QRAFT AI Enhanced U.S. Large Cap Momentum ETF (AMOM) Exchange: NYSE ARCA

The Fund is an actively-managed exchange-traded fund ("ETF") that seeks to achieve its investment objective by investing at least 80% of its net assets, plus the amounts of any borrowings for investment purposes, in securities of U.S.-listed large capitalization companies. The Fund defines large capitalization companies as companies having a market capitalization in excess of $4 billion at the time of purchase. The Fund invests in equity securities of such companies, including common stock, American Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs"). The Fund's adviser, Exchange Traded Concepts, LLC (the "Adviser") uses an investment process based on a proprietary artificial intelligence security selection process that extracts patterns from analyzing data, as discussed below, developed by QRAFT Technologies, Inc. ("Qraft"). Qraft is a South Korea-based provider of artificial intelligence investment systems and currently offers services to various financial institutions in Korea. The Adviser has licensed Qraft's proprietary artificial intelligence security selection process for the management of the Fund.   In pursuing the Fund's investment objective, the Adviser consults a database generated by Qraft's AI Quantitative Investment System ("AQUA"), which automatically selects and weights portfolios of U.S. large cap companies to provide exposure to a portfolio of 50 companies that have had higher residual returns relative to their similar-sized peers (based on market capitalization) over a rolling 3 to 36 month period. A stock's "residual return" equals its total return after removal of market, size and value risks factored into portfolio construction under conventional portfolio management. Use of "residual momentum" rather than conventional momentum to construct a portfolio is based on the stock management theory that stocks with higher residual returns have the potential to perform better and more consistently over time than conventional momentum stocks. AQUA's AI system finds a period within those 3 to 36 months that resulted in the best performance of stocks in the past and ranks those stocks by their residual returns (the "Momentum Database"). AQUA then uses a proprietary statistical analysis method to calculate and identify a set of parameters that contributed to the stocks' outperformance during the period. AQUA then assigns weightings to stocks within the Momentum Database to select a portfolio of investments that, based on AQUA's analysis, are expected to perform well in the future under the assumption that the same optimal parameters will occur or continue in the future.   In creating the eligible universe for the Momentum Database, AQUA utilizes automated data feed and data processing using deep learning technologies (i.e., exposure to and processing large amounts of data). First, each month, AQUA automatically sends queries to and collects from various data vendors company fundamental data (such as historical stock prices and other financial information) of all companies listed on the New York Stock Exchange and NASDAQ as well as macroeconomic data. AQUA processes and stores newly received data with stored historical data. AQUA analyzes the historical price data of the top 20% of U.S.-listed companies based on market capitalization. The final portfolios are then delivered to the Momentum Database for use by the Adviser. AQUA repeats such processes on the first business day of each month, and the Adviser makes or changes investments in the Fund based on the newly generated information.   While it is anticipated that the Adviser will purchase and sell securities based on recommendations of the Momentum Database, the Adviser has full discretion over investment decisions for the Fund. Therefore, the Adviser has full decision-making power not only if it identifies a potential technical issue or error with the Momentum Database, but also if it believes that the recommended portfolio does not further the Fund's investment objective or fails to take into account company events such as corporate actions, mergers and spin-offs. Additionally, the Adviser has discretion over the amount of cash maintained in the Fund's portfolio and the reinvestment of dividends in the Fund's portfolio, subject to the Fund's distribution requirements as a regulated investment company for federal income tax purposes. See "Federal Income Taxes" in the Fund's SAI for a more complete discussion. Notwithstanding the foregoing, the Fund limits the weighting of a single company to 10% and no more than 40% of the Fund's assets may be invested in securities with a more than 5% weighting in the Fund's portfolio. Due to the frequency of the adjustment of the portfolios in the Momentum Database, the Adviser expects that the Fund will frequently purchase and sell shares of securities.   While investing in a particular market sector is not a strategy of the Fund, its portfolio may be significantly invested in one or more sectors as a result of the security selection decisions made pursuant to its strategy. As of July 31, 2020, a significant portion of the Fund's assets consisted of securities of companies in the information technology and health care sectors, although this may change from time to time. The Fund is non-diversified and may invest a greater percentage of its assets in a particular issuer than a diversified fund.