ETFS DIVERSIFIEDFACTOR DEVELOPED EUROPE INDEX FUND (SBEU) Exchange: NYSE ARCA

DELISTED - Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in the component securities of the Index. The Fund may invest the remainder of its assets in cash and cash equivalents, such as repurchase agreements or money market instruments, or other instruments that Vident Investment Advisory, LLC, the sub-adviser to the Fund (the “Sub-Adviser”), believes will help the Fund track the Index.   Diversified-Factor Developed Europe Index   The Index is comprised of approximately 500 European listed stocks which are selected and weighted according to a proprietary methodology developed by EDHEC Risk Institute Asia Ltd. (“EDHEC” of the “Index Provider”). The Index is an equally weighted composition of 4 sub-indices within each of which the stocks are weighted according to the average weighting of certain diversification strategies (further details on the sub-indices and the diversification strategies are set out below). The universe of securities which may be selected for inclusion in a sub-index (and therefore the Index) is 500 of the largest (by market capitalization) and most liquid (based on trading ratios and trading volumes) stocks listed on exchanges in each of the following European countries: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The selection of the stocks for the sub-indices is not designed necessarily to reduce the number of stocks to ultimately be included in the Index but rather to alter the weightings in which they are applied through the use of factor-based selection and diversification strategies in the composition of the sub-indices. Each of the sub-indices selects stocks from this universe according to a particular strategy. The four factor-based selections represented by the sub-indices are: (i)Value – ranks the stocks in the universe according to their book market value, divides the stocks into those with high book to market value and low book to market value and selects only those stocks with a high book to market value (ii)High momentum – ranks the stocks in the universe according to their past one-year-minus-one-month total return, dividing the results into high momentum stocks and low momentum stocks and selects only the high momentum stocks (iii)Low volatility – ranks the according to historic volatility (estimated over the past 104 weeks), dividing the stocks into high volatility stocks and low volatility stocks and selects only the low volatility stocks; and (iv)Mid-cap – ranks the stocks according to their free-float market capitalization, dividing the stocks into large cap stocks and mid cap stocks and selecting the mid-cap stocks Within each sub-index, the stocks selected from the universe are weighted based on the simple average of the weightings produced by the application of the following weighting diversification strategies: (i)Maximum Deconcentration – weights stocks with the aim of combining the set of stocks with the lowest possible portfolio concentration (ii)Diversified Risk Weighted – attempts to equalise the contribution of individual stocks to the total volatility of the index, assuming uniform correlations across stocks (iii)Maximum Decorrelation – aims at minimising the volatility of the index without considering the volatility of individual stocks but only their pair wise correlations (iv)Efficient Minimum Volatility – aims at minimising the volatility of the index (by considering both individual volatilities and pair wise correlations) while ensuring a high degree of diversification for the index (v)Efficient Maximum Sharpe Ratio – aims at combining stocks to produce an index that offers the highest possible risk-adjusted expected returns The Fund employs a “replication strategy” approach to try to achieve its investment objective. “Replication strategy” is a passive indexing strategy that involves investing in all the securities of the Index in approximately the same proportion as the Index. However, the Fund may utilize a representative sampling strategy with respect to the Index when a replication strategy may be detrimental to shareholders, such as when there are practical difficulties or substantial costs involved in compiling a portfolio of all the equity securities in the Index. In general, if the Fund is performing as designed, the return of the Index will dictate the return for the Fund. The Fund pursues its investment objective regardless of the market conditions and does not take defensive positions. The Fund seeks to be fully invested at all times and will concentrate its investment (i.e., hold 25% or more of its total assets) in a particular industry or group of industries to approximately the same extent as the Index is so concentrated. Currently, the Index and the Fund are not concentrated.   The Index Provider is not affiliated with the Fund, the Adviser or the Sub-Adviser. The Index Provider determines the composition of the Index, relative weightings of the securities in the Index and publishes information regarding the market value of the Index.   The Adviser expects that, over time, the correlation between the Fund’s performance and that of the Index, before fees and expenses, will exceed 95%. A correlation of 100% would represent a perfect correlation. Because the Fund primarily uses a replication strategy, it can be expected to have greater correlation to the Index than if it uses a representative replication strategy.