Loncar Cancer Immunotherapy ETF (CNCR) Loncar China BioPharma ETF (CHNA)

Transcription

1 Lncar Cancer Immuntherapy ETF (CNCR) Lncar China BiPharma ETF (CHNA) Each listed n The Nasdaq Stck Market LLC PROSPECTUS December 31, 2018 The U.S. Securities and Exchange Cmmissin ( SEC ) has nt apprved r disapprved f these securities r passed upn the accuracy r adequacy f this Prspectus. Any representatin t the cntrary is a criminal ffense. Beginning n January 1, 2021, as permitted by regulatins adpted by the SEC, paper cpies f the Funds sharehlder reprts will n lnger be sent by mail, unless yu specifically request paper cpies f the Funds reprts frm yur financial intermediary, such as a brker-dealer r bank. Instead, the reprts will be made available n a website, and yu will be ntified by mail each time a reprt is psted and prvided with a website link t access the reprt. If yu already elected t receive sharehlder reprts electrnically, yu will nt be affected by this change and yu need nt take any actin. Please cntact yur financial intermediary t elect t receive sharehlder reprts and ther Fund cmmunicatins electrnically. Yu may elect t receive all future Fund reprts in paper free f charge. Please cntact yur financial intermediary t infrm them that yu wish t cntinue receiving paper cpies f Fund sharehlder reprts and fr details abut whether yur electin t receive reprts in paper will apply t all funds held with yur financial intermediary.

2 Lncar Cancer Immuntherapy ETF Lncar China BiPharma ETF TABLE OF CONTENTS FUND SUMMARY LONCAR CANCER IMMUNOTHERAPY ETF...2 FUND SUMMARY LONCAR CHINA BIOPHARMA ETF...7 ADDITIONAL INFORMATION ABOUT THE INDEXES...13 ADDITIONAL INFORMATION ABOUT THE FUNDS...13 PORTFOLIO HOLDINGS INFORMATION...20 MANAGEMENT...20 HOW TO BUY AND SELL SHARES...21 DIVIDENDS, DISTRIBUTIONS, AND TAXES...23 DISTRIBUTION...25 PREMIUM/DISCOUNT INFORMATION...25 ADDITIONAL NOTICES...25 FINANCIAL HIGHLIGHTS...26

3 FUND SUMMARY LONCAR CANCER IMMUNOTHERAPY ETF Investment Objective The Lncar Cancer Immuntherapy ETF (the Fund ) seeks t track the ttal return perfrmance, befre fees and expenses, f the Lncar Cancer Immuntherapy Index (the Index ). Fees and Expenses f the Fund This table describes the fees and expenses that yu may pay if yu buy and hld shares f the Fund ( Shares ). This table and the Example belw d nt include the brkerage cmmissins that investrs may pay n their purchases and sales f Shares. Annual Fund Operating Expenses (expenses that yu pay each year as a percentage f the value f yur investment) Management Fees 0.79% Distributin and/r Service (12b-1) Fees Nne Other Expenses 0.00% Ttal Annual Fund Operating Expenses 0.79% Expense Example This Example is intended t help yu cmpare the cst f investing in the Fund with the cst f investing in ther funds. The Example assumes that yu invest $10,000 in the Fund fr the time perids indicated and then redeem all f yur shares at the end f thse perids. The Example als assumes that yur investment has a 5% return each year and that the Fund s perating expenses remain the same. Althugh yur actual csts may be higher r lwer, based n these assumptins yur csts wuld be: Prtfli Turnver 1 Year: $81 3 Years: $252 5 Years: $ Years: $978 The Fund pays transactin csts, such as cmmissins, when it buys and sells securities (r turns ver its prtfli). A higher prtfli turnver rate may indicate higher transactin csts and may result in higher taxes when Shares are held in a taxable accunt. These csts, which are nt reflected in annual fund perating expenses r in the example, affect the Fund s perfrmance. Fr the fiscal year ended August 31, 2018, the Fund s prtfli turnver rate was 78% f the average value f its prtfli. Principal Investment Strategies The Fund uses a passive management (r indexing) apprach t track the perfrmance, befre fees and expenses, f the Index. Lncar Cancer Immuntherapy Index The Index is cmpsed f the cmmn stck f apprximately 25 pharmaceutical r bitechnlgy cmpanies identified by Lncar Investments, LLC ( Lncar r the Index Prvider ), the Fund s index prvider, as having a high strategic fcus n the develpment f drugs that harness the bdy s wn immune system t fight cancer ( immuntherapy ). Lncar identifies cmpanies with a high strategic fcus n cancer immuntherapy ( Immuntherapy Cmpanies ) based n whether they meet ne r mre f the fllwing criteria: (i) (ii) (iii) (iv) The cmpany has a cancer immuntherapy drug(s) apprved by either the U.S. Fd and Drug Administratin r the Eurpean Medicines Agency; The cmpany has a cancer immuntherapy drug(s) in the human stage f testing; The cmpany has annunced intentins t begin human stage testing f a cancer immuntherapy drug(s); r The cmpany has annunced an immuntherapy cllabratin r partnership with a majr pharmaceutical cmpany. The Index is cnstructed using an bjective, rules-based methdlgy that begins with an initial universe f all pharmaceutical and bitechnlgy cmpanies whse equity securities r American Depsitary Receipts ( ADRs ) are listed n a U.S. exchange. The initial universe is then narrwed t include nly thse cmpanies that have been determined by Lncar t be Immuntherapy Cmpanies, that are nt knwn t be under investigatin by the SEC r any ther gvernment r regulatry entity, that have a minimum market capitalizatin f $100 millin, and that meet certain liquidity threshlds. The Index may include small-, mid-, and large-capitalizatin cmpanies. 2

4 Frm the remaining cmpanies, the Index Prvider then selects (i) five f the largest pharmaceutical Immuntherapy Cmpanies, including the leading pharmaceutical cmpany in each f the three mst established and recgnized categries f immuntherapy techniques (cell-based therapies, checkpint inhibitrs and targeted antibdies), plus the tw ther largest pharmaceutical Immuntherapy Cmpanies, and (ii) the twenty largest bitechnlgy Immuntherapy Cmpanies based n their market capitalizatin. The Index is equal-weighted and is rebalanced and recnstituted n the third Tuesday f June and December. The Index was created by Lncar in March 2015 in anticipatin f the cmmencement f peratins f the Fund. Additinal infrmatin abut the Index is available n the Index Prvider s website at The Fund s Investment Strategy The Fund attempts t invest all, r substantially all, f its assets in the cmpnent securities and ADRs that make up the Index. Under nrmal circumstances, at least 80% f the Fund s ttal assets (exclusive f any cllateral held frm securities lending) will be invested in the cmpnent securities f the Index. Exchange Traded Cncepts, LLC ( ETC r the Adviser ), the Fund s investment adviser, expects that, ver time, the crrelatin between the Fund s perfrmance and that f the Index, befre fees and expenses, will be 95% r better. The Fund will generally use a replicatin strategy t achieve its investment bjective, meaning it generally will invest in all f the cmpnent securities f the Index. Hwever, the Fund may use a representative sampling strategy, meaning it may invest in a sample f the securities in the Index whse risk, return and ther characteristics clsely resemble the risk, return and ther characteristics f the Index as a whle, when the Fund s sub-adviser believes it is in the best interests f the Fund (e.g., when replicating the Index invlves practical difficulties r substantial csts, an Index cnstituent becmes temprarily illiquid, unavailable r less liquid, r as a result f legal restrictins r limitatins that apply t the Fund but nt t the Index). The Fund generally may invest up t 20% f its ttal assets (exclusive f any cllateral held frm securities lending) in securities r ther investments nt included in the Index, but which the Fund s sub-adviser believes will help the Fund track the Index. Fr example, the Fund may invest in securities that are nt cmpnents f the Index t reflect varius crprate actins and ther changes t the Index (such as recnstitutins, additins and deletins). T the extent the Index cncentrates (i.e., hlds mre than 25% f its ttal assets) in the securities f a particular industry r grup f related industries, the Fund will cncentrate its investments t apprximately the same extent as the Index. The Fund is expected t cncentrate in Immuntherapy Cmpanies. Principal Investment Risks Yu can lse mney n yur investment in the Fund. The Fund is subject t the risks described belw. Sme r all f these risks may adversely affect the Fund s net asset value per share ( NAV ), trading price, yield, ttal return, and/r ability t meet its bjective. Fr mre infrmatin abut the risks f investing in the Fund, see the sectin in the Fund s Prspectus titled Additinal Infrmatin Abut the Fund Principal Investment Risks. Depsitary Receipt Risk. Depsitary Receipts invlve risks similar t thse assciated with investments in freign securities, such as changes in plitical r ecnmic cnditins f ther cuntries and changes in the exchange rates f freign currencies. Depsitary Receipts listed n U.S. exchanges are issued by banks r trust cmpanies, and entitle the hlder t all dividends and capital gains that are paid ut n the underlying freign shares ( Underlying Shares ). When the Fund invests in Depsitary Receipts as a substitute fr an investment directly in the Underlying Shares, the Fund is expsed t the risk that the Depsitary Receipts may nt prvide a return that crrespnds precisely with that f the Underlying Shares. Equity Market Risk. The equity securities held in the Fund s prtfli may experience sudden, unpredictable drps in value r lng perids f decline in value. This may ccur because f factrs that affect securities markets generally r factrs affecting specific issuers, industries, sectrs r cmpanies in which the Fund invests. Cmmn stcks are susceptible t general stck market fluctuatins and t vlatile increases and decreases in value as market cnfidence in and perceptins f their issuers change. ETF Risks. Authrized Participants, Market Makers, and Liquidity Prviders Cncentratin Risk. The Fund has a limited number f financial institutins that may act as APs. In additin, there may be a limited number f market makers and/r liquidity prviders in the marketplace. T the extent either f the fllwing events ccur, Shares may trade at a material discunt t NAV and pssibly face delisting: (i) APs exit the business r therwise becme unable t prcess creatin and/r redemptin rders and n ther APs step frward t perfrm these services, r (ii) market makers and/r liquidity prviders exit the business r significantly reduce their business activities and n ther entities step frward t perfrm their functins. 3

5 Csts f Buying r Selling Shares. Due t the csts f buying r selling Shares, including brkerage cmmissins impsed by brkers and bid/ask spreads, frequent trading f Shares may significantly reduce investment results and an investment in Shares may nt be advisable fr investrs wh anticipate regularly making small investments. Shares f the Fund May Trade at Prices Other Than NAV. As with all exchange traded funds ( ETFs ), Fund shares may be bught and sld in the secndary market at market prices. Althugh it is expected that the market price f the shares f the Fund will apprximate the Fund s NAV, there may be times when the market price f the shares is mre than the NAV intra-day (premium) r less than the NAV intra-day (discunt) due t supply and demand f the Fund s shares r during perids f market vlatility. This risk is heightened in times f market vlatility r perids f steep market declines. Because certain securities held by the Fund trade n freign exchanges that are clsed when the Fund s primary listing exchange is pen, the Fund is likely t experience premiums and discunts greater than thse f dmestic ETFs. Trading. Althugh Shares are listed fr trading n The Nasdaq Stck Market LLC (the Exchange ) and may be traded n U.S. exchanges ther than the Exchange, there can be n assurance that Shares will trade with any vlume, r at all, n any stck exchange. In stressed market cnditins, the liquidity f Shares may begin t mirrr the liquidity f the Fund s underlying prtfli hldings, which can be significantly less liquid than Shares. Freign Cmpanies Risk. Investments in ADRs that prvide expsure t securities traded in freign markets invlve substantial risk due t limited infrmatin; different accunting, auditing and financial reprting standards; r adverse plitical r ecnmic develpments. Immuntherapy Cmpanies Risk. Immuntherapy Cmpanies are highly dependent n the develpment, prcurement and marketing f drugs and the prtectin and explitatin f intellectual prperty rights. A cmpany s valuatin can als be greatly affected if ne f its prducts is prven r alleged t be unsafe, ineffective r unprfitable. The stck prices f Immuntherapy Cmpanies have been and will likely cntinue t be very vlatile. The csts assciated with develping new drugs can be significant, and the results are unpredictable. Newly develped drugs may be susceptible t prduct bslescence due t intense cmpetitin frm new prducts and less cstly generic prducts. Mrever, the prcess fr btaining regulatry apprval by the U.S. Fd and Drug Administratin r ther gvernmental regulatry authrities is lng and cstly and there can be n assurance that the necessary apprvals will be btained r maintained. Certain cmpanies in which the Fund may invest are nn-u.s. issuers whse securities r ADRs are listed n U.S. exchanges. The internatinal peratins f many Immuntherapy Cmpanies expse them t risks assciated with instability and changes in ecnmic and plitical cnditins, freign currency fluctuatins, changes in freign regulatins and ther risks inherent t internatinal business. Nn-Diversificatin Risk. The Fund is cnsidered t be nn-diversified, which means that it may invest mre f its assets in the securities f a single issuer r a smaller number f issuers than if it were a diversified fund. As a result, the Fund may be mre expsed t the risks assciated with and develpments affecting an individual issuer r a smaller number f issuers than a fund that invests mre widely. This may increase the Fund s vlatility and cause the perfrmance f a relatively smaller number f issuers t have a greater impact n the Fund s perfrmance. Passive Investment Risk. The Fund is nt actively managed and the Fund s sub-adviser wuld nt sell shares f an equity security due t current r prjected underperfrmance f a security, industry r sectr, unless that security is remved frm the Index r the selling f shares f that security is therwise required upn a recnstitutin f the Index in accrdance with the Index methdlgy. Prtfli Turnver Risk. The Fund may actively and frequently trade securities r ther instruments in its prtfli t carry ut its investment strategies. A high prtfli turnver rate increases transactin csts, which may increase the Fund s expenses. Frequent trading may als cause adverse tax cnsequences fr investrs in the Fund due t an increase in shrt-term capital gains. Smaller Cmpanies Risk. The Fund may invest in the securities f smaller-capitalizatin cmpanies. As a result, the Fund may be mre vlatile than funds that invest in larger, mre established cmpanies. The securities f smallercapitalizatin cmpanies generally trade in lwer vlumes and are subject t greater and mre unpredictable price changes than larger capitalizatin stcks r the stck market as a whle. Smaller-capitalizatin cmpanies may be particularly sensitive t changes in interest rates, gvernment regulatin, brrwing csts and earnings. 4

6 Tax Risk. T qualify fr the favrable tax treatment generally available t regulated investment cmpanies ( RICs ), the Fund must satisfy certain diversificatin requirements. In particular, the Fund generally may nt acquire a security if, as a result f the acquisitin, mre than 50% f the value f the Fund s assets wuld be invested in (a) issuers in which the Fund has, in each case, invested mre than 5% f the Fund s assets r (b) issuers mre than 10% f whse utstanding vting securities are wned by the Fund. While the weighting f the Index is nt incnsistent with these rules, given the cncentratin f the Index in a relatively small number f securities, it may nt always be pssible fr the Fund t fully implement a replicatin strategy r a representative sampling strategy while satisfying these diversificatin requirements. The Fund s effrts t satisfy the diversificatin requirements may affect the Fund s executin f its investment strategy and may cause the Fund s return t deviate frm that f the Index, and the Fund s effrts t replicate r represent the Index may cause it inadvertently t fail t satisfy the diversificatin requirements. If the Fund were t fail t satisfy the diversificatin requirements, it culd incur penalty taxes and be frced t dispse f certain assets, r it culd fail t qualify as a regulated investment cmpany. If the Fund were t fail t qualify as a regulated investment cmpany, it wuld be taxed in the same manner as an rdinary crpratin, and distributins t its sharehlders wuld nt be deductible by the Fund in cmputing its taxable incme. Tracking Errr Risk. As with all index funds, the perfrmance f the Fund and its Index may differ frm each ther fr a variety f reasns. Fr example, the Fund incurs perating expenses and prtfli transactin csts nt incurred by the Index. In additin, the Fund may nt be fully invested in the securities f the Index at all times r may hld securities nt included in the Index. Perfrmance The fllwing perfrmance infrmatin indicates sme f the risks f investing in the Fund. The bar chart shws the Fund s perfrmance fr the calendar years ended December 31. The table illustrates hw the Fund s average annual returns fr the 1-year and since inceptin perids cmpare with thse f a brad measure f market perfrmance and the Index. The Fund s past perfrmance, befre and after taxes, des nt necessarily indicate hw it will perfrm in the future. Updated perfrmance infrmatin is als available n the Fund s website at r by calling the Fund tll free at Calendar Year Ttal Return 20% 10% 13.09% 0% -10% -20% -30% % Fr the year-t-date perid ended September 30, 2018, the Fund s ttal return was 4.84%. During the perid f time shwn in the bar chart, the Fund s highest quarterly return was 17.84% fr the quarter ended September 30, 2016 and the lwest quarterly return was 23.82% fr the quarter ended March 31,

7 Average Annual Ttal Returns Fr the Perids Ended December 31, 2017 Since Inceptin 1 Year (10/13/2015) Return Befre Taxes 13.09% -1.52% Return After Taxes n Distributins 12.49% -1.82% Return After Taxes n Distributins and Sale f Fund Shares 7.52% -1.26% Lncar Cancer Immuntherapy Index (reflects n deductin fr fees, expenses, r taxes) 14.05% -0.56% Standard & Pr s 500 (S&P 500 Index) (reflects n deductin fr fees, expenses, r taxes) 21.83% 16.32% After-tax returns are calculated using the histrical highest individual federal marginal incme tax rates during the perid cvered by the table abve and d nt reflect the impact f state and lcal taxes. Actual after-tax returns depend n an investr s tax situatin and may differ frm thse shwn. In certain cases, the figure representing Return After Taxes n Distributins and Sale f Fund Shares may be higher than the ther return figures fr the same perid. A higher after-tax return results when a capital lss ccurs upn redemptin and prvides an assumed tax deductin that benefits the investr. After-tax returns shwn are nt relevant t investrs wh hld their Shares thrugh tax-deferred arrangements such as an individual retirement accunt ( IRA ) r ther tax-advantaged accunts. Prtfli Management Adviser Sub-Adviser Prtfli Managers Purchase and Sale f Shares Exchange Traded Cncepts, LLC Vident Investment Advisry, LLC ( VIA r the Sub-Adviser ) Denise M. Krisk, CFA, President f VIA, has been a prtfli manager f the Fund since its inceptin in Octber, Austin Wen, Prtfli Manager f VIA, has been a prtfli manager f the Fund since December, Shares are listed n a natinal securities exchange, such as The Nasdaq Stck Market, LLC (the Exchange ), and mst investrs will buy and sell Shares f the Fund thrugh brkers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) r less than NAV (discunt). The Fund issues and redeems Shares at NAV nly in large blcks knwn as Creatin Units, which nly Authrized Participants ( APs ) (typically, brker-dealers) may purchase r redeem. Creatin Units generally cnsist f 50,000 Shares, thugh this may change frm time t time. The Fund generally issues and redeems Creatin Units in exchange fr a prtfli f securities clsely apprximating the hldings f the Fund (the Depsit Securities ) and/r a designated amunt f U.S. cash. Tax Infrmatin Fund distributins are generally taxable as rdinary incme, qualified dividend incme, r capital gains (r a cmbinatin), unless yur investment is in an individual retirement accunt ( IRA ) r ther tax-advantaged accunt. Distributins n investments made thrugh tax-deferred arrangements may be taxed later upn withdrawal f assets frm thse accunts. Financial Intermediary Cmpensatin If yu purchase Shares f the Fund thrugh a brker-dealer r ther financial intermediary (such as a bank) (an Intermediary ), the Adviser r its affiliates may pay Intermediaries fr certain activities related t the Fund, including participatin in activities that are designed t make Intermediaries mre knwledgeable abut exchange traded prducts, including the Fund, r fr ther activities, such as marketing, educatinal training r ther initiatives related t the sale r prmtin f Shares. These payments may create a cnflict f interest by influencing the Intermediary and yur salespersn t recmmend the Fund ver anther investment. Any such arrangements d nt result in increased Fund expenses. Ask yur salespersn r visit the Intermediary s website fr mre infrmatin. 6

8 FUND SUMMARY LONCAR CHINA BIOPHARMA ETF Investment Objective The Lncar China BiPharma ETF (the Fund ) seeks t track the perfrmance, befre fees and expenses, f the Lncar China BiPharma Index (the Index ). Fees and Expenses f the Fund This table describes the fees and expenses that yu may pay if yu buy and hld shares f the Fund ( Shares ). This table and the example belw d nt include the brkerage cmmissins that investrs may pay n their purchases and sales f Shares. Annual Fund Operating Expenses (expenses that yu pay each year as a percentage f the value f yur investment) Management Fees 0.79% Distributin and/r Service (12b-1) Fees 0.00% Other Expenses* 0.00% Ttal Annual Fund Operating Expenses 0.79% * Estimated fr the current fiscal year. Expense Example This example is intended t help yu cmpare the cst f investing in the Fund with the cst f investing in ther funds. The example assumes that yu invest $10,000 in the Fund fr the time perids indicated and then redeem all f yur shares at the end f thse perids. The example als assumes that yur investment has a 5% return each year and that the Fund s perating expenses remain the same. Althugh yur actual csts may be higher r lwer, based n these assumptins yur csts wuld be: Prtfli Turnver 1 Year: $81 3 Years: $252 The Fund pays transactin csts, such as cmmissins, when it buys and sells securities (r turns ver its prtfli). A higher prtfli turnver rate may indicate higher transactin csts and may result in higher taxes when Shares are held in a taxable accunt. These csts, which are nt reflected in annual fund perating expenses r in the example, affect the Fund s perfrmance. Fr the fiscal perid August 14, 2018 (cmmencement f peratins) thrugh August 31, 2018, the Fund s prtfli turnver rate was 0% f the average value f its prtfli. Principal Investment Strategy The Fund uses a passive management (r indexing) apprach t track the perfrmance, befre fees and expenses, f the Index. The Index was develped in 2018 by Lncar Investments LLC, the Fund s index prvider ( Lncar r the Index Prvider ), and seeks t track the perfrmance f a mdified equal-weighted prtfli f cmpanies directly invlved in the grwth f China s pharmaceutical and bitech related industries (China s bipharma sectr ). The Index includes pharmaceutical cmpanies, bitech cmpanies, drug manufacturers, diagnstics cmpanies, whlesalers r distributrs f bipharma prducts, and bipharma service prviders ( Bipharma Cmpanies ). Lncar China BiPharma Index The Index is cnstructed frm the universe f Nasdaq- r Hng Kng Stck Exchange-listed cmpanies identified by the Index methdlgy as Bipharma Cmpanies. T maintain a fcus n innvatin in the Chinese bipharma sectr, cmpanies in the Index universe are screened t eliminate thse that fcus strictly n manufacturing active pharmaceutical ingredients. The remaining cmpanies are then screened accrding t the Index rules t include nly cmpanies (i) whse principal crprate headquarters is in China r (ii) fr which at least 51% f the value f their prduct revenue and pipeline is tied directly t the Chinese market (such remaining cmpanies, China Bipharma Cmpanies ). The pl f China Bipharma Cmpanies is then screened fr investibility leaving nly cmpanies having a market capitalizatin f at least USD$200 millin, meeting a minimum liquidity threshld, and that are nt publicly knwn t currently be under frmal investigatin by a gvernment r regulatry entity. At the time f each recnstitutin f the Index n the secnd Mnday f each February and August (beginning in February 2019), each cnstituent is weighted equally, subject t the fllwing adjustments applied depending n a cmpany s market capitalizatin t emphasize the rle f larger cmpanies in the Index: 7

9 Market Capitalizatin (USD$) Weight Adjustment Factr $10 billin r mre 140% Between $1 billin and $10 billin 100% Frm $200 millin t $1 billin 70% As f Nvember 14, 2018, the Index cntained 28 cmpanies, 6 f which were listed n Nasdaq and 22 f which were listed n the Hng Kng Stck Exchange. As f Nvember 14, 2018, the three largest cmpnents f the Index were Sinpharm Grup C Ltd (6.41%), CSPC Pharmaceutical Grup Ltd (4.97%), and SSY Grup (4.94%). The Fund s Investment Strategy The Fund attempts t invest all, r substantially all, f its assets in the cmpnent securities and depsitary receipts that make up the Index. Under nrmal circumstances, at least 80% f the Fund s ttal assets (exclusive f any cllateral held frm securities lending) will be invested in the cmpnent securities f the Index r in depsitary receipts representing such cmpnent securities. Exchange Traded Cncepts, LLC ( ETC r the Adviser ), the Fund s investment adviser, expects that, ver time, the crrelatin between the Fund s perfrmance and that f the Index, befre fees and expenses, will be 95% r better. The Fund will generally use a replicatin strategy t achieve its investment bjective, meaning it generally will invest in all f the cmpnent securities f the Index in apprximately the same prprtin as in the Index. Hwever, the Fund may use a representative sampling strategy, meaning it may invest in a sample f the securities in the Index whse risk, return, and ther characteristics clsely resemble the risk, return, and ther characteristics f the Index as a whle, when the Fund s sub-adviser believes it is in the best interests f the Fund (e.g., when replicating the Index invlves practical difficulties r substantial csts, an Index cnstituent becmes temprarily illiquid, unavailable r less liquid, r as a result f legal restrictins r limitatins that apply t the Fund but nt t the Index). The Fund generally may invest up t 20% f its ttal assets (exclusive f any cllateral held frm securities lending) in securities r ther investments nt included in the Index, but which the Fund s sub-adviser believes will help the Fund track the Index. Fr example, the Fund may invest in securities that are nt cmpnents f the Index t reflect varius crprate actins and ther changes t the Index (such as recnstitutins, additins and deletins). T the extent the Index cncentrates (i.e., hlds mre than 25% f its ttal assets) in the securities f a particular industry r grup f related industries, the Fund will cncentrate its investments t apprximately the same extent as the Index. The Adviser expects that the Index, and cnsequently the Fund, will generally be cncentrated in the securities f bitech and pharmaceutical cmpanies. Principal Investment Risks Yu can lse mney n yur investment in the Fund. The Fund is subject t the risks described belw. Sme r all f these risks may adversely affect the Fund s net asset value per share ( NAV ), trading price, yield, ttal return, and/r ability t meet its bjective. Fr mre infrmatin abut the risks f investing in the Fund, see the sectin in the Fund s Prspectus titled Additinal Infrmatin Abut the Fund Principal Investment Risks. China Bipharma Risk. The bipharmaceutical industry in China is strictly regulated and changes in such regulatins, including banning r limiting certain prducts, may have a material adverse effect n the peratins, revenues, and prfitability f Bipharma Cmpanies. The laws and regulatins applicable t the prcess f administrative apprval f medicine and its prductin in China require entities prducing bipharma prducts t cmply strictly with certain standards and specificatins prmulgated by the gvernment. In the event that a prduct is discvered t be nt cmpliant with the gvernment s standards and specificatins, the health department may revke its apprval f such prduct, r therwise limit the use f such prduct. Additinally, the prcess f cnducting research and varius tests n new prducts befre btaining a new medicine certificate frm the Natinal Medical Prducts Administratin ( NMPA ) and subsequent prcedures may take several years, and the price f certain bipharma prducts may be regulated in China. Changes in these laws and regulatins, including banning r limiting certain prducts, culd have a material adverse effect n the peratins, revenues, and prfitability f Bipharma Cmpanies held by the Fund. Currency Exchange Rate Risk. The Fund s assets include investments denminated in nn-u.s. currencies r in securities that prvide expsure t such currencies. Changes in currency exchange rates and the relative value f nn- U.S. currencies will affect the value f the Fund s investment and the value f yur Shares. Currency exchange rates can be very vlatile and can change quickly and unpredictably. As a result, the value f an investment in the Fund may change quickly and withut warning and yu may lse mney. 8

10 Depsitary Receipt Risk. Depsitary Receipts invlve risks similar t thse assciated with investments in freign securities, such as changes in plitical r ecnmic cnditins f ther cuntries and changes in the exchange rates f freign currencies. Depsitary Receipts listed n U.S. exchanges are issued by banks r trust cmpanies, and entitle the hlder t all dividends and capital gains that are paid ut n the underlying freign shares ( Underlying Shares ). When the Fund invests in Depsitary Receipts as a substitute fr an investment directly in the Underlying Shares, the Fund is expsed t the risk that the Depsitary Receipts may nt prvide a return that crrespnds precisely with that f the Underlying Shares. Equity Market Risk. The equity securities held in the Fund s prtfli may experience sudden, unpredictable drps in value r lng perids f decline in value. This may ccur because f factrs that affect securities markets generally r factrs affecting specific issuers, industries, r sectrs in which the Fund invests. The trading prices f equity securities and ther instruments fluctuate in respnse t a variety f factrs. The Fund s NAV and market price may fluctuate significantly in respnse t these and ther factrs. As a result, an investr culd lse mney ver shrt r lng perids f time. ETF Risks. Authrized Participants, Market Makers, and Liquidity Prviders Cncentratin Risk. The Fund has a limited number f financial institutins that may act as APs. In additin, there may be a limited number f market makers and/r liquidity prviders in the marketplace. T the extent either f the fllwing events ccur, Shares may trade at a material discunt t NAV and pssibly face delisting: (i) APs exit the business r therwise becme unable t prcess creatin and/r redemptin rders and n ther APs step frward t perfrm these services, r (ii) market makers and/r liquidity prviders exit the business r significantly reduce their business activities and n ther entities step frward t perfrm their functins. Csts f Buying r Selling Shares. Due t the csts f buying r selling Shares, including brkerage cmmissins impsed by brkers and bid/ask spreads, frequent trading f Shares may significantly reduce investment results and an investment in Shares may nt be advisable fr investrs wh anticipate regularly making small investments. Shares f the Fund May Trade at Prices Other Than NAV. As with all exchange traded funds ( ETFs ), Fund shares may be bught and sld in the secndary market at market prices. Althugh it is expected that the market price f the shares f the Fund will apprximate the Fund s NAV, there may be times when the market price f the shares is mre than the NAV intra-day (premium) r less than the NAV intra-day (discunt) due t supply and demand f the Fund s shares r during perids f market vlatility. This risk is heightened in times f market vlatility r perids f steep market declines. Because certain securities held by the Fund trade n freign exchanges that are clsed when the Fund s primary listing exchange is pen, the Fund is likely t experience premiums and discunts greater than thse f dmestic ETFs. Trading. Althugh Shares are listed fr trading n The Nasdaq Stck Market LLC (the Exchange ) and may be traded n U.S. exchanges ther than the Exchange, there can be n assurance that Shares will trade with any vlume, r at all, n any stck exchange. In stressed market cnditins, the liquidity f Shares may begin t mirrr the liquidity f the Fund s underlying prtfli hldings, which can be significantly less liquid than Shares. Freign Securities Risk. Investments in nn-u.s. securities invlve certain risks that may nt be present with investments in U.S. securities. Fr example, investments in nn-u.s. securities may be subject t risk f lss due t freign currency fluctuatins r t plitical r ecnmic instability. Investments in nn-u.s. securities als may be subject t withhlding r ther taxes and may be subject t additinal trading, settlement, custdial, and peratinal risks. These and ther factrs can make investments in the Fund mre vlatile and ptentially less liquid than ther types f investments. Gegraphic Investment Risk. T the extent the Fund invests a significant prtin f its assets in the securities f cmpanies f a single cuntry r regin, such as China, it is mre likely t be impacted by events r cnditins affecting that cuntry r regin. China-Specific Risk. Investments in Chinese issuers subject the Fund t risks specific t China. China may be subject t cnsiderable degrees f ecnmic, plitical, and scial instability. China is a develping market and demnstrates significantly higher vlatility frm time t time in cmparisn t develped markets. Over the past 25 years, the Chinese gvernment has undertaken refrm f ecnmic and market practices and is expanding the sphere f private wnership f prperty in China. Hwever, Chinese markets generally cntinue 9

11 t experience inefficiency, vlatility, and pricing anmalies resulting frm gvernmental influence, a lack f publicly available infrmatin, and/r plitical and scial instability. Internal scial unrest r cnfrntatins with ther neighbring cuntries, including military cnflicts in respnse t such events, may als disrupt ecnmic develpment in China and result in a greater risk f currency fluctuatins, currency cnvertibility, interest rate fluctuatins, and higher rates f inflatin. Exprt grwth cntinues t be a majr driver f China s rapid ecnmic grwth. Reductin in spending n Chinese prducts and services, institutin f tariffs r ther trade barriers, r a dwnturn in any f the ecnmies f China s key trading partners may have an adverse impact n the Chinese ecnmy. Geplitical Risk. Sme cuntries and regins in which the Fund invests have experienced security cncerns, war r threats f war and aggressin, terrrism, ecnmic uncertainty, natural and envirnmental disasters and/r systemic market dislcatins that have led, and in the future may lead, t increased shrt-term market vlatility and may have adverse lng-term effects n the U.S. and wrld ecnmies and markets generally, each f which may negatively impact the Fund s investments. Market Capitalizatin Risk Large-Capitalizatin Investing. The securities f large-capitalizatin cmpanies may be relatively mature cmpared t smaller cmpanies and therefre subject t slwer grwth during times f ecnmic expansin. Large-capitalizatin cmpanies may als be unable t respnd quickly t new cmpetitive challenges, such as changes in technlgy and cnsumer tastes. Mid-Capitalizatin Investing. The securities f mid-capitalizatin cmpanies may be mre vulnerable t adverse issuer, market, plitical, r ecnmic develpments than securities f large-capitalizatin cmpanies. The securities f mid-capitalizatin cmpanies generally trade in lwer vlumes and are subject t greater and mre unpredictable price changes than large capitalizatin stcks r the stck market as a whle. Small-Capitalizatin Investing. The securities f small-capitalizatin cmpanies may be mre vulnerable t adverse issuer, market, plitical, r ecnmic develpments than securities f large- r mid-capitalizatin cmpanies. The securities f small-capitalizatin cmpanies generally trade in lwer vlumes and are subject t greater and mre unpredictable price changes than large- r mid-capitalizatin stcks r the stck market as a whle. There is typically less publicly available infrmatin cncerning smaller-capitalizatin cmpanies than fr larger, mre established cmpanies. New Fund Risk. The Fund is a recently rganized, nn-diversified management investment cmpany with n perating histry. As a result, prspective investrs have n track recrd r histry n which t base their investment decisin. Nn-Diversificatin Risk. The Fund is cnsidered t be nn-diversified, which means that it may invest mre f its assets in the securities f a single issuer r a smaller number f issuers than if it were a diversified fund. As a result, the Fund may be mre expsed t the risks assciated with and develpments affecting an individual issuer r a smaller number f issuers than a fund that invests mre widely. This may increase the Fund s vlatility and cause the perfrmance f a relatively smaller number f issuers t have a greater impact n the Fund s perfrmance. Passive Investment Risk. The Fund is nt actively managed and the Fund s sub-adviser wuld nt sell shares f an equity security due t current r prjected underperfrmance f a security, industry r sectr, unless that security is remved frm the Index r the selling f shares f that security is therwise required upn a recnstitutin f the Index in accrdance with the Index methdlgy. Prtfli Turnver Risk. The Fund may trade all r a significant prtin f the securities in its prtfli in cnnectin with each rebalance and recnstitutin f its Index. A high prtfli turnver rate increases transactin csts, which may increase the Fund s expenses. Frequent trading may als cause adverse tax cnsequences fr investrs in the Fund due t an increase in shrt-term capital gains. Sectr Risk. T the extent the Fund invests mre heavily in particular sectrs f the ecnmy, its perfrmance will be especially sensitive t develpments that significantly affect thse sectrs. The Fund s investments will be cncentrated in an industry r grup f industries t the extent the Index is s cncentrated. The Fund may be susceptible t an increased risk f lss, including lsses due t adverse ccurrences affecting the Fund mre than the market as a whle, t the extent that the Fund s investments are cncentrated in the securities f a particular industry, grup f industries, r sectr. A significant prtin f the Fund s assets will be invested in the bitechnlgy and pharmaceutical industries, which expse the Fund t the risks f the fllwing sectr: 10

12 Healthcare Sectr Risk. Cmpanies in the health care sectr are subject t extensive gvernment regulatin and their prfitability can be significantly affected by restrictins n gvernment reimbursement fr medical expenses, rising csts f medical prducts and services, pricing pressure (including price discunting), limited prduct lines, and an increased emphasis n the delivery f healthcare thrugh utpatient services. The csts assciated with develping new drugs can be significant, and the results are unpredictable. Newly develped drugs may be susceptible t prduct bslescence due t intense cmpetitin frm new prducts and less cstly generic prducts. Mrever, the prcess fr btaining regulatry apprval by the U.S. Fd and Drug Administratin ( FDA ), NMPA, r ther freign r dmestic gvernmental regulatry authrities is lng and cstly and there can be n assurance that the necessary apprvals will be btained r maintained. The values f many cmpanies in the health care sectr are als dependent n the develpment, prtectin and explitatin f intellectual prperty rights and ther prprietary infrmatin, and the prfitability f these cmpanies may be significantly affected by such things as the expiratin f patents r the lss f, r the inability t enfrce, intellectual prperty rights. Tax Risk. T qualify fr the favrable tax treatment generally available t a regulated investment cmpany ( RIC ), the Fund must satisfy, amng ther requirements described in the SAI, certain diversificatin requirements. Given the cncentratin f the Index in a relatively small number f securities, it may nt always be pssible fr the Fund t fully implement a replicatin strategy r a representative sampling strategy while satisfying these diversificatin requirements. The Fund s effrts t replicate r represent the Index may cause it inadvertently t fail t satisfy the diversificatin requirements. If the Fund were t fail t satisfy the diversificatin requirements, it culd be eligible fr relief prvisins if the failure is due t reasnable cause and nt willful neglect and if a penalty tax is paid with respect t each failure t satisfy the applicable requirements. Additinally, relief is prvided fr certain de minimis failures f the diversificatin requirements where the Fund crrects the failure within a specified perid. If the Fund were t fail t qualify as a RIC fr a tax year, and the relief prvisins are nt available, it wuld be taxed in the same manner as an rdinary crpratin, and distributins t its sharehlders wuld nt be deductible by the Fund in cmputing its taxable incme. In such case, its sharehlders wuld be taxed as if they received rdinary dividends, althugh crprate sharehlders culd be eligible fr the dividends received deductin (subject t certain limitatins) and individuals may be able t benefit frm the lwer tax rates available t qualified dividend incme. In additin, the Fund culd be required t recgnize unrealized gains, pay substantial taxes and interest, and make substantial distributins befre requalifying as a RIC. Tracking Errr Risk. As with all index funds, the perfrmance f the Fund and its Index may differ frm each ther fr a variety f reasns. Fr example, the Fund incurs perating expenses and prtfli transactin csts nt incurred by the Index. In additin, the Fund may nt be fully invested in the securities f the Index at all times r may hld securities nt included in the Index. Perfrmance The Fund is new and therefre des nt have a perfrmance histry fr a full calendar year. In the future, perfrmance infrmatin fr the Fund will be presented in this sectin. Updated perfrmance infrmatin is als available n the Fund s website at Prtfli Management Adviser Sub-Adviser Prtfli Managers Purchase and Sale f Shares Exchange Traded Cncepts, LLC Vident Investment Advisry, LLC ( VIA r the Sub-Adviser ) Denise M. Krisk, CFA, President f VIA, and Habib Mudachiru, FRM, Senir Prtfli Manager f VIA, have been prtfli managers f the Fund since its inceptin in 2018 Shares are listed n a natinal securities exchange, such as the Exchange, and mst investrs will buy and sell Shares thrugh brkers at market prices, rather than NAV. Because Shares trade at market prices rather than NAV, Shares may trade at a price greater than NAV (premium) r less than NAV (discunt). The Fund issues and redeems Shares at NAV nly in large blcks knwn as Creatin Units, which nly Authrized Participants ( APs ) (typically, brker-dealers) may purchase r redeem. Creatin Units generally cnsist f 50,000 Shares, thugh this may change frm time t time. The Fund generally issues and redeems Creatin Units in exchange fr a prtfli f securities clsely apprximating the hldings f the Fund (the Depsit Securities ) and/r a designated amunt f U.S. cash. 11

13 Tax Infrmatin Fund distributins are generally taxable as rdinary incme, qualified dividend incme, r capital gains (r a cmbinatin), unless yur investment is in an individual retirement accunt ( IRA ) r ther tax-advantaged accunt. Distributins n investments made thrugh tax-deferred arrangements may be taxed later upn withdrawal f assets frm thse accunts Financial Intermediary Cmpensatin If yu purchase Shares thrugh a brker-dealer r ther financial intermediary (such as a bank) (an Intermediary ), the Adviser r its affiliates may pay Intermediaries fr certain activities related t the Fund, including participatin in activities that are designed t make Intermediaries mre knwledgeable abut exchange traded prducts, including the Fund, r fr ther activities, such as marketing, educatinal training r ther initiatives related t the sale r prmtin f Shares. These payments may create a cnflict f interest by influencing the Intermediary and yur salespersn t recmmend the Fund ver anther investment. Any such arrangements d nt result in increased Fund expenses. Ask yur salespersn r visit the Intermediary s website fr mre infrmatin. 12

14 ADDITIONAL INFORMATION ABOUT THE INDEXES Frm time t time, each Index may include mre r less than the expected number f cmpanies as a result f events such as acquisitins, spin-ffs and ther crprate actins. Lncar is nt affiliated with the Adviser, the Sub-Adviser, the Fund s distributr, r any f their respective affiliates. Lncar prvides infrmatin t each Fund abut the cnstituents f the applicable Index and des nt prvide investment advice with respect t the desirability f investing in, purchasing r selling securities. The Adviser has entered int a licensing agreement with Lncar pursuant t which the Adviser pays a fee t use each Index. The Adviser is sub-licensing rights t each Index t the applicable Fund at n charge. The Index Calculatin Agent is Indxx, LLC, which is nt affiliated with either Fund, the Adviser, the Sub-Adviser, the Index Prvider, r the Fund s distributr. The Index Calculatin Agent prvides infrmatin t each Fund abut the cnstituents f the applicable Index and des nt prvide investment advice with respect t the desirability f investing in, purchasing r selling securities. If an Index cnstituent s shares are tendered r discntinued due t a merger r acquisitin, any funds received frm the tendered r discntinued security will be distributed t the remaining Index cnstituent s pr rata. ADDITIONAL INFORMATION ABOUT THE FUNDS Investment Objective Each f the Cancer Immuntherapy Fund and China BiPharma Fund s (each a Fund and, cllectively, the Funds ) investment bjective has been adpted as a nn-fundamental investment plicy and may be changed withut sharehlder apprval upn written ntice t sharehlders. Principal Investment Strategy f the China BiPharma Fund The China BiPharma Fund has adpted the fllwing plicy t cmply with Rule 35d-1 under the Investment Cmpany Act f Such plicy has been adpted as a nn-fundamental investment plicy and may be changed withut sharehlder apprval upn 60 days written ntice t sharehlders. Under nrmal circumstances, at least 80% f the China BiPharma Fund s net assets, plus brrwings fr investment purpses, will be invested in cmpanies in the bitechnlgy r pharmaceutical sectrs and ecnmically tied t China (the 35d-1 Plicy ). Fr purpses f the China BiPharma Fund s 35d-1 Plicy, the China BiPharma Fund cnsiders cmpanies that derive a majrity f their revenue r prfits frm prducts r services, r have a majrity f their assets invested in activities, that are predminantly tied t the develpment, sale, r distributin f regulated bilgic r pharmaceutical medicines intended fr human therapeutic use t be part f the bitechnlgy r pharmaceutical sectrs. Additinally, fr purpses f the China BiPharma Fund s 35d-1 Plicy, the Fund cnsiders the fllwing securities t be ecnmically tied t China: (i) securities f cmpanies that are rganized under the laws f China r that maintain their principal place f business in China; (ii) securities that are traded principally in China; and (iii) securities f issuers that derive at least 50% f their revenues r prfits frm gds prduced r sld, investments made, r services perfrmed in China, that have at least 50% f their assets in China, r that have at least 50% f the value f their prduct pipeline tied directly t the Chinese market. Principal Investment Risks As with any investment, there is a risk that yu culd lse all r a prtin f yur investment in a Fund. The fllwing risks culd affect the value f yur investment in a Fund: China Bipharma Risk (China BiPharma Fund nly). The bipharmaceutical industry in China is strictly regulated and changes in such regulatins, including banning r limiting certain prducts, may have a material adverse effect n the peratins, revenues, and prfitability f Bipharma Cmpanies. The laws and regulatins applicable t the prcess f administrative apprval f medicine and its prductin in China require entities prducing bipharma prducts t cmply strictly with certain standards and specificatins prmulgated by the gvernment. In the event that a prduct is discvered t be nt cmpliant with the gvernment s standards and specificatins, the health department may revke its apprval f such prduct, r therwise limit the use f such prduct. Additinally, the prcess f cnducting research and varius tests n new prducts befre btaining a new medicine certificate frm the NMPA and subsequent prcedures may take several years, and the price f certain bipharma prducts may be regulated in China. Changes in these laws and regulatins, including banning r limiting certain prducts, culd have a material adverse effect n the peratins, revenues, and prfitability f Bipharma Cmpanies held by the Fund. Currency Exchange Rate Risk (China BiPharma Fund nly). Changes in currency exchange rates and the relative value f nn-u.s. currencies will affect the value f the Fund s investments and the value f yur Shares. Because the Fund s NAV is determined n the basis f U.S. dllars, the U.S. dllar value f yur investment in the Fund may g dwn if the 13