EQL DISCLOSURE
RISKS OF UNDERLYING SECTOR ETFS
Investments in the Fund are subject to the risks associated with an investment in the Underlying Sector ETFs. These include the following risks. See also the section “Additional Risks” for additional risk factors.
Market Risk
The shares of the Underlying Sector ETFs are subject to market fluctuations
caused by such factors as economic, political, regulatory or market developments,
changes in interest rates and perceived trends in stock prices. Overall
stock values could decline generally or could underperform other investments.
Market Trading Risk
An investment in an Underlying Sector ETF involves risks similar to those of investing in any fund of equity securities, fixed income securities and/or commodities traded on an exchange. You should anticipate that the value of the Shares will decline, more or less, in correlation with any decline in value of the Underlying Sector ETFs.
Non-Correlation Risk
An Underlying Sector ETF may not match the return of its underlying index for
a number of reasons. For example, an Underlying ETF may incur a number of
operating expenses not applicable to its underlying index, and incur costs in
buying and selling securities, especially when rebalancing its securities holdings
to reflect changes in composition of its underlying index. In addition, the
performance of an Underlying Sector ETF and its underlying index may vary due
to asset valuation differences and differences between the Underlying Sector
ETF's portfolio and its underlying index resulting from legal restrictions (such as
diversification requirements that apply to an Underlying Sector ETF but not to
its underlying index).
Since the Underlying Index is not subject to the diversification requirements to which the Fund must adhere, the Fund may be required to deviate its investments from the securities and relative weightings of the Underlying Index. The Fund may not invest in certain securities included in the Underlying Index due to liquidity constraints. Liquidity constraints may delay the Fund's purchase or sale of securities included in the Underlying Index. For tax efficiency purposes, the Fund may sell certain securities to realize losses, causing it to deviate from the Underlying Index.
An Underlying Sector ETF may not be fully invested at times, either as a result of cash flows into the Underlying Sector ETF or reserves of cash held by the Underlying Sector ETF to meet redemptions and expenses. If an Underlying Sector ETF utilizes a sampling approach or futures or other derivative positions, its return may not correlate as well with the return on its underlying index, as would be the case if it purchased all of the stock in its underlying index with the same weightings as the underlying index.
Replication Management Risk
Unlike many investment companies, the Underlying Sector ETFs are not “actively”
managed. Therefore, they would not necessarily sell a stock because
the stock's issuer was in financial trouble unless that stock is removed from its
underlying index.
Equity Securities Risk
The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Large Capitalization Company Risk
Returns of large U.S. companies could trail the returns on investments in stocks of smaller companies.
Liquidity Risk
Liquidity risk exists when particular investments are difficult to purchase or sell. If an Underlying Sector ETF invests in securities that become illiquid, it may reduce the returns of the Underlying Sector ETF because the Underlying Sector ETF may be unable to sell the illiquid securities at an advantageous time or price.
