UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSRS

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

 

Investment Company Act File Number 811-22263

 

Exchange Traded Concepts Trust

(Exact name of registrant as specified in charter)

  

10900 Hefner Pointe Drive

Suite 400

Oklahoma City, OK 73120

(Address of principal executive offices) (Zip code)

 

J. Garrett Stevens

Exchange Traded Concepts Trust

10900 Hefner Pointe Drive

Suite 400

Oklahoma City, OK 73120

(Name and address of agent for service)

 

Copy to:

Christopher Menconi

Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue NW

Washington, DC 20004

 

Registrant’s telephone number, including area code: (405) 778-8377

 

Date of fiscal year end: November 30, 2022

 

Date of reporting period: May 31, 2022

 

 

 

 

Item 1. Reports to Stockholders.

 

(a) A copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “Act”) (17 CFR § 270.30e-1), is attached hereto.

 

   

EXCHANGE TRADED CONCEPTS TRUST

Capital Link Global Fintech Leaders ETF

Semi-Annual Report

May 31, 2022
(Unaudited)

 

Capital Link
Global Fintech Leaders ETF

Table of Contents

   

Schedule of Investments

 

1

Statement of Assets and Liabilities

 

3

Statement of Operations

 

4

Statements of Changes in Net Assets

 

5

Financial Highlights

 

6

Notes to Financial Statements

 

7

Disclosure of Fund Expenses

 

17

Review of Liquidity Risk Management Program

 

18

Board Consideration of Continuance of Advisory Agreement

 

19

Supplemental Information

 

22

The Fund files its complete schedule of investments with the U.S. Securities Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT within sixty days after the end of the period. The Fund’s Form N-PORT reports are available on the Commission’s website at https://www.sec.gov.

Exchange Traded Concepts, LLC’s proxy voting policies and procedures are attached to the Fund’s Statement of Additional Information (the “SAI”). The SAI, as well as information relating to how the Fund voted proxies relating to the Fund’s securities during the most recent 12-month period ended June 30, is available without charge, upon request, by calling 1-833-466-6383 and on the Commission’s website at https://www.sec.gov.

 

Capital Link

Global Fintech Leaders ETF

Schedule of Investments

May 31, 2022 (Unaudited)

Description

 

Shares

 

Fair Value

COMMON STOCK — 99.2%

     

 

 
       

 

 

Canada — 2.7%

     

 

 

TMX Group

 

5,360

 

$

583,229

       

 

 

China — 10.7%

     

 

 

Baidu ADR*

 

4,814

 

 

675,645

China Construction Bank, Cl H

 

798,000

 

 

594,008

Ping An Insurance Group of China, Cl A

 

76,800

 

 

509,942

Tencent Holdings

 

12,200

 

 

563,540

       

 

2,343,135

       

 

 

France — 5.7%

     

 

 

BNP Paribas(A)

 

10,646

 

 

605,694

Engie(A)

 

47,151

 

 

631,178

       

 

1,236,872

       

 

 

Germany — 5.3%

     

 

 

Mercedes-Benz Group

 

8,909

 

 

631,797

SAP

 

5,242

 

 

521,061

       

 

1,152,858

       

 

 

Hong Kong — 2.6%

     

 

 

Hong Kong Exchanges & Clearing

 

13,000

 

 

562,051

       

 

 

Japan — 11.3%

     

 

 

GMO Internet

 

24,000

 

 

470,318

HIS(A)*

 

36,000

 

 

648,389

Monex Group

 

117,700

 

 

458,375

Rakuten Group

 

75,100

 

 

422,655

SBI Holdings

 

22,600

 

 

459,747

       

 

2,459,484

       

 

 

Singapore — 2.6%

     

 

 

Singapore Exchange

 

81,627

 

 

567,441

Description

 

Shares

 

Fair Value

South Korea — 7.6%

     

 

 

Kakao

 

6,948

 

$

477,352

Samsung SDS

 

5,056

 

 

606,867

SK Telecom

 

12,350

 

 

569,985

       

 

1,654,204

Taiwan — 2.8%

     

 

 

Hon Hai Precision Industry

 

157,065

 

 

611,485

       

 

 

United Kingdom — 2.8%

     

 

 

HSBC Holdings PLC

 

91,192

 

 

612,575

       

 

 

United States — 45.1%

     

 

 

  Consumer Discretionary — 2.2%

     

 

 

Amazon.com*

 

197

 

 

473,625

       

 

 

  Consumer Staples  5.5%

     

 

 

Bunge

 

5,208

 

 

616,210

Nestle

 

4,727

 

 

576,975

       

 

1,193,185

  Financials  6.4%

     

 

 

CME Group, Cl A

 

2,534

 

 

503,835

Intercontinental Exchange

 

4,531

 

 

463,929

Signature Bank NY

 

1,979

 

 

427,999

       

 

1,395,763

  Information Technology  31.0%

     

 

 

Block, Cl A*

 

5,616

 

 

491,456

Cisco Systems

 

10,466

 

 

471,493

DocuSign, Cl A*

 

7,632

 

 

640,401

International Business
Machines

 

4,618

 

 

641,163

Intuit

 

1,303

 

 

540,041

Mastercard, Cl A

 

1,763

 

 

630,925

Microsoft

 

2,044

 

 

555,702

Oracle

 

7,356

 

 

529,044

PayPal Holdings*

 

5,928

 

 

505,125

Salesforce*

 

2,893

 

 

463,574

Visa, Cl A(A)

 

2,910

 

 

617,415

VMware, Cl A*

 

5,176

 

 

663,046

       

 

6,749,385

       

 

9,811,958

Total Common Stock
(Cost $23,302,957)

     

 

21,595,292

MONEY MARKET — 0.5%

     

 

 

JPMorgan U.S. Government Money Market Fund, Cl I 0.72%(B)

 

116,152

 

 

116,152

Total Money Market
(Cost $116,152)

     

 

116,152

       

 

 

The accompanying notes are an integral part of the financial statements.

1

Capital Link

Global Fintech Leaders ETF

Schedule of Investments

May 31, 2022 (Unaudited) (Concluded)

Description

 

Face
Amount

 

Fair Value

REPURCHASE AGREEMENTS(C)(D) — 1.8%

Citigroup Global Markets 0.80%, dated 05/31/2022 to be repurchased on 06/01/2022, repurchase price $135,239 (collateralized by a U.S. Treasury obligations, ranging in par value $0.01 – $26,260, 0.000% – 6.125%, 08/25/2022 – 01/31/2028; with total market value $137,998)

 

$

135,236

 

$

135,236

RBC Dominion Securities 0.79%, dated 05/31/2022 to be repurchased on 06/01/2022, repurchase price $250,005 (collateralized by a U.S. Treasury obligations, ranging in par value $0.01 – $84,925, 0.000% – 5.500%, 07/15/2022 – 05/20/2052; with total market value $255,000)

 

 

250,000

 

 

250,000

   

 

   

 

 

Total Repurchase Agreements (Cost $385,236)

 

 

   

 

385,236

   

 

   

 

 

Total Investments — 101.5%
(Cost $23,804,345)

 

 

   

$

22,096,680

Percentages are based on net assets of $21,767,496.

*       Non-income producing security.

(A)   Certain securities or partial positions of certain securities are on loan at May 31, 2022 (see Note 6). The total market value of securities on loan at May 31, 2022 was $950,890.

(B)   The rate reported is the 7-day effective yield as of May 31, 2022.

(C)   This security was purchased with cash collateral held from securities on loan (see Note 6). The total market value of such securities as of May 31, 2022 was $385,236.

(D)   Tri-Party Repurchase Agreement.

ADR — American Depositary Receipt

Cl — Class

The following is a summary of the inputs used as of May 31, 2022 when valuing the Fund’s investments carried at value:

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

Investments in Securities

 

 

   

 

   

 

 

Common Stock

 

$

21,595,292

 

$

 

$

 

$

21,595,292

Repurchase Agreements

 

 

 

 

385,236

 

 

 

 

385,236

Money Market

 

 

116,152

 

 

 

 

 

 

116,152

Total Investments in Securities

 

$

21,711,444

 

$

385,236

 

$

 

$

22,096,680

The accompanying notes are an integral part of the financial statements.

2

Capital Link

Global Fintech Leaders ETF

Statement of Assets and Liabilities

May 31, 2022 (Unaudited)

Assets:

 

 

 

Investments and Repurchase Agreement, at Cost

 

$

23,804,345

Investments at Fair Value*

 

$

21,711,444

Repurchase Agreements at Value

 

 

385,236

Cash and Cash Equivalents

 

 

1,518

Dividends Receivable

 

 

47,058

Reclaims Receivable

 

 

21,990

   

 

 

Total Assets

 

 

22,167,246

   

 

 

Liabilities:

 

 

 

Payable Upon Return on Securities Loaned

 

 

385,236

Foreign Currency Payable

 

 

881

Advisory Fees Payable

 

 

13,633

   

 

 

Total Liabilities

 

 

399,750

   

 

 

Net Assets

 

$

21,767,496

   

 

 

Net Assets Consist of:

 

 

 

Paid-in Capital

 

$

19,067,236

Total Distributable Earnings

 

 

2,700,260

   

 

 

Net Assets

 

$

21,767,496

   

 

 

Outstanding Shares of Beneficial Interest
(unlimited authorization – no par value)

 

 

600,000

Net Asset Value, Offering and Redemption Price Per Share

 

$

36.28

*       Includes Market Value of Securities on Loan of $950,890

The accompanying notes are an integral part of the financial statements.

3

Capital Link

Global Fintech Leaders ETF

Statement of Operations

For the six months ended May 31, 2022 (Unaudited)

Investment Income:

 

 

 

 

Dividend Income

 

$

393,326

 

Income from Securities Lending

 

 

2,746

 

Less: Foreign Taxes Withheld

 

 

(44,550

)

   

 

 

 

Total Investment Income

 

 

351,522

 

   

 

 

 

Expenses:

 

 

 

 

Advisory Fees

 

 

122,490

 

Less: Management Fee Waiver

 

 

(25,787

)

   

 

 

 

Net Expenses

 

 

96,703

 

   

 

 

 

Net Investment Income

 

 

254,819

 

   

 

 

 

Net Realized Gain (Loss) on:

 

 

 

 

Investments(1)

 

 

4,361,149

 

Foreign Currency Transactions

 

 

(2,691

)

   

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

 

 

 

 

Investments

 

 

(8,998,049

)

Foreign Currency Translations

 

 

(1,437

)

Net Realized and Unrealized Loss on Investments

 

 

(4,641,028

)

   

 

 

 

Net Decrease in Net Assets Resulting from Operations

 

$

(4,386,209

)

(1)    Includes realized gains and losses as a result of in-kind transactions (See Note 4 in Notes to Financial Statements).

The accompanying notes are an integral part of the financial statements.

4

Capital Link

Global Fintech Leaders ETF

Statements of Changes in Net Assets

 

Six Months
Ended May 31,
2022
(Unaudited)

 

Year Ended
November 30,
2021

Operations:

 

 

   

 

 

Net Investment Income

 

$

254,819

 

$

456,407

Net Realized Gain on Investments and Foreign Currency Transactions(1)

 

 

4,358,458

 

 

1,251,204

Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translation

 

 

(8,999,486)

 

 

3,448,744

   

 

   

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

(4,386,209)

 

 

5,156,355

   

 

   

 

 

Distributions:

 

 

(645,458)

 

 

(80,523)

Capital Share Transactions:

 

 

   

 

 

Issued

 

 

 

 

11,466,382

Redeemed

 

 

(4,023,710)

 

 

(2,790,908)

Increase (Decrease) in Net Assets from Capital Share Transactions

 

 

(4,023,710)

 

 

8,675,474

   

 

   

 

 

Total Increase (Decrease) in Net Assets

 

 

(9,055,377)

 

 

13,751,306

Net Assets:

 

 

   

 

 

Beginning of Period

 

 

30,822,873

 

 

17,071,567

End of Period

 

$

21,767,496

 

$

30,822,873

   

 

   

 

 

Share Transactions:

 

 

   

 

 

Issued

 

 

 

 

300,000

Redeemed

 

 

(100,000)

 

 

(75,000)

   

 

   

 

 

Net Increase (Decrease) in Shares Outstanding from Share Transactions

 

 

(100,000)

 

 

225,000

(1)    Includes realized gains and losses as a result of in-kind transactions (See Note 4 in Notes to Financial Statements).

Amounts designated as “—” are $0.

The accompanying notes are an integral part of the financial statements.

5

Capital Link

Global Fintech Leaders ETF

Financial Highlights

 

Selected Per Share Data & Ratios
Six Months Ended May 31, 2022 (Unaudited) and Year or Period Ended November 30,
For a Share Outstanding Throughout the Period/Year

 

Net Asset
Value,
Beginning
of Year
/
Period

 

Net
Investment
Income*

 

Net
Realized
and
Unrealized
Gain (Loss)
on
Investments

 

Total from
Operations

 

Distributions
from Net
Investment
Income

 

Distributions
from Net
Realized
Capital Gains

 

Total
Distributions

 

Net
Asset
Value,
End of
Year
/
Period

 

Market
Price,
End of
Year
/
Period

 

Total
Return
(1)

 

Net
Assets
End of
Period
(000)

 

Ratio of
Expenses
to Average
Net Assets
(Including
Waivers)

 

Ratio of
Expenses
to Average
Net Assets
(Excluding
Waivers)

 

Ratio of
Net
Investment
Income to
Average
Net Assets

 

Portfolio
Turnover
(2)

2022**

 

$  44.03

 

$  0.40

 

$  (7.23)

 

$  (6.83)

 

$  (0.70)

 

$  (0.22)

 

$  (0.92)

 

$ 36.28

 

$ 36.26

 

 (15.85)%

 

$ 21,767

 

0.75%^(3)

 

0.95%(3)

 

1.98%(3)

 

54%

2021

 

 35.94

 

 0.69

 

 7.55

 

 8.24

 

 (0.15)

 

 

 (0.15)

 

44.03

 

44.02

 

23.02

 

30,823

 

0.75^

 

0.95

 

1.66

 

20

2020

 

 28.25

 

 0.22

 

 7.94

 

 8.16

 

 (0.47)

 

 

 (0.47)

 

35.94

 

35.96

 

29.30

 

17,072

 

0.75^

 

0.95

 

0.72

 

26

2019

 

 24.24

 

 0.36

 

 3.94

 

 4.30

 

 (0.21)

 

 (0.08)

 

 (0.29)

 

28.25

 

28.26

 

18.22

 

8,475

 

0.73^

 

0.96

 

1.41

 

31

2018(4)

 

 25.00

 

 0.27

 

 (1.03)(5)

 

 (0.76)

 

 

 

 

24.24

 

24.23

 

(3.04)

 

10,303

 

0.65(3)

 

0.95(3)

 

1.30(3)

 

66

*       Per share data calculated using average shares method.

**     For the six months ended May 31, 2022.

^      The Ratio of Expenses to Average Net Assets includes the effect of a voluntary and/or contractual fee waiver (depending on the year) reducing expenses 0.20% (See Note 3 in Notes to Financial Statements).

(1)    Total return is for the period indicated and has not been annualized for periods less than one year. Returns do not reflect the deduction of taxes the shareholder would pay on fund distributions or redemption of Fund shares.

(2)    Portfolio turnover rate is for the period indicated and periods of less than one year have not been annualized. Excludes effect of securities received or delivered from processing in-kind creations or redemptions.

(3)    Annualized.

(4)    Commenced operations on January 29, 2018.

(5)    The amount shown for a share outstanding throughout the period does not accord with the aggregate net gains on investments for that period because the sales and repurchase of Fund shares in relation to fluctuating market value of the investments of the Fund.

Amounts designated as “—” are $0.

The accompanying notes are an integral part of the financial statements.

6

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited)

1. ORGANIZATION

Exchange Traded Concepts Trust (the “Trust”) is a Delaware statutory trust formed on July 17, 2009. The Trust is registered with the Commission under the Investment Company Act of 1940 (the “1940 Act”) as an open-end management investment company consisting of multiple investment portfolios. The financial statements herein are those of the Capital Link Global Fintech Leaders ETF (the “Fund”). The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the AF Global Fintech Leaders Index (the “Index”). The Fund is classified as “diversified” under the 1940 Act. Exchange Traded Concepts, LLC (the “Adviser”), an Oklahoma limited liability company, serves as the investment adviser for the Fund and is subject to the supervision of the Board of Trustees (the “Board”). The Fund commenced operations on January 29, 2018.

Shares of the Fund are listed and traded on NYSE Arca, Inc. (the “Exchange”). Market prices for the shares may be different from their net asset value (“NAV”). The Fund will issue and redeem shares on a continuous basis at NAV only in large blocks of shares, typically 25,000 shares, called “Creation Units”. Creation Units will be issued and redeemed principally in-kind for securities and/or cash constituting a substantial representation, or a representation of the securities on the Index. Once created, shares will trade in a secondary market at market prices that change throughout the day in amounts less than a Creation Unit.

2. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Trust, are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The accompanying financial statements have been prepared in accordance with U.S. GAAP on the accrual basis of accounting. Management has reviewed Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies (“ASC 946”), and concluded that the Fund meets the criteria of an “investment company,” and therefore, the Fund prepares its financial statements in accordance with investment company accounting as outlined in ASC 946.

Use of Estimates and Indemnifications — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

In the normal course of business, the Trust, on behalf of the Fund, enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements cannot be known; however, the Fund expects any risk of loss to be remote.

Security Valuation — The Fund records investments at fair value. Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ Stock Market (“NASDAQ”)), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale, at the most recent quoted bid price for long positions and at the most recent ask price for short positions. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. If available, debt securities are priced based upon valuations provided by independent, third-party pricing agents. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the fair value for such securities. Debt obligations with remaining maturities of sixty days or less when acquired will be valued at their market value. If a market value is not available from a pricing vendor or from an independent broker, the security shall be fair valued according

7

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

to the Trust’s fair value procedures. Prices for most securities held in the Fund are provided daily by recognized independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Fund seeks to obtain a bid price from at least one independent broker.

Securities for which market prices are not “readily available” are valued in accordance with fair value procedures established by the Board. The Fund’s fair value procedures are implemented through a Fair Value Committee (the “Committee”) designated by the Board. Some of the more common reasons that may necessitate that a security be valued using fair value procedures include: the security’s trading has been halted or suspended; the security has been de-listed from a national exchange; the security’s primary trading market is temporarily closed at a time, when under normal conditions, it would be open; the security has not been traded for an extended period of time; the security’s primary pricing source is not able or willing to provide a price; or trading of the security is subject to local government-imposed restrictions. In addition, the Fund may fair value their securities if an event that may materially affect the value of the Fund’s securities that traded outside of the United States (a ‘‘Significant Event’’) has occurred between the time of the security’s last close and the time that the Fund calculates its net asset value. A Significant Event may relate to a single issuer or to an entire market sector. Events that may be Significant Events include, but are not limited to: government actions, natural disasters, armed conflict, acts of terrorism and significant market fluctuations. If the Adviser becomes aware of a Significant Event that has occurred with respect to a security or group of securities after the closing of the exchange or market on which the security or securities principally trade, but before the time at which the Fund calculates its net asset value, it may request that a Committee meeting be called. When a security is valued in accordance with the fair value procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee.

In accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP, the Fund discloses fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

        Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

        Level 2 — Quoted prices which are not active, or inputs that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and

        Level 3 — Prices, inputs or exotic modeling techniques which are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The valuation techniques used by the Fund to measure fair value during the six months ended May 31, 2022 maximized the use of observable inputs and minimized the use of unobservable inputs.

For the six months ended May 31, 2022, there have been no significant changes to the Fund’s fair valuation methodologies.

Federal Income Taxes  It is the Fund’s intention to qualify as a regulated investment company for Federal income tax purposes by complying with the appropriate provisions of Subchapter M of the Internal Revenue Code of 1986, as amended. Accordingly, no provisions for Federal income taxes have been made in the financial statements.

The Fund’s policy is to classify interest and penalties associated with underpayment of Federal and state income taxes, if any, as income tax expense on its Statement of Operations. As of May 31, 2022, the Fund did not have any interest or penalties associated with the underpayment of any income taxes. The Fund has reviewed all

8

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on its tax returns.

Security Transactions and Investment Income — Security transactions are accounted for on trade date. Costs used in determining realized gains and losses on the sale of investment securities are based on specific identification. Dividend income is recorded on the ex-dividend date. Interest income is recognized on the accrual basis. Withholding taxes on foreign dividends, if any, have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.

Repurchase Agreements — Securities pledged as collateral for repurchase agreements are held by the Fund’s custodian bank until the repurchase date of the repurchase agreement. The Fund may also invest in tri-party repurchase agreements. Securities held as collateral for tri-party repurchase agreements are maintained by the broker’s custodian bank in a segregated account until the repurchase date of the repurchase agreement. Provisions of the repurchase agreements and the Fund’s policies require that the market value of the collateral, including accrued interest thereon, is sufficient in the event of default by the counterparty. If the counterparty defaults and the value of the collateral declines, or if the counterparty enters into an insolvency proceeding, realization of the collateral by the Fund may be delayed or limited.

At May 31, 2022, the market value of the repurchase agreements outstanding was $385,236.

Foreign Currency Translation — The books and records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars on the date of valuation. Purchases and sales of investment securities, income and expenses are translated into U.S. dollars at the relevant rates of exchange prevailing on the respective dates of such transactions. The Fund does not isolate that portion of realized or unrealized gains and losses resulting from changes in the foreign exchange rate from fluctuations arising from changes in the market prices of the securities. These gains and losses are included in net realized and unrealized gains and losses on investments on the Statement of Operations. Net realized and unrealized gains and losses on foreign currency transactions represent net foreign exchange gains or losses from foreign currency exchange contracts, disposition of foreign currencies, currency gains or losses realized between trade and settlement dates on securities transactions and the difference between the amount of the investment income and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. The Fund may be subject to foreign taxes related to foreign income received, capital gain on the sale of securities and certain foreign currency transactions (a portion of which may be reclaimable). All foreign taxes are recorded in accordance with the applicable regulations and rates that exist in the foreign jurisdictions in which the Fund invests.

Dividends and Distributions to Shareholders  The Fund pays out dividends from its net investment income and distributes its net capital gains, if any, to investors at least annually. All distributions are recorded on ex-dividend date.

Creation Units — The Fund issues and redeems shares on a continuous basis at NAV and only in large blocks of at least 25,000 shares (each block of shares for the Fund is called a “Creation Unit” or multiples thereof). Purchasers of Creation Units (“Authorized Participants”) at NAV must pay a standard creation transaction fee of $500 per transaction. An Authorized Participant who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 per transaction. In addition to the fixed creation or redemption transaction fee, an additional creation transaction fee may be charged. The Adviser may retain all or portion of the transaction fee to the extent the Adviser bears the expenses that otherwise would be borne by the Trust in connection with the purchase or redemption of a Creation Unit, which the transaction fee is designed to cover.

9

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Except when aggregated in Creation Units, shares are not redeemable securities of the Fund. Shares of the Fund may only be purchased or redeemed by certain Authorized Participants. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a Depository Trust Company (“DTC”) participant and, in each case, must have executed an Authorized Participant Agreement with the Fund’s distributor. Most retail investors will not qualify as Authorized Participants or have the resources to buy and sell whole Creation Units. Therefore, they will be unable to purchase or redeem the shares directly from the Fund. Rather, most retail investors will purchase shares in the secondary market with the assistance of a broker and will be subject to customary brokerage commissions or fees.

The following table discloses the Creation Unit breakdown based on the NAV as of May 31, 2022:

 

Creation
Unit Shares

 

Creation
Transaction
Fee

 

Value

 

Redemption
Transaction
Fee

   

25,000

 

$

500

 

$

907,000

 

$

500

 

To the extent the Fund permits the contribution of securities in exchange for the purchase of shares (contribution in-kind), shares may be issued in advance of receipt by the Fund at all or a portion of the applicable deposit securities. In these circumstances, the Fund may require the Authorized Participant to maintain with the Trust an amount of 115% of the daily mark-to-market of the missing deposit securities. Amounts are disclosed as Segregated Cash Balance with Authorized Participants for Deposit Security and Collateral Payable upon Return of Deposit Securities on the Statement of Assets and Liabilities, when applicable.

3. SERVICE PROVIDERS

Investment Advisory Agreement

The Adviser is located at 10900 Hefner Pointe Drive, Suite 400, Oklahoma City, Oklahoma 73120, its principal place of business, and 295 Madison Avenue, New York, New York 10017. The Adviser serves as investment adviser to the Trust, including the Fund, pursuant to an investment advisory agreement (“Advisory Agreement”). Under the Advisory Agreement, the Adviser provides investment advisory services to the Fund. The Adviser is responsible for the day-to-day management of the Fund, including, among other things, implementing changes to the Fund’s portfolio in connection with any rebalancing or reconstitution of the Index, trading portfolio securities on behalf of the Fund, and selecting broker-dealers to execute purchase and sale transactions, subject to the oversight of the Board. The Adviser also arranges for transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Fund to operate. The Adviser administers the Fund’s business affairs, provides office facilities and equipment and certain clerical, bookkeeping and administrative services, and provides its officers and employees to serve as officers or Trustees of the Trust.

For the services it provides to the Fund, the Fund pays the Adviser a fee, which is calculated daily and paid monthly, at an annual rate of 0.95% of the average daily net assets of the Fund.

The Adviser has contractually agreed to waive a portion of its management fee in an amount equal to 0.20% of the Fund’s average daily net assets through March 31, 2023, unless earlier terminated by the Board for any reason at any time.

Under the Advisory Agreement, the Adviser has agreed to pay all expenses incurred by the Fund except for the advisory fee, interest, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, extraordinary expenses, and distribution fees and expenses paid by the Fund under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (“Excluded Expenses”).

10

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Continued)

3. SERVICE PROVIDERS (continued)

The Adviser has entered into an arrangement with Capital Link, the Fund's index provider, pursuant to which the Adviser and the Fund are permitted to use the Index. As part of an arrangement between Capital Link and the Adviser, Capital Link has agreed to assume the Adviser’s obligation to pay all expenses of the Fund (except Excluded Expenses) and, to the extent applicable, to pay the Adviser a minimum fee.

A Trustee and certain officers of the Trust are affiliated with the Adviser and receive no compensation from the Trust for serving as officers and/or Trustee.

Distribution Arrangement

SEI Investments Distribution Co. (the “Distributor”) serves as the Fund’s underwriter and distributor of shares pursuant to a Distribution Agreement (the “Distribution Agreement”). Under the Distribution Agreement, the Distributor, as agent, receives orders to purchase shares in Creation Units and transmits such orders to the Fund’s custodian and transfer agent.

The Distributor has no obligation to sell any specific quantity of Fund shares. The Distributor bears the following costs and expenses relating to the distribution of shares: (i) the expenses of maintaining its registration or qualification as a dealer or broker under federal or state laws; (ii) filing fees; and (iii) all other expenses incurred in connection with the distribution services that are not reimbursed by the Adviser, as contemplated in the Distribution Agreement. The Distributor does not maintain any secondary market in Fund shares.

The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. In accordance with the Plan, the Fund is authorized to pay an amount up to 0.25% of its average daily assets each year for certain distribution-related activities. For the six months ended May 31, 2022, no fees were paid by the Fund under the Plan and the Plan will only be implemented with approval of the Board.

Administrator, Custodian and Transfer Agent

SEI Investments Global Funds Services (the “Administrator”) serves as the Fund’s Administrator pursuant to an Administration Agreement. The Bank of New York Mellon (the “Custodian” and “Transfer Agent”) serves as the Fund’s Custodian and Transfer agent pursuant to a Custodian Agreement and Transfer Agency Services Agreement. The Adviser of the Fund pays these fees.

An officer of the Trust is affiliated with the Administrator and receives no compensation from the Trust for serving as an officer.

4. INVESTMENT TRANSACTIONS

For the six months ended May 31, 2022, the purchases and sales of investments in securities, excluding in-kind transactions, long-term U.S. Government and short-term securities were:

 

Purchases

 

Sales and
Maturities

   

$

16,191,739

 

$

22,531,344

 

There were no purchases or sales of long-term U.S. Government securities by the Fund.

For the six months ended May 31, 2022, there were in-kind transactions associated with creations and redemptions:

 

Purchases

 

Sales

 

Net Realized
Gain/Loss

   

$

 

$

3,389,871

 

$

841,643

 

11

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Continued)

4. INVESTMENT TRANSACTIONS (continued)

For the year ended November 30, 2021 there were in-kind transactions associated with creations and redemptions:

 

Purchases

 

Sales

 

Net Realized
Gain/Loss

   

$

10,873,493

 

$

2,082,078

 

$

874,850

 

5. TAX INFORMATION

The amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with Federal income tax regulations, which may differ from U.S. GAAP. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. These book/tax differences may be temporary or permanent. To the extent these differences are permanent in nature, they are charged or credited to paid-in capital and distributable earnings, as appropriate, in the period that the differences arise.

Accordingly, the following permanent differences which are primarily attributable to redemption in kind transactions, have been reclassified within the components of net assets for the year ended November 30, 2021.

 

Paid-in
Capital

 

Distributable
Earnings
(Loss)

   

$

874,850

 

$

(874,850

)

 

The tax character of dividends and distributions declared during the last two fiscal years were as follows:

 

Ordinary
Income

2021

 

$

80,523

2020

 

 

139,789

As of November 30, 2021, the components of distributable earnings on a tax basis were as follows:

Undistributed Ordinary Income

 

$

600,092

Unrealized Appreciation

 

 

7,131,835

Total Distributable Earnings

 

$

7,731,927

During the year ended November 30, 2021 the Fund utilized $244,378 in short-term capital loss carryforwards and $70,392 in long-term capital loss carryforwards to offset capital gains.

For federal income tax purposes, the cost of investments owned at November 30, 2021, and the net realized gains or losses on investments sold for the period, were different from amounts reported for financial reporting purposes primarily due to wash sales which cannot be used for federal income tax purposes in the current period and have been deferred for use in future years. The federal tax cost and aggregate gross unrealized appreciation and depreciation on investments held by the Fund at May 31, 2022, were as follows:

 

Federal Tax
Cost

 

Aggregated
Gross
Unrealized
Appreciation

 

Aggregated
Gross
Unrealized
Depreciation

 

Net
Unrealized
Depreciation

   

$

23,804,345

 

$

1,740,969

 

$

(3,448,634

)

 

$

(1,707,665

)

 

12

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Continued)

6. SECURITIES LENDING

The Fund has entered into a Securities Lending Agreement with the Bank of New York Mellon (the “Lending Agent”) to lend portfolio securities to brokers, dealers and other financial organizations that meet capital and other credit requirements or other criteria established by the Trust’s Board. These loans, if and when made, may not exceed 33 1/3% of the total asset value of the Fund (including the loan collateral). The Fund will not lend portfolio securities to the Adviser or its affiliates unless permissible under the 1940 Act and the rules and promulgations thereunder. Loans of portfolio securities will be fully collateralized by cash, letters of credit or U.S. government securities, and the collateral will be maintained in an amount equal to at least 102% of the value of domestic equity securities and American Depositary Receipts (“ADR”) and 105% of the value of foreign equity securities (other than ADRs). However, due to market fluctuations during the day, the value of securities loaned on a particular day may, during the course of the day, exceed the value of collateral. On each business day, the amount of collateral is adjusted based on the prior day’s market fluctuations and the current day’s lending activity. Income from lending activity is determined by the amount of interest earned on collateral, less any amounts payable to the borrowers of the securities and the lending agent and the Fund earns a return from the collateral. Lending securities involves certain risks, including the risk that the Fund may be delayed or restricted from recovering the loaned securities or disposing of the collateral for the loan, which could give rise to loss because at adverse market actions expenses and/or delays in connection with the disposition of the underlying securities. Any gain or loss in the market price of the securities loaned and income from lending activity by the Fund that might occur during the term of the loan would be for the account of the Fund.

Cash collateral received in connection with securities lending is invested in repurchase agreements by the lending agent. The Fund does not have effective control of the non-cash collateral and therefore it is not disclosed in the Fund’s Schedule of Investments.

Securities lending transactions are entered into by the Fund under the Securities Lending Agreement, which permits the Fund, under certain circumstances such as an event of default, to offset amounts payable by the Fund to the same counterparty against amounts receivable from the counterparty to create a net payment due to or from the Fund.

The following is a summary of securities lending agreements held by the Fund, with cash collateral of overnight maturities and non-cash collateral, which would be subject to offset as of May 31, 2022:

 

Gross
Amount of
Recognized
Assets
(Value of
Securities
on Loan)

 

Value of
Cash
Collateral
Received*

 

Value of
Non-cash
Collateral
Received**

 

Net
Amount

   

$

950,890

 

$

385,236

 

$

565,654

 

$

 

*       The amount of collateral reflected in the table is presented on the Statement of Assets and Liabilities.

**     The amount of collateral reflected in the table does not include any over-collateralization received by the Fund.

13

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Continued)

6. SECURITIES LENDING (continued)

The value of loaned securities and related collateral outstanding at May 31, 2022 are shown in the Schedule of Investments. The value of the collateral held may be temporarily less than that required under the lending contract. As of May 31, 2022, the cash collateral was invested in Repurchase Agreements and the non-cash collateral consisted of U.S. Treasury Bills, Notes, Bonds and U.S. Treasury Inflation Indexed Bonds with the following maturities:

Remaining Contractual Maturity of the collateral, as of May 31, 2022:

 

Overnight and
Continuous

 

<30 Days

 

Between
30 & 90 Days

 

>90 Days

 

Total

Repurchase Agreements

 

$

385,236

 

$

 

$

 

$

 

$

385,236

U.S. Government Securities

 

 

 

 

5,109

 

 

17,504

 

 

577,595

 

 

600,208

Total

 

$

385,236

 

$

5,109

 

$

17,504

 

$

577,595

 

$

985,444

7. PRINCIPAL RISKS OF INVESTING IN THE FUND

As with all ETFs, a shareholder of the Fund is subject to the risk that his or her investment could lose money. The Fund is subject to the principal risks noted below, any of which may adversely affect the Fund’s NAV, trading price, yield, total return and ability to meet its investment objective. Additional principal risks are disclosed in the Fund’s prospectus. Please refer to the Fund’s prospectus for a complete description of the principal risks of investing in the Fund.

Cryptocurrency Risk:    Certain of the Fund’s investments may be subject to the risks associated with investing in cryptocurrencies. In particular, the Cryptocurrency Payees in which the Fund may invest may be subject to the risk that: the technology that facilitates the transfer of a cryptocurrency could fail; the decentralized, open source protocol of the peer-to-peer cryptocurrency computer network could be affected by Internet connectivity disruptions, fraud or cybersecurity attacks; such network may not be adequately maintained by its participants; because cryptocurrency is a new technological innovation with a limited history, it is a highly speculative asset; future regulatory actions or policies may limit the ability to exchange a cryptocurrency or utilize it for payments; the price of a cryptocurrency may be impacted by the transactions of a small number of holders of such cryptocurrency; and that a cryptocurrency will decline in popularity, acceptance or use, thereby impairing its price.

Digital Assets Risk.    The technology relating to digital assets is new and developing. Digital asset technology is used by companies to optimize their business practices, whether by using the technology within their business or operating business lines involved in the operation of the technology. Currently, there are few public companies for which digital asset technology represents an attributable and significant revenue stream. Digital asset technology may never develop optimized transactional processes that lead to increased realized economic returns to any company in which the Fund invests. In addition, an investment in companies actively engaged in digital asset technology may be subject to the risks:

    that digital asset technology is new and many of its uses may be untested; that the cryptographic keys necessary to transact on a digital asset ledger may be subject to theft, loss, or destruction; that competing platforms and technologies may be developed such that consumers or investors use an alternative to digital assets;

    that companies that use digital asset technology may be subject to cybersecurity risk; that companies may not be able to develop digital asset technology applications or may not be able to capitalize on those technologies;

    that digital asset companies may be subject to the risks posed by conflicting intellectual property claims;

    that there may be a lack of liquid markets and possible manipulation of digital assets;

14

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Continued)

7. PRINCIPAL RISKS OF INVESTING IN THE FUND (continued)

    that there may be risks posed by the lack of regulation in this space; and

    that digital asset systems built using third party products may be subject to technical defects or vulnerabilities beyond a company’s control.

Emerging Markets Securities Risk:    Emerging markets are subject to greater market volatility, lower trading volume, political and economic instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition, securities in emerging markets may be subject to greater price fluctuations than securities in more developed markets. Differences in regulatory, accounting, auditing, and financial reporting and recordkeeping standards could impede the Sub-Adviser’s ability to evaluate local companies and impact the Fund’s performance. Investments in securities of issuers in emerging markets may also be exposed to risks related to a lack of liquidity, greater potential for market manipulation, issuers’ limited reliable access to capital, and foreign investment structures. Additionally, the Fund may have limited rights and remedies available to it to pursue claims against issuers in emerging markets.

Limited Authorized Participants, Market Makers and Liquidity Providers Concentration Risk:    Because the Fund is an ETF, only a limited number of institutional investors (known as “Authorized Participants”) are authorized to purchase and redeem shares directly from the Fund. In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occurs, the risk of which is higher during periods of market stress, Fund shares may trade at a material discount to NAV and possibly face delisting: (i) Authorized Participants exit the business or otherwise become unable to process creation and/or redemption orders and no other Authorized Participants step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business or significantly reduce their business activities and no other entities step forward to perform their functions.

Market Risk:    The market price of a security or instrument could decline, sometimes rapidly or unpredictably, due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic or political conditions throughout the world, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the market generally and on specific securities. The market value of a security may also decline because of factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

Sector Focus Risk:    The Fund may invest a significant portion of its assets in one or more sectors and thus will be more susceptible to the risks affecting those sectors. While the Fund’s sector exposure is expected to vary over time based on the composition of its Index, the Fund anticipates that it may be subject to some or all of the risks described below. The list below is not a comprehensive list of the sectors to which the Fund may have exposure over time and should not be relied on as such.

Financials Sector Risk.    Financial services companies are subject to extensive governmental regulation, which may limit both the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, the scope of their activities, the prices they can charge and the amount of capital they must maintain. Profitability is largely dependent on the availability and cost of capital funds and can fluctuate significantly when interest rates change or due to increased competition. In addition, deterioration of the credit markets generally may cause an adverse impact in a broad range of markets, including U.S. and international credit and interbank money markets generally, thereby affecting a wide range of financial institutions and markets.

15

Capital Link
Global Fintech Leaders ETF

Notes to Financial Statements

May 31, 2022 (Unaudited) (Concluded)

7. PRINCIPAL RISKS OF INVESTING IN THE FUND (continued)

Information Technology Sector Risk:    The Fund is subject to the risk that market or economic factors impacting technology companies and companies that rely heavily on technology advances could have a major effect on the value of the Fund’s investments. The value of stocks of technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, the loss of patent, copyright and trademark protections, government regulation and competition, both domestically and internationally, including competition from foreign competitors with lower production costs. Information technology companies may also be smaller and less experienced companies, with limited product lines, markets or financial resources and fewer experienced management or marketing personnel. Information technology company stocks, especially those which are Internet related, have experienced extreme price and volume fluctuations that are often unrelated to their operating performance

8. RECENT MARKET EVENTS

The spread of COVID-19 around the world has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to the COVID-19 pandemic, as well as its impact on the U.S. and international economies. The operational and financial performance of the issuers of securities in which the Fund invests depends on future developments, including the duration and spread of the outbreak, and such developments may in turn impact the value of the Fund’s investments. The ultimate impact of the pandemic on the financial performance of the Fund’s investments is not reasonably able to be approximated at this time.

On February 24, 2022, Russia engaged in military actions in the sovereign territory of Ukraine. The current political and financial uncertainty surrounding Russia and Ukraine may increase market volatility and the economic risk of investing in securities in these countries and may also cause uncertainty for the global economy and broader financial markets. The ultimate fallout and long-term impact from these events are not known.

9. OTHER

At May 31, 2022, the records of the Trust reflected that 100% of the Fund’s total shares outstanding was held by three Authorized Participants in the form of Creation Units. However, the individual shares comprising such Creation Units are listed and traded on the Exchange and have been purchased and sold by persons other than Authorized Participants.

10. SUBSEQUENT EVENTS

The Fund has evaluated the need for additional disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued. Based on this evaluation, no additional disclosures and/or adjustments were required to the financial statements as of May 31, 2022.

16

Capital Link
Global Fintech Leaders ETF

Disclosure of Fund Expenses

(Unaudited)

All ETFs have operating expenses. As a shareholder of the Fund you incur an advisory fee. In addition to the advisory fee, a shareholder may pay brokerage expenses, taxes, interest, litigation expenses, dividend expense on securities sold short, and other extraordinary expenses (including acquired fund fees and expenses), if any. It is important for you to understand the impact of these ongoing costs on your investment returns. Shareholders may incur brokerage commissions on their purchases and sales of Fund shares, which are not reflected in these examples.

The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period (December 1, 2021 to May 31, 2022).

The table below illustrates your Fund’s costs in two ways:

Actual Fund Return. This section helps you to estimate the actual expenses after fee waivers that your Fund incurred over the period. The “Expenses Paid During Period” column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the “Ending Account Value” number is derived from deducting that expense cost from the Fund’s gross investment return.

You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under “Expenses Paid During Period.”

Hypothetical 5% Return. This section helps you compare your Fund’s costs with those of other funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Commission requires all funds to make this 5% calculation. You can assess your Fund’s comparative cost by comparing the hypothetical result for your Fund in the “Expenses Paid During Period” column with those that appear in the same charts in the shareholder reports for other funds.

NOTE: Because the return is set at 5% for comparison purposes — NOT your Fund’s actual return — the account values shown may not apply to your specific investment.

 

 

Beginning
Account
Value
12/1/2021

 

Ending
Account
Value
5/31/2022

 

Annualized
Expense
Ratios

 

Expenses
Paid
During
Period
(1)

Capital Link Global Fintech Leaders ETF

               

Actual Fund Return

 

$    1,000.00

 

$       841.50

 

0.75%

 

$    3.44

Hypothetical 5% Return

 

$    1,000.00

 

$    1,021.19

 

0.75%

 

$    3.78

(1)          Expenses are equal to the Fund’s annualized expense ratio (including broker expense) multiplied by the average account value over the period, multiplied 182/365 (to reflect the one-half year period shown).

17

Capital Link

Global Fintech Leaders ETF

Review of Liquidity Risk Management Program

(Unaudited)

Pursuant to Rule 22e-4 under the Investment Company Act of 1940, the Trust, on behalf of the series of the Trust covered by this shareholder report (the “Fund”), has adopted a liquidity risk management program to govern the Trust’s approach to managing liquidity risk. Rule 22e-4 seeks to promote effective liquidity risk management, thereby reducing the risk that the Fund will be unable to meet its redemption obligations and mitigating dilution of the interests of its shareholders. The Trust’s liquidity risk management program (the “Program”), which adopts the liquidity risk management policies and procedures of Exchange Traded Concepts, LLC, the Trust’s investment adviser (the “Adviser”), is tailored to reflect the Fund’s particular risks, but not to eliminate all adverse impacts of liquidity risk, which would be incompatible with the nature of the Fund.

The Adviser, which is the administrator of the Program, has formed a Liquidity Risk Working Group (“LRWG”) consisting of certain individuals from the Adviser’s portfolio management, capital markets and compliance teams. The LRWG is responsible for conducting an initial assessment of the liquidity risk of the Fund and to manage the liquidity risk of the Fund on an ongoing basis. Meetings of the LRWG are held no less than monthly.

At the February 2022 meeting of the Board of Trustees of the Trust, the Trustees received a report pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the period ended December 31, 2021. The report concluded that the Program is adequately designed to assess and manage the Fund’s liquidity risk and has been effectively implemented. The report reflected that no material changes have been made to the Program since its implementation.

There can be no assurance that the Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

18

Capital Link

Global Fintech Leaders ETF

Board Consideration of Continuance of Advisory Agreement

(Unaudited)

At a meeting held on December 9, 2021 (the “Meeting”), the Board of Trustees (the “Board”) of Exchange Trade Concepts Trust (the “Trust”) considered and approved an investment advisory agreement between the Trust, on behalf of the Capital Link Global Fintech Leaders ETF (the “Fund”), and Exchange Traded Concepts, LLC (“ETC” or the “Adviser”) pursuant to which ETC would provide advisory services to the Fund (the “Agreement”).

Pursuant to Section 15 of the Investment Company Act of 1940 (the “1940 Act”), the Agreement must be approved by a vote of (i) the Trustees or the shareholders of the Fund and (ii) a majority of the Trustees who are not parties to the Agreement or “interested persons” of any party thereto, as defined in the 1940 Act (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with its consideration of such approvals, the Board must request and evaluate, and ETC is required to furnish, such information as may be reasonably necessary to evaluate the terms of the Agreement. In addition, rules under the 1940 Act require an investment company to disclose in its shareholder reports the material factors and the conclusions with respect thereto that formed the basis for the Board’s approval of an investment advisory agreement.

Although the 1940 Act requires that the Agreement be approved by the in-person vote of a majority of the Independent Trustees, the Meeting was held virtually through the internet in view of the health risks associated with holding an in-person meeting during the COVID-19 pandemic and possible restrictions on gatherings. The Meeting was held in reliance on an order issued by the Securities and Exchange Commission that provides temporary relief from the in-person voting requirements of the 1940 Act with respect to the approval of a fund’s advisory agreement in response to the challenges arising in connection with the COVID-19 pandemic.

Consistent with these responsibilities, prior to the Meeting, the Board reviewed written materials from ETC and, at the Meeting, representatives from ETC presented additional oral and written information to help the Board evaluate the Agreement. Among other things, representatives from ETC provided an overview of its advisory business, including investment personnel and investment processes. Prior to the Meeting, the Trustees met to review and discuss certain information provided. During the Meeting, the Board discussed the materials it received, including a memorandum from legal counsel to the Independent Trustees on the responsibilities of Trustees in considering the approval of investment advisory agreements under the 1940 Act, considered ETC’s oral presentations, and deliberated on the approval of the Agreement in light of this information. Throughout the process, the Trustees were afforded the opportunity to ask questions of and request additional materials from ETC. The Independent Trustees were assisted in their review by independent legal counsel and met with counsel separately and without management present.

In considering whether to approve the continuance of the Agreement, the Board took into account the presentation made and the extensive discussion during the Meeting, including the discussion the Independent Trustees had during their executive session with independent legal counsel. In particular, the Trustees took into consideration (i) the nature, extent and quality of the services provided by ETC to the Fund; (ii) the Fund’s performance; (iii) the Adviser’s costs of and profits realized from providing advisory services to the Fund, including any fall-out benefits enjoyed by ETC or its affiliates; (iv) comparative fee and expense data for the Fund; (v) the extent to which the advisory fee for the Fund reflects economies of scale shared with Fund shareholders; and (vi) other factors the Board deemed to be relevant.

Nature, Extent, and Quality of Services

With respect to the nature, extent, and quality of the services provided to the Fund, the Board considered ETC’s specific responsibilities in all aspects of day-to-day management of the Fund. The Board noted that such responsibilities include providing investment advisory services to the Fund, including, among other things, implementing changes to the Fund’s portfolio in connection with any rebalancing or reconstitution of the Fund’s underlying index, monitoring compliance with various Fund policies and procedures and applicable securities regulations, trading portfolio securities and other investment instruments on behalf of the Fund, selecting broker-dealers to execute purchase and sale transactions, determining the daily baskets of deposit securities and cash components, executing portfolio securities trades for purchases and redemptions of Fund shares, quarterly reporting to the Board, and implementing Board directives as they relate to the Fund. The Board considered the

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Capital Link

Global Fintech Leaders ETF

Board Consideration of Continuance of Advisory Agreement

(Unaudited) (Continued)