The Fund employs a passive management or indexing investment approach designed to track the performance of the Index. The Vident Core U.S. Bond Index seeks to improve the overall mix of credit quality, interest rate and yield as compared to traditional U.S. core bond indices. The Index diversifies interest rate and credit risks across all core U.S. bond sectors, including U.S. Treasuries, U.S. agency securities, U.S. agency mortgage-backed securities (MBS), and investment-grade corporate bonds, as well as non-core fixed income sectors such as high-yield corporate bonds (also known as junk bonds) and Treasury Inflation-Protected Securities (TIPS). While diversification among sectors is an important factor that will drive the risk/ return profile of the strategy, another source of risk management is derived from the rules-based process that systematically over- or under-weights each sector based on valuations of each sector, historical relative valuations across sectors, sector default rates, and other quantitative factors.