Exchange
Traded Concepts Trust
ROBO Global® Robotics
and Automation Index ETF
Summary Prospectus | May 7, 2020
Principal Listing Exchange for the Fund:
NYSE Arca, Inc. | Ticker Symbol: THNQ
Before you invest, you may want to review
the Fund’s prospectus, which contains more information about the Fund and its risks. You can find the Fund’s prospectus
and other information about the Fund online at www.roboglobaletfs.com. You can also get this information at no cost by calling
1-855-456-ROBO, by sending an e-mail request to roboglobaletfs@seic.com or by asking any financial intermediary that offers shares
of the Fund. The Fund’s prospectus and statement of additional information, each dated May 7, 2020, as each may be amended
or supplemented from time to time, are incorporated by reference into this summary prospectus and may be obtained, free of charge,
at the website, phone number or email address noted above.
Beginning on January 1, 2021, as permitted
by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will
no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary, such as
a broker-dealer or bank. 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. Please contact your financial
intermediary to elect to receive shareholder reports and other Fund communications electronically.
You may elect to receive all future reports
in paper free of charge. Please contact your financial intermediary to inform them that you wish to continue receiving paper copies
of your shareholder reports and for details about whether your election to receive reports in paper will apply to all funds held
with your financial intermediary.
Investment Objective
The ROBO Global® Artificial
Intelligence ETF (the “Fund”) seeks to provide investment results that, before fees and expenses, correspond generally
to the price and yield performance of the ROBO Global® Artificial Intelligence Index (the “Index”).
Fees and Expenses
This table describes the fees and expenses
that you may pay if you buy and hold shares of the Fund. This table and the Example below do not include the brokerage commissions
that investors may pay on their purchases and sales of shares of the Fund.
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage
of the value of your investment)
|
Management Fee
|
0.75%
|
Distribution and Service (12b-1) Fees
|
0.00%
|
Other Expenses1
|
0.00%
|
Total Annual Fund Operating Expenses
|
0.75%
|
Fee Waiver2
|
-0.07%
|
Total Annual Fund Operating Expenses After Fee Waiver
|
0.68%
|
1 Other Expenses are based on
estimated amounts for the current fiscal year.
2
Exchange Traded Concepts, LLC (the “Adviser”) has contractually agreed to waive a portion
of its fee in an amount equal to 0.07% of the Fund’s average daily net assets through August 31, 2021. This arrangement may
be terminated only by the Board of Trustees of Exchange Traded Concepts Trust (the “Trust”).
Example
This Example is intended to help you compare
the cost of investing in the Fund with the cost of investing in other funds. The Example assumes that you invest $10,000 in the
Fund for the time periods indicated and then sell all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your cost would be:
Portfolio Turnover
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when shares of the Fund are held in a taxable account. These costs,
which are not reflected in annual fund operating expenses or in the Example, affect the Fund’s performance. Because the Fund
is new, portfolio turnover information is not yet available.
Principal Investment Strategies
The Fund will normally invest at least
80% of its total assets in securities of the Index or in depositary receipts representing securities of the Index. The Index, which
was developed and is provided by ROBO Global (the “Index Provider”), is designed to measure the performance of publicly-traded
companies that have a significant portion of their revenue derived from the field of artificial intelligence as described below
(“Artificial Intelligence Companies”). Under normal circumstances, the Fund will invest at least 80% of its net assets,
plus the amount of any borrowings for investment purposes, in securities of Artificial Intelligence Companies. This investment
policy may be changed without shareholder approval, upon 60 days notice to shareholders.
Companies eligible for inclusion in the
Index are those included in the ROBO Global Artificial Intelligence Database (the “AI Database”), a proprietary database,
created and maintained by the Index Provider, of companies that have a significant portion of their revenue derived from one or
more of the sub-sectors within the field of artificial intelligence represented in the ROBO Global Artificial Intelligence Industry
Classification (“ROBO AI Industry Classification”), and the potential to grow within this space through innovation
and/or market adoption of their products and services.
To construct the AI Database, the Index
Provider applies the ROBO AI Industry Classification. Like peer group artificial intelligence indexes, the Index measures the performance
of companies across sectors such as information technology, communications, consumer discretionary, healthcare and industrials
that are involved in artificial intelligence activities. The Index Provider then applies its proprietary methodology to further
classify companies included in the AI Database by “Infrastructure” or “Applications & Services” and
further divides such classifications into sub-sectors, which are unique to the ROBO AI Industry Classification. Infrastructure
companies include companies that build artificial intelligence engine and platform solutions that enable the use of artificial
intelligence technology. Within the Infrastructure classification are the following subsectors: (1) big data/analytics; (2) cloud
providers; (3) cognitive computing; (4) network and security; and (5) semiconductors. Applications & Services companies include
companies that apply artificial intelligence technology to their business. Within the Applications & Services classification
are the following subsectors: (1) healthcare; (2) factory automation; (3) eCommerce; (4) consumer; (5) consulting services; and
(6) business process.
Each eligible company is individually analyzed
and then given a “THNQ Score” ranging from 1 to 100 that is determined based on the levels of revenue the company receives
from Artificial Intelligence activities, levels of investment the firm makes in Artificial Intelligence, and the company’s
technology and market leadership in the Artificial Intelligence universe. Companies whose THNQ Score is greater than or equal to
50 and that meet the market capitalization and liquidity requirements described below are eligible for inclusion in the Index.
The Index is comprised of a minimum of 50 constituents and a maximum of 100 constituents. Companies in the Index are reweighted
at each rebalance according to their THNQ Score. Scores are reviewed on an ongoing basis by reevaluating the factors described
above.
Eligible Index components are exchange-listed
equity securities of Artificial Intelligence Companies that have a market capitalization exceeding $200 million at the time of
inclusion on the Index and a minimum trailing 3-month composite average daily value of $1 million at the time of inclusion.
The Index consists of securities of both
U.S. and foreign issuers, including securities of issuers located in emerging market countries. The Index Provider expects, under
normal circumstances, at least 25% of the Index components to represent securities of non-U.S. issuers, including China A-shares,
which are shares of mainland China-based companies that trade on the Chinese stock exchanges. The Index is rebalanced and additions
are made quarterly. Deletions from the Index may be made at any time due to changes in business, mergers, acquisitions, bankruptcies,
suspensions, de-listings and spin-offs, or for other reasons as determined at the sole discretion of the Index Provider. The Index
is unmanaged and cannot be invested in directly.
The Fund employs a “passive management”
investment strategy in seeking to achieve its investment objective. The Fund generally will use a replication methodology, meaning
it will invest in all of the securities comprising the Index in proportion to the weightings in the Index. However, the Fund may
utilize a sampling methodology under various circumstances, including when it may not be possible or practicable to purchase all
of the securities in the Index. The Adviser expects that over time, if the Fund has sufficient assets, the correlation between
the Fund’s performance, before fees and expenses, and that of the Index will be 95% or better. A figure of 100% would indicate
perfect correlation.
The Fund will concentrate its investments
(i.e., invest more than 25% of its total assets) in a particular industry or group of industries to approximately the same
extent that the Index concentrates in an industry or group of industries. As of April 30, 2020, the Index was concentrated in the
software industry. In addition, in replicating the Index, the Fund may from time to time invest a significant portion of its assets
in the securities of companies in one or more sectors. As of April 30, 2020, the Index had a significant amount of investment exposure
in the information technology sector.
The
Fund may invest up to 20% of its assets in investments that are not included in the Index, but which the Adviser believes will
help the Fund track the Index.
The
Fund is non-diversified under the Investment Company Act of 1940 (the “1940 Act”) and
may invest a greater percentage of its assets in a particular issuer than a diversified fund.
The Index Provider is not affiliated with
the Fund or the Adviser. The Index Provider developed the methodology for determining the securities to be included in the Index
and for the ongoing maintenance of the Index. The Index is calculated by Solactive AG, which is not affiliated with the Fund or
the Adviser.
Principal Risks
As with all funds, a shareholder is subject
to the risk that his or her investment could lose money. An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the FDIC or any government agency. The principal risks affecting shareholders’ investments in the Fund are
set forth below.
Artificial Intelligence Companies Risk:
The Fund invests primarily in the equity securities of Artificial Intelligence Companies and, as such, is particularly sensitive
to risks to those types of companies. These risks include, but are not limited to, small or limited markets for such securities,
changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. Artificial
Intelligence Companies may have limited product lines, markets, financial resources or personnel. Securities of Artificial Intelligence
Companies, especially smaller, start-up companies, tend to be more volatile than securities of companies that do not rely heavily
on technology. Rapid change to technologies that affect a company’s products could have a material adverse effect on such
company’s operating results. Artificial Intelligence Companies also rely heavily on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their proprietary rights in their products and technologies. There can
be no assurance that the steps taken by these companies to protect their proprietary rights will be adequate to prevent the misappropriation
of their technology or that competitors will not independently develop technologies that are substantially equivalent or superior
to such companies’ technology. Artificial Intelligence Companies typically engage in significant amounts of spending on research
and development, and there is no guarantee that the products or services produced by these companies will be successful.
China A-Shares Investment Risk:
The liquidity of the A-shares market and trading prices of A-shares could be more severely affected than the liquidity and trading
prices of other markets because the Chinese government restricts the flow of capital into and out of the A-shares market. The Fund
may experience losses due to illiquidity of the Chinese securities markets or delay or disruption in execution or settlement of
trades. The Fund’s investments in A-shares may become subject to frequent and widespread trading halts.
In addition, Stock Connect, which is a
securities trading and clearing link between the mainland China stock exchanges and the Hong Kong stock exchange, only operates
on days when the Chinese and Hong Kong stock markets are each open for trading and when banks in each market are open on the corresponding
settlement days. The Fund may purchase and sell A-shares through Stock Connect only on days when Stock Connect and U.S. markets
are open for trading. Therefore, if it is a normal trading day for the Chinese market but Hong Kong and/or U.S. markets are closed,
the Fund will not be able to trade any A-shares. The Fund may be subject to the risk of price fluctuations in A-shares on such
days. The Fund is also subject to the risk that it will not be able to buy or sell A-shares in a timely manner on days when the
U.S. markets are open but Stock Connect is not.
Common Stock Risk: Common stock
holds the lowest priority in the capital structure of a company, and therefore takes the largest share of the company’s risk
and its accompanying volatility. The value of the common stock held by the Fund may fall due to general market and economic conditions,
perceptions regarding the industries in which the issuers of securities held by the Fund participate, or facts relating to specific
companies in which the Fund invests.
Currency Exchange Rate Risk: To
the extent the Fund invests in securities denominated in non-U.S. currencies, changes in currency exchange rates and the relative
value of non-U.S. currencies will affect the value of the Fund’s investment and the value of your shares. Because the Fund’s
net asset value (“NAV”) is determined in U.S. dollars, the Fund’s NAV could decline if the currency of the non-U.S.
market in which the Fund invests depreciates against the U.S. dollar, even if the value of the Fund’s holdings, measured
in the foreign currency, increases. Currency exchange rates can be very volatile and can change quickly and unpredictably. As a
result, the value of an investment in the Fund may change quickly and without warning and you may lose money.
Depositary Receipt Risk: Depositary
receipts are subject to the risks associated with investing directly in foreign securities. In addition, investments in depositary
receipts may be less liquid than the underlying shares in their primary trading market.
Early Close/Trading Halt Risk: An
exchange or market may close or issue trading halts on specific securities, or the ability to buy or sell certain securities or
financial instruments may be restricted, which may result in the Fund being unable to buy or sell certain securities or financial
instruments. In such circumstances, the Fund may be unable to rebalance its portfolio, may be unable to accurately price its investments
and/or may incur substantial trading losses.
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.
Foreign Securities Risk: Investments
in non-U.S. securities involve certain risks that may not be present with investments in U.S. securities. For example, investments
in non-U.S. securities may be subject to risk of loss due to foreign currency fluctuations or to expropriation, nationalization
or adverse political or economic developments. Foreign securities may have relatively low market liquidity and decreased publicly
available information about issuers. Investments in non-U.S. securities also may be subject to withholding or other taxes and may
be subject to additional trading, settlement, custodial, and operational risks. Non-U.S. issuers may also be subject to inconsistent
and potentially less stringent accounting, auditing, financial reporting and investor protection standards than U.S. issuers. These
and other factors can make investments in the Fund more volatile and potentially less liquid than other types of investments. In
addition, where all or a portion of the Fund’s portfolio holdings trade in markets that are closed when the Fund’s
market is open, there may be valuation differences that could lead to differences between the Fund’s market price and the
value of the Fund’s portfolio holdings.
Geographic Investment Risk: To the
extent the Fund invests a significant portion of its assets in the securities of companies of a single country or region, it is
more likely to be impacted by events or conditions affecting that country or region.
Illiquid Investments Risk: This
risk exists when particular Fund investments are difficult to purchase or sell, which can reduce the Fund’s returns because
the Fund may be unable to transact at advantageous times or prices.
Index Tracking Risk: The Fund’s
return may not match or achieve a high degree of correlation with the return of the Index. To the extent the Fund utilizes a sampling
approach, it may experience tracking error to a greater extent than if the Fund sought to replicate the Index.
Industry Concentration Risk:
Because the Fund’s assets will be concentrated in an industry or group of industries to the extent the Index concentrates
in a particular industry or group of industries, the Fund is subject to loss due to adverse occurrences that may affect that industry
or group of industries. As of April 30, 2020, the Index was concentrated in the software industry.
Software Industry Concentration
Risk: Technological developments, fixed-rate pricing and the ability to attract and retain skilled employees can significantly
affect companies operating in the software industry. Changing domestic and international demand, research and development costs
and product obsolescence can affect the profitability of software companies. Software company stocks may experience substantial
fluctuations in market price.
Issuer-Specific
Risk: Fund performance depends on the performance of individual securities to which the Fund has exposure. Issuer-specific
events, including changes in the financial condition of an issuer, can have a negative impact on the value of the Fund.
Large-Capitalization
Risk: Returns on investments in securities of large companies could trail the returns on investments in securities of smaller
and mid-sized companies.
Limited Authorized Participants, Market
Makers and Liquidity Providers Risk: Because the Fund is an exchange-traded fund (“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 occur, shares of the Fund 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.
Management Risk: Because the Fund
may not fully replicate the Index and may hold fewer than the total number of securities in the Index and may hold securities not
included in the Index, the Fund is subject to management risk. This is the risk that the Adviser’s security selection process,
which is subject to a number of constraints, may not produce the intended results.
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.
Micro-Capitalization Risk: The micro-capitalization
companies in which the Fund may invest may be more vulnerable to adverse business or economic events than larger, more established
companies, and may underperform other segments of the market or the equity market as a whole. Securities of micro-capitalization
companies generally trade in lower volumes, are often more vulnerable to market volatility, and are subject to greater and more
unpredictable price changes than larger capitalization stocks or the stock market as a whole.
New/Smaller Fund Risk: A new or
smaller fund is subject to the risk that its performance may not represent how the fund is expected to or may perform in the long
term. In addition, new funds have limited operating histories for investors to evaluate and new and smaller funds may not attract
sufficient assets to achieve investment and trading efficiencies. There can be no assurance that the Fund will achieve an economically
viable size, in which case it could ultimately liquidate. The Fund may be liquidated by the Board of Trustees without a shareholder
vote. In a liquidation, shareholders of the Fund will receive an amount equal to the Fund’s NAV, after deducting the costs
of liquidation, including the transaction costs of disposing of the Fund’s portfolio investments. Receipt of a liquidation
distribution may have negative tax consequences for shareholders. Additionally, during the Fund’s liquidation all or a portion
of the Fund’s portfolio may be invested in a manner not consistent with its investment objective and investment policies.
Non-Diversification Risk: The Fund
is non-diversified under the 1940 Act, meaning that, as compared to a diversified fund, it can invest a greater percentage of its
assets in securities issued by or representing a small number of issuers. As a result, the performance of these issuers
can have a substantial impact on the Fund’s performance.
Operational Risk: The Fund and its
service providers may experience disruptions that arise from human error, processing and communications errors, counterparty or
third-party errors, technology or systems failures, any of which may have an adverse impact on the Fund.
Passive Investment Risk: The Fund
is not actively managed and, therefore, the Fund would not sell a security due to current or projected underperformance of the
security, industry or sector, unless that security is removed from the Index or selling the security is otherwise required upon
a rebalancing of the Index.
Preferred Securities Risk: Preferred
securities are subordinated to bonds and other debt instruments in a company’s capital structure and therefore will be subject
to greater credit risk than those debt instruments. In addition, preferred securities are subject to other risks, such as having
no or limited voting rights, being subject to special redemption rights, having distributions deferred or skipped, having limited
liquidity, changing tax treatments and possibly being in heavily regulated industries.
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
the 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.
Information Technology Sector
Risk: The Fund is subject to the risk that market or economic factors impacting information technology companies and companies
that rely heavily on technology advances could have a major effect on the value of the Fund’s investments in the information
technology sector. The value of stocks of information technology companies and companies that rely heavily on technology is particularly
vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation and competition, both
domestically and internationally, including competition from foreign competitors with lower production costs.
Small- and Mid-Capitalization Risk: The
small- and mid-capitalization companies in which the Fund invests may be more vulnerable to adverse business or economic events
than larger, more established companies, and may underperform other segments of the market or the equity market as a whole. Securities
of small- and mid-capitalization companies generally trade in lower volumes, are often more vulnerable to market volatility, and
are subject to greater and more unpredictable price changes than larger capitalization stocks or the stock market as a whole.
Trading Risk: Shares of the Fund
may trade on the NYSE Arca, Inc. (the “Exchange”) above or below their NAV. The NAV of shares of the Fund will fluctuate
with changes in the market value of the Fund’s holdings. In addition, although the Fund’s shares are currently listed
on the Exchange, there can be no assurance that an active trading market for shares will develop or be maintained. Trading
in Fund shares may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in shares
of the Fund inadvisable.
Performance Information
The
Fund is new and therefore has no performance history. Once the Fund has completed a full calendar year of operations, a bar chart
and table will be included that will provide some indication of the risks of investing in the Fund by comparing the Fund’s
return to a broad measure of market performance.
Investment Adviser
Exchange Traded Concepts, LLC serves as
the investment adviser to the Fund.
Portfolio Managers
Andrew Serowik, Portfolio Manager of the
Adviser, has served as a portfolio manager of the Fund since its inception in 2020.
Travis Trampe, Portfolio Manager of the
Adviser, has served as a portfolio manager of the Fund since its inception in 2020.
Purchase and Sale of Fund Shares
The Fund issues (or redeems) shares to
certain institutional investors (typically market makers or other broker-dealers) only in large blocks of at least 25,000 shares
known as “Creation Units.” Creation Unit transactions are typically conducted in exchange for the deposit or delivery
of in-kind securities and/or cash constituting a substantial replication, or a representation, of the securities included in the
Index. Individual shares of the Fund may only be purchased and sold on a national securities exchange through a broker-dealer.
You can purchase and sell individual shares of the Fund throughout the trading day like any publicly traded security. The Fund’s
shares are listed on the Exchange. The price of the Fund’s shares is based on market price and, because exchange-traded fund
shares trade at market prices rather than NAV, shares may trade at prices greater than NAV (premium) or less than NAV (discount).
Investors buying or selling Fund shares in the secondary market will pay brokerage commissions or other charges imposed by brokers
as determined by that broker. Except when aggregated in Creation Units, the Fund’s shares are not redeemable securities.
Tax Information
Distributions made by the Fund may be taxable
as ordinary income, qualified dividend income or long-term capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or individual retirement account. In that case, you may be taxed when you take a distribution from such account,
depending on the type of account, the circumstances of your distribution, and other factors.
Payments to Broker-Dealers and Other
Financial Intermediaries
If you purchase shares of the Fund through
a broker-dealer or other financial intermediary (such as a bank), the Fund or the Adviser may pay the intermediary for the sale
of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s
website for more information.
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