ETF Reports

Required Disclosures

S&P GLOBAL™ is used under license. The owner of these trademarks is S&P Global Inc. or its affiliate, which are not affiliated with CFRA Research or the author of this content.

ETFs may not be appropriate for all investors. To determine if this ETF is an appropriate investment for you, carefully consider the ETF’s investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the ETF’s prospectus.

This report is for informational purposes only. When using this report, investors are advised to consult the accompanying glossary of investment terms. Total return performance is historical and assumes reinvestment of all dividends and capital gain distributions. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that, when redeemed, an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.

ETFs issue and redeem shares at net asset value (“NAV”) only in large blocks of shares called “Creation Units”, or multiples thereof. Only broker dealers and large institutional investors with creation and redemption agreements, called Authorized Participants (“APs”) can purchase and redeem Creation Units. ETFs are subject to risks similar to those of stocks, including those regarding short selling, margin account maintenance and loss of principal. Investors buying or selling ETF shares on the secondary market may incur brokerage costs and other transactional fees.

Risks Disclosure

ETF Risk

Shares of an ETF may trade above or below their NAV. Shares will fluctuate in price due to daily volume changes. However, the market prices of Shares will generally fluctuate in accordance with changes in NAV as well as the relative supply of, and demand for, Shares on the Exchange.

During periods of market volatility the trading price of Shares may deviate significantly from the NAV.

Market risk. ETFs are typically designed to track the performance of certain indices, market sectors, or groups of assets such as stocks, bonds, or commodities. The market value of an ETF may decline due to general market conditions and the volatility associated with the underlying indices or assets can result in a loss of the ETF’s value.

Tracking error risk. The ETF’s goal is to track a specific market index or asset, normally referred as fund target index. The discrepancy between the ETF’s performance and the performance of its target index is known as tracking error. A variety of factors can create a performance gap between ETF and its target index such as the impact of transaction fees and expenses incurred by the ETF, changes in composition of the underlying index/assets, the ETF manager’s replication strategy and sampling techniques, and the timing of purchases and redemptions of fund shares.

Concentration risk. An ETF’s portfolio reflects the underlying Index’s concentration in the securities of a particular issuer or issuers, which means that the fund may invest a relatively high percentage of its assets in a limited number of issuers. Therefore, the ETF’s performance may be more vulnerable to changes in the market value of a single issuer or group of issuers and more susceptible to risks associated with a single economic, political or regulatory occurrence than a diversified fund.

Equity Investing Risk

The ETF invests in equity securities, which are subject to changes in value that may be attributable to market perception of a particular issuer or to general stock market fluctuations that affect all issuers. Investments in equity securities may be more volatile than those in other asset classes. Special risks are involved with significant exposure to a particular sector, including increased susceptibility related to economic, business or other developments affecting that sector

Small and midsize company risk. Small and midsize companies carry additional risks because the operating histories of these companies tend to be more limited, their earnings and revenues less predictable, and their share prices more volatile than those of larger, more established companies. The shares of smaller companies tend to trade less frequently than those of larger, more established companies, which can adversely affect the pricing of these securities and the ETF’s ability to sell these securities.

Large cap stock risk. Stocks of large cap companies may underperform the stocks of lower quality, or smaller capitalization companies during periods when the stocks of such companies are in favor.

Growth securities risk. Growth companies generally seek to achieve high earning growth regardless of market conditions. Growth stocks usually have high price-to-earnings and price-to-book ratios, which means that these stocks are relatively high-priced in comparison with the companies’ Net Asset Values (NAVs). Stocks of growth companies or “growth securities” have market values that may be more volatile than those of other types of investments. Growth securities typically do not pay a dividend, which can help cushion stock prices in market downturns and reduce potential losses.

Value securities risk. Value stocks are those that generally have fallen out of favor in the marketplace and are considered bargain-priced compared with book value, replacement value, or liquidation value. Typically, value stocks are priced much lower than stocks of similar companies in the same industry. The prices of value stocks may lag the stock market for long periods of time if the market fails to recognize the company’s intrinsic worth.

International Equity Risk

Foreign investment risk. ETF’s investments in foreign securities may be subject to political, social and economic factors affecting investments in foreign issuers. Special risks associated with investments in foreign issuers include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political and economic instability and differing auditing and legal standards.

Foreign currency risk. Investments in foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar or, in the case of hedged positions, that the U.S. dollar will decline relative to the currency being hedged. Currency exchange rates may fluctuate significantly over short periods of time. Foreign currencies are also subject to risks caused by inflation, interest rates, budget deficits and low savings rates, political factors and government intervention and controls.

Emerging market risk. The securities of issuers located in emerging markets tend to be more volatile and less liquid than securities of issuers located in more developed economies, and emerging markets generally have less diverse and less developed economic structures and less stable political systems than those of developed countries. The securities of issuers located or doing substantial business in emerging markets are often subject to rapid and large changes in price.

Fixed Income Investing Risk

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties.

Lower-quality (high yield bonds or junk bond) debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.

Credit and default risk. Corporate bonds are subject to credit risk. It’s important to pay attention to changes in the credit quality of the issuer, as less creditworthy issuers may be more likely to default on interest payments or principal repayment. If a bond issuer fails to make either a coupon or principal payment when they are due, or fails to meet some other provision of the bond indenture, it is said to be in default. To the extent the fund invests in high yield, its portfolio is subject to heightened credit risk.

Liquidity risk. When there is little or no active trading market for specific types of securities, it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities and the ETF’s share price may fall dramatically, even during periods of declining interest rates. The secondary market for certain bonds tends to be less well developed or liquid than many other securities markets, which may adversely affect the ETF’s ability to sell such bonds at attractive prices.

Derivatives risk. Investments in derivatives could have a potentially large impact on the ETF’s performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. Derivatives can be highly volatile, illiquid and difficult to value.

Collateralized bond obligation Risk. Collateralized Bond Obligations are structured financial products that pool together high yield bond obligations and repackages into separate groupings called tranches representing different degrees of credit quality. The higher quality tranches have greater degrees of protection and pay lower interest rates. The lower tranches, with greater risk, pay higher interest rates.

Government securities risk. The U.S. Treasury does not back in full all obligations of the U.S. government, its agencies and instrumentalities. Some obligations are backed only by the credit of the issuing agency or instrumentality, and in some cases there may be some risk of default by the issuer. The U.S. government or its agencies or instrumentalities cannot guarantee the market value of a security and they can guarantee only the timely payment of interest and principal when held to maturity. U.S government securities may increase or decrease in value based on global demand and changes in global economic conditions affect the demand for these securities.

Municipal securities risk. Public information available about municipal securities is in general limited and less available than that for corporate equities or bonds. Special factors, such as legislative changes, and state and local economic and business developments, may adversely affect the yield and/or value of the ETF’s investments in municipal securities. ETF’s investments in municipal projects of a municipality or a state may impact the ETF’s value, if economic, business or political conditions change for the municipality or state.

Commodity Exposure Risk

Prices of commodities may be affected based on unpredictable factors, such as changes in demand and supply relationships, high volatility, political instability, changes in interest rates, monetary and other governmental policies and any other factors affecting the output, production, delivery and transformation, where applicable, of a good or commodity. Securities of companies held by an ETF or an underlying fund that are dependent on a single commodity, or are concentrated in a single commodity sector, may typically exhibit even higher volatility attributable to commodity prices.

Currency Risk

Because an underlying ETF’s NAV is determined on the basis of the U.S. dollar, investors may lose money if the currency of a non-U.S. market in which the ETF or underlying fund invests depreciates against the U.S. dollar, even if the local currency value of the fund’s holdings in that market increases.

About ETF Report Distributors

This content has been prepared by Accounting Research & Analytics, LLC and/or one of its affiliates. It is published and distributed by Accounting Research & Analytics, LLC d/b/a CFRA with the following exceptions: In the European Union/European Economic Area, the content is published and distributed by CFRA UK Limited (company number 08456139 registered in England & Wales with its registered office address at PO Box 698, Titchfield House, 69-85 Tabernacle Street, London, EC2A 4RR, United Kingdom), which is regulated by the UK Financial Conduct Authority (No. 775151); in Malaysia, the content is published and distributed by CFRA MY Sdn Bhd (Company No. 683377-A) (formerly known as Standard & Poor’s Malaysia Sdn. Bhd) (“CFRA Malaysia”), which is regulated by the Securities Commission Malaysia (License No. CMSL/A0181/2007).

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Past performance is not necessarily indicative of future results. This document may contain forward-looking statements or forecasts; such forecasts are not a reliable indicator of future performance.

This report is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or engage in any investment activity. This report is for informational purposes only. Recommendations in this report are not made with respect to any particular investor or type of investor. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors and this material is not intended for any specific investor and does not take into account an investor’s particular investment objectives, financial situations or needs. Investors should seek independent financial advice regarding the suitability and/or appropriateness of making an investment or implementing the investment strategies discussed in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such investments, if any, may fluctuate and that the value of such investments may rise or fall. Accordingly, investors may receive back less than they originally invested. Investors should seek advice concerning any impact this investment may have on their personal tax position from their own tax advisor. Please note the publication date of this document. It may contain specific information that is no longer current and should not be used to make an investment decision. Unless otherwise indicated, there is no intention to update this document.

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