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ALPS Launches U.S. Equity High Volatility Put Write Index Fund

Equity Risk: The value of the Fund's options are based on the value of the underlying stocks, so the Fund is exposed to equity risk that the value of the stocks underlying options held by the Fund will fall. If the value of the stocks underlying the Fund’s options increases, however, the Fund’s returns will not increase accordingly.

Implied Volatility Risk. When the Fund writes options and receives premium it also incurs corresponding liability representing the value of the options until the options cash settle or expire worthless. The options values are partly based on the volatility used by dealers to price such options, so increases in the implied volatility of such options will cause the value of such options to increase, which will result in a corresponding increase in the liabilities of the Fund and a decrease the Fund’s NAV.

Tax Efficiency Risk. Unlike most exchange-traded funds, the Fund effects creations and redemptions for cash, rather than in-kind redemptions. If the Fund recognizes gains on sales, this generally will cause the Fund to recognize gains than would otherwise be required if it were able to distribute portfolio securities in-kind. As such, investment in the Fund may be less tax-efficient than investments in conventional exchange-traded funds.

Non-Correlation Risk. The Fund’s return may not match the return of the Index for a number of reasons. For example, an option sold by the Fund may be exercised prior to its expiration, which will result in the Fund buying the underlying stock at that time and holding the stock until the end of the 60-day period, but the Index will not reflect the early exercise of the option at that time. The Fund may also need to sell additional options (or terminate certain options it has already sold) prior to the end of the 60-day period to reflect Fund inflows or outflows; the costs of doing so may also contribute to tracking error. In addition, the Fund incurs a number of operating expenses not applicable to the Index and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of the Index.

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