• The Index is a modified market-capitalization weighted index designed to tactically allocate exposure to one of three allocations, based upon daily relative strength readings using point and figure charts.^
• The Index always holds exactly one of the three possible positions:
  • All the component securities in the Nasdaq US 500 Large Cap Index,
  • All the component securities in the Nasdaq US 500 Large Cap Equal Weight or
  • All the component securities in the First Trust Enhanced Short Maturity ETF (FTSM).
• To construct the Index, the closing price of the Nasdaq US 500 Large Cap Index and the Nasdaq US 500 Large Cap Equal Weight Index are compared against each other on a relative strength basis.
• The equity index which exhibits the best point and figure relative strength is compared next against a cash-like proxy using a relative strength chart.
  • If the resulting relative strength chart favors the cash-like proxy, then the Index will invest in FTSM, but if the relative strength chart favors the equity index, then the index will remain fully invested.
• The point and figure relative strength analysis to determine which position the Index should hold is conducted on a daily basis. This may result in a high portfolio turnover rate.
• When the Index holds one of the component indexes, the Index follows the same rebalance schedule as the component index held and when the Index holds FTSM there are no rebalances.

^Point and figure charts plot supply and demand within a security by focusing on its price movements and ignore small price fluctuations, trading volume and time to filter out insignificant price movements.