Exchange
Traded Concepts Trust
North Shore Dual Share Class ETF
Summary Prospectus | May 29, 2020
Principal Listing Exchange for the Fund:
NYSE Arca, Inc. | Ticker Symbol: DUAL
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 https://dualetf.com. You can also get this information at no cost by calling
1-855-545-3524, by sending an e-mail request to info@dualetf.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 29, 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 North Shore Dual Share Class ETF (the
“Fund”) seeks to provide investment results that, before fees and expenses, correspond generally to the total return
performance of the North Shore Dual Share Class 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.
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Annual Fund Operating Expenses
(expenses that you pay each year as a percentage
of the value of your investment)
|
|
Management Fee
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0.85%
|
|
Distribution and Service (12b-1) Fees
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0.00%
|
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Other Expenses1
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0.00%
|
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Total Annual Fund Operating Expenses
|
0.85%
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1 Other Expenses are based on estimated amounts for
the current fiscal year.
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 normally invests at least 80%
of its total assets in securities of the Index. The Index is designed to track the performance of “dual class stock”
companies – companies that issue at least two share classes of common stock, generally one to the investing public, and the
other to the company’s founders and executives (“Dual Share Class Companies”). A share class or share classes
that are offered to the general public typically have limited or no voting rights, generally giving the company’s founders
and executives more voting power and, therefore, more control over a company, which is viewed by advocates for Dual Share Class
Companies as advantageous to growth, development and long-term success of a company. The Index includes the common stock offered
to the general public by Dual Share Class Companies.
Eligible constituents for the Index are
Dual Share Class Companies selected from the top 3,000 largest companies by total market capitalization that are primarily listed
on a U.S. stock exchange (currently, New York Stock Exchange, The Nasdaq Stock Market LLC, or American Stock Exchange), with a
minimum market capitalization of at least $100 million (the “Index Universe”). The Index Universe is then filtered
by a company’s age, relative to the date of its initial public offering (“IPO”). Companies with IPO offerings
six (6) months to 20 years old are selected for the Index. Index constituents are then screened for whether they offer more than
one share class of common stock to the public. In this circumstance, the Index methodology calls for either (i) the retention of
the existing share class of stock held in the Index if it continues to satisfy all other eligibility criteria or (ii) investment
in the share class with the highest trading volume over a 30 day calendar day period. The Index primarily consists of securities
of companies incorporated in the United States. The Index is weighted according to a modified market capitalization weighting methodology.
As of April 30, 2020, the Index was comprised of 177 component securities.
The Index is rebalanced and reconstituted
on an annual basis at the close of the last trading day in June (the “Rebalance Date”). Security selection for the
Rebalance Date begins on the close of the trading day on the nearest Friday falling at least one month before the Rebalance Date.
Deletions from the Index may be made at any time due to changes in business, mergers, acquisitions, bankruptcies, suspensions,
de-listings and spin-offs. The Index is unmanaged and cannot be invested in directly.
The Fund employs a “passive management”
investment strategy designed to track the performance of the Index. Exchange Traded Concepts, LLC (the “Adviser”) 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 Adviser 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 not concentrated in any 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, a significant
portion of the Index consisted of companies in the communication services and information technology sectors.
The
index provider is North Shore Indices, Inc. (the “Index Provider”), which 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 is responsible for
the ongoing maintenance of the Index. The Index is calculated by Indxx, LLC, 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.
Dual Share Class Companies Risk:
Dual Share Class Companies create unique risks. Dual Share Class Companies allow for a concentration of voting power in the hands
of company insiders through a disproportionate allocation of voting rights among stockholders. Holders of the share class that
is available to the investing public, such as the Fund, typically have limited or no voting rights and are not able to enjoy the
voting rights they would have if they invested in the stock of companies with traditional ownership structures. Such stockholders
may be negatively affected in a variety of ways, including a company’s owners may use such power for personal benefit, while
passing on financial risk to common stockholders. The governance structure of Dual Share Class Companies allows for the entrenchment
of management in the company, which may prevent common stockholders from being able to address issues relating to mismanagement
of the company, such as share dilution, increased company debt, and financial underperformance relevant to the market. Investing
only in a portfolio of Dual Share Class Companies may impact the Fund’s relative investment performance depending on whether
such investments are in or out of favor in the market. A portfolio of Dual Share Class Companies may underperform a portfolio that
includes companies with traditional ownership structures.
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.
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.
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.
Equity Risk: The value of the equity
securities 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.
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 not concentrated in any industry.
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 net
asset value (“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.
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.
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.
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.
Communication Services Sector
Risk. Communication services companies are particularly vulnerable to the potential obsolescence of products and services due
to technological advancement and the innovation of competitors. Companies in the communication services sector may also be affected
by other competitive pressures, such as pricing competition, as well as research and development costs, substantial capital requirements
and government regulation. Additionally, fluctuating domestic and international demand, shifting demographics and often unpredictable
changes in consumer tastes can drastically affect a communication services company's profitability. While all companies may be
susceptible to network security breaches, certain companies in the communication services sector may be particular targets of hacking
and potential theft of proprietary or consumer information or disruptions in service, which could have a material adverse effect
on their businesses.
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 Fund’s shares 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 May 2020.
Travis Trampe, Portfolio Manager of the
Adviser, has served as a portfolio manager of the Fund since its inception in May 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 shares of the Fund 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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