EXCHANGE TRADED CONCEPTS TRUST

Capital Link NextGen Vehicles & Technology ETF

Annual Report

November 30, 2021

 

Capital Link
NextGen Vehicles & Technology ETF

Table of Contents

   

Management Discussion of Fund Performance

 

1

Schedule of Investments

 

3

Statement of Assets and Liabilites

 

5

Statement of Operations

 

6

Statements of Changes in Net Assets

 

7

Financial Highlights

 

8

Notes to Financial Statements

 

9

Report of Independent Registered Public Accounting Firm

 

21

Trustee and Officers of the Trust

 

22

Disclosure of Fund Expenses

 

25

Notice to Shareholders

 

26

Supplemental Information

 

27

The Fund files its complete schedules of investments with the U.S. Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N -PORT (Form N -Q for filings prior to March 31, 2020) within sixty days after the end of the period. The Fund’s Forms N -Q and N -PORT 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

NextGen Vehicles & Technology ETF

Management Discussion of Fund Performance

November 30, 2021 (Unaudited)

Dear Shareholders

On behalf of the entire Capital Link ETF team, we want to express our appreciation for the confidence you have placed in the Capital Link Global Green Energy Transport and Technology Leaders ETF (formerly, Capital Link NextGen Vehicles & Technology ETF) (“EKAR” or the “Fund”). The following information pertains to the fiscal year December 1, 2020 through November 30, 2021, and does not reflect recent changes to the Fund.

During the most recent fiscal year, EKAR tracked the ATFI NextGen Transport Technology Index, which is comprised of a basket of global stocks that have exposure to the theme of electric and self -driving /autonomous vehicles. Over the next decade, auto industry experts expect a dramatic production shift away from light vehicles powered by internal combustion engines to those propelled by electric batteries. Meanwhile, the world’s adoption of autonomous vehicles is being supported by a growing trend toward shared mobility, technological advancements and an evolving regulatory environment. To give this basket a more defined framework, stocks are placed in one of four custom stakeholder categories in terms of how they relate to the theme: Battery, OEMs, Suppliers and Semis & Software. Definitions of these categories.

1) Battery Producers: companies that mine for metals (such as lithium or cobalt) used in the production of batteries, manufacture of materials and specialty chemicals and components used in batteries, and production of battery cells; (2) Original Equipment Manufacturers: (“OEMs”) companies that design, manufacture and/or distribute Next Generation Vehicles; (3) Suppliers: companies that produce or distribute parts and components used in Next Generation Vehicles; and (4) Semis and Software: companies that (i) produce semiconductors used in but not limited to advanced driver -assistance systems (“ADAS”), light detection and ranging (“LiDAR”) and infotainment systems in Next Generation Vehicles and (ii) develop software necessary for sensing, mapping, and providing driving policy within Next Generation Vehicles. “Next Generation Vehicles” include both New Energy Vehicles (battery electric vehicles, plug -in hybrid electric vehicles, and fuel cell electric vehicles) and Autonomously Driven Vehicles.

Strong performance among automobile manufacturers positively impacted EKAR’s performance over the past year. In particular, stocks of electric vehicle (EV) manufacturers experienced especially strong performance. Tesla, EKAR’s largest holding, more than doubled during the fiscal year. Additionally, companies producing components for EVs performed strongly. Producers of materials such as the lithium used in EV batteries performed well as did semiconductor companies whose chips are used in the advanced circuitry of not only EVs but most newer vehicles.

The Fund had positive performance during the fiscal year ended November 30, 2021. The market price for EKAR increased 28.75%, and the net asset value increased 28.90% while the S&P 500 Index, a broad equity market index, gained 27.92% over the same period. The Fund’s Index returned 29.12%.

We appreciate your investment in EKAR.

The Fund began trading on February 13, 2018, and had 275,000 shares outstanding as of November 30, 2021. We appreciate your investment in EKAR.

Sincerely,

J. Garrett Stevens,
Chief Executive Officer
Exchange Traded Concepts, Adviser to the Fund

1

Capital Link

NextGen Vehicles & Technology ETF

Management Discussion of Fund Performance

November 30, 2021 (Unaudited) (Concluded)

Growth of a $10,000 Investment

(at Net Asset Value)

     

AVERAGE TOTAL RETURN
FOR THE YEAR ENDED NOVEMBER 30, 2021

   

One Year

 

Three Year

 

Annualized
Inception to Date*

   

Net Asset
Value

 

Market
Price

 

Net Asset
Value

 

Market
Price

 

Net Asset
Value

 

Market
Price

Capital Link NextGen Vehicles & Technology ETF

 

28.90%

 

28.75%

 

29.26%

 

29.14%

 

16.91%

 

16.98%

ATFI NextGen Transport Technology Index

 

29.12%

 

29.12%

 

29.88%

 

29.88%

 

17.76%

 

17.76%

S&P 500 ® Index

 

27.92%

 

27.92%

 

20.38%

 

20.38%

 

17.44%

 

17.44%

*       The Fund commenced operations on February 12, 2018.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that shares, when redeemed or sold in the market, may be worth more or less than their original cost. Past performance is no guarantee of future performance and should not be considered as a representation of the future results of the Fund. The Fund’s performance assumes the reinvestment of all dividends and all capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. A prospectus, containing this and other information, is available at cli -etfs .com. Investors should read the prospectus carefully before investing. There are risks associated with investing, including possible loss of principal.

Current performance may be lower or higher than the performance data shown above.

There are no assurances that the Fund will meet its stated objectives.

The Fund’s holdings and allocations are subject to change and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

The S&P ® 500 Index is a market -value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the S&P ® 500 Index proportionate to its market value.

2

Capital Link

NextGen Vehicles & Technology ETF

Schedule of Investments

November 30, 2021

Description

 

Shares

 

Fair Value

COMMON STOCK — 99.8%

     

 

 
       

 

 

Belgium — 0.8%

     

 

 

Umicore

 

1,934

 

$

93,628

       

 

 

Canada — 3.6%

     

 

 

First Quantum Minerals

 

8,178

 

 

173,595

Linamar

 

1,649

 

 

94,276

Magna International

 

2,085

 

 

155,627

       

 

423,498

Chile — 1.1%

     

 

 

Sociedad Quimica y Minera de Chile ADR

 

1,971

 

 

122,715

       

 

 

China — 5.3%

     

 

 

Baidu ADR*

 

2,141

 

 

320,808

NIO ADR*

 

2,934

 

 

114,807

NXP Semiconductors

 

834

 

 

186,282

       

 

621,897

France — 5.1%

     

 

 

Airbus*

 

2,142

 

 

238,016

Faurecia

 

1,538

 

 

65,611

Renault*

 

5,498

 

 

176,125

Valeo

 

4,364

 

 

125,455

       

 

605,207

Germany — 10.9%

     

 

 

Continental*

 

2,684

 

 

286,098

Daimler (A)

 

5,422

 

 

506,546

Infineon Technologies

 

4,765

 

 

214,163

Siemens

 

1,799

 

 

286,084

       

 

1,292,891

Description

 

Shares

 

Fair Value

Hong Kong — 6.8%

     

 

 

BAIC Motor, Cl H

 

161,500

 

$

66,706

BYD, Cl H

 

6,500

 

 

255,469

Geely Automobile Holdings

 

33,000

 

 

97,994

Great Wall Motor, Cl H

 

22,500

 

 

94,088

Guangzhou Automobile Group, Cl H

 

106,000

 

 

108,504

MMG*

 

124,000

 

 

45,014

Sinotruk Hong Kong

 

39,000

 

 

57,831

Zijin Mining Group, Cl H

 

62,000

 

 

82,393

       

 

807,999

Japan — 20.8%

     

 

 

Denso

 

4,100

 

 

300,824

Honda Motor

 

14,200

 

 

387,813

Nidec

 

3,200

 

 

366,374

Panasonic

 

16,100

 

 

176,179

Renesas Electronics*

 

6,300

 

 

80,009

Rohm

 

700

 

 

65,533

Sumitomo Chemical

 

13,100

 

 

60,456

Sumitomo Metal Mining

 

2,400

 

 

89,473

TDK

 

3,000

 

 

118,896

Toray Industries

 

16,000

 

 

93,115

Toyota Motor

 

25,500

 

 

449,386

Toyota Tsusho

 

2,500

 

 

109,098

Yaskawa Electric

 

3,700

 

 

165,864

       

 

2,463,020

Russia — 1.0%

     

 

 

Yandex, Cl A*

 

1,614

 

 

116,111

       

 

 

South Korea — 5.9%

     

 

 

Hyundai Mobis

 

812

 

 

150,725

Hyundai Motor

 

1,129

 

 

185,807

Kia

 

2,005

 

 

131,315

Samsung
Electro-Mechanics

 

596

 

 

83,537

Samsung SDI

 

261

 

 

151,164

       

 

702,548

Sweden — 1.5%

     

 

 

Autoliv

 

799

 

 

77,016

Veoneer*

 

2,886

 

 

102,741

       

 

179,757

Switzerland — 4.7%

     

 

 

ABB

 

10,893

 

 

375,381

STMicroelectronics

 

3,685

 

 

178,771

       

 

554,152

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

3

Capital Link

NextGen Vehicles & Technology ETF

Schedule of Investments

November 30, 2021 (Concluded)

Description

 

Shares

 

Fair Value

United States — 32.3%

     

 

 

Communication Services —   4.0%

     

 

 

Alphabet, Cl A*

 

165

 

$

468,262

       

 

 

Consumer Discretionary —   9.3%

     

 

 

Aptiv PLC*

 

1,274

 

 

204,286

Luminar Technologies, Cl A (A) *

 

6,851

 

 

111,671

Tesla*

 

688

 

 

787,595

       

 

 

Information Technology —   17.4%

     

 

 

Advanced Micro
Devices*

 

2,250

 

 

356,333

Ambarella*

 

643

 

 

115,431

Intel

 

7,198

 

 

354,142

Marvell Technology

 

2,700

 

 

192,159

MaxLinear, Cl A*

 

2,146

 

 

144,490

NVIDIA

 

1,667

 

 

544,709

ON Semiconductor*

 

2,184

 

 

134,163

Skyworks Solutions

 

1,476

 

 

223,850

       

 

 

Materials —   1.6%

     

 

 

Albemarle

 

325

 

 

86,609

FMC

 

1,043

 

 

104,498

       

 

3,828,198

Total Common Stock
(Cost $9,102,648)

     

 

11,811,621

       

 

 

MONEY MARKET — 0.1%

     

 

 

JPMorgan U.S. Government Money Market Fund, Cl I 0.01% (B)

 

12,435

 

 

12,435

Total Money Market
(Cost $12,435)

     

 

12,435

       

 

 

Description

 

Shares

 

Fair Value

REPURCHASE AGREEMENT — 0.9% (C)(D)

Citigroup 0.060%, dated 11 / 30 / 2021 to be repurchased on 12 / 01 / 2021, repurchase price $112,263 (collateralized by U.S. Government obligations, ranging in par value $0 – $16,907, 0.000% – 6.625%, 12 / 08 / 2021 – 11 / 15 / 2051; with total market value $114,513)

 

112,263

 

$

112,263

Total Repurchase Agreement
(Cost $112,263)

     

 

112,263

       

 

 

Total Investments — 100.8%
(Cost $9,227,346)

     

$

11,936,319

Percentages are based on net assets of $11,844,411.

*       Non -income producing security.

(A)   Certain securities or partial positions of certain securities are on loan at November 30, 2021 (see Note 6). The total market value of securities on loan at November 30, 2021 was $503,736.

(B)   The rate reported is the 7 -day effective yield as of November 30, 2021.

(C)   Tri -Party Repurchase Agreement.

(D)   This security was purchased with cash collateral held from securities on loan (see Note 6). The total market value of such securities as of November 30, 2021 was $112,263.

The following is a list of the inputs used as of November 30, 2021 in valuing the Fund’s investments carried at value:

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

Investments in Securities

 

 

   

 

   

 

   

 

 

Common Stock

 

$

11,811,621

 

$

 

$

 

$

11,811,621

Repurchase Agreement

 

 

 

 

112,263

 

 

 

 

112,263

Money Market

 

 

12,435

 

 

 

 

 

 

12,435

Total Investments in Securities

 

$

11,824,056

 

$

112,263

 

$

 

$

11,936,319

For the year ended November 30, 2021, there were no transfers in or out of Level 3.

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

4

Capital Link

NextGen Vehicles & Technology ETF

Statement of Assets and Liabilities

November 30, 2021

Assets:

 

 

 

Investments and Repurchase Agreement, at Cost

 

$

9,227,346

Cost of Foreign Currency

 

 

1,668

Investments at Fair Value*

 

$

11,824,056

Repurchase Agreements at Value

 

 

112,263

Foreign Currency at Value

 

 

1,664

Dividends Receivable

 

 

16,366

Reclaims Receivable

 

 

8,890

   

 

 

Total Assets

 

 

11,963,239

   

 

 

Liabilities:

 

 

 

Payable Upon Return on Securities Loaned

 

 

112,263

Advisory Fees Payable

 

 

6,565

Total Liabilities

 

 

118,828

   

 

 

Net Assets

 

$

11,844,411

   

 

 

Net Assets Consist of:

 

 

 

Paid-in Capital

 

$

9,101,949

Total Distributable Earnings

 

 

2,742,462

Net Assets

 

$

11,844,411

   

 

 

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

 

 

275,000

Net Asset Value, Offering and Redemption Price Per Share

 

$

43.07

*       Includes Market Value of Securities on Loan of $503,736.

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

5

Capital Link

NextGen Vehicles & Technology ETF

Statement of Operations

For the year ended November 30, 2021

Investment Income:

 

 

 

 

Dividend Income

 

$

129,905

 

Income from Securities Lending

 

 

6,100

 

Less: Foreign Taxes Withheld

 

 

(16,504

)

Total Investment Income

 

 

119,501

 

   

 

 

 

Expenses:

 

 

 

 

Advisory Fees

 

 

100,515

 

Other Fees

 

 

6

 

Less: Management Fee Waiver

 

 

(31,742

)

   

 

 

 

Net Expenses

 

 

68,779

 

   

 

 

 

Net Investment Income

 

 

50,722

 

   

 

 

 

Net Realized Gain on:

 

 

 

 

Investments (1)

 

 

418,589

 

Foreign Currency Transactions

 

 

374

 

   

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

 

 

 

 

Investments

 

 

1,565,740

 

Foreign Currency Translations

 

 

(455

)

Net Realized and Unrealized Gain on Investments

 

 

1,984,248

 

   

 

 

 

Net Increase in Net Assets Resulting from Operations

 

$

2,034,970

 

(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.

6

Capital Link

NextGen Vehicles & Technology ETF

Statements of Changes in Net Assets

 

Year Ended
November 30,
2021

 

Year Ended
November 30,
2020

Operations:

 

 

 

 

 

 

 

 

Net Investment Income

 

$

50,722

 

 

$

25,081

 

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

 

 

418,963

 

 

 

(409

)

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

 

 

1,565,285

 

 

 

1,197,204

 

   

 

 

 

 

 

 

 

Net Increase in Net Assets Resulting from Operations

 

 

2,034,970

 

 

 

1,221,876

 

   

 

 

 

 

 

 

 

Distributions:

 

 

(30,477

)

 

 

(18,739

)

Capital Share Transactions:

 

 

 

 

 

 

 

 

Issued

 

 

6,541,647

 

 

 

1,358,704

 

Redeemed

 

 

(898,516

)

 

 

 

Increase in Net Assets from Capital Share Transactions

 

 

5,643,131

 

 

 

1,358,704

 

   

 

 

 

 

 

 

 

Total Increase in Net Assets

 

 

7,647,624

 

 

 

2,561,841

 

Net Assets:

 

 

 

 

 

 

 

 

Beginning of Year

 

 

4,196,787

 

 

 

1,634,946

 

End of Year

 

$

11,844,411

 

 

$

4,196,787

 

Share Transactions:

 

 

 

 

 

 

 

 

Issued

 

 

175,000

 

 

 

50,000

 

Redeemed

 

 

(25,000

)

 

 

 

   

 

 

 

 

 

 

 

Net Increase in Shares Outstanding from Share Transactions

 

 

150,000

 

 

 

50,000

 

(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.

7

Capital Link

NextGen Vehicles & Technology ETF

Financial Highlights

 

Selected Per Share Data & Ratios

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)

2021

 

$  33.57

 

$   0.19

 

$      9.48

 

 

$       9.67

 

$      (0.17)

 

$      

 

$      (0.17)

 

$ 43.07

 

$   43.16

 

 28.90%

 

$11,844

 

0.65%^

 

0.95%

 

0.48%

 

22%

2020

 

    21.80

 

     0.26

 

11.76