To the extent permitted by applicable law, Goldman Sachs (including the Investment Adviser) may create, write,
sell, issue, invest in or act as placement agent or distributor of derivative instruments related to the Funds, or with respect to underlying securities or assets of the Funds, or which may be otherwise based on or seek to replicate or hedge
the performance of the Funds. Such derivative transactions, and any associated hedging activity, may differ from and be adverse to the interests of the Funds.
Goldman Sachs may make loans to, or enter into margin, asset-based or other credit facilities or similar transactions with, clients, companies or individuals
that may (or may not) be secured by publicly or privately held securities or other assets, including a clients Fund shares as described above. Some of these borrowers may be public or private companies, or founders, officers or shareholders in
companies in which the Funds (directly or indirectly) invest, and such loans may be secured by securities of such companies, which may be the same as, pari passu with, or more senior or junior to, interests held (directly or indirectly) by the
Funds. In connection with its rights as lender, Goldman Sachs may act to protect its own commercial interest and may take actions that adversely affect the borrower, including by liquidating or causing the liquidation of securities on behalf of a
borrower or foreclosing and liquidating such securities in Goldman Sachs own name. Such actions may adversely affect the Funds (e.g., if a large position in a security is liquidated, among the other potential adverse consequences, the value of
such security may decline rapidly and the Funds may in turn decline in value or may be unable to liquidate their positions in such security at an advantageous price or at all). In addition, Goldman Sachs may make loans to shareholders or enter into
similar transactions that are secured by a pledge of, or mortgage over, a shareholders Fund shares, which would provide Goldman Sachs with the right to redeem such Fund shares in the event that such shareholder defaults on its obligations.
These transactions and related redemptions may be significant and may be made without notice to the shareholders.
Code of Ethics and Personal
Trading
Each of the Funds and Goldman Sachs, as each Funds Investment Adviser and Distributor, has adopted a Code of Ethics (the Code
of Ethics) in compliance with Section 17(j) of the Act designed to provide that personnel of the Investment Adviser, and certain additional Goldman Sachs personnel who support the Investment Adviser, comply with applicable federal
securities laws and place the interests of clients first in conducting personal securities transactions. The Code of Ethics imposes certain restrictions on securities transactions in the personal accounts of covered persons to help avoid conflicts
of interest. Subject to the limitations of the Code of Ethics, covered persons may buy and sell securities or other investments for their personal accounts, including investments in the Funds, and may also take positions that are the same as,
different from, or made at different times than, positions taken (directly or indirectly) by the Funds. The Codes of Ethics are available on the EDGAR Database on the SECs Internet site at http://www.sec.gov. Copies may also be obtained after
paying a duplicating fee by electronic request to publicinfo@sec.gov. Additionally, all Goldman Sachs personnel, including personnel of the Investment Adviser, are subject to firm-wide policies and procedures regarding confidential and proprietary
information, information barriers, private investments, outside business activities and personal trading.
Proxy Voting by the Investment Adviser
The Investment Adviser has implemented processes designed to prevent conflicts of interest from influencing proxy voting decisions that it makes
on behalf of advisory clients, including the Funds, and to help ensure that such decisions are made in accordance with its fiduciary obligations to its clients. Notwithstanding such proxy voting processes, proxy voting decisions made by the
Investment Adviser in respect of securities held by the Funds may benefit the interests of Goldman Sachs and/or Accounts other than the Funds. For a more detailed discussion of these policies and procedures, see the section of this SAI entitled
PROXY VOTING.
Potential Limitations and Restrictions on Investment Opportunities and Activities of Goldman Sachs and the Funds
The Investment Adviser may restrict its investment decisions and activities on behalf of the Funds in various circumstances, including as a result
of applicable regulatory requirements, information held by the Investment Adviser or Goldman Sachs, Goldman Sachs roles in connection with other clients and in the capital markets (including in connection with advice it may give to such
clients or commercial arrangements or transactions that may be undertaken by such clients or by Goldman Sachs), Goldman Sachs internal policies and/or potential reputational risk in connection with Accounts (including the Funds). The
Investment Adviser might not engage in transactions or other activities for, or enforce certain rights in favor of, one or more Funds due to Goldman Sachs activities outside the Funds (e.g., the Investment Adviser may refrain from making
investments for the Funds that would cause Goldman Sachs to exceed position limits or cause Goldman Sachs to have additional disclosure obligations and may limit purchases or sales of securities in respect of which Goldman Sachs is engaged in an
underwriting or other distribution) and regulatory requirements, policies and reputational risk assessments.
In addition, the Investment Adviser may
restrict, limit or reduce the amount of a Funds investment, or restrict the type of governance or voting rights it acquires or exercises, where the Fund (potentially together with Goldman Sachs and other
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Accounts) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests. For example, such limitations may exist if a position or transaction
could require a filing or license or other regulatory or corporate consent, which could, among other things, result in additional costs and disclosure obligations for, or impose regulatory restrictions on, Goldman Sachs, including the Investment
Adviser, or on other Accounts, or where exceeding a threshold is prohibited or may result in regulatory or other restrictions. In certain cases, restrictions and limitations will be applied to avoid approaching such threshold. Circumstances in which
such restrictions or limitations may arise include, without limitation: (i) a prohibition against owning more than a certain percentage of an issuers securities; (ii) a poison pill that could have a dilutive impact on the
holdings of the Fund should a threshold be exceeded; (iii) provisions that would cause Goldman Sachs to be considered an interested stockholder of an issuer; (iv) provisions that may cause Goldman Sachs to be considered an
affiliate or control person of the issuer; and (v) the imposition by an issuer (through charter amendment, contract or otherwise) or governmental, regulatory or self-regulatory organization (through law, rule,
regulation, interpretation or other guidance) of other restrictions or limitations.
When faced with the foregoing limitations, Goldman Sachs may avoid
exceeding the threshold because exceeding the threshold could have an adverse impact on the ability of the Investment Adviser or Goldman Sachs to conduct its business activities. The Investment Adviser may also reduce a Funds interest in, or
restrict a Fund from participating in, an investment opportunity that has limited availability or where Goldman Sachs has determined to cap its aggregate investment in consideration of certain regulatory or other requirements so that other Accounts
that pursue similar investment strategies may be able to acquire an interest in the investment opportunity. The Investment Adviser may determine not to engage in certain transactions or activities which may be beneficial to the Funds because
engaging in such transactions or activities in compliance with applicable law would result in significant cost to, or administrative burden on, the Investment Adviser or create the potential risk of trade or other errors.
The Investment Adviser generally is not permitted to use material non-public information in effecting purchases and sales in transactions for the Funds that
involve public securities. The Investment Adviser may limit an activity or transaction (such as a purchase or sale transaction) which might otherwise be engaged in by the Funds, including as a result of information held by Goldman Sachs (including
the Investment Adviser or its personnel). For example, directors, officers and employees of Goldman Sachs may take seats on the boards of directors of, or have board of directors observer rights with respect to, companies in which Goldman Sachs
invests on behalf of the Funds. To the extent a director, officer or employee of Goldman Sachs were to take a seat on the board of directors of, or have board of directors observer rights with respect to, a public company, the Investment Adviser (or
certain of its investment teams) may be limited and/or restricted in its or their ability to trade in the securities of the company. In addition, any such director, officer or employee of Goldman Sachs that is a member of the board of directors of a
portfolio company may have duties in his or her capacity as a director that conflict with the Investment Advisers duties to Accounts, and may act in a manner that may disadvantage or otherwise harm a Fund and/or Goldman Sachs.
Different areas of Goldman Sachs may come into possession of material non-public information regarding an issuer of securities held by an Underlying Fund in
which an Account invests. In the absence of information barriers between such different areas of Goldman Sachs, the Account may be prohibited, including by internal policies, from redeeming from such Underlying Fund during the period such material
non-public information is held by such other part of Goldman Sachs, which period may be substantial. As a result, the Account may not be permitted to redeem from an Underlying Fund in whole or in part during periods when it otherwise would have been
able to do so, which could adversely affect the Account. Other investors in the Underlying Fund that are not subject to such restrictions may be able to redeem from the Underlying Fund during such periods.
In addition, the Investment Advisers clients may partially or fully fund a new Account with in-kind securities in which the Investment Adviser may be
restricted. In such circumstances, the Investment Adviser may sell any such securities at the next available trading window, subject to operational and technological limitations (unless such securities are subject to another express arrangement). As
a result, such Accounts may be required to dispose of investments at an earlier or later date and/or at a less favorable price than would otherwise have been the case had the Investment Adviser not been so restricted. Accounts will be responsible
for all tax liabilities that result from any such sale transactions.
The Investment Adviser operates a program reasonably designed to ensure compliance
generally with economic and trade sanctions-related obligations applicable directly to its activities (although such obligations are not necessarily the same obligations that the Funds may be subject to). Such economic and trade sanctions may
prohibit, among other things, transactions with and the provision of services to, directly or indirectly, certain countries, territories, entities and individuals. These economic and trade sanctions, and the application by the Investment Adviser of
its compliance program in respect thereof, may restrict or limit the Funds investment activities.
The Investment Adviser may determine to limit or
not engage at all in transactions and activities on behalf of the Funds for reputational or other reasons. Examples of when such determinations may be made include, but are not limited to, where Goldman Sachs is providing (or may provide) advice or
services to an entity involved in such activity or transaction, where Goldman Sachs
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or an Account is or may be engaged in the same or a related activity or transaction to that being considered on behalf of the Funds, where Goldman Sachs or an Account has an interest in an entity
involved in such activity or transaction, where there are political, public relations, or other reputational considerations relating to counterparties or other participants in such activity or transaction or where such activity or transaction on
behalf of or in respect of the Funds could affect in tangible or intangible ways Goldman Sachs, the Investment Adviser, an Account or their activities.
In order to engage in certain transactions on behalf of a Fund, the Investment Adviser will also be subject to (or cause the Fund to become subject to) the
rules, terms and/or conditions of any venues through which it trades securities, derivatives or other instruments. This includes, but is not limited to, where the Investment Adviser and/or the Fund may be required to comply with the rules of certain
exchanges, execution platforms, trading facilities, clearinghouses and other venues, or may be required to consent to the jurisdiction of any such venues. The rules, terms and/or conditions of any such venue may result in the Investment Adviser
and/or the Fund being subject to, among other things, margin requirements, additional fees and other charges, disciplinary procedures, reporting and recordkeeping, position limits and other restrictions on trading, settlement risks and other related
conditions on trading set out by such venues.
From time to time, a Fund, the Investment Adviser or its affiliates and/or their service providers or
agents may be required, or may determine that it is advisable, to disclose certain information about the Fund, including, but not limited to, investments held by the Fund, and the names and percentage interest of beneficial owners thereof (and the
underlying beneficial owners of such beneficial owners), to third parties, including local governmental authorities, regulatory organizations, taxing authorities, markets, exchanges, clearing facilities, custodians, brokers and trading
counterparties of, or service providers to, the Investment Adviser or the Fund. The Investment Adviser generally expects to comply with requests to disclose such information as it so determines including through electronic delivery platforms;
however, the Investment Adviser may determine to cause the sale of certain assets for the Fund rather than make certain required disclosures, and such sale may be at a time that is inopportune from a pricing or other standpoint. In addition, the
Investment Adviser may provide third parties with aggregated data regarding the activities of, or certain performance or other metrics associated with the Accounts, and the Investment Adviser may receive compensation from such third parties for
providing them such information.
Goldman Sachs may become subject to additional restrictions on its business activities that could have an impact on the
Funds activities. In addition, the Investment Adviser may restrict its investment decisions and activities on behalf of the Funds and not other Accounts, including Accounts sponsored, managed or advised by the Investment Adviser.
Brokerage Transactions
The Investment Adviser
often selects U.S. and non-U.S. broker-dealers (including affiliates of the Investment Adviser) that furnish the Investment Adviser, the Funds, Investment Adviser affiliates and other Goldman Sachs personnel with proprietary or third party brokerage
and research services (collectively, brokerage and research services) that provide, in the Investment Advisers view, appropriate assistance to the Investment Adviser in the investment decision-making process. These brokerage and
research services may be bundled with the trade execution, clearing or settlement services provided by a particular broker-dealer and, subject to applicable law, the Investment Adviser may pay for such brokerage and research services with client
commissions (or soft-dollars). There may be instances or situations in which such practices are subject to restrictions under applicable law. For example, the EUs Markets in Financial Instruments Directive II (MiFID II)
restricts EU domiciled investment advisers from receiving research and other materials that do not qualify as acceptable minor non-monetary benefits from broker-dealers unless the research or materials are paid for by the investment
advisers from their own resources or from research payment accounts funded by and with the agreement of their clients.
Accounts may differ with regard to
whether and to what extent they pay for brokerage and research services through commissions and, subject to applicable law, brokerage and research services may be used to service the Funds and any or all other Accounts throughout the Investment
Adviser, including Accounts that do not pay commissions to the broker-dealer relating to the brokerage and research service arrangements. As a result, brokerage and research services (including soft dollar benefits) may disproportionately benefit
other Accounts relative to the Funds based on the relative amount of commissions paid by the Funds and in particular those Accounts that do not pay for brokerage and research services or do so to a lesser extent, including in connection with the
establishment of maximum budgets for research costs (and switching to execution-only pricing when maximums are met). The Investment Adviser does not attempt to allocate soft dollar benefits proportionately among clients or to track the benefits of
brokerage and research services to the commissions associated with a particular Account or group of Accounts.
Aggregation of Orders by the
Investment Adviser
The Investment Adviser follows policies and procedures pursuant to which it may (but is not required to) combine or aggregate
purchase or sale orders for the same security or other instrument for multiple Accounts (including Accounts in which Goldman
B-78
Sachs or personnel of Goldman Sachs have an interest) (sometimes referred to as bunching), so that the orders can be executed at the same time and block trade treatment of any such
orders can be elected when available. The Investment Adviser aggregates orders when the Investment Adviser considers doing so to be operationally feasible and appropriate and in the interests of its clients and may elect block trade treatment when
available. In addition, under certain circumstances orders for the Funds may be aggregated with orders for Accounts that contain Goldman Sachs assets.
When a bunched order or block trade is completely filled, or if the order is only partially filled, at the end of the day, the Investment Adviser generally
will allocate the securities or other instruments purchased or the proceeds of any sale pro rata among the participating Accounts, based on the Funds relative sizes. If an order is filled at several different prices, through multiple trades
(whether at a particular broker-dealer or among multiple broker-dealers), generally all participating Accounts will receive the average price and pay the average commission, however, this may not always be the case (due to, e.g., odd lots, rounding,
market practice or constraints applicable to particular Accounts).
Although it may do so in certain circumstances, the Investment Adviser does not always
bunch or aggregate orders for different Funds, elect block trade treatment or net buy and sell orders for the same Fund, if portfolio management decisions relating to the orders are made by different portfolio management teams or if different
portfolio management processes are used for different account types, if bunching, aggregating, electing block trade treatment or netting is not appropriate or practicable from the Investment Advisers operational or other perspective, or if
doing so would not be appropriate in light of applicable regulatory considerations. For example, time zone differences, trading instructions, cash flows, separate trading desks or portfolio management processes may, among other factors, result in
separate, non-aggregated, non-netted executions, with orders in the same instrument being entered for different Accounts at different times or, in the case of netting, buy and sell trades for the same instrument being entered for the same Account.
The Investment Adviser may be able to negotiate a better price and lower commission rate on aggregated orders than on orders for Funds that are not aggregated, and incur lower transaction costs on netted orders than orders that are not netted. The
Investment Adviser is under no obligation or other duty to aggregate or net for particular orders. Where orders for a Fund are not aggregated with other orders, or not netted against orders for the Fund or other Accounts, the Fund will not benefit
from a better price and lower commission rate or lower transaction cost that might have been available had the orders been aggregated or netted. Aggregation and netting of orders may disproportionately benefit some Accounts relative to other
Accounts, including a Fund, due to the relative amount of market savings obtained by the Accounts. The Investment Adviser may aggregate orders of Accounts that are subject to MiFID II (MiFID II Advisory Accounts) with orders of Accounts
not subject to MiFID II, including those that generate soft dollar commissions (including the Funds) and those that restrict the use of soft dollars. All Accounts included in an aggregated order with MiFID II Advisory Accounts pay (or receive) the
same average price for the security and the same execution costs (measured by rate). However, MiFID II Advisory Accounts included in an aggregated order may pay commissions at execution-only rates below the total commission rates paid by
Accounts included in the aggregated order that are not subject to MiFID II.
Affiliated Indexes
The Investment Adviser and its affiliates may develop, own and operate stock market and other indexes (each, an Index) based on investment and
trading strategies developed by the Investment Adviser or its affiliates (Investment Adviser Strategies). The Investment Adviser may in the future enter into revenue sharing arrangements with third party co-developers of an Index
pursuant to which the Investment Adviser receives a portion of the fees generated from licensing the right to use the Index or components thereof to third parties. Some of the Funds seek to track the performance of the Indexes. The Investment
Adviser may, from time to time, manage Accounts that invest in the Funds. In addition, the Investment Adviser manages Accounts which track the same Indexes used by the Funds or which are based on the same, or substantially similar, Investment
Adviser Strategies that are used in the operation of the Indexes and the Funds. The operation of the Indexes, the Funds and the Accounts in this manner may give rise to potential conflicts of interest.
For example, Accounts that track the same Indexes used by the Funds may engage in purchases and sales of securities prior to when the Index and the Funds
engage in similar transactions because such Accounts may be managed and rebalanced on an ongoing basis, whereas the Funds portfolios are only rebalanced on a periodic basis corresponding with the rebalancing of the Index. These differences may
result in the Accounts having more favorable performance relative to that of the Index and the Funds or other Accounts that track the Index. Other potential conflicts include the potential for unauthorized access to Index information, allowing Index
changes that benefit the Investment Adviser or other Accounts and not the investors in the Funds, and the manipulation of Index pricing to present the performance of the Funds, or tracking ability, in a preferential light.
The Investment Adviser has adopted policies and procedures that are designed to address potential conflicts that may arise in connection with the Investment
Advisers operation of the Indexes, the Funds and the Accounts. The Investment Adviser has established certain information barriers and other policies to address the sharing of information between different businesses within the Investment
Adviser, including with respect to personnel responsible for maintaining the Indexes and those involved
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in decision-making for the Funds. In addition, as described above in Code of Ethics and Personal Trading, the Investment Adviser has adopted a Code of Ethics.
In addition, because knowledge of the Index constituents and/or their weights in advance of public disclosure of such information may constitute material,
non-public information, Solactive AG, as calculation agent, publishes index constituent data on its website on a daily basis reflecting a hypothetical indication of the weighting and holdings of the Goldman Sachs ActiveBeta® Emerging Markets Equity Index, the Goldman Sachs ActiveBeta® Europe Equity Index, the Goldman Sachs ActiveBeta® International Equity Index, the Goldman Sachs ActiveBeta® Japan Equity Index, the Goldman Sachs ActiveBeta® U.S. Large Cap Equity Index and the Goldman Sachs ActiveBeta® U.S. Small Cap Equity Index. Such information is a hypothetical indication
of what the weightings and constituents would be if each Index were rebalanced on a daily basis and may differ substantially from the constituents at the next actual rebalance. Neither the Investment Adviser nor its affiliates guarantees the
quality, accuracy and/or the completeness of this information nor any data included therein. Such hypothetical information is for informative purposes only and does not reflect the constituents of the applicable Index.
To the extent it is intended that a Fund track an Index, the Fund may not match, and may vary substantially from, the Index for any period of time. A Fund
that tracks an Index may purchase, hold and sell securities at times when a non-Index fund would not do so. The Investment Adviser does not guarantee that any tracking error targets will be achieved. Funds tracking an Index may be negatively
impacted by any errors in the Index, either as a result of calculation errors, inaccurate data sources or otherwise. The Investment Adviser does not guarantee the timeliness, accuracy and/or completeness of an Index and the Investment Adviser is not
responsible for errors, omissions or interruptions in the Index (including when the Investment Adviser or an affiliate acts as the Index provider) or the calculation thereof (including when the Investment Adviser or an affiliate acts as the
calculation agent).
B-80
CREATIONS AND REDEMPTIONS
The Trust issues and sells shares of the Funds only in Creation Units on a continuous basis through the Distributor, without a sales load, at
the NAV next determined after receipt of an order in proper form as described in the Participant Agreement (as defined below), on any Business Day (as defined below).
For orders received in proper form before 12:00 p.m., Eastern time on a given Business Day (NAV 1 Order), the Goldman Sachs Access
Treasury 0-1 Year ETF will effect deliveries as follows, in each case on the same Business Day (T+0): (i) Creation Units by 3:00 p.m., Eastern time (for transactions for which the Authorized Participant (as defined below) has
advanced full collateral) or by 6:00 p.m., Eastern time (for transactions for which the Authorized Participant has not advanced full collateral); and (ii) redemption proceeds by 3:00 p.m., Eastern time (by 5:30 p.m., Eastern time for certain
Authorized Participants). For orders received in proper form on or after 12:00 p.m., Eastern time on a given Business Day (NAV 2 Order), the Fund will effect deliveries as follows, in each case on the next Business Day (T+1):
(i) Creation Units by 6:00 p.m., Eastern time; and (ii) redemption proceeds by 3:00 p.m., Eastern time (by 5:30 p.m., Eastern time for certain Authorized Participants).
Although Creation Units and redemption proceeds will normally be delivered as described above, Creation Units or redemption proceeds may be
delayed longer than one day under certain circumstances, namely: (1) for any period during which there is a non-routine closure of the Fedwire or applicable Federal Reserve Banks; (2) for any period (a) during which the NYSE is closed
other than customary weekend and holiday closings or (b) during which trading on the NYSE is restricted; (3) for any period during which an emergency exists as a result of which (a) disposal of securities owned by the Fund is not
reasonably practicable or (b) it is not reasonably practicable for the Fund to fairly determine the NAV of Shares of the Fund; (4) for any period during which the SEC has, by rule or regulation, deemed that (a) trading shall be
restricted or (b) an emergency exists; (5) for any period that the SEC may by order permit for shareholder protection; or (6) for any period during which the Fund, as part of a necessary liquidation of the Fund, has properly postponed
and/or suspended redemption of shares and payment in accordance with federal securities laws. Any such suspension or postponement described above will be consistent with the Funds obligations under Section 22(e) of the Investment Company
Act.
The following table sets forth the number of Shares of each Fund that constitute a Creation Unit for such Fund:
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Fund
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Creation Unit Size
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Goldman Sachs Access Treasury 0-1 Year ETF
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10,000
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Goldman Sachs Access Inflation Protected USD Bond ETF
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25,000
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Goldman Sachs Access High Yield Corporate Bond ETF
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50,000
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Goldman Sachs Access Investment Grade Corporate Bond ETF
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50,000
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Goldman Sachs Access Emerging Markets Local Currency Bond ETF
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25,000
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Goldman Sachs Access Emerging Markets USD Bond ETF
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50,000
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|
Goldman Sachs Access Ultra Short Bond ETF
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25,000
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|
In its discretion, the Investment Adviser reserves the right to increase or decrease the number of a
Funds Shares that constitute a Creation Unit. The Board reserves the right to declare a split or a consolidation in the number of shares outstanding of a Fund, and to make a corresponding change in the number of shares constituting a Creation
Unit, in the event that the per share price in the secondary market rises (or declines) to an amount that falls outside the range deemed desirable by the Board.
A Business Day with respect to the Funds is each day NYSE, an Exchange and the Trust are open, including any day that a Fund is
required to be open under Section 22(e) of the Act, which excludes weekends and the following holidays: New Years Day, Martin Luther King, Jr. Day, Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. Orders from large institutional investors who have entered into agreements with the Funds Distributor (Authorized Participants) to create or redeem Creation Units will only be accepted on a Business Day.
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 NYSE is stopped at a time other than its regularly scheduled closing time. The Trust reserves the right to reprocess creation and redemption transactions that were initially processed at a NAV other than (i) the NAV
determined by the Fund at 12:00 p.m., Eastern time (NAV 1) and the Funds official closing NAV (NAV 2) (as each may be subsequently adjusted) (with respect to the Goldman Sachs Access Treasury 0-1 Year ETF), or
(ii) a Funds official closing NAV (as the same may be subsequently adjusted) (with respect to all other Funds). The Trust reserves the right to recover amounts from (or distribute amounts to) Authorized Participants based on (i) NAV
1 and NAV 2 (with respect to the Goldman Sachs Access Treasury 0-1 Year ETF), or (ii) the official closing NAV (with respect to all other Funds). The Trust also 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.
B-81
Fund Deposit
The consideration for purchase of Creation Units generally consists of (i) cash (with respect to the Goldman Sachs Access High Yield
Corporate Bond ETF, Goldman Sachs Investment Grade Corporate Bond ETF, Goldman Sachs Access Emerging Markets Local Currency Bond and Goldman Sachs Access Emerging Markets USD Bond ETF), or (ii) Deposit Securities and the Cash Component (with
respect to the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF and Goldman Sachs Access Ultra Short Bond ETF). When permitted or required by a Fund, the consideration for purchase of Creation Units
may consist of (i) Deposit Securities and the Cash Component (with respect to the Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF, Goldman Sachs Access Emerging Markets Local Currency
Bond and Goldman Sachs Access Emerging Markets USD Bond ETF), or (ii) cash (with respect to the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF and Goldman Sachs Access Ultra Short Bond ETF).
Together, the Deposit Securities and Cash Component constitute the Fund Deposit, which represents the minimum initial and subsequent investment amount for a Creation Unit of a Fund. For each Fund except the Goldman Sachs Access Ultra
Short Bond ETF, the portfolio of securities required may, in certain limited circumstances (such as in connection with pending changes to a Funds Index), be different than the portfolio of securities the Fund will deliver upon redemption of
Fund shares.
The function of the Cash Component is to compensate for any differences between the NAV per Creation Unit and the Deposit
Amount (as defined below). The Cash Component would be an amount equal to the difference between the NAV of the shares (per Creation Unit) and the Deposit Amount, which is an amount equal to the market value of the Deposit Securities. If
the Cash Component is a positive number (the NAV per Creation Unit exceeds the Deposit Amount), the Authorized Participant will deliver the Cash Component. If the Cash Component is a negative number (the NAV per Creation Unit is less than the
Deposit Amount), the Authorized Participant will receive the Cash Component. Computation of the Cash Component excludes any stamp duty or other similar fees and expenses payable upon transfer of beneficial ownership of the Deposit Securities, which
shall be the sole responsibility of the Authorized Participant.
BNYM, through the National Securities Clearing Corporation
(NSCC), makes available on each Business Day, prior to the opening of business (subject to amendments) on an Exchange (currently 9:30 a.m., Eastern time), the identity and the required number of each Deposit Security and the amount of
the Cash Component (or cash deposit) to be included in the current Fund Deposit (based on information at the end of the previous Business Day).
The Deposit Securities and Cash Component are subject to any adjustments, as described below, in order to effect purchases of Creation Units
of a Fund until such time as the next-announced composition of the Deposit Securities and Cash Component is made available.
With respect
to each Fund except the Goldman Sachs Access Ultra Short Bond ETF, the composition of the Deposit Securities and the amount of the Cash Component may also change in response to adjustments to the weighting or composition of the component securities
of such Funds Index.
The Trust may require the substitution of an amount of cash (a cash-in-lieu amount) to replace any
Deposit Security of a Fund that is a non-deliverable instrument. The amount of cash contributed will be equivalent to the price of the instrument listed as a Deposit Security. The Trust reserves the right to permit or require the substitution of a
cash-in-lieu amount to be added to replace any Deposit Security that is a TBA transaction, that may not be available in sufficient quantity for delivery, that may not be eligible for trading by a Participating Party (defined below), that
may not be permitted to be re-registered in the name of the Trust as a result of an in-kind creation order pursuant to local law or market convention, or that may not be eligible for transfer through the systems of the DTC or the Federal Reserve
System for U.S. Treasury Securities. The Trust also reserves the right to permit or require a cash-in-lieu amount where the delivery of Deposit Securities by the Authorized Participant (as described below) would be restricted under the
securities laws or where the delivery of Deposit Securities from an investor to the Authorized Participant would result in the disposition of Deposit Securities by the Authorized Participant becoming restricted under the securities laws, and in
certain other situations.
In such cases where the Trust makes market purchases because a Deposit Security may not be permitted to be
re-registered in the name of the Trust as a result of an in-kind creation order pursuant to local law or market convention, or for other reasons, the Authorized Participant will reimburse the Trust for, among other things, any difference between the
market value at which the securities were purchased by the Trust and the cash in lieu amount (which amount, at the Investment Advisers discretion, may be capped), applicable registration fees and taxes. Brokerage commissions incurred in
connection with the Trusts acquisition of Deposit Securities will be at the expense of a Fund and will affect the value of all Shares of the Fund; but the Investment Adviser may adjust the transaction fee to the extent the composition of the
Deposit Securities changes or cash in lieu is added to the Cash Component to protect ongoing shareholders. The Trust may permit a cash-in-lieu amount for certain reasons at the Trusts sole discretion but is not required to do so.
With respect to a Fund, the adjustments to the proportions of Deposit Securities described above will reflect changes known to the Investment Adviser on the date of announcement to be in effect by the time of delivery of the Fund Deposit, in the
composition of the Funds Index or resulting from stock splits and other corporate actions.
B-82
Procedures for Creating Creation Units
To be eligible to place orders with the Distributor and to create a Creation Unit of a Fund, an entity must be: (i) a Participating
Party, i.e. a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the NSCC (the Clearing Process), a clearing agency that is registered with the SEC; or
(ii) a participant of DTC (DTC Participant) and must have executed an agreement with the Distributor (and accepted by the Transfer Agent), with respect to creations and redemptions of Creation Units (Participant
Agreement) (discussed below). A Participating Party or DTC Participant who has executed a Participant Agreement is referred to as an Authorized Participant. All shares of the Funds, however created, will be entered on the records
of DTC in the name of its nominee for the account of a DTC Participant.
Except as described below, and in all cases subject to the terms
of the applicable Participant Agreement, all orders to create Creation Units of a Fund must be received by the Transfer Agent by specified times (Order Cutoff Times) in each case on the date such order is placed for creation of Creation
Units to be effected based on the NAV of shares of such Fund as next determined after receipt of an order in proper form. With respect to the Goldman Sachs Access Treasury 0-1 Year ETF, an order to create a Creation Unit of the Fund must be received
before 12:00 p.m., Eastern time for that order to be effected at NAV 1. An order to create a Creation Unit of the Fund must be received on or after 12:00 p.m., and before the closing time of the regular trading session of the Funds Exchange
(ordinarily 4:00 p.m., Eastern time) for that order to be effected at NAV 2. With respect to all other Funds, the Order Cutoff Time is the closing time of the regular trading session of their respective Exchanges (ordinarily 4:00 p.m., Eastern
time). Orders requesting substitution of a cash-in-lieu amount or a cash deposit (collectively, Non-Standard Orders), must be received by the Transfer Agent no later than (i) 11:00 a.m., Eastern time for such order to be
effected at NAV 1 or on or after 12:00 p.m., and no later than 3:00 p.m., Eastern time in order to be effected at NAV 2 (with respect to the Goldman Sachs Access Treasury 0-1 Year ETF), or (ii) 3:00 p.m., Eastern time (with respect to all other
Funds). On days when an Exchange closes earlier than normal (such as the day before a holiday), the Funds require standard orders to create Creation Units to be placed by the earlier closing time and Non-Standard Orders to create Creation Units must
be received no later than one hour prior to the earlier closing time. Notwithstanding the foregoing, the Trust may, but is not required to, permit Non-Standard Orders until (i) 12:00 p.m., Eastern time for NAV 1 Orders or until 4:00 p.m.,
Eastern time for NAV 2 Orders (with respect to the Goldman Sachs Access Treasury 0-1 Year ETF, or (ii) 4:00 p.m., Eastern time (with respect to all other Funds), or until the market close (in the event an Exchange closes early). The date on
which an order to create Creation Units (or an order to redeem Creation Units, as discussed below) is placed is referred to as the Transmittal Date. Orders must be transmitted by an Authorized Participant through the Transfer
Agents electronic order system or by telephone or other transmission method acceptable to the Transfer Agent and approved by the Distributor pursuant to procedures set forth in the Participant Agreement. Economic or market disruptions or
changes, or telephone or other communication failure may impede the ability to reach the Transfer Agent, Distributor or an Authorized Participant.
All investor orders to create Creation Units shall be placed with an Authorized Participant in the form required by such Authorized
Participant. In addition, an Authorized Participant may request that an investor make certain representations or enter into agreements with respect to an order (to provide for payments of cash). Investors should be aware that their particular broker
may not have executed a Participant Agreement and, therefore, orders to create Creation Units of a Fund will have to be placed by the investors broker through an Authorized Participant. In such cases, there may be additional charges to such
investor. A limited number of broker-dealers are expected to execute a Participant Agreement and only a small number of such Authorized Participants are expected to have international capabilities.
Creation Units may be created in advance of the receipt by the Trust of all or a portion of the Fund Deposit. In such cases, the Authorized
Participant will remain liable for the full deposit of the missing portion(s) of the Fund Deposit and will be required to post collateral with the Trust consisting of cash at least equal to a percentage of the marked-to-market value of such missing portion(s) that is specified in the Participant Agreement. With respect to the Goldman Sachs Access Treasury 0-1 Year ETF, to effect settlement of NAV 1 Orders by 3:00
p.m., Eastern time on a given Business Day, an Authorized Participant must post collateral with the Trust by 12:00 p.m., Eastern time that day consisting of cash at least equal to a percentage of the marked-to-market value of the entire Fund Deposit
that is specified in the Participant Agreement. In each case, Trust may use such collateral to buy the missing portion(s) of the Fund Deposit at any time and will subject such Authorized Participant to liability for any shortfall between the cost to
the Trust of purchasing such securities and the value of such collateral. The Trust will have no liability for any such shortfall. The Trust will return any unused portion of the collateral to the Authorized Participant once the entire Fund Deposit
has been properly received by the Transfer Agent and deposited into the Trust.
Those persons placing orders for Creation Units should
ascertain any deadlines applicable to DTC and the Federal Reserve Bank wire system by contacting the operations department of the broker or depository institution effectuating such
B-83
transfer of Deposit Securities and Cash Component. Orders for creation that are effected outside the Clearing Process are likely to require transmittal by the DTC Participant earlier on the
Transmittal Date than orders effected using the Clearing Process.
Orders to create Creation Units of a Fund may be placed through the
Clearing Process utilizing procedures applicable for domestic securities (see Placement of Creation Orders Using Clearing Process) or outside the Clearing Process utilizing the procedures applicable to foreign securities
(Foreign Fund) (see Placement of Creation Orders Outside Clearing ProcessForeign Fund).
Placement of Creation
Orders Using Clearing Process
Fund Deposits must be delivered through a DTC Participant that has executed a Participant Agreement. A
DTC Participant who wishes to place an order creating Creation Units of a Fund need not be a Participating Party, but such orders must state that the creation of Creation Units will be effected through a transfer of securities and cash. The Fund
Deposit transfer must be ordered by the DTC Participant in a timely fashion so as to ensure the delivery of the requisite number of Deposit Securities through DTC to the account of the Trust and the delivery of the Cash Component (if applicable)
directly to the Transfer Agent through the Federal Reserve wire system, in each case (i) no later than 11:00 a.m., Eastern time, on the next Business Day immediately following the Transmittal Date (with respect to all Funds except the Goldman
Sachs Access Treasury 0-1 Year ETF), or (ii) by no later than the time specified in the following table (with respect to the Goldman Sachs Access Treasury 0-1 Year ETF):
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Order Type
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Settlement Time (Delivery of
Creation Unit(s) to Authorized
Participant)
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Delivery Deadline (Delivery of Fund Deposit by
Authorized
Participant to Trust)
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NAV 1 Order*
*Authorized Participant elects to post full collateral to settle by 3:00 p.m., Eastern time (T+0)
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By 3:00 p.m., Eastern time (T+0)
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Authorized Participant must post full collateral by 12:00 p.m., Eastern time (T+0)
Authorized Participant must deliver Deposit Securities and Cash Component (if
applicable) by 3:00 p.m., Eastern time (T+0) (by 5:30 p.m., Eastern time (T+0) for certain Authorized Participants, as set forth in the Participant Agreement)
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NAV 1 Order**
**Authorized Participant does not elect to post full collateral to settle by 3:00 p.m., Eastern time (T+0)
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By 6:00 p.m., Eastern time (T+0)
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By 3:00 p.m., Eastern time (T+0) (by 5:30 p.m., Eastern time (T+0) for certain Authorized Participants, as set forth in the Participant Agreement)
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NAV 2 Order
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By 6:00 p.m., Eastern time (T+1)
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By 3:00 p.m., Eastern time (T+1) (by 5:30 p.m., Eastern time (T+1) for certain Authorized Participants, as set forth in the Participant Agreement)
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Notwithstanding the above, where the Federal Reserve and/or DTC are closed on a day when the NYSE and the
Goldman Sachs Access Treasury 0-1 Year ETFs Exchange are open (such as Columbus Day and Veterans Day), (i) NAV 2 Orders placed the day before the day on which the Federal Reserve and/or DTC are closed will settle on a T+2 basis and
(ii) all orders placed the day on which the Federal Reserve and/or DTC are closed will settle on a T+1 basis.
All questions as to the
number of Deposit Securities to be delivered, and the validity, form and eligibility (including time of receipt) for the deposit of any tendered securities, will be determined by the Trust, whose determination shall be final and binding. An order to
create Creation Units of a Fund is deemed received by the Transfer Agent, and approved by the Distributor on the Transmittal Date if (i) such order is received by the Transfer Agent not later than the Order Cutoff Time on such Transmittal Date;
and (ii) all other procedures set forth in the Participant Agreement are properly followed. However, if the Transfer Agent does not receive both the requisite Deposit Securities and the Cash Component in a timely fashion, such order will be
cancelled. Upon written notice to the Transfer Agent, such cancelled order may be resubmitted the following Business Day using the Fund Deposit as newly constituted to reflect the current NAV of the applicable Fund. The delivery of Creation Units so
created will occur no later than the second (2nd) Business Day following the day on which the creation order is deemed received by the Transfer Agent and approved by the Distributor.
B-84
Additional transaction fees may be imposed in circumstances in which any cash can be used in lieu
of Deposit Securities to create Creation Units. (See Creation Transaction Fee section below.)
Placement of Creation Orders Outside
Clearing ProcessForeign Fund
The Transfer Agent will inform the Distributor, the Investment Adviser and the Custodian upon
receipt of a Creation Order. The Custodian will then provide such information to the appropriate subcustodian. The Custodian will cause the subcustodian of a Fund to maintain an account into which the Deposit Securities (or the cash value of all or
part of such securities, in the case of a permitted or required cash purchase or cash in lieu amount) will be delivered. Deposit Securities must be delivered to an account maintained at the applicable local custodian. The Trust must also
receive, on or before the Settlement Date, immediately available or same day funds estimated by the Custodian to be sufficient to pay the Cash Component next determined after receipt in proper form of the purchase order, together with the creation
transaction fee described below. The Settlement Date for a Fund is generally the second Business Day following the Transmittal Date.
Once the Transfer Agent has accepted a creation order, the Transfer Agent will confirm the issuance of a Creation Unit of a Fund against
receipt of payment, at such NAV as will have been calculated after receipt in proper form of such order. The Transfer Agent will then transmit a confirmation of acceptance of such order.
Creation Units will not be issued until the transfer of good title to the Trust of the Deposit Securities and the payment of the Cash
Component have been completed. When the subcustodian has confirmed to the Custodian that the required Deposit Securities (or the cash value thereof) have been delivered to the account of the relevant subcustodian, the Distributor and the Investment
Adviser will be notified of such delivery and the Transfer Agent will issue and cause the delivery of the Creation Units.
Acceptance of Creation
Orders
The Trust and the Distributor reserve the absolute right to reject or revoke acceptance of a creation order transmitted to it
in respect to a Fund, for example if: (i) the order is not in proper form in accordance with the procedures set forth in the Participant Agreement; (ii) the investor(s), upon obtaining the Shares ordered, would own 80% or more of the
currently outstanding Shares of such Fund; (iii) acceptance of the Fund Deposit would have certain adverse tax consequences to such Fund; (iv) acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful;
(v) acceptance of the Fund Deposit would otherwise, in the discretion of the Trust or the Investment Adviser, have an adverse effect on the Trust or the rights of beneficial owners of such Fund; or (vi) in the event that circumstances
outside the control of the Trust, the Transfer Agent, the Distributor or the Investment Adviser make it for all practical purposes impossible to process creation orders. Examples of such circumstances include acts of God; public service or utility
problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, facsimile and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information
systems affecting the Trust, the Investment Adviser, the Distributor, DTC, Federal Reserve, the Transfer Agent or any other participant in the creation process, and other extraordinary events. The Distributor shall notify the Authorized Participant
acting on behalf of the creator of a Creation Unit of its rejection of the order of such person. Neither the Trust, the Transfer Agent, the Distributor nor the Investment Adviser are under any duty, however, to give notification of any defects or
irregularities in the delivery of Fund Deposits nor shall any of them incur any liability for the failure to give any such notification.
All questions as to the number of shares of Deposit Securities and the validity, form, eligibility, and acceptance for deposit of any
securities to be delivered and the amount and form of the Cash Component, as applicable, shall be determined by the Trust, and the Trusts determination shall be final and binding.
Use of Eligible Securities List (Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF, Goldman
Sachs Access Emerging Markets Local Currency Bond ETF and Goldman Sachs Access Emerging Markets USD Bond ETF only)
In connection with
certain cash creations, the Investment Adviser may place purchase orders for a Funds portfolio transactions through the use of an Eligible Securities List. The Eligible Securities List would be compiled by the Investment Adviser
and would consist of securities that the Investment Adviser would consider purchasing on a given business day as part of the representative sampling strategy for a Fund, and may also include certain information about risk and other characteristics
of the securities that the Investment Adviser would consider purchasing. The securities on the Eligible Securities List may not be current holdings of a Fund. Following close of trading on the prior business day and prior to the commencement of
trading on the given business day, the Investment Adviser would post the Eligible Securities List on a Funds website and disseminate the Eligible Securities List to market makers and Authorized Participants for the Fund. A market maker or
Authorized Participant may contact the Investment Adviser prior to or after submission of a cash creation order regarding the possible sale of securities from the Eligible Securities List to a Fund. Once a cash creation order is received by a Fund,
the Investment Adviser would have the discretion to purchase securities from the Eligible Securities List from a market maker or Authorized Participant, or to purchase securities in the open market.
B-85
Creation Transaction Fee
With respect to the Goldman Sachs Access Treasury 0-1 Year ETF, a creation transaction fee payable to the Custodian of $2.00 per U.S. Treasury
Security issue comprising the Deposit Securities is imposed on each creation transaction. With respect to all other Funds, no fixed creation transaction fee will be assessed on a creation transaction.
In the case of cash creations or where the Trust permits or requires a creator to substitute cash in lieu of depositing a portion of
the Deposit Securities, the creator may be assessed a variable charge to compensate the Funds for the costs associated with purchasing the applicable securities. (See Fund Deposit section above.) As a result, in order to seek to
replicate the in-kind creation order process, the Trust expects to purchase, in the secondary market or otherwise gain exposure to, the portfolio securities that could have been delivered as a result of an in-kind creation order pursuant to local
law or market convention, or for other reasons (Market Purchases). In such cases where the Trust makes Market Purchases, the Authorized Participant will reimburse the Trust for, among other things, any difference between the market value
at which the securities and/or financial instruments were purchased by the Trust and the cash in lieu amount (which amount, at the Investment Advisers discretion, may be capped), applicable registration fees, brokerage commissions and certain
taxes. The Investment Adviser may adjust the transaction fee to the extent the composition of the creation securities changes or cash in lieu is added to the Cash Component to protect ongoing shareholders. Creators of Creation Units are responsible
for the costs of transferring the securities constituting the Deposit Securities to the account of the Trust. See Portfolio Transactions and Brokerage for additional information regarding certain cash creation transactions. From time to
time, all or a portion of the Goldman Sachs Access Treasury 0-1 Year ETFs fixed creation transaction fee may be waived at the sole discretion of the Investment Adviser, including in connection with an Authorized Participants investment
of seed capital in the Fund or where an Authorized Participant is engaged in certain customized creation and redemption basket activity that is designed to benefit the Fund by facilitating index tracking in a tax efficient manner
(i.e., to minimize the realization of capital gains).
Redemption of Creation Units
Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form on a Business
Day and only through a DTC Participant who has executed a Participant Agreement. The Funds will not redeem Shares in amounts less than Creation Units (except each Fund may redeem Shares in amounts less than a Creation Unit in the event such Fund is
being liquidated). Beneficial owners must accumulate enough Shares in the secondary market to constitute a Creation Unit in order to have such Shares redeemed by the Trust. There can be no assurance, however, that there will be sufficient liquidity
in the public trading market at any time to permit assembly of a Creation Unit. Authorized Participants should expect to incur brokerage and other costs in connection with assembling a sufficient number of Shares to constitute a redeemable Creation
Unit. All redemptions are subject to the procedures contained in the applicable Participant Agreement.
With respect to each Fund, BNYM,
through the NSCC, makes available immediately prior to the opening of business on an Exchange (currently 9:30 a.m., Eastern time) on each Business Day, the identity of the Funds securities and/or an amount of cash that will be applicable
(subject to possible amendment or correction) to redemption requests received in proper form (as described below) on that day. All orders are subject to acceptance by the Distributor. A Funds (other than the Goldman Sachs Access Ultra Short
Bond ETF) securities received on redemption (Fund Securities) may include, with respect to the Fund, securities in different proportions than securities of an Index or may include securities not currently represented in the Index. Fund
Securities received on redemption may not be identical to Deposit Securities that are applicable to creations of Creation Units.
Unless
cash-only redemptions are available or specified for a Fund, the redemption proceeds for a Creation Unit will generally consist of Fund Securitiesas announced on the Business Day of the request for a redemption order received in proper form
plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities, less the redemption transaction fee and
variable fees described below. Notwithstanding the foregoing, the Trust will substitute a cash-in-lieu amount to replace any Fund Security that is a non-deliverable instrument. The Trust may permit a cash-in-lieu amount for
certain reasons at the Trusts sole discretion but is not required to do so. The amount of cash paid out in such cases will be equivalent to the value of the instrument listed as a Fund Security. In the event that the Fund Securities have a
value greater than the NAV of the Shares, a compensating cash payment equal to the difference is required to be made by an Authorized Participant.
Redemptions of shares for Fund Securities will be subject to compliance with applicable U.S. federal and state securities laws, and each Fund
reserves the right to redeem Creation Units for cash to the extent that the Trust could not lawfully deliver specific Fund Securities upon redemptions or could not do so without first registering the Fund Securities under such laws. An Authorized
Participant, or a beneficial owner of shares for which it is acting, subject to a legal restriction with respect to a particular security included in the redemption of a Creation Unit may be paid an equivalent amount of cash. This would
B-86
specifically prohibit delivery of Fund Securities that are not registered in reliance upon Rule 144A under the 1933 Act to a redeeming beneficial owner of shares that is not a qualified
institutional buyer, as such term is defined under Rule 144A of the 1933 Act. The Authorized Participant may request the redeeming beneficial owner of the shares to complete an order form or to enter into agreements with respect to such
matters as compensating cash payment.
The right of redemption may be suspended or the date of payment postponed with respect to a Fund:
(i) for any period during which the NYSE is closed (other than customary weekend and holiday closings); (ii) for any period during which trading on the NYSE is suspended or restricted; (iii) for any period during which an emergency
exists as a result of which disposal by the Fund of securities it owns or determination of the Funds NAV is not reasonably practicable; or (iv) in such other circumstances as permitted by the SEC.
If the Trust determines, based on information available to the Trust when a redemption request is submitted by an Authorized Participant, that
(i) the short interest of a Fund in the marketplace is greater than or equal to 100% and (ii) the orders in the aggregate from all Authorized Participants redeeming Fund Shares on a Business Day represent 25% or more of the outstanding
Shares of the Fund, such Authorized Participant will be required to verify to the Trust the accuracy of its representations that are deemed to have been made by submitting a request for redemption. If, after receiving notice of the verification
requirement, the Authorized Participant does not verify the accuracy of its representations that are deemed to have been made by submitting a request for redemption in accordance with this requirement, its redemption request will be considered not
to have been received in proper form.
Redemption Transaction Fee
With respect to the Goldman Sachs Access Treasury 0-1 Year ETF, a redemption transaction fee payable to the Custodian of $2.00 per U.S.
Treasury Security issue comprising the Fund Securities is imposed on each redemption transaction. With respect to all other Funds, the basic redemption transaction fee is the same no matter how many Creation Units are being redeemed pursuant to any
one redemption request, in the following amounts:
|
|
|
|
|
Fund
|
|
Redemption Transaction Fee
|
|
Goldman Sachs Access Inflation Protected USD Bond ETF
|
|
$
|
0
|
|
Goldman Sachs Access High Yield Corporate Bond ETF
|
|
$
|
500
|
|
Goldman Sachs Access Investment Grade Corporate Bond ETF
|
|
$
|
500
|
|
Goldman Sachs Access Emerging Markets Local Currency Bond ETF
|
|
$
|
500
|
|
Goldman Sachs Access Emerging Markets USD Bond ETF
|
|
$
|
500
|
|
Goldman Sachs Access Ultra Short Bond ETF
|
|
$
|
0
|
|
An additional variable charge for cash redemptions or partial cash redemptions (when cash redemptions are
permitted or required for a Fund) may also be imposed to compensate each applicable Fund for the costs associated with selling the applicable securities. As a result, in order to seek to replicate the in-kind redemption order process, the Trust
expects to sell, in the secondary market, the portfolio securities or settle any financial instruments that may not be permitted to be re-registered in the name of the Participating Party as a result of an in-kind redemption order pursuant to local
law or market convention, or for other reasons (Market Sales). In such cases where the Trust makes Market Sales, the Authorized Participant will reimburse the Trust for, among other things, any difference between the market value at
which the securities and/or financial instruments were sold or settled by the Trust and the cash-in-lieu amount (which amount, at the Investment Advisers discretion, may be capped), applicable registration fees, brokerage commissions and
certain taxes (Transaction Costs). The Investment Adviser may adjust the transaction fee to the extent the composition of the redemption securities changes or cash-in-lieu is added to the Cash Component to protect ongoing shareholders.
In no event will fees charged by a Fund in connection with a redemption exceed 2% of the value of each Creation Unit. Investors who use the services of a broker or other such intermediary may be charged a fee for such services. See Portfolio
Transactions and Brokerage for additional information regarding certain cash redemption transactions. To the extent a Fund cannot recoup the amount of Transaction Costs incurred in connection with a redemption from the redeeming shareholder
because of the 2% cap or otherwise, those Transaction Costs will be borne by the Funds remaining shareholders and negatively affect the Funds performance. From time to time, all or a portion of a Funds basic redemption transaction
fee may be waived at the sole discretion of the Investment Adviser, including in connection with an Authorized Participants redemption of seed capital invested in a Fund or where an Authorized Participant is engaged in certain customized
creation and redemption basket activity that is designed to benefit a Fund (except the Goldman Sachs Access Ultra Short Bond ETF) by facilitating index tracking in a tax efficient manner (i.e., to minimize the realization of capital gains).
Placement of Redemption Orders
Orders to redeem Creation Units of a Fund must be delivered through a DTC Participant that has executed the Participant Agreement. A DTC
Participant who wishes to place an order for redemption of Creation Units of a Fund need not be a
B-87
Participating Party, but such orders must state that redemption of Creation Units of the Fund will be effected through transfer of Creation Units of the Fund directly through DTC.
With respect to all Funds except the Goldman Sachs Access Treasury 0-1 Year ETF, an order to redeem Creation Units of a Fund is deemed
received by BNYM, and accepted by the Distributor on the Transmittal Date if (i) such order is received by BNYM not later than 4:00 p.m., Eastern time on such Transmittal Date; (ii) such order is preceded or accompanied by the requisite
number of Shares of Creation Units specified in such order, which delivery must be made through DTC to BNYM no later than 11:00 a.m., Eastern time on such Settlement Date; and (iii) all other procedures set forth in the Participant Agreement
are properly followed.
With respect to the Goldman Sachs Access Treasury 0-1 Year ETF, an order to redeem Creation Units of the Fund is
deemed received by BNYM on the Transmittal Date if (i) such order is received by BNYM before 12:00 p.m., Eastern time for the order to be effected at NAV 1 and on or after 12:00 p.m., Eastern time and before the closing time for the order to be
effected at NAV 2, in all cases on such Transmittal Date; (ii) all other procedures set forth in the Participant Agreement are properly followed. An Authorized Participant must deliver the requisite number of Shares of Creation Units specified
in such order through DTC to BNYM and deliver any applicable cash amount directly to BNYM through the Federal Reserve wire system, in each case by no later than the time specified in the following table:
|
|
|
|
|
Order Type
|
|
Settlement Time (Delivery of Fund Securities to
Authorized
Participant)
|
|
Delivery Deadline (Delivery of Shares by
Authorized
Participant to Trust)
|
NAV 1 Order
|
|
By 3:00 p.m., Eastern time (T+0) (by 5:30 p.m., Eastern time (T+0) for certain Authorized Participants, as set forth in the Participant Agreement)
|
|
By 1:00 pm. Eastern time (T+0)
|
|
|
|
NAV 2 Order
|
|
By 3:00 p.m., Eastern time (T+1) (by 5:30 p.m., Eastern time (T+1) for certain Authorized Participants, as set forth in the Participant Agreement)
|
|
By 1:00 pm. Eastern time (T+1)
|
Notwithstanding the above, where the Federal Reserve and/or DTC are closed on a day when the NYSE and the Funds Exchange
are open (such as Columbus Day and Veterans Day), (i) NAV 2 Orders placed the day before the day on which the Federal Reserve and/or DTC are closed will settle on a T+2 basis and (ii) all orders placed the day on which the Federal Reserve
and/or DTC are closed will settle on a T+1 basis.
Placement of Redemption Orders Outside Clearing ProcessForeign Fund
Arrangements satisfactory to the Trust must be in place for the Participating Party to transfer the Creation Units through DTC on or before the
Settlement Date. Redemptions of Shares for Fund Securities will be subject to compliance with applicable U.S. federal and state securities laws and a Fund (whether or not it otherwise permits or requires cash redemptions) reserves the right to
redeem Creation Units for cash to the extent that the Fund could not lawfully deliver specific Fund Securities upon redemptions or could not do so without first registering the Fund Securities under such laws.
In connection with taking delivery of Shares for Fund Securities upon redemption of Creation Units, a redeeming shareholder or entity acting
on behalf of a redeeming shareholder must maintain appropriate custody arrangements with a qualified broker-dealer, bank or other custody providers in each jurisdiction in which any of a Fund Securities are customarily traded, to which account such
Fund Securities will be delivered. If neither the redeeming shareholder nor the entity acting on behalf of a redeeming shareholder has appropriate arrangements to take delivery of a Fund Securities in the applicable foreign jurisdiction and it is
not possible to make other such arrangements, or if it is not possible to effect deliveries of the Fund Securities in such jurisdictions, the Trust may, in its discretion, exercise its option to redeem such Shares in cash, and the redeeming
shareholder will be required to receive its redemption proceeds in cash.
Regular Foreign Holidays. A Fund generally intends to
effect deliveries of Creation Units and portfolio securities on a basis of T plus two Business Days (i.e., days on which the national securities exchange is open) (T+2). A Fund may effect deliveries of Creation Units
and portfolio securities on a basis other than T + 2 in order to accommodate local holiday schedules, to account for different treatment among foreign and U.S. markets of dividend record dates and ex-dividend dates or under certain other
circumstances. The ability of the Trust to effect in-kind creations and redemptions within two Business Days of receipt of an order in good form is subject, among other things, to the condition that, within the time period from the date of the order
to the date of delivery of the securities, there are no days that are holidays in the applicable foreign market. For every occurrence of one or more intervening holidays in the applicable foreign market that are not holidays observed in the U.S.
equity market, the redemption settlement cycle may be extended by the number of such intervening holidays. In addition to holidays, other unforeseeable closings in a foreign market due to emergencies may also prevent the Trust from delivering
securities within
B-88
normal settlement periods. The securities delivery cycles currently practicable for transferring portfolio securities to redeeming Authorized Participants, coupled with foreign market holiday
schedules, will require a delivery process longer than seven calendar days for a Fund, in certain circumstances. The holidays applicable to a Fund during such periods are listed below, as are instances where more than seven days will be needed to
deliver redemption proceeds. Although certain holidays may occur on different dates in subsequent years, the number of days required to deliver redemption proceeds in any given year is not expected to exceed the maximum number of days listed below
for a Fund. The proclamation of new holidays, the treatment by market participants of certain days as informal holidays (e.g., days on which no or limited securities transactions occur, as a result of substantially shortened
trading hours), the elimination of existing holidays, or changes in local securities delivery practices, could affect the information set forth herein at some time in the future. Because the portfolio securities of a Fund may trade on days that the
Funds Exchange is closed or on days that are not Business Days for the Fund, Authorized Participants may not be able to redeem their shares of a Fund, or to purchase and sell shares of the Fund on an Exchange, on days when the NAV of the Fund
could be significantly affected by events in the relevant non-U.S. markets.
Calendar Year 2019
|
|
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|
|
|
|
AUSTRALIA
|
|
|
|
|
|
|
January 1
|
|
April 22
|
|
August 5
|
|
December 25
|
January 28
|
|
April 25
|
|
October 7
|
|
November 5
|
April 19
|
|
May 6
|
|
|
|
|
January 1
|
|
April 22
|
|
August 5
|
|
December 25
|
|
|
|
|
AUSTRIA
|
|
|
|
|
|
|
January 1
|
|
June 10
|
|
November 1
|
|
December 26
|
April 22
|
|
June 20
|
|
November 15
|
|
|
May 1
|
|
August 15
|
|
December 25
|
|
|
May 30
|
|
|
|
|
|
|
|
|
|
|
BELGIUM
|
|
|
|
|
|
|
January 1
|
|
May 30
|
|
August 15
|
|
December 25
|
April 22
|
|
June 10
|
|
November 1
|
|
|
May 1
|
|
July 21
|
|
November 11
|
|
|
|
|
|
|
BRAZIL
|
|
|
|
|
|
|
January 1
|
|
April 19
|
|
September 7
|
|
December 25
|
March 4
|
|
May 1
|
|
October 12
|
|
|
March 5
|
|
June 20
|
|
November 2
|
|
|
March 6
|
|
July 9
|
|
November 15
|
|
|
|
|
|
|
CHILE
|
|
|
|
|
|
|
January 1
|
|
July 16
|
|
September 20
|
|
December 31
|
April 19
|
|
August 15
|
|
October 31
|
|
|
May 1
|
|
September 18
|
|
November 1
|
|
|
May 21
|
|
September 19
|
|
December 25
|
|
|
|
|
|
|
CHINA
|
|
|
|
|
|
|
January 1
|
|
February 9
|
|
June 7
|
|
October 2
|
February 4
|
|
February 10
|
|
September 13
|
|
October 3
|
February 5
|
|
April 5
|
|
September 30
|
|
October 4
|
February 6
|
|
May 1
|
|
October 1
|
|
October 7
|
February 7
|
|
|
|
|
|
|
|
|
|
|
COLOMBIA
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
August 7
|
|
November 11
|
January 7
|
|
June 3
|
|
August 19
|
|
December 25
|
March 25
|
|
June 24
|
|
October 14
|
|
|
April 18
|
|
July 1
|
|
November 4
|
|
|
April 19
|
|
|
|
|
|
|
|
|
|
|
CZECH REPUBLIC
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
October 28
|
|
December 26
|
April 19
|
|
May 8
|
|
December 24
|
|
|
April 22
|
|
July 5
|
|
December 25
|
|
|
|
|
|
|
DENMARK
|
|
|
|
|
|
|
January 1
|
|
April 22
|
|
June 5
|
|
December 25
|
April 18
|
|
May 17
|
|
June 10
|
|
December 26
|
April 19
|
|
May 30
|
|
December 24
|
|
December 31
|
|
|
|
|
EGYPT
|
|
|
|
|
|
|
January 1
|
|
April 29
|
|
June 7
|
|
August 13
|
January 7
|
|
May 1
|
|
July 1
|
|
August 15
|
B-89
|
|
|
|
|
|
|
January 25
|
|
June 5
|
|
July 23
|
|
|
April 25
|
|
June 6
|
|
August 12
|
|
|
The Egyptian market is closed every Friday.
|
|
|
|
|
|
|
|
|
FINLAND
|
|
|
|
December 25
|
|
|
January 1
|
|
April 22
|
|
December 6
|
|
December 25
|
January 6
|
|
May 1
|
|
December 24
|
|
December 26
|
April 19
|
|
May 30
|
|
|
|
|
|
|
|
|
FRANCE
|
|
|
|
|
|
|
January 1
|
|
May 8
|
|
July 14
|
|
November 11
|
April 22
|
|
May 30
|
|
August 15
|
|
December 25
|
May 1
|
|
June 10
|
|
November 1
|
|
December 26
|
|
|
|
|
GERMANY
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
June 10
|
|
December 25
|
April 9
|
|
May 30
|
|
October 3
|
|
December 26
|
April 22
|
|
|
|
|
|
|
|
|
|
|
GREECE
|
|
|
|
|
|
|
January 1
|
|
April 26
|
|
June 17
|
|
December 25
|
March 11
|
|
April 29
|
|
August 15
|
|
December 26
|
March 25
|
|
May 1
|
|
October 28
|
|
|
|
|
|
|
HONG KONG
|
|
|
|
|
|
|
January 1
|
|
April 5
|
|
May 13
|
|
October 1
|
February 4
|
|
April 19
|
|
June 7
|
|
October 7
|
February 5
|
|
April 20
|
|
July 1
|
|
December 25
|
February 6
|
|
April 22
|
|
September 14
|
|
December 26
|
February 7
|
|
May 1
|
|
|
|
|
|
|
|
|
HUNGARY
|
|
|
|
|
|
|
January 1
|
|
April 22
|
|
August 20
|
|
December 25
|
March 15
|
|
May 1
|
|
October 23
|
|
December 26
|
April 19
|
|
June 10
|
|
November 1
|
|
|
|
|
|
|
INDIA
|
|
|
|
|
|
|
March 4
|
|
May 1
|
|
September 2
|
|
October 28
|
March 21
|
|
June 5
|
|
September 10
|
|
November 12
|
April 17
|
|
August 12
|
|
October 2
|
|
December 25
|
April 19
|
|
August 15
|
|
October 7
|
|
|
|
|
|
|
INDONESIA
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
June 6
|
|
December 31
|
February 5
|
|
May 30
|
|
August 12
|
|
|
April 19
|
|
June 5
|
|
December 25
|
|
|
|
|
|
|
IRELAND
|
|
|
|
|
|
|
January 1
|
|
May 6
|
|
October 28
|
|
|
March 17
|
|
June 3
|
|
December 25
|
|
|
April 22
|
|
August 5
|
|
December 26
|
|
|
|
|
|
|
ISRAEL
|
|
|
|
|
|
|
March 21
|
|
May 9
|
|
September 30
|
|
October 13
|
April 25
|
|
June 9
|
|
October 1
|
|
October 14
|
April 26
|
|
August 11
|
|
October 8
|
|
October 20
|
May 8
|
|
September 29
|
|
October 9
|
|
October 21
|
The Israeli market is closed every Friday
|
|
|
|
|
|
|
|
|
ITALY
|
|
|
|
|
|
|
January 1
|
|
April 22
|
|
June 2
|
|
December 8
|
January 6
|
|
April 25
|
|
August 15
|
|
December 25
|
April 19
|
|
May 1
|
|
November 1
|
|
December 26
|
|
|
|
|
JAPAN
|
|
|
|
|
|
|
January 1
|
|
March 21
|
|
July 15
|
|
October 14
|
January 2
|
|
April 19
|
|
August 12
|
|
November 4
|
January 3
|
|
May 3
|
|
September 16
|
|
November 25
|
January 14
|
|
May 4
|
|
September 23
|
|
December 23
|
February 11
|
|
May 6
|
|
|
|
|
|
|
|
|
MALAYSIA
|
|
|
|
|
|
|
January 1
|
|
February 5
|
|
May 30
|
|
September 16
|
January 21
|
|
May 1
|
|
June 5
|
|
December 25
|
February 1
|
|
May 19
|
|
August 12
|
|
|
B-90
|
|
|
|
|
|
|
MEXICO
|
|
|
|
|
|
|
January 1
|
|
April 18
|
|
May 5
|
|
December 12
|
February 4
|
|
April 19
|
|
September 16
|
|
December 25
|
March 18
|
|
May 1
|
|
November 18
|
|
|
|
|
|
|
NETHERLANDS
|
|
|
|
|
|
|
January 1
|
|
April 27
|
|
May 30
|
|
December 25
|
April 19
|
|
May 4
|
|
June 10
|
|
December 26
|
April 22
|
|
May 5
|
|
|
|
|
|
|
|
|
NEW ZEALAND
|
|
|
|
|
|
|
January 1
|
|
April 19
|
|
June 3
|
|
December 26
|
January 2
|
|
April 22
|
|
October 28
|
|
|
February 6
|
|
April 25
|
|
December 25
|
|
|
|
|
|
|
NORWAY
|
|
|
|
|
|
|
January 1
|
|
April 22
|
|
June 10
|
|
December 31
|
April 17
|
|
May 1
|
|
December 24
|
|
|
April 18
|
|
May 17
|
|
December 25
|
|
|
April 19
|
|
May 30
|
|
December 26
|
|
|
|
|
|
|
PERU
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
October 8
|
|
December 25
|
April 18
|
|
July 29
|
|
November 1
|
|
|
April 19
|
|
August 30
|
|
|
|
|
|
|
|
|
PHILIPPINES
|
|
|
|
|
|
|
January 1
|
|
April 18
|
|
June 12
|
|
December 24
|
February 5
|
|
April 19
|
|
August 21
|
|
December 25
|
February 25
|
|
April 20
|
|
August 26
|
|
December 30
|
April 9
|
|
May 1
|
|
November 1
|
|
December 31
|
|
|
|
|
POLAND
|
|
|
|
|
|
|
January 1
|
|
May 3
|
|
November 11
|
|
December 26
|
April 19
|
|
June 20
|
|
December 24
|
|
December 31
|
April 22
|
|
August 15
|
|
December 25
|
|
|
May 1
|
|
November 1
|
|
|
|
|
|
|
|
|
PORTUGAL
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
August 15
|
|
|
April 19
|
|
June 10
|
|
November 1
|
|
|
April 25
|
|
June 20
|
|
December 25
|
|
|
|
|
|
|
QATAR
|
|
|
|
|
|
|
February 12
|
|
June 5
|
|
August 10
|
|
August 12
|
June 4
|
|
June 6
|
|
August 11
|
|
December 18
|
The Qatari market is closed every Friday
|
|
|
|
|
|
|
ROMANIA
|
|
|
|
|
|
|
January 1
|
|
April 26
|
|
June 17
|
|
December 26
|
January 2
|
|
April 29
|
|
August 15
|
|
|
January 24
|
|
May 1
|
|
December 25
|
|
|
|
|
|
|
RUSSIA
|
|
|
|
|
|
|
January 1
|
|
February
|
|
May 9
|
|
|
January 2
|
|
March 8
|
|
June 12
|
|
|
January 7
|
|
May 1
|
|
November 4
|
|
|
|
|
|
|
SINGAPORE
|
|
|
|
|
|
|
January 1
|
|
April 19
|
|
June 5
|
|
October 27
|
February 5
|
|
May 1
|
|
August 9
|
|
December 25
|
February 6
|
|
May 19
|
|
August 11
|
|
|
|
|
|
|
SOUTH AFRICA
|
|
|
|
|
|
|
January 1
|
|
April 22
|
|
September 24
|
|
December 26
|
March 21
|
|
May 1
|
|
December 16
|
|
|
April 19
|
|
August 9
|
|
December 25
|
|
|
|
|
|
|
SOUTH KOREA
|
|
|
|
|
|
|
January 1
|
|
March 1
|
|
August 15
|
|
October 3
|
February 4
|
|
May 1
|
|
September 12
|
|
October 9
|
February 5
|
|
May 6
|
|
September 13
|
|
December 25
|
February 6
|
|
June 6
|
|
|
|
December 31
|
B-91
|
|
|
|
|
|
|
SPAIN
|
|
|
|
|
|
|
January 1
|
|
April 19
|
|
May 1
|
|
December 25
|
|
|
|
|
SRI LANKA
|
|
|
|
|
|
|
January 15
|
|
June 19
|
|
August 26
|
|
November 11
|
April 19
|
|
July 2
|
|
August 30
|
|
November 26
|
May 1
|
|
July 31
|
|
October 28
|
|
December 25
|
|
|
|
|
SWEDEN
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
June 22
|
|
December 25
|
January 6
|
|
May 30
|
|
November 2
|
|
December 26
|
April 19
|
|
June 6
|
|
December 24
|
|
December 31
|
April 22
|
|
June 21
|
|
|
|
|
|
|
|
|
SWITZERLAND
|
|
|
|
|
|
|
January 1
|
|
April 22
|
|
June 10
|
|
December 25
|
January 2
|
|
May 30
|
|
August 1
|
|
December 26
|
April 19
|
|
|
|
|
|
|
|
|
|
|
TAIWAN
|
|
|
|
|
|
|
January 1
|
|
February 6
|
|
April 4
|
|
June 7
|
February 4
|
|
February 7
|
|
April 5
|
|
September 13
|
February 5
|
|
February 8
|
|
May 1
|
|
October 10
|
|
|
|
|
THAILAND
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
August 12
|
|
December 10
|
February 19
|
|
May 20
|
|
October 14
|
|
December 31
|
April 8
|
|
July 16
|
|
October 23
|
|
|
April 15
|
|
July 29
|
|
December 5
|
|
|
April 16
|
|
|
|
|
|
|
|
|
|
|
TURKEY
|
|
|
|
|
|
|
January 1
|
|
June 4
|
|
July 15
|
|
August 14
|
April 23
|
|
June 5
|
|
August 12
|
|
August 30
|
May 1
|
|
June 6
|
|
August 13
|
|
October 29
|
|
|
|
|
UNITED ARAB EMIRATES
|
|
|
|
|
|
|
January 1
|
|
June 4
|
|
August 12
|
|
December 2
|
April 3
|
|
June 5
|
|
August 13
|
|
|
May 6
|
|
June 6
|
|
|
|
|
The United Arab Emirates markets are closed on Fridays
|
|
|
|
|
|
|
|
|
UKRAINE
|
|
|
|
|
|
|
January 1
|
|
April 28
|
|
May 9
|
|
October 14
|
January 7
|
|
April 29
|
|
June 28
|
|
December 25
|
March 8
|
|
May 1
|
|
August 24
|
|
|
|
|
|
|
UNITED KINGDOM
|
|
|
|
|
|
|
January 1
|
|
May 6
|
|
August 5
|
|
December 25
|
April 19
|
|
May 27
|
|
August 6
|
|
December 26
|
April 22
|
|
|
|
|
|
|
|
Calendar Year 2020
|
|
|
|
|
ARGENTINA
|
|
|
|
|
|
|
January 1
|
|
April 10
|
|
July 9
|
|
December 8
|
February 24
|
|
May 1
|
|
August 17
|
|
December 25
|
February 25
|
|
May 25
|
|
October 12
|
|
December 31
|
March 24
|
|
June 17
|
|
November 23
|
|
|
April 2
|
|
June 20
|
|
December 7
|
|
|
|
|
|
|
AUSTRALIA
|
|
|
|
|
|
|
January 1
|
|
April 10
|
|
April 13
|
|
December 25
|
January 26
|
|
April 11
|
|
April 25
|
|
December 26
|
January 27
|
|
April 12
|
|
April 27
|
|
December 28
|
|
|
|
|
AUSTRIA
|
|
|
|
|
|
|
January 1
|
|
May 21
|
|
August 15
|
|
December 8
|
January 6
|
|
June 1
|
|
October 26
|
|
December 25
|
April 13
|
|
June 15
|
|
November 1
|
|
December 26
|
May 1
|
|
|
|
|
|
|
B-92
|
|
|
|
|
|
|
BELGIUM
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
June 1
|
|
November 1
|
April 12
|
|
May 21
|
|
July 21
|
|
November 11
|
April 13
|
|
May 31
|
|
August 15
|
|
December 25
|
|
|
|
|
BRAZIL
|
|
|
|
|
|
|
January 1
|
|
April 21
|
|
September 7
|
|
|
February 25
|
|
May 1
|
|
October 12
|
|
November 15
|
April 10
|
|
June 11
|
|
November 2
|
|
December 25
|
|
|
|
|
CHILE
|
|
|
|
|
|
|
January 1
|
|
May 21
|
|
September 18
|
|
November 1
|
April 10
|
|
June 29
|
|
September 19
|
|
November 2
|
April 11
|
|
July 16
|
|
October 12
|
|
December 8
|
May 1
|
|
August 15
|
|
October 31
|
|
December 25
|
|
|
|
|
CHINA
|
|
|
|
|
|
|
January 1
|
|
January 28
|
|
April 5
|
|
October 2
|
January 24
|
|
January 29
|
|
April 6
|
|
October 3
|
January 25
|
|
January 30
|
|
May 1
|
|
October 4
|
January 26
|
|
January 31
|
|
June 25
|
|
October 5
|
January 27
|
|
April 4
|
|
October 1
|
|
October 6
|
|
|
|
|
|
|
October 7
|
|
|
|
|
COLUMBIA
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
July 20
|
|
November 16
|
January 6
|
|
May 25
|
|
August 7
|
|
December 8
|
March 19
|
|
June 15
|
|
August 17
|
|
December 25
|
April 9
|
|
June 22
|
|
October 12
|
|
|
April 10
|
|
June 29
|
|
November 2
|
|
|
|
|
|
|
CZECH REPUBLIC
|
|
|
|
|
|
|
January 1
|
|
May 8
|
|
September 28
|
|
December 24
|
April 10
|
|
July 5
|
|
October 28
|
|
December 25
|
April 13
|
|
July 6
|
|
November 17
|
|
December 26
|
May 1
|
|
|
|
|
|
|
|
|
|
|
DENMARK
|
|
|
|
|
|
|
January 1
|
|
April 12
|
|
May 21
|
|
December 24
|
April 9
|
|
April 13
|
|
May 31
|
|
December 25
|
April 10
|
|
May 8
|
|
June 1
|
|
December 26
|
|
|
|
|
EGYPT
|
|
|
|
|
|
|
January 1
|
|
April 20
|
|
July 23
|
|
October 29
|
January 7
|
|
April 25
|
|
July 31
|
|
|
January 25
|
|
May 1
|
|
August 20
|
|
|
April 19
|
|
May 24
|
|
October 6
|
|
|
The Egyptian market is closed every Friday.
|
|
|
|
|
|
|
|
|
FINLAND
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
November 1
|
|
December 26
|
January 6
|
|
May 21
|
|
December 6
|
|
|
April 10
|
|
June 19
|
|
December 24
|
|
|
April 13
|
|
June 20
|
|
December 25
|
|
|
|
|
|
|
FRANCE
|
|
|
|
|
|
|
January 1
|
|
May 8
|
|
July 14
|
|
November 11
|
April 13
|
|
May 21
|
|
August 15
|
|
December 25
|
May 1
|
|
June 1
|
|
November 1
|
|
|
|
|
|
|
GERMANY
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
June 1
|
|
December 25
|
April 10
|
|
May 21
|
|
October 3
|
|
December 26
|
April 13
|
|
|
|
|
|
|
B-93
|
|
|
|
|
|
|
GREECE
|
|
|
|
|
|
|
January 1
|
|
April 17
|
|
June 7
|
|
December 25
|
January 6
|
|
April 19
|
|
June 8
|
|
December 26
|
March 2
|
|
April 20
|
|
August 17
|
|
|
March 25
|
|
May 1
|
|
October 28
|
|
|
|
|
|
|
HONG KONG
|
|
|
|
|
|
|
January 1
|
|
April 10
|
|
June 25
|
|
December 25
|
January 25
|
|
April 11
|
|
July 1
|
|
December 26
|
January 27
|
|
April 13
|
|
October 1
|
|
|
January 28
|
|
April 30
|
|
October 2
|
|
|
April 4
|
|
May 1
|
|
October 26
|
|
|
|
|
|
|
HUNGARY
|
|
|
|
|
|
|
January 1
|
|
April 13
|
|
August 20
|
|
December 25
|
March 15
|
|
May 1
|
|
August 21
|
|
December 26
|
April 10
|
|
May 31
|
|
October 23
|
|
|
April 12
|
|
June 1
|
|
November 1
|
|
|
|
|
|
|
INDIA
|
|
|
|
|
|
|
January 26
|
|
April 14
|
|
August 15
|
|
October 29
|
February 21
|
|
May 7
|
|
August 29
|
|
November 14
|
April 6
|
|
July 31
|
|
October 2
|
|
November 30
|
April 10
|
|
August 12
|
|
October 25
|
|
December 25
|
|
|
|
|
INDONESIA
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
June 1
|
|
December 25
|
January 25
|
|
May 7
|
|
July 31
|
|
|
March 22
|
|
May 21
|
|
August 17
|
|
|
March 25
|
|
May 24
|
|
August 20
|
|
|
April 10
|
|
May 26
|
|
October 29
|
|
|
|
|
|
|
IRELAND
|
|
|
|
|
|
|
January 1
|
|
May 4
|
|
October 26
|
|
December 28
|
March 17
|
|
June 1
|
|
December 25
|
|
|
April 13
|
|
August 3
|
|
December 26
|
|
|
|
|
|
|
ISRAEL
|
|
|
|
|
|
|
March 10
|
|
April 16
|
|
July 30
|
|
September 28
|
March 11
|
|
April 29
|
|
August 19
|
|
October 3
|
April 4
|
|
May 8
|
|
August 20
|
|
October 10
|
April 9
|
|
May 29
|
|
September 19
|
|
October 11
|
April 15
|
|
May 31
|
|
September 20
|
|
|
The Israeli market is closed every Friday
|
|
|
|
|
|
|
|
|
ITALY
|
|
|
|
|
|
|
January 1
|
|
April 25
|
|
August 15
|
|
December 25
|
January 6
|
|
May 1
|
|
November 1
|
|
December 26
|
April 13
|
|
June 2
|
|
December 8
|
|
|
|
|
|
|
JAPAN
|
|
|
|
|
|
|
January 1
|
|
May 3
|
|
August 11
|
|
November 23
|
January 13
|
|
May 4
|
|
September 21
|
|
December 23
|
February 11
|
|
May 5
|
|
September 22
|
|
|
March 20
|
|
May 6
|
|
October 12
|
|
|
April 29
|
|
July 20
|
|
November 3
|
|
|
|
|
|
|
MALAYSIA
|
|
|
|
|
|
|
January 25
|
|
May 7
|
|
July 31
|
|
September 16
|
January 26
|
|
May 24
|
|
August 20
|
|
October 29
|
January 27
|
|
May 25
|
|
August 31
|
|
December 25
|
May 1
|
|
May 26
|
|
September 9
|
|
|
B-94
|
|
|
|
|
|
|
MEXICO
|
|
|
|
|
|
|
January 1
|
|
April 9
|
|
September 16
|
|
November 16
|
February 3
|
|
April 10
|
|
October 12
|
|
November 20
|
March 16
|
|
May 1
|
|
November 2
|
|
November 26
|
|
|
|
|
NETHERLANDS
|
|
|
|
|
|
|
January 1
|
|
April 27
|
|
May 31
|
|
December 25
|
April 12
|
|
May 5
|
|
June 1
|
|
December 26
|
April 13
|
|
May 21
|
|
|
|
|
|
|
|
|
NEW ZEALAND
|
|
|
|
|
|
|
January 1
|
|
March 9
|
|
June 1
|
|
November 30
|
January 2
|
|
March 23
|
|
September 28
|
|
December 25
|
January 20
|
|
April 10
|
|
October 23
|
|
December 26
|
January 27
|
|
April 13
|
|
October 26
|
|
|
February 3
|
|
April 14
|
|
November 2
|
|
|
February 6
|
|
April 25
|
|
November 13
|
|
|
|
|
|
|
NORWAY
|
|
|
|
|
|
|
January 1
|
|
May 5
|
|
December 25
|
|
|
April 12
|
|
May 21
|
|
December 26
|
|
|
April 13
|
|
May 31
|
|
|
|
|
April 27
|
|
June 1
|
|
|
|
|
|
|
|
|
PAKISTAN
|
|
|
|
|
|
|
February 5
|
|
May 25
|
|
October 29
|
|
|
March 23
|
|
May 26
|
|
December 25
|
|
|
April 13
|
|
July 31
|
|
|
|
|
May 1
|
|
August 14
|
|
|
|
|
|
|
|
|
PERU
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
July 28
|
|
October 8
|
April 9
|
|
June 29
|
|
July 29
|
|
November 1
|
April 10
|
|
July 27
|
|
August 30
|
|
December 8
|
|
|
|
|
|
|
December 25
|
|
|
|
|
PHILIPPINES
|
|
|
|
|
|
|
January 1
|
|
April 11
|
|
July 31
|
|
December 8
|
January 25
|
|
May 1
|
|
August 21
|
|
December 24
|
April 9
|
|
May 24
|
|
August 31
|
|
December 25
|
April 10
|
|
June 12
|
|
November 1
|
|
December 30
|
|
|
|
|
November 30
|
|
|
|
|
|
|
POLAND
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
August 15
|
|
December 26
|
January 6
|
|
May 3
|
|
November 1
|
|
|
April 12
|
|
May 31
|
|
November 11
|
|
|
April 13
|
|
June 11
|
|
December 25
|
|
|
|
|
|
|
PORTUGAL
|
|
|
|
|
|
|
January 1
|
|
June 10
|
|
December 1
|
|
|
April 10
|
|
June 11
|
|
December 8
|
|
|
May 1
|
|
October 5
|
|
December 25
|
|
|
|
|
|
|
QATAR
|
|
|
|
|
|
|
February 12
|
|
May 26
|
|
July 30
|
|
August 4
|
March 11
|
|
May 27
|
|
July 31
|
|
December 18
|
May 25
|
|
May 28
|
|
August 3
|
|
|
The Qatari market is closed every Friday
|
|
|
|
|
|
|
|
|
RUSSIA
|
|
|
|
|
|
|
January 1
|
|
January 7
|
|
May 1
|
|
May 12
|
January 2
|
|
February 23
|
|
May 4
|
|
November 4
|
January 3
|
|
February 24
|
|
May 9
|
|
|
January 6
|
|
March 9
|
|
May 11
|
|
|
B-95
|
|
|
|
|
|
|
|
|
|
|
SINGAPORE
|
|
|
|
|
|
|
January 1
|
|
April 19
|
|
May 20
|
|
August 12
|
February 5
|
|
May 1
|
|
June 5
|
|
October 27
|
February 6
|
|
May 19
|
|
August 9
|
|
October 28
|
|
|
|
|
August 11
|
|
December 25
|
|
|
|
|
SOUTH AFRICA
|
|
|
|
|
|
|
January 1
|
|
April 13
|
|
June 16
|
|
December 16
|
March 21
|
|
April 27
|
|
August 10
|
|
December 25
|
April 10
|
|
May 1
|
|
September 24
|
|
December 26
|
|
|
|
|
SOUTH KOREA
|
|
|
|
|
|
|
January 1
|
|
September 30
|
|
December 25
|
|
|
January 24
|
|
October 1
|
|
|
|
|
April 30
|
|
October 2
|
|
|
|
|
May 5
|
|
October 9
|
|
|
|
|
|
|
|
|
SPAIN
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
November 1
|
|
December 25
|
January 6
|
|
August 15
|
|
December 6
|
|
|
April 19
|
|
October 12
|
|
December 8
|
|
|
|
|
|
|
SWEDEN
|
|
|
|
|
|
|
January 1
|
|
April 13
|
|
June 6
|
|
December 24
|
January 6
|
|
May 1
|
|
June 19
|
|
December 25
|
April 10
|
|
May 21
|
|
June 20
|
|
December 31
|
April 12
|
|
May 31
|
|
November 1
|
|
|
|
|
|
|
SWITZERLAND
|
|
|
|
|
|
|
January 1
|
|
May 21
|
|
August 1
|
|
December 25
|
April 10
|
|
May 31
|
|
September 20
|
|
|
April 13
|
|
June 1
|
|
|
|
|
|
|
|
|
TAIWAN
|
|
|
|
|
|
|
January 1
|
|
January 29
|
|
May 1
|
|
October 2
|
January 23
|
|
February 28
|
|
June 25
|
|
October 9
|
January 24
|
|
April 2
|
|
June 26
|
|
October 10
|
January 28
|
|
April 3
|
|
October 1
|
|
|
|
|
|
|
THAILAND
|
|
|
|
|
|
|
January 1
|
|
May 1
|
|
August 12
|
|
December 10
|
February 19
|
|
May 20
|
|
October 14
|
|
December 31
|
April 8
|
|
July 16
|
|
October 23
|
|
|
April 15
|
|
July 29
|
|
December 5
|
|
|
April 16
|
|
|
|
|
|
|
|
|
|
|
TURKEY
|
|
|
|
|
|
|
January 1
|
|
April 13
|
|
May 21
|
|
October 23
|
January 2
|
|
April 14
|
|
July 5
|
|
December 7
|
January 25
|
|
April 15
|
|
July 28
|
|
December 10
|
March 9
|
|
May 1
|
|
August 12
|
|
December 31
|
April 6
|
|
May 7
|
|
October 13
|
|
|
|
|
|
|
UNITED ARAB EMIRATES
|
|
|
|
|
|
|
January 1
|
|
May 26
|
|
August 2
|
|
December 2
|
March 22
|
|
July 30
|
|
August 20
|
|
December 3
|
May 24
|
|
July 31
|
|
October 29
|
|
|
May 25
|
|
August 1
|
|
November 30
|
|
|
The United Arab Emirates markets are closed on Fridays
|
|
|
|
|
|
|
|
|
UNITED KINGDOM
|
|
|
|
|
|
|
January 1
|
|
May 4
|
|
August 31
|
|
December 28
|
April 10
|
|
May 25
|
|
December 25
|
|
|
B-96
Redemptions. The longest redemption cycle for the Funds is a function of the longest redemption cycle
among the countries whose securities comprise the Funds. In the calendar years 2019 and 2020, the dates of regular holidays affecting the following securities markets present the worst-case (longest) redemption cycle* for the Funds as follows.
SETTLEMENT PERIODS GREATER THAN SEVEN DAYS FOR YEAR 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Settlement
Period
|
|
|
End of Settlement
Period
|
|
|
Number of Days in
Settlement Period
|
|
Australia
|
|
|
4/18/2019
|
|
|
|
4/26/2019
|
|
|
|
8
|
|
Brazil
|
|
|
2/27/2019
|
|
|
|
3/7/2019
|
|
|
|
8
|
|
|
|
|
2/28/2019
|
|
|
|
3/8/2019
|
|
|
|
8
|
|
|
|
|
3/1/2019
|
|
|
|
3/11/2019
|
|
|
|
10
|
|
China
|
|
|
1/30/2019
|
|
|
|
2/11/2019
|
|
|
|
12
|
|
|
|
|
1/31/2019
|
|
|
|
2/12/2019
|
|
|
|
12
|
|
|
|
|
2/1/2019
|
|
|
|
2/11/2019
|
|
|
|
10
|
|
|
|
|
2/1/2019
|
|
|
|
2/13/2019
|
|
|
|
12
|
|
Finland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/23/2019
|
|
|
|
12/31/2019
|
|
|
|
8
|
|
Hong Kong
|
|
|
1/31/2019
|
|
|
|
2/8/2019
|
|
|
|
8
|
|
|
|
|
2/1/2019
|
|
|
|
2/11/2019
|
|
|
|
10
|
|
Japan
|
|
|
12/26/2018
|
|
|
|
1/4/2019
|
|
|
|
9
|
|
|
|
|
12/27/2018
|
|
|
|
1/7/2019
|
|
|
|
11
|
|
|
|
|
12/28/2018
|
|
|
|
1/8/2019
|
|
|
|
11
|
|
Malaysia
|
|
|
1/30/2019
|
|
|
|
2/7/2019
|
|
|
|
8
|
|
|
|
|
1/31/2019
|
|
|
|
2/8/2019
|
|
|
|
8
|
|
Russia
|
|
|
1/31/2019
|
|
|
|
2/8/2019
|
|
|
|
8
|
|
Taiwan
|
|
|
2/1/2019
|
|
|
|
2/11/2019
|
|
|
|
10
|
|
New Zealand
|
|
|
4/18/2019
|
|
|
|
4/26/2019
|
|
|
|
8
|
|
*
|
These worst-case redemption cycles are based on information regarding regular holidays, which may be out of
date. Based on changes in holidays, longer (worse) redemption cycles are possible
|
SETTLEMENT PERIODS GREATER THAN SEVEN DAYS FOR
YEAR 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Settlement
Period
|
|
|
End of Settlement
Period
|
|
|
Number of Days in
Settlement Period
|
|
Australia
|
|
|
4/6/2020
|
|
|
|
4/14/2020
|
|
|
|
8
|
|
|
|
|
4/7/2020
|
|
|
|
4/15/2020
|
|
|
|
8
|
|
|
|
|
4/8/2020
|
|
|
|
4/16/2020
|
|
|
|
8
|
|
|
|
|
4/9/2020
|
|
|
|
4/17/2020
|
|
|
|
8
|
|
|
|
|
12/21/2020
|
|
|
|
12/29/2020
|
|
|
|
8
|
|
|
|
|
12/22/2020
|
|
|
|
12/30/2020
|
|
|
|
8
|
|
|
|
|
12/23/2020
|
|
|
|
12/31/2020
|
|
|
|
8
|
|
|
|
|
12/24/2020
|
|
|
|
1/2/2021
|
|
|
|
11
|
|
Brazil
|
|
|
2/19/2020
|
|
|
|
2/27/2020
|
|
|
|
8
|
|
|
|
|
2/20/2020
|
|
|
|
2/28/20202
|
|
|
|
8
|
|
Brazil (cont.)
|
|
|
2/21/2020
|
|
|
|
3/2/2020
|
|
|
|
10
|
|
|
|
|
2/24/2020
|
|
|
|
3/3/2020
|
|
|
|
8
|
|
B-97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Settlement
Period
|
|
|
End of Settlement
Period
|
|
|
Number of Days in
Settlement Period
|
|
China
|
|
|
1/22/2020
|
|
|
|
2/3/2020
|
|
|
|
12
|
|
|
|
|
1/23/2020
|
|
|
|
2/3/2020
|
|
|
|
12
|
|
|
|
|
1/24/2020
|
|
|
|
2/5/2020
|
|
|
|
12
|
|
|
|
|
1/27/2020
|
|
|
|
2/5/2020
|
|
|
|
9
|
|
|
|
|
1/28/2020
|
|
|
|
2/5/2020
|
|
|
|
8
|
|
|
|
|
9/28/2020
|
|
|
|
10/8/2020
|
|
|
|
10
|
|
|
|
|
9/29/2020
|
|
|
|
10/9/2020
|
|
|
|
10
|
|
|
|
|
9/30/2020
|
|
|
|
10/12/2020
|
|
|
|
12
|
|
Hong Kong
|
|
|
1/22/2020
|
|
|
|
2/3/2020
|
|
|
|
12
|
|
|
|
|
1/23/2020
|
|
|
|
2/4/2020
|
|
|
|
12
|
|
|
|
|
1/24/2020
|
|
|
|
2/5/2020
|
|
|
|
12
|
|
|
|
|
1/27/2020
|
|
|
|
2/5/2020
|
|
|
|
9
|
|
|
|
|
1/28/2020
|
|
|
|
2/5/2020
|
|
|
|
8
|
|
Israel
|
|
|
3/3/2020
|
|
|
|
3/12/2020
|
|
|
|
9
|
|
|
|
|
3/4/2020
|
|
|
|
3/16/2020
|
|
|
|
12
|
|
|
|
|
3/5/2020
|
|
|
|
3/17/2020
|
|
|
|
12
|
|
|
|
|
3/9/2020
|
|
|
|
2/18/2020
|
|
|
|
9
|
|
|
|
|
4/2/2020
|
|
|
|
4/13/2020
|
|
|
|
11
|
|
|
|
|
4/6/2020
|
|
|
|
4/14/2020
|
|
|
|
8
|
|
|
|
|
4/7/2020
|
|
|
|
4/20/2020
|
|
|
|
13
|
|
|
|
|
4/8/2020
|
|
|
|
4/21/2020
|
|
|
|
13
|
|
Japan
|
|
|
1/10/2020
|
|
|
|
1/20/2020
|
|
|
|
9
|
|
|
|
|
4/28/2020
|
|
|
|
5/7/2020
|
|
|
|
8
|
|
|
|
|
4/29/2020
|
|
|
|
5/8/2020
|
|
|
|
8
|
|
|
|
|
4/30/2020
|
|
|
|
5/11/2020
|
|
|
|
10
|
|
|
|
|
5/1/2020
|
|
|
|
5/12/2020
|
|
|
|
11
|
|
Malaysia
|
|
|
1/21/2020
|
|
|
|
1/29/2020
|
|
|
|
8
|
|
|
|
|
1/22/2020
|
|
|
|
1/30/2020
|
|
|
|
8
|
|
|
|
|
1/23/2020
|
|
|
|
1/31/2020
|
|
|
|
8
|
|
|
|
|
1/24/2020
|
|
|
|
2/4/2020
|
|
|
|
11
|
|
|
|
|
1/27/2020
|
|
|
|
2/4/2020
|
|
|
|
8
|
|
Mexico
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2020
|
|
|
|
2/11/2020
|
|
|
|
10
|
|
|
|
|
4/3/2020
|
|
|
|
4/13/2020
|
|
|
|
10
|
|
|
|
|
4/6/2020
|
|
|
|
4/14/2020
|
|
|
|
8
|
|
|
|
|
4/7/2020
|
|
|
|
4/15/2020
|
|
|
|
8
|
|
|
|
|
4/8/2020
|
|
|
|
4/16/2020
|
|
|
|
8
|
|
Peru
|
|
|
7/24/2020
|
|
|
|
8/3/2020
|
|
|
|
9
|
|
Qatar
|
|
|
5/19/2020
|
|
|
|
5/28/2020
|
|
|
|
9
|
|
|
|
|
5/20/2020
|
|
|
|
6/1/2020
|
|
|
|
12
|
|
|
|
|
5/21/2020
|
|
|
|
6/2/2020
|
|
|
|
12
|
|
Russia
|
|
|
1/2/2020
|
|
|
|
1/14/2020
|
|
|
|
12
|
|
|
|
|
1/3/2020
|
|
|
|
1/14/2020
|
|
|
|
11
|
|
|
|
|
1/6/2020
|
|
|
|
1/14/2020
|
|
|
|
8
|
|
B-98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of Settlement
Period
|
|
|
End of Settlement
Period
|
|
|
Number of Days in
Settlement Period
|
|
Spain
|
|
|
1/2/2020
|
|
|
|
1/14/2020
|
|
|
|
13
|
|
|
|
|
1/3/2020
|
|
|
|
1/15/2020
|
|
|
|
12
|
|
|
|
|
4/22/2020
|
|
|
|
5/4/2020
|
|
|
|
11
|
|
|
|
|
4/23/2020
|
|
|
|
5/5/2020
|
|
|
|
11
|
|
|
|
|
4/24/2020
|
|
|
|
5/6/2020
|
|
|
|
11
|
|
|
|
|
4/27/2020
|
|
|
|
5/7/2020
|
|
|
|
9
|
|
|
|
|
4/28/2020
|
|
|
|
5/8/2020
|
|
|
|
9
|
|
|
|
|
4/29/2020
|
|
|
|
5/11/2020
|
|
|
|
11
|
|
|
|
|
4/30/2020
|
|
|
|
5/12/2020
|
|
|
|
11
|
|
|
|
|
10/1/2020
|
|
|
|
10/13/2020
|
|
|
|
11
|
|
|
|
|
10/2/2020
|
|
|
|
10/14/2020
|
|
|
|
11
|
|
|
|
|
10/5/2020
|
|
|
|
10/15/2020
|
|
|
|
9
|
|
|
|
|
10/6/2020
|
|
|
|
10/16/2020
|
|
|
|
9
|
|
|
|
|
10/7/2020
|
|
|
|
10/19/2020
|
|
|
|
11
|
|
|
|
|
10/8/2020
|
|
|
|
10/20/2020
|
|
|
|
11
|
|
|
|
|
10/9/2020
|
|
|
|
10/21/2020
|
|
|
|
11
|
|
|
|
|
11/27/2020
|
|
|
|
12/9/2020
|
|
|
|
11
|
|
|
|
|
11/30/2020
|
|
|
|
12/10/2020
|
|
|
|
9
|
|
|
|
|
12/1/2020
|
|
|
|
12/11/2020
|
|
|
|
9
|
|
|
|
|
12/2/2020
|
|
|
|
12/14/2020
|
|
|
|
9
|
|
|
|
|
12/3/2020
|
|
|
|
12/15/2020
|
|
|
|
9
|
|
|
|
|
12/4/2020
|
|
|
|
12/16/2020
|
|
|
|
9
|
|
|
|
|
12/7/2020
|
|
|
|
12/17/2020
|
|
|
|
9
|
|
|
|
|
12/16/2020
|
|
|
|
12/28/2020
|
|
|
|
11
|
|
|
|
|
12/17/2020
|
|
|
|
12/29/2020
|
|
|
|
11
|
|
|
|
|
12/18/2020
|
|
|
|
12/30/2020
|
|
|
|
11
|
|
|
|
|
12/21/2020
|
|
|
|
12/31/2020
|
|
|
|
10
|
|
|
|
|
12/22/2020
|
|
|
|
1/4/2021
|
|
|
|
12
|
|
|
|
|
12/23/2020
|
|
|
|
1/5/2021
|
|
|
|
12
|
|
|
|
|
12/24/2020
|
|
|
|
1/6/2021
|
|
|
|
12
|
|
Switzerland
|
|
|
4/3/2020
|
|
|
|
4/15/2020
|
|
|
|
11
|
|
|
|
|
4/6/2020
|
|
|
|
4/16/2020
|
|
|
|
9
|
|
|
|
|
4/7/2020
|
|
|
|
4/17/2020
|
|
|
|
9
|
|
|
|
|
4/8/2020
|
|
|
|
4/20/2020
|
|
|
|
11
|
|
|
|
|
4/9/2020
|
|
|
|
4/21/2020
|
|
|
|
11
|
|
Taiwan
|
|
|
1/22/2020
|
|
|
|
1/30/2020
|
|
|
|
8
|
|
|
|
|
1/23/2020
|
|
|
|
1/31/2020
|
|
|
|
8
|
|
|
|
|
1/24/2020
|
|
|
|
2/3/2020
|
|
|
|
10
|
|
*
|
These worst-case redemption cycles are based on information regarding regular holidays, which may be out of
date. Based on changes in holidays, longer (worse) redemption cycles are possible
|
B-99
BOOK ENTRY ONLY SYSTEM
DTC acts as securities depositary for the Shares. Shares of the Funds are represented by securities registered in the name of DTC or its
nominee and deposited with, or on behalf of, DTC. Certificates will not be issued for Shares.
DTC, a
limited-purpose trust company, was created to hold securities of the DTC Participants and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities
through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the NYSE and FINRA. Access to the
DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the Indirect Participants).
Beneficial ownership of Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants
and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to herein as Beneficial Owners) is shown on, and the transfer of ownership is effected only through, records
maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through the DTC
Participant a written confirmation relating to their purchase of Shares.
Conveyance of all notices, statements and other communications
to Beneficial Owners is effected as follows. Pursuant to the Depositary Agreement between the Trust and DTC, DTC is required to make available to the Trust upon request and for a fee to be charged to the Trust a listing of the Shares holdings of
each DTC Participant. The Trust shall inquire of each such DTC Participant as to the number of Beneficial Owners holding Shares, directly or indirectly, through such DTC Participant. The Trust shall provide each such DTC Participant with copies of
such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or
indirectly, to such Beneficial Owners. In addition, the Trust shall pay to each such DTC Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory
requirements.
Share distributions shall be made to DTC or its nominee, Cede & Co., as the registered holder of all Shares. DTC
or its nominee, upon receipt of any such distributions, shall credit immediately DTC Participants accounts with payments in amounts proportionate to their respective beneficial interests in Shares as shown on the records of DTC or its nominee.
Payments by DTC Participants to Indirect Participants and Beneficial Owners of Shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in a street name, and will be the responsibility of such DTC Participants.
The Trust
has no responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in such Shares, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through
such DTC Participants.
DTC may determine to discontinue providing its service with respect to the Shares at any time by giving reasonable
notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such
a replacement is unavailable, to issue and deliver printed certificates representing ownership of Shares, unless the Trust makes other arrangements with respect thereto satisfactory to an Exchange.
Request for Multiple Copies of Shareholder Documents
To reduce expenses, it is intended that only one copy of a Funds Prospectus and each annual and semi-annual report, when available, will
be mailed to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact the financial intermediary through which you hold your shares.
B-100
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 Act. Under
the Plan, each 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 each 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
Funds, 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 each Funds assets on an ongoing basis, these fees will increase the cost of your
investment in such 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 Funds.
B-101
PORTFOLIO TRANSACTIONS AND BROKERAGE
The portfolio transactions for the Funds are generally effected at a net price without a brokers commission (i.e., a dealer is
dealing with the Funds as principal and receives compensation equal to the spread between the dealers cost for a given security and the resale price of such security). In certain foreign countries, debt securities are traded on exchanges at
fixed commission rates. In connection with portfolio transactions, the Management Agreements provide that the Investment Adviser shall attempt to obtain the most favorable execution and net price available. The Management Agreements provide that, on
occasions when the Investment Adviser deems the purchase or sale of a security to be in the best interests of a Fund as well as its other customers (including any other fund or other investment company or advisory account for which an Investment
Adviser or an affiliate acts as Investment Adviser), the Fund, to the extent permitted by applicable laws and regulations, may aggregate the securities to be sold or purchased for the Fund with those to be sold or purchased for such other customers
in order to obtain the best net price and most favorable execution. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Investment Adviser in the manner it
considers to be most equitable and consistent with its fiduciary obligations to such Fund and such other customers. In some instances, this procedure may adversely affect the size and price of the position obtainable for a Fund. The Management
Agreements permit the Investment Adviser, in its discretion, to purchase and sell portfolio securities to and from dealers who provide the Trust with brokerage or research services in which dealers may execute brokerage transactions at a higher cost
to a Fund. Brokerage and research services furnished by firms through which a Fund effects its securities transactions may be used by the Investment Adviser in servicing other accounts and not all of these services may be used by the Investment
Adviser in connection with the Fund generating the brokerage credits. Such research or other services may include research reports on companies, industries and securities; economic and financial data; financial publications; computer data bases;
quotation equipment and services; and research-oriented computer hardware, software and other services. The fees received under the Management Agreements are not reduced by reason of the Investment Adviser receiving such brokerage and research
services.
Such services are used by the Investment Adviser in connection with all of its investment activities, and some of such services
obtained in connection with the execution of transactions for a Fund may be used in managing other investment accounts. Conversely, brokers furnishing such services may be selected for the execution of transactions of such other accounts, whose
aggregate assets may be larger than those of a Fund, and the services furnished by such brokers may be used by the Investment Adviser in providing management services for the Trust. The Investment Adviser may also participate in so-called
commission sharing arrangements and client commission arrangements under which the Investment Adviser may execute transactions through a broker-dealer and request that the broker-dealer allocate a portion of the commissions
or commission credits to another firm that provides research to the Investment Adviser. The Investment Adviser excludes from use under these arrangements those products and services that are not fully eligible under applicable law and regulatory
interpretations even as to the portion that would be eligible if accounted for separately.
The research services received as part
of commission sharing and client commission arrangements will comply with Section 28(e) of the Securities Exchange Act of 1934 and may be subject to different legal requirements in the jurisdictions in which the Investment Adviser does
business. Participating in commission sharing and client commission arrangements may enable the Investment Adviser to consolidate payments for research through one or more channels using accumulated client commissions or credits from transactions
executed through a particular broker-dealer to obtain research provided by other firms. Such arrangements also help to ensure the continued receipt of research services while facilitating best execution in the trading process. The Investment Adviser
believes such research services are useful in its investment decision-making process by, among other things, ensuring access to a variety of high quality research, access to individual analysts and availability of resources that the Investment
Adviser might not be provided access to absent such arrangements.
When creation or redemption transactions consist of cash, the
transactions may require a Fund to contemporaneously transact with broker-dealers for purchases of Deposit Securities or sales of Fund Securities (as defined above), as applicable. Depending on the timing of the transactions and certain other
factors, such transactions may be placed with the purchasing or redeeming Authorized Participant in its capacity as a broker-dealer or with its affiliated broker-dealer and conditioned upon an agreement with the Authorized Participant or its
affiliated broker-dealer to transact at guaranteed prices in order to reduce transaction costs incurred as a consequence of settling creation or redemption baskets in cash rather than in-kind.
Specifically, following a Funds receipt of a creation or redemption order, to the extent such purchases or redemptions consist of a cash
portion, the Fund may enter an order with the Authorized Participant or affiliated broker-dealer to purchase or sell the Deposit Securities or Fund Securities, as applicable. Such Authorized Participant or its affiliated broker-dealer will be
required to guarantee that such Fund will achieve execution of its order at a price at least as favorable to the Fund as the Funds valuation of the Deposit Securities/Fund Securities used for purposes of calculating the NAV applied to the
creation or redemption transaction giving rise to the order, which will depend on the results achieved by the executing firm and will vary depending on market activity, timing and a variety of other factors.
B-102
An Authorized Participant is required to deposit an amount with a Fund in order to ensure that
the execution of the order on the terms noted above will be honored on orders arising from creation transactions executed by an Authorized Participant or its affiliate as broker-dealer. If the broker-dealer executing the order achieves executions in
market transactions at a price equal to or more favorable than such Funds valuation of the Deposit Securities, the Fund receives the benefit of the favorable executions and the deposit is returned to the Authorized Participant. If, however,
the broker-dealer executing the order is unable to achieve a price at least equal to such Funds valuation of the securities, the Fund retains the portion of the deposit equal to the full amount of the execution shortfall (including any taxes,
brokerage commissions or other costs) and may require the Authorized Participant to deposit any additional amount required to cover the full amount of the actual execution transaction.
An Authorized Participant agrees to pay the shortfall amount in order to ensure that a guarantee on execution will be honored for brokerage
orders arising from redemption transactions executed by an Authorized Participant or its affiliate as broker-dealer. If the broker-dealer executing the order achieves executions in market transactions at a price equal to or more favorable than a
Funds valuation of the Fund Securities, the Fund receives the benefit of the favorable executions. If, however, the broker-dealer is unable to achieve executions in market transactions at a price at least equal to a Funds valuation of
the securities, the Fund will be entitled to the portion of the offset equal to the full amount of the execution shortfall (including any taxes, brokerage commissions or other costs).
The Goldman Sachs Access Treasury 0-1 Year ETF and Goldman Sachs Access Investment Grade Corporate Bond ETF paid no brokerage commissions
during the last three fiscal years.
Since the Goldman Sachs Access High Yield Corporate Bond ETF was recently organized, it did not pay
brokerage commissions during the fiscal year ended August 31, 2017. For the fiscal years ended August 31, 2018 and August 31, 2019, the Fund paid no brokerage commissions.
Since the Goldman Sachs Access Inflation Protected USD Bond ETF and Goldman Sachs Access Ultra Short Bond ETF were recently organized, they
did not pay brokerage commissions during the fiscal years ended August 31, 2017 and August 31, 2018. For the fiscal year ended August 31, 2019, the Funds paid not brokerage commissions.
Since the Goldman Sachs Access Emerging Markets Local Currency Bond ETF and Goldman Sachs Access Emerging Markets USD Bond ETF were not in
operation as of August 31, 2019, they did not pay brokerage commissions during the last three fiscal years.
Subject to the above
considerations, the Investment Adviser may use Goldman Sachs or an affiliate as a broker for a Fund. In order for Goldman Sachs or an affiliate, acting as agent, to effect securities or futures transactions for a Fund, the commissions, fees or other
remuneration received by Goldman Sachs or an affiliate must be reasonable and fair compared to the commissions, fees or other remuneration received by other brokers in connection with comparable transactions involving similar securities or futures
contracts. Furthermore, the Trustees, including a majority of the Independent Trustees, have adopted procedures which are reasonably designed to provide that any commissions, fees or other remuneration paid to Goldman Sachs are consistent with the
foregoing standard. Brokerage transactions with Goldman Sachs are also subject to such fiduciary standards as may be imposed upon Goldman Sachs by applicable law.
See Custodian, Sub-Custodians and Provider of Administrative Services for information regarding foreign exchange transaction
services and execution of trades in connection with certain creation and redemption transactions.
B-103
DETERMINATION OF NET ASSET VALUE
In accordance with procedures adopted by the Trustees, the NAV per share of a Funds Shares is calculated by the Funds provider of
administrative services by determining the value of the net assets attributed to the Fund and dividing by the number of outstanding shares of the Fund. All securities are generally valued on each Business Day at the following times: (i) 12:00
p.m. Eastern time and as of the close of regular trading on the NYSE (normally, but not always, 4:00 p.m. Eastern time) (with respect to the Goldman Sachs Access Treasury 0-1 Year ETF), or (ii) as of the close of regular trading on the NYSE
(normally, but not always, 4:00 p.m., Eastern time) (with respect to all other funds), or such other times as the NYSE or the National Association of Securities Dealers Automated Quotations System (NASDAQ) market may officially close.
For the purpose of calculating the NAV per share of the Funds, investments are valued under valuation procedures established by the
Trustees. Portfolio securities of a Fund for which accurate market quotations are readily available are generally valued as follows: (i) equity securities listed on any U.S. or foreign stock exchange or on the NASDAQ will be valued at the last
sale price or the official closing price on the exchange or system in which they are principally traded on the valuation date. If there is no sale or official closing price on the valuation date, equity securities may be valued at the closing bid
price for long positions or the closing ask price for short positions at the time closest to, but no later than, the NAV calculation time. If the relevant exchange or system has not closed by the above mentioned time for determining the Funds
NAV, the securities will be valued at the last sale price or official closing price, or if not available at the bid price at the time the NAV is determined; (ii) over-the-counter equity securities not quoted on NASDAQ will be valued at the last
sale price on the valuation day or, if no sale occurs, at the last bid price for long positions or the last ask price for short positions at the time closest to, but no later than, the NAV calculation time; (iii) equity securities for which no
prices are obtained under sections (i) or (ii), including those for which a pricing service supplies no exchange quotation or a quotation that is believed by the Investment Adviser to not represent fair value, will be valued through the use of
broker quotes, if possible; (iv) fixed income securities will be valued via electronic feeds from independent pricing services to the administrator using evaluated prices provided by a recognized pricing service and dealer-supplied quotations.
Fixed income securities for which a pricing service either does not supply a quotation or supplies a quotation that is believed by the Investment Adviser to not represent fair value, will be valued through the use of broker quotes, if possible;
(v) fixed income securities for which accurate market quotations are not readily available will be valued by the Investment Adviser based on Board-approved fair valuation policies that incorporate 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 and various other factors; (vi) investments in open-end registered investment companies (excluding
investments in ETFs) and investments in private funds are valued based on the NAV of those registered investment companies or private funds (which may use fair value pricing as discussed in their prospectus or offering memorandum); (vii) spot
foreign exchange rates will be valued using a pricing service at the time closest to the NAV calculation time for Goldman Sachs Access Ultra Short Bond ETF and closest to the time used for the index calculation for all other Funds, and forward
foreign currency contracts will be valued by adding forward points provided by an independent pricing service to the spot foreign exchange rates and interpolating based upon maturity dates of each contract or by using outright forward rates, where
available (if quotations are unavailable from a pricing service or, if the quotations by the Investment Adviser are believed to be inaccurate, the contracts will be valued by calculating the mean between the last bid and ask quotations supplied by
at least one dealer in such contracts); (viii) exchange-traded futures contracts will be valued at the last published settlement price on the exchange where they are principally traded (or, if a sale occurs after the last published settlement
price but before the NAV calculation time, at the last sale price at the time closest to, but no later than, the NAV calculation time); (ix) exchange-traded options contracts with settlement prices will be valued at the last published
settlement price on the exchange where they are principally traded (or, if a sale occurs after the last published settlement price but before the NAV calculation time, at the last sale price at the time closest to, but no later than, the NAV
calculation time); (x) exchange-traded options contracts without settlement prices will be valued at the midpoint of the bid and ask prices on the exchange where they are principally traded (or, in the absence of two-way trading, at the last
bid price for long positions and the last ask price for short positions at the time closest to, but no later than, the NAV calculation time); (xi) over-the-counter derivatives, including, but not limited to, interest rate swaps, credit default
swaps, total return index swaps, put/call option combos, total return basket swaps, index volatility and foreign exchange (FX) variance swaps, will be valued at their fair market value as determined using counterparty supplied
valuations, an independent pricing service or valuation models which use market data inputs supplied by an independent pricing service; and (xii) all other instruments, including those for which a pricing service supplies no exchange
quotation/price or a quotation that is believed by the Investment Adviser to be inaccurate, will be valued in accordance with the valuation procedures approved by the Board of Trustees. Securities may also be valued at fair value in accordance with
procedures approved by the Board of Trustees where a Funds provider of administrative services is unable for other reasons to facilitate pricing of individual securities or calculate the Funds NAV, or if the Investment Adviser believes
that such quotations do not accurately reflect fair value. Fair values determined in accordance with the valuation procedures approved by the Board of Trustees 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.
The value of all assets and liabilities expressed in
foreign currencies will be converted into U.S. dollar values at foreign currency exchange rates generally determined as of 4:00 p.m. Eastern Time for the Goldman Sachs Access Ultra Short Bond
B-104
ETF and as of 4:00 p.m. Greenwich Mean Time for all other Funds. If such quotations are not available, the rate of exchange will be determined in good faith under procedures established by the
Board of Trustees.
Generally, trading in securities on European, Asian and Far Eastern securities exchanges and on over-the-counter
markets in these regions is substantially completed at various times prior to the close of business on each Business Day in New York (i.e., a day on which the NYSE is open for trading). In addition, European, Asian or Far Eastern securities trading
generally or in a particular country or countries may not take place on all Business Days in New York. Furthermore, trading takes place in various foreign markets on days which are not Business Days in New York and days on which a Funds NAV is
not calculated. Such calculation does not take place contemporaneously with the determination of the prices of the majority of the portfolio securities used in such calculation.
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 either domestic or foreign securities in light of significant events, to reflect what it believes to be the fair value of the securities at the time of determining a Funds 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.
In general, fair value represents a good faith approximation of the current value of an asset and may be used when there is no public market
or possibly no market at all for an asset. A security that is fair valued may be valued at a price higher or lower than actual market quotations or the value determined by other funds using their own fair valuation procedures or by other investors.
The fair value of an asset may not be the price at which that asset is ultimately sold.
The proceeds received by a Fund and each other
series of the Trust from the issue or sale of its Shares, and all net investment income, realized and unrealized gain and proceeds thereof, subject only to the rights of creditors, will be specifically allocated to the Fund or particular series and
constitute the underlying assets of the Fund or series. The underlying assets of a Fund will be segregated on the books of account, and will be charged with the liabilities in respect of the Fund and with a share of the general liabilities of the
Trust. Expenses of the Trust with respect to a Fund and the other series of the Trust are generally allocated in proportion to the NAVs of the respective Fund except where allocations of expenses can otherwise be fairly made.
Each Fund relies on various sources to calculate its NAV. The ability of a Funds 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 a Funds NAV and/or the inability to calculate NAV over extended time periods and affect the ability of the Goldman Sachs Access Treasury 0-1 Year ETF to effect in-kind creations and
redemptions on a T+0 or T+1 basis, respectively. The Funds 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 a 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 Funds
NAV.
B-105
SHARES OF THE TRUST
Each Fund is a series of Goldman Sachs ETF Trust, a Delaware statutory trust formed on December 16, 2009.
The Trustees have authority under the Trusts Declaration of Trust to create and classify shares of beneficial interest in separate
series, without further action by shareholders. The Trustees also have authority to classify and reclassify any series of shares into one or more classes of shares. As of December 27, 2019, the Trustees have authorized the issuance of one class of
shares of each Fund (Shares). Additional series may be added in the future.
Each Share of a Fund represents a proportionate
interest in the assets belonging to the applicable class of the Fund and all expenses of the Fund are borne at the same rate by each class of shares. In addition, the fees and expenses set forth below for Shares may be subject to fee waivers or
reimbursements, as discussed more fully in the Funds Prospectus.
Certain aspects of the Shares may be altered after advance notice
to shareholders if it is deemed necessary in order to satisfy certain tax regulatory requirements.
When issued for the consideration
described in the Funds Prospectus, shares are fully paid and non-assessable. The Trustees may, however, cause shareholders, or shareholders of a particular series or class, to pay certain custodian, transfer agency, shareholder servicing or
similar charges by setting off the same against declared but unpaid dividends or by reducing share ownership (or by both means). In the event of liquidation, shareholders are entitled to share pro rata in the net assets of the Funds available for
distribution to such shareholders. All shares are freely transferable and have no preemptive, subscription or conversion rights. The Trustees may require Shareholders to redeem Shares for any reason under terms set by the Trustees.
The Act requires that where more than one series of shares exists, each series must be preferred over all other series in respect of assets
specifically allocated to such series. In addition, Rule 18f-2 under the Act provides that any matter required to be submitted by the provisions of the Act or applicable state law, or otherwise, to the holders of the outstanding voting securities of
an investment company such as the Trust shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding shares of each series affected by such matter. Rule 18f-2 further provides that a series
shall be deemed to be affected by a matter unless the interests of each series in the matter are substantially identical or the matter does not affect any interest of such series. However, Rule 18f-2 exempts the selection of independent public
accountants, the approval of principal distribution contracts and the election of trustees from the separate voting requirements of Rule 18f-2.
The Trust is not required to hold annual meetings of shareholders and does not intend to hold such meetings. In the event that a meeting of
shareholders is held, each Share of the Trust will be entitled, as determined by the Trustees without the vote or consent of the shareholders, either to one vote for each share or to one vote for each dollar of NAV represented by such share on all
matters presented to shareholders including the election of Trustees (this method of voting being referred to as dollar based voting). However, to the extent required by the Act or otherwise determined by the Trustees, series and classes
of the Trust will vote separately from each other. Shareholders of the Trust do not have cumulative voting rights in the election of Trustees. Meetings of shareholders of the Trust, or any series or class thereof, may be called by the Trustees,
certain officers or upon the written request of holders of 10% or more of the shares entitled to vote at such meetings. The Trustees will call a special meeting of shareholders for the purpose of electing Trustees, if, at any time, less than a
majority of Trustees holding office at the time were elected by shareholders. The shareholders of the Trust will have voting rights only with respect to the limited number of matters specified in the Declaration of Trust and such other matters as
the Trustees may determine or may be required by law.
The Declaration of Trust provides for indemnification of Trustees, officers,
employees and agents of the Trust unless the recipient is adjudicated (i) to be liable by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such persons office or
(ii) not to have acted in good faith in the reasonable belief that such persons actions were in the best interest of the Trust. The Declaration of Trust provides that, if any shareholder or former shareholder of any series is held
personally liable solely by reason of being or having been a shareholder and not because of the shareholders acts or omissions or for some other reason, the shareholder or former shareholder (or the shareholders heirs, executors,
administrators, legal representatives or general successors) shall be held harmless from and indemnified against all loss and expense arising from such liability. The Trust, acting on behalf of any affected series, must, upon request by such
shareholder, assume the defense of any claim made against such shareholder for any act or obligation of the series and satisfy any judgment thereon from the assets of the series.
The Declaration of Trust states that the Trust shall continue without limitation of time but, Trustees may without Shareholder approval
(i) sell and convey all or substantially all of the assets of the Trust or any affected Series to another trust, partnership, association, or corporation, or to a separate series of shares thereof, organized under the laws of any state, which
trust, partnership, association, or corporation is an open-end management investment company as defined in the Investment
B-106
Company Act, or is a series thereof, for adequate consideration which may include the assumption of all outstanding obligations, taxes, and other liabilities, accrued or contingent, of the Trust
or any affected Series, and which may include shares of beneficial interest, stock, or other ownership interests of such trust, partnership, association, or corporation or of a series thereof; or (ii) at any time, sell and convert into money
all of the assets of the Trust or any affected series.
The Declaration of Trust authorizes the Trustees, without shareholder approval, to
cause the Trust, or any series thereof, to merge, reorganize or consolidate with any corporation, association, trust or other organization or sell or exchange all or substantially all of the property belonging to the Trust or any series thereof. In
addition, the Trustees, without shareholder approval, may adopt a master-feeder structure by investing all or a portion of the assets of a series of the Trust in the securities of another open-end investment company with substantially the same
investment objective, restrictions and policies.
The Declaration of Trust permits the Trustees to amend the Declaration of Trust without
a shareholder vote. However, shareholders of the Trust have the right to vote on any amendment (i) that would adversely affect the voting rights of shareholders; (ii) that is required by law to be approved by shareholders; (iii) that
would amend the provisions of the Declaration of Trust regarding amendments and supplements thereto; or (iv) that the Trustees determine to submit to shareholders.
Shareholder and Trustee Liability
Under
Delaware Law, the shareholders of the Funds are not generally subject to liability for the debts or obligations of the Trust. Similarly, Delaware law provides that a series of the Trust will not be liable for the debts or obligations of any other
series of the Trust. However, no similar statutory or other authority limiting statutory trust shareholder liability exists in other states. As a result, to the extent that a Delaware statutory trust or a shareholder is subject to the jurisdiction
of courts of such other states, the courts may not apply Delaware law and may thereby subject the Delaware statutory trust shareholders to liability. To guard against this risk, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of a series. Notice of such disclaimer will normally be given in each agreement, obligation or instrument entered into or executed by a series of the Trust. The Declaration of Trust provides for indemnification by
the relevant series for all loss suffered by a shareholder as a result of an obligation of the series. The Declaration of Trust also provides that a series shall, upon request, assume the defense of any claim made against any shareholder for any act
or obligation of the series and satisfy any judgment thereon. In view of the above, the risk of personal liability of shareholders of a Delaware statutory trust is remote.
In addition to the requirements under Delaware law, the Declaration of Trust provides that shareholders of a series may bring a derivative
action on behalf of the series only if the following conditions are met: (a) shareholders eligible to bring such derivative action under Delaware law who collectively hold at least 10% of the outstanding shares of the series, or 10% of the
outstanding shares of the class to which such action relates, shall join in the request for the Trustees to commence such action; and (b) the Trustees must be afforded a reasonable amount of time to consider such shareholder request and to
investigate the basis of such claim. The Trustees will be entitled to retain counsel or other advisers in considering the merits of the request and may require an undertaking by the shareholders making such request to reimburse the series for the
expense of any such advisers in the event that the Trustees determine not to bring such action.
The Declaration of Trust further provides
that the Trustees will not be liable for errors of judgment or mistakes of fact or law, but nothing in the Declaration of Trust protects a Trustee against liability to which he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.
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TAXATION
The following are certain additional U.S. federal income tax considerations generally affecting a Fund and the purchase, ownership and
disposition of shares of the Fund that are not described in the Prospectus. The discussions below and in the Prospectus are only summaries and are not intended as substitutes for careful tax planning. They do not address special tax rules applicable
to certain classes of investors, such as tax-exempt entities, insurance companies and financial institutions. Each prospective shareholder is urged to consult his or her own tax adviser with respect to the specific federal, state, local and foreign
tax consequences of investing in a Fund. The summary is based on the laws in effect on December 27, 2019 which are subject to change. Future changes in tax laws may adversely impact a Fund and its shareholders.
Fund Taxation
Each Fund is
treated as a separate taxable entity and has either elected or will elect to be treated and intends to qualify for each of its taxable years as a regulated investment company under Subchapter M of Subtitle A, Chapter 1, of the Code.
There are certain tax requirements that each Fund must follow if it is to avoid federal taxation. In its efforts to adhere to these
requirements, each Fund may have to limit its investment activities in some types of instruments. Qualification as a regulated investment company under the Code requires, among other things, that (i) a Fund derive at least 90% of its gross
income for each taxable year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stocks or securities or foreign currencies, net income from qualified publicly traded partnerships or other
income (including but not limited to gains from options, futures, and forward contracts) derived with respect to the Funds business of investing in stocks, securities or currencies (the 90% gross income test); and (ii) a Fund
diversify its holdings so that, in general, at the close of each quarter of its taxable year, (a) at least 50% of the fair market value of the Funds total (gross) assets is comprised of cash, cash items, U.S. Government Securities,
securities of other regulated investment companies and other securities limited in respect of any one issuer to an amount not greater in value than 5% of the value of the Funds total assets and to not more than 10% of the outstanding voting
securities of such issuer, and (b) not more than 25% of the value of its total (gross) assets is invested in the securities of any one issuer (other than U.S. Government Securities and securities of other regulated investment companies), two or
more issuers controlled by the Fund and engaged in the same, similar or related trades or businesses, or certain publicly traded partnerships.
For purposes of the 90% gross income test, income that a Fund earns from equity interests in certain entities that are not treated as
corporations or as qualified publicly traded partnerships for U.S. federal income tax purposes (e.g., partnerships or trusts) will generally have the same character for the Fund as in the hands of such an entity; consequently, such Fund may
be required to limit its equity investments in any such entities that earn fee income, rental income, or other nonqualifying income. In addition, future Treasury regulations could provide that qualifying income under the 90% gross income test will
not include gains from foreign currency transactions that are not directly related to a Funds principal business of investing in stock or securities or options and futures with respect to stock or securities. Using foreign currency positions
or entering into foreign currency options, futures and forward or swap contracts for purposes other than hedging currency risk with respect to securities in a Funds portfolio or anticipated to be acquired may not qualify as
directly-related under these tests.
If a Fund complies with the foregoing provisions, then in any taxable year in which the
Fund distributes, in compliance with the Codes timing and other requirements, an amount at least equal to the sum of 90% of its investment company taxable income (which includes dividends, taxable interest, taxable accrued original
issue discount and market discount income, income from securities lending, any net short-term capital gain in excess of net long-term capital loss, certain net realized foreign exchange gains and any other taxable income other than net capital
gain, as defined below, and is reduced by deductible expenses), plus 90% of the excess of its gross tax-exempt interest income (if any) over certain disallowed deductions, the Fund (but not its shareholders) will be relieved of federal income
tax on any income of the Fund, including long-term capital gains, distributed to shareholders. If, instead, a Fund retains any investment company taxable income or net capital gain (the excess of net long-term capital gain over net short-term
capital loss), it will be subject to a tax at regular corporate rates on the amount retained. Because there are some uncertainties regarding the computation of the amounts deemed distributed to Fund shareholders for these purposesincluding, in
particular, uncertainties regarding the portion, if any, of amounts paid in redemption of Fund shares that should be treated as such distributionsthere can be no assurance that a Fund will avoid corporate-level tax in each year.
Each Fund generally intends to distribute for each taxable year to its shareholders all or substantially all of its investment company taxable
income, net capital gain and any tax-exempt interest. Exchange control or other foreign laws, regulations or practices may restrict repatriation of investment income, capital or the proceeds of securities sales by foreign investors and may therefore
make it more difficult for a Fund to satisfy the distribution requirements described above, as well as the excise tax distribution requirements described below. Each Fund generally expects, however, to be able to obtain sufficient cash to satisfy
B-108
those requirements, from new investors, the sale of securities or other sources. If for any taxable year a Fund does not qualify as a regulated investment company, it will be taxed on all of its
taxable income and net capital gain at corporate rates, and its distributions to shareholders will generally be taxable as ordinary dividends to the extent of its current and accumulated earnings and profits.
If a Fund retains any net capital gain, the Fund may designate the retained amount as undistributed capital gains in a notice to its
shareholders who (1) if subject to U.S. federal income tax on long-term capital gains, will be required to include in income for federal income tax purposes, as long-term capital gain, their shares of that undistributed amount, and
(2) will be entitled to credit their proportionate shares of the tax paid by the Fund against their U.S. federal income tax liabilities, if any, and to claim refunds to the extent the credit exceeds those liabilities. For U.S. federal income
tax purposes, the tax basis of shares owned by a shareholder of a Fund will be increased by the amount of any such undistributed net capital gain included in the shareholders gross income and decreased by the federal income tax paid by the
Fund on that amount of net capital gain.
To avoid a 4% federal excise tax, a Fund must generally distribute (or be deemed to have
distributed) by December 31 of each calendar year an amount at least equal to the sum of 98% of its taxable ordinary income (taking into account certain deferrals and elections) for the calendar year, 98.2% of the excess of its capital gains
over its capital losses (generally computed on the basis of the one-year period ending on October 31 of such year), and all taxable ordinary income and the excess of capital gains over capital losses for all previous years that were not
distributed for those years and on which the Fund paid no federal income tax. For federal income tax purposes, dividends declared by a Fund in October, November or December to shareholders of record on a specified date in such a month and paid
during January of the following year are taxable to such shareholders, and deductible by the Fund, as if paid on December 31 of the year declared. Each Fund anticipates that it will generally make timely distributions of income and capital
gains in compliance with these requirements so that it will generally not be required to pay the excise tax.
For federal income tax
purposes, each Fund is generally permitted to carry forward a net capital loss in any taxable year to offset its own capital gains, if any. These amounts are available to be carried forward to offset future capital gains to the extent permitted by
the Code and applicable tax regulations. As of August 31, 2019, the following Funds had capital loss carryforwards approximating the amounts indicated, expiring in the years indicated:
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Fund
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Capital Loss
Carryforward
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Expiration
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Goldman Sachs Access High Yield Corporate Bond ETF
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$
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509,049
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Perpetual Short-Term
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1,005
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Perpetual Long-Term
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Goldman Sachs Access Investment Grade Corporate Bond ETF
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431,430
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Perpetual Short-Term
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49,645
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Perpetual Long-Term
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Gains and losses on the sale, lapse, or other termination of options and futures contracts, options thereon
and certain forward contracts (except certain foreign currency options, forward contracts and futures contracts) will generally be treated as capital gains and losses. Certain of the futures contracts, forward contracts and options held by a Fund
will be required to be marked-to-market for federal tax purposesthat is, treated as having been sold at their fair market value on the last day of the Funds taxable year (or, for excise tax purposes, on the last day of the
relevant period). These provisions may require a Fund to recognize income or gains without a concurrent receipt of cash. Any gain or loss recognized on actual or deemed sales of these futures contracts, forward contracts, or options will (except for
certain foreign currency options, forward contracts, and futures contracts) be treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss. As a result of certain hedging transactions entered into by a Fund, it may be
required to defer the recognition of losses on futures contracts, forward contracts, and options or underlying securities or foreign currencies to the extent of any unrecognized gains on related positions held by the Fund, and the characterization
of gains or losses as long-term or short-term may be changed. The tax provisions described in this paragraph may affect the amount, timing and character of a Funds distributions to shareholders. The application of certain requirements for
qualification as a regulated investment company and the application of certain other tax rules may be unclear in some respects in connection with certain investment practices such as dollar rolls, or investments in certain derivatives, including
interest rate swaps, floors, caps and collars, currency swaps, total return swaps, mortgage swaps, index swaps, forward contracts and structured notes. As a result, a Fund may therefore be required to limit its investments in such transactions and
it is also possible that the IRS may not agree with the Funds tax treatment of such transactions. In addition, the tax treatment of derivatives, and certain other investments, may be affected by future legislation, Treasury Regulations and
guidance issued by the IRS that could affect the timing, character and amount of a Funds income and gains and distributions to shareholders. Certain tax elections may be available to a Fund to mitigate some of the unfavorable consequences
described in this paragraph.
Section 988 of the Code contains special tax rules applicable to certain foreign currency transactions
and instruments, which may affect the amount, timing and character of income, gain or loss recognized by a Fund. Under these rules, foreign exchange
B-109
gain or loss realized with respect to foreign currencies and certain futures and options thereon, foreign currency-denominated debt instruments, foreign currency forward contracts, and foreign
currency-denominated payables and receivables will generally be treated as ordinary income or loss, although in some cases elections may be available that would alter this treatment. If a net foreign exchange loss treated as ordinary loss under
Section 988 of the Code were to exceed a Funds investment company taxable income (computed without regard to that loss) for a taxable year, the resulting loss would not be deductible by the Fund or its shareholders in future years. Net
loss, if any, from certain foreign currency transactions or instruments could exceed net investment income otherwise calculated for accounting purposes, with the result being either no dividends being paid or a portion of a Funds dividends
being treated as a return of capital for tax purposes, nontaxable to the extent of a shareholders tax basis in his shares and, once such basis is exhausted, generally giving rise to capital gains.
Each Funds investment, if any, in zero coupon securities, deferred interest securities, certain structured securities or other
securities bearing original issue discount or, if a Fund elects to include market discount in income currently, market discount, as well as any marked-to-market gain from certain options, futures or forward contracts, as described above,
will in many cases cause the Fund to realize income or gain before the receipt of cash payments with respect to these securities or contracts. For a Fund to obtain cash to enable the Fund to distribute any such income or gain, to maintain its
qualification as a regulated investment company and to avoid federal income and excise taxes, the Fund may be required to liquidate portfolio investments sooner than it might otherwise have done.
Investments in lower-rated securities may present special tax issues for a Fund to the extent actual or anticipated defaults may be more
likely with respect to those kinds of securities. Tax rules are not entirely clear about issues such as when an investor in such securities may cease to accrue interest, original issue discount, or market discount; when and to what extent deductions
may be taken for bad debts or worthless securities; how payments received on obligations in default should be allocated between principal and income; and whether exchanges of debt obligations in a workout context are taxable. These and other issues
will generally need to be addressed by a Fund, in the event it invests in such securities, so as to seek to eliminate or to minimize any adverse tax consequences.
If a Fund acquires stock (including, under proposed regulations, an option to acquire stock such as is inherent in a convertible bond) in
certain foreign corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, rents, royalties or capital gain) or hold at least 50% of their assets in investments producing such passive
income (passive foreign investment companies), the Fund could be subject to federal income tax and additional interest charges on excess distributions received from such companies or gain from the sale of stock in such
companies, even if all income or gain actually received by the Fund is timely distributed to its shareholders. A Fund will not be able to pass through to its shareholders any credit or deduction for such a tax. In some cases, elections may be
available that will ameliorate these adverse tax consequences, but those elections will require a Fund to include each year certain amounts as income or gain (subject to the distribution requirements described above) without a concurrent receipt of
cash. A Fund may attempt to limit and/or to manage its holdings in passive foreign investment companies to minimize its tax liability or maximize its return from these investments.
If a Fund invests in certain real estate investment trusts (REITs) or in real estate mortgage investment conduit residual
interests, a portion of the Funds income may be classified as excess inclusion income. A shareholder that is otherwise not subject to tax may be taxable on their share of any such excess inclusion income as unrelated business
taxable income. In addition, tax may be imposed on a Fund on the portion of any excess inclusion income allocable to any shareholders that are classified as disqualified organizations.
Taxable U.S. ShareholdersDistributions
For U.S. federal income tax purposes, distributions by a Fund, whether reinvested in additional shares or paid in cash, generally will be
taxable to shareholders who are subject to tax.
In general, distributions from investment company taxable income for the year will be
taxable as ordinary income. However, distributions to noncorporate shareholders attributable to dividends received by a Fund, if any, from U.S. and certain foreign corporations will generally be taxed at the long-term capital gain rate (described
below), as long as certain other requirements are met. For these lower rates to apply, the noncorporate shareholders must have owned their Fund shares for at least 61 days during the 121-day period beginning 60 days before a Funds ex-dividend
date and the Fund must also have owned the underlying stock for this same period beginning 60 days before the ex-dividend date for the stock. The amount of a Funds distributions that otherwise qualify for these lower rates may be reduced as a
result of the Funds securities lending activities, hedging activities or a high portfolio turnover rate.
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Distributions reported to shareholders as derived from a Funds dividend income, if any,
that would be eligible for the dividends received deduction if the Fund were not a regulated investment company may be eligible for the dividends received deduction for corporate shareholders. The dividends received deduction, if available, is
reduced to the extent the shares with respect to which the dividends are received are treated as debt-financed under federal income tax law and is eliminated if the shares are deemed to have been held for less than a minimum period, generally 46
days. The dividends received deduction also may be reduced as a result of a Funds hedging activities, securities lending activities or a high portfolio turnover rate. The dividend may, if it is treated as an extraordinary dividend
under the Code, reduce a shareholders tax basis in its shares of a Fund. Capital gain dividends (i.e., dividends from net capital gain), if reported as such to shareholders, will be taxed to shareholders as long-term capital gain
regardless of how long shares have been held by shareholders, but are not eligible for the dividends received deduction for corporations. The maximum individual rate applicable to long-term capital gains is generally either 15% or 20%, depending on
whether the individuals income exceeds certain threshold amounts. Distributions, if any, that are in excess of a Funds current and accumulated earnings and profits will first reduce a shareholders tax basis in his shares and, after
such basis is reduced to zero, will generally constitute capital gains to a shareholder who holds his shares as capital assets.
Under
recent tax legislation, individuals and certain other noncorporate entities are generally eligible for a 20% deduction with respect to ordinary dividends received from REITs (qualified REIT dividends) and certain taxable income from
publicly traded partnerships. The IRS has recently issued proposed regulations permitting a registered investment company to pass through to its shareholders qualified REIT dividends eligible for the 20% deduction. However, the proposed regulations
do not provide a mechanism for a registered investment company to pass through to its shareholders income from publicly traded partnerships that would be eligible for such deduction.
Different tax treatment, including penalties on certain excess contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts maintained as qualified retirement plans. Shareholders should consult their tax advisers for more information.
Taxable U.S. ShareholdersSale of Shares
When a shareholders shares are sold, redeemed or otherwise disposed of in a transaction that is treated as a sale for tax purposes, the
shareholder will generally recognize gain or loss equal to the difference between the shareholders adjusted tax basis in the shares and the cash, or fair market value of any property, received. (To aid in computing that tax basis, a
shareholder should generally retain its account statements for the period that it holds shares.) If the shareholder holds the shares as a capital asset at the time of sale, the character of the gain or loss should be capital, and treated as
long-term if the shareholders holding period is more than one year and short-term otherwise, subject to the rules below.
Certain
special tax rules may apply to a shareholders capital gains or losses on Fund shares. If a shareholder receives a capital gain dividend with respect to shares and such shares have a tax holding period of six months or less at the time of a
sale or redemption of such shares, then any loss the shareholder realizes on the sale or redemption will be treated as a long-term capital loss to the extent of such capital gain dividend. Additionally, any loss realized on a sale or redemption of
shares of a Fund may be disallowed under wash sale rules to the extent the shares disposed of are replaced with other shares of the same Fund within a period of 61 days beginning 30 days before and ending 30 days after the shares are
disposed of, 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. If a Fund redeems a shareholder in-kind rather than in cash, the
shareholder would realize the same gain or loss as if the shareholder had been redeemed in cash. Further, the shareholders basis in the securities received in the in-kind redemption would be the securities fair market value on the date
of the in-kind redemption.
Medicare Tax
An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions
received from a 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 persons 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.
Foreign Taxes
The Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF, Goldman Sachs Access Emerging
Markets Local Currency Bond ETF and Goldman Sachs Access Emerging Markets USD Bond ETF anticipate that they may be subject to foreign taxes on income (possibly including, in some cases, capital gains) from foreign securities. Tax conventions between
certain countries and the United States may reduce or eliminate those foreign taxes
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in some cases. If more than 50% of a Funds total assets at the close of a taxable year consists of stock or securities of foreign corporations, or if at least 50% of the value of the
Funds total assets at the close of each quarter of its taxable year is represented by interests in other regulated investment companies, the Fund may file an election with the IRS pursuant to which the shareholders of the Fund will be required
(1) to report as dividend income (in addition to taxable dividends actually received) their pro rata shares of foreign income taxes paid by the Fund that are treated as income taxes under U.S. tax regulations (which excludes, for example, stamp
taxes, securities transaction taxes, and similar taxes) even though not actually received by those shareholders, and (2) to treat those respective pro rata shares as foreign income taxes paid by them, which they can claim either as a foreign
tax credit, subject to applicable limitations, against their U.S. federal income tax liability or as an itemized deduction. (Shareholders who do not itemize deductions for federal income tax purposes will not, however, be able to deduct their pro
rata portion of foreign taxes paid by the Fund, although those shareholders will be required to include their share of such taxes in gross income if the foregoing election is made by a Fund.)
If a shareholder chooses to take credit for the foreign taxes deemed paid by such shareholder as a result of any such election by a Fund, the
amount of the credit that may be claimed in any year may not exceed the same proportion of the U.S. tax against which such credit is taken which the shareholders taxable income from foreign sources (but not in excess of the shareholders
entire taxable income) bears to his entire taxable income. For this purpose, distributions from long-term and short-term capital gains or foreign currency gains by a Fund will generally not be treated as income from foreign sources. This foreign tax
credit limitation may also be applied separately to certain specific categories of foreign-source income and the related foreign taxes. As a result of these rules, which have different effects depending upon each shareholders particular tax
situation, certain shareholders of a Fund may not be able to claim a credit for the full amount of their proportionate share of the foreign taxes paid by the Fund even if the election is made by the Fund.
Shareholders who are not liable for U.S. federal income taxes, including retirement plans, other tax-exempt shareholders and non-U.S.
shareholders, will ordinarily not benefit from the foregoing Fund election with respect to foreign taxes. Each year, if any, that a Fund files the election described above, shareholders will be notified of the amount of (1) each
shareholders pro rata share of qualified foreign taxes paid by the Fund and (2) the portion of Fund dividends that represents income from foreign sources. If a Fund cannot or does not make this election, it may deduct its foreign taxes in
computing the amount it is required to distribute.
Non-U.S. Shareholders
The discussion above relates solely to U.S. federal income tax law as it applies to U.S. persons subject to tax under such law.
Except as discussed below, distributions to shareholders who, as to the United States, are not U.S. persons, (i.e.,
are nonresident aliens, foreign corporations, fiduciaries of foreign trusts or estates or other non-U.S. investors) generally will be subject to U.S. federal withholding tax at the rate of 30% on distributions treated as ordinary income unless the
tax is reduced or eliminated pursuant to a tax treaty or the distributions are effectively connected with a U.S. trade or business of the shareholder; but distributions of net capital gain (the excess of any net long-term capital gains over any net
short-term capital losses) including amounts retained by a Fund which are designated as undistributed capital gains, to such a non-U.S. shareholder will not be subject to U.S. federal income or withholding tax unless the distributions are
effectively connected with the shareholders trade or business in the United States or, in the case of a shareholder who is a nonresident alien individual, the shareholder is present in the United States for 183 days or more during the taxable
year and certain other conditions are met. Non-U.S. shareholders may also be subject to U.S. federal withholding tax on deemed income resulting from any election by a Fund to treat qualified foreign taxes it pays as passed through to shareholders
(as described above), but may not be able to claim a U.S. tax credit or deduction with respect to such taxes.
Non-U.S. shareholders
generally are not subject to U.S. federal income tax withholding on certain distributions of interest income and/or short-term capital gains that are designated by a Fund. It is expected that each Fund will generally make designations of short-term
gains and long-term gains, to the extent permitted, but such Fund does not intend to make designations of any distributions attributable to interest income. Therefore, all distributions of interest income will be subject to withholding when paid to
non-U.S. investors.
Any capital gain realized by a non-U.S. shareholder upon a sale or redemption of shares of a Fund will not be subject
to U.S. federal income or withholding tax unless the gain is effectively connected with the shareholders trade or business in the U.S., or in the case of a shareholder who is a nonresident alien individual, the shareholder is present in the
U.S. for 183 days or more during the taxable year and certain other conditions are met.
B-112
Non-U.S. persons who fail to furnish the proper IRS Form W-8 (i.e., W-8BEN, W-8BEN-E,
W-8ECI, W-8IMY or W-8EXP), or an acceptable substitute, may be subject to backup withholding at a 24% rate on dividends (including capital gain dividends) and on the proceeds of redemptions and exchanges. Also, non-U.S. shareholders of a Fund may be
subject to U.S. estate tax with respect to their Fund shares.
Withholding of U.S. tax (at a 30% rate) is required with respect to
payments of dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive new 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.
Each shareholder who is not a U.S. person should consult his or her tax adviser regarding the U.S. and non-U.S. tax consequences of ownership
of shares of, and receipt of distributions from, a Fund.
Backup Withholding
Backup withholding may be required at a rate up to 24% with respect to distributions payable to shareholders who fail to provide their correct
taxpayer identification number or to make required certifications, or who have been notified by the IRS that they are subject to backup withholding. Corporate shareholders and certain other shareholders specified in the Code generally are exempt
from such backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholders U.S. federal tax liability.
Medicare Tax
An additional 3.8%
Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from a 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 persons 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.
Creation Units
As a result of
U.S. federal income tax requirements, the Trust on behalf of the Fund, has the right to reject an order for a creation of shares if the creator (or group of creators) would, upon obtaining the shares so ordered, own 80% or more of the outstanding
shares of the Fund and if, pursuant to Section 351 of the Code, the Fund would have a basis in the Deposit Securities different from the market value of such securities on the date of deposit. The Trust also has the right to require information
necessary to determine beneficial share ownership for purposes of the 80% determination. See Creations and Redemptions.
State and Local
Taxes
Each Fund may be subject to state or local taxes in jurisdictions in which the Fund is deemed to be doing business. In
addition, in those states or localities that impose income taxes, the treatment of a Fund and its shareholders under those jurisdictions tax laws may differ from the treatment under federal income tax laws, and investment in the Fund may have
tax consequences for shareholders that are different from those of a direct investment in the Funds portfolio securities. Shareholders should consult their own tax advisers concerning state and local tax matters.
B-113
FINANCIAL STATEMENTS
The audited financial statements and related report of PricewaterhouseCoopers LLP, independent registered public accounting firm, contained in
the Annual Report of the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF, Goldman Sachs Access High Yield Corporate Bond ETF, Goldman Sachs Access Investment Grade Corporate Bond ETF and Goldman
Sachs Access Ultra Short Bond ETF are hereby incorporated herein by reference. No other portions of the Annual Report of such Funds are incorporated herein by reference. A copy of the Annual Report of such Funds and a copy of the Annual Report of
the Goldman Sachs Access Emerging Markets Local Currency Bond ETF and Goldman Sachs Access Emerging Markets USD Bond ETF (when available) may be obtained upon request and without charge by writing Goldman Sachs Funds, P.O. Box 06050, Chicago,
Illinois 60606 or by calling 1-800-621-2550.
B-114
PROXY VOTING
The Trust, on behalf of the Funds, has delegated the voting of portfolio securities to the Investment Adviser. For client accounts for which
the Investment Adviser has voting discretion, the Investment Adviser has adopted policies and procedures (the Proxy Voting Policy) for the voting of proxies. Under the Proxy Voting Policy, the Investment Advisers guiding principles
in performing proxy voting are to make decisions that favor proposals that in the Investment Advisers view tend to maximize a companys shareholder value and are not influenced by conflicts of interest. To implement these guiding
principles for investments in publicly-traded equities, the Investment Adviser has developed customized proxy voting guidelines (the Guidelines) that they generally apply when voting on behalf of client accounts. Attached as Appendix B
is a summary of the Guidelines. These Guidelines address a wide variety of individual topics, including, among other matters, shareholder voting rights, anti-takeover defenses, board structures, the election of directors, executive and director
compensation, reorganizations, mergers, issues of corporate social responsibility and various shareholder proposals. The Guidelines embody the positions and factors the Investment Adviser generally considers important in casting proxy votes.
The Proxy Voting Policy, including the Guidelines, is reviewed periodically to ensure that it continues to be consistent with the Investment
Advisers guiding principles.
The Investment Adviser has retained a third-party proxy voting service (Proxy Service),
currently Institutional Shareholder Services, to assist in the implementation and administration of certain proxy voting-related functions including, without limitation, operational, recordkeeping and reporting services. The Proxy Service also
prepares a written analysis and recommendation (a Recommendation) of each proxy vote that reflects the Proxy Services application of the Guidelines to particular proxy issues. While it is the Investment Advisers policy
generally to follow the Guidelines and Recommendations from the Proxy Service, the Investment Advisers portfolio management teams (Portfolio Management Teams) may on certain proxy votes seek approval to diverge from the Guidelines
or a Recommendation by following an override process. Such decisions are subject to a review and approval process, including a determination that the decision is not influenced by any conflict of interest. A Portfolio Management Team
that receives approval through the override process to cast a proxy vote that diverges from the Guidelines and/or a Recommendation may vote differently than other Portfolio Management Teams that did not seek to override that vote. In forming their
views on particular matters, the Portfolio Management Teams are also permitted to consider applicable regional rules and practices, including codes of conduct and other guides, regarding proxy voting, in addition to the Guidelines and
Recommendations. The Investment Adviser may hire other service providers to replace or supplement the Proxy Service with respect to any of the services the Investment Adviser currently receives from the Proxy Service.
GSAM conducts periodic due diligence meetings with the Proxy Service which include, but are not limited to, a review of the Proxy
Services general organizational structure, new developments with respect to research and technology, work flow improvements and internal due diligence with respect to conflicts of interest.
From time to time, the Investment Adviser may face regulatory, compliance, legal or logistical limits with respect to voting securities that
they may purchase or hold for client accounts, which can affect the Investment Advisers ability to vote such proxies, as well as the desirability of voting such proxies. Among other limits, federal, state and foreign regulatory restrictions or
company specific ownership limits, as well as legal matters related to consolidated groups, may restrict the total percentage of an issuers voting securities that the Investment Adviser can hold for clients and the nature of the Investment
Advisers voting in such securities. The Investment Advisers ability to vote proxies may also be affected by, among other things: (i) late receipt of meeting notices; (ii) requirements to vote proxies in person:
(iii) restrictions on a foreigners ability to exercise votes; (iv) potential difficulties in translating the proxy; (v) requirements to provide local agents with unrestricted powers of attorney to facilitate voting instructions;
and (vi) requirements that investors who exercise their voting rights surrender the right to dispose of their holdings for some specified period in proximity to the shareholder meeting.
The Investment Adviser has adopted policies and procedures designed to prevent conflicts of interest from influencing its proxy voting
decisions that the Investment Adviser makes on behalf of a client account. These policies and procedures include the Investment Advisers use of the Guidelines and Recommendations from the Proxy Service, the override approval process previously
discussed, and the establishment of information barriers between the Investment Adviser and other businesses within The Goldman Sachs Group, Inc. Notwithstanding such proxy voting policies and procedures, actual proxy voting decisions of the
Investment Adviser may have the effect of benefitting the interests of other clients or businesses of other divisions or units of Goldman Sachs and/or its affiliates.
Voting decisions with respect to fixed income securities and the securities of privately held issuers generally will be made by a Funds
managers based on their assessment of the particular transactions or other matters at issue.
B-115
Information regarding how the Funds voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 will be available on or through the Funds website at www.gsam.com/content/gsam/us/en/advisors/resources/client-service/proxy-voting.html without charge and on the SECs website
at www.sec.gov.
B-116
PAYMENTS TO OTHERS (INCLUDING INTERMEDIARIES)
The Investment Adviser, Distributor (upon direction of a Fund or the Investment Adviser) and/or their affiliates may make payments to
intermediaries from time to time to promote the sale, distribution and/or servicing of shares of a Fund (each, an Intermediary). Certain payments (Additional Payments) are made out of the Investment Advisers, and/or its
affiliates own assets (which may come directly or indirectly from fees paid by a Fund), are not an additional charge to the Fund or its shareholders, and do not change the price paid by investors for the purchase of the Funds shares or
the amount the Fund receives as proceeds from such purchases. Although paid by the Investment Adviser, Distributor (upon direction of a Fund or the Investment Adviser), and/or their affiliates, the Additional Payments are in addition to the
distribution and service fees paid by the Fund to the Intermediaries as described in the Funds Prospectus and this SAI.
The
Additional Payments are intended to compensate Intermediaries for, among other things: marketing activities and presentations, educational training programs, the support or purchase of technology platforms/software and/or reporting systems. The
Investment Adviser, Distributor (upon direction of a Fund or the Investment Adviser) and/or their affiliates may also make payments to Intermediaries for certain printing, publishing and mailing costs associated with such 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 sales of Fund shares. In addition, the Investment Adviser, Distributor (upon direction of a Fund or the Investment
Adviser) and/or their affiliates may make payments to Intermediaries that make Fund shares available to their clients or for otherwise promoting such Fund, including through provision of consultative services to GSAM or its affiliates relating to
marketing of the Fund and/or sale of Fund shares.
These Additional Payments may be significant to certain Intermediaries, and may be an
important factor in an Intermediarys willingness to support the sale of a Fund through its distribution system.
The Investment
Adviser and/or its affiliates may be motivated to make Additional Payments since they promote the sale of Fund shares to clients of Intermediaries and the retention of those investments by those clients. To the extent Intermediaries sell more shares
of a Fund or retain shares of a Fund in their clients accounts, the Investment Adviser benefits from the incremental management and other fees paid by the Fund with respect to those assets.
In addition, certain Intermediaries may have access to certain research and investment services from the Investment Adviser and/or its
affiliates. Such research and investment services (Additional Services) may include research reports; economic analysis; portfolio analysis, portfolio construction and similar tools and software; business planning services; certain
marketing and investor education materials and strategic asset allocation modeling. The Intermediary may not pay for these products or services or may only pay for a portion of these products or services. The cost of the Additional Services and the
particular services provided may vary from Intermediary to Intermediary.
The presence of these Additional Payments or Additional
Services, the varying fee structure and the basis on which an Intermediary compensates its registered representatives or salespersons may create an incentive for a particular Intermediary, registered representative or salesperson to highlight,
feature or recommend funds, including a Fund, or other investments based, at least in part, on the level of compensation paid. Additionally, if one fund sponsor makes greater distribution payments than another, an Intermediary may have an incentive
to recommend one fund complex over another. Similarly, if an Intermediary receives more distribution assistance for one share class versus another, that Intermediary may have an incentive to recommend that share class. Because Intermediaries may be
paid varying amounts per class for sub-transfer agency and related recordkeeping services, the service requirements of which also may vary by class, this may create an additional incentive for financial firms and their financial advisors to favor
one fund complex over another, or one fund class over another. You should consider whether such incentives exist when evaluating any recommendations from an Intermediary to purchase or sell Shares of a Fund.
Your Intermediary may charge you additional fees or commissions other than those disclosed in the Prospectus. Shareholders should contact
their Intermediary for more information about the Additional Payments or Additional Services they receive and any potential conflicts of interest, as well as for information regarding any fees and/or commissions it charges. For additional questions,
please contact Goldman Sachs Funds at 1-800-621-2550.
Not described above are other subsidiaries of Goldman Sachs who may receive revenue
from the Investment Adviser, Distributor and/or their affiliates through intra-company compensation arrangements and for financial, distribution, administrative and operational services.
Furthermore, the Investment Adviser and/or its affiliates may, to the extent permitted by applicable regulations, sponsor various trainings
and educational programs and reimburse investors for certain expenses incurred in connection with accessing the Funds through portal arrangements. The Investment Adviser and its affiliates may also pay for the travel expenses, meals, lodging and
entertainment of Intermediaries and their salespersons and guests in connection with educational, sales and promotional programs subject to applicable FINRA regulations. Other compensation may also be offered from time to time to the extent not
prohibited by applicable federal or state laws or FINRA regulations. This compensation is not included in, and is made in addition to, the Additional Payments described above.
B-117
OTHER INFORMATION
Portfolio Holdings Disclosure
The Trust
has adopted a policy regarding the disclosure of information about each Funds portfolio holdings. The policy provides that neither a Fund nor its Investment Adviser or any agent or employee thereof will disclose the Funds portfolio
holdings information to any person other than in accordance with the policy. The Board of Trustees of the Trust must approve all material amendments to this policy.
Each Funds complete portfolio holdings are publicly disseminated each day such Fund is open for business through financial reporting and
news services, including the Funds publicly accessible Internet website (http://www.gsamfunds.com). In addition, a basket composition file, which includes the security names and share quantities to deliver in exchange for Fund shares, together
with estimates and actual cash components, is publicly disseminated daily prior to the opening of an Exchange via the NSCC.
As described
above under Creations and Redemptions, following close of trading on a business day and prior to the commencement of trading on the next business day, the Investment Adviser may post an Eligible Securities List on the Funds (except
the Goldman Sachs Access Treasury 0-1 Year ETF, Goldman Sachs Access Inflation Protected USD Bond ETF and Goldman Sachs Access Ultra Short Bond ETF) website and disseminate the Eligible Securities List to market makers and Authorized Participants
for such Funds. Such Eligible Securities List would consist of securities that the Investment Adviser would consider purchasing on such next business day as part of the representative sampling strategy for each Fund and may also include certain
information about risk and other characteristics of the securities that the Investment Adviser would consider purchasing.
Information
that is not publicly available as set forth above may be provided to third parties only if the third party recipients are required to keep all portfolio holdings information confidential and are prohibited from trading on the information they
receive. Disclosure to such third parties must be approved in advance by the Investment Advisers legal or compliance department.
Miscellaneous
The Prospectus and this SAI do not contain all the information included in the Registration Statement filed with the SEC under the
1933 Act with respect to the securities offered by the Prospectus. Certain portions of the Registration Statement have been omitted from the Prospectus and this SAI pursuant to the rules and regulations of the SEC. The Registration Statement
including the exhibits filed therewith may be examined at the office of the SEC in Washington, D.C.
Statements contained in the
Prospectus or in this SAI as to the contents of any contract or other document referred to are not necessarily complete, and, in each instance, reference is made to the copy of such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this SAI form a part, each such statement being qualified in all respects by such reference.
Corporate Actions
From time to time, the issuer of a security held in a Funds portfolio may initiate a corporate action relating to that security.
Corporate actions relating to equity securities may include, among others, an offer to purchase new shares, or to tender existing shares, of that security at a certain price. Corporate actions relating to debt securities may include, among others,
an offer for early redemption of the debt security, or an offer to convert the debt security into stock. Certain corporate actions are voluntary, meaning that a Fund may only participate in the corporate action if it elects to do so in a timely
fashion. Participation in certain corporate actions may enhance the value of a Funds investment portfolio.
In cases where a Fund or
the Investment Adviser receives sufficient advance notice of a voluntary corporate action, the Investment Adviser will exercise its discretion, in good faith, to determine whether the Fund will participate in that corporate action. If a Fund or the
Investment Adviser does not receive sufficient advance notice of a voluntary corporate action, the Fund may not be able to timely elect to participate in that corporate action. Participation or lack of participation in a voluntary corporate action
may result in a negative impact on the value of a Funds investment portfolio.
B-118
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Although the Trust does not have information concerning the beneficial ownership of shares held in the names of DTC Participants, as of
November 29, 2019, the name and percentage ownership of each DTC Participant that owned of record 5% or more of the outstanding Shares of each Fund were as follows:
|
|
|
|
|
Fund
|
|
Name/Address
|
|
Percentage of
Shares
|
Goldman Sachs Access Treasury 0-1 Year ETF
|
|
Charles Schwab, 101 Montgomery Street, San Francisco, CA 94104
|
|
19.37%
|
|
Morgan Stanley Smith Barney LLC, 1 Harborside Financial Center, Plaza II, Jersey City, NJ 07311
|
|
9.10%
|
|
Merrill Lynch, Peirce, Fenner and Smith, Inc., 1 Bryant Park, New York, NY 10036
|
|
8.15%
|
|
National Financial Services LLC, 200 Liberty Street, New York, NY 10281
|
|
8.08%
|
|
TD Ameritrade, 200 S 108th Ave, Omaha, NE 68154
|
|
8.04%
|
|
Wells Fargo Clearing Services, LLC, 1 North Jefferson Ave, St. Louis, MO 63103
|
|
7.52%
|
|
Oppenheimer & Co., Inc., 125 Broad Street, New York, NY 10004
|
|
6.47%
|
|
LPL Financial Corporation, 4707 Executive Drive, San Diego, CA 92121-3091
|
|
5.21%
|
|
|
|
Goldman Sachs Access Inflation Protected USD Bond ETF
|
|
Bank of America, One Bryant Park, New York, NY 10036
|
|
31.23%
|
|
TD Ameritrade, 200 S 108th Ave, Omaha, NE 68154
|
|
18.33%
|
|
JP Morgan Securities, LLC, 383 Madison Ave., New York, NY 10179
|
|
11.66%
|
|
Citigroup Global Markets Inc., 388 Greenwich Street, Tower Building, New York, NY 10013
|
|
10.00%
|
|
National Financial Services LLC, 200 Liberty Street, New York, NY 10281
|
|
9.58%
|
|
Apex Clearing Corporation, 350 North St. Paul Street, Suite 1300, Dallas, TX 75201
|
|
8.49%
|
|
|
|
Goldman Sachs Access High Yield Corporate Bond ETF
|
|
Goldman Sachs & Co., 200 West Street, New York, NY 10282
|
|
29.57%
|
|
UMB Bank, N.A., 1010 Grand Blvd Kansas City, MO 64106
|
|
16.26%
|
|
State Street Bank & Trust Company, One Lincoln Street, Boston, MA 02111
|
|
12.25%
|
|
JP Morgan Chase Bank, NA, 14201 Dallas Parkway, Chase Intl Plaza, Dallas, TX 75254-2916
|
|
7.85%
|
|
JP Morgan Securities, LLC, 383 Madison Ave., New York, NY 10179
|
|
7.59%
|
|
National Financial Services LLC, 200 Liberty Street, New York, NY 10281
|
|
5.03%
|
|
|
|
Goldman Sachs Access Investment Grade Corporate Bond ETF
|
|
State Street Bank & Trust Company, One Lincoln Street, Boston, MA 02111
|
|
26.37%
|
|
TD Ameritrade, 200 S 108th Ave, Omaha, NE 68154
|
|
14.00%
|
|
National Financial Services LLC, 200 Liberty Street, New York, NY 10281
|
|
13.26%
|
|
Pershing LLC, One Pershing Plaza, Jersey City, NJ 07399
|
|
12.55%
|
|
Reliance Trust Company, 1100 Abernathy Road, Suite 400, Atlanta, GA 30328-5634
|
|
12.54%
|
|
Charles Schwab, 101 Montgomery Street, San Francisco, CA 94104
|
|
6.68%
|
|
|
|
Goldman Sachs Access Ultra Short Bond ETF
|
|
Pershing LLC, One Pershing Plaza, Jersey City, NJ 07399
|
|
34.54%
|
|
Goldman Sachs & Co., 200 West Street, New York, NY 10282
|
|
28.38%
|
|
Charles Schwab, 101 Montgomery Street, San Francisco, CA 94104
|
|
11.74%
|
|
Northern Trust Corporation, 50 S La Salle St., Chicago, IL 60603
|
|
6.83%
|
|
JP Morgan Securities, LLC, 383 Madison Ave., New York, NY 10179
|
|
5.79%
|
|
Fifth Third Bancorp, Fifth Third Center, 38 Fountain Square Plaza, Cincinnati, OH 45263
|
|
5.07%
|
B-119