Trustee and President, Exchange Traded Concepts, LLC
President, Exchange Listed Funds Trust
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE, ALONG WITH INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE SHOULD YOU PREFER TO VOTE BY ONE OF THOSE METHODS.
EXCHANGE TRADED CONCEPTS TRUST
EXCHANGE LISTED FUNDS TRUST
10900 Hefner Pointe Drive, Suite C, Edmond,400, Oklahoma 73013
73120
Notice of Joint Special Meeting of Shareholders
To Be Held on May 12, 2015
December 22, 2021
A joint special meeting of shareholders (the “Meeting”) of the shareholders of each series (each, a “Fund” and collectively, the “Funds”) of Exchange Traded Concepts Trust and Exchange Traded ConceptsListed Funds Trust II (each, a “Trust” and collectively,together, the “Trusts”), will be held at the offices of Exchange Traded Concepts, LLC, 353 Central Park West,295 Madison Avenue, New York, New York 10025,10017, on May 12, 2015December 22, 2021 at 10:11:00 a.m., Eastern Time. You are being
At the Meeting, shareholders of each Trust will be asked to vote separately on eachthe proposal solely with respectto elect Trustees to the Fund(s) that you own.
Meeting.
Shareholders of record of the Funds at the close of business on March 27, 2015November 15, 2021 are entitled to notice of, and to vote at, the Meeting or any adjournment(s) thereof. ShareholdersThe proposal will be voted upon separately by each Trust; however, the vote for each Trustee will apply on a Trust-wide basis, and all applicable series of each Fund will vote separately from shareholders of each other Fund with respect to Proposals 1, 2 and 3. Shareholders of each Fund in Exchange Traded Concepts Trust will vote together as a group with respect to Proposal 4. Only shareholders of the Horizons S&P 500® Covered Call ETF will vote on Proposal 4 with respect to Exchange Traded Concepts Trust II. Each proposal will be implemented if approved by shareholders and is not contingent on the approvalproposal.
After careful consideration, the Board of any other proposal.
Trustees of each Trust unanimously recommends that shareholders vote “FOR” the proposal to elect Trustees to the Board of Trustees of each Trust.
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Dated: April 3, 2015
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF VOTES YOU HOLD. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IT IS IMPORTANT THAT YOUR PROXY CARD BE RETURNED PROMPTLY.FOR YOUR CONVENIENCE, YOU MAY ALSO VOTE BY TELEPHONE OR INTERNET BY FOLLOWING THE ENCLOSED INSTRUCTIONS. IF YOU VOTE BY TELEPHONE OR VIA THE INTERNET, PLEASE DO NOT RETURN YOUR PROXY CARD UNLESS YOU ELECT TO CHANGE YOUR VOTE.IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALSFOR THE MEETING TO BE HELD ON MAY 12, 2015ThisFund2021trustees.pdf.
A shareholder report is not yet available for EMQQ The Emerging Markets Internet & Ecommerce ETF. Shareholders of the Fund can request the Fund’s annual or semi-annual report, when available, by calling the Fund at 1-855-888-9892 or visiting www.emqqetf.com.5
Shareholders of the Yorkville High Income MLP ETF and the Yorkville High Income Infrastructure MLP ETF can request the Funds’ annual report, dated November 30, 2014, by calling the Funds at 1-855-YES-YETF or visiting www.yetfs.com.Shareholders of the YieldShares High IncomeShort-Term Reversal Strategy ETF can request the Fund’s annual report, dated December 31, 2013,shareholder reports by calling the Fund at 1-855-796-38631-833-835-6633 or visiting www.yieldshares.com.www.utrnetf.com.
Shareholders of the Horizons S&P 500® Covered Call ETF can request the Fund’s annual report, dated April 30, 2014, by calling the Funds at 1-855-HZN-ETFS or visiting www.us.horizonsetfs.com.6
EXCHANGE TRADED CONCEPTS TRUSTForensic Accounting ETFROBO-STOXTM Global Robotics and Automation Index ETFJanus Equal Risk Weighted Large Cap ETF(formerly, VelocityShares Equal Risk Weighted Large Cap ETF)YieldShares High Income ETFEMQQ The Emerging Markets Internet & Ecommerce ETFYorkville High Income MLP ETFYorkville High Income Infrastructure MLP ETF2545 South Kelly Avenue, Suite C, Edmond, Oklahoma 73013
EXCHANGE TRADED CONCEPTS TRUST IIHorizons S&P 500® Covered Call ETF2545 South Kelly Avenue, Suite C, Edmond, Oklahoma 73013
JOINT PROXY STATEMENT
Joint Special Meeting of ShareholdersTo be Held on May 12, 2015This Joint Proxy Statement and enclosed notice and proxy card are being furnished in connection with the solicitation of proxies by the Boards of Trustees of Exchange Traded Concepts Trust and Exchange Traded Concepts Trust II (each, a “Trust” and together, the “Trusts”). The proxies are being solicited for use at a Joint Special Meeting of Shareholders of the Trusts to be held at the offices of Exchange Traded Concepts, LLC, 353 Central Park West, New York, New York 10025, on May 12, 2015 at 10:00 a.m. Eastern Time (the “Meeting”), and at any and all adjournments or postponements thereof.The Board of Trustees of the Trusts (each, a “Board” and collectively, the “Boards”) have called the Meeting and are soliciting proxies from shareholders of each series of the Trusts (each, a “Fund” and collectively, the “Funds”) for the purposes listed below:7
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This Proxy Statement and the accompanying notice and the proxy card are being first mailed to shareholders on or about April 3, 2015.You are entitled to vote at the Meeting for each Fund share you held as the shareholder of record as of the close of business on March 27, 2015 (the “Record Date”). Shareholders of each Fund will vote separately from shareholders of each other Fund with respect to Proposals 1, 2 and 3. Shareholders of each Fund in Exchange Traded Concepts Trust will vote together as a group with respect to Proposal 4. Only shareholders of the Horizons S&P 500® Covered Call ETF will vote on Proposal 4 with respect to Exchange Traded Concepts Trust II. Each proposal will be implemented if approved by shareholders and is not contingent on the approval of any other proposal.If you have any questions about the Proposal or about voting, please call 1-866-296-4857. Representatives are available to assist you Monday through Friday 9 a.m. to 10 p.m. Eastern Time.9
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EXHIBITS
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ApprovalProposals 1A and 1B (collectively, “Proposal 1”) relateTrustees to actions that need to be taken in response to a transaction (the “Transaction”) that changed the controlling interestsBoards of Trustees of
Exchange Traded ConceptsLLC, the investment adviser to eachTrust and Exchange Listed Funds Trust
The to the Board of each Trust. Each Nominee is an independent or disinterested person within the meaning of the Investment Company Act of 1940 (the “1940 Act”) provides that a fund’s investment advisory agreement must terminate whenever there. A Trustee is a “change in control”deemed to be independent to the extent he or she is not an “interested person” of the investment adviser. The Transaction resulted in a change in control of the Adviser. In order for the Adviser to continue serving as investment adviser to the Funds, new investment advisory agreements must be approved to replace those that automatically terminated as a result of the Transaction. For that reason, we are seeking shareholder approval of a new investment advisory agreement for each of the Funds.
Background
The Adviser has provided investment advisory services to each Fund since inception. The proposal to approve a new investment advisory agreement between each of the Trusts, on behalf of the Funds, and the Adviser (each, a “Proposed Advisory Agreement”) stems from a change in control of the Adviser and its parent company, Yorkville ETF Holdings, LLC (“Yorkville”). Yorkville is located at 353 Central Park West, 2nd Floor, New York City, New York 10025. Yorkville is the sole controlling owner of the Adviser by virtue of its ownership of at least 75% of the Adviser’s outstanding equity interests. Prior to the Transaction, Yorkville was controlled directly by Darren R. Schuringa, by virtue of his ownership of more than 25% of Yorkville’s outstanding equity interests, and indirectly by Richard Hogan through the Richard Hogan Trust, by virtue of that Trust’s ownership of more than 25% of Yorkville’s outstanding equity interests. As a result of their ownership of Yorkville and Yorkville’s ownership of the Adviser, Messrs. Hogan and Schuringa may have each been deemed indirect control persons of the Adviser by virtue of their indirect ownership of at least 25% of the Adviser’s outstanding equity interests.
On January 15, 2015, Yorkville acquired 100% of Mr. Schuringa’s interest in Yorkville, leaving Mr. Hogan, through the Richard Hogan Trust as the controlling shareholder of Yorkville. The Adviser has informed each of the Boards that no changes are planned to the management or operations of the Adviser as a result of the Transaction. Underterm is defined in the 1940 Act this Transaction resulted in a change in control of the Adviser. Section 2(a)(4) of the 1940 Act provides that a change in control of an investment adviser causes an assignment of that adviser’s investment advisory contracts, and Section 15(a) of the 1940 Act provides that an investment advisory contract must automatically terminate upon its assignment. Accordingly, the Transaction resulted in the automatic termination of the investment advisory agreements pursuant to which the Adviser had previously provided investment advisory services to each of the(“Independent Trustee”). Exchange Listed Funds (each, an “Old Advisory Agreement”).
In anticipation of the Transaction, at a special in-person meeting held on December 19, 2014, the Boards, including a majority of the Trustees who are not “interested persons” of the Funds within the meaning of Section 2(a)(19) of the 1940 Act (the “Independent Trustees”), approved interim investment advisory agreements between each Trust on behalf of the Funds, and the Adviser (each, an “Interim Advisory Agreement”). As permitted by the 1940 Act, the Adviser continued serving as investment adviser to the Funds upon completion of the Transaction pursuant to the Interim Advisory Agreements. The Interim Advisory Agreements have the same advisory fee rate and otherwise are the same in all material respects as the Old Advisory Agreements, except that, as required by the 1940 Act, the Interim Advisory Agreements have a term of up to 150 days and require that compensation payable to the Adviser be kept in an escrow account pending shareholder approval of new advisory agreements. If the Proposed Advisory Agreements are not approved by Fund shareholders, the Adviser will be entitled to be paid the lesser of any costs incurred in performing under the Interim Advisory Agreement and the total amount in the escrow account.
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The Proposed Advisory Agreements require shareholder approval, without which the Adviser will not be able to continue serving as investment adviser once the Interim Advisory Agreements expire. At a meeting on January 22, 2015, the Boards, including a majority of the Independent Trustees, approved the Proposed Advisory Agreements and recommended that they be submitted to Fund shareholders for approval.
The Proposed Advisory Agreements are the same in all material respects as the Old Advisory Agreements. The Adviser has informed the Trusts that no changes are planned to the management or operations of the Adviser as a result of the Transaction and that the services provided by the Adviser to the Funds will not be affected by the Transaction.
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Information Relating to Proposal 1A
Proposed Advisory Agreement betweenExchange Traded Concepts Trust and Exchange Traded Concepts, LLC
Forensic Accounting ETFROBO-STOXTM Global Robotics and Automation Index ETFJanus Equal Risk Weighted Large Cap ETFYieldShares High Income ETFEMQQ The Emerging Markets Internet & Ecommerce ETFYorkville High Income MLP ETFYorkville High Income Infrastructure MLP ETF
The Old Advisory Agreement between Exchange Traded Concepts Trust (the “Trust”) and the Adviser, dated March 2, 2012, on behalf of each Fund (each, a “Fund” and collectively, the “Funds”), was approved by each Fund’s initial shareholder on the dates shown below, and was not subsequently submitted to a vote of Fund shareholders. The Old Advisory Agreement with respect to all Funds except EMQQ The Emerging Markets Internet & Ecommerce ETF was renewed by the Trust’s Board of Trustees (the “Board”) on February 18, 2014. The Old Advisory Agreement with respect to EMQQ The Emerging Markets Internet & Ecommerce ETF was approved by the Board on November 11, 2014.
A copy of the form of the Proposed Advisory Agreement between Exchange Traded Concepts Trust and the Adviser is attached to this Proxy Statement as Exhibit A.
Description of the Proposed Advisory Agreement. The following description of the material terms of the Proposed Advisory Agreement is only a summary and is qualified in its entirety by reference to Exhibit A.
Duration and Termination. The Proposed Advisory Agreement, like the Old Advisory Agreement, will remain in effect for a period of two years, unless sooner terminated. After the initial two-year period, continuation of the Proposed Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees. The Interim Advisory Agreement will remain in effect for a period of up to 150 days, unless sooner terminated.
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Like the Old Advisory Agreement, the Proposed Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, or by vote of a majority of the outstanding voting securities of a Fund or (ii) by the Adviser by not more than sixty (60) days’ nor less than thirty (30) days’ written notice to the Trust.
Advisory Services. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement require that the Adviser (i) provide the Funds with investment research, advice and supervision and furnish continuously an investment program for the Funds, consistent with each Fund’s investment objective and policies; (ii) oversee the day-to-day operations of the Funds, subject to the direction and control of the Board and the officers of the Trust; (iii) if it exercises its authority under the agreements to select and retain sub-advisers to the Funds, supervise the activities of the sub-advisers; and (iv) bear the costs of all advisory and non-advisory services required to operate the Funds, except Excluded Expenses, as defined below, in exchange for a single unitary management fee. In addition, the Adviser is responsible for arranging transfer agency, custody, fund administration, securities lending, accounting, and other non-distribution related services necessary for the Funds to operate. The Adviser also administers the Funds’ 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.
Management Fees. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement provide that the Adviser receives a unitary management fee based on each Fund’s average daily net assets at the annual rate set forth in the table below. The fee is computed daily and paid monthly. The aggregate amount of advisory fees paid to the Adviser by each Fund for the Fund’s last fiscal period is also set forth in the table below.
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The Interim Advisory Agreement differs from the Old Advisory Agreement and Proposed Advisory Agreement in that, as required by Rule 15a-4 under the 1940 Act, compensation payable to the Adviser will be kept in an escrow account pending shareholder approval of a new advisory agreement. If the Proposed Advisory Agreement is not approved by Fund shareholders, the Adviser will be entitled to be paid the lesser of any costs incurred in performing the interim contract and the total amount in the escrow account.
Brokerage Policies. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement authorize the Adviser to select (or oversee a sub-adviser’s selection of) the brokers or dealers that will execute the purchases and sales of securities of the Fund and direct the Adviser to seek (or oversee a sub-adviser that will seek) for the Funds the most favorable execution and net price available under the circumstances. The Adviser (or a sub-adviser) may cause the Funds to pay a broker a commission in excess of that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research services provided by the broker to the sub-adviser.
For each Fund’s most recently completed fiscal period, no Fund paid commissions on portfolio brokerage transactions to brokers who may be deemed to be affiliated persons of the Fund or the Adviser or affiliated persons of such persons.
Payment of Expenses. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement provide that the Adviser will bear its own costs of providing services under the agreement and is obligated to pay all expenses incurred by the Funds except for the fee paid to the Adviser pursuant to the Agreement, 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, accrued deferred tax liability, extraordinary expenses, and distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, “Excluded Expenses”).
Other Provisions. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement provide that the Adviser shall indemnify and hold harmless the Trust, its affiliated persons, and controlling persons against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of the Adviser’s willful misfeasance, bad faith or gross negligence generally in the performance of its duties, or by reason of the reckless disregard of its obligations and duties under the agreement. All other litigation arising out of the agreement, or any and every other nature, shall be satisfied solely out of the assets of the Funds, and the Adviser shall not be subject to liability to the Trust or the Funds or to any shareholder of the Funds for any act or omission in the course of, or connected with, rendering services under the agreement or for any losses that may be sustained in the purchase, holding or sale of any security by the Funds.
Executive Officers and Directors of the Adviser. Information regarding the principal executive officers and directors of the Adviser is set forth in Appendix A.
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Other Funds with Similar Investment Objectives Managed by the Adviser. Below is a list of other funds with similar investment objectives as the Funds managed by the Adviser, the size of each other fund and the rate of the Adviser’s compensation with respect to each other fund. The advisory fee for each fund listed is a unitary management fee based on each fund’s average daily net assets at the annual rate set forth in the table below. The fee is computed daily and paid monthly. The other funds’ investment objectives are similar to the Funds in that each fund’s investment objective is to seek to track, before fees and expenses, the performance of an underlying index, which is also listed below.
1. Comprised of all of the equity securities in the S&P 500 Index and short (written) call options on up to 100% of each of the option eligible securities in the S&P 500 Index.2. Comprised of all of the equity securities in the S&P Financial Select Sector Index and short (written) call options on up to 100% of each of the option eligible securities in the S&P Financial Select Sector Index.3. Comprised of equity securities designed to represent the performance of some of the largest companies across various sectors in Europe.17
4 In addition, if the combined average daily net assets of all series in the Source ETF Trust is greater than $1 billion on September 16, 2016, the management fee from Source will be: 4 bps on the first $500 million; 3 bps on the next $1 billion; 2 bps on the next $2.5 billion; and 1.5 bps on assets over $4 billion.5. Comprised of U.S. equity securities selected based on a proprietary hedge fund position replication methodology.6. Comprised of emerging market securities selected by various governance screens.7. Comprised of domestic equities selected by various governance screens.8. Comprised of large capitalization securities selected based on various valuation metrics.9. Comprised of the common stock of Shariah compliant large capitalization U.S. companies.10. Comprised of fixed income securities selected by various governance screens.Required Vote. Approval of Proposal 1A with respect to each Fund requires the affirmative vote of a “majority of the outstanding voting securities” of such Fund when a quorum is present. Under the 1940 Act, a “majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund present or represented by proxy at the Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Meeting, or (b) more than 50% of the outstanding shares. If Proposal 1A is approved by a Fund’s shareholders, the Proposed Advisory Agreement, with respect to such Fund, is expected to become effective on the date of the Meeting.
If Proposal 1A is not approved by a Fund’s shareholders, the Adviser will continue to serve as investment adviser to such Fund pursuant to the Interim Advisory Agreement, and the Board will consider alternatives for the Fund, including seeking subsequent approval of a new investment advisory agreement by Fund shareholders. Approval of the Proposed Advisory Agreement by shareholders of one Fund is not contingent on approval of the Proposed Advisory Agreement by shareholders of any other Fund.
Recommendation of the Board of Trustees. The Board believes that the terms and conditions of the Proposed Advisory Agreement are fair to, and in the best interests of, each Fund and its shareholders. The Board believes that, upon a Fund’s shareholder approval of Proposal 1A, the Adviser will continue providing such Fund the same level of services as it provided under the Old Advisory Agreement and currently provides under the Interim Advisory Agreement. The Board was presented with information demonstrating that the Proposed Advisory Agreement would enable Fund shareholders to continue to obtain quality services at a cost that is fair and reasonable.
In considering the Proposed Advisory Agreement, the Board took into consideration (i) the nature, extent and quality of the services to be provided by the Adviser; (ii) the historical performance of each Fund; (iii) the Adviser’s expected cost and profits realized from providing such services, including any fall-out benefits enjoyed by the Adviser or its affiliates; (iv) comparative fee and expense data for each Fund; (v) the extent to which the advisory fee for a Fund reflects economies of scale shared with Fund shareholders; and (vi) other factors the Board deemed to be relevant. In their deliberations, the Board did not identify any single piece of information discussed below that was all-important, controlling or determinative of its decision.
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Nature, Extent and Quality of Services Provided. The Board considered the Adviser’s specific responsibilities in all aspects of day-to-day management of the Funds, such as providing portfolio investment management services. The Board noted that the services to be provided under the Proposed Advisory Agreement were identical in all material respects to those services provided under the Old Advisory Agreement and Interim Advisory Agreement. In particular, they noted that the Adviser has served as each Fund’s investment adviser since its inception.
In considering the nature, extent and quality of the services to be provided by the Adviser, the Board considered the quality of the Adviser’s compliance infrastructure. The Board also considered the Adviser’s experience working with ETFs, including the Funds and other series of the Trust. The Board noted that it had previously received a copy of the Adviser’s registration form (“Form ADV”), as well as the response of the Adviser to a detailed series of questions which included, among other things, information about the background and experience of the firm’s management and staff. The Board also considered the overall quality of the Adviser’s personnel, operations, financial condition, and investment advisory capabilities.
The Board considered other services provided to the Funds, such as overseeing the activities of the Funds’ investment sub-advisers and monitoring compliance with various Fund policies and procedures and with applicable securities regulations. Based on the factors above, as well as those discussed below, the Board concluded that it was satisfied with the nature, extent and quality of the services to be provided to each Fund by the Adviser.
Historical Performance. The Board then considered the past performance of each Fund, including the Funds with limited historical performance. The Board noted that the index-based investment objective of each Fund made analysis of investment performance, in absolute terms, less of a priority than that which normally attaches to the performance of actively managed funds. Instead, the Board focused on the extent to which each Fund achieved its investment objective as a passively managed fund. In that regard, the Board reviewed information regarding factors impacting the performance of the Funds, including the construction of their underlying indices and the addition or deletion of securities from the underlying indices. The Board reviewed the information regarding each Fund’s index tracking, discussing, as applicable, factors which contributed to a Fund’s tracking error over certain periods of time. With respect to EMQQ The Emerging Markets Internet & Ecommerce ETF and the Forensic Accounting ETF, the Board noted that each Fund satisfactorily tracked its underlying index. With respect to the Yorkville High Income MLP ETF and the Yorkville High Income Infrastructure MLP ETF, the Board reviewed the information regarding each Fund’s index tracking, noting that each Fund’s tracking error, as anticipated by Yorkville Advisors, was attributable to the Fund’s taxation as a C corporation and that, after taking this into account, each Fund satisfactorily tracked its underlying index. With respect to the other Funds in the Trust, the Board noted that, while each Fund had underperformed its underlying index over certain periods as reflected in the meeting materials, each Fund’s recent performance was more in line with its underlying index and did not necessitate significant additional review. The Board further noted that it received regular reports from the Funds’ Adviser and sub-advisers regarding the Funds’ performance at its quarterly meetings.
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Costs of Services Provided and Economies of Scale. The Board reviewed the advisory fees to be paid to the Adviser for its services to each Fund under the Proposed Advisory Agreement and compared the advisory fees to be paid by each Fund to those paid by comparable funds. The Board noted that each Fund’s advisory fees were consistent with the range of advisory fees paid by other peer funds.
The Board noted that the advisory fees payable under the Proposed Advisory Agreement were identical to the advisory fees paid under the Old Advisory Agreement. The Board took into consideration that the advisory fee for the Fund was a “unified fee,” meaning that the Fund would pay no expenses other than the Excluded Expenses. The Board noted that the Adviser would be responsible for compensating the Trust’s other service providers and paying each Fund’s other expenses out of its own fee and resources, except that Yorkville Advisors has agreed to assume the responsibility to pay the Yorkville Funds’ (as defined below) expenses out of its own fee and resources. The Board further noted, nevertheless, that the Adviser is ultimately responsible for ensuring that the obligation to the Yorkville Funds is satisfied. The Board considered the costs and expenses incurred by the Adviser in providing advisory services, evaluated the compensation and benefits expected to be received by the Adviser from its relationship with the Funds, and performed a profitability analysis with respect to each of the Funds. The Board concluded for each Fund that the advisory fees appeared reasonable in light of the services rendered. In addition, the Board considered for each Fund whether economies of scale have been realized. The Board concluded that no significant economies of scale have been realized by any of the Funds and that the Board will have the opportunity to periodically reexamine whether such economies have been achieved.
Conclusion. No single factor was determinative of the Board’s decision to approve the Proposed Advisory Agreement on behalf of each Fund; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including a majority of the Independent Trustees, determined that the Proposed Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to each of the Funds. The Board, including a majority of the Independent Trustees, therefore determined that the approval of the Proposed Advisory Agreement was in the best interests of each Fund and its shareholders.
The Board of Trustees of Exchange Traded Concepts Trust unanimously recommends thatshareholders of each Fund vote “FOR” Proposal 1A.
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Information Relating to Proposal 1B
Proposed Advisory Agreement betweenExchange Traded Concepts Trust II and Exchange Traded Concepts, LLC
Horizons S&P 500® Covered Call ETF
The Old Advisory Agreement between Exchange Traded Concepts Trust II (the “Trust”) and the Adviser, dated May 23, 2013, on behalf of the Horizons S&P 500® Covered Call ETF (the “Fund”), was approved by the Trust’s Board of Trustees (the “Board”) on May 23, 2013, was approved by the Fund’s initial shareholder on May 23, 2013, and was not subsequently submitted to a vote of Fund shareholders.
A copy of the form of the Proposed Advisory Agreement between Exchange Traded Concepts Trust II and the Adviser is attached to this Proxy Statement as Exhibit B.
Description of the Proposed Advisory Agreement. The following description of the material terms of the Proposed Advisory Agreement is only a summary and is qualified in its entirety by reference to Exhibit B.
Duration and Termination. The Proposed Advisory Agreement, like the Old Advisory Agreement, will remain in effect for a period of two years, unless sooner terminated. After the initial two-year period, continuation of the Proposed Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees. The Interim Advisory Agreement will remain in effect for a period of up to 150 days, unless sooner terminated.
Like the Old Advisory Agreement, the Proposed Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, or by vote of a majority of the outstanding voting securities of the Fund or (ii) by the Adviser by not more than sixty (60) days’ nor less than thirty (30) days’ written notice to the Trust.
Advisory Services. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement require that the Adviser (i) provide the Fund with investment research, advice and supervision and furnish continuously an investment program for the Fund, consistent with the Fund’s investment objective and policies; (ii) oversee the day-to-day operations of the Fund, subject to the direction and control of the Board and the officers of the Trust; (iii) if it exercises its authority under the agreements to select and retain sub-advisers to the Fund, supervise the activities of the sub-advisers; and (iv) bear the costs of all advisory and non-advisory services required to operate the Fund, except Excluded Expenses, as defined below, in exchange for a single unitary management fee. In addition, the Adviser is responsible for arranging transfer agency, custody, fund administration, securities lending, accounting, and other non-distribution related services necessary for the Fund to operate. The Adviser also 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.
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Management Fees. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement provide that the Adviser receives a unitary management fee based on the Fund’s average daily net assets at the annual rate set forth in the table below. The fee is computed daily and paid monthly. The aggregate amount of advisory fees paid to the Adviser by the Fund for the Fund’s last fiscal period is also set forth in the table below.
The Interim Advisory Agreement differs from the Old Advisory Agreement and Proposed Advisory Agreement in that, as required by Rule 15a-4 under the 1940 Act, compensation payable to the Adviser will be kept in an escrow account pending shareholder approval of a new advisory agreement. If the Proposed Advisory Agreement is not approved by Fund shareholders, the Adviser will be entitled to be paid the lesser of any costs incurred in performing the interim contract and the total amount in the escrow account.
Brokerage Policies. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement authorize the Adviser to select (or oversee a sub-adviser’s selection of) the brokers or dealers that will execute the purchases and sales of securities of the Fund and direct the Adviser to seek (or oversee a sub-adviser that will seek) for the Fund the most favorable execution and net price available under the circumstances. The Adviser (or a sub-adviser) may cause the Fund to pay a broker a commission in excess of that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research services provided by the broker to the Adviser or its sub-adviser.
For the Fund’s most recently completed fiscal period, the Fund did not pay any commissions on portfolio brokerage transactions to brokers who may be deemed to be affiliated persons of the Fund or the Adviser or affiliated persons of such persons.
Payment of Expenses. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement provide that the Adviser will bear its own costs of providing services under the agreement and is obligated to pay all expenses incurred by the Fund except for the fee paid to the Adviser pursuant to the Agreement, 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, accrued deferred tax liability, extraordinary expenses, and distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, “Excluded Expenses”).
Other Provisions. Each of the Old Advisory Agreement, Interim Advisory Agreement and Proposed Advisory Agreement provide that the Adviser shall indemnify and hold harmless the Trust, its affiliated persons, and controlling persons against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of the Adviser’s willful misfeasance, bad faith or gross negligence generally in the performance of its duties, or by reason of the reckless disregard of its obligations and duties under the agreement. All other litigation arising out of the agreement, or any and every other nature, shall be satisfied solely out of the assets of the Fund, and the Adviser shall not be subject to liability to the Trust or the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services under the agreement or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund.
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Executive Officers and Directors of the Adviser. Information regarding the principal executive officers and directors of the Adviser is set forth in Appendix A.
Other Funds with Similar Investment Objectives. Below is a list of other funds with similar investment objectives as the Fund managed by the Adviser, the size of each other fund and the rate of the Adviser’s compensation with respect to each other fund. The advisory fee is a unitary management fee based on each fund’s average daily net assets at the annual rate set forth in the table below. The fee is computed daily and paid monthly. The other funds’ investment objectives are similar to the Fund in that each fund’s investment objective is to seek to track, before fees and expenses, the performance of an underlying index, which is also listed below.
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1. Comprised of 380-400 equity securities and designed to measure the performance of certain U.S. large capitalization companies that have been selected and ranked according to their “earnings quality.”2. Comprised of U.S. and non-U.S. securities of robotics-related and/or automation related companies.3. Comprised of all of the stocks in the S&P 500 Index, weighted according to a proprietary risk-weighting methodology.4. Comprised of U.S. exchange-listed closed-end funds.5. Comprised of publicly-traded, emerging market internet and ecommerce companies.6. Comprised of master limited partnerships (“MLPs”) publicly-traded on a U.S. securities exchange.7. Comprised of infrastructure MLPs publicly-traded on a U.S. securities exchange.8. Comprised of equity securities designed to represent the performance of some of the largest companies across various sectors in Europe.9. In addition, if the combined average daily net assets of all series in the Source ETF Trust is greater than $1 billion on September 16, 2016, the management fee from Source will be: 4 bps on the first $500 million; 3 bps on the next $1 billion; 2 bps on the next $2.5 billion; and 1.5 bps on assets over $4 billion.10. Comprised of U.S. equity securities selected based on a proprietary hedge fund position replication methodology.11. Comprised of emerging market securities selected by various governance screens.24
12. Comprised of domestic equities selected by various governance screens.13. Comprised of large capitalization securities selected based on various valuation metrics.14. Comprised of the common stock of Shariah compliant large capitalization U.S. companies.15. Comprised of fixed income securities selected by various governance screens.
Required Vote. Approval of Proposal 1B with respect to the Fund requires the affirmative vote of a “majority of the outstanding voting securities” of the Fund when a quorum is present. Under the 1940 Act, a “majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund present or represented by proxy at the Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Meeting, or (b) more than 50% of the outstanding shares.
If Proposal 1B is approved by the Fund’s shareholders, the Proposed Advisory Agreement is expected to become effective on the date of the Meeting. If Proposal 1B is not approved by the Fund’s shareholders, the Adviser will continue to serve as investment adviser to the Fund pursuant to the Interim Advisory Agreement, and the Board will consider alternatives for the Fund, including seeking subsequent approval of a new investment advisory agreement by Fund shareholders.
Recommendation of the Board of Trustees. The Board believes that the terms and conditions of the Proposed Advisory Agreement are fair to, and in the best interests of, the Fund and its shareholders. The Board believes that, upon the Fund’s shareholder approval of Proposal 1B, the Adviser will continue providing the Fund the same level of services as it provided under the Old Advisory Agreement and currently provides under the Interim Advisory Agreement. The Board was presented with information demonstrating that the Proposed Advisory Agreement would enable Fund shareholders to continue to obtain quality services at a cost that is fair and reasonable.
In considering the Proposed Advisory Agreement, the Board took into consideration (i) the nature, extent and quality of the services to be provided by the Adviser; (ii) the historical performance of the Fund; (iii) the Adviser’s expected cost and profits realized from providing such services, including any fall-out benefits enjoyed by the Adviser 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. In their deliberations, the Board did not identify any single piece of information discussed below that was all-important, controlling or determinative of its decision.
Nature, Extent and Quality of Services Provided. The Board considered the Adviser’s specific responsibilities in all aspects of day-to-day management of the Fund, such as providing portfolio investment management services. The Board noted that the services to be provided under the Proposed Advisory Agreement were identical in all material respects to those services provided under the Old Advisory Agreement and Interim Advisory Agreement. In particular, they noted that the Adviser has served as the Fund’s investment adviser since its inception.
In considering the nature, extent and quality of the services to be provided by the Adviser, the Board considered the quality of the Adviser’s compliance infrastructure The Board also considered the Adviser’s experience working with ETFs, including the Fund and series of the other Trusts managed by the Adviser. The Board noted that it had previously received a copy of the Adviser’s registration form (“Form ADV”), as well as the response of the Adviser to a detailed series of questions which included, among other things, information about the background and experience of the firm’s management and staff. The Board also considered the overall quality of the Adviser’s personnel, operations, financial condition, and investment advisory capabilities.
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The Board considered other services provided to the Fund, such as overseeing the activities of the Fund’s investment sub-adviser and monitoring compliance with various Fund policies and procedures and with applicable securities regulations. Based on the factors above, as well as those discussed below, the Board concluded that it was satisfied with the nature, extent and quality of the services to be provided to the Fund by the Adviser.
Historical Performance. The Board then considered the past performance of the Fund. The Board noted that the index-based investment objective of the Fund made analysis of investment performance, in absolute terms, less of a priority than that which normally attaches to the performance of actively managed funds. Instead, the Board focused on the extent to which the Fund achieved its investment objective as a passively managed fund. In that regard, the Board reviewed information regarding factors impacting the performance of the Fund, including the construction of its underlying index and the addition or deletion of securities from the underlying index. The Board reviewed the information regarding the Fund’s index tracking, noting that the Fund satisfactorily tracked its underlying index.
Costs of Services Provided and Economies of Scale. The Board reviewed the advisory fees to be paid to the Adviser for its services to the Fund under the Proposed Advisory Agreement and compared the advisory fees to be paid by the Fund to those paid by comparable funds. The Board noted that the Fund’s advisory fees were consistent with the range of advisory fees paid by other peer funds.
The Board noted that the advisory fees payable under the Proposed Advisory Agreement were identical to the advisory fees paid under the Old Advisory Agreement. The Board took into consideration that the advisory fee for the Fund was a “unified fee,” meaning that the Fund would pay no expenses other than the Excluded Expenses. The Board noted that the Adviser would be responsible for compensating the Trust’s other service providers and paying the Fund’s other expenses out of its own fee and resources. The Board considered the costs and expenses incurred by the Adviser in providing advisory services, evaluated the compensation and benefits expected to be received by the Adviser from its relationship with the Fund, and performed a profitability analysis with respect to the Fund. The Board concluded that the advisory fees appeared reasonable in light of the services rendered. In addition, the Board considered for the Fund whether economies of scale have been realized. The Board concluded that no significant economies of scale have been realized by the Fund and that the Board will have the opportunity to periodically reexamine whether such economies have been achieved.
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Conclusion. No single factor was determinative of the Board’s decision to approve the Proposed Advisory Agreement on behalf of the Fund; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including a majority of the Independent Trustees, determined that the Proposed Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to the Fund. The Board, including a majority of the Independent Trustees, therefore determined that the approval of the Proposed Advisory Agreement was in the best interests of the Fund and its shareholders.
The Board of Trustees of Exchange Traded Concepts Trust II unanimously recommends thatshareholders of the Fund vote “FOR” Proposal 1B.
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PROPOSAL 2
Approval of New Sub-Advisory AgreementsBackground
As described above under “Proposal 1—Background,” the Transaction resulted in the termination of the Old Advisory Agreements between each Trust and the Adviser. The Transaction also resulted in the termination of the sub-advisory agreement between the Adviser and Yorkville ETF Advisors, LLC, on behalf of the Yorkville High Income MLP ETF and the Yorkville High Income Infrastructure MLP ETF (the “Yorkville Sub-Advisory Agreement”). Further, the termination of the Old Advisory Agreements caused the automatic termination of all of the Adviser’s other sub-advisory agreements (together with the Yorkville Sub-Advisory Agreement, each an “Old Sub-Advisory Agreement”). Accordingly, in Proposals 2A, 2B, 2C, and 2D (collectively, “Proposal 2”), the Boards are requesting that shareholders approve new sub-advisory agreements (each, a “Proposed Sub-Advisory Agreement”) with the sub-advisers (each, a “Sub-Adviser”) listed under the fourth column in the following tables:
Exchange Traded Concepts Trust
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Exchange Traded Concepts Trust II
In anticipation of the Transaction, at a special in-person meeting on December 19, 2014, the Boards, including a majority of the Independent Trustees, approved interim sub-advisory agreements between the Adviser and the Sub-Advisers listed in the third column of the table above (each, an “Interim Sub-Advisory Agreement”). As permitted by the 1940 Act, certain of the Sub-Advisers under the Old Sub-Advisory Agreements, including Yorkville ETF Advisors, LLC (“Yorkville Advisors”), Penserra Capital Management LLC (“Penserra”), and Horizons ETFs Management (USA) LLC (“Horizons”) continued serving as sub-advisers to their respective Funds upon the effectiveness of the Transaction pursuant to Interim Sub-Advisory Agreements. However, with respect to Yorkville High Income MLP ETF and Yorkville High Income Infrastructure MLP ETF (the “Yorkville Funds”), Forensic Accounting ETF, ROBO-STOXTM Global Robotics and Automation Index ETF, and Janus Equal Risk Weighted Large Cap ETF, each of which was sub-advised by Index Management Solutions LLC (“IMS”), the Board approved Interim Sub-Advisory Agreements with Penserra, at the recommendation of the Adviser, to replace the Old Sub-Advisory Agreements between the Adviser and IMS.
All Funds, except the Yorkville Funds. The Interim Sub-Advisory Agreements have the same sub-advisory fee rates as the Old Sub-Advisory Agreements. For all Funds, except the Yorkville Funds, the Interim Sub-Advisory Agreements are also the same in all other material respects as the Old Sub-Advisory Agreements, except that the Funds formerly sub-advised by IMS are being sub-advised by Penserra and, as required by the 1940 Act, the Interim Sub-Advisory Agreements have a term of up to 150 days.
Yorkville Funds. The Interim Sub-Advisory Agreements have the same sub-advisory fee rates as the Old Sub-Advisory Agreements. The Yorkville Funds, however, have two sets of Interim Sub-Advisory Agreements, one with Yorkville Advisors and the other with Penserra. Yorkville Advisors is the investment sub-adviser to the Yorkville Funds and is responsible for the day-to-day management of the Yorkville Funds. Yorkville Advisors also makes investment decisions for the Yorkville Funds and continuously reviews, supervises and administers the investment program of the Yorkville Funds, subject to the supervision of the Adviser and the Board. Penserra is the trading sub-adviser to the Yorkville Funds and is responsible for trading portfolio securities on behalf of the Yorkville Funds, including selecting broker-dealers to execute purchase and sale transactions as instructed by Yorkville Advisors or in connection with any rebalancing or reconstitution of the Yorkville Funds’ underlying indexes, subject to the supervision of the Adviser and the Board of Trustees. The Interim Sub-Advisory Agreement between the Adviser and Yorkville Advisors is the same in all material respects as the Old Sub-Advisory Agreement, except that, as required by the 1940 Act, the Interim Sub-Advisory Agreement has a term of up to 150 days and requires that compensation payable to Yorkville Advisors be kept in an escrow account pending shareholder approval of the Proposed Sub-Advisory Agreement. If the Proposed Sub-Advisory Agreement between the Adviser and Yorkville Advisors is not approved by Fund shareholders, Yorkville Advisors, under the Interim Sub-Advisory Agreement, will be entitled to be paid the lesser of any costs incurred in performing the interim contract and the total amount in the escrow account. The Interim Sub-Advisory Agreement with Yorkville Advisors is subject to the same escrow account requirement as the Interim Advisory Agreements because Yorkville Advisors’ Old Sub-Advisory Agreement terminated as a result of the Transaction. Further, the Interim Sub-Advisory Agreement between the Adviser and Penserra, also with respect to the Yorkville Funds, is the same in all material respects as the Old Sub-Advisory Agreement between the Adviser and IMS, except that Penserra replaced IMS and, as required by the 1940 Act, the Interim Sub-Advisory Agreement has a term of up to 150 days.
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The Proposed Sub-Advisory Agreements require shareholder approval in order to enable the Funds to continue to be managed in a manner that is substantially similar to the management of the Funds prior to the Transaction. At a meeting on January 22, 2015, the Boards, including a majority of the Independent Trustees, approved the Proposed Sub-Advisory Agreements and recommended that they be submitted to Fund shareholders for approval.
The Proposed Sub-Advisory Agreements are substantially similar to the Old Sub-Advisory Agreements that were in place for the Funds. With respect to the Funds previously sub-advised by IMS, however, the Board of Trustees of Exchange Traded Concepts Trust has determined to replace IMS as sub-adviser. Accordingly, the Proposed Sub-Advisory Agreements for those Funds involve new entities as sub-advisers, either Vident Investment Advisory, LLC or Penserra Capital Management LLC, and new fee arrangements with those sub-advisers. The proposed new fee arrangements will not change the overall investment advisory fees paid by the Funds. The terms of the Proposed Sub-Advisory Agreements are otherwise substantially similar to the corresponding Old Sub-Advisory Agreements with IMS.
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Information Relating to Proposal 2A
Vident Investment Advisory LLCProposed Sub-Advisory Agreement
Forensic Accounting ETFROBO-STOXTM Global Robotics and Automation Index ETFJanus Equal Risk Weighted Large Cap ETFYieldShares High Income ETF
In Proposal 2A, the Board of Trustees of the Exchange Traded Concepts Trust (the “Trust”) requests that shareholders approve a Proposed Sub-Advisory Agreement between the Adviser and Vident Investment Advisory LLC (“Vident”) with respect to the Forensic Accounting ETF, ROBO-STOXTM Global Robotics and Automation Index ETF, Janus Equal Risk Weighted Large Cap ETF (formerly, VelocityShares Equal Risk Weighted Large Cap ETF) and YieldShares High Income ETF (collectively, the “Funds”).
Prior to the Transaction, the Funds were sub-advised by IMS pursuant to the Old Sub-Advisory Agreement dated March 2, 2012, as amended, which was approved by each Fund’s initial shareholder on the dates shown below, and was not subsequently submitted to a vote of Fund shareholders. The Old Sub-Advisory Agreement was renewed by the Trust’s Board of Trustees (the “Board”) on February 18, 2014.
However, upon the recommendation of the Adviser and having conducted due diligence regarding Vident, the Board has determined that the approval of Vident as the sub-adviser to the Funds is in the best interests of the Funds and their shareholders. The approval of Vident stems from a change in personnel at IMS. On or about November 11, 2014, Denise M. Krisko, previously the Chief Investment Officer of IMS, left IMS to join Vident as its President. Prior to leaving IMS, Ms. Krisko had been each Fund’s portfolio manager since its inception.
In connection with Ms. Krisko’s departure from IMS, the Adviser met with Ms. Krisko and Mr. Nicholas A. Stonestreet, the Chief Executive Officer of Vident and Vident Financial, LLC, Vident’s parent company, to discuss Vident’s interest in becoming the Funds’ sub-adviser to enable the Funds to benefit from Ms. Krisko’s continued management of the Funds. After meeting with Ms. Krisko and Mr. Stonestreet and conducting due diligence regarding Vident, the Adviser determined that the approval of Vident as each Fund’s sub-adviser was in the best interests of each Fund and its shareholders. Consequently, the Adviser recommended to the Board that it approve the Proposed Sub-Advisory Agreement between Vident and the Adviser to enable Vident to serve as each Fund’s sub-adviser and to enable Ms. Krisko to resume having primary responsibility for the day-to-day management of each Fund upon shareholder approval. The Adviser also recommended that the Proposed Sub-Advisory Agreement be presented to shareholders of each Fund for approval prior to the expiration of each Fund’s Interim Sub-Advisory Agreement between the Adviser and Penserra, which is limited to a term of no more than 150 days.
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Description of the Proposed Sub-Advisory Agreement. The following description of the material terms of the Proposed Sub-Advisory Agreement is only a summary and is qualified in its entirety by reference to the form of Proposed Sub-Advisory Agreement between the Adviser and Vident, which is attached to this Proxy Statement as Exhibit C. The terms of the Proposed Sub-Advisory Agreement with Vident are substantially similar to the terms of the Old Sub-Advisory Agreement with IMS and the Interim Sub-Advisory Agreement with Penserra, except that compensation to Vident is proposed to be different than that paid under the Old-Sub Advisory and the Interim Sub-Advisory Agreements.
Duration and Termination. The Proposed Sub-Advisory Agreement, like the Old Sub-Advisory Agreement between the Adviser and IMS, will remain in effect for a period of two years, unless sooner terminated. After the initial two-year period, continuation of the Proposed Sub-Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees. The Interim Sub-Advisory Agreement with Penserra will remain in effect for a period of up to 150 days, unless sooner terminated.
The Proposed Sub-Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, or by vote of a majority of the outstanding voting securities of the Fund, or by the Adviser, in each case, upon sixty (60) days’ written notice to the Sub-Adviser; or (ii) by the Sub-Adviser upon sixty (60) days’ written notice to the Adviser and the Board. These termination provisions are identical to the Old Sub-Advisory Agreement’s termination provisions.
Sub-Advisory Services. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement require that the Sub-Adviser manage all of the securities and other assets of the Funds, in particular the purchase, retention and disposition of Fund assets, in accordance with the Funds’ investment objective, guidelines, policies and restrictions, subject to the supervision of the Adviser and the Board. Under each sub-advisory agreement, the Sub-Adviser determines the Fund assets to be purchased or sold by a Fund and places orders with or through broker-dealers selected by the Sub-Adviser.
Management Fees. The Proposed Sub-Advisory Agreement has a sub-advisory fee, paid by the Adviser and not by the Funds, based on each Fund’s average daily net assets at the annual rate set forth in the table below. The fees are computed daily and paid monthly. The aggregate amount of sub-advisory fees paid to the Sub-Adviser by the Adviser for each Fund’s last fiscal period is also set forth in the table below. As discussed above, the sub-advisory fees under the Proposed Sub-Advisory Agreement are different than the sub-advisory fees under the Old Sub-Advisory Agreement. The proposed new sub-advisory fees are listed in the table below, along with the amount a sub-adviser would have received had the proposed fees been in effect, and the percentage difference between the amounts actually received and those which would have been received under the Proposed Sub-Advisory Agreement. The sub-advisory fees under the Proposed Sub-Advisory Agreement will not change the overall investment advisory fees paid by the Funds.
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Brokerage Policies. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement authorize the Funds’ Sub-Adviser to select the brokers or dealers that will execute the purchases and sales of securities of the Funds and direct the Sub-Adviser to seek for the Funds the most favorable execution and net price available under the circumstances. The Sub-Adviser may cause the Funds to pay a broker a commission in excess of that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research services provided by the broker to the Sub-Adviser.
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For each Fund’s most recently completed fiscal period, no Fund paid commissions on portfolio brokerage transactions to brokers who may be deemed to be affiliated persons of the Fund or the Sub-Adviser or affiliated persons of such persons.
Payment of Expenses. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Sub-Adviser will pay all of the costs and expenses incurred by it in connection with the sub-advisory services provided for the Funds.
Other Provisions. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof, and all controlling persons from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses) arising from or in connection with the performance of the Sub-Adviser’s obligations under the agreements; provided, however, that the Sub-Adviser’s obligation shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Adviser shall indemnify and hold harmless the Sub-Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses) arising from or in connection with the performance of the Adviser’s obligations under the agreements; provided, however, that the Adviser’s obligation shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement.
Portfolio Managers. Under the Interim Sub-Advisory Agreement, Dustin Lewellyn, CFA, Managing Director of Penserra, serves as each Fund’s portfolio manager and is primarily responsible for the day to day management of the Funds. Upon shareholder approval of the Proposed Sub-Advisory Agreement described under Proposal 2A, Denise M. Krisko, CFA, President and portfolio manager of Vident, will have primary responsibility for the day-to-day management of the Funds.
Ms. Krisko became the President of Vident in November 2014 and has over nineteen years of investment management experience. Ms. Krisko was previously the Chief Investment Officer and managed each Fund on behalf of the Funds’ previous sub-adviser, IMS, from each Fund’s inception until November 2014. Prior to joining IMS, she was a Managing Director and Co-Head of the Equity Index Management and Head of East Coast Equity Index Strategies for Mellon Capital Management. She was also a Managing Director of The Bank of New York and Head of Equity Index Strategies for BNY Investment Advisors from August 2005 until the merger of The Bank of New York with Mellon Bank in 2007, when she assumed her role with Mellon Capital Management. Ms. Krisko attained the Chartered Financial Analyst designation in 2000. Ms. Krisko graduated with a BS from Pennsylvania State University and obtained her MBA from Villanova University.
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Executive Officers and Directors of Vident. The address of Vident and its executive officers and directors is 300 Colonial Center Parkway, Suite 330, Roswell, Georgia 30076. Vident was formed in 2014 and, as of the date of this Proxy Statement, manages one other fund in another trust that does not have similar investment objectives as the Funds. The following are the executive officers and directors of Vident:
Additional Information about the Trust and Vident. No Trustee or officer of the Trust holds any position with Vident.
Other Funds with Similar Investment Objectives. Below is a list of other funds with similar investment objectives as the Funds managed by Vident, the size of each other fund and the rate of Vident’s compensation with respect to each other fund. The basis point component of the sub-advisory fee is based on the fund’s average daily net assets at the annual rate set forth in the table below. The fee is computed daily and paid monthly. The other fund’s investment objectives are similar to the Funds in that the fund’s investment objective is to seek to track, before fees and expenses, the performance of an underlying index, which is also listed below.
1 Comprised of domestic equities selected by various governance screens.
Required Vote. Approval of Proposal 2A with respect to each Fund requires the affirmative vote of a “majority of the outstanding voting securities” of such Fund when a quorum is present. Under the 1940 Act, a “majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund present or represented by proxy at the Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Meeting, or (b) more than 50% of the outstanding shares.
If Proposal 2A is approved by a Fund’s shareholders, the Proposed Sub-Advisory Agreement, with respect to such Fund, is expected to become effective on the date of the Meeting. If Proposal 2A is not approved by a Fund’s shareholders, Penserra will continue to serve as sub-adviser to such Fund pursuant to the Interim Sub-Advisory Agreement, and the Board will consider alternatives for the Fund, including seeking subsequent approval of a new sub-advisory agreement by Fund shareholders. Approval of the Proposed Sub-Advisory Agreement by shareholders of one Fund is not contingent on approval of the Proposed Sub-Advisory Agreement by shareholders of any other Fund.
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Recommendation of the Board of Trustees. The Board believes that the terms and conditions of the Proposed Sub-Advisory Agreement are fair to, and in the best interests of, each Fund and its shareholders. The Board believes that, upon a Fund’s shareholder approval of Proposal 2A, Vident will begin providing the same level of services as Penserra currently provides under the Interim Sub-Advisory Agreement and IMS provided under the Old Sub-Advisory Agreement. The Board was presented with information demonstrating that the Proposed Sub-Advisory Agreement would enable Fund shareholders to continue to obtain quality services at a cost that was fair and reasonable.
In considering the Proposed Sub-Advisory Agreement, the Board took into consideration (i) the nature, extent and quality of the services to be provided by Vident; (ii) the historical performance of the Funds; (iii) Vident’s expected cost and profits realized from providing such services, including any fall-out benefits enjoyed by Vident or its affiliates; (iv) comparative fee and expense data for the Funds; (v) the extent to which the sub-advisory fees for the Funds reflect economies of scale shared with Fund shareholders; and (vi) other factors the Board deemed to be relevant.Nature, Extent and Quality of Services Provided. The Board considered the Sub-Adviser’s specific responsibilities in all aspects of day-to-day management of the Funds, including the qualifications, experience and responsibilities of the portfolio managers. The Board noted that the services to be provided under the Proposed Sub-Advisory Agreement were identical in all material respects to those services provided under the Old Sub-Advisory Agreement. In particular, they noted that Ms. Krisko, the President of Vident, served as the portfolio manager of each of the Funds for the period from their inception through November 2014.
In considering the nature, extent and quality of the services to be provided by Vident, the Board considered the quality of Vident’s compliance infrastructure and the determination of the Trust’s Chief Compliance Officer that Vident has appropriate compliance policies and procedures in place. The Board noted that it had previously received a copy of Vident’s registration form (“Form ADV”), as well as the response of Vident to a detailed series of questions which included, among other things, information about the background and experience of the firm’s management and staff. After discussion, the Independent Trustees concluded that the overall quality of Vident’s personnel, operations, financial condition, and investment advisory capabilities is appropriate to perform its duties under the Proposed Sub-Advisory Agreement and that the nature, overall quality, cost and extent of such services was expected to be satisfactory.
Historical Performance. The Board then considered the past performance of the Funds. The Board noted that the Sub-Adviser had not previously managed the Funds but that the Sub-Adviser’s portfolio manager had been primarily responsible for the day-to-day management of the Funds from their inception until November 2014.
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The Board also noted that the index-based investment objective of each Fund made analysis of investment performance, in absolute terms, less of a priority than that which normally attaches to the performance of actively managed funds. Instead, the Board focused on the extent to which each Fund achieved its investment objective as a passively managed fund. In that regard, the Board reviewed information regarding factors impacting the performance of the Funds, including the construction of their underlying indices and the addition or deletion of securities from the underlying indices. The Board reviewed the information regarding each Fund’s index tracking. With respect to the Forensic Accounting ETF, the Board noted that the Fund satisfactorily tracked its underlying index. With respect to the other Funds, although each Fund had underperformed its underlying index over certain periods as reflected in the meeting materials, each Fund’s recent performance was more in line with its underlying index and did not necessitate significant additional review. The Board further noted that it would receive regular reports from Vident regarding the Funds’ performance at its quarterly meetings.
Costs of Services Provided and Economies of Scale. The Board reviewed the sub-advisory fees to be paid by the Adviser to Vident for its services to each Fund under the Proposed Sub-Advisory Agreement. The Board noted that, like the Old Sub-Advisory Agreement, the sub-advisory fees under the Proposed Sub-Advisory Agreement had two components: 1) a basis point fee based on assets under management and 2) a minimum annual fee. The Board further noted that each Fund’s basis point fee, with the exception of the Forensic Accounting ETF, were lower than the basis point sub-advisory fees paid under the Old Sub-Advisory Agreement. In addition, the Board noted that, with respect to the Forensic Accounting ETF, the proposed basis point fee was higher than the fee under the Old Sub-Advisory Agreement and that, with respect to all of the Funds, except the ROBO-STOX Global Robotics and Automation ETF, the annual minimum fees were higher than the minimum fees under the Old Sub-Advisory Agreement. The Board considered that the fees to be paid to Vident would be paid by the Adviser, not by the Fund, and noted that the fee reflected an arms-length negotiation between the Adviser and Vident. The Board further determined that the fee reflected an appropriate allocation of the advisory fee paid to the Adviser given the work performed by each firm. The Board concluded that the proposed sub-advisory fee was reasonable.
The Board considered the costs and expenses incurred by Vident in providing sub-advisory services, evaluated the compensation and benefits expected to be received by Vident from its relationship with the Funds, and performed a profitability analysis with respect to each of the Funds. The Board concluded for each Fund that the advisory fees appeared reasonable in light of the services rendered. In addition, the Board considered for each Fund whether economies of scale have been realized. The Board concluded that no significant economies of scale have been realized by any of the Funds and that the Board will have the opportunity to periodically reexamine whether such economies have been achieved.
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Conclusion. No single factor was determinative of the Board’s decision to approve the Proposed Sub-Advisory Agreement on behalf of each Fund; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including a majority of the Independent Trustees, determined that the Proposed Sub-Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to each of the Funds. The Board, including a majority of the Independent Trustees, therefore determined that the approval of the Proposed Sub-Advisory Agreement was in the best interests of each Fund and its shareholders.
The Board of Trustees of Exchange Traded Concepts Trust unanimouslyrecommends that shareholders of each Fund vote “FOR” Proposal 2A.
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Information Relating to Proposal 2B
Penserra Capital Management LLCProposed Sub-Advisory Agreement
EMQQ The Emerging Markets Internet & Ecommerce ETFYorkville High Income MLP ETFYorkville High Income Infrastructure MLP ETF
In Proposal 2B, the Board of Trustees of the Exchange Traded Concepts Trust (the “Trust”) requests that shareholders approve a Proposed Sub-Advisory Agreement between the Adviser and Penserra Capital Management LLC (“Penserra”) with respect to EMQQ The Emerging Markets Internet & Ecommerce ETF, Yorkville High Income MLP ETF, and Yorkville High Income Infrastructure MLP ETF (collectively, the “Funds”).
Prior to the Transaction, Penserra served as sub-adviser to EMQQ The Emerging Markets Internet & Ecommerce ETF (“EMQQ”) pursuant to the Old Sub-Advisory Agreement dated November 11, 2014, which was approved by the Trust’s Board of Trustees (the “Board”) on November 11, 2014, approved by EMQQ’s initial shareholder on November 11, 2014, and was not subsequently submitted to a vote of EMQQ shareholders. Index Management Solutions LLC (“IMS”) served as sub-adviser to Yorkville High Income MLP ETF and Yorkville High Income Infrastructure MLP ETF (the “Yorkville Funds”) prior to the Transaction pursuant to the Old Sub-Advisory Agreement dated March 2, 2012, as amended, which was approved by each Yorkville Fund’s initial shareholder on March 1, 2012 and February 11, 2013, respectively, and was not subsequently submitted to a vote of either Yorkville Fund’s shareholders. The Old Sub-Advisory Agreement for the Yorkville Funds was renewed by the Board on February 18, 2014.
Penserra currently serves as sub-adviser to the Funds pursuant to an Interim Sub-Advisory Agreement. With respect to the Yorkville Funds, the decision to appoint Penserra as sub-adviser stemmed from a change in personnel at IMS. On or about November 11, 2014, Denise M. Krisko, previously the Chief Investment Officer of IMS, left IMS to join a different investment adviser. Upon the recommendation of the Adviser and having conducted due diligence regarding Penserra, and based on the Board’s recent experience with Penserra sub-advising EMQQ, the Board has determined that approval of Penserra as the sub-adviser to the Yorkville Funds is in the best interests of those Funds and their shareholders. The Board also has determined that approval of Penserra to continue as the sub-adviser to EMQQ is in the best interest of EMQQ and its shareholders.
Description of the Proposed Sub-Advisory Agreement. The following description of the material terms of the Proposed Sub-Advisory Agreement is only a summary and is qualified in its entirety by reference to the form of the Proposed Sub-Advisory Agreement between the Adviser and Penserra, which is attached to this Proxy Statement as Exhibit D. The terms of the Proposed Sub-Advisory Agreement with Penserra are substantially similar to the terms of the Old Sub-Advisory Agreement with IMS and identical Penserra’s Interim Sub-Advisory Agreement and Old Sub-Advisory Agreement with respect to EMQQ, except that compensation to Penserra is proposed to be different than that paid under the Old-Sub Advisory and the Interim Sub-Advisory Agreements.
Duration and Termination. The Proposed Sub-Advisory Agreement, like each of the Old Sub-Advisory Agreements, will remain in effect for a period of two years, unless sooner terminated. After the initial two-year period, continuation of the Proposed Sub-Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees. The Interim Sub-Advisory Agreement will remain in effect for a period of up to 150 days, unless sooner terminated.
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The Proposed Sub-Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, or by vote of a majority of the outstanding voting securities of the Fund, or by the Adviser, in each case, upon sixty (60) days’ written notice to the Sub-Adviser; or (ii) by the Sub-Adviser upon sixty (60) days’ written notice to the Adviser and the Board. These termination provisions are identical to the termination provisions of the Old Sub-Advisory Agreement with Penserra and identical to the termination provisions of the Old Sub-Advisory Agreement with IMS.
Sub-Advisory Services. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement require that the Sub-Adviser manage all of the securities and other assets of the Funds, including the purchase, retention and disposition of Fund assets, in accordance with each Fund’s investment objective, guidelines, policies and restrictions, subject to the supervision of the Adviser and the Board. Under each sub-advisory agreement, the Sub-Adviser determines the Fund assets to be purchased or sold by a Fund and places orders with or through broker dealers selected by the Sub-Adviser.
Management Fees. The Proposed Sub-Advisory Agreement has a sub-advisory fee, paid by the Adviser and not by the Funds, based on each Fund’s average daily net assets at the annual rate set forth in the table below. The fees are computed daily and paid monthly. The aggregate amount of sub-advisory fees paid to the Sub-Adviser by the Adviser for each Fund’s last fiscal period is also set forth in the table below. As discussed above, for the Yorkville Funds, the sub-advisory fees under the Proposed Sub-Advisory Agreements are different than the sub-advisory fees under the Old Sub-Advisory Agreement. The proposed new sub-advisory fees are listed in the table below, along with the amount a sub-adviser would have received had the proposed fees been in effect, and the percentage difference between the amounts actually received and those which would have been received under the Proposed Sub-Advisory Agreement. The sub-advisory fees under the Proposed Sub-Advisory Agreement would not impact the overall investment advisory fees paid by the Yorkville Funds, which are not proposed to change from the Old Advisory Agreements.
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Brokerage Policies. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement authorize the Funds’ Sub-Adviser to select the brokers or dealers that will execute the purchases and sales of securities of the Funds and direct the Sub-Adviser to seek for the Funds the most favorable execution and net price available under the circumstances. The Sub-Adviser may cause the Fund to pay a broker a commission in excess of that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research services provided by the broker to the Sub-Adviser.
For each Fund’s most recently completed fiscal period, no Fund paid commissions on portfolio brokerage transactions to brokers who may be deemed to be affiliated persons of the Fund or the Sub-Adviser or affiliated persons of such persons.
Payment of Expenses. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Sub-Adviser will pay all of the costs and expenses incurred by it in connection with the sub-advisory services provided for the Funds.
Other Provisions. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof, and all controlling persons from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses) arising from or in connection with the performance of the Sub-Adviser’s obligations under the agreements; provided, however, that the Sub-Adviser’s obligation shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Adviser shall indemnify and hold harmless the Sub-Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses) arising from or in connection with the performance of the Adviser’s obligations under the agreements; provided, however, that the Adviser’s obligation shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement.
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Portfolio Manager. Dustin Lewellyn, CFA, Managing Director of Penserra, has served as the portfolio manager to EMQQ since its inception. In addition, under the Interim Sub-Advisory Agreement, Mr. Lewellyn serves as each Yorkville Fund’s portfolio manager. As portfolio manager, he is primarily responsible for the day to day management of the Funds. Upon shareholder approval of the Proposed Sub-Advisory Agreement described under Proposal 2B, Mr. Lewellyn will continue to have primary responsibility for the day to day management of the Funds.
Mr. Lewellyn has been a Managing Director with Penserra since 2012 and is President and Founder of Golden Gate Investment Consulting LLC, a firm he started in 2011. Prior to that, Mr. Lewellyn was a managing director at Charles Schwab Investment Management, Inc. (“CSIM”), which he joined in 2009, and head of portfolio management for Schwab ETFs. Prior to joining CSIM, he worked for two years as director of ETF product management and development at a major financial institution focused on asset and wealth management. Prior to that, he was a portfolio manager for institutional clients at a financial services firm for three years. In addition, he held roles in portfolio operations and product management at a large asset management firm for more than 6 years.
Executive Officers and Directors of Penserra. Penserra Capital Management LLC, sub-adviser to the Funds, is a New York limited liability company. Penserra is located at 140 Broadway, 26th Floor, New York, New York 10005. Penserra provides investment advisory services to two other funds in separate trusts that do not have similar investment objectives to the Funds. The following are the executive officers and directors of Penserra:
Additional Information about the Trust and Penserra. No Trustee or officer of the Trust holds any position with Penserra.
Other Funds with Similar Investment Objectives. Below is a list of other funds with similar investment objectives as the Funds managed by Penserra, the size of each other fund and the rate of Penserra’s compensation with respect to each other fund. The basis point component of each sub-advisory fee is based on each fund’s average daily net assets at the annual rate set forth in the table below. The fee is computed daily and paid monthly. The other funds’ investment objectives are similar to the Funds in that each fund’s investment objective is to seek to track, before fees and expenses, the performance of an underlying index, which is also listed below.
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1. Composed of U.S. and non-U.S. securities (or their depositary receipts) of cyber security-related companies.2. Comprised of 380-400 equity securities and designed to measure the performance of certain U.S. large capitalization companies that have been selected and ranked according to their “earnings quality.”3. Comprised of U.S. and non-U.S. securities of robotics-related and/or automation related companies.4. Comprised of all of the stocks in the S&P 500 Index, weighted according to a proprietary risk-weighting methodology.5. Comprised of U.S. exchange-listed closed-end funds.
Required Vote. Approval of Proposal 2B with respect to each Fund requires the affirmative vote of a “majority of the outstanding voting securities” of such Fund when a quorum is present. Under the 1940 Act, a “majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund present or represented by proxy at the Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Meeting, or (b) more than 50% of the outstanding shares.
If Proposal 2B is approved by a Fund’s shareholders, the Proposed Sub-Advisory Agreement, with respect to such Fund, is expected to become effective on the date of the Meeting. If Proposal 2B is not approved by a Fund’s shareholders, Penserra will continue to serve as sub-adviser to such Fund pursuant to the Interim Sub-Advisory Agreement, and the Board will consider alternatives for the Fund, including seeking subsequent approval of a new sub-advisory agreement by Fund shareholders. Approval of the Proposed Sub-Advisory Agreement by shareholders of one Fund is not contingent on approval of the Proposed Sub-Advisory Agreement by shareholders of any other Fund.
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Recommendation of the Board of Trustees. The Board believes that the terms and conditions of the Proposed Sub-Advisory Agreement are fair to, and in the best interests of, each Fund and its shareholders. The Board believes that, upon a Fund’s shareholder approval of Proposal 2B, Penserra will continue providing the same level of services as it currently provides to each Fund under the Interim Sub-Advisory Agreement and that Penserra provided to EMQQ under the Old Sub-Advisory Agreement. The Board was presented with information demonstrating that the Proposed Sub-Advisory Agreement would enable Fund shareholders to continue to obtain quality services at a cost that was fair and reasonable.
In considering the Proposed Sub-Advisory Agreement, the Board took into consideration not only information provided to it in connection with the January 22, 2015 meeting, but also information that Penserra had provided the Board at its November 11, 2014 meeting in connection with its approval of Penserra’s Old Sub-Advisory Agreement with EMQQ. The information related to (i) the nature, extent and quality of the services to be provided by Penserra; (ii) the historical performance of the Funds; (iii) Penserra’s expected cost and profits realized from providing such services, including any fall-out benefits enjoyed by Penserra or its affiliates; (iv) comparative fee and expense data for the Funds; (v) the extent to which the sub-advisory fees for the Funds reflect economies of scale shared with Fund shareholders; and (vi) other factors the Board deemed to be relevant. At the January 22, 2015 meeting, Penserra confirmed that no material changes had been made to the information that it had provided to the Board at its November 11, 2014 meeting.
Nature, Extent and Quality of Services Provided. The Board considered the Sub-Adviser’s specific responsibilities in all aspects of day-to-day management of the Funds, including the qualifications, experience and responsibilities of the portfolio managers. The Board noted that the services to be provided under the Proposed Sub-Advisory Agreement were identical in all material respects to those services provided under the Old Sub-Advisory Agreements.
In considering the nature, extent and quality of the services to be provided by Penserra, the Board considered the quality of Penserra’s compliance infrastructure and the determination of the Trust’s Chief Compliance Officer that Penserra has appropriate compliance policies and procedures in place. The Board noted that it had previously received a copy of Penserra’s registration form (“Form ADV”), as well as the response of Penserra to a detailed series of questions which included, among other things, information about the background and experience of the firm’s management and staff. After discussion, the Independent Trustees concluded that the overall quality of Penserra’s personnel, operations, financial condition, and investment advisory capabilities is appropriate to perform its duties under the Proposed Sub-Advisory Agreement and that the nature, overall quality, cost and extent of such services was expected to be satisfactory.
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Historical Performance. The Board then considered the past performance of each Fund, including the Funds with limited historical performance. The Board noted that the Sub-Adviser had not previously managed any of the Funds except EMQQ. With respect to EMQQ, the Board noted that the index-based investment objective of the Fund made analysis of investment performance, in absolute terms, less of a priority than that which normally attaches to the performance of actively managed funds. Instead, the Board focused on the extent to which the Fund achieved its investment objective as a passively managed fund. In that regard, the Board reviewed information regarding factors impacting the performance of EMQQ, including the construction of its underlying index and the addition or deletion of securities from the underlying index. The Board reviewed the information regarding the Fund’s index tracking and tracking error, noting that the Fund satisfactorily tracked its underlying index during its limited period of operations since inception.
Costs of Services Provided and Economies of Scale. The Board reviewed the sub-advisory fees to be paid by the Adviser to Penserra for its services to each Fund under the Proposed Sub-Advisory Agreement. The Board noted that, like the Old Sub-Advisory Agreement, the sub-advisory fees under the Proposed Sub-Advisory Agreement had two components: 1) a basis point fee based on assets under management and 2) a minimum annual fee. The Board noted that, for the Yorkville Funds, the basis point fees were lower than the basis point fees under the Old Sub-Advisory Agreement, but that the minimum annual fees were higher. The Board considered, however, that the fees to be paid to Penserra would be paid by the Adviser, not by the Fund, and noted that the fee reflected an arms-length negotiation between the Adviser and Penserra. The Board further determined that the fees reflected an appropriate allocation of the advisory fee paid to the Adviser given the work performed by each firm. The Board concluded that the proposed sub-advisory fees were reasonable.The Board considered the costs and expenses incurred by Penserra in providing sub-advisory services, evaluated the compensation and benefits expected to be received by Penserra from its relationship with the Funds, and performed a profitability analysis with respect to each of the Funds. The Board concluded for each Fund that the sub-advisory fees appeared reasonable in light of the services rendered. In addition, the Board considered for each Fund whether economies of scale have been realized. The Board concluded that no significant economies of scale have been realized by any of the Funds and that the Board will have the opportunity to periodically reexamine whether such economies have been achieved.
Conclusion. No single factor was determinative of the Board’s decision to approve the Proposed Sub-Advisory Agreement on behalf of each Fund; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including a majority of the Independent Trustees, determined that the Proposed Sub-Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to each of the Funds. The Board, including a majority of the Independent Trustees, therefore determined that the approval of the Proposed Sub-Advisory Agreement was in the best interests of each Fund and its shareholders.
The Board of Trustees of Exchange Traded Concepts Trust unanimously recommends thatshareholders of each Fund vote “FOR” Proposal 2B.
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Information Relating to Proposal 2C
Yorkville ETF Advisors, LLCProposed Sub-Advisory Agreement
Yorkville High Income MLP ETFYorkville High Income Infrastructure MLP ETF
In Proposal 2C, the Board of Trustees of Exchange Traded Concepts Trust (the “Trust”) requests that shareholders approve a Proposed Sub-Advisory Agreement between the Adviser and Yorkville ETF Advisors, LLC (“Yorkville Advisors” or the “Sub-Adviser”) with respect to the Yorkville High Income MLP ETF and Yorkville High Income Infrastructure MLP ETF (collectively, the “Yorkville Funds”). Prior to the Transaction, Yorkville Advisors served as sub-adviser to the Yorkville Funds pursuant to the Old Sub-Advisory Agreement dated March 7, 2012, as amended October 1, 2013, which was approved by each Yorkville Fund’s initial shareholder on March 1, 2012 and February 11, 2013, respectively, and was not subsequently submitted to a vote of either Yorkville Fund’s shareholders. The Old Sub-Advisory Agreement was renewed by the Trust’s Board of Trustees (the “Board”) on February 18, 2014.
Description of the Proposed Sub-Advisory Agreement. The following description of the material terms of the Proposed Sub-Advisory Agreement is only a summary and is qualified in its entirety by reference to the form of the Proposed Sub-Advisory Agreement between the Adviser and Yorkville Advisors, which is attached to this Proxy Statement as Exhibit E. The terms of the Proposed Sub-Advisory Agreement with Yorkville Advisors are substantially identical to the terms of Yorkville’s Interim Sub-Advisory Agreement and the terms of the Old Sub-Advisory Agreement with respect to the Yorkville Funds.
Duration and Termination. The Proposed Sub-Advisory Agreement, like the Old Sub-Advisory Agreement, will remain in effect for a period of two years, unless sooner terminated. After the initial two-year period, continuation of the Proposed Sub-Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees. The Interim Sub-Advisory Agreement will remain in effect for a period of up to 150 days, unless sooner terminated.
The Proposed Sub-Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, or by vote of a majority of the outstanding voting securities of the Funds or by the Adviser, in each case, upon sixty (60) days’ written notice to the Sub-Adviser; or (ii) by the Sub-Adviser upon sixty (60) days’ written notice to the Adviser and the Board. These termination provisions are identical to the termination provisions of the Old Sub-Advisory Agreement with Yorkville Advisors.
Sub-Advisory Services. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement require that the Sub-Adviser manage all of the securities and other assets of the Funds, including the purchase, retention and disposition of Fund assets, in accordance with the Funds’ investment objective, guidelines, policies and restrictions, subject to the supervision of the Adviser and the Board. Under each sub-advisory agreement, unless such authority has been retained by the Adviser or delegated to another sub-adviser, the Sub-Adviser determines the Fund assets to be purchased or sold by a Fund and places orders with or through broker dealers selected by the Sub-Adviser.
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Management Fees. The Proposed Sub-Advisory Agreement has a sub-advisory fee, paid by the Adviser and not by the Funds, based on each Fund’s average daily net assets at the annual rate set forth in the table below. The fees are computed daily and paid monthly. The aggregate amount of sub-advisory fees paid to the Sub-Adviser by the Adviser for each Fund’s last fiscal period is also set forth in the table below.
Brokerage Policies. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement authorize the Funds’ Sub-Adviser to select the brokers or dealers that will execute the purchases and sales of securities of the Funds and direct the Sub-Adviser to seek for the Funds the most favorable execution and net price available under the circumstances. The Sub-Adviser may cause the Funds to pay a broker a commission in excess of that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research services provided by the broker to the Sub-Adviser.
For each Fund’s most recently completed fiscal period, no Fund paid commissions on portfolio brokerage transactions to brokers who may be deemed to be affiliated persons of the Funds or the Sub-Adviser or affiliated persons of such persons.
Payment of Expenses. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Sub-Adviser will pay all of the costs and expenses incurred by it in connection with the sub-advisory services provided for the Funds. Each of those Agreements also provide that the Sub-Adviser agrees to assume, the responsibility to pay or cause to be paid from the Sub-Adviser’s own resources, which may include the sub-advisory fee paid to it by the Adviser, all fees and expenses of the Yorkville Funds not paid by the Adviser, excluding 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, accrued deferred tax liability, extraordinary expenses, and distribution fees and expenses paid by a Yorkville Fund under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (“Excluded Expenses”).
Other Provisions. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof, and all controlling persons from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses) arising from or in connection with the performance of the Sub-Adviser’s obligations under the agreements; provided, however, that the Sub-Adviser’s obligation shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Adviser shall indemnify and hold harmless the Sub-Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses) arising from or in connection with the performance of the Adviser’s obligations under the agreements; provided, however, that the Adviser’s obligation shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement.
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Portfolio Manager. Dustin Lewellyn, CFA, Managing Director of Penserra Capital Management LLC (“Penserra”) serves as each Yorkville Fund’s portfolio manager. As portfolio manager, he is primarily responsible for the day to day management of the Yorkville Funds. Mr. Lewellyn replaced Darren R. Schuringa, CFA, who had served as portfolio manager for each of the Yorkville Funds since their inception. Mr. Schuringa resigned from his position as portfolio manager of Yorkville Advisors effective as of the date of the Transaction. Upon shareholder approval of the Proposed Sub-Advisory Agreement described under Proposal 2B, Mr. Lewellyn will continue to have primary responsibility for the day to day management of the Yorkville Funds.
Mr. Lewellyn has been a Managing Director with Penserra since 2012 and is President and Founder of Golden Gate Investment Consulting LLC, a firm he started in 2011. Prior to that, Mr. Lewellyn was a managing director at Charles Schwab Investment Management, Inc. (“CSIM”), which he joined in 2009, and head of portfolio management for Schwab ETFs. Prior to joining CSIM, he worked for two years as director of ETF product management and development at a major financial institution focused on asset and wealth management. Prior to that, he was a portfolio manager for institutional clients at a financial services firm for three years. In addition, he held roles in portfolio operations and product management at a large asset management firm for more than 6 years.
Executive Officers and Directors of Yorkville. Yorkville ETF Advisors, LLC, a Delaware limited liability company, is located at 950 Third Avenue, 23rd Floor, New York, New York 10022. The Sub-Adviser provides investment advisory services to exchange-traded funds. The following are the executive officers and directors of Yorkville:
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Additional Information about the Trust and Yorkville Advisors. Mr. Hogan serves as the Treasurer and the Secretary of the Trust. No Trustee of the Trust holds any position with Yorkville Advisors.
Required Vote. Approval of Proposal 2C with respect to each Yorkville Fund requires the affirmative vote of a “majority of the outstanding voting securities” of such Fund when a quorum is present. Under the 1940 Act, a “majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund present or represented by proxy at the Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Meeting, or (b) more than 50% of the outstanding shares.
If Proposal 2C is approved by a Yorkville Fund’s shareholders, the Proposed Sub-Advisory Agreement, with respect to such Fund, is expected to become effective on the date of the Meeting. If Proposal 2C is not approved by a Yorkville Fund’s shareholders, Yorkville Advisors will continue to serve as sub-adviser to such Fund pursuant to the Interim Sub-Advisory Agreement, and the Board will consider alternatives for the Fund, including seeking subsequent approval of a new sub-advisory agreement by Fund shareholders. Approval of the Proposed Sub-Advisory Agreement by shareholders of one Yorkville Fund is not contingent on approval of the Proposed Sub-Advisory Agreement by shareholders of the other Yorkville Fund.
Recommendation of the Board of Trustees. The Board believes that the terms and conditions of the Proposed Sub-Advisory Agreement are fair to, and in the best interests of, each Yorkville Fund and its shareholders. The Board believes that, upon a Fund’s shareholder approval of Proposal 2C, Yorkville Advisors will continue providing the same level of services as it currently provides under the Interim Sub-Advisory Agreement and the Old Sub-Advisory Agreement. The Board was presented with information demonstrating that the Proposed Sub-Advisory Agreement would enable Fund shareholders to continue to obtain quality services at a cost that was fair and reasonable.
In considering the Proposed Sub-Advisory Agreement, the Board took into consideration (i) the nature, extent and quality of the services to be provided by Yorkville Advisors; (ii) the historical performance of the Yorkville Funds; (iii) Yorkville Advisors’ expected cost and profits realized from providing such services, including any fall-out benefits enjoyed by Yorkville Advisors or its affiliates; (iv) comparative fee and expense data for the Yorkville Funds; (v) the extent to which the sub-advisory fees for the Yorkville Funds reflect economies of scale shared with Fund shareholders; and (vi) other factors the Board deemed to be relevant.
Nature, Extent and Quality of Services Provided. The Board considered the Sub-Adviser’s specific responsibilities in all aspects of day-to-day management of the Funds, including the qualifications, experience and responsibilities of the portfolio managers. The Board noted that the services to be provided under the Proposed Sub-Advisory Agreement were identical in all material respects to those services provided under the Old Sub-Advisory Agreement. The Board noted that the Transaction resulted in the departure of the portfolio manager of the Funds. The Board received assurance from Yorkville Advisors that it had arranged for individuals other than the portfolio manager who provided services to the Yorkville Funds prior to the Transaction to provide services to the Yorkville Funds after the Transaction, in order to provide continuity of services to the Funds.
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In considering the nature, extent and quality of the services to be provided by Yorkville Advisors, the Board considered the quality of Yorkville Advisors’ compliance infrastructure and the determination of the Trust’s Chief Compliance Officer that Yorkville Advisors has appropriate compliance policies and procedures in place. The Board noted that it had previously received a copy of Yorkville Advisors’ registration form (“Form ADV”), as well as the response of Yorkville Advisors to a detailed series of questions which included, among other things, information about the background and experience of the firm’s management and staff. After discussion, the Independent Trustees concluded that the overall quality of Yorkville Advisors’ personnel, operations, financial condition, and investment advisory capabilities is appropriate to perform its duties under the Proposed Sub-Advisory Agreement and that the nature, overall quality, cost and extent of such services was expected to continue to be satisfactory.
Historical Performance. The Board then considered the past performance of each Fund. The Board noted that the index-based investment objective of the Yorkville Funds made analysis of investment performance, in absolute terms, less of a priority than that which normally attaches to the performance of actively managed funds. Instead, the Board focused on the extent to which a Fund achieved its investment objective as a passively managed fund. In that regard, the Board reviewed information regarding factors impacting the performance of the Yorkville Funds, including the construction of its underlying indices and the addition or deletion of securities from the underlying indices. The Board reviewed the information regarding each Fund’s index tracking, noting that each Fund’s tracking error, as anticipated by Yorkville Advisors, was attributable to the Fund’s taxation as a C corporation and that, after taking this into account, each Fund satisfactorily tracked its underlying index.
Costs of Services Provided and Economies of Scale. The Board reviewed the sub-advisory fees to be paid by the Adviser to Yorkville Advisors for its services to each Fund under the Proposed Sub-Advisory Agreement. The Board noted that each Fund’s sub-advisory fees were consistent with the range of advisory fees paid by other peer funds and were identical to the sub-advisory fees paid under the Old Sub-Advisory Agreement. The Board considered that the fees to be paid to Yorkville Advisors would be paid by the Adviser, not by the Fund. The Board further determined that the fee reflected an appropriate allocation of the advisory fee paid to the Adviser given the work performed by each firm. The Board considered that Yorkville Advisors is responsible for paying all of the expenses associated with operating each Fund, except Excluded Expenses. The Board concluded that the proposed sub-advisory fee was reasonable.
The Board considered the costs and expenses incurred by Yorkville Advisors in providing sub-advisory services, evaluated the compensation and benefits expected to be received by Yorkville Advisors from its relationship with the Funds, and performed a profitability analysis with respect to each of the Yorkville Funds. The Board concluded for each Fund that the advisory fees appeared reasonable in light of the services rendered. In addition, the Board considered for each Yorkville Fund whether economies of scale have been realized. The Board concluded that no significant economies of scale have been realized by either Yorkville Fund and that the Board will have the opportunity to periodically reexamine whether such economies have been achieved.
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Conclusion. No single factor was determinative of the Board’s decision to approve the Proposed Sub-Advisory Agreement on behalf of each Yorkville Fund; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including a majority of the Independent Trustees, determined that the Proposed Sub-Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to each of the Yorkville Funds. The Board, including a majority of the Independent Trustees, therefore determined that the approval of the Proposed Sub-Advisory Agreement was in the best interests of each Yorkville Fund and its shareholders.
The Board of Trustees of Exchange Traded Concepts Trust unanimously recommends thatshareholders of each Yorkville Fund vote “FOR” Proposal 2C.
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Information Relating to Proposal 2D
Horizons ETFs Management (USA) LLCProposed Sub-Advisory Agreement
Horizons S&P 500® Covered Call ETF
In Proposal 2D, the Board of Trustees of the Exchange Traded Concepts Trust II (the “Trust”) requests that shareholders approve a Proposed Sub-Advisory Agreement between the Adviser and Horizons ETFs Management (USA) LLC (“Horizons” or the “Sub-Adviser”) with respect to Horizons S&P 500® Covered Call ETF (the “Fund”). Prior to the Transaction, Horizons served as sub-adviser to the Fund pursuant to the Old Sub-Advisory Agreement dated May 23, 2013, which was approved by the Fund’s initial shareholder on May 23, 2013 and was not subsequently submitted to a vote of Fund shareholders. The Old Sub-Advisory Agreement was approved by the Trust’s Board of Trustees (the “Board”) on May 23, 2013.
Description of the Proposed Sub-Advisory Agreement. The following description of the material terms of the Proposed Sub-Advisory Agreement is only a summary and is qualified in its entirety by reference to the form of the Proposed Sub-Advisory Agreement between the Adviser and Horizons attached to this Proxy Statement as Exhibit F. The terms of the Proposed Sub-Advisory Agreement with Horizons are substantially identical to the terms of Horizons’ Interim Sub-Advisory Agreement and the terms of the Old Sub-Advisory Agreement with respect to the Fund, unless otherwise noted below.
Duration and Termination. The Proposed Sub-Advisory Agreement, like the Old Sub-Advisory Agreement, will remain in effect for a period of two years, unless sooner terminated. After the initial two-year period, continuation of the Proposed Sub-Advisory Agreement from year to year is subject to annual approval by the Board, including at least a majority of the Independent Trustees. The Interim Sub-Advisory Agreement will remain in effect for a period of up to 150 days, unless sooner terminated.
The Proposed Sub-Advisory Agreement may be terminated without penalty (i) by vote of a majority of the Board, or by vote of a majority of the outstanding voting securities of the Fund, or by the Adviser, in each case, upon sixty (60) days’ written notice to the Sub-Adviser; (ii) by the Sub-Adviser upon sixty (60) days’ written notice to the Adviser and the Board. The termination provisions of the Proposed Sub-Advisory Agreement are identical to those of the Old Sub-Advisory Agreement, except that 1) the Old Sub-Advisory Agreement required a vote of the majority of the Trustees who are not parties to the Old Sub-Advisory Agreement or interested persons of any such party to terminate the Old Sub-Advisory Agreement and 2) the Proposed Sub-Advisory Agreement allows the Adviser to terminate the agreement upon (60) days’ written notice to the Sub-Adviser.
Sub-Advisory Services. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement require that the Sub-Adviser manage all of the securities and other assets of the Fund, including the purchase, retention and disposition of Fund assets, in accordance with the Fund’s investment objective, guidelines, policies and restrictions, subject to the supervision of the Adviser and the Board. Under each sub-advisory agreement, the Sub-Adviser determines the Fund assets to be purchased or sold by the Fund and places orders with or through broker dealers selected by the Sub-Adviser.
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Management Fees. The Proposed Sub-Advisory Agreement has a sub-advisory fee, paid by the Adviser and not by the Fund. The aggregate amount of sub-advisory fees paid to the Sub-Adviser by the Adviser for the Fund’s last fiscal period is also set forth in the table below.
Brokerage Policies. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement authorize the Fund’s Sub-Adviser to select the brokers or dealers that will execute the purchases and sales of securities of the Fund and direct the Sub-Adviser to seek for the Fund the most favorable execution and net price available under the circumstances. The Sub-Adviser may cause the Fund to pay a broker a commission in excess of that which another broker might have charged for effecting the same transaction, in recognition of the value of the brokerage and research services provided by the broker to the Sub-Adviser.
For the Fund’s most recently completed fiscal period, the Fund paid no commissions on portfolio brokerage transactions to brokers who may be deemed to be affiliated persons of the Fund or the Sub-Adviser or affiliated persons of such persons.
Payment of Expenses. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Sub-Adviser will pay all of the costs and expenses incurred by it in connection with the sub-advisory services provided for the Fund.
Other Provisions. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof, and all controlling persons from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses) arising from or in connection with the performance of the Sub-Adviser’s obligations under the agreements; provided, however, that the Sub-Adviser’s obligation shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement. Each of the Old Sub-Advisory Agreement, Interim Sub-Advisory Agreement and Proposed Sub-Advisory Agreement provide that the Adviser shall indemnify and hold harmless the Sub-Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses) arising from or in connection with the performance of the Adviser’s obligations under the agreements; provided, however, that the Adviser’s obligation shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of the reckless disregard of its duties under the agreement.
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Portfolio Manager. Under the Interim Sub-Advisory Agreement, Steven Hawkins is a Portfolio Manager at Horizons ETFs Management (USA) LLC and has served as a Portfolio Manager of the Fund since its inception. Nicolas Piquard is also a Portfolio Manager at Horizons ETFs Management (USA) LLC and has served as a Portfolio Manager of the Fund since 2014. Messrs. Hawkins and Piquard are primarily responsible for the day to day management of the Fund. Upon shareholder approval of the Proposed Sub-Advisory Agreement described under Proposal 2D, they will continue to have primary responsibility for the day to day management of the Fund.
Executive Officers and Directors of Horizons. Horizons ETFs Management (USA) LLC, a Delaware limited liability company formed in 2012, is an investment adviser located at 1350 Avenue of the Americas, 33rd Floor, New York, New York, 10019. The Sub-Adviser provides advisory services to various other exchange-traded funds. The following are the executive officers and directors of Horizons:
Additional Information about the Trust and Horizons. No Trustee or officer of the Trust holds any position with Horizons.
Other Fund with Similar Investment Objective. Below is a list of other funds with similar investment objectives as the Fund, the size of each other fund and the rate of Horizons’ compensation with respect to each other fund. The advisory fee is based on the fund’s average daily net assets at the annual rate set forth in the table below. The fee is computed daily and paid monthly. The other fund’s investment objectives are similar to the Fund in that the fund’s investment objective is to seek to track, before fees and expenses, the performance of an underlying index, which is also listed below.
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1 Comprised of blue chip companies listed on the Korea Stock Market.
Required Vote. Approval of Proposal 2D with respect to the Fund requires the affirmative vote of a “majority of the outstanding voting securities” of the Fund when a quorum is present. Under the 1940 Act, a “majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund present or represented by proxy at the Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Meeting, or (b) more than 50% of the outstanding shares.
If Proposal 2D is approved by the Fund’s shareholders, the Proposed Sub-Advisory Agreement, with respect to the Fund, is expected to become effective on the date of the Meeting. If Proposal 2D is not approved by the Fund’s shareholders, Horizons will continue to serve as sub-adviser to the Fund pursuant to the Interim Sub-Advisory Agreement, and the Board will consider alternatives for the Fund, including seeking subsequent approval of a new sub-advisory agreement by Fund shareholders.
Recommendation of the Board of Trustees. The Board believes that the terms and conditions of the Proposed Sub-Advisory Agreement are fair to, and in the best interests of, the Fund and its shareholders. The Board believes that, upon a Fund’s shareholder approval of Proposal 2D, Horizons will continue providing the same level of services as it currently provides under the Interim Sub-Advisory Agreement and the Old Sub-Advisory Agreement. The Board was presented with information demonstrating that the Proposed Sub-Advisory Agreement would enable Fund shareholders to continue to obtain quality services at a cost that was fair and reasonable.
In considering the Proposed Sub-Advisory Agreement, the Board took into consideration (i) the nature, extent and quality of the services to be provided by Horizons; (ii) the historical performance of the Fund; (iii) Horizons’ expected cost and profits realized from providing such services, including any fall-out benefits enjoyed by Horizons or its affiliates; (iv) comparative fee and expense data for the Fund; (v) the extent to which the sub-advisory fees for the Fund reflect economies of scale shared with Fund shareholders; and (vi) other factors the Board deemed to be relevant.
Nature, Extent and Quality of Services Provided. The Board considered the Sub-Adviser’s specific responsibilities in all aspects of day-to-day management of the Fund, including the qualifications, experience and responsibilities of the portfolio managers. The Board noted that the services to be provided under the Proposed Sub-Advisory Agreement were identical in all material respects to those services provided under the Old Sub-Advisory Agreement.
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In considering the nature, extent and quality of the services to be provided by Horizons, the Board considered the quality of Horizons’ compliance infrastructure and the determination of the Trust’s Chief Compliance Officer that Horizons has appropriate compliance policies and procedures in place. The Board noted that it had previously received a copy of Horizons’ registration form (“Form ADV”), as well as the response of Horizons to a detailed series of questions which included, among other things, information about the background and experience of the firm’s management and staff. After discussion, the Independent Trustees concluded that the overall quality of Horizons’ personnel, operations, financial condition, and investment advisory capabilities is appropriate to perform its duties under the Proposed Sub-Advisory Agreement and that the nature, overall quality, cost and extent of such services was expected to continue to be satisfactory.
Historical Performance. The Board then considered the past performance of the Fund. The Board noted that the index-based investment objective of the Fund made analysis of investment performance, in absolute terms, less of a priority than that which normally attaches to the performance of actively managed funds. Instead, the Board focused on the extent to which the Fund achieved its investment objective as a passively managed fund. In that regard, the Board reviewed information regarding factors impacting the performance of the Fund, including the construction of its underlying indices and the addition or deletion of securities from the underlying indices. The Board reviewed the information regarding the Fund’s index tracking and tracking error, noting that the Fund satisfactorily tracked its underlying index.
Costs of Services Provided and Economies of Scale. The Board reviewed the sub-advisory fees to be paid by the Adviser to Horizons for its services to the Fund under the Proposed Sub-Advisory Agreement. The Board noted that the Fund’s sub-advisory fees were identical to the sub-advisory fees paid under the Old Sub-Advisory Agreement. The Board considered that the fees to be paid to Horizons would be paid by the Adviser, not by the Fund, and noted that the fee reflected an arms-length negotiation between the Adviser and Horizons. The Board further determined that the fee reflected an appropriate allocation of the advisory fee paid to the Adviser given the work performed by each firm. The Board concluded that the proposed sub-advisory fee was reasonable.
The Board considered the costs and expenses incurred by Horizons in providing sub-advisory services, evaluated the compensation and benefits expected to be received by Horizons from its relationship with the Fund, and performed a profitability analysis with respect to the Fund. The Board concluded for the Fund that the advisory fees appeared reasonable in light of the services rendered. In addition, the Board considered for the Fund whether economies of scale have been realized but concluded that no significant economies of scale have been achieved by the Fund.
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Conclusion. No single factor was determinative of the Board’s decision to approve the Proposed Sub-Advisory Agreement on behalf of the Fund; rather, the Board based its determination on the total mix of information available to it. Based on a consideration of all the factors in their totality, the Board, including a majority of the Independent Trustees, determined that the Proposed Sub-Advisory Agreement, including the compensation payable under the agreement, was fair and reasonable to the Fund. The Board, including a majority of the Independent Trustees, therefore determined that the approval of the Proposed Sub-Advisory Agreement was in the best interests of the Fund and its shareholders.
The Board of Trustees of Exchange Traded Concepts Trust II unanimously recommends thatshareholders of the Fund vote “FOR” Proposal 2D.57
PROPOSAL 3
Approval of a “Manager of Managers”Arrangement
Forensic Accounting ETFROBO-STOXTM Global Robotics and Automation Index ETFJanus Equal Risk Weighted Large Cap ETFYieldShares High Income ETFHorizons S&P 500® Covered Call ETF
Background
Fund shareholders are being asked to approve a “manager of managers” arrangement that would permit a Fund and the Adviser to enter into, and materially amend, sub-advisory agreements with sub-advisers retained by a Fund and the Adviser to manage all or a portion of the Fund’s assets without obtaining shareholder approval, if the Board concludes that such an arrangement would be in the best interests of the shareholders of the Fund. Each Board, including the Independent Trustees, has approved the use of a “manager of managers” arrangement, and any such arrangement utilized by a Fund would be subject to Board oversight and conditions imposed by the U.S. Securities and Exchange Commission (“SEC”) in either a rule or an exemptive order, including the requirement that any sub-advisory agreement or material change to such agreement be approved by the Board (including a majority of the Independent Trustees).
If shareholders of a Fund approve Proposal 3, the Fund would be able to implement a “manager of managers” arrangement. In that case, no further shareholder vote would be required either to approve a sub-advisory agreement or materially amend any such sub-advisory agreement, subject to the conditions in the exemptive order, as applicable, including approval of any such agreement or material change to such agreement by the Board (including a majority of the Independent Trustees). In view of the fact that “manager of managers” exemptive orders are typically subject to the condition that fund shareholders approve a “manager of managers” arrangement prior to reliance on the exemptive order, the Board has determined to ask each Fund’s shareholders to approve the “manager of managers” arrangement for such Fund in conjunction with the solicitation of shareholder approval of the other proposals discussed in this Proxy Statement to avoid the cost of seeking shareholder approval separately.
Benefit to the Funds
Based on the recommendation of the Adviser, the Boards believe that it is in the best interests of each Fund and its shareholders to provide the Adviser and the Boards with increased flexibility to recommend, supervise, evaluate and change sub-advisers without incurring the significant delay and expense associated with obtaining prior shareholder approval.
Without the approval of the “manager of managers” arrangement, a Fund would be required to call and hold a shareholder meeting before it appoints a sub-adviser or materially amends a sub-advisory agreement. Additionally, a Fund would have to seek shareholder approval of a new sub-advisory agreement if a sub-adviser undergoes a change in control, even if there will be no change in the persons managing the Fund. Each time a shareholder meeting is called, a Fund must create and distribute proxy materials and solicit proxy votes from the Fund’s shareholders. This process is time-consuming and costly, and such costs may be borne by the Fund, thereby reducing shareholders’ investment returns. A “manager of managers” arrangement allows the Fund and the Adviser to make decisions regarding sub-advisory services solely with regard to merit and without factoring the significant costs and time delays associated with seeking and obtaining shareholder approval. It is anticipated that a “manager of managers” arrangement will permit each Fund to operate more efficiently and cost-effectively.
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If a Fund’s shareholders approve Proposal 3, the Fund’s Board will oversee the selection and engagement of sub-advisers for the Fund. Further, a Fund’s Board, including a majority of the Independent Trustees, will evaluate and consider for approval all new sub-advisory agreements. Finally, under the 1940 Act, a Fund’s Board, including a majority of the Independent Trustees, will be required to review and consider any sub-advisory agreement for renewal annually, following an initial two year period. Prior to entering into, renewing or amending a sub-advisory agreement, the Adviser and the relevant sub-adviser will have a legal duty to provide the Board with information on factors pertinent to the Board’s decision regarding those advisory arrangements.
If shareholders of a Fund do not approve Proposal 3, the Fund would be required to solicit shareholder approval of new or materially amended sub-advisory agreements or further solicit Fund shareholders’ approval of the “manager of managers” arrangement.
Effect on Fees and Quality of Advisory Services
Proposal 3 does not affect the amount of investment advisory fees paid by a Fund to the Adviser. When entering into and amending sub-advisory agreements, the Adviser will negotiate fees paid to the sub-advisers for their services. The sub-advisory fees are paid by the Adviser out of each Fund’s investment advisory fee. The fees paid to the Adviser by a Fund will be considered by the Board in approving and renewing advisory and sub-advisory agreements.
Under Proposal 3, shareholder approval will continue to be required in the event of any proposed increase in the investment advisory fee paid by a Fund to the Adviser. Further, whether or not shareholders approve Proposal 3, the Adviser will continue to be required to provide the same level of management and administrative services to a Fund as it currently provides to the Fund.
Conditions for Establishing a Manager of Managers Arrangement
Currently, the only means for establishing a “manager of managers” arrangement is by filing an application with the SEC requesting an exemptive order that would provide relief from the provisions of Section 15(a) of the 1940 Act and Rule 18f-2 thereunder. These provisions of the 1940 Act require that shareholders approve advisory agreements, including any sub-advisory agreements, and approve any material amendments to such agreements. The Adviser and the Trusts filed a request for such exemptive relief with the SEC (the “Application”), and the SEC granted the relief in an order issued March 10, 2015 (the “Order”).
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If a Fund’s shareholders approve Proposal 3, the Adviser and the Fund would be authorized to (1) engage new or additional sub-advisers; (2) enter into and modify existing sub-advisory agreements; and (3) terminate and replace sub-advisers without obtaining further approval of the Fund’s shareholders, provided the Board, including a majority of the Independent Trustees, has approved the new or amended sub-advisory agreement. Under the terms and conditions of the Order, the Adviser and the Fund would be subject to several conditions imposed by the SEC. For example, within 90 days of the hiring of a new sub-adviser, the Fund would be required to provide shareholders with an information statement containing information about the sub-adviser and the sub-advisory agreement, similar to that which would have been provided in a proxy statement seeking shareholder approval of such an arrangement or change thereto. For a complete list of the conditions imposed by the terms and conditions of the Order, please refer to Exhibit G.
Required Vote. Approval of Proposal 3 by each Fund requires the affirmative vote of a “majority of the outstanding voting securities” of such Fund when a quorum is present. Under the 1940 Act, a “majority of the outstanding voting securities” means the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund present or represented by proxy at the Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy at the Meeting, or (b) more than 50% of the outstanding shares.
If Proposal 3 is approved by Fund shareholders, each Board and the Adviser would be permitted to act as described herein, including by engaging new or additional sub-advisers with the Board’s approval, including a majority of the Independent Trustees, and without shareholder approval. If Proposal 3 is not approved by Fund shareholders, the Adviser and the Boards would not be permitted to rely on the Order until a “manager of managers” arrangement is approved by Fund shareholders at a future meeting of shareholders. Approval of Proposal 3 by shareholders of one Fund is not contingent on approval of the Proposal by shareholders of any other Fund.
Each Board unanimously recommends that shareholders
of each Fund vote “FOR” Proposal 3.
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PROPOSAL 4Election of a Trustee to the Board of Trustees of
Exchange Traded Concepts Trust andExchange Traded Concepts Trust IIBackgroundProposals 4A and 4B (collectively, “Proposal 4”) relate to the election of Timothy J. Jacoby (the “Nominee”) to the Board of Trustees of Exchange Traded Concepts Trust and Exchange Traded Concepts Trust II. Each Board currently consists of respectively, four and three Independent Trustees, including Mr. Jacoby,Ms. Petrone, and one Trustee who is an “interested person” of the Trust (the “Interested Trustee”) as that term is defined in the 1940 Act. EachAct (the “Interested Trustee”). Exchange Traded Concepts Trust currently consists of four Independent Trustees, including each Nominee, and one Interested Trustee. For each Trust, each Trustee was elected to the Board by shareholdersthe initial shareholder of the Trust at the inceptiontime of the Trust,Trust’s organization, except for the Nominee,Nominees and Timothy J. Jacoby, who was elected by shareholders of each Trust at a special joint meeting of shareholders held on May 12, 2015. Ms. Petrone was appointed to fillas a vacancy on JuneTrustee of each Trust effective October 17, 2019. Mr. Strauss was appointed as a Trustee of Exchange Traded Concepts Trust effective January 1, 2014.2021. Each Trustee, including the Nominees, has been serving as a Trustee to one or both Boards continuously since his or her election or appointment.
Shareholders of record of each Fund comprising Exchange Traded Concepts Trust will vote together as a single class. Shareholders of record of Horizons S&P 500® Covered Call ETF will vote on the proposal with respect to Exchange Traded Concepts Trust II. If elected, the Nominee will serve in accordance with the Agreement and Declaration of Trust and the by-laws of each Trust. Further, if the Nominee is elected, all Trustees on each Board will have been elected by shareholders of their respective Trusts.
Mr. Jacoby has indicated that he is able and willing to continue to serve as Trustee for each Trust if elected. If for any reason Mr. Jacoby becomes unable to serve before the Meeting, proxies will be voted for a substitute nominated by each Board, unless a shareholder instructs otherwise. Trust.
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a standingan Audit Committee that is composed of each of the Independent Trustees of the Trust. Mr. Jacoby, an Independent Trustee, serves as Chair. The Board has determined that Mr. Jacoby is an audit committee financial expert. The Audit Committee operates under a written charter approved by the Board. The principal responsibilities of the Audit Committee include: recommending which firm to engage as each Fund’sthe Funds’ independent registered public accounting firm and whether to terminate this relationship; reviewing the independent registered public accounting firm’s compensation, the proposed scope and terms of its engagement, and the firm’s independence; pre-approving audit and non-audit services provided by each Fund’sthe Funds’ independent registered public accounting firm to the Trust and certain other affiliated entities; serving as a channel of communication between the independent registered public accounting firm and the Trustees; reviewing the results of each external audit, including any qualifications in the independent registered public accounting firm’s opinion, any related management letter, management’s responses to recommendations made by the independent registered public accounting firm in connection with the audit, reports submitted to the Committee by the internal auditing department of the Trust’s administrator that are material to the Trust as a whole, if any, and management’s responses to any such reports; reviewing each Fund’s audited financial statements and considering any significant disputes between the Trust’s management and the independent registered public accounting firm that arose in connection with the preparation of those financial statements; considering, in consultation with the independent registered public accounting firm and the Trust’s senior internal accounting executive, if any, the independent registered public accounting firms’ report on the adequacy of the Trust’s internal financial controls; reviewing, in consultation with each Fund’sthe Funds’ independent registered public accounting firm, major changes regarding auditing and accounting principles and practices to be followed when preparing thea Fund’s financial statements; and other audit related matters. The Audit Committee also serves as the Trust’s Qualified Legal Compliance Committee, which provides a mechanism for reporting legal violations. The Audit Committee meets periodically, as necessary. The Audit Committee for the Board of Exchange Listed Funds Trust met six (6) times during the fiscal year ended August 31, 2021. The Audit Committee for the Board of Exchange Traded Concepts Trust met three (3)five (5) times induring the Trust’s most recently completed fiscal year. The Audit Committee of the Board of Exchange Traded Concepts Trust II met one (1) time in the Trust’s most recently completed fiscal year.year ended August 31, 2021.
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standingGovernance and Nominating Committee that is composed of each of the Independent Trustees of the Trust. Mr. Mahle serves as Chair. The Governance and Nominating Committee operates under a written charter approved by the Board. The principal responsibility of the Governance and Nominating Committee is to consider, recommend and nominate candidates to fill vacancies on the Trust’s Board, if any. The Governance and Nominating Committee generally will not consider nominees recommended by shareholders. Each Governance and Nominating Committee has adopted a formal charter, copies of which are attached as Exhibits HA and I.B. The Governance and Nominating Committee meets periodically, as necessary. The Governance and Nominating Committee for the Board of Exchange Listed Funds Trust met one (1) time during the fiscal year ended August 31, 2021. The Governance and Nominating Committee for the Board of Exchange Traded Concepts Trust met one (1) time induring the Trust’s most recently completed fiscal year. The Nominating Committee for the Board of Exchange Traded Concepts Trust II met one (1) time in the Trust’s most recently completed fiscal year.
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theeach Nominee, and the executive officers of each Trust is set forth in the sections below. Each Trustee holds office during the continued lifetime of the Trust until he or she dies, resigns, is declared bankrupt or incompetent by a court of appropriate jurisdiction, or is removed, or, if sooner, until the next meeting of Trust shareholders called for the purpose of electing Trustees and until the election and qualification of his successor. Any Trustee may resign at any time and may be removed by a vote of two-thirds of the outstanding shares of the Trust or by action of a majority of the Trustees. Each officer serves until he resigns or is removed by the Board or by the President of the Trust or by such other officer upon whom such power of removal may be conferred by the Board.
NomineeNominees that would be material to an evaluation of the ability or integrity of the NomineeNominees and that would require disclosure under Item 401(f) of Regulation S-K under the Securities Exchange Act of 1934, as amended.
of Trustees of Exchange Traded Concepts Trust consists of four Independent Trustees, Mr.Ms. Linda Petrone (Nominee) and Messrs. Timothy J. Jacoby, David M. Mahle, Kurt Wolfgruber,Stuart Strauss (Nominee), and Mark Zurack, and one Interested Trustee, Mr. J. Garrett Stevens. The Nominee has been serving on the Board since he was appointed by the Trustees to fill a vacancy on June 1, 2014. The address of each Trustee and the Nominee is c/o Exchange Traded Concepts Trust, 2545 S. Kelly Ave.,10900 Hefner Pointe Drive, Suite C, Edmond,400, Oklahoma 73013.City, Oklahoma 73120. Information regarding the Trustees, including the Nominee,Nominees, is set forth below.65
Set forth below are the names, ages, positions with the Trust, lengths and term of office, and the principal occupations and other directorships held during at least the last five years of each of the persons currently serving as officers of the Trust. The address of J. Garrett Stevens and Richard Hogan is c/o Exchange Traded Concepts Trust, 2545 S. Kelly Ave., Suite C, Edmond, Oklahoma 73013, and the address of Peter Rodriguez and Eric Kleinschmidt is SEI Investments Company, One Freedom Valley Drive, Oaks, Pennsylvania 19456.66
Individual Trustee and Nominee Qualifications. The Trust has concluded that each of the Trustees, including the Nominee, should serve on the Board because of their ability to review and understand information about the Funds provided to them by management, to identify and request other information they may deem relevant to the performance of their duties, to question management and other service providers regarding material factors bearing on the management and administration of the Funds, and to exercise their business judgment in a manner that serves the best interests of Fund shareholders. The Trust has concluded that each of the Trustees should serve as a Trustee based on their own experience, qualifications, attributes and skills as described below.
Nominee. The Trust has concluded that Mr. Jacoby should serve as a Trustee because of the experience he has gained from over 25 years in or serving the investment management industry. Most recently, Mr. Jacoby served as a partner at the audit and professional services firm Deloitte & Touche LLP, where he had worked since 2000, providing various services to asset management firms that manage mutual funds, hedge funds and private equity funds. Prior to that, Mr. Jacoby held various senior positions at financial services firms. Additionally, he served as a partner at Ernst & Young LLP. Mr. Jacoby is a Certified Public Accountant.
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Remaining Trustees. The Trust has concluded that Mr. Stevens should serve as Trustee because of the experience he gained in his roles with registered broker-dealer and investment management firms, as Chief Executive Officer of the Adviser, his experience in and knowledge of the financial services industry, and the experience he has gained as serving as Trustee of the Trust since 2009.
The Trust has concluded that Mr. Mahle should serve as Trustee because of the experience he has gained as an attorney in the investment management industry of a major law firm, representing exchange-traded funds and other investment companies as well as their sponsors and advisers and his knowledge and experience in investment management law and the financial services industry. Mr. Mahle is also a professor of law at Fordham Law School, where he lectures on investment companies and investment adviser regulations.
The Trust has concluded that Mr. Wolfgruber should serve as a Trustee because of his experience as President and Chief Investment Officer of OppenheimerFunds, Inc. where he was employed from 2000 to 2009. Mr. Wolfgruber was responsible for the oversight of sales, marketing, trading, risk management and the investment process of ten investment teams which, together, managed over $150 billion across domestic and international asset classes. Mr. Wolfgruber has been involved in investment management for over 35 years with previous experience as a research analyst, portfolio manager and team and business leader at JP Morgan Investment Management from 1974 to 2000. He is a Chartered Financial Analyst.
The Trust has concluded that Mr. Zurack should serve as a Trustee because of the experience he has gained serving in various leadership roles in the equity derivatives groups of a large financial institution, his experience in teaching equity derivatives at the graduate level, as well as his knowledge of the financial services industry.
In its periodic assessment of the effectiveness of the Board, the Board considers the complementary individual skills and experience of the individual Trustees primarily in the broader context of the Board’s overall composition so that the Board, as a body, possesses the appropriate (and appropriately diverse) skills and experience to oversee the business of the Funds.
Ownership of Securities. As of the Record Date, no Trustee owned shares of any series of the Trust.
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Board Compensation. The following table sets forth the fees paid to the Trustees for the fiscal year ended December 31, 2014. Independent Trustee fees are paid from the unitary fee paid to the Adviser by the Funds. Trustee compensation does not include reimbursed out-of-pocket expenses in connection with attendance meetings.
1 Aggregation Compensation is allocated equally between Exchange Traded Concepts Trust and Source ETF Trust in the Fund Complex.
2 As compensation for service on the Exchange Trade Concepts Trust and Source ETF Trust Boards, the Trustees are entitled to the $35,000 annual base fee, as well as a $2,500 in-person meeting fee or $4,000 per day, whichever is lower. The Trustees also will be paid $1,000 per telephonic meeting. The Audit Committee chair will also receive a $5,000 annual fee.
3 Mr. Jacoby, Mr. Wolfgruber and Mr. Mahle each receive $15,000 for their service on the Board of Exchange Traded Concepts Trust II in the Fund Complex.
Communication with Trustees. Shareholders may send communications directly to the Trustees in writing at the address specified above under “Trustees and Officers.”
Information Related to the Auditor and the Audit Committee. Cohen Fund Audit Services, Ltd. (the “Auditor”) is located at 1350 Euclid Avenue, Suite 800, Cleveland, Ohio 44115 and serves as the independent registered public accounting firm for each Fund comprising the Trust. More information related to the Auditor and the Audit Committee, including the Audit Committee’s pre-approval policies and procedures, can be found in Exhibit J.
Required Vote. The affirmative vote of a plurality of all outstanding shares of Exchange Traded Concepts Trust voting together, and not by separate Fund, at the Meeting is required for the election of the Nominee. A plurality vote means that the person receiving the highest number of votes will be elected, and therefore, to be elected, the Nominee must be the nominee receiving the most “FOR” votes (even if less than a majority of the votes cast), provided a quorum is present.
The Board of Trustees of Exchange Traded Concepts Trust unanimously recommends thatTrust shareholders vote “FOR” Proposal 4A.
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Information Regarding Proposal 4B
Exchange Traded Concepts Trust II
Trustees and Officers. Currently, the Board of Trustees of Exchange Traded Concepts Trust II consists of three Independent Trustees, Mr. Jacoby, David M. Mahle, and Kurt Wolfgruber, and one Interested Trustee, Richard Hogan. The Nominee has been serving on the Board since he was appointed by the Trustees to fill a vacancy on June 1, 2014. The address of each Trustee and the Nominee is c/o Exchange Traded Concepts Trust II, 2545 S. Kelly Ave., Suite C, Edmond, Oklahoma 73013. Information regarding the Trustees, including the Nominee, is set forth below.
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The address of Messrs. J. Garrett Stevens, Richard Hogan, James J. Baker, Jr., and Matthew Fleischer is c/o Exchange Traded Concepts Trust, 10900 Hefner Pointe Drive, Suite 400, Oklahoma City, Oklahoma 73120; and the address of Mr. Eric Olsen is SEI Investments Company, One Freedom Valley Drive, Oaks, Pennsylvania 19456.
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Nominee.
The Trust has concluded that Mr. Wolfgruber should serve as a Trustee because of his experience as President and Chief Investment Officer of OppenheimerFunds, Inc. where he was employed from 2000 to 2009. Mr. Wolfgruber was responsible for the oversight of sales, marketing, trading, risk management and the investment process of ten investment teams which, together, managed over $150 billion across domestic and international asset classes. Mr. Wolfgruber has been involved in investment management for over 35 years with previous experience as a research analyst, portfolio manager and team and business leader at JP Morgan Investment Management from 1974 to 2000. He is a Chartered Financial Analyst.
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Board Compensation. The table below sets forth the actual compensation paid to each Trustee for the fiscal year ended DecemberAugust 31, 2014.2021. Independent Trustee fees are paid from the unitary fee paid to the Adviser by the Funds. Trustee compensation does not include reimbursed out-of-pocket expenses in connection with attendance at meetings.
1 Aggregation Compensation is allocated equally between Exchange Traded Concepts Trust and Source ETF Trust in the Fund Complex.
2 As compensation for service on the Exchange Trade Concepts Trust and Source ETF Trust Boards, the Trustees are entitled to the $35,000 annual base fee, as well as a $2,500 in-person meeting fee or $4,000 per day, whichever is lower. The Trustees also will be paid $1,000 per telephonic meeting. The Audit Committee chair will also receive a $5,000 annual fee.
KPMG LLPCohen & Company, Ltd. is located at Oklahoma Tower, 210 Park Ave., #2850, Oklahoma City, OK 73102151 North Franklin Street, Suite 575, Chicago, Illinois 60606 and serves as the independent registered public accounting firm for each Fund comprising the Trust. More information related to the AuditorCohen and the Audit Committee, including the Audit Committee’s pre-approval policies and procedures, can be found in Exhibit JC.
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TheIf a quorum is present, the affirmative vote of a plurality of all outstanding shares of Exchange Traded Conceptsthe Trust II voting together, and notvoted in person or by separate Fund, at the Meetingproxy is required for the election of a Nominee. Shareholders of the Nominee. A pluralityFunds of the Trust will vote means thattogether as a single class and the person receivingvoting power of the highest numbershares of votesthe Funds will be elected, and therefore, to be elected,counted together in determining the Nominee must be the nominee receiving the most “FOR” votes (even if less than a majorityresults of the votes cast), provided a quorum is present.
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aits respective Trust, each of which is a Delaware statutory trust and registered investment company under the 1940 Act. The record holders of outstanding shares of a Fund are entitled to vote one vote per share (and a fractional vote per fractional share) on all matters presented at the Meeting with respect to that Fund, including Proposals 1, 2, and 3.Fund. The record holders of outstanding shares of each seriesFund of theeach Trust also are also entitled to vote one vote per share (and a fractional vote per fractional share) on all matters presented at the Meeting with respect to the Trust, including Proposal 4.
If you have any questions regarding the Proxy Statement, please call toll-free please call 1-866-296-4857. Representatives are available to assist you Monday through Friday 9 a.m. to 10 p.m. Eastern Time. If you sign and return the accompanying proxy card, you may revoke it by giving written notice of such revocation to the Secretary of the Trust(s) prior to the Meeting or by delivering a subsequently dated proxy card or by attending and voting at the Meeting in person. Proxies voted by telephone or internet may be revoked at any time before they are voted by proxy voting again through the website or toll-free number listed in the enclosed proxy card. Properly executed proxies will be voted, as you instruct, by the persons named in the accompanying proxy card. In the absence of such direction, however, the persons named in the accompanying proxy card intend to vote “FOR” Proposals 1, 2, and 3, and “FOR” the election of Mr. Jacoby with respect to Proposal 4each Nominee and may vote at their discretion with respect to other matters not now known to the Boards that may be presented at the Meeting. Attendance by a shareholder at the Meeting does not, in itself, revoke a proxy.75
also include telephone, facsimile, electronic or oral communications by certain officers or employees of the Trusts or the Adviser or any investment adviser or sub-adviser to the Trusts, none of whom will be paid for these services, or by a third-party proxy solicitation firm. The Adviser will pay the costs of the Meeting and the expenses incurred in connection with the solicitation of proxies, and a sub-adviser or other entity may reimburse the Adviser for a portion of the expenses related to the solicitation of proxies for the Funds. The Trusts also may also request broker-dealer firms, custodians, nominees and fiduciaries to forward proxy materials to the beneficial owners of the shares of the Funds held of record by such persons. The Adviser may reimburse such broker-dealer firms, custodians, nominees and fiduciaries for their reasonable expenses incurred in connection with such proxy solicitation, including reasonable expenses in communicating with persons for whom they hold shares of the Funds.
Other Information
Exchange Traded Concepts Trust II. for each Fund of the Trust.
thea Fund or the Trust, and their names and addresses, were as listed in Exhibit LE. Any shareholder listed in Exhibit LE as owning 25% or more of the outstanding shares of thea Fund or Trust may be presumed to “control” (as that term is defined in the 1940 Act) thethat Fund or Trust, respectively. Shareholders controlling thea Fund or Trust could have the ability to vote a majority of the shares of thethat Fund or Trust on any matter requiring the approval of Fund or Trust shareholders, respectively. From time to time, the number of shares held in “street name” accounts of various securities brokers and dealers for the benefit of their clients may exceed 5% of the total shares outstanding of a Fund or a Trust.76
proposalsproposal described above. If other business should properly come before the Meeting, the proxy holders will vote thereon in accordance with their best judgment.By-lawsBy-Laws of each Trust do not provide for annual meetings of shareholders, and the Trusts do not currently intend to hold such meetings in the future. Shareholder proposals for inclusion in a proxy statement for any subsequent meeting of a Trust’s shareholders must be received by the Trust a reasonable period of time prior to any such meeting.Householding. write to the Trusts at the address set forth on the cover page to this Proxy Statement.
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APPENDIX A:
Executive Officers and Directors of the Adviser. Information regarding the principal executive officers and directorsBoards of the Adviser is set forth below. The address of the Adviser and its executive officers and directors is 2545 S. Kelly Avenue, Suite C, Edmond, Oklahoma 73013. The Adviser was formed in 2008 and provides investment advisory services to ETFs, including the Funds. The following are the executive officers and directors of the Adviser:
Mr. Stevens serves as 78
EXHIBIT A:
Form of Proposed Advisory Agreement between Exchange Traded Concepts Trust and Exchange Traded Concepts, LLC79
ADVISORY AGREEMENT
ADVISORY AGREEMENT (the “Agreement”) made as of this ___th day of_____________ 2015 by and between
W I T N E S S E T H
WHEREAS, the Board of Trustees (the “Board”) of the Trust has selected the Adviser to act as investment adviser to the Trust on behalf of the series set forth on Schedule A to this Agreement (each a “Fund” and, collectively, the “Funds”), as such Schedule may be amended from time to time upon mutual agreement of the parties, and to provide certain related services, as more fully set forth below, and to perform such services under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the Trust and the Adviser do hereby agree as follows:
1.The Adviser’s Services.
(a)Discretionary Investment Management Services. The Adviser shall act as investment adviser with respect to the Funds. In such capacity, the Adviser shall, subject to the supervision of the Board, regularly provide the Funds with investment research, advice and supervision and shall furnish continuously an investment program for the Funds, consistent with the respective investment objectives and policies of each Fund. The Adviser shall determine, from time to time, what securities shall be purchased for the Funds, what securities shall be held or sold by the Funds and what portion of the Funds’ assets shall be held uninvested in cash, subject always to the provisions of the Trust’s Agreement and Declaration of Trust, By-Laws and its registration statement on Form N-1A (the “Registration Statement”) under the 1940 Act, and under the Securities Act of 1933, as amended (the “1933 Act”), covering Fund shares, as filed with the U.S. Securities and Exchange Commission (the “Commission”), and to the investment objectives, policies and restrictions of the Funds, as each of the same shall be from time to time in effect. To carry out such obligations, the Adviser shall exercise full discretion and act for the Funds in the same manner and with the same force and effect as the Funds themselves might or could do with respect to purchases, sales or other transactions, as well as with respect to all other such things necessary or incidental to the furtherance or conduct of such purchases, sales or other transactions. No reference in this Agreement to the Adviser having full discretionary authority over each Fund’s investments shall in any way limit the right of the Board, in its sole discretion, to establish or revise policies in connection with the management of a Fund’s assets or to otherwise exercise its right to control the overall management of a Fund.
(b)Selection of Sub-Adviser(s). The Adviser shall have the authority hereunder to select and retain sub-advisers, including an affiliated person (as defined under the 1940 Act) of the Adviser (each a “Sub-Adviser”), for each of the Funds referenced in Schedule A to perform some or all of the services for which the Adviser is responsible pursuant to this Agreement. The Adviser shall supervise the activities of the Sub-Adviser(s), and the retention of a Sub-Adviser by the Adviser shall not relieve the Adviser of its responsibilities under this Agreement. Any such Sub-Adviser shall be registered and in good standing with the Commission and capable of performing its sub-advisory duties pursuant to a sub-advisory agreement approved by the Trust’s Board of Trustees and, except as otherwise permitted by the 1940 Act or by rule or regulation, a vote of a majority of the outstanding voting securities of the applicable Fund. The Adviser will compensate the sub-adviser for its services to the Funds.
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(c)Compliance. The Adviser agrees to comply with the requirements of the 1940 Act, the Investment Advisers Act of 1940 (the “Advisers Act”), the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Commodity Exchange Act and the respective rules and regulations thereunder, as applicable, as well as with all other applicable federal and state laws, rules, regulations and case law that relate to the services and relationships described hereunder and to the conduct of its business as a registered investment adviser. The Adviser also agrees to comply with the objectives, policies and restrictions set forth in the Registration Statement, as amended or supplemented, of the Funds, and with any policies, guidelines, instructions and procedures approved by the Board and provided to the Adviser. In selecting each Fund’s portfolio securities and performing the Adviser’s obligations hereunder, the Adviser shall cause each Fund to comply with the diversification and source of income requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification as a regulated investment company if the Fund has elected to be treated as a regulated investment company under the Code. The Adviser shall maintain compliance procedures that it reasonably believes are adequate to ensure its compliance with the foregoing. No supervisory activity undertaken by the Board shall limit the Adviser’s full responsibility for any of the foregoing.
(d)Proxy Voting. The Board has the authority to determine how proxies with respect to securities that are held by the Funds shall be voted, and the Board has initially determined to delegate the authority and responsibility to vote proxies for each Fund’s securities to the Adviser. So long as proxy voting authority for a Fund has been delegated to the Adviser, the Adviser shall exercise its proxy voting responsibilities. The Adviser shall carry out such responsibility in accordance with any instructions that the Board shall provide from time to time, and at all times in a manner consistent with Rule 206(4)-6 under the Advisers Act and its fiduciary responsibilities to the Trust. The Adviser shall provide periodic reports and keep records relating to proxy voting as the Board may reasonably request or as may be necessary for the Funds to comply with the 1940 Act and other applicable law. Any such delegation of proxy voting responsibility to the Adviser may be revoked or modified by the Board at any time. The Trust acknowledges and agrees that the Adviser may delegate its responsibility to vote proxies for a Fund to the Fund’s Sub-Adviser(s).
(e)Recordkeeping. The Adviser shall not be responsible for the provision of administrative, bookkeeping or accounting services to the Funds, except as otherwise provided herein or as may be necessary for the Adviser to supply to the Trust or its Board the information required to be supplied under this Agreement.
The Adviser shall maintain separate books and detailed records of all matters pertaining to Fund assets advised by the Adviser required by Rule 31a-1 under the 1940 Act (other than those records being maintained by any administrator, custodian or transfer agent appointed by the Funds) relating to its responsibilities provided hereunder with respect to the Funds, and shall preserve such records for the periods and in a manner prescribed therefore by Rule 31a-2 under the 1940 Act (the “Funds’ Books and Records”). The Funds’ Books and Records shall be available to the Board at any time upon request, shall be delivered to the Trust upon the termination of this Agreement and shall be available without delay during any day the Trust is open for business.
(f)Holdings Information and Pricing. The Adviser shall provide regular reports regarding Fund holdings, and shall, on its own initiative, furnish the Trust and the Board from time to time with whatever information the Adviser believes is appropriate for this purpose. The Adviser agrees to immediately notify the Trust if the Adviser reasonably believes that the value of any security held by a Fund may not reflect its fair value. The Adviser agrees to provide any pricing information of which the Adviser is aware to the Trust, the Board and/or any Fund pricing agent to assist in the determination of the fair value of any Fund holdings for which market quotations are not readily available or as otherwise required in accordance with the 1940 Act or the Trust’s valuation procedures for the purpose of calculating each Fund’s net asset value in accordance with procedures and methods established by the Board.
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(g)Cooperation with Agents of the Trust. The Adviser agrees to cooperate with and provide reasonable assistance to the Trust, any Trust custodian or foreign sub-custodians, any Trust pricing agents and all other agents and representatives of the Trust, such information with respect to the Funds as they may reasonably request from time to time in the performance of their obligations, provide prompt responses to reasonable requests made by such persons and establish appropriate interfaces with each so as to promote the efficient exchange of information and compliance with applicable laws and regulations.
2.Code of Ethics. The Adviser has adopted a written code of ethics that it reasonably believes complies with the requirements of Rule 17j-1 under the 1940 Act, which it will provide to the Trust. The Adviser shall ensure that its Access Persons (as defined in the Adviser’s Code of Ethics) comply in all material respects with the Adviser’s Code of Ethics, as in effect from time to time. Upon request, the Adviser shall provide the Trust with a (i) a copy of the Adviser’s current Code of Ethics, as in effect from time to time, and (ii) certification that it has adopted procedures reasonably necessary to prevent Access Persons from engaging in any conduct prohibited by the Adviser’s Code of Ethics. Annually, the Adviser shall furnish a written report, which complies with the requirements of Rule 17j-1, concerning the Adviser’s Code of Ethics to the Trust. The Adviser shall respond to requests for information from the Trust as to violations of the Code of Ethics by Access Persons and the sanctions imposed by the Adviser. The Adviser shall immediately notify the Trust of any material violation of the Code of Ethics, whether or not such violation relates to a security held by any Fund.
3.Information and Reporting. The Adviser shall provide the Trust and its respective officers with such periodic reports concerning the obligations the Adviser has assumed under this Agreement as the Trust may from time to time reasonably request.
(a)Notification of Breach / Compliance Reports. The Adviser shall notify the Trust immediately upon detection of (i) any material failure to manage any Fund in accordance with its investment objectives and policies or any applicable law; or (ii) any material breach of any of the Funds’ or the Adviser’s policies, guidelines or procedures. In addition, the Adviser shall provide a quarterly report regarding each Fund’s compliance with its investment objectives and policies, applicable law, including, but not limited to the 1940 Act and Subchapter M of the Code, as applicable, and the Fund’s policies, guidelines or procedures as applicable to the Adviser’s obligations under this Agreement. The Adviser agrees to correct any such failure promptly and to take any action that the Board may reasonably request in connection with any such breach. Upon request, the Adviser shall also provide the officers of the Trust with supporting certifications in connection with such certifications of Fund financial statements and disclosure controls pursuant to the Sarbanes-Oxley Act. The Adviser will promptly notify the Trust in the event (i) the Adviser is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board, or body, involving the affairs of the Trust (excluding class action suits in which a Fund is a member of the plaintiff class by reason of the Fund’s ownership of shares in the defendant) or the compliance by the Adviser with the federal or state securities laws or (ii) an actual change in control of the Adviser resulting in an “assignment” (as defined in the 1940 Act) has occurred or is otherwise proposed to occur.
(b)Board and Filings Information. The Adviser will also provide the Trust with any information reasonably requested regarding its management of the Funds required for any meeting of the Board, or for any shareholder report, amended registration statement, proxy statement, or prospectus supplement to be filed by the Trust with the Commission. The Adviser will make its officers and employees available to meet with the Board from time to time on due notice to review its investment management services to the Funds in light of current and prospective economic and market conditions and shall furnish to the Board such information as may reasonably be necessary in order for the Board to evaluate this Agreement or any proposed amendments thereto.
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(c)Transaction Information. The Adviser shall furnish to the Trust such information concerning portfolio transactions as may be necessary to enable the Trust or its designated agent to perform such compliance testing on the Funds and the Adviser’s services as the Trust may, in its sole discretion, determine to be appropriate. The provision of such information by the Adviser to the Trust or its designated agent in no way relieves the Adviser of its own responsibilities under this Agreement.
4.Brokerage.
(a)Principal Transactions. In connection with purchases or sales of securities for the account of a Fund, neither the Adviser nor any of its directors, officers or employees will act as a principal or agent or receive any commission except as permitted by the 1940 Act.
(b)Placement of Orders. The Adviser shall arrange for the placing of all orders for the purchase and sale of securities for a Fund’s account with brokers or dealers selected by the Adviser. In the selection of such brokers or dealers and the placing of such orders, the Adviser is directed at all times to seek for each Fund the most favorable execution and net price available under the circumstances. It is also understood that it is desirable for the Funds that the Adviser have access to brokerage and research services provided by brokers who may execute brokerage transactions at a higher cost to the Funds than may result when allocating brokerage to other brokers, consistent with section 28(e) of the 1934 Act and any Commission staff interpretations thereof. Therefore, the Adviser is authorized to place orders for the purchase and sale of securities for a Fund with such brokers, subject to review by the Board from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Adviser in connection with its or its affiliates’ services to other clients.
(c)Aggregated Transactions. On occasions when the Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other clients of the Adviser, the Adviser may, to the extent permitted by applicable law and regulations, aggregate the order for securities to be sold or purchased. In such event, the Adviser will allocate securities or futures contracts so purchased or sold, as well as the expenses incurred in the transaction, in the manner the Adviser reasonably considers to be equitable and consistent with its fiduciary obligations to the Fund and to such other clients under the circumstances.
(d)Affiliated Brokers. The Adviser or any of its affiliates may act as broker in connection with the purchase or sale of securities or other investments for a Fund, subject to: (i) the requirement that the Adviser seek to obtain best execution and price within the policy guidelines determined by the Board and set forth in the Fund’s current prospectus and statement of additional information; (ii) the provisions of the 1940 Act; (iii) the provisions of the Advisers Act; (iv) the provisions of the 1934 Act; and (v) other provisions of applicable law. These brokerage services are not within the scope of the duties of the Adviser under this Agreement. Subject to the requirements of applicable law and any procedures adopted by the Board, the Adviser or its affiliates may receive brokerage commissions, fees or other remuneration from a Fund for these services in addition to the Adviser’s fees for services under this Agreement.
5.Custody. Nothing in this Agreement shall permit the Adviser to take or receive physical possession of cash, securities or other investments of a Fund.
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6.Allocation of Charges and Expenses. The Adviser will bear its own costs of providing services hereunder. The Adviser agrees to pay all expenses incurred by the Funds except for the fee paid to the Adviser pursuant to this Agreement, interest, taxes, brokerage commissions and other expenses incurred in placing or settlement of orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, “Excluded Expenses”).
The Trust acknowledges and agrees that the Adviser may delegate its responsibility to pay some or all expenses incurred by the Funds, except for Excluded Expenses, to one or more third parties, including but not limited to, each Sub-Adviser.
7.Representations, Warranties and Covenants.
(a)Properly Registered. The Adviser is registered as an investment adviser under the Advisers Act, and will remain so registered for the duration of this Agreement. The Adviser is not prohibited by the Advisers Act or the 1940 Act from performing the services contemplated by this Agreement, and to the best knowledge of the Adviser, there is no proceeding or investigation that is reasonably likely to result in the Adviser being prohibited from performing the services contemplated by this Agreement. The Adviser agrees to promptly notify the Trust of the occurrence of any event that would disqualify the Adviser from serving as an investment adviser to an investment company. The Adviser is in compliance in all material respects with all applicable federal and state law in connection with its investment management operations.
(b)ADV Disclosure. The Adviser has provided the Trust with a copy of its Form ADV as most recently filed with the Commission and will, promptly after filing any amendment to its Form ADV with the Commission, furnish a copy of such amendments to the Trust. The information contained in the Adviser’s Form ADV is accurate and complete in all material respects and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
(c)Fund Disclosure Documents. The Adviser has reviewed and will in the future review, the Registration Statement, and any amendments or supplements thereto, the annual or semi-annual reports to shareholders, other reports filed with the Commission and any marketing material of a Fund (collectively the “Disclosure Documents”) and represents and warrants that with respect to disclosure about the Adviser, the manner in which the Adviser manages the Fund or information relating directly or indirectly to the Adviser, such Disclosure Documents contain or will contain, as of the date thereof, no untrue statement of any material fact and does not omit any statement of material fact which was required to be stated therein or necessary to make the statements contained therein not misleading.
(d)Use Of The Name “Exchange Traded Concepts.” The Adviser has the right to use the name “Exchange Traded Concepts” (the “Name”) in connection with its services to the Trust and that, subject to the terms set forth in Section 8 of this Agreement, the Trust shall have the right to use the Name in connection with the management and operation of the Funds. The Adviser is not aware of any threatened or existing actions, claims, litigation or proceedings that would adversely effect or prejudice the rights of the Adviser or the Trust to use the Name.
(e)Insurance. The Adviser maintains errors and omissions insurance coverage in an appropriate amount and shall provide prior written notice to the Trust (i) of any material changes in its insurance policies or insurance coverage; or (ii) if any material claims will be made on its insurance policies. Furthermore, the Adviser shall upon reasonable request provide the Trust with any information it may reasonably require concerning the amount of or scope of such insurance.
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(f)No Detrimental Agreement. The Adviser represents and warrants that it has no arrangement or understanding with any party, other than the Trust, that would influence the decision of the Adviser with respect to its selection of securities for a Fund, and that all selections shall be done in accordance with what is in the best interest of the Fund.
(g)Conflicts. The Adviser shall act honestly, in good faith and in the best interests of the Trust including requiring any of its personnel with knowledge of Fund activities to place the interest of the Funds first, ahead of their own interests, in all personal trading scenarios that may involve a conflict of interest with the Funds, consistent with its fiduciary duties under applicable law.
(h)Representations. The representations and warranties in this Section 7 shall be deemed to be made on the date this Agreement is executed and at the time of delivery of the quarterly compliance report required by Section 3(a), whether or not specifically referenced in such report.
8.The Name “Exchange Traded Concepts.” The Adviser grants to the Trust a sublicense to use the Name as part of the name of any Fund. The foregoing authorization by the Adviser to the Trust to use the Name as part of the name of any Fund is not exclusive of the right of the Adviser itself to use, or to authorize others to use, the Name; the Trust acknowledges and agrees that, as between the Trust and the Adviser, the Adviser has the right to use, or authorize others to use, the Name. The Trust shall (1) only use the Name in a manner consistent with uses approved by the Adviser; (2) use its best efforts to maintain the quality of the services offered using the Name; and (3) adhere to such other specific quality control standards as the Adviser may from time to time promulgate. At the request of the Adviser, the Trust will (a) submit to Adviser representative samples of any promotional materials using the Name; and (b) change the name of any Fund within three months of its receipt of the Adviser’s request, or such other shorter time period as may be required under the terms of a settlement agreement or court order, so as to eliminate all reference to the Name and will not thereafter transact any business using the Name in the name of any Fund; provided, however, that the Trust may continue to use beyond such date any supplies of prospectuses, marketing materials and similar documents that the Trust had on the date of such name change in quantities not exceeding those historically produced and used in connection with such Fund.
9.Adviser’s Compensation. The Funds shall pay to the Adviser, as compensation for the Adviser’s services hereunder, a fee, determined as described in Schedule A that is attached hereto and made a part hereof. Such fee shall be computed daily and paid not less than monthly in arrears by the Funds.
The method for determining net assets of a Fund for purposes hereof shall be the same as the method for determining net assets for purposes of establishing the offering and redemption prices of Fund shares as described in the Fund’s prospectus. In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the current month as a percentage of the total number of days in such month.
10.Independent Contractor. In the performance of its duties hereunder, the Adviser is and shall be an independent contractor and, unless otherwise expressly provided herein or otherwise authorized in writing, shall have no authority to act for or represent the Trust or any Fund in any way or otherwise be deemed to be an agent of the Trust or any Fund. If any occasion should arise in which the Adviser gives any advice to its clients concerning the shares of a Fund, the Adviser will act solely as investment counsel for such clients and not in any way on behalf of the Fund.
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11.Assignment. This Agreement shall automatically terminate, without the payment of any penalty, in the event of its assignment (as defined in section 2(a)(4) of the 1940 Act); provided that such termination shall not relieve the Adviser of any liability incurred hereunder.
12.Entire Agreement and Amendments. This Agreement represents the entire agreement among the parties with regard to the investment management matters described herein and may not be added to or changed orally and may not be modified or rescinded except by a writing signed by the parties hereto except as otherwise noted herein.
13.Duration and Termination.
(a)This Agreement shall become effective as of the date executed and shall remain in full force and effect continually thereafter, subject to renewal as provided in subparagraph (d) of this section and unless terminated automatically as set forth in Section 11 hereof or until terminated as follows:
(b)The Trust may cause this Agreement to terminate either (i) by vote of its Board or (ii) with respect to any Fund, upon the affirmative vote of a majority of the outstanding voting securities of the Fund; or
(c)The Adviser may at any time terminate this Agreement by not more than sixty (60) days’ nor less than thirty (30) days’ written notice delivered or mailed by registered mail, postage prepaid, to the Trust; or
(d)This Agreement shall automatically terminate two years from the date of its execution unless its renewal is specifically approved at least annually thereafter by (i) a majority vote of the Trustees, including a majority vote of such Trustees who are not interested persons of the Trust or the Adviser, at a meeting called for the purpose of voting on such approval; or (ii) the vote of a majority of the outstanding voting securities of each Fund; provided, however, that if the continuance of this Agreement is submitted to the shareholders of the Funds for their approval and such shareholders fail to approve such continuance of this Agreement as provided herein, the Adviser may continue to serve hereunder as to the Funds in a manner consistent with the 1940 Act and the rules and regulations thereunder; and
Termination of this Agreement pursuant to this Section shall be without payment of any penalty.
In the event of termination of this Agreement for any reason, the Adviser shall, immediately upon notice of termination or on such later date as may be specified in such notice, cease all activity on behalf of the Funds and with respect to any of the assets, except as otherwise required by any fiduciary duties of the Adviser under applicable law. In addition, the Adviser shall deliver the Fund Books and Records to the Trust by such means and in accordance with such schedule as the Trust shall direct and shall otherwise cooperate, as reasonably directed by the Trust, in the transition of portfolio asset management to any successor of the Adviser.
14.Certain Definitions. For the purposes of this Agreement:
(a)“Affirmative vote of a majority of the outstanding voting securities of the Fund” shall have the meaning as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission under the 1940 Act or any interpretations of the Commission staff.
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(b)“Interested persons” and “Assignment” shall have their respective meanings as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission under the 1940 Act or any interpretations of the Commission staff.
15.Liability of the Adviser. The Adviser shall indemnify and hold harmless the Trust and all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the 1933 Act) (collectively, the “Adviser Indemnitees”) against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of the Adviser’s willful misfeasance, bad faith or gross negligence generally in the performance of its duties hereunder or its reckless disregard of its obligations and duties under this Agreement.
16.Enforceability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.
17.Limitation of Liability. The parties to this Agreement acknowledge and agree that all litigation arising hereunder, whether direct or indirect, and of any and every nature whatsoever shall be satisfied solely out of the assets of the affected Fund and that no Trustee, officer or holder of shares of beneficial interest of the Fund shall be personally liable for any of the foregoing liabilities. The Trust’s Certificate of Trust, as amended from time to time, is on file in the Office of the Secretary of State of the State of Delaware. Such Certificate of Trust and the Trust’s Agreement and Declaration of Trust describe in detail the respective responsibilities and limitations on liability of the Trustees, officers, and holders of shares of beneficial interest.
18.Jurisdiction. This Agreement shall be governed by and construed in accordance with the substantive laws of the state of Delaware and the Adviser consents to the jurisdiction of courts, both state or federal, in Delaware, with respect to any dispute under this Agreement.
19.Paragraph Headings. The headings of paragraphs contained in this Agreement are provided for convenience only, form no part of this Agreement and shall not affect its construction.
20.Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed on their behalf by their duly authorized officers as of the date first above written.87
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SCHEDULE A
to the
ADVISORY AGREEMENT
dated __________, 2015
between
EXCHANGE TRADED CONCEPTS TRUST
and
EXCHANGE TRADED CONCEPTS, LLC
The Trust will pay to the Adviser as compensation for the Adviser’s services rendered, a fee, computed daily at an annual rate based on the average daily net assets of the respective Fund in accordance the following fee schedule:
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EXHIBIT B:Form of Proposed Advisory Agreement between Exchange Traded Concepts Trust II and Exchange Traded Concepts, LLC90
ADVISORY AGREEMENT
ADVISORY AGREEMENT (the “Agreement”) made as of this ____ day of ________, 2015 by and between EXCHANGE TRADED CONCEPTS TRUST II (the “Trust”), a Delaware statutory trust registered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), and EXCHANGE TRADED CONCEPTS, LLC, an Oklahoma limited liability company with its principal place of business at 2545 South Kelly Avenue, Suite C, Edmond, Oklahoma 73013 (the “Adviser”).
W I T N E S S E T H
WHEREAS, the Board of Trustees (the “Board”) of the Trust has selected the Adviser to act as investment adviser to the Trust on behalf of the series set forth on Schedule A to this Agreement (each a “Fund” and, collectively, the “Funds”), as such Schedule may be amended from time to time upon mutual agreement of the parties, and to provide certain related services, as more fully set forth below, and to perform such services under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the Trust and the Adviser do hereby agree as follows:
1.The Adviser’s Services.
(a)Discretionary Investment Management Services. The Adviser shall act as investment adviser with respect to the Funds. In such capacity, the Adviser shall, subject to the supervision of the Board, regularly provide the Funds with investment research, advice and supervision and shall furnish continuously an investment program for the Funds, consistent with the respective investment objectives and policies of each Fund. The Adviser shall determine, from time to time, what securities shall be purchased for the Funds, what securities shall be held or sold by the Funds and what portion of the Funds’ assets shall be held uninvested in cash, subject always to the provisions of the Trust’s Agreement and Declaration of Trust, By-Laws and its registration statement on Form N-1A (the “Registration Statement”) under the 1940 Act, and under the Securities Act of 1933, as amended (the “1933 Act”), covering Fund shares, as filed with the U.S. Securities and Exchange Commission (the “Commission”), and to the investment objectives, policies and restrictions of the Funds, as each of the same shall be from time to time in effect. To carry out such obligations, the Adviser shall exercise full discretion and act for the Funds in the same manner and with the same force and effect as the Funds themselves might or could do with respect to purchases, sales or other transactions, as well as with respect to all other such things necessary or incidental to the furtherance or conduct of such purchases, sales or other transactions. No reference in this Agreement to the Adviser having full discretionary authority over each Fund’s investments shall in any way limit the right of the Board, in its sole discretion, to establish or revise policies in connection with the management of a Fund’s assets or to otherwise exercise its right to control the overall management of a Fund.
(b)Selection of Sub-Adviser(s). The Adviser shall have the authority hereunder to select and retain sub-advisers, including an affiliated person (as defined under the 1940 Act) of the Adviser (each a “Sub-Adviser”), for each of the Funds referenced in Schedule A to perform some or all of the services for which the Adviser is responsible pursuant to this Agreement. The Adviser shall supervise the activities of each Sub-Adviser, and the retention of each Sub-Adviser by the Adviser shall not relieve the Adviser of its responsibilities under this Agreement. Any such Sub-Adviser shall be registered and in good standing with the Commission and capable of performing its sub-advisory duties pursuant to a sub-advisory agreement approved by the Trust’s Board and, except as otherwise permitted by the 1940 Act or by rule or regulation, a vote of a majority of the outstanding voting securities of the applicable Fund. The Adviser will compensate each Sub-Adviser for its services to the Funds.
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(c)Compliance. The Adviser agrees to comply with the requirements of the 1940 Act, the Investment Advisers Act of 1940 (the “Advisers Act”), the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Commodity Exchange Act and the respective rules and regulations thereunder, as applicable, as well as with all other applicable federal and state laws, rules, regulations and case law that relate to the services and relationships described hereunder and to the conduct of its business as a registered investment adviser. The Adviser also agrees to comply with the objectives, policies and restrictions set forth in the Registration Statement, as amended or supplemented, of the Funds, and with any policies, guidelines, instructions and procedures approved by the Board and provided to the Adviser. In selecting each Fund’s portfolio securities and performing the Adviser’s obligations hereunder, the Adviser shall cause each Fund to comply with the diversification and source of income requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification as a regulated investment company if the Fund has elected to be treated as a regulated investment company under the Code. The Adviser shall maintain compliance procedures that it reasonably believes are adequate to ensure its compliance with the foregoing. No supervisory activity undertaken by the Board shall limit the Adviser’s full responsibility for any of the foregoing.
(d)Proxy Voting. The Board has the authority to determine how proxies with respect to securities that are held by the Funds shall be voted, and the Board has initially determined to delegate the authority and responsibility to vote proxies for each Fund’s securities to the Adviser. So long as proxy voting authority for a Fund has been delegated to the Adviser, the Adviser shall exercise its proxy voting responsibilities. The Adviser shall carry out such responsibility in accordance with any instructions that the Board shall provide from time to time, and at all times in a manner consistent with Rule 206(4)-6 under the Advisers Act and its fiduciary responsibilities to the Trust. The Adviser shall provide periodic reports and keep records relating to proxy voting as the Board may reasonably request or as may be necessary for the Funds to comply with the 1940 Act and other applicable law. Any such delegation of proxy voting responsibility to the Adviser may be revoked or modified by the Board at any time. The Trust acknowledges and agrees that the Adviser may delegate its responsibility to vote proxies for a Fund to the Fund’s Sub-Adviser(s).
(e)Recordkeeping. The Adviser shall not be responsible for the provision of administrative, bookkeeping or accounting services to the Funds, except as otherwise provided herein or as may be necessary for the Adviser to supply to the Trust or its Board the information required to be supplied under this Agreement.
The Adviser shall maintain separate books and detailed records of all matters pertaining to Fund assets advised by the Adviser required by Rule 31a-1 under the 1940 Act (other than those records being maintained by any administrator, custodian or transfer agent appointed by the Funds) relating to its responsibilities provided hereunder with respect to the Funds, and shall preserve such records for the periods and in a manner prescribed therefore by Rule 31a-2 under the 1940 Act (the “Funds’ Books and Records”). The Funds’ Books and Records shall be available to the Board at any time upon request, shall be delivered to the Trust upon the termination of this Agreement and shall be available without delay during any day the Trust is open for business.
(f)Holdings Information and Pricing. The Adviser shall provide regular reports regarding Fund holdings, and shall, on its own initiative, furnish the Trust and the Board from time to time with whatever information the Adviser believes is appropriate for this purpose. The Adviser agrees to immediately notify the Trust if the Adviser reasonably believes that the value of any security held by a Fund may not reflect its fair value. The Adviser agrees to provide any pricing information of which the Adviser is aware to the Trust, the Board and/or any Fund pricing agent to assist in the determination of the fair value of any Fund holdings for which market quotations are not readily available or as otherwise required in accordance with the 1940 Act or the Trust’s valuation procedures for the purpose of calculating each Fund’s net asset value in accordance with procedures and methods established by the Board.
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(g)Cooperation with Agents of the Trust. The Adviser agrees to cooperate with and provide reasonable assistance to the Trust, any Trust custodian or foreign sub-custodians, any Trust pricing agents and all other agents and representatives of the Trust, such information with respect to the Funds as they may reasonably request from time to time in the performance of their obligations, provide prompt responses to reasonable requests made by such persons and establish appropriate interfaces with each so as to promote the efficient exchange of information and compliance with applicable laws and regulations.
2.Code of Ethics. The Adviser has adopted a written code of ethics that it reasonably believes complies with the requirements of Rule 17j-1 under the 1940 Act, which it will provide to the Trust. The Adviser shall ensure that its Access Persons (as defined in the Adviser’s Code of Ethics) comply in all material respects with the Adviser’s Code of Ethics, as in effect from time to time. Upon request, the Adviser shall provide the Trust with a (i) a copy of the Adviser’s current Code of Ethics, as in effect from time to time, and (ii) certification that it has adopted procedures reasonably necessary to prevent Access Persons from engaging in any conduct prohibited by the Adviser’s Code of Ethics. Annually, the Adviser shall furnish a written report, which complies with the requirements of Rule 17j-1, concerning the Adviser’s Code of Ethics to the Trust. The Adviser shall respond to requests for information from the Trust as to violations of the Code of Ethics by Access Persons and the sanctions imposed by the Adviser. The Adviser shall immediately notify the Trust of any material violation of the Code of Ethics, whether or not such violation relates to a security held by any Fund.
3.Information and Reporting. The Adviser shall provide the Trust and its respective officers with such periodic reports concerning the obligations the Adviser has assumed under this Agreement as the Trust may from time to time reasonably request.
(a)Notification of Breach / Compliance Reports. The Adviser shall notify the Trust immediately upon detection of (i) any material failure to manage any Fund in accordance with its investment objectives and policies or any applicable law; or (ii) any material breach of any of the Funds’ or the Adviser’s policies, guidelines or procedures. In addition, the Adviser shall provide a quarterly report regarding each Fund’s compliance with its investment objectives and policies, applicable law, including, but not limited to the 1940 Act and Subchapter M of the Code, as applicable, and the Fund’s policies, guidelines or procedures as applicable to the Adviser’s obligations under this Agreement. The Adviser agrees to correct any such failure promptly and to take any action that the Board may reasonably request in connection with any such breach. Upon request, the Adviser shall also provide the officers of the Trust with supporting certifications in connection with such certifications of Fund financial statements and disclosure controls pursuant to the Sarbanes-Oxley Act. The Adviser will promptly notify the Trust in the event (i) the Adviser is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board, or body, involving the affairs of the Trust (excluding class action suits in which a Fund is a member of the plaintiff class by reason of the Fund’s ownership of shares in the defendant) or the compliance by the Adviser with the federal or state securities laws or (ii) an actual change in control of the Adviser resulting in an “assignment” (as defined in the 1940 Act) has occurred or is otherwise proposed to occur.
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(b)Board and Filings Information. The Adviser will also provide the Trust with any information reasonably requested regarding its management of the Funds required for any meeting of the Board, or for any shareholder report, amended registration statement, proxy statement, or prospectus supplement to be filed by the Trust with the Commission. The Adviser will make its officers and employees available to meet with the Board from time to time on due notice to review its investment management services to the Funds in light of current and prospective economic and market conditions and shall furnish to the Board such information as may reasonably be necessary in order for the Board to evaluate this Agreement or any proposed amendments thereto.
(c)Transaction Information. The Adviser shall furnish to the Trust such information concerning portfolio transactions as may be necessary to enable the Trust or its designated agent to perform such compliance testing on the Funds and the Adviser’s services as the Trust may, in its sole discretion, determine to be appropriate. The provision of such information by the Adviser to the Trust or its designated agent in no way relieves the Adviser of its own responsibilities under this Agreement.
4.Brokerage.
(a)Principal Transactions. In connection with purchases or sales of securities for the account of a Fund, neither the Adviser nor any of its directors, officers or employees will act as a principal or agent or receive any commission except as permitted by the 1940 Act.
(b)Placement of Orders. The Adviser shall arrange for the placing of all orders for the purchase and sale of securities for a Fund’s account with brokers or dealers selected by the Adviser. In the selection of such brokers or dealers and the placing of such orders, the Adviser is directed at all times to seek for each Fund the most favorable execution and net price available under the circumstances. It is also understood that it is desirable for the Funds that the Adviser have access to brokerage and research services provided by brokers who may execute brokerage transactions at a higher cost to the Funds than may result when allocating brokerage to other brokers, consistent with section 28(e) of the 1934 Act and any Commission staff interpretations thereof. Therefore, the Adviser is authorized to place orders for the purchase and sale of securities for a Fund with such brokers, subject to review by the Board from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Adviser in connection with its or its affiliates’ services to other clients.
(c)Aggregated Transactions. On occasions when the Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other clients of the Adviser, the Adviser may, to the extent permitted by applicable law and regulations, aggregate the order for securities to be sold or purchased. In such event, the Adviser will allocate securities or futures contracts so purchased or sold, as well as the expenses incurred in the transaction, in the manner the Adviser reasonably considers to be equitable and consistent with its fiduciary obligations to the Fund and to such other clients under the circumstances.
(d)Affiliated Brokers. The Adviser or any of its affiliates may act as broker in connection with the purchase or sale of securities or other investments for a Fund, subject to: (i) the requirement that the Adviser seek to obtain best execution and price within the policy guidelines determined by the Board and set forth in the Fund’s current prospectus and statement of additional information; (ii) the provisions of the 1940 Act; (iii) the provisions of the Advisers Act; (iv) the provisions of the 1934 Act; and (v) other provisions of applicable law. These brokerage services are not within the scope of the duties of the Adviser under this Agreement. Subject to the requirements of applicable law and any procedures adopted by the Board, the Adviser or its affiliates may receive brokerage commissions, fees or other remuneration from a Fund for these services in addition to the Adviser’s fees for services under this Agreement.
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5.Custody. Nothing in this Agreement shall permit the Adviser to take or receive physical possession of cash, securities or other investments of a Fund.
6.Allocation of Charges and Expenses. The Adviser will bear its own costs of providing services hereunder. The Adviser agrees to pay all expenses incurred by the Funds except for the fee paid to the Adviser pursuant to this Agreement, interest, taxes, brokerage commissions and other expenses incurred in placing or settlement of orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability, extraordinary expenses, and distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act (collectively, “Excluded Expenses”).
The Trust acknowledges and agrees that the Adviser may delegate its responsibility to pay some or all expenses incurred by the Funds, except for Excluded Expenses, to one or more third parties, including but not limited to, each Sub-Adviser.
7.Representations, Warranties and Covenants.
(a)Properly Registered. The Adviser is registered as an investment adviser under the Advisers Act, and will remain so registered for the duration of this Agreement. The Adviser is not prohibited by the Advisers Act or the 1940 Act from performing the services contemplated by this Agreement, and to the best knowledge of the Adviser, there is no proceeding or investigation that is reasonably likely to result in the Adviser being prohibited from performing the services contemplated by this Agreement. The Adviser agrees to promptly notify the Trust of the occurrence of any event that would disqualify the Adviser from serving as an investment adviser to an investment company. The Adviser is in compliance in all material respects with all applicable federal and state law in connection with its investment management operations.
(b)ADV Disclosure. The Adviser has provided the Trust with a copy of its Form ADV as most recently filed with the Commission and will, promptly after filing any amendment to its Form ADV with the Commission, furnish a copy of such amendments to the Trust. The information contained in the Adviser’s Form ADV is accurate and complete in all material respects and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
(c)Fund Disclosure Documents. The Adviser has reviewed and will in the future review, the Registration Statement, and any amendments or supplements thereto, the annual or semi-annual reports to shareholders, other reports filed with the Commission and any marketing material of a Fund (collectively the “Disclosure Documents”) and represents and warrants that with respect to disclosure about the Adviser, the manner in which the Adviser manages the Fund or information relating directly or indirectly to the Adviser, such Disclosure Documents contain or will contain, as of the date thereof, no untrue statement of any material fact and does not omit any statement of material fact which was required to be stated therein or necessary to make the statements contained therein not misleading.
(d)Use Of The Name “Exchange Traded Concepts.” The Adviser has the right to use the name “Exchange Traded Concepts” (the “Name”) in connection with its services to the Trust and that, subject to the terms set forth in Section 8 of this Agreement, the Trust shall have the right to use the Name in connection with the management and operation of the Funds. The Adviser is not aware of any threatened or existing actions, claims, litigation or proceedings that would adversely effect or prejudice the rights of the Adviser or the Trust to use the Name.
(e)Insurance. The Adviser maintains errors and omissions insurance coverage in an appropriate amount and shall provide prior written notice to the Trust (i) of any material changes in its insurance policies or insurance coverage; or (ii) if any material claims will be made on its insurance policies. Furthermore, the Adviser shall upon reasonable request provide the Trust with any information it may reasonably require concerning the amount of or scope of such insurance.
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(f)No Detrimental Agreement. The Adviser represents and warrants that it has no arrangement or understanding with any party, other than the Trust, that would influence the decision of the Adviser with respect to its selection of securities for a Fund, and that all selections shall be done in accordance with what is in the best interest of the Fund.
(g)Conflicts. The Adviser shall act honestly, in good faith and in the best interests of the Trust including requiring any of its personnel with knowledge of Fund activities to place the interest of the Funds first, ahead of their own interests, in all personal trading scenarios that may involve a conflict of interest with the Funds, consistent with its fiduciary duties under applicable law.
(h)Representations. The representations and warranties in this Section 7 shall be deemed to be made on the date this Agreement is executed and at the time of delivery of the quarterly compliance report required by Section 3(a), whether or not specifically referenced in such report.
8.The Name. The Adviser grants to the Trust a sublicense to use the Name as part of the name of any Fund. The foregoing authorization by the Adviser to the Trust to use the Name as part of the name of any Fund is not exclusive of the right of the Adviser itself to use, or to authorize others to use, the Name; the Trust acknowledges and agrees that, as between the Trust and the Adviser, the Adviser has the right to use, or authorize others to use, the Name. The Trust shall (1) only use the Name in a manner consistent with uses approved by the Adviser; (2) use its best efforts to maintain the quality of the services offered using the Name; and (3) adhere to such other specific quality control standards as the Adviser may from time to time promulgate. At the request of the Adviser, the Trust will (a) submit to Adviser representative samples of any promotional materials using the Name; and (b) change the name of any Fund within three months of its receipt of the Adviser’s request, or such other shorter time period as may be required under the terms of a settlement agreement or court order, so as to eliminate all reference to the Name and will not thereafter transact any business using the Name in the name of any Fund; provided, however, that the Trust may continue to use beyond such date any supplies of prospectuses, marketing materials and similar documents that the Trust had on the date of such name change in quantities not exceeding those historically produced and used in connection with such Fund.
9.Adviser’s Compensation. The Funds shall pay to the Adviser, as compensation for the Adviser’s services hereunder, a fee, determined as described in Schedule A that is attached hereto and made a part hereof. Such fee shall be computed daily and paid not less than monthly in arrears by the Funds.
The method for determining net assets of a Fund for purposes hereof shall be the same as the method for determining net assets for purposes of establishing the offering and redemption prices of Fund shares as described in the Fund’s prospectus. In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the current month as a percentage of the total number of days in such month.
10.Independent Contractor. In the performance of its duties hereunder, the Adviser is and shall be an independent contractor and, unless otherwise expressly provided herein or otherwise authorized in writing, shall have no authority to act for or represent the Trust or any Fund in any way or otherwise be deemed to be an agent of the Trust or any Fund. If any occasion should arise in which the Adviser gives any advice to its clients concerning the shares of a Fund, the Adviser will act solely as investment counsel for such clients and not in any way on behalf of the Fund.
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11.Assignment. This Agreement shall automatically terminate, without the payment of any penalty, in the event of its assignment (as defined in section 2(a)(4) of the 1940 Act); provided that such termination shall not relieve the Adviser of any liability incurred hereunder.
12.Entire Agreement and Amendments. This Agreement represents the entire agreement among the parties with regard to the investment management matters described herein and may not be added to or changed orally and may not be modified or rescinded except by a writing signed by the parties hereto except as otherwise noted herein.
13.Duration and Termination. This Agreement shall become effective as of the date executed and shall remain in full force and effect continually thereafter, subject to renewal as provided in subparagraph (c) of this section and unless terminated automatically as set forth in Section 11 hereof or until terminated as follows:
(a)The Trust may cause this Agreement to terminate either (i) by vote of its Board or (ii) with respect to any Fund, upon the affirmative vote of a majority of the outstanding voting securities of the Fund; or
(b)The Adviser may at any time terminate this Agreement by not more than sixty (60) days’ nor less than thirty (30) days’ written notice delivered or mailed by registered mail, postage prepaid, to the Trust; or
(c)This Agreement shall automatically terminate two years from the date of its execution unless its renewal is specifically approved at least annually thereafter by (i) a majority vote of the Trustees, including a majority vote of such Trustees who are not interested persons of the Trust or the Adviser, at a meeting called for the purpose of voting on such approval; or (ii) the vote of a majority of the outstanding voting securities of each Fund; provided, however, that if the continuance of this Agreement is submitted to the shareholders of the Funds for their approval and such shareholders fail to approve such continuance of this Agreement as provided herein, the Adviser may continue to serve hereunder as to the Funds in a manner consistent with the 1940 Act and the rules and regulations thereunder; and
Termination of this Agreement pursuant to this Section shall be without payment of any penalty.
In the event of termination of this Agreement for any reason, the Adviser shall, immediately upon notice of termination or on such later date as may be specified in such notice, cease all activity on behalf of the Funds and with respect to any of the assets, except as otherwise required by any fiduciary duties of the Adviser under applicable law. In addition, the Adviser shall deliver the Fund Books and Records to the Trust by such means and in accordance with such schedule as the Trust shall direct and shall otherwise cooperate, as reasonably directed by the Trust, in the transition of portfolio asset management to any successor of the Adviser.
14.Certain Definitions. For the purposes of this Agreement:
(a)“Affirmative vote of a majority of the outstanding voting securities of the Fund” shall have the meaning as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission under the 1940 Act or any interpretations of the Commission staff.
(b)“Interested persons” and “Assignment” shall have their respective meanings as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission under the 1940 Act or any interpretations of the Commission staff.
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15.Liability of the Adviser. The Adviser shall indemnify and hold harmless the Trust and all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the 1933 Act) (collectively, the “Adviser Indemnitees”) against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of the Adviser’s willful misfeasance, bad faith or gross negligence generally in the performance of its duties hereunder or its reckless disregard of its obligations and duties under this Agreement.
16. �� Enforceability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.
17.Limitation of Liability. The parties to this Agreement acknowledge and agree that all litigation arising hereunder, whether direct or indirect, and of any and every nature whatsoever shall be satisfied solely out of the assets of the affected Fund and that no Trustee, officer or holder of shares of beneficial interest of the Fund shall be personally liable for any of the foregoing liabilities. The Trust’s Certificate of Trust, as amended from time to time, is on file in the Office of the Secretary of State of the State of Delaware. Such Certificate of Trust and the Trust’s Agreement and Declaration of Trust describe in detail the respective responsibilities and limitations on liability of the Trustees, officers, and holders of shares of beneficial interest.
18.Jurisdiction. This Agreement shall be governed by and construed in accordance with the substantive laws of the state of Delaware and the Adviser consents to the jurisdiction of courts, both state or federal, in Delaware, with respect to any dispute under this Agreement.
19.Paragraph Headings. The headings of paragraphs contained in this Agreement are provided for convenience only, form no part of this Agreement and shall not affect its construction.
20.Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed on their behalf by their duly authorized officers as of the date first above written.
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SCHEDULE Ato theADVISORY AGREEMENTDated ______, 2015 betweenEXCHANGE TRADED CONCEPTS TRUST IIandEXCHANGE TRADED CONCEPTS, LLC
The Trust will pay to the Adviser as compensation for the Adviser’s services rendered, a fee, computed daily at an annual rate based on the average daily net assets of the respective Fund in accordance the following fee schedule:
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EXHIBIT CForm of Proposed Sub-Advisory Agreement between Exchange Traded Concepts, LLC and Vident Investment Advisory LLC101
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the “Agreement”) made as of this ___th day of ________, 2015 by and between Exchange Traded Concepts, LLC, an Oklahoma limited liability company, with its principal place of business at 2545 South Kelly Avenue, Suite C, Edmond, Oklahoma 73013 (the “Adviser”) and Vident Investment Advisory LLC (“Vident”), a Delaware limited liability company with its principal place of business at 300 Colonial Center Parkway, Suite 330, Roswell, Georgia 30076 (the “Sub-Adviser”), with respect to each series of Exchange Traded Concepts Trust (the “Trust”) identified on Schedule A to this Agreement (each a “Fund” and collectively, the “Funds”).WITNESSETH
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”);
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated ___________, 2015 (the “Investment Advisory Agreement”) with the Trust, an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Sub-Adviser is registered as an investment adviser under the Advisers Act;
WHEREAS, the Investment Advisory Agreement contemplates that the Adviser may appoint one or more sub-advisers to perform some or all of the services for which the Adviser is responsible; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the Adviser and each Fund.
NOW, THEREFORE, the parties hereto agree as follows:
1.Duties of the Sub-Adviser. Subject to supervision and oversight of the Adviser and the Board of Trustees (the “Board”), and in accordance with the terms and conditions of the Agreement, the Sub-Adviser shall manage all of the securities and other assets of the Funds (the “Assets”), including the purchase, retention and disposition of the Assets, in accordance with the Funds’ respective investment objectives, policies and restrictions as stated in each Fund’s prospectus and statement of additional information, as currently in effect and as amended or supplemented from time to time (referred to collectively as the “Prospectus”), and subject to the following:
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2.Duties of the Adviser. The Adviser shall continue to have responsibility for all services to be provided to the Funds pursuant to the Advisory Agreement and shall oversee and review the Sub-Adviser’s performance of its duties under this Agreement; provided, however, that in connection with its management of the Assets, nothing herein shall be construed to relieve the Sub-Adviser of responsibility for compliance in all material respects with the Trust’s Declaration of Trust (as defined herein), the Prospectus, the instructions and directions of the Board, the requirements of the 1940 Act, the Code, and all other applicable federal and state laws and regulations, as each is amended from time to time.
3.Delivery of Documents. The Adviser has furnished the Sub-Adviser with copies of each of the following documents:
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The Adviser shall promptly furnish the Sub-Adviser from time to time with copies of all amendments of or supplements to the foregoing. Until so provided, the Sub-Adviser may continue to rely on those documents previously provided. The Adviser shall not, and shall not permit any of the Funds to use the Sub-Adviser’s name or make representations regarding the Sub-Adviser or its affiliates without prior written consent of the Sub-Adviser, such consent not to be unreasonably withheld. Notwithstanding the foregoing, the Sub-Adviser’s approval is not required when the information regarding the Sub-Adviser used by the Adviser or the Funds is limited to information disclosed in materials provided by the Sub-Adviser to the Adviser and the information is used (a) as required by applicable law, rule or regulation, in the Prospectus of the Funds or in Fund shareholder reports or proxy statements; or (b) as may be otherwise specifically approved in writing by the Sub-Adviser prior to use.
4.Compensation to the Sub-Adviser. For the services to be provided by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee at the rate specified in Schedule A which is attached hereto and made part of this Agreement. The fee will be calculated based on the average daily value of the Assets under the Sub-Adviser’s management and will be paid to the Sub-Adviser monthly. Except as may otherwise be prohibited by law or regulation (including any then current SEC staff interpretation), the Sub-Adviser may, in its sole discretion and from time to time, waive a portion of its fee.
In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the current month as a percentage of the total number of days in such month.
5.Expenses. The Sub-Adviser will furnish, at its expense, all necessary facilities and personnel, including salaries, expenses and fees of any personnel required for the Sub-Adviser to perform its duties under this Agreement and administrative facilities, including bookkeeping, and all equipment necessary for the efficient conduct of the Sub-Adviser’s duties under this Agreement. The Sub-Adviser may enter into an agreement with a Fund to limit the operating expenses of the Fund.
106
6.Indemnification. The Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act), and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended) of the Adviser and of the Trust from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Sub-Adviser’s obligations under this Agreement; provided, however, that the Sub-Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
The Adviser shall indemnify and hold harmless the Sub-Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Adviser’s obligations under this Agreement; provided, however, that the Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
7.Representations and Warranties of Sub-Adviser. The Sub-Adviser represents and warrants to the Adviser and the Funds as follows:
107
8.Representations and Warranties of the Adviser. The Adviser represents and warrants to the Sub-Adviser and the Funds as follows:
108
9.Duration and Termination.
109
This Agreement shall terminate automatically and immediately in the event of its assignment, or in the event of a termination of the Advisory Agreement with the Trust. As used in this Section 9, the terms “assignment” and “vote of a majority of the outstanding voting securities” shall have the respective meanings set forth in the 1940 Act and the rules and regulations thereunder, subject to such exceptions as may be granted by the SEC under the 1940 Act.
10.Compliance Program of the Sub-Adviser. The Sub-Adviser hereby represents and warrants that:
11.Confidentiality. Subject to the duty of the Adviser or Sub-Adviser to comply with applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential all non-public information pertaining to the Funds and the actions of the Sub-Adviser and the Funds in respect thereof. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Funds, the Board, or such persons as the Adviser may designate in connection with the Funds. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Funds. The Sub-Adviser shall maintain and enforce adequate security procedures with respect to all materials, records, documents and data relating to any of its responsibilities pursuant to this Agreement including all means for the effecting of investment transactions.
110
111
13.Governing Law. This Agreement shall be governed by the internal laws of the State of Delaware, without regard to conflict of law principles; provided, however, that nothing herein shall be construed as being inconsistent with the 1940 Act.
14.Severability. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.
15.Notice. Any notice, advice or report to be given pursuant to this Agreement shall be deemed sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid addressed by the party giving notice to the other party at the last address furnished by the other party:
112
16.Amendment of Agreement. This Agreement may be amended only by written agreement of the Adviser and the Sub-Adviser and only in accordance with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.
17.Entire Agreement. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to this Agreement’s subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.
18.Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act will be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the 1940 Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested persons,” “assignment,” and “affiliated persons,” as used herein will have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the SEC, whether of special or of general application, such provision will be deemed to incorporate the effect of such rule, regulation or order.
19.Headings. The headings in the sections of this Agreement are inserted for convenience of reference only and will not constitute a part hereof.
In the event the terms of this Agreement are applicable to more than one Fund of the Trust, the Adviser is entering into this Agreement with the Sub-Adviser on behalf of the respective Funds severally and not jointly, with the express intention that the provisions contained in each numbered paragraph hereof shall be understood as applying separately with respect to each Fund as if contained in separate agreements between the Adviser and Sub-Adviser for each such Fund. In the event that this Agreement is made applicable to any additional Funds by way of a Schedule executed subsequent to the date first indicated above, provisions of such Schedule shall be deemed to be incorporated into this Agreement as it relates to such Fund so that, for example, the execution date for purposes of Section 9 of this Agreement with respect to such Fund shall be the execution date of the relevant Schedule.
113
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the day and year first written above.
114
Schedule Ato theSub-Advisory Agreementby and betweenExchange Traded Concepts LLCandVident Investment Advisory LLC
As of ___________, 2015
Sub-Advisory Fee. Pursuant to Section 4, the Adviser shall pay the Sub-Adviser compensation at an annual rate based on a percentage of the average daily net assets of each Fund as follows:
Agreed and Accepted:
115
EXHIBIT D:Form of Proposed Sub-Advisory Agreement between Exchange Traded Concepts, LLC and Penserra Capital Management LLC116
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the “Agreement”) made as of this ___th day of ________, 2015 by and between Exchange Traded Concepts, LLC, an Oklahoma limited liability company, with its principal place of business at 2545 South Kelly Avenue, Suite C, Edmond, Oklahoma 73013 (the “Adviser”) and Penserra Capital Management LLC (“Penserra”), a limited liability company with its principal place of business at 140 Broadway, 26th Floor, New York New York 10005 (the “Sub-Adviser”), with respect to each series of Exchange Traded Concepts Trust (the “Trust”) identified on Schedule A to this Agreement (each a “Fund” and collectively, the “Funds”).WITNESSETH
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”);
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated ___________, 2015 (the “Investment Advisory Agreement”) with the Trust, an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Sub-Adviser is registered as an investment adviser under the Advisers Act;
WHEREAS, the Investment Advisory Agreement contemplates that the Adviser may appoint one or more sub-advisers to perform some or all of the services for which the Adviser is responsible; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the Adviser and each Fund.
NOW, THEREFORE, the parties hereto agree as follows:
1.Duties of the Sub-Adviser. Subject to supervision and oversight of the Adviser and the Board of Trustees (the “Board”), and in accordance with the terms and conditions of the Agreement, the Sub-Adviser shall manage all of the securities and other assets of the Funds (the “Assets”), including the purchase, retention and disposition of the Assets, in accordance with the Funds’ respective investment objectives, policies and restrictions as stated in each Fund’s prospectus and statement of additional information, as currently in effect and as amended or supplemented from time to time (referred to collectively as the “Prospectus”), and subject to the following:
117
118
119
2.Duties of the Adviser. The Adviser shall continue to have responsibility for all services to be provided to the Funds pursuant to the Advisory Agreement and shall oversee and review the Sub-Adviser’s performance of its duties under this Agreement; provided, however, that in connection with its management of the Assets, nothing herein shall be construed to relieve the Sub-Adviser of responsibility for compliance in all material respects with the Trust’s Declaration of Trust (as defined herein), the Prospectus, the instructions and directions of the Board, the requirements of the 1940 Act, the Code, and all other applicable federal and state laws and regulations, as each is amended from time to time.
3.Delivery of Documents. The Adviser has furnished the Sub-Adviser with copies of each of the following documents:
120
The Adviser shall promptly furnish the Sub-Adviser from time to time with copies of all amendments of or supplements to the foregoing. Until so provided, the Sub-Adviser may continue to rely on those documents previously provided. The Adviser shall not, and shall not permit any of the Funds to use the Sub-Adviser’s name or make representations regarding the Sub-Adviser or its affiliates without prior written consent of the Sub-Adviser, such consent not to be unreasonably withheld. Notwithstanding the foregoing, the Sub-Adviser’s approval is not required when the information regarding the Sub-Adviser used by the Adviser or the Funds is limited to information disclosed in materials provided by the Sub-Adviser to the Adviser and the information is used (a) as required by applicable law, rule or regulation, in the Prospectus of the Funds or in Fund shareholder reports or proxy statements; or (b) as may be otherwise specifically approved in writing by the Sub-Adviser prior to use.
4.Compensation to the Sub-Adviser. For the services to be provided by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee at the rate specified in Schedule A which is attached hereto and made part of this Agreement. The fee will be calculated based on the average daily value of the Assets under the Sub-Adviser’s management and will be paid to the Sub-Adviser monthly. Except as may otherwise be prohibited by law or regulation (including any then current SEC staff interpretation), the Sub-Adviser may, in its sole discretion and from time to time, waive a portion of its fee.
In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the current month as a percentage of the total number of days in such month.
5.Expenses. The Sub-Adviser will furnish, at its expense, all necessary facilities and personnel, including salaries, expenses and fees of any personnel required for the Sub-Adviser to perform its duties under this Agreement and administrative facilities, including bookkeeping, and all equipment necessary for the efficient conduct of the Sub-Adviser’s duties under this Agreement. The Sub-Adviser may enter into an agreement with a Fund to limit the operating expenses of the Fund.
6.Indemnification. The Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act), and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended) of the Adviser and of the Trust from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Sub-Adviser’s obligations under this Agreement; provided, however, that the Sub-Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
121
The Adviser shall indemnify and hold harmless the Sub-Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Adviser’s obligations under this Agreement; provided, however, that the Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
7.Representations and Warranties of Sub-Adviser. The Sub-Adviser represents and warrants to the Adviser and the Funds as follows:
122
8.Representations and Warranties of the Adviser. The Adviser represents and warrants to the Sub-Adviser and the Funds as follows:
123
9.Duration and Termination.
124
This Agreement shall terminate automatically and immediately in the event of its assignment, or in the event of a termination of the Advisory Agreement with the Trust. As used in this Section 9, the terms “assignment” and “vote of a majority of the outstanding voting securities” shall have the respective meanings set forth in the 1940 Act and the rules and regulations thereunder, subject to such exceptions as may be granted by the SEC under the 1940 Act.
10.Compliance Program of the Sub-Adviser. The Sub-Adviser hereby represents and warrants that:
11.Confidentiality. Subject to the duty of the Adviser or Sub-Adviser to comply with applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential all non-public information pertaining to the Funds and the actions of the Sub-Adviser and the Funds in respect thereof. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Funds, the Board, or such persons as the Adviser may designate in connection with the Funds. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Funds. The Sub-Adviser shall maintain and enforce adequate security procedures with respect to all materials, records, documents and data relating to any of its responsibilities pursuant to this Agreement including all means for the effecting of investment transactions.
12.Reporting of Compliance Matters.
125
12.Names.
126
13.Governing Law. This Agreement shall be governed by the internal laws of the State of Delaware, without regard to conflict of law principles; provided, however, that nothing herein shall be construed as being inconsistent with the 1940 Act.
14.Severability. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.
15.Notice. Any notice, advice or report to be given pursuant to this Agreement shall be deemed sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid addressed by the party giving notice to the other party at the last address furnished by the other party:
16.Amendment of Agreement. This Agreement may be amended only by written agreement of the Adviser and the Sub-Adviser and only in accordance with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.
17.Entire Agreement. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to this Agreement’s subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.
127
18.Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act will be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the 1940 Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested persons,” “assignment,” and “affiliated persons,” as used herein will have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the SEC, whether of special or of general application, such provision will be deemed to incorporate the effect of such rule, regulation or order.
19.Headings. The headings in the sections of this Agreement are inserted for convenience of reference only and will not constitute a part hereof.
In the event the terms of this Agreement are applicable to more than one Fund of the Trust, the Adviser is entering into this Agreement with the Sub-Adviser on behalf of the respective Funds severally and not jointly, with the express intention that the provisions contained in each numbered paragraph hereof shall be understood as applying separately with respect to each Fund as if contained in separate agreements between the Adviser and Sub-Adviser for each such Fund. In the event that this Agreement is made applicable to any additional Funds by way of a Schedule executed subsequent to the date first indicated above, provisions of such Schedule shall be deemed to be incorporated into this Agreement as it relates to such Fund so that, for example, the execution date for purposes of Section 9 of this Agreement with respect to such Fund shall be the execution date of the relevant Schedule.
20.Miscellaneous.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the day and year first written above.
128
Schedule Ato theSub-Advisory Agreementby and betweenExchange Traded Concepts LLCandPenserra Capital Management LLC
As of ___________, 2015
Sub-Advisory Fee. Pursuant to Section 4, the Adviser shall pay the Sub-Adviser compensation at an annual rate based on a percentage of the average daily net assets of each Fund as follows:
Agreed and Accepted:
129
EXHIBIT E:Form of Proposed Sub-Advisory Agreement between Exchange Traded Concepts, LLC and Yorkville ETF Advisors, LLC130
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the “Agreement”) made as of this ___th day of __________, 2015 by and between Exchange Traded Concepts, LLC, an Oklahoma limited liability company, with its principal place of business at 2545 South Kelly Avenue, Suite C, Edmond, Oklahoma 73013 (the “Adviser”) and Yorkville ETF Advisors, LLC, a Delaware limited liability company with its principal place of business at 950 Third Avenue, 23rd Floor, New York, New York 10022 (the “Sub-Adviser”), with respect to each series of Exchange Traded Concepts Trust (the “Trust”) identified on Schedule A to this Agreement (each a “Fund” and collectively, the “Funds”).
WITNESSETH
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”);
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated _________, 2015 (the “Investment Advisory Agreement”) with the Trust, an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Sub-Adviser is registered as an investment adviser under the Advisers Act;
WHEREAS, the Investment Advisory Agreement contemplates that the Adviser may appoint one or more sub-advisers to perform some or all of the services for which the Adviser is responsible; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the Adviser and each Fund.
NOW, THEREFORE, the parties hereto agree as follows:
1.Duties of the Sub-Adviser. Subject to supervision and oversight of the Adviser and the Board of Trustees (the “Board”), and in accordance with the terms and conditions of the Agreement, the Sub-Adviser shall manage all of the securities and other assets of the Funds (the “Assets”), including the purchase, retention and disposition of the Assets, in accordance with the Funds’ respective investment objectives, policies and restrictions as stated in each Fund’s prospectus and statement of additional information, as currently in effect and as amended or supplemented from time to time (referred to collectively as the “Prospectus”), and subject to the following:
131
132
133
2.Duties of the Adviser. The Adviser shall continue to have responsibility for all services to be provided to the Funds pursuant to the Advisory Agreement and shall oversee and review the Sub-Adviser’s performance of its duties under this Agreement; provided, however, that in connection with its management of the Assets, nothing herein shall be construed to relieve the Sub-Adviser of responsibility for compliance in all material respects with the Trust’s Declaration of Trust (as defined herein), the Prospectus, the instructions and directions of the Board, the requirements of the 1940 Act, the Code, and all other applicable federal and state laws and regulations, as each is amended from time to time.
134
3.Delivery of Documents. The Adviser has furnished the Sub-Adviser with copies of each of the following documents:
The Adviser shall promptly furnish the Sub-Adviser from time to time with copies of all amendments of or supplements to the foregoing. Until so provided, the Sub-Adviser may continue to rely on those documents previously provided. The Adviser shall not, and shall not permit any of the Funds to use the Sub-Adviser’s name or make representations regarding the Sub-Adviser or its affiliates without prior written consent of the Sub-Adviser, such consent not to be unreasonably withheld. Notwithstanding the foregoing, the Sub-Adviser’s approval is not required when the information regarding the Sub-Adviser used by the Adviser or the Funds is limited to information disclosed in materials provided by the Sub-Adviser to the Adviser and the information is used (a) as required by applicable law, rule or regulation, in the Prospectus of the Funds or in Fund shareholder reports or proxy statements; or (b) as may be otherwise specifically approved in writing by the Sub-Adviser prior to use.
4.Compensation to the Sub-Adviser. For the services to be provided by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee at the rate specified in Schedule A which is attached hereto and made part of this Agreement. The fee will be calculated based on the average daily value of the Assets under the Sub-Adviser’s management and will be paid to the Sub-Adviser monthly. Except as may otherwise be prohibited by law or regulation (including any then current SEC staff interpretation), the Sub-Adviser may, in its sole discretion and from time to time, waive a portion of its fee.
In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the current month as a percentage of the total number of days in such month.
5.Expenses. The Sub-Adviser will furnish, at its expense, all necessary facilities and personnel, including salaries, expenses and fees of any personnel required for the Sub-Adviser to perform its duties under this Agreement and administrative facilities, including bookkeeping, and all equipment necessary for the efficient conduct of the Sub-Adviser’s duties under this Agreement. The Sub-Adviser may enter into an agreement with a Fund to limit the operating expenses of the Fund. The Adviser hereby delegates, and the Sub-Adviser agrees to assume, the responsibility to pay or cause to be paid from the Sub-Adviser’s own resources, which may include the sub-advisory fee paid to it by the Adviser, all fees and expenses of the Funds not paid by the Adviser, excluding 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, accrued deferred tax liability, extraordinary expenses, and distribution fees and expenses paid by a Fund under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act.
135
6.Indemnification.
The Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act), and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended) of the Adviser and of the Trust from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Sub-Adviser’s obligations under this Agreement; provided, however, that the Sub-Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
The Adviser shall indemnify and hold harmless the Sub-Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Adviser’s obligations under this Agreement; provided, however, that the Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
7.Representations and Warranties of Sub-Adviser. The Sub-Adviser represents and warrants to the Adviser and the Funds as follows:
136
8.Representations and Warranties of the Adviser. The Adviser represents and warrants to the Sub-Adviser and the Funds as follows:
137
9.Duration and Termination.
138
This Agreement shall terminate automatically and immediately in the event of its assignment, or in the event of a termination of the Advisory Agreement with the Trust. As used in this Section 9, the terms “assignment” and “vote of a majority of the outstanding voting securities” shall have the respective meanings set forth in the 1940 Act and the rules and regulations thereunder, subject to such exceptions as may be granted by the SEC under the 1940 Act.
10.Compliance Program of the Sub-Adviser. The Sub-Adviser hereby represents and warrants that:
11.Confidentiality. Subject to the duty of the Adviser or Sub-Adviser to comply with applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential all non-public information pertaining to the Funds and the actions of the Sub-Adviser and the Funds in respect thereof. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Funds, the Board, or such persons as the Adviser may designate in connection with the Funds. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Funds. The Sub-Adviser shall maintain and enforce adequate security procedures with respect to all materials, records, documents and data relating to any of its responsibilities pursuant to this Agreement including all means for the effecting of investment transactions.
139
12.Reporting of Compliance Matters.
12.Names.
140
13.Governing Law. This Agreement shall be governed by the internal laws of the State of Delaware, without regard to conflict of law principles; provided, however, that nothing herein shall be construed as being inconsistent with the 1940 Act.
14.Severability. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.
15.Notice. Any notice, advice or report to be given pursuant to this Agreement shall be deemed sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid addressed by the party giving notice to the other party at the last address furnished by the other party:
16.Amendment of Agreement. This Agreement may be amended only by written agreement of the Adviser and the Sub-Adviser and only in accordance with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.
141
17.Entire Agreement. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to this Agreement’s subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.
18.Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act will be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the 1940 Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested persons,” “assignment,” and “affiliated persons,” as used herein will have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the SEC, whether of special or of general application, such provision will be deemed to incorporate the effect of such rule, regulation or order.
19.Headings. The headings in the sections of this Agreement are inserted for convenience of reference only and will not constitute a part hereof.
In the event the terms of this Agreement are applicable to more than one Fund of the Trust, the Adviser is entering into this Agreement with the Sub-Adviser on behalf of the respective Funds severally and not jointly, with the express intention that the provisions contained in each numbered paragraph hereof shall be understood as applying separately with respect to each Fund as if contained in separate agreements between the Adviser and Sub-Adviser for each such Fund. In the event that this Agreement is made applicable to any additional Funds by way of a Schedule executed subsequent to the date first indicated above, provisions of such Schedule shall be deemed to be incorporated into this Agreement as it relates to such Fund so that, for example, the execution date for purposes of Section 9 of this Agreement with respect to such Fund shall be the execution date of the relevant Schedule.
20.Miscellaneous.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the day and year first written above.
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Schedule Ato theSub-Advisory Agreementby and betweenExchange Traded Concepts LLCandYorkville ETF Advisors, LLC
As of __________, 2015
EXCHANGE TRADED CONCEPTS TRUST
Sub-Advisory Fee. Pursuant to Section 4, the Adviser shall pay the Sub-Adviser compensation at an annual rate based on a percentage of the average daily net assets of each Fund as follows:
Agreed and Accepted:
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EXHIBIT F:Form of Proposed Sub-Advisory Agreement between Exchange Traded Concepts, LLC and Horizons ETFs Management (USA) LLC
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SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the “Agreement”) made as of this ___th day of ______________, 2015 by and between Exchange Traded Concepts, LLC, an Oklahoma limited liability company, with its principal place of business at 2545 South Kelly Avenue, Suite C, Edmond, Oklahoma 73013 (the “Adviser”) and Horizons ETFs Management (USA) LLC, a Delaware limited liability company with its principal place of business at One Bryant Park, 39th Floor, New York, New York 10036 (the “Sub-Adviser”), with respect to each series of Exchange Traded Concepts Trust II (the “Trust”) identified on Schedule A to this Agreement (each a “Fund” and collectively, the “Funds”).
WITNESSETH
WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”);
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated ________, 2015 (the “Investment Advisory Agreement”) with the Trust, an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Sub-Adviser is registered as an investment adviser under the Advisers Act;
WHEREAS, the Investment Advisory Agreement contemplates that the Adviser may appoint one or more sub-advisers to perform some or all of the services for which the Adviser is responsible; and
WHEREAS, the Sub-Adviser is willing to furnish such services to the Adviser and each Fund.
NOW, THEREFORE, the parties hereto agree as follows:
1.Duties of the Sub-Adviser. Subject to supervision and oversight of the Adviser and the Board of Trustees (the “Board”), and in accordance with the terms and conditions of the Agreement, the Sub-Adviser shall manage all of the securities and other assets of the Funds (the “Assets”), including the purchase, retention and disposition of the Assets, in accordance with the Funds’ respective investment objectives, policies and restrictions as stated in each Fund’s prospectus and statement of additional information, as currently in effect and as amended or supplemented from time to time (referred to collectively as the “Prospectus”), and subject to the following:
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2.Duties of the Adviser. The Adviser shall continue to have responsibility for all services to be provided to the Funds pursuant to the Advisory Agreement and shall oversee and review the Sub-Adviser’s performance of its duties under this Agreement; provided, however, that in connection with its management of the Assets, nothing herein shall be construed to relieve the Sub-Adviser of responsibility for compliance in all material respects with the Trust’s Declaration of Trust (as defined herein), the Prospectus, the instructions and directions of the Board, the requirements of the 1940 Act, the Code, and all other applicable federal and state laws and regulations, as each is amended from time to time.
3.Delivery of Documents. The Adviser has furnished the Sub-Adviser with copies of each of the following documents:
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The Adviser shall promptly furnish the Sub-Adviser from time to time with copies of all amendments of or supplements to the foregoing. Until so provided, the Sub-Adviser may continue to rely on those documents previously provided. The Adviser shall not, and shall not permit any of the Funds to use the Sub-Adviser’s name or make representations regarding the Sub-Adviser or its affiliates without prior written consent of the Sub-Adviser, such consent not to be unreasonably withheld. Notwithstanding the foregoing, the Sub-Adviser’s approval is not required when the information regarding the Sub-Adviser used by the Adviser or the Funds is limited to information disclosed in materials provided by the Sub-Adviser to the Adviser and the information is used (a) as required by applicable law, rule or regulation, in the Prospectus of the Funds or in Fund shareholder reports or proxy statements; or (b) as may be otherwise specifically approved in writing by the Sub-Adviser prior to use.
4.Compensation to the Sub-Adviser. For the services to be provided by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee at the annual rate specified in Schedule A which is attached hereto and made part of this Agreement. The fee will be calculated based on the average daily value of the Assets under the Sub-Adviser’s management and will be paid to the Sub-Adviser monthly. Except as may otherwise be prohibited by law or regulation (including any then current SEC staff interpretation), the Sub-Adviser may, in its sole discretion and from time to time, waive a portion of its fee.
In the event of termination of this Agreement, the fee provided in this Section shall be computed on the basis of the period ending on the last business day on which this Agreement is in effect subject to a pro rata adjustment based on the number of days elapsed in the current month as a percentage of the total number of days in such month.
5.Expenses. The Sub-Adviser will furnish, at its expense, all necessary facilities and personnel, including salaries, expenses and fees of any personnel required for the Sub-Adviser to perform its duties under this Agreement and administrative facilities, including bookkeeping, and all equipment necessary for the efficient conduct of the Sub-Adviser’s duties under this Agreement. Except for expenses assumed or agreed to be paid by the Sub-Adviser pursuant to this Agreement or otherwise, the Sub-Adviser shall not be liable for any costs or expenses incurred by (a) the Trust or any Fund or (b) the Adviser in discharging its obligations as investment adviser to the Funds. The Sub-Adviser may enter into an agreement with the Trust to limit the operating expenses of one or more Funds.
6.Indemnification.
The Sub-Adviser shall indemnify and hold harmless the Adviser, the Trust, all affiliated persons (within the meaning of Section 2(a)(3) of the 1940 Act), and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended) of the Adviser and of the Trust from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Sub-Adviser’s obligations under this Agreement; provided, however, that the Sub-Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser’s own willful misfeasance, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
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The Adviser shall indemnify and hold harmless the Sub-Adviser and all affiliated persons (within the meaning of Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15 of the Securities Act of 1933, as amended) of the Sub-Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorney’s fees and other related expenses) however arising from or in connection with the performance of the Adviser’s obligations under this Agreement; provided, however, that the Adviser’s obligation under this Section 6 shall be reduced to the extent that the claim against, or the loss, liability or damage experienced by the Sub-Adviser, is caused by or is otherwise directly related to the Sub-Adviser’s own willful misfeasance, bad faith or gross negligence, or to the reckless disregard of its duties under this Agreement.
7.Representations and Warranties of Sub-Adviser. The Sub-Adviser represents and warrants to the Adviser and the Funds as follows:
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8.Representations and Warranties of the Adviser. The Adviser represents and warrants to the Sub-Adviser and the Funds as follows:
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9.Duration and Termination.
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This Agreement shall terminate automatically and immediately in the event of its assignment, or in the event of a termination of the Advisory Agreement with the Trust. As used in this Section 9, the terms “assignment” and “vote of a majority of the outstanding voting securities” shall have the respective meanings set forth in the 1940 Act and the rules and regulations thereunder, subject to such exceptions as may be granted by the SEC under the 1940 Act.
10.Compliance Program of the Sub-Adviser. The Sub-Adviser hereby represents and warrants that:
11.Confidentiality. Subject to the duty of the Adviser or Sub-Adviser to comply with applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential all non-public information pertaining to the Funds and the actions of the Sub-Adviser and the Funds in respect thereof. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Funds, the Board, or such persons as the Adviser may designate in connection with the Funds. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Funds. The Sub-Adviser shall maintain and enforce adequate security procedures with respect to all materials, records, documents and data relating to any of its responsibilities pursuant to this Agreement including all means for the effecting of investment transactions.
12.Reporting of Compliance Matters.
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13.Names.
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14.Governing Law. This Agreement shall be governed by the internal laws of the State of New York, without regard to conflict of law principles; provided, however, that nothing herein shall be construed as being inconsistent with the 1940 Act.
15.Severability. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.
16.Notice. Any notice, advice or report to be given pursuant to this Agreement shall be deemed sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid addressed by the party giving notice to the other party at the last address furnished by the other party:
17.Amendment of Agreement. This Agreement may be amended only by written agreement of the Adviser and the Sub-Adviser and only in accordance with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.
18.Entire Agreement. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to this Agreement’s subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.
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19.Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act will be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the 1940 Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested persons,” “assignment,” and “affiliated persons,” as used herein will have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the SEC, whether of special or of general application, such provision will be deemed to incorporate the effect of such rule, regulation or order.
20.Headings. The headings in the sections of this Agreement are inserted for convenience of reference only and will not constitute a part hereof.
In the event the terms of this Agreement are applicable to more than one Fund of the Trust, the Adviser is entering into this Agreement with the Sub-Adviser on behalf of the respective Funds severally and not jointly, with the express intention that the provisions contained in each numbered paragraph hereof shall be understood as applying separately with respect to each Fund as if contained in separate agreements between the Adviser and Sub-Adviser for each such Fund. In the event that this Agreement is made applicable to any additional Funds by way of a Schedule executed subsequent to the date first indicated above, provisions of such Schedule shall be deemed to be incorporated into this Agreement as it relates to such Fund so that, for example, the execution date for purposes of Section 9 of this Agreement with respect to such Fund shall be the execution date of the relevant Schedule.
21.Miscellaneous.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the day and year first written above.
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Schedule Ato theSub-Advisory Agreementby and betweenExchange Traded Concepts LLCandHorizons ETFs Management (USA) LLC
As of __________, 2015
Agreed and Accepted:
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EXHIBIT G:
TERMS AND CONDITIONS OF “MANAGER OF MANAGERS” EXEMPTIVE RELIEFCapitalized terms used below are used as defined in the Application.
Applicants agree that any order of the Commission granting the requested relief will be subject to the following conditions1:1.Before a Subadvised Fund may rely on the order requested in the Application, the operation of the Subadvised Fund in the manner described in this Application, including the hiring of Wholly-Owned Sub-Advisers, will be approved by a majority of the Subadvised Fund’s outstanding voting securities as defined in the 1940 Act, which in the case of a Master Fund will include voting instructions provided by shareholders of the Feeder Funds investing in such Master Fund or other voting arrangements that comply with Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or, in the case of a new Subadvised Fund whose public shareholders purchase shares on the basis of a prospectus containing the disclosure contemplated by condition 2 below, by the initial shareholder(s) before offering the Subadvised Fund’s shares to the public.2.The prospectus for each Subadvised Fund, and in the case of a Master Fund relying on the requested relief, the prospectus for each Feeder Fund investing in such Master Fund, will disclose the existence, substance and effect of any order granted pursuant to this Application. Each Subadvised Fund (and any such Feeder Fund) will hold itself out to the public as employing the multi-manager structure described in this Application. Each prospectus will prominently disclose that the Adviser has the ultimate responsibility, subject to oversight by the Board, to oversee the Sub-Advisers and recommend their hiring, termination, and replacement.3.The Adviser will provide general management services to a Subadvised Fund, including overall supervisory responsibility for the general management and investment of the Subadvised Fund’s assets. Subject to review and approval of the Board, the Adviser will (a) set a Subadvised Fund’s overall investment strategies, (b) evaluate, select, and recommend Sub-Advisers to manage all or a portion of a Subadvised Fund’s assets, and (c) implement procedures reasonably designed to ensure that Sub-Advisers comply with a Subadvised Fund’s investment objective, policies and restrictions. Subject to the review by the Board, the Adviser will (a) when appropriate, allocate and reallocate a Subadvised Fund’s assets among Sub-Advisers; and (b) monitor and evaluate the performance of Sub-Advisers.4.A Subadvised Fund will not make any Ineligible Sub-Adviser Changes without such agreement, including the compensation to be paid thereunder, being approved by the shareholders of the applicable Subadvised Fund, which in the case of a Master Fund will include voting instructions provided by shareholders of the Feeder Fund investing in such Master Fund or other voting arrangements that comply with Section 12(d)(1)(E)(iii)(aa) of the 1940 Act.5.Subadvised Funds will inform shareholders, and if the Subadvised Fund is a Master Fund, shareholders of any Feeder Funds, of the hiring of a new Sub-Adviser within 90 days after the hiring of the new Sub-Adviser pursuant to the Modified Notice and Access Procedures.6.At all times, at least a majority of the Board will be Independent Trustees, and the selection and nomination of new or additional Independent Trustees will be placed within the discretion of the then-existing Independent Trustees.7.Independent Legal Counsel, as defined in Rule 0-1(a)(6) under the 1940 Act, will be engaged to represent the Independent Trustees. The selection of such counsel will be within the discretion of the then-existing Independent Trustees.
1 Applicants will only comply with conditions 7, 8, 9, and 12 if they rely on the Fee Disclosure Relief that would allow them to provide Aggregate Fee Disclosure.160
8.The Adviser will provide the Board, no less frequently than quarterly, with information about the profitability of the Adviser on a per Subadvised Fund basis. The information will reflect the impact on profitability of the hiring or termination of any sub-adviser during the applicable quarter.9.Whenever a sub-adviser is hired or terminated, the Adviser will provide the Board with information showing the expected impact on the profitability of the Adviser.10.Whenever a sub-adviser change is proposed for a Subadvised Fund with an Affiliated Sub-Adviser or a Wholly-Owned Sub-Adviser, the Board, including a majority of the Independent Trustees, will make a separate finding, reflected in the Board minutes, that such change is in the best interests of the Subadvised Fund and its shareholders, and if the Subadvised Fund is a Master Fund, the best interests of any applicable Feeder Funds and their respective shareholders, and does not involve a conflict of interest from which the Adviser or the Affiliated Sub-Adviser or Wholly-Owned Sub-Adviser derives an inappropriate advantage.11.No Trustee or officer of the Trust, a Fund or a Feeder Fund, or partner, director, manager or officer of the Adviser, will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by such person) any interest in a Sub-Adviser except for (a) ownership of interests in the Adviser or any entity, except a Wholly-Owned Sub-Adviser, that controls, is controlled by, or is under common control with the Adviser, or (b) ownership of less than 1% of the outstanding securities of any class of equity or debt of any publicly traded company that is either a Sub-Adviser or an entity that controls, is controlled by, or under common control with a Sub-Adviser.12.Each Subadvised Fund and any Feeder Fund that invests in a Subadvised Fund that is a Master Fund will disclose the Aggregate Fee Disclosure in its registration statement.13.Any new Sub-Advisory Agreement or any amendment to a Subadvised Fund’s existing Investment Management Agreement or Sub-Advisory Agreement that directly or indirectly results in an increase in the aggregate advisory fee rate payable by the Subadvised Fund will be submitted to the Subadvised Fund’s shareholders for approval.14.In the event the Commission adopts a rule under the 1940 Act providing substantially similar relief to that requested in the Application, the requested order will expire on the effective date of that rule.161
EXHIBIT H:
EXCHANGE TRADED CONCEPTS TRUST(the “Trust”)
Nominating Committee Charter
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EXCHANGE TRADED CONCEPTS TRUST II(the “Trust”)Nominating Committee Charter
I. Nominating Committee: Membership
II. Board: Selection and TenureA. The Committee shall periodically review the composition of the Board, including its size and the balance of its members’ skills, experience and background.
B. The Committee shall periodically review and make recommendations with regard to the tenure of the Independent Trustees, including term limits and/or age limits.
C. The Committee shall periodically review and make recommendations with respect to adoption of and administration of any policy for retirement from Board membership.
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III. Board: Nominations and FunctionsA. The Committee shall select and nominate all persons to serve as Independent Trustees. The Committee shall evaluate candidates’ qualifications for Board membership and the independence of such candidates from the investment advisers and other principal service providers for the funds of the Trusts. Persons selected must be independent in terms of both the letter and the spirit of the 1940 Act. The Committee shall also consider the effect of any relationships beyond those delineated in the 1940 Act that might impair independence, e.g., business, financial or family relationships with investment advisers or service providers.
B. The Committee also shall consider proposals of and make recommendations for “interested” Trustee candidates to the Board.
C. The Committee may adopt from time to time specific, minimum qualifications that the Committee believes a candidate must meet before being considered as a candidate for Board membership and shall comply with any rules adopted from time to time by the U.S. Securities and Exchange Commission regarding investment company nominating committees and the nomination of persons to be considered as candidates for Board membership.
D. The Committee shall review shareholder recommendations for nominations to fill vacancies on the Board if such recommendations are submitted in writing and addressed to the Committee at the applicable Trust’s offices. The Committee shall adopt, by resolution, a policy regarding its procedures for considering candidates for the Board, including any recommended by shareholders.
IV. Committees: Selection and ReviewA. The Committee shall periodically review committee assignments and make nominations for Independent Trustee membership on all committees.
B. The Committee shall periodically review and make recommendations to the full Board regarding the responsibilities and charters of any committees (other than the Audit Committee) of the Board, whether there is a continuing need for each committee, whether there is a need for additional committees, and whether committees should be combined or reorganized.
V. Board: Education and OperationsA. The Committee shall periodically review and make recommendations about ongoing education for incumbent Independent Trustees and about appropriate orientation for new Trustees.
B. The Committee shall periodically review and make recommendations about the organization of board meetings, including the frequency, timing and agendas of the meetings.
C. The Committee shall conduct a self-assessment and coordinate evaluation of the performance of the Board (and, in particular, the Independent Trustees) as a whole, at least annually, with a view towards enhancing its effectiveness.
D. The Committee shall periodically, with the assistance of its counsel, define and clarify the duties and responsibilities of Board members. Included among these shall be legal and fiduciary duties, expectations regarding preparation, attendance, participation at meetings, fund ownership and limitations on investments.
VI. Governance Committee: OperationsA. The Committee shall meet at the direction of its Chair as often as appropriate to accomplish its purpose. In any event, the Committee shall meet at least once each year and shall conduct at least one meeting in person.
B. A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. The action of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the action of the Committee. The Committee may meet in person or by telephone, and the Committee may act by written consent, to the extent permitted by law and by the applicable Trust’s by-laws. In the event of any inconsistency between this Charter and a Trust’s organizational documents, the provisions of the Trust’s organizational documents shall govern.
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C. The Committee shall submit minutes of its meeting on a regular basis and shall regularly report to the full Board no later than the next regularly scheduled Board meeting.
D. The Committee shall review the Committee charter at least annually and recommend appropriate changes.
E. The Committee shall have the resources and authority to discharge its responsibilities, including authority to retain special counsel and other experts or consultants at the expense of the appropriate Fund(s) or Trust.
VII. Other Powers and ResponsibilitiesA. The Committee shall monitor the performance of legal counsel for the Independent Trustees, and any other service providers (other than the independent auditors, which are monitored by the Audit Committee) that are chosen by the Independent Trustees, and shall supervise counsel for the Independent Trustees.
B. The Committee shall periodically review and make recommendations about any appropriate changes to director compensation to the full Board.
C. The Committee has the authority to review and make recommendations to the Board concerning all other matters not listed above pertaining to the functioning of the Board and committees of the Board and pertaining generally to the governance of the Trusts, including the adequacy and appropriateness of insurance coverage and the review and evaluation of possible conflicts of interest.168
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The Auditors
KPMG LLP (“KPMG”) serves as the independent registered public accounting firm for Exchange Traded Concepts Trust II and each of its Funds. KPMG provides audit services, tax return review and assistance and consultation in connection with review of SEC filings.Fees Paid to the Auditors.
Percentage of Audit-Related Fees, Tax Fees and All Other Fees Approved by the Audit Committee Pursuant to the Pre-Approval Policies and Procedures. With respect to Exchange Traded Concepts Trust, during the fiscal year ending on December 31, 2014, (i) $0 was charged by CFAS for audit-related or other services; and (ii) 100% of the Tax Fees charged by CFAS, as indicated in the above table were required to be pre-approved, and were pre-approved, by the Audit Committee. With respect to Exchange Traded Concepts Trust II, during the fiscal year ending on April 30, 2014, (i) $6,000 was charged by KPMG for audit-related or other services; and (ii) 0% of the fees charged by KPMG, as indicated in the above table were required to be pre-approved by the Audit Committee.
Performance of Audit Services by Full-Time, Permanent Employees of the Auditor. With respect to Exchange Traded Concepts Trust, during the fiscal year ending on December 31, 2014, less than 50% of hours expended on CFAS’s engagement to audit the Funds’ financial statements were attributed to work performed by persons other than CFAS’ full-time, permanent employees. With respect to Exchange Traded Concepts Trust II, during the fiscal year ending on April 30, 2014, less than 50% of hours expended on KPMG’s engagement to audit the Funds’ financial statements were attributed to work performed by persons other than KPMG’s full-time, permanent employees.
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Non-Audit Fees. The aggregate non-audit fees billed by CFAS for services rendered to Exchange Traded Concepts Trust and any Service Affiliate3 were $3,500 during the fiscal year ending on December 31, 2014. The aggregate non-audit fees billed by KPMG for services rendered to Exchange Traded Concepts Trust II and any Service Affiliate3 were $25,000 during the fiscal year ending on April 30, 2014.
Auditor Independence. During the past fiscal year, CFAS provided certain non-audit services to Exchange Traded Concepts Trust's investment adviser or to entities controlling, controlled by, or under common control with Exchange Traded Concepts
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EXCHANGE TRADED CONCEPTS TRUSTAUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
I. Statement of Principles
Under the Sarbanes-Oxley Act of 2002 (the “Act”), the Audit Committee of the Board of Trustees (the “Audit Committee”) of the Exchange Traded Concepts Trust on behalf of its series (each a “Fund” and collectively, “the Funds”) is responsible for the appointment, compensation and oversight of the work of the independent auditor. As part of this responsibility, the Audit Committee is required to pre-approve the (i) audit and permissible non-audit services provided to the Funds; (ii) non-audit services provided to the Funds’ investment advisers, and to any “control affiliates” of such investment advisers, that relate directly to the Funds’ operations or financial reporting; and (iii) certain other non-audit services to the Funds’ investment advisers and their control affiliates performed by the independent auditor in order to assure that they do not impair the auditor’s independence from the Funds. To implement these provisions of the Act, the Securities and Exchange Commission (the “SEC”) has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the Audit Committee's administration of the engagement of the independent auditor. Accordingly, the Audit Committee has adopted and the Board of Trustees has ratified, thisan Audit and Non-Audit Services Pre-Approval Policy (the “Policy”), which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the independent auditor may be pre-approved.The SEC's rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either may (1) be pre-approved pursuant to pre-approval policies and procedures established by the Audit Committee (“general pre-approval”) or (2) require the specific pre-approval of the Audit Committee (“specific pre-approval”). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the independent auditor.
For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC's rules on auditor independence and whether the provision of such services by the independent auditor would compromise the independent auditor's independence. The Audit Committee will also consider, in the normal course, the qualifications of the independent auditor and other factors in connection with their engagement.
Appendices A, B, C and D to this Policy describe the Audit, Audit-Related, Tax and All Other Services that have the general pre-approval of the Audit Committee. The Audit Committee will annually review and pre-approve the services that may be provided by the independent auditor during the following twelve months without obtaining specific pre-approval from the Audit Committee. Any proposed services exceeding the pre-approved maximum fee amounts set forth in Appendices A, B, C or D of this Policy will also require specific pre-approval by the Audit Committee.
This Policy is designed (1) to be detailed as to the particular services to be provided by the independent auditor, (2) to ensure that the Audit Committee is informed of each service provided by the independent auditor and (3) to ensure that the policies and procedures set forth herein do not include delegation of the Audit Committee's responsibilities under the Securities Exchange Act of 1934 to management. The Audit Committee, in adopting this Policy and providing for general pre-approval of the services listed on Appendices A through D, is mindful that the SEC's principles of independence with respect to services provided by auditors are largely predicated on three basic principles, violations of which would impair the auditor's independence: (1) an auditor cannot function in the role of management, (2) an auditor cannot audit his or her own work and (3) an auditor cannot serve in an advocacy role for his or her client. This Policy does not delegate the Audit Committee's responsibilities to pre-approve services performed by the independent auditor to management.
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The independent registered public accountant has reviewed this Policy and believes that implementation of the policy will not adversely affect the auditor’s independence.
II. DelegationAs provided in the Act and the SEC's rules, the Audit Committee may delegate either type of preapproval authority to one or more of its members. By this Policy, the Committee delegates specific preapproval authority to either the Audit Committee Chair or financial expert, provided that the estimated fee for any such proposed pre-approved service does not exceed $25,000 and any pre-approval decisions are reported to the Audit Committee at its next regularly scheduled meeting.
III. Audit Services“Audit Services” are services necessary to perform an audit or review in accordance with generally accepted auditing standards, as well as those services that generally only the independent auditor can reasonably provide, which may include (1) attest services, (2) comfort letters, (3) statutory audits and (4) consents and assistance with and review of documents filed with the SEC. The annual consolidated Audit Services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. The Audit Committee has pre-approved the engagement of the independent auditor to provide the Audit Services in Appendix A.
IV. Audit-Related ServicesAudit-Related Services are assurance and related services that are reasonably related to the performance of the audit or review of the Funds’ financial statements or that are traditionally performed by the independent auditor. Audit-Related Services include, among others, due diligence services pertaining to potential business acquisitions/dispositions; consultations concerning financial accounting and reporting standards; accounting consultations and audits in connection with acquisitions; internal control reviews; attest services that are not required by statute or regulation; and employee benefit plan audits. The Audit Committee has pre-approved the engagement of the independent auditor to provide the Audit-Related Services in Appendix B.
V. Tax ServicesThe Audit Committee believes that the independent auditor can provide Tax Services to the Funds such as tax compliance, tax planning and tax advice without impairing the auditor’s independence, and the SEC has stated that the independent auditor may provide such services. Hence, the Audit Committee believes it may grant general pre-approval to those Tax Services that have historically been provided by the auditor, that the Audit Committee has reviewed and believes would not impair the independence of the auditor, and that are consistent with the SEC’s rules on auditor independence. The Audit Committee has pre-approved the engagement of the independent auditor to provide the Tax Services in Appendix C.
VI. All Other ServicesThe Audit Committee believes that, in addition to the services discussed above, the independent auditor may provide certain non-audit services without impairing the independent auditor's independence.Accordingly, the Audit Committee has pre-approved the engagement of the independent auditor to provide the All Other Services in Appendix D.
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VII. Prohibited ServicesA list of the SEC's prohibited non-audit services is attached to this Policy as Exhibit I. The SEC’s rules and relevant guidance should be consulted to determine the precise definitions of these services and the applicability of exceptions to certain of the prohibitions.
VIII. ProceduresAll requests or applications for services to be provided by the independent auditor shall be submitted to the Funds’ Chief Financial Officer (“CFO”) and must include a detailed description of the services proposed to be rendered. Exhibit II is a sample of a pre-approval request form that may be used to facilitate the pre-approval process. The Fund's CFO will determine whether such services (1) require specific pre-approval, (2) are included within the list of services that have received the general preapproval of the Audit Committee or (3) have been previously pre-approved in connection with the independent auditor's annual engagement letter for the applicable year or otherwise. Requests or applications to provide services that require specific pre-approval by the Audit Committee will be submitted to the Audit Committee by the CFO. The Audit Committee will be informed by the CFO on a quarterly basis of all services rendered by the independent auditor.
All services to be provided pursuant to this Policy shall be provided by the independent auditor pursuant to an engagement letter with the Funds, the investment adviser or applicable control affiliate that satisfies the following requirements (except that matters as to which an engagement letter would be impractical because of timing issues or because the matter is small may not be the subject of an engagement letter):
IX. Additional RequirementsThe Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the independent auditor and to assure the auditor’s independence from the Funds, such as reviewing a formal written statement from the independent auditor delineating all relationships between the independent auditor and the Funds, consistent with Independence Standards Board Standard No. 1, and discussing with the independent auditor its methods and procedures for ensuring independence.174
Appendix APre-Approved Audit Services*
Dated: __________________
* These services are in addition to those that are approved in connection with the annual engagement letter with the independent accountant and in addition to any services that are specifically preapproved.175
Appendix BPre-Approved Audit-Related Services*
Dated: __________________
* These services are in addition to those that are approved in connection with the annual engagement letter with the independent accountant and in addition to any services that are specifically preapproved.
176
Appendix CPre-Approved Tax Services*
Dated: __________________
* These services are in addition to those that are approved in connection with the annual engagement letter with the independent accountant and in addition to any services that are specifically preapproved.
177
Appendix DPre-Approved All Other Services*
Dated: __________________
* These services are in addition to those that are approved in connection with the annual engagement letter with the independent accountant and in addition to any services that are specifically preapproved.178
Exhibit IProhibited Non-Audit Services
179
EXCHANGE TRADED CONCEPTS TRUST IIAUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
The Audit Committee shall approveapproves (i) all audit and non-audit services that the Trust’s independent auditorsaccountants provide to the Trust and (ii) all non-audit services that the Trust’s independent auditorsaccountants provide to the Trust’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides services to the Trust (“advisory affiliates”), if the engagement relates directly to the operations and financial reporting of the Trust. De minimis non-audit services do not require pre-approval. All of the services described in the table above were pre-approved by the relevant Trust’s Audit Committee.
180
181
Forensic Accounting ETF
182
ROBO-STOXTM Global Robotics and Automation Index ETF
183
Janus Equal Risk Weighted Large Cap ETF(formerly, VelocityShares Equal Risk Weighted Large Cap ETF)
184
YieldShares High Income ETF
185
EMQQ The Emerging Markets Internet & Ecommerce ETF
186
Yorkville High Income MLP ETF
187
Yorkville High Income Infrastructure MLP ETF
188
Horizons S&P 500® Covered Call ETF
189
We call your attention to the accompanying Joint Proxy Statement. Your vote is very important to us regardless of the number of votesshares you hold. You are requested to complete, date, and sign the enclosed proxy card and return it promptly in the envelope provided for that purpose. Your proxy card also provides instructions for voting via telephone or the Internet if you wish to take advantage of these voting options. Proxies may be revoked prior to the Meeting by timely executing and submitting a revised proxy (following the methods noted above), by giving written notice of revocation to the Trustsapplicable Trust(s) prior to the Meeting, or by voting in person at the Meeting.
By Order of the Boards of Trustees,
J. Garrett Stevens
President, Exchange Listed Funds Trust
Trustee and President, Exchange Traded Concepts, LLC
November 22, 2021
EXCHANGE TRADED CONCEPTS TRUST
EXCHANGE LISTED FUNDS TRUST
10900 Hefner Pointe Drive, Suite 400, Oklahoma City, Oklahoma 73120
JOINT PROXY STATEMENT
Joint Special Meeting of Shareholders
To be Held on December 22, 2021
Important Notice Regarding the Availability of Proxy Materials for the Joint Special Meeting of Shareholders to be Held on December 22, 2021:
The Join Proxy Statement is available on the internetInternet at proxyonline.com/https://vote.proxyonline.com/etc/docs/etc2015.pdf.
This Joint Proxy Statement and enclosed notice and proxy card are being furnished in connection with the solicitation of proxies by the Boards of Trustees of Exchange Traded Concepts Trust and Exchange Listed Funds Trust (each, a “Trust” and together, the “Trusts”). The proxies are being solicited for use at a Joint Special Meeting of Shareholders of the Trusts to be held at the offices of Exchange Traded Concepts, LLC, 295 Madison Avenue, New York, New York 10017, on December 22, 2021 at 11:00 a.m., Eastern Time, and at any and all adjournments or postponements thereof (the “Meeting”). This Joint Proxy Statement and the accompanying notice and the proxy card are being first mailed to shareholders on or about November 22, 2021.
The Board of Trustees of each Trust (each, a “Board” and together, the “Boards”) have called the Meeting and are soliciting proxies from shareholders of each series of the Trusts (each, a “Fund” and collectively, the “Funds”), as identified in these proxy materials, for the following purpose:
| Proposal | Funds Voting |
| To elect Trustees to each Trust’s Board of Trustees | All Funds of each Trust |
Shareholders of record of the Funds at the close of business on November 15, 2021 (the “Record Date”) are entitled to vote at the Meeting or any adjournment(s) thereof. The proposal will be voted upon separately by each Trust; however, the vote for each Trustee will apply on a Trust-wide basis, and all applicable series of each Trust will vote together on the proposal. The proposal will be implemented for a Trust if approved by shareholders and is not contingent on the approval of the proposal by the other Trust.
Shareholders can find important information about the Funds in their annualshareholder reports. Each Fund will furnish, without charge, a copy of the most recent annual report and the most recent semi-annual report succeeding such annual report, if any, to a Fund shareholder upon request. You may obtain copies of these reports by writing to the Trustsapplicable Trust at the address set forth on the cover page to this Proxy Statementabove or by calling the Fund or visiting thea Fund’s website as set forth below.
below:
Exchange Listed Funds Trust
Shareholders of the Forensic AccountingArmor US Equity Index ETF can request the Fund’s shareholder reports by calling 1-844-880-3837 or visiting www.armoretfs.com.
When available, shareholders of the Asian Growth Cubs ETF can request the Fund’s shareholder reports by calling 1-833-833-3177 or visiting www.dawnglobal.com.
Shareholders of the Cabana Target Drawdown 5 ETF, Cabana Target Drawdown 7 ETF, Cabana Target Drawdown 10 ETF, Cabana Target Drawdown 13 ETF, and Cabana Target Drawdown 16 ETF can request the Funds’ annual report, dated November 30, 2014,or semi-annual reports by calling 1-800-239-9536 or visiting www.cabanaetfs.com. When available, shareholders of the Cabana Target Leading Sector Aggressive ETF, Cabana Target Leading Sector Conservative ETF, and Cabana Target Leading Sector Moderate ETF can request the Funds’ annual or semi-annual reports by calling the phone number or visiting the website listed above.
Shareholders of the Corbett Road Tactical Opportunity ETF can request the Fund’s shareholder reports by calling 1-866-983-0885 or visiting www.corbettroadfunds.com.
Shareholders of the QRAFT AI-Enhanced US High Dividend ETF, QRAFT AI-Enhanced US Large Cap ETF, QRAFT AI-Enhanced US Large Cap Momentum ETF, and QRAFT AI-Enhanced US Next Value ETF can request the Funds’ shareholder reports by calling 1-855-973-7880 or visiting www.qraftaietfs.com.
Shareholders of the Gavekal Asia Pacific Government Bond ETF can request the Fund’s shareholder by calling 1-833-817-7116 or visiting www.agovetf.com.
Shareholders of the Saba Closed-End Funds ETF can request the Fund’s shareholder reports by calling 1-212-542-4644 or visiting www.sabaetf.com.
Shareholders of The High Yield ETF can request the Fund’s shareholder reports by calling 1-844-880-3837 or visiting www.hyldetf.com.
Exchange Traded Concepts Trust
Shareholders of the ETC 6 Meridian Hedged Equity-Index Option Strategy ETF, ETC 6 Meridian Low Beta Equity Strategy ETF, ETC 6 Meridian Mega Cap Equity ETF, and ETC 6 Meridian Small Cap Equity ETF can request the Funds’ shareholder reports by calling 1-866-749-6383 or visiting www.6meridianfunds.com. When available, shareholders of the ETC 6 Meridian Quality Growth ETF can request the Fund’s shareholder reports by calling the phone number or visiting the website listed above.
When available, shareholders of the Bitwise Crypto Industry Innovators ETF can request the Fund’s shareholder reports by calling 1-833-365-2487 or visiting www.bitqetf.com.
Shareholders of the Capital Link NextGen Protocol ETF and Capital Link NextGen Vehicles & Technology ETF can request the Funds’ shareholder reports by calling 1-833-466-6383 or visiting www.cli-etfs.com.
Shareholders of the EMQQ The Emerging Markets Internet & Ecommerce™ ETF can request the Fund’s shareholder reports by calling 1-855-888-9892 or visiting www.emqqetf.com.
When available, shareholders of the FMQQ The Next Frontier Internet & Ecommerce ETF can request the Fund’s shareholder reports by calling 1-855-888-9892 or visiting www.fmqqetf.com.
When available, shareholders of the Fount Metaverse ETF and Fount Subscription Economy ETF can request the Funds’ shareholder reports by calling 1-855-425-7426 or visiting www.fountetfs.com.
Shareholders of the Hull Tactical US ETF can request the Fund’s shareholder reports by calling 1-844-485-5383 or visiting www.hulltacticalfunds.com.
Shareholders of the Nifty India Financials ETF can request the Fund’s shareholder reports by calling 1-855-212-4633 or visiting www.indiafinancials.com.
Shareholders of the North Shore Global Uranium Mining ETF can request the Fund’s shareholder reports by calling the Fund at 1-855-545-FLAG1-877-876-6383 or visiting www.flagetf.com.
www.urnmetf.com.
Shareholders of the ROBO-STOXROBO GlobalTM® Artificial Intelligence ETF, ROBO Global® Healthcare Technology and Innovation ETF and ROBO Global® Robotics and Automation Index ETF can request the Fund’s annual report, dated April 30, 2014,Funds’ shareholder reports by calling the Fund at 1-855-456-ROBO1-855-456-7626 or visiting www.robostoxetfs.com.
www.roboglobaletfs.com.
Shareholders of the Janus Equal Risk WeightedVesper U.S. Large Cap ETF (formerly, VelocityShares Equal Risk Weighted Large Cap ETF) can request the Fund’s annual report, dated April 30, 2014, by calling the Fund at 1-877-583-5624 or visiting https://www.janus.com/advisor/exchange-traded-funds/janus-equal-risk-weighted-large-cap-etf/commentary-and-literature.
ii
TABLE OF CONTENTS
| 1 | ||
| Background | 1 | |
| Information | 2 | |
| Information | ||
| 5 | ||
| 8 | ||
| 12 | ||
Exhibit | ||
| A-1 | ||
| Exhibit | B-1 | |
| Exhibit | C-1 | |
| D-1 | ||
| Exhibit E: Beneficial Owners of 5% or More of Each Fund | E-1 |
iii
Election of New Investment Advisory Agreements
Exchange Traded Concepts
The purpose of the Funds (the “Adviser”proposal is to ask shareholders to elect Linda Petrone and Stuart Strauss (each, a “Nominee” and together, the “Nominees”).
Section 16(a) of the 1940 Act restricts the Board’s ability to appoint new Trustees to the Board unless immediately after such appointment at least two-thirds of the Trustees then holding office have been elected by shareholders of the Trust. Presently, four-fifthsthree-quarters of the Trustees of Exchange Listed Funds Trust and three-fifths of the Trustees of Exchange Traded Concepts Trust and three-quarters of the Trustees of Exchange Traded Concepts Trust II have been elected by shareholders. In connection with each Nominee’s consideration by the Boards, as applicable, each Board’s Governing and Nominating Committee and Independent Trustees reviewed each Nominee’s biographical information, experiences, and other factors they deemed relevant. Each Board proposes that shareholders of the respective TrustsTrust elect the NomineeNominees so each Board has the flexibility to fill vacancies and appoint new Trustees in the future without the expense of conducting additional shareholder meetings. In connection with his appointment to the Boards in 2014,If each Board’s Nominating Committee and Independent Trustees reviewed Mr. Jacoby’s biographical information, experiences, and other factors they deemed relevant.
If shareholders of aeither Trust do not elect Mr. Jacoby, heMs. Petrone, she would continue serving on that Trust’s Board but would not be considered to have been elected by shareholders. This could cause another proxy solicitation to be required to fill a Board vacancy in the future. Such additional proxy solicitation will not be needed if Mr. JacobyMs. Petrone is elected at the Meeting.
If shareholders of Exchange Traded Concepts Trust do not elect Mr. Strauss, he would continue serving on that Trust’s Board but would not be considered to have been elected by shareholders. If shareholders of Exchange Listed Funds Trust do not elect Mr. Strauss, he would not serve on that Trust’s Board and the Board may consider replacement candidates for nomination. This could cause another proxy solicitation to be required to fill a Board vacancy in the future. Such additional proxy solicitation will not be needed if Mr. Strauss is elected at the Meeting.
The persons named as proxies intend, in the absence of contrary instructions, to vote all proxies on behalf of shareholders for the election of the Nominees. The Nominees have consented to being named in this Joint Proxy Statement and to serving, or continuing to serve, on each Trust’s Board of Trustees. However, if the Nominees should become unavailable for election, due to events not known or anticipated, the persons named as proxies will vote for such other nominee(s) as the current Board may recommend.
About the BoardsBoard of Trustees.Board. The Board elects the officers of the Trust who are responsible for administering the day-to-day operations of the Trust and the Funds. Each Board has approved contracts, as described below, under which certain companies provide essential services to each Trust.
Board Responsibilities.
The management and affairs of each Trust and its respective series are overseen by each Trust’sTrust and the Funds.
Like for most mutual funds, the day-to-day business of each Trust, including the management of risk, is performed by third partythird-party service providers, such as the Adviser,Funds’ investment adviser, Exchange Traded Concepts, LLC (the “Adviser”), the Fund’s sub-adviser, theFunds’ sub-advisers, as applicable, each Trust’s distributor and theeach Trust’s administrator. The Trustees of each Trust are responsible for overseeing athat Trust’s service providers and, thus, have oversight responsibility with respect to risk management performed by those service providers. Risk management seeks to identify and address risks, i.e., events or circumstances that could have material adverse effects on the business, operations, shareholder services, investment performance or reputation of the Funds. Each Trust and its service providers employ a variety of processes, procedures and controls to identify many of those possible events or circumstances, to lessen the probability of their occurrence and/or to mitigate the effects of such events or circumstances if they do occur. Each service provider is responsible for one or more discrete aspects of the Trust’s business (e.g., the sub-adviser ismay be responsible for the day-to-day management of a Fund’s portfolio investments) and, consequently, for managing the risks associated with that business.function. Each Board has emphasized to the Trust’s service providers the importance of maintaining vigorous risk management.
The Trustees’ role in risk oversight begins before the inception of a Fund,fund, at which time certain of the Fund’sfund’s service providers present the Board with information concerning the investment objectives, strategies and risks of the Fundfund as well as proposed investment limitations for the Fund.fund. Additionally, the Fund’s Adviserfund’s investment adviser provides the Board with an overview of, among other things, its investment philosophy, brokerage practices and compliance infrastructure. Thereafter, the Board continues its oversight function as various personnel, including the Trust’s Chief Compliance Officer, as well as personnel of the Sub-Adviserany sub-adviser and other service providers such as the Fund’sfund’s independent accountants, make periodic reports to the Audit Committee or to the Board with respect to various aspects of risk management. The Board and the Audit Committee oversee efforts by management and service providers to manage risks to which each series of the FundsTrust may be exposed.
Each Board is responsible for overseeing the nature, extent and quality of the services provided to the Funds by the Adviser and any sub-advisers and receives information about those services at its regular meetings. In addition, on an annual basis, in connection with its consideration of whether to renew the advisory agreements with the Adviser and aany applicable sub-adviser, the Board meets with the Adviser and the sub-adviser to review such services. Among other things, the Board regularly considers the Adviser’s and theany sub-adviser’s adherence to aeach Fund’s investment restrictions and compliance with various Fund policies and procedures and with applicable securities regulations. The Board also reviews information about theeach Fund’s performance and the Fund’s investments, including, for example, portfolio holdings schedules.
Each Trust’s Chief Compliance Officer reports regularly to the Board to review and discuss compliance issues and Fund and Adviser risk assessments. At least annually, the Trust’s Chief Compliance Officer provides the Board with a report reviewing the adequacy and effectiveness of the Trust’s policies and procedures and those of its service providers, including the Adviser and any sub-advisers. The report addresses the operation of the policies and procedures of the Trust and each service provider since the date of the last report; any material changes to the policies and procedures since the date of the last report; any recommendations for material changes to the policies and procedures; and any material compliance matters since the date of the last report.
Each Board receives reports from the Trust’s service providers regarding operational risks and risks related to the valuation and liquidity of portfolio securities. Each Board also has also established a valuation committee that is responsible for implementing each Trust’s Fair Value Procedures and Pricing Procedures and providing reports to the Board concerning investments for which market quotations are not readily available. Annually, the Board approved independent registered public accounting firm reviews with the Audit Committee its audit of the Funds’ financial statements, focusing on major areas of risk encountered by the Funds and noting any significant deficiencies or material weaknesses in the Funds’ internal controls. Additionally, in connection with its oversight function, each Board oversees Fund management’s implementation of disclosure controls and procedures, which are designed to ensure that information required to be disclosed by the Trust in its periodic reports with the U.S. Securities and Exchange Commission (“SEC”(the “SEC”) are recorded, processed, summarized, and reported within the required time periods. Each Board also oversees the Trust’s internal controls over financial reporting, which comprise policies and procedures designed to provide reasonable assurance regarding the reliability of the Trust’s financial reporting and the preparation of the Trust’s financial statements.
From their review of these reports and discussions with the Adviser, the Sub-Adviser,sub-advisers, the Chief Compliance Officer, the independent registered public accounting firm and other service providers, the Board and the Audit Committee learn in detail about the material risks of the Funds, thereby facilitating a dialogue about how management and service providers identify and mitigate those risks.
Each Board recognizes that not all risks that may affect the Funds can be identified and/or quantified, that it may not be practical or cost-effective to eliminate or mitigate certain risks, that it may be necessary to bear certain risks (such as investment-related risks) to achieve the Funds’ goals, and that the processes, procedures and controls employed to address certain risks may be limited in their effectiveness. Moreover, reports received by the Trustees as to risk management matters are typically summaries of the relevant information. Most of the Funds’ investment management and business affairs are carried out by or through the Adviser and other service providers each of which has an independent interest in risk management but whose policies and the methods by which one or more risk management functions are carried out may differ from the Funds’ and each other’s in the setting of priorities, the resources available or the effectiveness of relevant controls. As a result of the foregoing and other factors, each Board’s ability to monitor and manage risk, as a practical matter, is subject to limitations.
Board Committees
. The Board of each Trust has established the following standing committees of the Board:Audit Committee
. The Board hasGovernance and Nominating Committee
. The Board has ayear ended August 31, 2021. of Trustees, a majority of the Trustees then in office must be in attendance to constitute a quorum. The Trusts doFor each Trust, the Trust does not have policies with respect to the Trustees’ attendance at meetings, but as a matter of practice all of the Trustees attend the Trust’s Board and committee meetings (in person or by telephone) to the extent possible.
Board Meetings and Board Committees.
At any meeting of the Board, The Board of each Trust held three regular meetings during the fiscal year ended August 31, 2021. In addition, the Board of Exchange Traded Concepts Trust held five (5) special meetings and the Board of Exchange Listed Funds Trust held four (4) special meetings during the fiscal year ended August 31, 2021. During this time period, all of the Trustees attended at least 75% of all of the meetings of the Board and Board committees for which they were eligible to attend.ChairmanChair of each Board of Trustees is an interested person of the Funds. Mr. Richard Hogan serves as Chair of the Board of Exchange Listed Funds Trust and Mr. J. Garrett Stevens is Chairmanserves as Chair of the Board of Exchange Traded Concepts Trust. In addition to the Chair, each Trust also has a lead Independent Trustee. Mr. David Mahle serves as the lead Independent Trustee for Exchange Listed Funds Trust and Richard Hogan is Chairman ofMr. Timothy J. Jacoby serves as the Board oflead Independent Trustee for Exchange Traded Concepts Trust II. Neither Trust has a lead independent trustee.Trust. Each Board of Trustees is comprised of a super-majority (67 percent or more) of Independent Trustees.Trustees – 75% for Exchange Listed Funds Trust and 80% for Exchange Traded Concepts Trust. Each Trust has an Audit Committee and a Governance and Nominating Committee, each of which is chaired by an Independent Trustee and comprised solely of Independent Trustees. The Committeecommittee chair for each committee is responsible for running the Committeecommittee meeting, formulating agendas for those meetings, and coordinating with management to serve as a liaison between the Independent Trustees and management on matters within the scope of the responsibilities of the Committeecommittee as set forth in its Board-approved charter. Each Board has determined that this leadership structure is appropriate given the specific characteristics and circumstances of the Funds. Each Board made this determination in consideration of, among other things, the fact that the Independent Trustees of the Funds constitute a super-majority of the Board, the number of Independent Trustees that constitute the Board, the amount of assets under management in the Trust, the number of Funds overseen by the Board, and the total number of Trustees on the Board. Each Board also believes that its leadership structure facilitates the orderly and efficient flow of information to the Independent Trustees from Fund management.
Members of each Board
. TheTrustees and Officers
. Information regarding the Trustees, includingLegal Proceedings.
Neither Board is aware of any legal proceedings involving theTrustees and Officers
. Currently, the BoardName and | Position(s) | Term of Office | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex2 Overseen By Trustee | Other Directorships Held by Trustee During the Past 5 Years | ||
Interested Trustee | |||||||
J. Garrett Stevens (1979) | Trustee and President | Trustee (Since 2009); President (Since 2011) | Investment Adviser/Vice President, T.S. Phillips Investments, Inc. | 19 | Trustee, ETF Series Solutions (2012 to | ||
Independent Trustees | |||||||
Timothy J. Jacoby | |||||||
(1952) | Trustee | Since 2014 | Senior Partner, Deloitte & Touche LLP, Private Equity/Hedge Fund/Mutual Fund Services Practice | ||
Linda Petrone (1962) | Trustee | Since | Founding Partner, | None. | |
Stuart Strauss (1953) | Trustee | Since 2021 | Partner, Dechert, LLP (2009 to 2020). | 19 | None. |
| Mark Zurack (1957) | Trustee | Since 2011 | Professor, Columbia Business School (since 2002). | 19 | Independent Trustee, AQR Funds (35 portfolios) (since 2014); Independent Trustee, Exchange |
| (1) | Each Trustee shall serve during the continued life of the Trust until he or she dies, resigns, is declared bankrupt or incompetent by a court of competent jurisdiction, or is removed. |
| (2) | The fund complex includes each series of the Trust and of Exchange Listed Funds Trust. |
Set forth below are the names, addresses, ages, positions with the Trust, lengths and term of office, and the principal occupations and other directorships held during at least the last five years ofis information about each of the persons currently serving as officers of the Trust.
Name | Position(s) | Term of Office and Length of Time Served1 | Principal Occupation(s) |
J. Garrett Stevens | Trustee and President | Trustee (Since President (Since 2011) | Investment |
| Richard Hogan (1961) | Secretary | Since 2011 | President, Exchange Traded Concepts, |
| LLC (since 2011); Private Investor (since 2003); Trustee and Secretary, | Exchange Listed Funds Trust (since 2012); Board Member, Peconic Land Trust (2012 to 2016); Managing Member, Yorkville ETF Advisors | ||
| James J. Baker Jr. (1951) | Treasurer | Since 2015 | Managing Partner, Exchange Traded Concepts, |
Eric Olsen (1970) | Assistant Treasurer | Since | |
Matthew B. Fleischer (1983) | Chief Compliance Officer | Since |
| 1 | Each officer serves at the pleasure of the Board. |
Individual Trustee and Nominee Qualifications
. The Trust has concluded that each of the Trustees, including the Nominees, should serve on the Board because of their ability to review and understand information about the Funds provided to them by management, to identify and request other information they may deem relevant to the performance of their duties, to question management and other service providers regarding material factors bearing on the management and administration of the Funds, and to exercise their business judgment in a manner that serves the best interests of the Funds’ shareholders. The Trust has concluded that each of the Trustees should serve as a Trustee based on their own experience, qualifications, attributes and skills as described below.Nominees. The Trust has concluded that Ms. Petrone should serve as a Trustee because of the experience she has gained serving in leadership roles in the equity derivatives group of a large financial institution, as well as her knowledge of the financial services industry.
The Trust has concluded that Mr. Strauss should serve as a Trustee because of the experience he has gained as an attorney in the investment management industry, including as partner of a major law firm, representing exchange-traded funds and other investment companies as well as their sponsors and advisers and his knowledge of and experience in investment management law and the financial services industry.
Remaining Trustees. The Trust has concluded that Mr. Stevens should serve as Trustee because of the experience he gained in his roles with registered broker-dealer and investment management firms, as Chief Executive Officer of the Adviser, his experience in and knowledge of the financial services industry, and the experience he has gained as serving as Trustee of the Trust since 2009.
The Trust has concluded that Mr. Jacoby should serve as a Trustee because of the experience he has gained from over 25 years in or serving the investment management industry. Most recently,Until his retirement in June 2014, Mr. Jacoby served as a partner at the audit and professional services firm Deloitte & Touche LLP, where he had worked since 2000, providing various services to asset management firms that manage mutual funds, hedge funds and private equity funds. Prior to that, Mr. Jacoby held various senior positions at financial services firms. Additionally, he served as a partner at Ernst & Young LLP. Mr. Jacoby is a Certified Public Accountant.
The Trust has concluded that Mr. Zurack should serve as a Trustee because of the experience he has gained serving in various leadership roles in the equity derivatives groups of a large financial institution, his experience in teaching equity derivatives at the graduate level, as well as his knowledge of the financial services industry.
In its periodic assessment of the effectiveness of the Board, the Board considers the complementary individual skills and experience of the individual Trustees primarily in the broader context of the Board’s overall composition so that the Board, as a body, possesses the appropriate (and appropriately diverse) skills and experience to oversee the business of the Funds.
Ownership of Securities. As of the Record Date, no Trustee beneficially owned shares of any series of the Trust.
Board Compensation. The following table sets forth the compensation paid to the Trustees of the Trust for the fiscal year ended August 31, 2021. Independent Trustee fees are paid from the investment advisory fee paid to the Adviser by the Funds. Trustee compensation does not include reimbursed out-of-pocket expenses in connection with attendance at meetings.
| Name | Aggregate | Pension or Retirement Benefits Accrued as Part of Fund Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation from the Trust and Fund Complex1 |
| Interested Trustee | ||||
| Stevens | $0 | N/A | N/A | $0 for service on 1 board |
| Independent Trustees | ||||
| Jacoby | $65,500 | N/A | N/A | $139,913 for service on 2 boards |
| Mahle2 | $29,500 | N/A | N/A | $90,000 for service on 2 boards |
| Petrone | $58,000 | N/A | N/A | $116,000 for service on 2 boards |
| Strauss3 | $31,000 | N/A | N/A | $31,000 for service on 1 board |
| Zurack | $58,000 | N/A | N/A | $58,000 for service on 1 board |
| 1 | The fund complex includes each series of the Trust and of Exchange Listed Funds Trust. |
| 2 | David Mahle served as an Independent Trustee of the Trust through December 31, 2020. For his service as lead Independent Trustee, Mr. Mahle was entitled to a $5,000 annual fee. |
| 3 | Stuart Strauss was appointed as an Independent Trustee of the Trust effective January 1, 2021. |
Communication with Trustees. Shareholders may send communications directly to the Trustees in writing at the address specified above under “Trustees and Officers.”
Information Related to the Independent Accountants and the Audit Committee. Cohen & Company, Ltd. (“Cohen”) is located at 151 North Franklin Street, Suite 575, Chicago, Illinois 60606 and serves as the independent registered public accounting firm for each Fund comprising the Trust. More information related to Cohen and the Audit Committee, including the Audit Committee’s pre-approval policies and procedures, can be found in Exhibit C.
Required Vote. If a quorum is present, the affirmative vote of a plurality of shares of the Trust voted in person or by proxy is required for the election of a Nominee. Shareholders of the Funds of the Trust will vote together as a single class and the voting power of the shares of the Funds will be counted together in determining the results of the voting for the proposal.
The Board of Trustees of Exchange Traded Concepts Trust unanimously recommends that
shareholders vote “FOR” the proposal.
Information Specific to Exchange Listed Funds Trust
Trustees and Officers. Currently, the Board consists of three Independent Trustees, Ms. Linda Petrone (Nominee) and Messrs. Timothy J. Jacoby and David M. Mahle, and one Interested Trustee, Mr. Richard Hogan. Mr. Strauss (Nominee) does not currently serve on the Board of the Trust. The address of each Trustee is c/o Exchange Listed Funds Trust, 10900 Hefner Pointe Drive, Suite 400, Oklahoma City, Oklahoma 73120. Information regarding the Trustees, including each Nominee, is set forth below.
Name and | Position(s) | Term of | Principal | Number of Portfolios in Fund Complex(2) Overseen By Trustee | Other |
| Interested Trustee | |||||
Richard Hogan (1961) | Trustee and Secretary | Since 2012 | Director, Exchange Traded Concepts, LLC (since 2011); Private Investor (since 2002); Secretary, Exchange Traded Concepts Trust (since 2011); Managing Member, Yorkville ETF Advisors (2011 to 2016). | 18 | Board Member, Peconic Land Trust of Suffolk County, NY. |
| Independent Trustees | |||||
Timothy J. Jacoby (1952) | Trustee | Since 2014 | Senior Partner, Deloitte & Touche LLP, Private Equity/Hedge Fund/Mutual Fund Services Practice (2000 to 2014). | 37 | Independent Trustee, Edward Jones Money Market Fund (since 2017); Audit Committee Chair, Perth Mint Physical Gold ETF (2018 to 2020); Independent Trustee, Source ETF Trust (2014 to 2015). |
David M. Mahle (1943) | Trustee | Since 2012 | Consultant, Jones Day (2012 to 2015); Of Counsel, Jones Day (2008 to 2011); Partner, Jones Day (1988 to 2008). | 18 | Independent Trustee, Exchange Traded Concepts Trust (2012 to 2020); Independent Trustee, Source ETF Trust (2014-2015). |
Linda Petrone (1962) | Trustee | Since 2019 | Founding Partner, Sage Search Advisors (since 2012). | 37 | None. |
| Independent Trustee Nominee | |||||
Stuart Strauss (1953) | Trustee Nominee | N/A | Partner, Dechert, LLP (2009 to 2020). | 19 | None. |
| 1 | Each Trustee shall serve during the continued life of the Trust until he or she dies, resigns, is declared bankrupt or incompetent by a court of competent jurisdiction, or is removed. |
| 2 | The Fund Complex includes each series of the Trust and of Exchange Traded Concepts Trust. |
Set forth below is information about each of the persons currently serving as officers of the Trust. The address of Messrs. J. Garrett Stevens, Richard Hogan, James J. Baker Jr., and Matthew Fleischer is c/o Exchange Listed Funds Trust, 10900 Hefner Pointe Drive, Suite 400, Oklahoma City, Oklahoma 73120; and the address of Mr. Christopher W. Roleke is Foreside Management Services, LLC, 10 High Street, Suite 302, Boston, Massachusetts 02110.
Name | Position(s) Held | Term of | Principal Occupation(s) |
J. Garrett Stevens (1979) | President | Since 2012 | Investment Adviser/Vice President, T.S. Phillips Investments, Inc. (since 2000); Chief Executive Officer, Exchange Traded Concepts, LLC (since 2009); and President, Exchange Traded Concepts Trust (since 2011). |
Richard Hogan (1961) | Trustee and Secretary | Since 2012 | Director, Exchange Traded Concepts, LLC (since 2011); Private Investor (since 2003); Secretary, Exchange Traded Concepts Trust (since 2011); Board Member, Peconic Land Trust (2012 to 2016); Managing Member, Yorkville ETF Advisors (2011 to 2016). |
Christopher W. Roleke (1972) | Treasurer | Since 2012 | Managing Director/Fund Principal Financial Officer, Foreside Management Services, LLC (since 2011). |
James J. Baker Jr. (1951) | Assistant Treasurer | Since 2015 | Managing Partner, Exchange Traded Concepts, LLC (since 2011); Managing Partner, Yorkville ETF Advisors (2012 to 2016); Vice President, Goldman Sachs (2000 to 2011). |
Matthew B. Fleischer (1983) | Chief Compliance Officer | Since 2021 | Associate Counsel, Ameriprise Financial, Columbia Threadneedle Funds (2015 to 2017); Vice President, Compliance, Goldman Sachs Group, Inc., Goldman Sachs Asset Management Funds (2017 to 2021); Exchange Listed Funds Trust, Chief Compliance Officer (since 2021); Exchange Traded Concepts Trust, Chief Compliance Officer (since 2021). |
| 1 | Each officer serves at the pleasure of the Board. |
Individual Trustee and Nominee Qualifications. The Trust has concluded that each of the Trustees and Mr. Strauss, a Nominee, should serve on the Board because of their ability to review and understand information about the Funds provided to them by management, to identify and request other information they may deem relevant to the performance of their duties, to question management and other service providers regarding material factors bearing on the management and administration of the Funds, and to exercise their business judgment in a manner that serves the best interests of the Funds’ shareholders. The Trust has concluded that each of the Trustees should serve as a Trustee based on their own experience, qualifications, attributes and skills as described below.
Nominees. The Trust has concluded that Ms. Petrone should serve as a Trustee because of the experience she has gained serving in leadership roles in the equity derivatives group of a large financial institution, as well as her knowledge of the financial services industry.
The Trust has concluded that Mr. Strauss should serve as a Trustee because of the experience he has gained as an attorney in the investment management industry, including as partner of a major law firm, representing exchange-traded funds and other investment companies as well as their sponsors and advisers and his knowledge of and experience in investment management law and the financial services industry.
Remaining Trustees. The Trust has concluded that Mr. Hogan should serve as a Trustee because of his 26+ years of experience in senior level ETF management which began at Spear, Leeds & Kellogg (“SLK”) in 1987, becoming a Limited Partner in 1990 and a Managing Director in 1992. As Managing Director of the Index Derivatives Group, he established trading operations in Chicago, Singapore and London as well as other satellite operations and nurtured Exchange Traded Funds (“ETFs”) as a Specialist in SPDRs, WEBS, Sector SPDRs, iShares and other ETFs. Mr. Hogan became a Managing Director of Goldman Sachs when SLK was merged and played a critical role in combining the ETF operations of SLK, Goldman and Hull Trading (a prior Goldman acquisition). He has worked closely with Exchange staff, issuers, index providers and others in conceiving, designing, developing, launching, marketing and trading new ETFs, and championed the idea of a fixed income ETF. Mr. Hogan is a Founder and Managing MemberDirector of Yorkville ETF Advisors,the Adviser.
The Trust has concluded that Mr. Jacoby should serve as a sponsorTrustee because of exchange tradedthe experience he has gained from over 25 years in or serving the investment management industry. Until his retirement in June 2014, Mr. Jacoby served as a partner at the audit and professional services firm Deloitte & Touche LLP, where he had worked since 2000, providing various services to asset management firms that manage mutual funds, hedge funds and has been actively involved with Exchange Traded Concepts since inception.
private equity funds. Prior to that, Mr. Jacoby held various senior positions at financial services firms. Additionally, he served as a partner at Ernst & Young LLP. Mr. Jacoby is a Certified Public Accountant.
The Trust has concluded that Mr. Mahle should serve as a Trustee because of the experience he has gained as an attorney in the investment management industry of a major law firm, representing exchange-traded funds and other investment companies as well as their sponsors and advisers and his knowledge and experience in investment management law and the financial services industry. Mr. Mahle is also a professor of law at Fordham Law School, where he lectures on investment companies and investment adviser regulations.
In its periodic assessment of the effectiveness of the Board, the Board considers the complementary individual skills and experience of the individual Trustees primarily in the broader context of the Board’s overall composition so that the Board, as a body, possesses the appropriate (and appropriately diverse) skills and experience to oversee the business of the funds.
Funds.
Ownership of Securities
. As of the Record Date, no Trustee beneficially owned shares of any series of the Trust.Board Compensation. The following table showssets forth the dollar amount ranges of each Trustee’s “beneficial ownership” of Shares of each Fund and each other seriescompensation paid to the Trustees of the Trust as of the end of the most recently completely calendar year. Dollar amount ranges disclosed are established by the SEC. “Beneficial ownership” is determined in accordance with Rule 16a-1(a)(2) under the 1934 Act.
| Name | Aggregate Compensation | Pension or Retirement Benefits Accrued as Part of Fund Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation from the Trust and Fund Complex |
Interested Trustee | ||||
| $0 | $0 for service on | |||
Independent Trustees | ||||
| $ | $ | |||
| $ | $ | |||
| $ | $ | |||
| 1 | The Fund Complex includes each series of the Trust and Exchange Traded Concepts Trust. |
Communication with Trustees
. Shareholders may send communications directly to the Trustees in writing at the address specified above under “Trustees and Officers.”Information Related to the AuditorIndependent Accountants and the Audit Committee
Required Vote.
voting for the proposal.
The Board of Trustees of Exchange Traded ConceptsListed Funds Trust II unanimously recommends that
shareholders vote “FOR” Proposal 4B.the proposal.
11
Record Date/Shareholders Entitled to Vote.
Each Fund is a separate series, or portfolio, ofTrust.
Shareholders of the Trustseach Trust at the close of business on March 27, 2015,November 15, 2021, the Record Date, will be entitled to be present and vote at the Meeting. A table indicating the number of shares outstanding and entitled to vote on behalf of each Fund can be found in Exhibit KD.
Voting Proxies.
You should read the entire Proxy Statement before voting.If sufficient votes are not received by the date of the Meeting, a person named as proxy may propose one or more adjournments of the Meeting to permit further solicitation of proxies. The persons named as proxies will vote all proxies in favor of adjournment that voted in favor of any of Proposals 1, 2, or 3the proposal (or abstained) and vote against adjournment all proxies that voted against each of Proposal 1, 2, or 3.
the proposal.AEach Fund must have a quorum of shares represented at the Meeting, in person or by proxy, to take action on any matter relating to the Funds.that Fund. Under theeach Trust’s Agreement and Declaration of Trust of each Trust, a quorum is constituted by the presence in person or by proxy of at least one-third of the outstanding shares of theeach Fund or Trust (as applicable to each proposal) entitled to vote at the Meeting.
Quorum Required.
Abstentions and broker non-votes (i.e., proxies from brokers or nominees indicating that they have not received instructions from the beneficial owners on an item for which the brokers or nominees do not have discretionary power to vote) will be treated as present for determining whether a quorum is present with respect to a particular matter. However, abstentions and broker non-votes will have the effect of a vote against Proposals 1, 2, and 3 and any other matter that requires the affirmative vote of a Fund’s outstanding shares for approval. Abstentions and broker non-votes will not be counted as voting on Proposal 4the proposal or any other matter at the Meeting when the voting requirement is based on achieving a plurality or percentage of the “voting securities present.”
If a quorum is not present at the Meeting, or a quorum is present at the Meeting but sufficient votes to approve a proposal are not received, the Secretary of the Meeting or the holders of a majority of the shares of the FundFunds or Trust (as applicable to each proposal) present at the Meeting in person or by proxy may adjourn the Meeting with respect to such proposal(s) to permit further solicitation of proxies.
Method and Cost of Proxy Solicitation.
Proxies will be solicited by the Trusts primarily by mail. The solicitation also mayInvestment Adviser, Sub-Advisers, Principal Underwriters, and Administrators
Exchange Traded Concepts Trust
. Exchange Traded Concepts, LLC, located at 10900 Hefner Pointe Drive, Suite 400, Oklahoma City, Oklahoma 73120, serves as the investment adviser to each Fund of the Trust.Vident Investment Advisory, LLC, located at 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009, serves as the sub-adviser to the Trust’s ROBO Global® Robotics and Automation Index ETF. Penserra Capital Management LLC, located at 4 Orinda Way, 100-A, Orinda, California 94563, serves as the sub-adviser to the Trust’s EMQQ The Emerging Markets Internet & Ecommerce ETF. HTAA, LLC located at 141 West Jackson Boulevard, Suite 1650, Chicago, Illinois 60604, serves as the sub-adviser to the Trust’s Hull Tactical US ETF. 6 Meridian LLC, located at 8301 E 21st St. North, Suite 150, Wichita, Kansas 67206, serves as the sub-adviser to the Trust’s ETC 6 Meridian Hedged Equity-Index Option Strategy ETF, ETC 6 Meridian Low Beta Equity Strategy ETF, ETC 6 Meridian Mega Cap Equity ETF, ETC 6 Meridian Small Cap Equity ETF, and ETC 6 Meridian Quality Growth ETF.
SEI Investments Distribution Co. and SEI Investments Global Funds Services, both located at One Freedom Valley Drive, Oaks, Pennsylvania 19456, serve as distributor and administrator, respectively, for each seriesFund of the Trust.
Exchange Listed Funds Trust. Exchange Traded Concepts, LLC, located at 10900 Hefner Pointe Drive, Suite 400, Oklahoma City, Oklahoma 73120, serves as the investment adviser to each Fund of the Trust.
Cabana LLC, located at 220 S. School Avenue, Fayetteville, Arkansas 72701, serves as the sub-adviser to the Trust’s Cabana Target Drawdown 5 ETF, Cabana Target Drawdown 7 ETF, Cabana Target Drawdown 10 ETF, Cabana Target Drawdown 13 ETF, Cabana Target Drawdown 16 ETF, Cabana Target Leading Sector Aggressive ETF, Cabana Target Leading Sector Conservative ETF, and Cabana Target Leading Sector Moderate ETF. MacKay Shields LLC, located at 1345 Avenue of the Americas, New York, New York 10105, and WhiteStar Asset Management LLC, located at 300 Crescent Court, Suite 200 Dallas, Texas 75201, each serve as a sub-adviser to the Trust’s High Yield ETF. Saba Capital Management, L.P., located at 405 Lexington Avenue, 58th Floor, New York, New York 10174, serves as the sub-adviser to the Trust’s Saba Closed-End Funds ETF. Corbett Road Capital Management, LLC, located at 7901 Jones Branch Drive, Suite 800, McLean, Virginia 22102, serves as the sub-adviser to the Trust’s Corbett Road Tactical Opportunity ETF. Gavekal Capital Limited, located at Suite 3101, Central Plaza, 18 Harbour Road, Wan Chai, Hong Kong, serves as the sub-adviser to the Trust’s Gavekal Asia Pacific Government Bond ETF. Kingsway Capital Partners Limited, located at Eight Floor, 6 New Street Square, New Fetter Lane, London, England, EC4A 3A, serves as the sub-adviser to the Trust’s Asian Growth Cubs ETF.
Foreside Fund Services, LLC, located at Three Canal Plaza, Suite 100, Portland, Maine 04101, serves as the distributor for Horizons S&P 500® Covered Call ETF. Citieach Fund Services Ohio, Inc.of the Trust. The Bank of New York Mellon (“BNYM”), located at 100 Summer Suite, Suite 1500, Boston, MA 02110,240 Greenwich Street, New York, New York, 10286, serves as administrator to Horizons S&P 500® Covered Call ETF.
Share Ownership.
To the knowledge of each Trust’s management, as of the close of business on the Record Date, the officers and Trustees of each Trust, as a group, beneficially owned less than one percent of each Fund’s outstanding shares and less than one percent of each Trust’s outstanding shares. To the knowledge of each Trust’s management, as of the close of business on the Record Date, persons owning of record more than 5% of the outstanding shares ofOther Matters to Come Before the Meeting.
The Trusts’ management does not know of any matters to be presented at the Meeting other than theShareholder Proposals.
The Agreement and Declaration of Trust, as amended, andHouseholding. If possible, depending on shareholder registration and address information, and unless you have otherwise opted out, only one copy of this Joint Proxy Statement will be sent to shareholders at the same address. However, each shareholder will receive separate proxy cards. If you would like to receive a separate copy of thethis Joint Proxy Statement, please call 1-866-296-4857.contact the bank, trust company, broker, dealer, investment adviser or other financial intermediary through which you hold your shares (each, an “Authorized Institution”) directly. If you currentlywould like to receive a separate copy of future proxy statements, or you are now receiving multiple copies of Proxy Statements or shareholder reportsproxy statements and would like to request to receive a single copy of documents in the future, please call 1-866-296-4857 or
contact your Authorized Institution.
Reports and Other Information.
Proxy materials, reports, and other information filed by the Funds can be inspected and copied at the Public Reference Facilities maintained by the SEC at 100 F Street, NE, Washington, DC 20549-0102. The SEC maintains a website (at http://www.sec.gov) that contains other information about the Funds.TO ENSURE THE PRESENCE OF A QUORUM AT THE SPECIAL MEETING, PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE, ALONG WITH INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE SHOULD YOU PREFER TO VOTE BY ONE OF THOSE METHODS.
By Order |
| Trustees, J. Garrett | ||
President, Exchange Listed Funds Trust
Trustee and President, of Exchange Traded Concepts Trust and President and Principal Executive Officer, but not Trustee, of Exchange Traded Concepts Trust II.
November 22, 2021
EXCHANGE TRADED CONCEPTS TRUST (the
(the “Trust”), a Delaware statutory trust registered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”),
Governance and EXCHANGE TRADED CONCEPTS, LLC, an Oklahoma limited liability company with its principal place of business at 2545 South Kelly Avenue, Suite C, Edmond, Oklahoma 73013 (the “Adviser”).
Nominating Committee Charter of Exchange Traded Concepts Trust
(the “Charter”)
| I. | Governance and Nominating Committee: Membership |
The Governance and Nominating Committee (the “Committee”) shall be composed entirely of “Independent Trustees” (members of the Board of Trustees (the “Board”) who are not interested persons of the TrustsTrust as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended), and consist of all the Independent Trustees with one Independent Trustee elected as chair of the Committee (the “Chair”). Matters to be addressed “periodically” under the terms of this Charter shall be addressed at least annually, normally in conjunction with the annual self-assessment required by Section V.C. hereof.
| II. | Board: Selection and Tenure |
| A. | The Committee shall periodically review the composition of the Board, including its size and the balance of its members’ skills, experience and |
| B. | The Committee shall periodically review and make recommendations with regard to the tenure of the Independent Trustees, including term limits and/or age limits. |
| C. | The Committee shall periodically review and make recommendations with respect to adoption of and administration of any policy for retirement from Board membership. |
| III. | Board: Nominations and Functions |
| A. | The Committee shall select and nominate all persons to serve as Independent Trustees. The Committee shall evaluate candidates’ qualifications for Board membership and the independence of such candidates from the investment advisers and other principal service providers for the funds of the |
| B. | The Committee also shall consider proposals of and make recommendations for “interested” Trustee candidates to the Board. |
| C. | The Committee may adopt from time to time specific, minimum qualifications that the Committee believes a candidate must meet before being considered as a candidate for Board membership and shall comply with any rules adopted from time to time by the U.S. Securities and Exchange Commission regarding investment company nominating committees and the nomination of persons to be considered as candidates for Board membership. |
| D. | The Committee shall review shareholder recommendations for nominations to fill vacancies on the Board if such recommendations are submitted in writing and addressed to the Committee at the applicable Trust’s offices. The Committee shall adopt, by resolution, a policy regarding its procedures for considering candidates for the Board, including any recommended by shareholders. |
| E. | The Committee, with the assistance of counsel, shall review the independence of incumbent Independent Trustees and shall make recommendations to the Board in the event it determines that an incumbent Trustee no longer satisfies applicable standards of independence. |
| IV. | Committees: Selection and Review |
| A. | The Committee shall periodically review committee assignments and make nominations for Independent Trustee membership on all committees. |
| B. | The Committee shall periodically review and make recommendations to the full Board regarding the responsibilities and charters of any committees (other than the Audit Committee) of the Board, whether there is a continuing need for each committee, whether there is a need for additional committees, and whether committees should be combined or reorganized. |
| V. | Board: Education and Operations |
| A. | The Committee shall periodically review and make recommendations about ongoing education for incumbent Independent Trustees and about appropriate orientation for new Trustees. |
| B. | The Committee shall periodically review and make recommendations about the organization of board meetings, including the frequency, timing and agendas of the meetings. |
| C. | The Committee shall conduct a self-assessment and coordinate evaluation of the performance of the Board (and, in particular, the Independent Trustees) as a whole, at least annually, with a view towards enhancing its effectiveness. |
| D. | The Committee shall periodically, with the assistance of its counsel, define and clarify the duties and responsibilities of Board members. Included among these shall be legal and fiduciary duties, expectations regarding preparation, attendance, participation at meetings, fund ownership and limitations on investments. |
| VI. |
| A. | The Committee shall meet at the direction of its Chair as often as appropriate to accomplish its purpose. In any event, the Committee shall meet at least once each year and shall conduct at least one meeting in person. |
| B. | A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. The action of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the action of the Committee. The Committee may meet in person or by telephone, and the Committee may act by written consent, to the extent permitted by law and by the applicable Trust’s by-laws. In the event of any inconsistency between this Charter and a Trust’s organizational documents, the provisions of the Trust’s organizational documents shall govern. |
| C. | The Committee shall submit minutes of its meeting on a regular basis and shall regularly report to the full Board no later than the next regularly scheduled Board meeting. |
| D. | The Committee shall review the Committee charter at least annually and recommend appropriate changes. |
| E. | The Committee shall have the resources and authority to discharge its responsibilities, including authority to retain special counsel and other experts or consultants at the expense of the appropriate Fund(s) or Trust. |
| F. | The Committee may invite members of management, counsel, and others to attend its meetings as it deems appropriate. |
| VII. | Other Powers and Responsibilities |
| A. | The Committee shall monitor the performance of legal counsel for the Independent Trustees, and any other service providers (other than the independent auditors, which are monitored by the Audit Committee) that are chosen by the Independent Trustees, and shall supervise counsel for the Independent Trustees. |
| B. | The Committee shall periodically review and make recommendations about any appropriate changes to director compensation to the full Board. |
| C. | The Committee has the authority to review and make recommendations to the Board concerning all other matters not listed above pertaining to the functioning of the Board and committees of the Board and pertaining generally to the governance of the |
| Adopted: | October 20, 2009 |
| Amended: | February 23, 2012 |
| Amended: | March 1, 2016 |
EXCHANGE TRADED CONCEPTS TRUST
Board of Trustees Retirement Policy
Statement of General Policy
Each Trustee shall resign at the end of the calendar year in which such person first attains the age of seventy-five years.
Exemption from General Policy
A Trustee may continue to serve for one or more additional one-year terms after attaining the age of seventy-five under the following circumstances:
Prior to the end of the calendar year in which a Trustee first attains the age of seventy-five (and prior to the end of each calendar year thereafter), the Board of Trustees of the Trust shall (i) meet to review the performance such Board member; (ii) find that the continued service of such Board member is in the best interests of the Trust; and (iii) unanimously approve the exemption from the Trust’s retirement policy.
| Adopted: | October 20, 2009 |
| Amended: | February 23, 2012 |
| Amended: | March 1, 2016 |
EXCHANGE LISTED FUNDS TRUST
(the “Trust”)
Governance and Nominating Committee Charter of Exchange Traded Concepts Trust II
(the “Charter”)
| I. | Governance and Nominating Committee: Membership |
The Governance and Nominating Committee (the “Committee”) shall be composed entirely of “Independent Trustees” (members of the Board of Trustees (the “Board”) who are not interested persons of the TrustsTrust as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended), and consist of all the Independent Trustees with one Independent Trustee elected as chair of the Committee (the “Chair”). Matters to be addressed “periodically” under the terms of this Charter shall be addressed at least annually, normally in conjunction with the annual self-assessment required by Section V.C. hereof.
| II. | Board: Selection and Tenure |
| A. | The Committee shall periodically review the composition of the Board, including its size and the balance of its members’ skills, experience and background, and shall make recommendations to the Board concerning the need to increase or decrease the size of the Board or to add individuals with different backgrounds or skill sets in order to provide an appropriate mix of backgrounds, knowledge and experience on the Board. |
| B. | The Committee shall periodically review and make recommendations with regard to the tenure of the Independent Trustees, including term limits and/or age limits. |
| C. | The Committee shall periodically review and make recommendations with respect to adoption of and administration of any policy for retirement from Board membership. |
| III. | Board: Nominations and Functions |
| A. | The Committee shall select and nominate all persons to serve as Independent Trustees. The Committee shall evaluate candidates’ qualifications for Board membership and the independence of such candidates from the investment advisers and other principal service providers for the funds of the Trust. Persons selected must be independent in terms of both the letter and the spirit of the 1940 Act. The Committee shall also consider the effect of any relationships beyond those delineated in the 1940 Act that might impair independence, e.g., business, financial or family relationships with investment advisers or service providers. |
| B. | The Committee also shall consider proposals of and make recommendations for “interested” Trustee candidates to the Board. |
| C. | The Committee may adopt from time to time specific, minimum qualifications that the Committee believes a candidate must meet before being considered as a candidate for Board membership and shall comply with any rules adopted from time to time by the U.S. Securities and Exchange Commission regarding investment company nominating committees and the nomination of persons to be considered as candidates for Board membership. |
| D. | The Committee shall review shareholder recommendations for nominations to fill vacancies on the Board if such recommendations are submitted in writing and addressed to the Committee at the applicable Trust’s offices. The Committee shall adopt, by resolution, a policy regarding its procedures for considering candidates for the Board, including any recommended by shareholders. |
| E. | The Committee, with the assistance of counsel, shall review the independence of incumbent Independent Trustees and shall make recommendations to the Board in the event it determines that an incumbent Trustee no longer satisfies applicable standards of independence. |
| IV. | Committees: Selection and Review |
| A. | The Committee shall periodically review committee assignments and make nominations for Independent Trustee membership on all committees. |
| B. | The Committee shall periodically review and make recommendations to the full Board regarding the responsibilities and charters of any committees (other than the Audit Committee) of the Board, whether there is a continuing need for each committee, whether there is a need for additional committees, and whether committees should be combined or reorganized. |
| V. | Board: Education and Operations |
| A. | The Committee shall periodically review and make recommendations about ongoing education for incumbent Independent Trustees and about appropriate orientation for new Trustees. |
| B. | The Committee shall periodically review and make recommendations about the organization of board meetings, including the frequency, timing and agendas of the meetings. |
| C. | The Committee shall conduct a self-assessment and coordinate evaluation of the performance of the Board (and, in particular, the Independent Trustees) as a whole, at least annually, with a view towards enhancing its effectiveness. |
| D. | The Committee shall periodically, with the assistance of its counsel, define and clarify the duties and responsibilities of Board members. Included among these shall be legal and fiduciary duties, expectations regarding preparation, attendance, participation at meetings, fund ownership and limitations on investments. |
| VI. | Committee Procedures |
| A. | The Committee shall meet at the direction of its Chair as often as appropriate to accomplish its purpose. In any event, the Committee shall meet at least once each year and shall conduct at least one meeting in person. |
| B. | A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. The action of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the action of the Committee. The Committee may meet in person or by telephone, and the Committee may act by written consent, to the extent permitted by law and by the applicable Trust’s by-laws. In the event of any inconsistency between this Charter and a Trust’s organizational documents, the provisions of the Trust’s organizational documents shall govern. |
| C. | The Committee shall submit minutes of its meeting on a regular basis and shall regularly report to the full Board no later than the next regularly scheduled Board meeting. |
| D. | The Committee shall review the Committee charter at least annually and recommend appropriate changes. |
| E. | The Committee shall have the resources and authority to discharge its responsibilities, including authority to retain special counsel and other experts or consultants at the expense of the appropriate Fund(s) or Trust. |
| F. | The Committee may invite members of management, counsel, and others to attend its meetings as it deems appropriate. |
| VII. | Other Powers and Responsibilities |
| A. | The Committee shall monitor the performance of legal counsel for the Independent Trustees, and any other service providers (other than the independent auditors, which are monitored by the Audit Committee) that are chosen by the Independent Trustees, and shall supervise counsel for the Independent Trustees. |
| B. | The Committee shall periodically review and make recommendations about any appropriate changes to director compensation to the full Board. |
| C. | The Committee has the authority to review and make recommendations to the Board concerning all other matters not listed above pertaining to the functioning of the Board and committees of the Board and pertaining generally to the governance of the Trust, including the performance of individual Independent Trustees; the procedures applicable to meetings of the Board and the setting of agendas for Board meetings; the need to assign inside or outside staff or consultants to support the Independent Trustees; the adequacy and appropriateness of insurance coverage; and the review and evaluation of possible conflicts of interest. |
| Adopted: | October 20, 2009 |
| Amended: | February 23, 2012 |
| Amended: | March 1, 2016 |
EXCHANGE TRADED CONCEPTSLISTED FUNDS TRUST II
Board of Trustees Retirement Policy
Statement of General Policy
Each Trustee shall resign at the end of the calendar year in which such person first attains the age of seventy-five years.
Exemption from General Policy
A Trustee may continue to serve for one or more additional one-year terms after attaining the age of seventy-five under the following circumstances:
Prior to the end of the calendar year in which a Trustee first attains the age of seventy fiveseventy-five (and prior to the end of each calendar year thereafter), the Board of Trustees of the Trust shall (i) meet to review the performance such Board member; (ii) find that the continued service of such Board member is in the best interests of the Trust; and (iii) unanimously approve the exemption from the Trust’s retirement policy.
| Adopted: | October 20, 2009 |
| Amended: | February 23, 2012 |
| Amended: | March 1, 2016 |
Information Concerning the AuditorsIndependent Accountants and Audit Committees
of Exchange Traded Concepts Trust and Exchange Traded ConceptsListed Funds Trust II
Cohen Fund Audit Services,& Company, Ltd. (“CFAS”Cohen”) serves as the independent registered public accounting firm for Exchange Traded Conceptseach Trust and each of itstheir respective Funds. CFASCohen provides audit services, tax return review and assistance and consultation in connection with review of SEC filings.
Representatives of CFAS and KPMGCohen are not expected to be at the Special Meeting to answer questions relating to the services provided or to be provided to the Funds. However, representatives of CFAS and KPMGCohen could be contacted during the Special Meeting if any matter were to arise requiring assistance.
The following table sets forth the aggregate fees billed by CFAS and KPMGCohen for the most recent two fiscal years.
Audit Fees(1) | Audit Related Fees(2) | Tax Fees(3) | All Other Fees(4) | |||||||||||||||||||||||||||||||
Fiscal Year End | Fiscal Year Ended 2013 | Fiscal Year Ended 2014 | Fiscal Year Ended 2013 | Fiscal Year Ended 2014 | Fiscal Year Ended 2013 | Fiscal Year Ended 2014 | Fiscal Year Ended 2013 | Fiscal Year Ended 2014 | ||||||||||||||||||||||||||
| Exchange Traded Concepts Trust | 12/31 | $ | 15,100 | $ | 14,000 | $ | 0 | $ | 0 | $ | 3,500 | $ | 3,500 | $ | 0 | $ | 0 | |||||||||||||||||
| Exchange Traded Concepts Trust II | 4/30 | $ | 0 | $ | 17,500 | $ | 0 | $ | 6,000 | $ | 0 | $ | 19,000 | $ | 0 | $ | 0 | |||||||||||||||||
years:
| Audit Fees(1) | Audit Related Fees(2) | Tax Fees(3) | All Other Fees(4) | |||||||||||||||||||||||||||||||||||
| Fiscal Year End | Most Recent Fiscal Year End | Fiscal Year Prior to Most Recent Fiscal Year End | Most Recent Fiscal Year End | Fiscal Year Prior to Most Recent Fiscal Year End | Most Recent Fiscal Year End | Fiscal Year Prior to Most Recent Fiscal Year End | Most Recent Fiscal Year End | Fiscal Year Prior to Most Recent Fiscal Year End | ||||||||||||||||||||||||||||||
| Armor US Equity Index ETF | 11/30 | $13,500 | N/A | $0 | N/A | $3,500 | N/A | $0 | N/A | |||||||||||||||||||||||||||||
| Saba Closed-End Funds ETF | 11/30 | $17,500 | $17,500 | $0 | $0 | $4,000 | $4,000 | $0 | $0 | |||||||||||||||||||||||||||||
| ETC 6 Meridian Low Beta Equity Strategy ETF, ETC 6 Meridian Mega Cap Equity ETF, ETC 6 Meridian Small Cap Equity ETF, ETC 6 Meridian Hedged Equity-Index Option Strategy ETF | 11/30 | $97,500 | $58,500 | $0 | $0 | $23,500 | $12,500 | $0 | $0 | |||||||||||||||||||||||||||||
| Capital Link NextGen Protocol ETF | 11/30 | $97,500 | $58,500 | $0 | $0 | $23,500 | $12,500 | $0 | $0 | |||||||||||||||||||||||||||||
| Capital Link NextGen Vehicles & Technology ETF | 11/30 | $97,500 | $58,500 | $0 | $0 | $23,500 | $12,500 | $0 | $0 | |||||||||||||||||||||||||||||
| Hull Tactical US ETF | 11/30 | $97,500 | $25,500 | $0 | $0 | $23,500 | $12,500 | $0 | $0 | |||||||||||||||||||||||||||||
| Cabana Target Drawdown 5 ETF, Cabana Target Drawdown 7 ETF, Cabana Target Drawdown 10 ETF, Cabana Target Drawdown 13 ETF, Cabana Target Drawdown 16 ETF | 4/30 | $66,250 | N/A | $0 | N/A | $17,500 | N/A | $0 | N/A | |||||||||||||||||||||||||||||
| Nifty India Financials ETF | 4/30 | 15,000 | N/A | $0 | N/A | $3,500 | N/A | $0 | N/A | |||||||||||||||||||||||||||||
| QRAFT AI-Enhanced U.S. Large Cap ETF, QRAFT AI-Enhanced U.S. Large Cap Momentum ETF, QRAFT AI-Enhanced U.S. High Dividend ETF, QRAFT AI-Enhanced U.S. Next Value ETF | 4/30 | $53,000 | $40,500 | $0 | $0 | $12,000 | $9,000 | $0 | $0 | |||||||||||||||||||||||||||||
| ROBO Global® Robotics and Automation Index ETF, ROBO Global® Healthcare Technology and Innovation ETF, ROBO Global® Artificial Intelligence ETF | 4/30 | $44,500 | $31,500 | $0 | $0 | $10,500 | $6,500 | $0 | $0 | |||||||||||||||||||||||||||||
| High Yield ETF | 6/30 | $17,000 | $17,000 | $0 | $0 | $3,500 | $3,500 | $0 | $0 | |||||||||||||||||||||||||||||
| EMQQ The Emerging Markets Internet & Ecommerce ETF | 8/31 | $43,500 | $43,500 | $0 | $0 | $10,500 | $10,500 | $0 | $0 | |||||||||||||||||||||||||||||
| North Shore Global Uranium Mining ETF | 8/31 | $43,500 | $43,500 | $0 | $0 | $10,500 | $10,500 | $0 | $0 | |||||||||||||||||||||||||||||
| Vesper U.S. Large Cap Short-Term Reversal Strategy ETF | 8/31 | $43,500 | $43,500 | $0 | $0 | $10,500 | $10,500 | $0 | $0 | |||||||||||||||||||||||||||||
| (1) | “Audit Fees” are the aggregate fees billed for professional services for the audit of the Fund’s annual financial statements and services provided in connection with statutory and regulatory filings or engagements. |
| (2) | “Audit Related Fees” are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements that are not reported under “Audit Fees”. These fees include offerings related to the Fund’s common shares and leverage. |
| (3) | “Tax Fees” are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. The Tax Fees for the Funds relate to the preparation of the Fund’s income and excise tax returns and the review of the Fund’s annual excise tax distribution calculations. All of such Tax Fees were required to be pre-approved, and were pre-approved, by the Audit Committee. |
| (4) | “All Other Fees” are the aggregate fees billed for products and services other than “Audit Fees”, “Audit-Related Fees” and “Tax Fees”. These fees represent all “Agreed-Upon Procedures” engagements pertaining to the Fund’s use of leverage. |
Each Trust’s investment adviser that provide ongoing services to Exchange Traded Concepts Trust that were not subject to pre-approval pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The Audit Committee of the Board of Trustees reviewed and considered these non-audit services, including whether the provision of these non-audit services is compatible with maintaining the principal accountant's independence.
The following table sets forth the aggregate non-audit fees billed by Cohen for services provided to each Fund and its investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under comment control with the investment adviser that provides ongoing services to the Fund, for the most recent two fiscal years:
Fund | Fiscal Year End | Most Recent Fiscal Year | Fiscal Year Prior to Most Recent Fiscal Year End |
| Armor US Equity Index ETF | 11/30 | $3,500 | N/A |
| Saba Closed-End Funds ETF | 11/30 | $4,000 | $4,000 |
| ETC 6 Meridian Low Beta Equity Strategy ETF, ETC 6 Meridian Mega Cap Equity ETF, ETC 6 Meridian Small Cap Equity ETF, ETC 6 Meridian Hedged Equity-Index Option Strategy ETF | 11/30 | $23,500 | $12,500 |
| Capital Link NextGen Protocol ETF | 11/30 | $23,500 | $12,500 |
| Capital Link NextGen Vehicles & Technology ETF | 11/30 | $23,500 | $12,500 |
| Hull Tactical US ETF | 11/30 | $23,500 | $12,500 |
| Cabana Target Drawdown 5 ETF, Cabana Target Drawdown 7 ETF, Cabana Target Drawdown 10 ETF, Cabana Target Drawdown 13 ETF, Cabana Target Drawdown 16 ETF | 4/30 | $17,500 | N/A |
| Nifty India Financials ETF | 4/30 | $3,500 | N/A |
| QRAFT AI-Enhanced U.S. Large Cap ETF, QRAFT AI-Enhanced U.S. Large Cap Momentum ETF, QRAFT AI-Enhanced U.S. High Dividend ETF, QRAFT AI-Enhanced U.S. Next Value ETF | 4/30 | $12,000 | $9,000 |
| ROBO Global® Robotics and Automation Index ETF, ROBO Global® Healthcare Technology and Innovation ETF, ROBO Global® Artificial Intelligence ETF | 4/30 | $10,500 | $6,500 |
| High Yield ETF | 6/30 | $3,500 | $3,500 |
| EMQQ The Emerging Markets Internet & Ecommerce ETF | 8/31 | $10,500 | $10,500 |
| North Shore Global Uranium Mining ETF | 8/31 | $10,500 | $10,500 |
| Vesper U.S. Large Cap Short-Term Reversal Strategy ETF | 8/31 | $10,500 | $10,500 |
During each Trust’s most recent fiscal years, Cohen provided certain non-audit services to the Trusts’ investment adviser or to entities controlling, controlled by, or under common control with the Trusts’ investment adviser that provides ongoing services to the Trusts that were not subject to pre-approval. The Audit Committee for each Trust considered whether the provision of these non-audit services is compatible with maintaining Cohen’s independence.
C-2
Outstanding Shares
As of the Record Date, the total number of shares outstanding and entitled to vote for each Fund is set forth in the table below:
| Armor US Equity Index ETF | |
| 1,200,000 | |
| Cabana Target Drawdown 7 ETF | 1,050,0000 |
| Cabana Target Drawdown 10 ETF | 30,400,000 |
| Cabana Target Drawdown 13 ETF | 10,575,000 |
| Cabana Target Drawdown 16 ETF | 5,825,000 |
| Cabana Target Leading Sector Aggressive ETF | 7,650,000 |
| Cabana Target Leading Sector Conservative ETF | 7,300,000 |
| Cabana Target Leading Sector Moderate ETF | 10,325,000 |
| Corbett Road Tactical Opportunity ETF | 650,000 |
| QRAFT AI-Enhanced US High Dividend ETF | 450,001 |
| QRAFT AI-Enhanced US Large Cap ETF | 775,001 |
| QRAFT AI-Enhanced US Large Cap | |
| Gavekal Asia Pacific Government Bond ETF | 490,000 |
| Saba Closed-End Funds ETF | 4,000,001 |
| High Yield ETF | 4,150,000 |
| Exchange Traded Concepts Trust | |
| ETC 6 Meridian Hedged Equity-Index Option Strategy ETF | 8,300,000 |
| ETC 6 Meridian Low Beta Equity Strategy ETF | 4,075,000 |
| ETC 6 Meridian Mega Cap Equity ETF | 4,600,000 |
| ETC 6 Meridian Quality Growth ETF | 850,000 |
| ETC 6 Meridian Small Cap Equity ETF | 1,275,000 |
| Bitwise Crypto Industry Innovators ETF | 4,300,000 |
| Capital Link NextGen Protocol ETF | 700,000 |
| Capital Link NextGen Vehicles & Technology ETF | 275,000 |
| EMQQ The Emerging Markets Internet & Ecommerce ETF | 24,400,000 |
| FMQQ The Next Frontier Internet & Ecommerce ETF | 300,000 |
| Fount Metaverse ETF | 350,000 |
| North Shore Global Uranium Mining ETF | 10,300,000 |
| ROBO Global® Artificial Intelligence ETF | 27,900,000 |
| ROBO Global® Healthcare Technology and Innovation ETF | 5,150,001 |
| ROBO Global® Robotics and Automation Index ETF | 950,000 |
| Vesper U.S. Large Cap Short-Term Reversal Strategy ETF | 2,350,000 |
Beneficial Owners of 5% or More of Each Fund
As of the Record Date,November 1, 2021, the following persons were the owners of 5% or more than 5% of the outstanding shares of the following Funds:
| Fund | Participant Name and Address | Percentage |
Exchange Listed Funds Trust | ||
| Armor US Equity Index ETF | Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 39% |
Charles Schwab & Co., Inc. 211 Main Street | 37% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 6% | |
Raymond James & Associates Inc. 880 Carilion Parkway PO Box 14508 Saint Petersburg, FL 33716 | 6% | |
| Asian Growth Cubs ETF | Goldman Sachs & Co. LLC 200 West Street New York, NY 10282 | 83% |
| Cabana Target Drawdown 5 ETF | TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 85% |
National Financial Services, LLC 200 Liberty Street One World Financial Center 10281New York, NY | ||
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE | 81% | |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 12% | |
Charles Schwab & Co., Inc. 211 Main Street | ||
Cabana Target Drawdown 10 ETF | TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 83% |
National Financial Services, LLC 200 Liberty Street One World Financial Center 10281New York, NY | ||
Cabana Target Drawdown 13 ETF | TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 88% |
National Financial Services, LLC 200 Liberty Street One World Financial Center 10281New York, NY | ||
| Fund | Participant Name and Address | Percentage |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | ||
National Financial Services, LLC 200 Liberty Street One World Financial Center 10281New York, NY | ||
Cabana Target Leading Sector Aggressive ETF | TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 87% |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 11% | |
| Cabana Target Leading Sector Conservative ETF | TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 84% |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 11% | |
| Cabana Target Leading Sector Moderate ETF | TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 87% |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 10% | |
| Corbett Road Tactical Opportunity ETF | TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 49% |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 47% | |
| QRAFT AI-Enhanced US High Dividend ETF | CitiBank, N.A. 388 Greenwich Street New York, NY 10013 | 47% |
HSBC Bank USA, NA/Clearing 454 Fifth Avenue New York, NY 10018 | 24% | |
Charles Schwab & Co., Inc. 211 Main Street | ||
National Financial Services, LLC 200 Liberty Street One New York, NY 10281 | ||
| Fund | Participant Name and Address | Percentage |
CitiBank, N.A. 388 Greenwich Street New York, NY | ||
HSBC Bank USA, NA/Clearing 454 Fifth Avenue New York, NY 10018 | 21% | |
The Bank Of New York Mellon 240 Greenwich Street | 6% | |
Charles Schwab & Co., Inc. 211 Main Street | ||
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY |
Charles Schwab & Co., Inc. 211 Main Street | |
CitiBank, N.A. 388 Greenwich Street | |
New York, NY | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE | |
E*Trade Securities LLC Harborside 2 200 Hudson Street Jersey City, NJ | ||
HSBC Bank USA, NA/Clearing 454 Fifth Avenue New York, NY 10018 | 7% | |
BofA Securities, Inc. One Bryant Park New York, NY 10036 | 6% | |
| QRAFT AI-Enhanced US Next Value ETF | CitiBank, N.A. 388 Greenwich Street New York, NY 10013 | 56% |
BofA Securities, Inc. One Bryant Park New York, NY 10036 | 20% | |
Interactive Brokers Retail Equity Clearing One Pickwick Plaza Greenwich, CT 06830 | 7% | |
| Gavekal Asia Pacific Government Bond ETF | Charles Schwab & Co., Inc. 211 Main Street | |
| Fund | Participant Name and Address | Percentage |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | ||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 7% | |
J.P. Morgan Securities LLC/JPMC 500 Stanton Christiana Rd. Newark, DE 19713 | 5% | |
| Saba Closed-End Funds ETF | Charles Schwab & Co., Inc. 211 Main Street | 15% |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 14% | |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 13% | |
Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 11% | |
Raymond James & Associates Inc. 880 Carilion Parkway PO Box 14508 Saint Petersburg, FL 33716 | 10% | |
Interactive Brokers Retail Equity Clearing One Pickwick Plaza Greenwich, CT 06830 | 7% | |
LPL Financial LLC 9785 Towne Center Drive San Diego, CA 92121 | ||
JPMorgan Chase Bank, National Association 4 New York Plaza New York, NY 10004 | 5% | |
| High Yield ETF | National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 21% |
Charles Schwab & Co., Inc. 211 Main Street | 14% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 12% | |
Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 6% |
| Fund | Participant Name and Address | Percentage Ownership |
Raymond James & Associates Inc. 880 Carilion Parkway PO Box 14508 Saint Petersburg, FL 33716 | 5% | |
Stifel, Nicolaus & Company, Incorporated 501 N Broadway One Financial Plaza St. Louis, MO 63102 | 5% | |
| Exchange Traded Concepts Trust | ||
| ETC 6 Meridian Hedged Equity-Index Option Strategy ETF | Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 97% |
| ETC 6 Meridian Low Beta Equity Strategy ETF | Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 98% |
| ETC 6 Meridian Mega Cap Equity ETF | Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 98% |
| ETC 6 Meridian Quality Growth ETF | Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 95% |
| ETC 6 Meridian Small Cap Equity ETF | Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 96% |
| Bitwise Crypto Industry Innovators ETF | National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 14% |
Charles Schwab & Co., Inc. 211 Main Street | 12% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 6% | |
Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 5% | |
E*Trade Securities LLC Harborside 2 200 Hudson Street Suite 501 Jersey City, NJ 07311 | 5% | |
| Capital Link NextGen Protocol ETF | National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 25% |
Charles Schwab & Co., Inc. 211 Main Street | 16% | |
| Fund | Participant Name and Address | Percentage Ownership |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 13% | |
Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 7% | |
Vanguard Marketing Corporation 100 Vanguard Blvd Malvern, PA 19355 | 6% | |
E*Trade Securities LLC Harborside 2 200 Hudson Street Suite 501 Jersey City, NJ 07311 | 5% | |
J.P. Morgan Securities LLC/JPMC 500 Stanton Christiana Rd. Newark, DE 19713 | 5% | |
| Capital Link NextGen Vehicles & Technology ETF | J.P. Morgan Securities LLC/JPMC 500 Stanton Christiana Rd. Newark, DE 19713 | 21% |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 16% | |
Charles Schwab & Co., Inc. 211 Main Street | 14% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 14% | |
CitiBank, N.A. 388 Greenwich Street New York, NY 10013 | 7% | |
| EMQQ The Emerging Markets Internet & Ecommerce ETF | Charles Schwab & Co., Inc. 211 Main Street | 16% |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 13% | |
Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 11% | |
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 11% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 8% |
| Fund | Participant Name and Address | Percentage Ownership |
| FMQQ The Next Frontier Internet & Ecommerce ETF | National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 32% |
Charles Schwab & Co., Inc. 211 Main Street | 19% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 14% | |
Vanguard Marketing Corporation 100 Vanguard Blvd Malvern, PA 19355 | 10% | |
Interactive Brokers Retail Equity Clearing One Pickwick Plaza Greenwich, CT 06830 | 8% | |
J.P. Morgan Securities LLC/JPMC 500 Stanton Christiana Rd. Newark, DE 19713 | 6% | |
| Fount Metaverse ETF | Cowen and Company LLC 599 Lexington Ave. 20th Floor New York, NY 10022 | 89% |
Robinhood Securities, LLC 500 Colonial Center Parkway Suite 100 Lake Mary, FL 32746 | 6% | |
| Fount Subscription Economy ETF | Cowen and Company LLC 599 Lexington Ave. 20th Floor New York, NY 10022 | 89% |
| Hull Tactical US ETF | UBS Financial Services, Inc. 1200 Harbor Boulevard Weehawken, NJ 07086 | 51% |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 13% | |
Charles Schwab & Co., Inc. 211 Main Street | 8% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 7% | |
| Nifty India Financials ETF | Fifth Third Bank, National Association 38 Fountain Square Plaza Cincinnati, OH 45202 | 20% |
| Fund | Participant Name and Address | Percentage Ownership |
Charles Schwab & Co., Inc. 211 Main Street | 16% | |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 13% | |
The Northern Trust Company 50 South La Salle Street Chicago IL 60603 | 12% | |
E*Trade Securities LLC Harborside 2 200 Hudson Street Suite 501 Jersey City, NJ 07311 | 6% | |
Interactive Brokers Retail Equity Clearing One Pickwick Plaza Greenwich, CT 06830 | 5% | |
CitiBank, N.A. 388 Greenwich Street New York, NY 10013 | 5% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 5% | |
| North Shore Global Uranium ETF | National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 18% |
Charles Schwab & Co., Inc. 211 Main Street | 13% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 9% | |
CitiBank, N.A. 388 Greenwich Street New York, NY 10013 | 9% | |
Interactive Brokers Retail Equity Clearing One Pickwick Plaza Greenwich, CT 06830 | 6% | |
BofA Securities, Inc. One Bryant Park New York, NY 10036 | 6% | |
Brown Brothers Harriman & Co. 140 Broadway | 6% |
| Fund | Participant Name and Address | Percentage Ownership |
| ROBO Global® Artificial Intelligence ETF | National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 26% |
Charles Schwab & Co., Inc. 211 Main Street | 20% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 11% | |
UBS Financial Services, Inc. 1200 Harbor Boulevard Weehawken, NJ 07086 | 7% | |
Vanguard Marketing Corporation 100 Vanguard Blvd Malvern, PA 19355 | 5% | |
| ROBO Global® Healthcare Technology and Innovation ETF | Charles Schwab & Co., Inc. 211 Main Street | 33% |
UBS Financial Services, Inc. 1200 Harbor Boulevard Weehawken, NJ 07086 | 20% | |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 10% | |
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 8% | |
| ROBO Global® Robotics and Automation Index ETF | Charles Schwab & Co., Inc. 211 Main Street | 12% |
UBS Financial Services, Inc. 1200 Harbor Boulevard Weehawken, NJ 07086 | 10% | |
National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 10% | |
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 10% | |
JPMorgan Chase Bank, National Association 4 New York Plaza New York, NY 10004 | 8% | |
CitiBank, N.A. 388 Greenwich Street New York, NY 10013 | 6% |
| Fund | Participant Name and Address | Percentage Ownership |
American Enterprise Investment Services Inc. 707 2nd Avenue South Minneapolis, MN 55402 | 5% | |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 5% | |
Pershing LLC One Pershing Plaza, 10th Floor Jersey City, NJ 07399 | 5% | |
| Vesper U.S. Large Cap Short-Term Reversal Strategy ETF | National Financial Services, LLC 200 Liberty Street One World Financial Center New York, NY 10281 | 13% |
TD Ameritrade Clearing, Inc. 200 South 108th Avenue Omaha, NE 68154 | 11% | |
The Bank Of New York Mellon 240 Greenwich Street | 11% | |
Charles Schwab & Co., Inc. 211 Main Street | 8% | |
RBC Capital Markets, LLC 3 World Financial Center 200 Vesey St. New York, NY 10281 | 8% | |
PNC Bank, National Association The Tower at PNC Plaza 300, 5th Avenue Pittsburgh, PA 15222 United States | 7% | |
Manufacturers and Traders Trust Company 1 M&T Plaza Buffalo, New York 14203 | 7% | |
LPL Financial LLC 9785 Towne Center Drive San Diego, CA 92121 | 7% | |
Brown Brothers Harriman & Co. 140 Broadway | 5% |
