The Fund primarily invests in securities comprising the Index. The Index is designed to measure the performance of a portfolio of twenty-five (25) securities selected from the Solactive GBS United States 500 Index (the “Solactive 500”) that Vesper Capital Management, LLC (the “Index Provider”) believes will most likely benefit from the “short-term reversal” effect, as determined by applying a proprietary algorithm (“Chow’s Ratio” or “Algorithm”). Under normal circumstances, the Fund invests at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in large capitalization securities issued by a U.S. company or a company economically tied to the United States. A company is deemed to be economically tied to the United States if one or more of the following tests are met: (i) the company is organized in, or its primary business office or principal trading market of its equity is located in, the United States; (ii) a majority of the company’s revenues are derived from the United States; or (iii) a majority of the company’s assets are located in the United States.

Short-term reversal effect generally means that, on average, stocks with relatively poor weekly (risk-adjusted) performance, may reverse and earn higher returns relative to peer stocks the following week. Short-term reversal investment strategies have recently developed due to the accessibility and availability of short-term pricing data and lower trading costs.

The eligible universe of Index components includes all companies in the Solactive 500. From that universe, according to the Index’s quantitative, rules-based methodology, 25 securities are selected by the Index Provider applying Chow’s Ratio to historical short-term price data of the companies’ stocks in an attempt to identify those securities that are believed to have the best chance to experience short-term reversal as well as maintain minimum risk exposure and transaction costs. Chow’s Ratio is a proprietary algorithm that uses short-term pricing data and volatility measures to identify stocks that have experienced one-week price declines and assesses their price stability to identify which stocks are fundamentally sound and have the greatest potential for reversal and which ones are fundamentally flawed and have the greatest potential for further decline. The stocks believed to have the best chance of reversal are ultimately selected for the Index. After applying the Algorithm, the 25 securities with the lowest ratios (a lower ratio represents a higher likelihood of experiencing short-term reversal) are selected for inclusion in the Index.

The Index is evaluated and re-balanced on a weekly basis. As a result, the Fund will have a high portfolio turnover rate.

Index components are equal weighted at each weekly reconstitution of the Index. A stock in the Index is only removed at rebalance if it has been assigned a ratio that is higher than that of the 50 securities of the Solactive 500 with the lowest ratios. In such case, the security with the lowest ratio from the new list of 25 securities that is not already included in the Index is selected for inclusion. As of December 1, 2023, the Index comprised 25 component securities with an average market capitalization of $117.57 billion.

The Fund employs a “passive management” investment strategy designed to track the performance of the Index. Exchange Traded Concepts, LLC (the “Adviser”), the Fund’s adviser, generally will use a replication methodology, meaning it will invest in all of the securities composing the Index in proportion to their respective weightings in the Index. However, the Adviser may utilize a sampling methodology under various circumstances, including when it may not be possible or practicable to purchase all of the securities in the Index. The Adviser expects that over time, if the Fund has sufficient assets, the correlation between the Fund’s performance, before fees and expenses, and that of the Index will be 95% or better. A figure of 100% would indicate perfect correlation.

The Fund may invest up to 20% of its total assets in investments that are not included in the Index, but that the Adviser believes will help the Fund track the performance of the Index.

The Fund will concentrate its investments (i.e., invest more than 25% of its total assets) in a particular industry or group of industries to approximately the same extent the Index concentrates in an industry or group of industries. In addition, in replicating the Index, the Fund may from time to time invest a significant portion of its assets in the securities of companies in one or more sectors. Due to the Fund’s weekly reconstitution, the Fund’s concentration in an industry or group of industries or a particular sector may change from week to week.

The Index Provider is not affiliated with the Fund or the Adviser. The Index Provider developed the methodology for determining the securities to be included in the Index and for the ongoing maintenance of the Index. The Index is calculated by Solactive AG, which is not affiliated with the Fund or the Adviser.