# EDGAR Filing Document

**Accession Number:** 0001877493
**File Stem:** 0001999371-26-001456
**Filing Date:** 2026-1
**Character Count:** 993197
**Document Hash:** e525eb0171b69207715c5f4538b686ac
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001999371-26-001456.hdr.sgml**: 20260122

**ACCESSION NUMBER**: 0001999371-26-001456

**CONFORMED SUBMISSION TYPE**: 485BPOS

**PUBLIC DOCUMENT COUNT**: 38

**FILED AS OF DATE**: 20260122

**DATE AS OF CHANGE**: 20260122

**EFFECTIVENESS DATE**: 20260122

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Valkyrie ETF Trust II
- **CENTRAL INDEX KEY:** 0001877493

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 485BPOS
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-23725
- **FILM NUMBER:** 26552029

**BUSINESS ADDRESS:**
- **STREET 1:** 437 MADISON AVENUE
- **STREET 2:** 28TH FLOOR
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10022
- **BUSINESS PHONE:** 800-617-0004

**MAIL ADDRESS:**
- **STREET 1:** 437 MADISON AVENUE
- **STREET 2:** 28TH FLOOR
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10022
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Valkyrie ETF Trust II
- **CENTRAL INDEX KEY:** 0001877493

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 485BPOS
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-258722
- **FILM NUMBER:** 26552028

**BUSINESS ADDRESS:**
- **STREET 1:** 437 MADISON AVENUE
- **STREET 2:** 28TH FLOOR
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10022
- **BUSINESS PHONE:** 800-617-0004

**MAIL ADDRESS:**
- **STREET 1:** 437 MADISON AVENUE
- **STREET 2:** 28TH FLOOR
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10022

## Series and Classes Contracts Data

### CoinShares Bitcoin and Ether ETF (Series ID: S000074058)

| Class ID   | Class Name                       | Ticker Symbol   |
|:---|:---|:---|
| C000231452 | CoinShares Bitcoin and Ether ETF | BTF             |

### CoinShares Bitcoin Mining ETF (Series ID: S000075052)

| Class ID   | Class Name                    | Ticker Symbol   |
|:---|:---|:---|
| C000233855 | CoinShares Bitcoin Mining ETF | WGMI            |

?xml version='1.0' encoding='ASCII'?

**As filed with the Securities and Exchange Commission on January 22, 2026**

**No. 333-258722**

**No. 811-23725**

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

------

**FORM N-1A**

---

| | |
|:---|:---|
| **REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933** | ☐ |
| **Pre-Effective Amendment No.** | ☒ |
| **Post-Effective Amendment No. 66** | ☒ |
| **and/or** |  |

---

---

| | |
|:---|:---|
| **REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940** | ☐ |
| **Amendment No. 70** | ☒ |

---

**Valkyrie ETF Trust II**

(Exact Name of Registrant as Specified in Charter)

**437 Madison Avenue 28<sup>th</sup> Floor**

**New York, New York 10022**

(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code: **(615) 909-6421**

**Corporation Service Company 251 Little Falls Drive Wilmington, DE 19808**

(Name and Address of Agent for Service)

Copy to:

**Morrison C. Warren, Esq.**

**Chapman and Cutler LLP**

**320 South Canal Street**

**Chicago, IL 60606**

**It is proposed that this filing will become effective (check appropriate box):**

☒ Immediately upon filing pursuant to paragraph (b) of
Rule 485.

☐ On (date) pursuant to paragraph (b) of Rule 485.

☐ 60 days after filing pursuant to paragraph (a)(1) of Rule 485.

☐ On (date) pursuant to paragraph (a) of Rule 485.

☐ 75 days after filing pursuant to paragraph (a)(2) of Rule 485.

☐ On (date) pursuant to paragraph (a) of Rule 485.

**If appropriate, check the following box:**

☐ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Contents of Post-Effective Amendment No. 66

This Registration Statement comprises the following papers and contents:

The Facing Sheet

Part A - Prospectus for CoinShares Bitcoin and Ether ETF; CoinShares Bitcoin Mining ETF (each, a "Fund" and collectively, the "Funds")

Part B - Statement of Additional Information for CoinShares Bitcoin and Ether ETF; CoinShares Bitcoin Mining ETF

Part C - Other Information

Signatures

Index to Exhibits

Exhibits

**PROSPECTUS**

**CoinShares Bitcoin and Ether ETF**

(*formerly* CoinShares Valkyrie Bitcoin and Ether Strategy ETF)

 **(Ticker: BTF)**

![](coinshares485bpos003.jpg)

**January 22, 2026**

CoinShares Bitcoin and Ether ETF (*formerly* CoinShares Valkyrie Bitcoin and Ether Strategy ETF) (the *"Fund"*), a series of Valkyrie ETF Trust II, lists and principally trades its shares on Nasdaq Stock Market LLC (the *"Exchange"*). Shares of the Fund trade on the Exchange at market prices that may be below, at or above the Fund's net asset value.

**Neither the U.S. Securities and Exchange Commission nor the Commodity Futures Trading Commission has approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.**

**Table of Contents**

---

| | |
|:---|:---|
| [Summary Information](#coinshares485bposa001) | 1 |
| [Additional Information About the Fund's Principal Investment Strategies](#coinshares485bposa002) | 16 |
| [Additional Risks of Investing in the Fund](#coinshares485bposa003) | 20 |
| [Management of the Fund](#coinshares485bposa004) | 30 |
| [How to Buy and Sell Shares](#coinshares485bposa005) | 31 |
| [Dividends, Distributions and Taxes](#coinshares485bposa006) | 32 |
| [Distributor](#coinshares485bposa007) | 35 |
| [Net Asset Value](#coinshares485bposa008) | 35 |
| [Fund Service Providers](#coinshares485bposa009) | 36 |
| [Financial Highlights](#coinshares485bposa010) | 37 |
| [Premium/Discount Information](#coinshares485bposa011) | 38 |
| [Investments by Other Investment Companies](#coinshares485bposa012) | 38 |

---

**CoinShares Bitcoin and Ether ETF**

**Investment Objective**

The Fund seeks to provide investors with capital appreciation. There can be no assurance that the Fund will achieve its investment objective.

**Fees and Expenses of the Fund**

This table describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund (*"Shares"*). **Investors may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example set forth below.**

**Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)**

---

| | |
|:---|:---|
| Management Fees | 0.95% |
| Distribution and Service (12b-1) Fees | 0.00% |
| Acquired Fund Fees and Expenses | 0.03% |
| Other Expenses<sup>(1)</sup> | 0.29% |
| Total Annual Fund Operating Expenses | 1.27% |
| (Less Fees Waived/Expenses Reimbursed) | 0.00% |
| Total Annual Operating Expenses After Fees Waived/Expenses Reimbursed<sup>(2)</sup> | 1.27% |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) "Other
 Expenses" consist entirely of futures commission merchant capital charges and interest
 expense incurred from reverse repurchase agreements. These amounts have been restated
 to reflect current fees.

&nbsp;&nbsp;&nbsp;&nbsp;(2) These
 amounts have been restated to reflect current fees.

**EXAMPLE**

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds.

This example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain at current levels. This example does not include the brokerage commissions that investors may pay to buy and sell Shares.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Although your actual costs may be higher or lower, your costs, based on these assumptions, would be: | $129 | $403 | $697 | $1534 |

---

***Portfolio Turnover***

The Fund pays transaction costs, such as commissions, when it purchases and sells securities (or "turns over" its portfolio). A higher portfolio turnover will cause the Fund to incur additional transaction costs and may result in higher taxes when Shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the example, may affect the Fund's performance. During the fiscal year ended September 30, 2025, the Fund's portfolio turnover rate was 0% of the average value of its portfolio.

**Principal Investment Strategies**

The Fund is an actively-managed exchange-traded fund (*"ETF"*) that seeks to achieve its investment objective by investing all or substantially all of its assets in exchange-traded futures contracts on bitcoin and ether (individually, *"Bitcoin Futures Contracts"* and *"Ether Futures Contracts"* and, collectively, *"Bitcoin and Ether Futures Contracts"*) and "Collateral Investments" (as defined below) (together with Bitcoin and Ether Futures Contracts, "Bitcoin- and Ether-Linked Investments"). The Fund's investment in Bitcoin and Ether Futures Contracts will be approximately equally weighted as of the rebalance date and will be rebalanced on a monthly basis, provided that during rebalancing periods or while taking temporary defensive positions, the Fund may be over- or under-weight with respect to one or another type of Bitcoin and Ether Futures Contract. **The Fund does not directly invest in bitcoin or ether.** Rather, the Fund seeks to benefit from increases in prices to Bitcoin and Ether Futures Contracts.

Under normal market conditions, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in Bitcoin and Ether Futures Contracts. For purposes of this investment test, derivative contracts (such as Bitcoin and Ether Futures Contracts) will be valued using their notional value. The Fund invests indirectly, via a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the *"Subsidiary"*), in standardized, cash-settled futures contracts on Bitcoin- and Ether-Linked investments.

The Fund is classified as "non-diversified" under the Investment Company Act of 1940 (the *"1940 Act"*).

**Bitcoin, ether and Bitcoin and Ether Futures Contracts are a relatively new asset class and are subject to unique and substantial risks, including the risk that the value of the Fund's investments could decline rapidly, including to zero. Bitcoin, ether and Bitcoin and Ether Futures Contracts have historically been more volatile than traditional asset classes. You should be prepared to lose your entire investment.**

*Bitcoin and Ether*

Bitcoin and ether are digital assets. The ownership and behavior of bitcoin and ether is determined by participants in online, peer-to-peer networks that connect computers that run publicly accessible, or "open source," software that follows the rules and procedures governing the Bitcoin Network and Ethereum Networks, respectively. The Bitcoin Network and Ethereum Network are a peer-to-peer payment networks that operates on a cryptographic protocol, commonly referred to as the "Bitcoin Protocol" or "Ethereum Protocol." The value of bitcoin and ether is not backed by any government, corporation or other identified body. Their value is determined, in part, by the supply and demand in markets created to facilitate the trading of bitcoin and ether. Ownership and the ability to transfer or take other actions with respect to bitcoin or ether is protected through public-key cryptography. Public-key cryptography, or asymmetric cryptography, is an encryption scheme that uses two mathematically related, but not identical, keys - a public key and a private key. Unlike symmetric key algorithms that rely on one key to both encrypt and decrypt, each key performs a unique function. The public key is used to encrypt and the private key is used to decrypt.

Bitcoin, the Bitcoin Network and the operating software that governs the Bitcoin Network were initially discussed in a white paper that was attributed to an individual named Satoshi Nakamoto. However, no individual has been reliably identified as bitcoin's creator, and it is generally believed that the name is a pseudonym for the actual inventor(s). The first bitcoin were created in 2009 upon the release of the Bitcoin Network source code (i.e., the software and protocol that created and launched the Bitcoin Network). Since 2009, the Bitcoin Network has been actively developed by a group of engineers known as Core Developers. Bitcoin is an open-source project, and it is not represented by an official organization or authority. The supply of bitcoin is constrained formulaically by the Bitcoin Protocol instead of being explicitly delegated to an identified body (*e.g.*, a central bank or corporate treasury) to control. Units of bitcoin are treated as mutually interchangeable (*i.e.*, fungible). No single entity owns or operates the Bitcoin Network, which is collectively maintained by (1) a decentralized group of participants who run computer software that results in the recording and validation of transactions (these parties are commonly referred to as "miners"), (2) developers who propose improvements to the Bitcoin Protocol and the software that enforces the Bitcoin Protocol and (3) users who choose what bitcoin software to run. From time to time, the developers suggest changes to the bitcoin software, and if a sufficient number of users and miners elect not to adopt the changes, a new digital asset, operating on the earlier version of the bitcoin software, may be created, commonly referred to as a "fork". The price of the Bitcoin Futures Contracts in which the Fund invests may reflect the impact of these forks.

<u>Initial Distribution</u>: 60.0 million ether, or 83.33% of the supply, was sold to the public in a crowd sale conducted between July and August 2014 that raised approximately $18 million which was used to fund the development of the Ethereum Network.

<u>Ethereum Foundation</u>: 6.0 million ether, or 8.33% of the supply, was distributed to the Ethereum Foundation for operational costs.

<u>Ethereum Developers</u>: 3.0 million ether, or 4.17% of the supply, was distributed to developers who contributed to the Ethereum Network.

<u>Developer Purchase Program</u>: 3.0 million ether, or 4.17% of the supply, was distributed to members of the Ethereum Foundation to purchase at the initial crowd sale price.

Following the launch of the Ethereum Network, ether supply initially increased through a progressive mining process. Following the introduction of EIP-1559, described below, ether supply and issuance rate varies based on factors such as recent use of the network.

Coinciding with the network launch, it was decided that EthSuisse would be dissolved, designating the Ethereum Foundation as the sole organization dedicated to protocol development. Historically and continuing through the present, the development of the source code of the Ethereum protocol has been overseen by the Ethereum Foundation and the core developers. The core developers evolve over time, largely based on self-determined participation. The Ethereum Network is decentralized in that it does not require governmental authorities or financial institution intermediaries to create, transmit or determine the value of ether. Rather, following the initial distribution of ether, ether is created, burned and allocated by the Ethereum Network protocol through a process that is currently subject to an issuance and burn rate. Among other things, ether is used to pay for transaction fees and computational services (i.e., smart contracts) on the Ethereum Network; users of the Ethereum Network pay for the computational power of the machines executing the requested operations with ether. Requiring payment in ether on the Ethereum Network incentivizes developers to write quality applications and increases the efficiency of the Ethereum Network because wasteful code costs more. It also ensures that the Ethereum Network remains economically viable by compensating people for their contributed computational resources.

Bitcoin and ether may be regarded as a currency or digital commodity depending on its specific use in particular transactions. Bitcoin and ether may be used as a medium of exchange or unit of account. Although a number of large and small retailers accept bitcoin and ether as a form of payment in the United States and foreign markets, there is relatively limited use of bitcoin and ether for commercial and retail payments. Similarly, bitcoin and ether may be used as a store of value (*i.e.*, an asset that maintains its value rather than depreciating), although they have experienced significant periods of price volatility.

The value of bitcoin and ether is determined by the value that various market participants place on bitcoin through their transactions. Price discovery occurs through secondary market trading on bitcoin and ether trading platforms, over-the-counter trading desks and direct peer-to-peer payments. Many digital asset trading platforms are open 24 hours a day, 7 days a week. Digital asset trading platforms and over-the-counter trading desks have a relatively limited history, limited liquidity and trading across trading platforms order books which has resulted in periods of high volatility and price divergence among trading platforms. In addition, during high volatility periods, in addition to price divergences, some bitcoin and ether trading platforms have experienced issues related to account access and trade execution.

*Bitcoin and Ether Futures Contracts*

Futures contracts are financial contracts the value of which depends on, or is derived from, the underlying reference asset. In the case of Bitcoin and Ether Futures Contracts, the underlying reference asset is bitcoin and ether, respectively. Futures contracts may be physically-settled or cash settled. The only futures contracts in which the Fund invests (as described below) are cash-settled Bitcoin and Ether Futures Contracts. "Cash-settled" means that when the relevant futures contract expires, if the value of the underlying reference asset exceeds the futures contract price, the seller pays to the purchaser cash in the amount of that excess. Alternatively, if the futures contract price exceeds the value of the underlying reference asset, the purchaser pays to the seller cash in the amount of that excess. In a cash-settled futures contract on bitcoin or ether, the amount of cash to be paid is equal to the difference between the value of the bitcoin or ether, respectively, underlying futures contract at the close of the last trading day of the contract and the futures contract price as specified in the agreement.

The Fund will invest indirectly, via the Subsidiary, in standardized, cash-settled futures contracts on bitcoin and ether. Such futures contracts are traded on commodity exchanges registered with the Commodity Futures Trading Commission (the "*CFTC"*). Currently, the Bitcoin and Ether Futures Contracts in which the Fund will invest are only traded on the Chicago Mercantile Exchange (the *"CME"*). The value of Bitcoin and Ether Futures Contracts on the CME are determined by reference to the CME CF Bitcoin Reference Rate and CME CF Ether Reference Rate, respectively, each of which provide an indication of the volume-weighted average price of bitcoin and ether across certain trading platforms.

As the futures contracts approach expiration, they may be replaced by similar contracts that have a later expiration. This process is referred to as "rolling." The Fund intends to "roll" its Bitcoin and Ether Futures Contracts prior to expiration. The Fund's investment sub-adviser, Vident Advisory, LLC (d/b/a Vident Asset Management) (*"Vident"* or the *"Sub-Adviser"*), with oversight from the Fund's investment adviser, Valkyrie Funds LLC (*"Valkyrie"* or the *"Adviser"*), seeks to invest in "front month" Bitcoin and Ether Futures Contracts. "Front month" contracts are the monthly contracts with the nearest expiration date. Typically, the Fund will roll to the next "nearby" Bitcoin and Ether Futures Contracts. The "nearby" contracts are those contracts with the next closest expiration date. There is no guarantee that such a strategy will produce the desired results.

The Fund's investment in the Subsidiary is intended to provide the Fund with exposure to the bitcoin and ether futures markets in accordance with applicable rules and regulations. The Subsidiary and the Fund will have the same investment adviser, investment sub-adviser and investment objective. The Subsidiary will also follow the same general investment policies and restrictions as the Fund. Except as noted herein, for purposes of this Prospectus, references to the Fund's investment strategies and risks include those of the Subsidiary. The Fund complies with the provisions of the Investment Company Act of 1940 (the *"1940 Act"*) governing investment policies and capital structure and leverage on an aggregate basis with the Subsidiary. Furthermore, the Adviser, as the investment adviser to the Subsidiary, complies with the provisions of the 1940 Act relating to investment advisory contracts as it relates to its advisory agreement with the Subsidiary. The Subsidiary also complies with the provisions of the 1940 Act relating to affiliated transactions and custody. The Subsidiary's custodian is U.S. Bank National Association. In order to qualify as a regulated investment company (*"RIC"*) for purposes of federal income tax treatment under the Internal Revenue Code of 1986, as amended (the *"Code"*), the Fund may have to reduce its exposure to its Subsidiary on or around the end of each of the Fund's fiscal quarter ends. If, in any year, the Fund were to fail to qualify for the special tax treatment accorded a RIC under Subchapter M of the Code and its shareholders, and were ineligible to or were not to cure such failure, the Fund would be taxed in the same manner as an ordinary corporation subject to U.S. federal income tax on all its income at the fund level. The resulting taxes could substantially reduce the Fund's net assets and the amount of income available for distribution. In addition, in order to requalify for taxation as a RIC, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make certain distributions.

*Collateral Investments*

In addition to the investments in Bitcoin and Ether Futures Contracts, the Fund (and the Subsidiary, as applicable) will invest its remaining assets directly in cash, cash-like instruments or high-quality securities (collectively the *"Collateral Investments"*). The Collateral Investments may consist of high-quality securities, which include: (1) U.S. Government securities, such as bills, notes and bonds issued by the U.S. Treasury; (2) money market funds; and/or (3) corporate debt securities, such as commercial paper and other short-term unsecured promissory notes issued by businesses that are rated investment grade or determined by the Sub-Adviser to be of comparable quality. For these purposes, "investment grade" is defined as investments with a rating at the time of purchase in one of the four highest categories of at least one nationally recognized statistical rating organizations (*e.g.*, BBB- or higher from S&P Global Ratings or Baa3 or higher from Moody's Investors Service, Inc.). The Collateral Investments are designed to provide liquidity (*i.e.*, provide an asset that can easily be exchanged for cash), and satisfy the "margin" requirements applicable to the Fund's futures portfolio, which require that the Fund post collateral to secure its obligations under those contracts. Collateral Investments may also be invested in as Secondary Investments, as described below.

In order to help maintain the desired level of exposure to Bitcoin and Ether Futures Contracts, the Fund may enter into reverse repurchase agreements, a form of borrowing in which the Fund sells portfolio securities to financial institutions and agrees to repurchase them at a mutually agreed-upon date and price that is higher than the original sale price, and use the proceeds for investment purchases.

*Secondary Investments*

The Fund's investment in futures contracts will be limited by the position limits established by the derivatives exchange applicable to such contracts. Currently, the position limit for Bitcoin Futures Contracts on the CME is 2,000 contracts for an applicable month, with each contract representing five bitcoin, while the position limit for Ether Futures Contracts is 8,000 contracts for an applicable month, with each contract representing 50 ether. The Fund will be prohibited from purchasing Bitcoin and Ether Futures Contracts in excess of these limits. If the Fund is prohibited by applicable position limits from buying additional front month Bitcoin and Ether Futures Contracts, the Fund will invest, in the discretion of the Sub-Adviser, in longer dated Bitcoin and Ether Futures Contracts and/or additional Collateral Investments (collectively, *"Secondary Investments"*).

**Principal Risks**

As with all investments, there are certain risks of investing in the Fund. The Fund's Shares will change in value and you could lose money by investing in the Fund. An investment in the Fund does not represent a complete investment program. An investment in the Fund is not a bank deposit and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency, the Adviser, Sub-Adviser or any of their affiliates. You should consider carefully the following risks before investing in the Fund.

Each risk summarized below is considered a "principal risk" of investing in the Fund, regardless of the order in which it appears.

**The Shares will change in value, and you could lose money by investing in the Fund. The Fund may not achieve its investment objective.**

**Market Risk.** Market risk is the risk that a particular security, or Shares of the Fund in general, may fall in value. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more significantly than others. These events also adversely affect the prices and liquidity of the Fund's portfolio securities or other instruments and could result in disruptions in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund's Shares and result in increased market volatility. During any such events, the Fund's Shares may trade at increased premiums or discounts to their net asset value.

**Bitcoin and Ether Market Risk.** The prices of bitcoin, ether and Bitcoin and Ether Futures Contracts have historically been highly volatile. The value of the Fund's investments in Bitcoin and Ether Futures Contracts and other instruments that provide exposure to bitcoin, ether and Bitcoin and Ether Futures Contracts – and therefore the value of an investment in the Fund – could decline significantly and without warning, including to zero. The value of ether and bitcoin has been, and may continue to be, substantially dependent on speculation, such that trading and investing in these crypto assets generally may not be based on fundamental analysis. In addition, the price of bitcoin and ether has been highly correlated, even during periods of volatility, with ether tending to exhibit more pronounced rises and falls. If you are not prepared to accept significant and unexpected changes in the value of the Fund and the possibility that you could lose your entire investment in the Fund you should not invest in the Fund.

**Bitcoin Risk.** Bitcoin is a relatively new innovation and the market for bitcoin is subject to rapid price swings, changes and uncertainty. Trading prices of bitcoin and other digital assets have experienced significant volatility in recent periods and may continue to do so. For instance, there were steep increases in the value of certain digital assets, including bitcoin, over the course of 2021, and multiple market observers asserted that digital assets were experiencing a "bubble." These increases were followed by steep drawdowns throughout 2022 in digital asset trading prices, including for bitcoin. These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout bitcoin's history, including in 2011, 2013-2014, and 2017-2018, before repeating again in 2021-2022. Throughout 2023, 2024 and 2025, bitcoin prices continued to exhibit extreme volatility. Such volatility may persist.

The further development of the Bitcoin Network and the acceptance and use of bitcoin are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development of the Bitcoin Network or the acceptance of bitcoin may adversely affect the price of bitcoin. Bitcoin is subject to the risk of fraud, theft, manipulation or security failures, operational or other problems that impact digital asset trading venues. Additionally, if one or a coordinated group of miners were to gain control of 51% of the Bitcoin Network, they would have the ability to manipulate transactions, halt payments and fraudulently obtain bitcoin. A significant portion of bitcoin is held by a small number of holders sometimes referred to as "whales." Transactions of these holders may influence the price of bitcoin.

Unlike the exchanges for more traditional assets, such as equity securities and futures contracts, bitcoin and digital asset trading venues are largely unregulated and highly fragmented. Due to the fragmentation, regulatory non-compliance and lack of oversight of these trading venues there is a heightened potential for fraud and manipulation. Digital asset trading platforms on which bitcoin is traded, and which may serve as a pricing source for the calculation of the reference rate that is used for the purposes of valuing the Fund's investments, are or may become subject to enforcement actions by regulatory authorities, and such enforcement actions may have a material adverse impact on the Fund, its investments, and its ability to implement its investment strategy.

As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote bitcoin in a way that artificially increases the price of bitcoin). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Over the past several years, a number of digital asset trading venues have been closed due to fraud, failure or security breaches. Investors in bitcoin may have little or no recourse should such theft, fraud or manipulation occur and could suffer significant losses. New or changing laws and regulations may affect the use of blockchain technology and/or investments in crypto assets or crypto asset-related investments. In addition, digital asset trading venues, bitcoin miners, and other participants may have significant exposure to other cryptocurrencies. Instability in the price, availability or legal or regulatory status of those instruments may adversely impact the operation of the digital asset trading venues and the Bitcoin Network. The realization of any of these risks could result in a decline in the acceptance of bitcoin and consequently a reduction in the value of bitcoin, bitcoin futures, and the Fund. Finally, the creation of a "fork" (as described above) or a substantial giveaway of bitcoin (sometimes referred to as an "air drop") may result in significant and unexpected declines in the value of bitcoin, bitcoin futures, and the Fund.

**Ether Risk.** Ether is a relatively new innovation and the market for ether is subject to rapid price swings, changes and uncertainty. The further development of the Ethereum Network and the acceptance and use of ether are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development of the Ethereum Network or the acceptance of ether may adversely affect the price of ether. Ether is subject to the risk of fraud, theft, manipulation or security failures, operational or other problems that impact digital asset trading venues. Additionally, if one or a coordinated group of validators were to gain control of two-thirds of staked ether, they would have the ability to manipulate transactions and fraudulently obtain ether. If such a validator or group of validators were to gain control of one-third of staked ether, they could halt payments. A significant portion of ether is held by a small number of holders sometimes referred to as "whales". Transactions of these holders may influence the price of ether.

Unlike the exchanges for more traditional assets, such as equity securities and futures contracts, ether and digital asset trading venues are largely unregulated and highly fragmented. Due to the fragmentation, regulatory non-compliance and lack of oversight of these trading venues there is a heightened potential for fraud and manipulation. Digital asset trading platforms on which ether is traded, and which may serve as a pricing source for the calculation of the reference rate that is used for the purposes of valuing the Fund's investments, are or may become subject to enforcement actions by regulatory authorities, and such enforcement actions may have a material adverse impact on the Fund, its investments, and its ability to implement its investment strategy.

As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote ether in a way that artificially increases the price of ether). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Over the past several years, a number of digital asset trading venues have been closed due to fraud, failure or security breaches. Investors in ether may have little or no recourse should such theft, fraud or manipulation occur and could suffer significant losses. New or changing laws and regulations may affect the use of blockchain technology and/or investments in crypto assets or crypto asset-related investments. The realization of any of these risks could result in a decline in the acceptance of ether and consequently a reduction in the value of ether, ether futures, and the Fund. Finally, the creation of a "fork" or a substantial giveaway of ether (sometimes referred to as an "air drop") may result in significant and unexpected declines in the value of ether, ether futures, and the Fund. A fork may be intentional, such as the "Merge." The "Merge" refers to protocol changes altering the method by which transactions are validated.

Depending on its characteristics, a digital asset may be considered a "security", or offered and sold as a "security", under the federal securities laws. The test for determining whether a particular digital asset is a "security", or offered and sold as a "security", is complex and difficult to apply, and the outcome is difficult to predict. The SEC has taken no official position on whether ether is a security under the federal securities laws. On the other hand, the SEC has brought enforcement actions against the issuers and promoters of several other digital assets on the basis that the digital assets in question are securities. Any enforcement action by the SEC or a state securities regulator asserting that ether is a security, or a court decision, to that effect would be expected to have an immediate material adverse impact on the trading value of ether, as well as the Shares. This is because the business models behind most digital assets are incompatible with regulations applying to transactions in securities. If a digital asset is determined or asserted to be a security, it is likely to become difficult or impossible for the digital asset to be traded, cleared or custodied in the United States through the same channels used by non-security digital assets, which in addition to materially and adversely affecting the trading value of the digital asset is likely to significantly impact its liquidity and market participants' ability to convert the digital asset into U.S. dollars.

All networked systems are vulnerable to various kinds of attacks. As with any computer network, the Ethereum Network contains certain flaws. For example, the Ethereum Network is currently vulnerable to several types of attacks, including:

● ">33% attack" where, if a validator or group of validators were to gain control of more than 33% of the staked ether, a malicious actor could cause a temporary fork in the blockchain.

● ">50% attack" where, if a validator or group of validators acting in concert were to gain control of more than 50% of the staked ether, a malicious actor would be able to gain full control of the network and the ability to manipulate the blockchain, potentially for an extended period of time or even permanently.

● ">66% attack" where, if a validator or group of validators acting in concert were to gain control of more than 66% of the staked ether, a malicious actor could permanently and irreversibly manipulate the blockchain.

The success of these types of attacks depends on the malicious actors ability to gather an enormous amount of ether and other resources, which serves as the primary practical defense of the network. A successful attack could lead to temporary or permanent disruption of the network, which would have a negative effect on the price of ether and the value of the Shares.

**Futures Contracts Risk.** Risks of futures contracts include: (i) an imperfect correlation between the value of the futures contract and the underlying asset; (ii) possible lack of a liquid secondary market; (iii) the inability to close a futures contract when desired; (iv) losses caused by unanticipated market movements, which may be unlimited; (v) an obligation for the Fund to make daily cash payments to maintain its required margin, particularly at times when the Fund may have insufficient cash; and (vi) unfavorable execution prices from rapid selling. Unlike equities, which typically entitle the holder to a continuing stake in a corporation, futures contracts normally specify a certain date for settlement in cash based on the reference asset. As the futures contracts approach expiration, they may be replaced by similar contracts that have a later expiration. This process is referred to as "rolling." If the market for these contracts is in "contango," meaning that the prices of futures contracts in the nearer months are lower than the price of contracts in the distant months, the sale of the near-term month contract would be at a lower price than the longer-term contract, resulting in a cost to "roll" the futures contract. The actual realization of a potential roll cost will be dependent upon the difference in price of the near and distant contract. The costs associated with rolling Bitcoin and Ether Futures Contracts typically are substantially higher than the costs associated with other futures contracts and may have a significant adverse impact on the performance of the Fund. Because the margin requirement for futures contracts is less than the value of the assets underlying the futures contract, futures trading involves a degree of leverage. As a result, a relatively small price movement in a futures contract may result in immediate and substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 40% of the value of the futures contract is deposited as margin, a subsequent 20% decrease in the value of the futures contract would result in a loss of half of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A decrease in excess of 40% would result in a loss exceeding the original margin deposit, if the futures contract were closed out. Thus, a purchase or sale of a futures contract may result in losses in excess of the amount initially invested in the futures contract. However, the Fund would presumably have sustained comparable losses if, instead of investing in the futures contract, it had invested in the underlying financial instrument and sold it after the decline.

**Bitcoin and Ether Futures Contracts Risk.** In addition to the risks of futures contracts generally, the markets for Bitcoin and Ether Futures Contracts have additional unique risks. The markets for Bitcoin and Ether Futures Contracts may be less developed, less liquid and more volatile than more established futures markets. While the Bitcoin and Ether Futures Contracts markets has grown substantially since they commenced trading, there can be no assurance that this growth will continue. Bitcoin and Ether Futures Contracts are subject to collateral requirements and daily limits may impact the Fund's ability to achieve the desired exposure. If the Fund is unable to meet its investment objective, the Fund's returns may be lower than expected. Additionally, these collateral requirements may require the Fund to liquidate its position when it otherwise would not do so.

**Cost of Futures Investment Risk.** When a Bitcoin or Ether Futures Contract is nearing expiration, the Fund will generally sell it and use the proceeds to buy a Bitcoin and Ether Futures Contract with a later expiration date. This is commonly referred to as "rolling". The costs associated with rolling Bitcoin and Ether Futures Contracts typically are substantially higher than the costs associated with other futures contracts and may have a significant adverse impact on the performance of the Fund.

**Futures/Spot Correlation Risk.** The markets for bitcoin and ether, on the one hand, and Bitcoin and Ether Futures Contracts, on the other, are related but separate markets. These markets may exhibit imperfectly correlation, or even no correlation, between price movements of either a Bitcoin or Ether Futures Contract and price movements of the bitcoin or ether, respectively. This might occur due to factors unrelated to the value of bitcoin or ether, such as speculative or other pressures on the markets in which these assets are traded.

**Forked Digital Asset Risk.** The Bitcoin Network and Ethereum Network operate using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and validators adopt the modification. When a modification is introduced and a substantial majority of users and validators consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and validators consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a "hard fork" of the Bitcoin Network or Ethereum Network, as applicable, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of the Bitcoin Network or the Ethereum Network running in parallel, yet lacking interchangeability. For example, in August 2017, bitcoin "forked" into Bitcoin and a new digital asset, Bitcoin Cash, as a result of a several-year dispute over how to increase the rate of transactions that the Bitcoin Network can process.

Forks may also occur as a network community's response to a significant security breach. For example, in June 2016, an anonymous hacker exploited a smart contract running on the Ethereum Network to syphon approximately $60 million of ether held by The DAO, a distributed autonomous organization, into a segregated account. In response to the hack, most participants in the Ethereum community elected to adopt a "fork" that effectively reversed the hack. However, a minority of users continued to develop the original blockchain, now referred to as "Ethereum Classic" with the digital asset on that blockchain now referred to as Ether Classic, or ETC. ETC now trades on several digital asset trading platforms. A fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Such a fork could lead to users and validators abandoning the digital asset with the flawed software. It is possible, however, that a substantial number of users and validators could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This could result in a permanent fork, as in the case of ether and ether classic.

In addition, many developers have previously initiated hard forks in the Blockchain to launch new digital assets, such as Bitcoin Gold and Bitcoin Diamond. To the extent such digital assets compete with bitcoin or ether, such competition could impact demand for bitcoin or ether and could adversely impact the value of the Shares.

Furthermore, a hard fork can lead to new security concerns. For example, when the Ethereum and Ethereum Classic networks split in July 2016. Replay attacks, in which transactions from one network were rebroadcast to nefarious effect on the other network, plagued digital asset trading platforms through at least October 2016. A digital asset trading platforms announced in July 2016 that it had lost 40,000 Ether Classic, worth about $100,000 at that time, as a result of replay attacks. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of mining/validating power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual validator or validator pool's power to exceed levels necessary to execute an attack on the network

A future fork in the Bitcoin Network or Ethereum Network could adversely affect the value of the Shares.

**Digital Asset Industry Risk.** The digital asset industry has recently been subject to a number of high-profile regulatory events as well as the introduction of new products and services. This has led to volatility and disruption in the digital asset markets and financial difficulties for several prominent industry participants, including digital asset trading platforms, hedge funds and lending platforms. For example, in the first half of 2022, digital asset lenders Celsius Network LLC and Voyager Digital Ltd. and digital asset hedge fund Three Arrows Capital each declared bankruptcy, and the stablecoin TerraUSD collapsed. These events caused a loss of confidence in participants in the digital asset ecosystem, negative publicity surrounding digital assets more broadly and market-wide declines in digital asset trading prices and liquidity.

Thereafter, in November 2022, FTX Trading Ltd. (*"FTX"*), the third largest digital asset trading platform by volume at the time, halted customer withdrawals amid rumors of the company's liquidity issues and likely insolvency. Shortly thereafter, FTX's CEO resigned and FTX and numerous affiliates of FTX filed for bankruptcy. The U.S. Department of Justice (*"DOJ"*) subsequently brought criminal charges, including charges of fraud, violations of federal securities laws, money laundering, and campaign finance offenses, against FTX's former CEO and others. In November 2023, FTX's former CEO was convicted of fraud and money laundering. Similar charges related to violations of anti-money laundering laws were brought in November 2023 against Binance and its former CEO. FTX is also under investigation by the SEC, the Justice Department, and the Commodity Futures Trading Commission, as well as by various regulatory authorities in the Bahamas, Europe and other jurisdictions. In response to these events, the digital asset markets have experienced extreme price volatility and declines in liquidity, and regulatory and enforcement scrutiny has increased, including from the DOJ, the SEC, the CFTC, the White House and Congress. In addition, several other entities in the digital asset industry filed for bankruptcy following FTX's bankruptcy filing, such as BlockFi Inc. and Genesis Global Capital, LLC. The SEC also brought charges against Genesis Global Capital, LLC and Gemini Trust Company, LLC on January 12, 2023, for their alleged unregistered offer and sale of securities to retail investors. In October 2023, the New York Attorney General brought charges against Gemini, Genesis Global Capital and numerous affiliates of Genesis Global Capital, and Digital Currency Group alleging violations of law relating to the Gemini Earn program. In May 2024, the Bankruptcy Court of the Southern District of New York approved a settlement of the charges with the Genesis entities.

These events resulted in calls for heightened scrutiny and regulation of the digital asset industry, with a specific focus on digital asset trading platforms, and custodians. For example, in June 2023, the SEC brought charges against Binance (the *"Binance Complaint"*) and Coinbase (the *"Coinbase Complaint"*), two of the largest digital asset trading platforms, alleging that they solicited U.S. investors to buy, sell, and trade "crypto asset securities" through their unregistered trading platforms and operated unregistered securities exchanges, brokerages and clearing agencies. Binance subsequently announced that it would be suspending USD deposits and withdrawals on Binance.US and that it plans to delist its USD trading pairs. In addition, in November 2023, the SEC brought similar charges against Kraken (the *"Kraken Complaint"*), alleging that it operated as an unregistered securities exchange, brokerage and clearing agency. The Binance Complaint, the Coinbase Complaint and the Kraken Complaint led to further volatility in digital asset prices. In January 2025, the SEC launched the Crypto Task Force dedicated to developing a comprehensive and clear regulatory framework for digital assets led by Commissioner Hester Peirce. Subsequently, Commissioner Peirce announced a list of specific priorities to further that initiative, which included pursuing final rules related to a digital asset's security status, a revised path to registered offerings and listings for digital asset-based investment vehicles, and clarity regarding digital asset custody, lending and staking. In February 2025, Coinbase and the SEC entered into a joint stipulation to dismiss the SEC's lawsuit with prejudice, subject to the court's approval. Kraken has also announced that it reached an agreement in principle with the SEC to dismiss the SEC's lawsuit, subject to formal approval by the SEC's Commissioners. In May 2025, the SEC voluntarily dismissed its lawsuit against Binance. Several other digital asset market participants have also announced that the SEC informed them that the SEC was terminating its investigation or enforcement action into their firm. The final outcome of these lawsuits (to the extent not yet dismissed), their effect on the broader digital asset ecosystem and the reputational impact on industry participants, remain uncertain.

A wide range of U.S. regulators, including the Federal Reserve Board, the SEC, the CFTC, FinCEN, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Bureau of Investigation, as well as the White House, have issued a growing number of reports and releases concerning digital assets and digital asset markets. In addition, the U.S. Congress has enacted and proposed a number of bills that will have significant impacts on the U.S. digital asset market. However, the extent and content of any forthcoming laws and regulations are not yet ascertainable with certainty, and it may not be ascertainable in the near future. It is possible that new laws and increased regulation and regulatory scrutiny may require the Fund to comply with certain regulatory regimes, which could result in new costs for the Fund. The Fund may have to devote increased time and attention to regulatory matters, which could increase costs to the Fund.

In 2025, Congress undertook significant legislative efforts to address the rapidly evolving landscape of digital assets and cryptocurrencies, culminating in the passage of a landmark bill: the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the *"GENIUS Act"*). This legislative action represents the first comprehensive federal framework for the regulation of stablecoins in the United States.

The GENIUS Act, signed into law in July 2025, establishes the first federal regulatory framework for the issuance and operation of payment stablecoins—digital assets designed to maintain a stable value relative to a fiat currency, such as the U.S. dollar. The GENIUS Act requires that all payment stablecoins be fully backed on a one-to-one basis by high-quality liquid assets, such as U.S. dollars or short-term U.S. Treasury securities, and subjects issuers to rigorous reserve, audit, and disclosure requirements. The GENIUS Act introduces a dual licensing regime, allowing stablecoin issuers to operate under either federal or state regulatory oversight, provided that state regimes are "substantially similar" to federal standards. Issuers with more than $10 billion in outstanding stablecoins must obtain a federal license. The GENIUS Act also imposes strict AML, sanctions compliance, and consumer protection obligations, including prioritizing stablecoin holders' claims in the event of issuer insolvency. Notably, the Act prohibits non-financial public companies from issuing stablecoins without special approval and restricts the payment of interest or yield on stablecoins.

In addition, the Digital Asset Market Clarity Act of 2025 (the "*CLARITY Act*") was passed by the U.S. House of Representatives in July 2025. The CLARITY Act was designed to resolve longstanding regulatory uncertainty regarding the classification and oversight of digital assets. The CLARITY Act establishes a clear framework for distinguishing between digital assets that are securities, commodities, or payment stablecoins. It delineates the respective jurisdictions of the SEC and the CFTC, granting the CFTC exclusive authority over "digital commodities" and the SEC authority over "digital securities." The CLARITY Act also introduces criteria for determining when a digital asset is sufficiently decentralized to be treated as a commodity rather than a security. In addition, the CLARITY Act imposes registration requirements and operational standards for digital asset intermediaries, including exchanges, brokers, and dealers. It mandates consumer protection measures, anti-money laundering *("AML"*) and countering the financing of terrorism (*"CFT"*) compliance, and enhanced disclosure obligations. The Act aims to foster innovation while providing market participants with greater regulatory certainty and aligning U.S. policy with emerging international standards. Similar market structure legislation is currently under consideration by the U.S. Senate but there is no certainty whether the legislation will be enacted in 2026 or what form final legislation will take.

These legislative efforts were accompanied by additional measures, such as the Anti-CBDC Surveillance State Act, which prohibits the Federal Reserve from issuing a retail central bank digital currency without congressional authorization. While the GENIUS Act represents significant progress toward a comprehensive regulatory regime for digital assets, substantial uncertainty remains regarding the implementation and interpretation of this new law. The effectiveness of this framework, and the framework proposed under the CLARITY Act, if passed by Congress, will depend on subsequent rulemaking by federal and state regulators, interagency coordination, and the evolving approach to enforcement. Market participants may face transitional risks as regulatory standards are developed and applied, and there is potential for further legislative or regulatory changes as the digital asset ecosystem continues to evolve.

These events are continuing to develop at a rapid pace and it is not possible to predict at this time all of the risks that they may pose to the Fund, the Fund's third-party service providers, or to the digital asset industry as a whole. Continued disruption and instability in the digital asset markets as these events develop, including further declines in the trading prices and liquidity of the digital assets tracked by the Index, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.

**Digital Asset Competition Risk.** Bitcoin was the first digital asset to gain global adoption and critical mass, and as a result, it has a "first to market" advantage over other digital assets, and remains the largest digital asset by market capitalization. As of December 31, 2025, ether was the second largest digital asset by market capitalization as tracked by CoinMarketCap.com. As of December 31, 2025, bitcoin and ether comprised 71.4% of the total market capitalization of the digital asset ecosystem tracked by CoinMarketCap.com. Alternative digital assets tracked by CoinMarketCap.com had a total market capitalization of approximately $1.32 trillion as of December 31, 2025. Each such asset competes directly and indirectly with every other digital asset for developer mindshare, institutional and retail adoption, network effects, exchange listings, liquidity, and ultimately market value. Because none of these alternative digital assets currently enjoys a dominant share of the market, incremental changes in perceived technological superiority, scalability, security, regulatory treatment, or utility can cause rapid, material shifts in user adoption, capital flows, and market price.

Layer 2 scaling solutions present an additional dimension of competitive risk. So-called "Layer 2" solutions are protocols built on top of an underlying smart contract platform blockchain, and intended to provide scalability to the underlying blockchain by increasing transaction efficiency. For example, Polygon is a smart contract platform protocol built on top of the Ethereum blockchain; it is intended to provide scalability to Ethereum by allowing users to transact on a variety of blockchains deployed on the Ethereum Network. Under this model, Ethereum functions as the base layer, or "Layer 1" blockchain. The Polygon protocol offers developers sidechain, roll-ups and other Layer 2 solutions which can be tailored to an individual developer's intended use case. Such solutions are intended to improve upon the transaction speed, cost and efficiency of transactions on their respective Layer 1. However, Layer 2 solutions have only been recently developed and may not function as intended. For example, smart contracts deployed on one Layer 2 solution may not be interoperable with smart contracts deployed on other Layer 2 solutions. In particular, the advent of Layer 2 solutions presents the possibility of fracturing liquidity of DeFi dApps on a smart contract platform's mainchain by splitting such liquidity among multiple, non-interoperable Layer 2 solutions, which could limit their use case or reduce efficiency. Layer 2 solutions also rely, to various degrees, on the functionality of the underlying Layer 1 blockchain. To the extent that the Ethereum Network is viewed as an unreliable Layer 1 solution, or that other networks provide better speed, costs, efficiency and features than the Ethereum Network, use of the Ethereum Network as a Layer 1 solution may decline with a corresponding reduction in the demand for, and price of, ether. In addition, DeFi dApps have been the frequent target of numerous hacking and manipulation attempts, with some such attempts resulting in irreversible losses to their users. There is also considerable regulatory uncertainty regarding DeFi dApps status and compliance with a variety of legal regimes, including federal securities law, anti-money laundering laws, and federal and state money service business laws. To the extent that DeFi dApps continue to experience hacking events or adverse regulatory events, the Ethereum Networks value as a Layer 1 solution may decline with a corresponding reduction in the demand for, and price of, ether.

**Investment Strategy Risk.** The Fund, through the Subsidiary, invests in Bitcoin and Ether Futures Contracts. The Fund does not invest directly in or hold bitcoin or ether. The price of Bitcoin and Ether Futures Contracts may differ, sometimes significantly, from the current cash price of bitcoin and ether, which is sometimes referred to as the "spot" price of bitcoin or ether. Consequently, the performance of the Fund is likely to perform differently from the spot price of bitcoin and ether.

**Liquidity Risk.** The market for Bitcoin and Ether Futures Contracts is still developing and may be subject to periods of illiquidity. During such times it may be difficult or impossible to buy or sell a position at the desired price. Market disruptions or volatility can also make it difficult to find a counterparty willing to transact at a reasonable price and sufficient size. Illiquid markets may cause losses, which could be significant. The large size of the positions which the Fund may acquire increases the risk of illiquidity, may make its positions more difficult to liquidate, and increase the losses incurred while trying to do so.

**Collateral Investments Risk.** The Fund's use of Collateral Investments may include obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities, including bills, notes and bonds issued by the U.S. Treasury, money market funds and corporate debt securities, such as commercial paper.

Some securities issued or guaranteed by federal agencies and U.S. Government-sponsored instrumentalities may not be backed by the full faith and credit of the United States, in which case the investor must look principally to the agency or instrumentality issuing or guaranteeing the security for ultimate repayment, and may not be able to assert a claim against the United States itself in the event that the agency or instrumentality does not meet its commitment. The U.S. Government, its agencies and instrumentalities do not guarantee the market value of their securities, and consequently, the value of such securities may fluctuate. Although the Fund may hold securities that carry U.S. Government guarantees, these guarantees do not extend to shares of the Fund.

Money market funds are subject to management fees and other expenses. Therefore, investments in money market funds will cause the Fund to bear indirectly a proportional share of the fees and costs of the money market funds in which it invests. At the same time, the Fund will continue to pay its own management fees and expenses with respect to all of its assets, including any portion invested in the shares of the money market fund. It is possible to lose money by investing in money market funds.

Corporate debt securities such as commercial paper generally are short-term unsecured promissory notes issued by businesses. Corporate debt may carry variable or floating rates of interest. Corporate debt securities carry both credit risk and interest rate risk. Credit risk is the risk that the Fund could lose money if the issuer of a corporate debt security is unable to pay interest or repay principal when it is due.

**Reverse Repurchase Agreements Risk.** The Fund may invest in reverse repurchase agreements. Reverse repurchase agreements are transactions in which the Fund sells portfolio securities to financial institutions such as banks and broker-dealers, and agrees to repurchase them at a mutually agreed-upon date and price which is higher than the original sale price. Reverse repurchase agreements are a form of leverage and the use of reverse repurchase agreements by the Fund may increase the Fund's volatility. The Fund incurs costs, including interest expense, in connection with the opening and closing of reverse repurchase agreements that will be borne by the shareholders.

Reverse repurchase agreements are also subject to the risk that the other party to the reverse repurchase agreement will be unable or unwilling to complete the transaction as scheduled, which may result in losses to the Fund. In situations where the Fund is required to post collateral with a counterparty, the counterparty may fail to segregate the collateral or may commingle the collateral with the counterparty's own assets. As a result, in the event of the counterparty's bankruptcy or insolvency, the Fund's collateral may be subject to the conflicting claims of the counterparty's creditors, and the Fund may be exposed to the risk of a court treating the Fund as a general unsecured creditor of the counterparty, rather than as the owner of the collateral. There can be no assurance that a counterparty will not default and that the Fund will not sustain a loss on a transaction as a result.

Reverse repurchase agreements also involve the risk that the market value of the securities sold by the Fund may decline below the price at which it is obligated to repurchase the securities. In addition, when the Fund invests the proceeds it receives in a reverse repurchase transaction, there is a risk that those investments may decline in value. In this circumstance, the Fund could be required to sell other investments in order to meet its obligations to repurchase the securities.

**Debt Securities Risk.** Investments in debt securities subject the holder to the credit risk of the issuer. Credit risk refers to the possibility that the issuer or other obligor of a security will not be able or willing to make payments of interest and principal when due. Generally, the value of debt securities will change inversely with changes in interest rates. To the extent that interest rates rise, certain underlying obligations may be paid off substantially slower than originally anticipated and the value of those securities may fall sharply. During periods of falling interest rates, the income received by the Fund may decline. If the principal on a debt security is prepaid before expected, the prepayments of principal may have to be reinvested in obligations paying interest at lower rates. Debt securities generally do not trade on a securities exchange making them generally less liquid and more difficult to value than common stock.

**Valuation Risk.** The Fund or the Subsidiary may hold securities or other assets that may be valued on the basis of factors other than market quotations. This may occur because the asset or security does not trade on a centralized exchange, or in times of market turmoil or reduced liquidity. There are multiple methods that can be used to value a portfolio holding when market quotations are not readily available. The value established for any portfolio holding at a point in time might differ from what would be produced using a different methodology or if it had been priced using market quotations. Portfolio holdings that are valued using techniques other than market quotations, including "fair valued" assets or securities, may be subject to greater fluctuation in their valuations from one day to the next than if market quotations were used. In addition, there is no assurance that the Fund or the Subsidiary could sell or close out a portfolio position for the value established for it at any time, and it is possible that the Fund or the Subsidiary would incur a loss because a portfolio position is sold or closed out at a discount to the valuation established by the Fund or the Subsidiary at that time. The Fund's ability to value investments may be impacted by technological issues or errors by pricing services or other third-party service providers.

**Subsidiary Investment Risk.** Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary are organized, respectively, could result in the inability of the Fund to operate as intended and could negatively affect the Fund and its shareholders. The Subsidiary is not registered under the 1940 Act and is not subject to all the investor protections of the 1940 Act. However, as the Subsidiary is wholly-owned by the Fund, and the investors of the Fund will have the investor protections of the 1940 Act, the Fund as a whole—including the Subsidiary—will provide investors with 1940 protections.

**Target Exposure and Rebalancing Risks.** The Fund will normally seek to maintain aggregate notional exposure to bitcoin and ether equal to 100% of the net assets of the Fund. However, in order to comply with certain tax qualification tests at the end of each tax quarter, the Fund may reduce its exposure to Bitcoin and Ether Futures Contracts on or about such dates. If the value of Bitcoin and Ether Futures Contracts rises during such periods that the Fund has reduced its exposure, the performance of the Fund will be less than it would have been had the Fund maintained is exposure through such period.

**Commodity Regulatory Risk.** The Fund's use of commodity futures subject to regulation by the CFTC has caused the Fund to be classified as a "commodity pool" and this designation requires that the Fund comply with CFTC rules, which may impose additional regulatory requirements and compliance obligations. The Fund's investment decisions may need to be modified, and commodity contract positions held by the Fund may have to be liquidated at disadvantageous times or prices, to avoid exceeding any applicable position limits established by the CFTC, potentially subjecting the Fund to substantial losses. The regulation of commodity transactions in the United States is subject to ongoing modification by government, self-regulatory and judicial action. The effect of any future regulatory change with respect to any aspect of the Fund is impossible to predict, but could be substantial and adverse to the Fund.

**Volatility Risk.** Volatility is the characteristic of a security or other asset, an index or a market to fluctuate significantly in price within a short time period. The prices of bitcoin, ether and Bitcoin and Ether Futures Contracts have historically been highly volatile. The value of the Fund's investments in Bitcoin and Ether Futures Contracts – and therefore the value of an investment in the Fund – could decline significantly and without warning, including to zero. If you are not prepared to accept significant and unexpected changes in the value of the Fund and the possibility that you could lose your entire investment in the Fund, you should not invest in the Fund.

**Interest Rate Risk.** Interest rate risk is the risk that the value of the debt securities in the Fund's portfolio will decline because of rising market interest rates. Interest rate risk is generally lower for shorter term debt securities and higher for longer-term debt securities. The Fund may be subject to a greater risk of rising interest rates than would normally be the case due to the current period of historically low rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives. Duration is a reasonably accurate measure of a debt security's price sensitivity to changes in interest rates and a common measure of interest rate risk. Duration measures a debt security's expected life on a present value basis, taking into account the debt security's yield, interest payments and final maturity. In general, duration represents the expected percentage change in the value of a security for an immediate 1% change in interest rates. For example, the price of a debt security with a three-year duration would be expected to drop by approximately 3% in response to a 1% increase in interest rates. Therefore, prices of debt securities with shorter durations tend to be less sensitive to interest rate changes than debt securities with longer durations. As the value of a debt security changes over time, so will its duration.

**Capital Gains Distribution Risk**. The Fund may realize and distribute significant net capital gains due to its use of rolling futures contracts. Such capital gains distributions may represent a significant percentage of the Fund's net asset value. Each capital gains distribution will typically reduce the Fund's net asset value by approximately the amount of the distribution on the ex-dividend date (i.e., the date by which you need to own a dividend-paying stock in order to receive the upcoming dividend payment). The repeated payment of distributions by the Fund, if any, may significantly erode the Fund's net asset value and trading price over time. As a result, an investor may suffer significant losses to their investment. Short-term and long-term realized capital gains distributions paid by the Fund are taxable to its shareholders.

**Cash Transaction Risk.** Most ETFs generally make in-kind redemptions to avoid being taxed at the fund level on gains on the distributed portfolio securities. However, unlike most ETFs, the Fund currently intends to effect some or all redemptions for cash, rather than in-kind, because of the nature of the Fund's investments. The Fund may be required to sell portfolio securities to obtain the cash needed to distribute redemption proceeds, which involves transaction costs that the Fund may not have incurred had it effected redemptions entirely in kind. These costs may include brokerage costs and/or taxable gains or losses, which may be imposed on the Fund and decrease the Fund's net asset value to the extent such costs are not offset by a transaction fee payable to an AP. If the Fund recognizes gain on these sales, this generally will cause the Fund to recognize gain it might not otherwise have recognized if it were to distribute portfolio securities in-kind, or to recognize such gain sooner than would otherwise be required. This may decrease the tax efficiency of the Fund compared to ETFs that utilize an in-kind redemption process, and there may be a substantial difference in the after-tax rate of return between the Fund and other ETFs.

**Clearing Broker Risk.** The Fund's investments in exchange-traded futures contracts expose it to the risks of a clearing broker (or a futures commission merchant ("FCM")). Under current regulations, a clearing broker or FCM maintains customers' assets in a bulk segregated account. There is a risk that Fund assets deposited with the clearing broker to serve as margin may be used to satisfy the broker's own obligations or the losses of the broker's other clients. In the event of default, the Fund could experience lengthy delays in recovering some or all of its assets and may not see any recovery at all. Furthermore, the Fund is subject to the risk that no FCM is willing or able to clear the Fund's transactions or maintain the Fund's assets. If the Fund's FCMs are unable or unwilling to clear the Fund's transactions, or if the FCM refuses to maintain the Fund's assets, the Fund will be unable have its orders for Bitcoin and Ether Futures Contracts fulfilled or assets custodied. In such a circumstance, the performance of the Fund will likely deviate from the performance of bitcoin and ether and may result in the proportion of Bitcoin and Ether Futures Contracts in the Fund's portfolio relative to the total assets of the Fund to decrease.

**Investment Capacity Risk.** If the Fund's ability to obtain exposure to Bitcoin and Ether Futures Contracts consistent with its investment objective is disrupted for any reason, including but not limited to, limited liquidity in the Bitcoin and Ether Futures Contracts markets, a disruption to the Bitcoin and Ether Futures Contracts market, or as a result of margin requirements or position limits imposed by the Fund's FCMs, the exchanges on which the Bitcoin and Ether Futures Contracts trade, or the CFTC, the Fund would not be able to achieve its investment objective and may experience significant losses.

**Frequent Trading Risk.** The Fund regularly purchases and subsequently sells (*i.e.*, "rolls") individual futures contracts throughout the year so as to maintain a fully invested position. As the contracts near their expiration dates, the Fund rolls them over into new contracts. This frequent trading of contracts may increase the amount of commissions or mark-ups to broker-dealers that the Fund pays when it buys and sells contracts, which may detract from the Fund's performance. High portfolio turnover may result in the Fund paying higher levels of transaction costs and may generate greater tax liabilities for shareholders. Frequent trading risk may cause the Fund's performance to be less than expected.

**Credit Risk.** An issuer or other obligated party of a debt security may be unable or unwilling to make dividend, interest and/or principal payments when due. In addition, the value of a debt security may decline because of concerns about the issuer's ability or unwillingness to make such payments.

**Leverage Risk.** The Fund seeks to achieve and maintain the exposure to the price of bitcoin and ether by using leverage inherent in futures contracts. Therefore, the Fund is subject to leverage risk. When the Fund purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction, it creates leverage, which can result in the Fund losing more than it originally invested. As a result, these investments may magnify losses to the Fund, and even a small market movement may result in significant losses to the Fund. Leverage may also cause a Fund to be more volatile because it may exaggerate the effect of any increase or decrease in the value of the Fund's portfolio securities. Futures trading involves a degree of leverage and as a result, a relatively small price movement in futures instruments may result in immediate and substantial losses to the Fund. The Fund may at times be required to liquidate portfolio positions, including when it is not advantageous to do so, in order to comply with guidance from the Securities and Exchange Commission (the *"SEC"*) regarding asset segregation requirements to cover certain leveraged positions.

**Active Management Risk.** The Fund is actively managed and its performance reflects the application of investment techniques and risk analyses in the investment decisions that the Sub-Adviser and Adviser make for the Fund. Such judgments about the Fund's investments may prove to be incorrect. If the investments selected and the strategies employed by the Fund fail to produce the intended results, the Fund could underperform as compared to other funds with similar investment objectives and/or strategies, or could have negative returns.

**Active Market Risk.** Although the Shares are listed for trading on the Exchange, there can be no assurance that an active trading market for the Shares will develop or be maintained. Shares trade on the Exchange at market prices that may be below, at or above the Fund's net asset value. Securities, including the Shares, are subject to market fluctuations and liquidity constraints that may be caused by such factors as economic, political, or regulatory developments, changes in interest rates, and/or perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments.

**Asset Concentration Risk.** Since the Fund may take concentrated positions in Bitcoin and Ether Futures Contracts, the Fund's performance may be disproportionately and significantly impacted by the poor performance of those positions to which it has significant exposure. Concentration in Bitcoin and Ether Futures Contracts makes the Fund more susceptible to any single occurrence affecting the underlying positions and may subject the Fund to greater market risk than more diversified funds.

**Authorized Participant Concentration Risk.** Only an authorized participant may engage in creation or redemption transactions directly with the Fund. The Fund has a limited number of institutions that act as authorized participants on an agency basis (*i.e.* on behalf of other market participants). To the extent that these institutions exit the business or are unable to proceed with creation and/or redemption orders with respect to the Fund and no other authorized participant is able to step forward to create or redeem, in either of these cases, Shares may trade at a discount to the Fund's net asset value and possibly face delisting.

**Cyber Security Risk.** The Fund is susceptible to operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund's digital information systems through "hacking" or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition, cyber security breaches of the Fund's third-party service providers, such as its administrator, transfer agent, custodian, or sub-adviser, as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. While the Fund has established business continuity plans and risk management systems designed to reduce the risks associated with cyber security, there are inherent limitations in such plans and systems. Additionally, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third-party service providers.

**Inflation Risk.** Inflation may reduce the intrinsic value of increases in the value of the Fund. Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Fund's assets can decline as can the value of the Fund's distributions.

**Market Maker Risk.** If the Fund has lower average daily trading volumes, it may rely on a small number of third-party market makers to provide a market for the purchase and sale of Shares. Any trading halt or other problem relating to the trading activity of these market makers could result in a dramatic change in the spread between the Fund's net asset value and the price at which the Shares are trading on the Exchange, which could result in a decrease in value of the Shares. In addition, decisions by market makers or authorized participants to reduce their role or step away from these activities in times of market stress could inhibit the effectiveness of the arbitrage process in maintaining the relationship between the underlying values of the Fund's portfolio securities and the Fund's market price. This reduced effectiveness could result in Shares trading at a discount to net asset value and also in greater than normal intra-day bid-ask spreads for Shares.

**Non-Diversification Risk.** The Fund is classified as "non-diversified" under the 1940 Act. As a result, the Fund is only limited as to the percentage of its assets which may be invested in the securities of any one issuer by the diversification requirements imposed by the Code. The Fund may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the Fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly invested in certain issuers.

**Operational Risk.** The Fund is exposed to operational risks arising from a number of factors, including, but not limited to, human error, processing and communication errors, errors of the Fund's service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. The Fund, Adviser and Sub-Adviser seek to reduce these operational risks through controls and procedures. However, these measures do not address every possible risk and may be inadequate to address these risks.

**Premium/Discount Risk.** The market price of the Fund's Shares will generally fluctuate in accordance with changes in the Fund's net asset value as well as the relative supply of and demand for Shares on the Exchange. The Fund's market price may deviate from the value of the Fund's underlying portfolio holdings, particularly in time of market stress, with the result that investors may pay more or receive less than the underlying value of the Fund shares bought or sold. The Adviser and Sub-Adviser cannot predict whether Shares will trade below, at or above their net asset value because the Shares trade on the Exchange at market prices and not at net asset value. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for Shares will be closely related, but not identical, to the same forces influencing the prices of the holdings of the Fund trading individually or in the aggregate at any point in time. However, given that Shares can only be purchased and redeemed in Creation Units, and only to and from broker-dealers and large institutional investors that have entered into participation agreements (unlike shares of closed-end funds, which frequently trade at appreciable discounts from, and sometimes at premiums to, their net asset value), the Adviser and Sub-Adviser believe that large discounts or premiums to the net asset value of Shares should not be sustained. During stressed market conditions, the market for the Fund's Shares may become less liquid in response to deteriorating liquidity in the market for the Fund's underlying portfolio holdings, which could in turn lead to differences between the market price of the Fund's Shares and their net asset value. This can be reflected as a spread between the bid and ask prices for the Fund quoted during the day or a premium or discount in the closing price from the Fund's net asset value.

**Small Fund Risk.** The Fund currently has fewer assets than larger funds, and like other smaller funds, large inflows and outflows may impact the Fund's market exposure for limited periods of time. This impact may be positive or negative, depending on the direction of market movement during the period affected. If the Fund fails to attract a large amount of assets, shareholders of the Fund may incur higher expenses as the Fund's fixed costs would be allocated over a smaller number of shareholders. Failure to grow and large outflows may be factors the Board considers in any determination to cease the Fund's operations and dissolve.

**Tax Risk.** The Fund intends to elect and to qualify each year to be treated as a RIC under Subchapter M of the Code. As a RIC, the Fund will not be subject to U.S. federal income tax on the portion of its net investment income and net capital gain that it distributes to Shareholders, provided that it satisfies certain requirements of the Code. If the Fund does not qualify as a RIC for any taxable year and certain relief provisions are not available, the Fund's taxable income will be subject to tax at the Fund level and to a further tax at the shareholder level when such income is distributed. Additionally, buying securities shortly before the record date for a taxable dividend or capital gain distribution is commonly known as "buying the dividend." In the event a shareholder purchases Shares shortly before such a distribution, the entire distribution may be taxable to the shareholder even though a portion of the distribution effectively represents a return of the purchase price. To comply with the asset diversification test applicable to a RIC, the Fund must limit its investments in the Subsidiary to 25% of the Fund's total assets at the end of each tax quarter or cure any non-compliance during the grace period. The investment strategy of the Fund may cause the Fund to hold more than 25% of the Fund's total assets in investments in the Subsidiary the majority of the time. The Fund intends to manage the exposure to the Subsidiary so that the Fund's investments in the Subsidiary do not exceed 25% of the total assets at the end of any tax quarter. If the Fund's investments in the Subsidiary were to exceed 25% of the Fund's total assets at the end of a tax quarter, the Fund, generally, has a grace period to cure such lack of compliance. If the Fund fails to timely cure, it may no longer be eligible to be treated as a RIC.

Because Bitcoin and Ether Futures Contracts produce non-qualifying income for purposes of qualifying as a RIC, the Fund makes its investments in Bitcoin and Ether Futures Contracts through the Subsidiary. The Fund intends to treat any income it may derive from the futures contracts received by the Subsidiary as "qualifying income" under the provisions of the Code applicable to RICs. The Internal Revenue Service (the *"IRS"*) has issued numerous Private Letter Rulings ("PLRs") provided to third parties not associated with the Fund or its affiliates (which only those parties may rely on as precedent) concluding that similar arrangements resulted in qualifying income. Many of such PLRs have now been revoked by the IRS. In March of 2019, the Internal Revenue Service published Regulations that concluded that income from a corporation similar to the Subsidiary would be qualifying income, if the income is related to the Fund's business of investing in stocks or securities. Although the Regulations do not require distributions from the Subsidiary, the Fund intends to cause the Subsidiary to make distributions that would allow the Fund to make timely distributions to its shareholders. The Fund generally will be required to include in its own taxable income the income of the Subsidiary for a tax year, regardless of whether the Fund receives a distribution of the Subsidiary's income in that tax year, and this income would nevertheless be subject to the distribution requirement for qualification as a regulated investment company and would be taken into account for purposes of the 4% excise tax.

If, in any year, the Fund were to fail to qualify for the special tax treatment accorded a RIC and its shareholders, and were ineligible to or were not to cure such failure, the Fund would be taxed in the same manner as an ordinary corporation subject to U.S. federal income tax on all its income at the fund level. The resulting taxes could substantially reduce the Fund's net assets and the amount of income available for distribution. In addition, in order to requalify for taxation as a RIC, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make certain distributions.

**Trading Issues Risk.** Trading in Fund Shares on the Exchange may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in Shares inadvisable. In addition, trading in Fund Shares on the Exchange is subject to trading halts caused by extraordinary market volatility pursuant to the Exchange's "circuit breaker" rules. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of the Fund will continue to be met or will remain unchanged. The Fund may have difficulty maintaining its listing on the Exchange in the event the Fund's assets are small, the Fund does not have enough shareholders, or if the Fund is unable to proceed with creation and/or redemption orders.

**PERFORMANCE**

On October 3, 2023 and again on July 14, 2025, the Fund's investment strategy changed. Prior to October 3, 2023, the Fund sought to achieve its investment objective by investing all or substantially all of its assets in exchange-traded futures contracts on bitcoin and Collateral Investments. Following October 3, 2023 and prior to July 14, 2025, the Fund sought to achieve its investment objective by investing all or substantially all of its assets in Bitcoin and Ether Futures Contracts and Collateral Investments. Following July 14, 2025 the Fund seeks to achieve its investment objective by investing at least 80% of its net assets (plus borrowings for investment purposes) in Bitcoin and Ether Futures Contracts. For purposes of this investment test, derivative contracts (such as Bitcoin and Ether Futures Contracts) will be valued using their notional value.

Therefore, the Fund's performance and historical returns shown below are not necessarily indicative of the performance that the Fund would have generated based upon its current strategy.

The bar chart and table below illustrate the annual calendar year returns of the Fund based on net asset value as well as the average annual Fund returns. The bar chart and table provide an indication of the risks of investing in the Fund by showing changes in the Fund's performance from year-to-year and by showing how the Fund's average annual total returns based on net asset value compare to those of a broad-based market index. The Fund's performance information is accessible on the Fund's website at <u>https://coinshares.com/us/etf/btf/</u>.

![](coinshares485bpos002.jpg)

The Fund's highest quarterly return was 69.66% (quarter ended March 31, 2023) and the Fund's lowest quarterly return was -59.24% (quarter ended June 30, 2022).

---

| | | |
|:---|:---|:---|
| **Average Annual Total Return as of December 31, 2025** | **Average Annual Total Return as of December 31, 2025** | **Average Annual Total Return as of December 31, 2025** |
| **CoinShares Bitcoin and Ether ETF** | **1 Year** | **Since Inception <br> (10/21/2021)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return Before Taxes | -10.70% | -1.96% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return After Taxes on Distributions | -32.75% | -12.84% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return After Taxes on Distributions and Sale of Fund Shares | -6.75% | -5.51% |
| **S&P 500 Total Return Index** (reflects no deduction for fees, expenses or taxes) | 17.88% | 11.87% |

---

The Fund's past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.

Returns before taxes do not reflect the effects of any income or capital gains taxes. All after-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local tax. Returns after taxes on distributions reflect the taxed return on the payment of dividends and capital gains.

Your own actual after-tax returns will depend on your specific tax situation and may differ from what is shown here. After-tax returns are not relevant to investors who hold Shares in tax-deferred accounts such as individual retirement accounts (IRAs) or employee-sponsored retirement plans.

**Management**

*<u>Investment Adviser</u>*

Valkyrie Funds LLC

*<u>Investment Sub-Adviser</u>*

Vident Asset Management

*<u>Portfolio Managers</u>*

The following persons serve as portfolio managers of the Fund.

● Bill Cannon, Head of ETF Portfolio Management of Valkyrie

● Rafael Zayas, CFA, Senior Vice President and Head of Portfolio Management and Trading of Vident

● Austin Wen, Portfolio Manager of Vident

Each of the portfolio managers is primarily and jointly responsible for the day-to-day management of the Fund. Mr. Zayas has served in such capacity since the Fund's inception in 2021. Mr. Cannon and Mr. Wen have served in such capacity since 2022.

**Purchase and Sale of Shares**

The Fund issues and redeems Shares on a continuous basis, at net asset value, only in large blocks of shares called "Creation Units." Individual Shares of the Fund may only be purchased and sold on the secondary market through a broker-dealer. Since Shares of the Fund trade on securities exchanges in the secondary market at their market price rather than their net asset value, the Fund's Shares may trade at a price greater than (premium) or less than (discount) the Fund's net asset value. An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase Shares of the Fund (bid) and the lowest price a seller is willing to accept for Shares of the Fund (ask) when buying or selling Shares in the secondary market (the *"bid-ask spread"*).

Recent information, including the Fund's net asset value, market price, premiums and discounts, and bid-ask spreads, is available online at https://coinshares.com/us/etf/btf/.

**Tax Information**

The Fund's distributions will generally be taxable as ordinary income, returns of capital or capital gains. A sale of Shares may result in capital gain or loss.

**Payments to Broker-Dealers and Other Financial Intermediaries**

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank), Valkyrie and ALPS Distributors, Inc. (the "Distributor"), the Fund's distributor, may pay the intermediary for the sale of Shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

**Additional Information About the Fund's Principal Investment Strategies**

The Fund is a series of Valkyrie ETF Trust II and is regulated as an "investment company" under the 1940 Act. The Fund is actively managed and does not seek to track the performance of an index. The Fund's investment objective is non-fundamental and may be changed without approval by the holders of a majority of the outstanding voting securities of the Fund. Unless an investment policy is identified as being fundamental, all investment policies included in this prospectus and the Fund's Statement of Additional Information (*"SAI"*) are non-fundamental and may be changed by the Board of Trustees of the Trust (the *"Board"*) without shareholder approval. If there is a material change to the Fund's investment objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will achieve its investment objective. The Adviser may determine to utilize swap agreements (derivative contracts entered into primarily with major global financial institutions for a specified period wherein two parties agree to exchange or "swap" payments based on the change in value of an underlying asset or benchmark) to obtain exposure to bitcoin.

**Disclosure of Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of the Fund's portfolio holdings is available in the Fund's SAI, which is available at https://coinshares.com/us/etf/btf/.

**Additional Information Regarding the Fund's Strategy**

The Fund seeks capital appreciation. The Fund is an actively-managed ETF that pursues its investment strategy primarily by investing all or substantially all of its assets in Bitcoin and Ether Futures Contracts, as identified by the Fund's investment sub-adviser, Vident. The Fund will also invest in Collateral Investments, which are designed to provide liquidity, serve as margin, or otherwise collateralize the Subsidiary's investments in Bitcoin and Ether Futures Contracts. The Fund will not hold bitcoin directly.

**Bitcoin, ether and Bitcoin and Ether Futures Contracts are a relatively new asset class and are subject to unique and substantial risks, including the risk that the value of the Fund's investments could decline rapidly, including to zero. Bitcoin, ether and Bitcoin and Ether Futures Contracts have historically been more volatile than traditional asset classes. You should be prepared to lose your entire investment.**

*Bitcoin*

Bitcoin is a digital asset that serves as the unit of account of an open-source, decentralized, peer-to-peer computer network. The adoption of bitcoin to pay for goods and services, stored for future use or converted to a fiat (i.e., currency issued by a governmental authority, such as the United States dollar) currency has been limited as of the date of this Prospectus.

The value of bitcoin is not backed by any government, corporation or other identified body. The value is determined, in part, by the supply and demand for bitcoin in the markets for exchange that have been organized to facilitate the trading of bitcoin. By design, the supply of bitcoin is limited to 21 million bitcoins. As of the date of this Prospectus, there are approximately 19.98 million bitcoins in circulation.

The Bitcoin Network

Bitcoin is maintained on the decentralized, open source, peer-to-peer computer network (the *"Bitcoin Network"*). No single entity owns or operates the Bitcoin Network. Bitcoin was first described in a white paper released in 2008 and published under the pseudonym "Satoshi Nakamoto". The protocol underlying bitcoin was subsequently released in 2009 and open source software currently operates on a worldwide network of computers. The Bitcoin Network is accessed through software and governs bitcoin's creation and movement. The source code for Bitcoin Network, often referred to as the Bitcoin Protocol, is open-source, and anyone can contribute to its development.

The infrastructure of the Bitcoin Network is collectively maintained by participants in the Bitcoin Network, including miners, developers and users. Miners validate transactions and are compensated for that service in bitcoin. Developers maintain and contribute updates to the Bitcoin Protocol. Users access the Bitcoin Network, an open-source software. Anyone can be a user, developer, or miner. The first step in using the Bitcoin Network for transactions is to download specialized software referred to as a "bitcoin wallet" which can be downloaded on a computer or smartphone and can both send and receive bitcoin. Within a bitcoin wallet, a user can generate one or more unique "bitcoin addresses" which a user can send or receive bitcoin from his or her address to another user's address.

Bitcoin is "stored" on a digital transaction ledger commonly known as "blockchain," which is a type of shared and continually reconciled database stored in a decentralized manner on the computers of certain users of the digital asset and is protected by cryptography. The bitcoin blockchain contains a record and history of each bitcoin transaction. The amount of bitcoin associated with each bitcoin address, as well as each bitcoin transaction to or from such address is transparently reflected in the blockchain and can be viewed by websites that operate as "blockchain explorers."

Proof-of-Work Process

The Bitcoin Protocol

The Bitcoin Protocol is an open-source software. Any developer can review the underlying code and suggest changes thereto. There is no official group or company that is responsible for making modifications to bitcoin. A number of individual developers regularly contribute to specific distribution of bitcoin software known as the "Bitcoin Core." The Bitcoin Core is a maintained open source repository on the website Github. There are many other compatible versions of bitcoin software, but Bitcoin Core is the de facto standard for the Bitcoin Protocol, and is also known as the "reference software." The core developers for the Bitcoin Core operate under a volunteer basis and without strict hierarchical administration. The core developers are able to access, and can alter, the Bitcoin Network source code and, as a result, are responsible for the quasi-official releases of updates and other changes to the Bitcoin Network's source code. Because bitcoin has no central authority, the release of updates to the Bitcoin Network's source code by the core developers does not guarantee that the updates will be automatically adopted by the other participants. Users and miners must accept any changes by downloading the proposed modification, and such modification is effective only with respect to those bitcoin users and miners who choose to download it. The modification to the source code becomes a part of the Bitcoin Network only if it is accepted by participants that collectively have a majority of the processing power on the Bitcoin Network. If only a percentage of users and miners accept a modification, a division occurs such that one network will run the pre-modification source code and the other network will run the modified source code. This division is known as a "fork".

*Ether*

Smart Contracts and Development on the Ethereum Network

Smart contracts are programs that run on a blockchain that can execute automatically when certain conditions are met. Smart contracts facilitate the exchange of anything representative of value, such as money, information, property, or voting rights. Using smart contracts, users can send or receive digital assets, create markets, store registries of debts or promises, represent ownership of property or a company, move funds in accordance with conditional instructions and create new digital assets.

Development on the Ethereum Network involves building more complex tools on top of smart contracts, such as decentralized apps (DApps); organizations that are autonomous, known as decentralized autonomous organizations (DAOs); and entirely new decentralized networks. For example, a company that distributes charitable donations on behalf of users could hold donated funds in smart contracts that are paid to charities only if the charity satisfies certain pre-defined conditions.

Moreover, the Ethereum Network has also been used as a platform for creating new digital assets and conducting their associated initial coin offerings. As of December 31, 2025, a substantial portion of digital assets on the Ethereum Network represent a significant share of total digital asset market value.

More recently, the Ethereum Network has been used for decentralized finance (DeFi) or open finance platforms, which seek to democratize access to financial services, such as borrowing, lending, custody, trading, derivatives and insurance, by removing third-party intermediaries. DeFi can allow users to lend and earn interest on their digital assets, exchange one digital asset for another and create derivative digital assets such as stablecoins, which are digital assets pegged to a reserve asset such as fiat (i.e., currency issued by a governmental authority, such as the United States dollar) currency.

In addition, the Ethereum Network and other smart contract platforms have been used for creating non-fungible tokens, or NFTs. Unlike digital assets native to smart contract platforms which are fungible and enable the payment of fees for smart contract execution. Instead, NFTs allow for digital ownership of assets that convey certain rights to other digital or real-world assets. This new paradigm allows users to own rights to other assets through NFTs, which enable users to trade them with others on the Ethereum Network. For example, an NFT may convey rights to a digital asset that exists in an online game or a DApp, and users can trade their NFT in the DApp or game, and carry them to other digital experiences, creating an entirely new free-market internet-native economy that can be monetized in the physical world.

Proof-of-Stake Process

In the second half of 2020, the Ethereum Network began the first of several stages of an upgrade that was initially known as "Ethereum 2.0." and eventually became known as the "Merge" to transition the Ethereum Network from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism. The Merge was completed on September 15, 2022 and the Ethereum Network has operated on a proof-of-stake model since such time.

Unlike proof-of-work, in which miners expend computational resources to compete to validate transactions and are rewarded coins in proportion to the amount of computational resources expended, in proof-of-stake, miners (sometimes called validators) risk or "stake" coins to compete to be randomly selected to validate transactions and are rewarded coins in proportion to the amount of coins staked. Any malicious activity, such as validating multiple blocks, disagreeing with the eventual consensus or otherwise violating protocol rules, results in the forfeiture or "slashing" of a portion of the staked coins. Proof-of-stake is viewed as more energy efficient and scalable than proof-of-work and is sometimes referred to as "virtual mining". Every 12 seconds, approximately, a new block is added to the Ethereum Blockchain with the latest transactions processed by the network, and the validator that generated this block is awarded ether.

Limits on Ether Supply

The rate at which new ether are issued and put into circulation is expected to vary. In September 2022 the Ethereum Network converted from proof-of-work to a new proof-of-stake consensus mechanism. Following the Merge, approximately 1,700 ether are issued per day, though the issuance rate varies based on the number of validators on the network. In addition, the issuance of new ether could be partially or completely offset by the burn mechanism introduced by the EIP-1559 modification, under which ether are removed from supply at a rate that varies with network usage. On occasion, the ether supply has been deflationary over a 24-hour period as a result of the burn mechanism. The attributes of the new consensus algorithm are subject to change, but in sum, the new consensus algorithm and related modifications reduced total new ether issuances and could turn the ether supply deflationary over the long term.

As of the date of this Prospectus, there are approximately 121 million ether outstanding.

*Investment in the Subsidiary*

The Fund expects to gain exposure to Bitcoin and Ether Futures Contracts by investing a portion of its assets in a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands, the Valkyrie Bitcoin Strategy (Cayman) Ltd. The tax year end of the Subsidiary is September 30th. Valkyrie serves as investment adviser and Vident serves as investment sub-adviser to the Subsidiary, subject to the oversight of the Subsidiary's board of directors.

*Secondary Investments*

The Fund's investment in futures contracts will be limited by the position limits established by the applicable derivatives exchange applicable to such contracts. Currently, the position limit for Bitcoin Futures Contracts on the CME is 2,000 contracts for an applicable month, with each contract representing five bitcoin, while the position limit for Ether Futures Contracts is 8,000 contracts for an applicable month, with each contract representing 50 ether. The Fund will be prohibited from purchasing Bitcoin and Ether Futures Contracts in excess of these limits. If the Fund is prohibited by applicable position limits from buying additional front month Bitcoin and Ether Futures Contracts, the Fund will invest, in the discretion of the Sub-Adviser, in longer dated Bitcoin and Ether Futures Contracts and/or additional Collateral Investments (collectively, *"Secondary Investments"*).

Shareholders and prospective investors in the Fund may visit https://coinshares.com/us/etf/btf/ or call 1-800-617-0004 with questions regarding bitcoin, ether, Bitcoin and Ether Futures Contracts and the Fund's investment strategy.

**Fund Investments**

**Principal Investments**

*Bitcoin and Ether Futures Contracts*

Futures contracts are financial contracts the value of which depends on, or is derived from, the underlying reference asset. For Bitcoin and Ether Futures Contracts, the underlying reference asset is bitcoin and ether, respectively. A futures contract is a standardized contract traded on an exchange. The contract will stipulate an exchange to buy or sell a specified type and quantity of a particular underlying asset at a designated price. Futures contracts may be physically-settled or cash-settled. The only futures contracts in which the Fund invests are cash-settled Bitcoin and Ether Futures Contracts traded on commodity exchanges registered with the CFTC. "Cash-settled" means that when the relevant futures contract expires, if the value of the underlying asset exceeds the futures contract price, the seller pays to the purchaser cash in the amount of that excess, and if the futures contract price exceeds the value of the underlying asset, the purchaser pays to the seller cash in the amount of that excess. In a cash-settled Bitcoin and Ether Futures Contracts, the amount of cash to be paid is equal to the difference between the value of the bitcoin or ether underlying the futures contract at the close of the last trading day of the contract and the futures contract price specified in the agreement. The CME has specified that the value of bitcoin underlying Bitcoin Futures Contracts traded on the applicable exchange will be determined by reference to a volume-weighted average of bitcoin trading prices on multiple digital asset trading venues.

Futures contracts exhibit "futures basis", meaning the difference between the current market value of the underlying bitcoin or ether (the "spot" price) and the price of the cash-settled futures contract. A negative futures basis exists when cash-settled Bitcoin and Ether Futures Contracts generally trade at a premium to the current market value of bitcoin or ether. Under this scenario, the Fund's investments in Bitcoin and Ether Futures Contracts will generally underperform a direct investment in bitcoin or ether.

In order to satisfy certain tax qualification tests, the Fund expects to gain exposure to Bitcoin and Ether Futures Contracts by investing in Bitcoin and Ether Futures Contracts through the Subsidiary.

The Fund will "roll" its Bitcoin and Ether Futures Contracts. Futures contracts expire on a designated date (the "expiration date"). The Bitcoin and Ether Futures Contracts in which the Fund invests are cash settled on their expiration date unless they are "rolled" prior to expiration. The Fund generally intends to "roll" its Bitcoin and Ether Futures Contracts prior to expiration. The Fund seeks to invest in "front month" Bitcoin and Ether Futures Contracts. "Front month" contracts are the monthly contracts with the nearest expiration date. Typically, the Fund will roll to the next "nearby" Bitcoin and Ether Futures Contracts. The "nearby" contracts are those contracts with the next closest expiration date. There is no guarantee that such a strategy will produce the desired results.

To the extent the Fund enters into derivatives transactions, it will do so pursuant to Rule 18f-4 under the 1940 Act. Rule 18f-4 requires the Fund to implement certain policies and procedures designed to manage its derivatives risks, dependent upon the Fund's level of exposure to derivative instruments.

In order to qualify as a regulated investment company (*"RIC"*) for purposes of federal income tax treatment under the Code, the Fund may have to reduce its exposure to its Subsidiary on or around the end of each of the Fund's fiscal quarter ends. If, in any year, the Fund were to fail to qualify for the special tax treatment accorded a RIC and its shareholders, and were ineligible to or were not to cure such failure, the Fund would be taxed in the same manner as an ordinary corporation subject to U.S. federal income tax on all its income at the fund level. The resulting taxes could substantially reduce the Fund's net assets and the amount of income available for distribution. In addition, in order to requalify for taxation as a RIC, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make certain distributions.

*Collateral Investments*

In addition to the investments in Bitcoin and Ether Futures Contracts, the Fund (and the Subsidiary, as applicable) will invest its remaining assets directly in cash, cash-like instruments or high-quality securities (collectively the "Collateral Investments"). The Collateral Investments may consist of high-quality securities, which include: (1) U.S. Government securities, such as bills, notes and bonds issued by the U.S. Treasury; (2) money market funds; and/or (3) corporate debt securities, such as commercial paper and other short-term unsecured promissory notes issued by businesses that are rated investment grade or determined by the Sub-Adviser to be of comparable quality. For these purposes, "investment grade" is defined as investments with a rating at the time of purchase in one of the four highest categories of at least one nationally recognized statistical rating organizations (*e.g.*, BBB- or higher from S&P Global Ratings or Baa3 or higher from Moody's Investors Service, Inc.). The Collateral Investments are designed to provide liquidity (*i.e.*, provide an asset that can easily be exchanged for cash), and satisfy the "margin" requirements applicable to the Fund's futures portfolio, which require that the Fund post collateral to secure its obligations under those contracts. Collateral Investments may also be invested in as Secondary Investments, as described above.

In order to help maintain the desired level of exposure to Bitcoin and Ether Futures Contracts, the Fund may enter into reverse repurchase agreements, a form of borrowing in which the Fund sells portfolio securities to financial institutions and agrees to repurchase them at a mutually agreed-upon date and price that is higher than the original sale price, and use the proceeds for investment purchases.

**Non-Principal Investments**

*Cash Equivalents and Short-Term Investments*

The Fund may invest in securities with maturities of less than two years or cash equivalents, or it may hold cash, in order to collateralize its (or the Subsidiary's) investments or for temporary defensive purposes. The percentage of the Fund invested in such holdings varies and depends on several factors, including market conditions. For temporary defensive purposes and during periods of high cash inflows or outflows, the Fund may depart from its principal investment strategies and invest part or all of its assets in these securities or it may hold cash. During such periods, the Fund may not be able to achieve its investment objective. The Fund may adopt a defensive strategy when the portfolio managers believe instruments in which the Fund normally invests have elevated risks due to political or economic factors and in other extraordinary circumstances.

*U.S. Government Securities*

The Fund may invest in short-term U.S. Government securities. U.S. Government securities include U.S. Treasury obligations and securities issued or guaranteed by various agencies of the U.S. Government, or by various instrumentalities that have been established or sponsored by the U.S. Government. U.S. Treasury obligations are backed by the "full faith and credit" of the U.S. Government. Securities issued or guaranteed by federal agencies and U.S. Government sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. Government.

**Additional Risks of Investing in the Fund**

Risk is inherent in all investing. Investing in the Fund involves risk, including the risk that you may lose all or part of your investment. There can be no assurance that the Fund will meet its stated objective. Before you invest, you should consider the following supplemental disclosure pertaining to the Principal Risks set forth above as well as additional Non-Principal Risks set forth below in this prospectus.

**<u>Principal Risks</u>**

**Market Risk.** Market risk is the risk that a particular security, or Shares of the Fund in general, may fall in value. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more significantly than others. These events also adversely affect the prices and liquidity of the Fund's portfolio securities or other instruments and could result in disruptions in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund's Shares and result in increased market volatility. During any such events, the Fund's Shares may trade at increased premiums or discounts to their net asset value.

**Bitcoin and Ether Market Risk.** The prices of bitcoin, ether and Bitcoin and Ether Futures Contracts have historically been highly volatile. The value of the Fund's investments in Bitcoin and Ether Futures Contracts and other instruments that provide exposure to bitcoin, ether and Bitcoin and Ether Futures Contracts – and therefore the value of an investment in the Fund – could decline significantly and without warning, including to zero. The value of ether and bitcoin has been, and may continue to be, substantially dependent on speculation, such that trading and investing in these crypto assets generally may not be based on fundamental analysis. In addition, the price of bitcoin and ether has been highly correlated, even during periods of volatility, with ether tending to exhibit more pronounced rises and falls. If you are not prepared to accept significant and unexpected changes in the value of the Fund and the possibility that you could lose your entire investment in the Fund you should not invest in the Fund.

**Bitcoin Risk.** Bitcoin is a relatively new innovation and the market for bitcoin is subject to rapid price swings, changes and uncertainty. Trading prices of bitcoin and other digital assets have experienced significant volatility in recent periods and may continue to do so. For instance, there were steep increases in the value of certain digital assets, including bitcoin, over the course of 2021, and multiple market observers asserted that digital assets were experiencing a "bubble." These increases were followed by steep drawdowns throughout 2022 in digital asset trading prices, including for bitcoin. These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout bitcoin's history, including in 2011, 2013-2014, and 2017-2018, before repeating again in 2021-2022. Throughout 2023, 2024 and 2025, bitcoin prices continued to exhibit extreme volatility. Such volatility may persist.

The further development of the Bitcoin Network and the acceptance and use of bitcoin are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development of the Bitcoin Network or the acceptance of bitcoin may adversely affect the price of bitcoin. Bitcoin is subject to the risk of fraud, theft, manipulation or security failures, operational or other problems that impact digital asset trading venues. Additionally, if one or a coordinated group of miners were to gain control of 51% of the Bitcoin Network, they would have the ability to manipulate transactions, halt payments and fraudulently obtain bitcoin. A significant portion of bitcoin is held by a small number of holders sometimes referred to as "whales." Transactions of these holders may influence the price of bitcoin.

Unlike the exchanges for more traditional assets, such as equity securities and futures contracts, bitcoin and digital asset trading venues are largely unregulated and highly fragmented. Due to the fragmentation, regulatory non-compliance and lack of oversight of these trading venues there is a heightened potential for fraud and manipulation. Digital asset trading platforms on which bitcoin is traded, and which may serve as a pricing source for the calculation of the reference rate that is used for the purposes of valuing the Fund's investments, are or may become subject to enforcement actions by regulatory authorities, and such enforcement actions may have a material adverse impact on the Fund, its investments, and its ability to implement its investment strategy.

As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote bitcoin in a way that artificially increases the price of bitcoin). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Over the past several years, a number of digital asset trading venues have been closed due to fraud, failure or security breaches. Investors in bitcoin may have little or no recourse should such theft, fraud or manipulation occur and could suffer significant losses. New or changing laws and regulations may affect the use of blockchain technology and/or investments in crypto assets or crypto asset-related investments. In addition, digital asset trading venues, bitcoin miners, and other participants may have significant exposure to other cryptocurrencies. Instability in the price, availability or legal or regulatory status of those instruments may adversely impact the operation of the digital asset trading venues and the Bitcoin Network.

The realization of any of these risks could result in a decline in the acceptance of bitcoin and consequently a reduction in the value of bitcoin, bitcoin futures, and the Fund. Finally, the creation of a "fork" (as described above) or a substantial giveaway of bitcoin (sometimes referred to as an "air drop") may result in significant and unexpected declines in the value of bitcoin, bitcoin futures, and the Fund.

**Ether Risk.** Ether is a relatively new innovation and the market for ether is subject to rapid price swings, changes and uncertainty. The further development of the Ethereum Network and the acceptance and use of ether are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development of the Ethereum Network or the acceptance of ether may adversely affect the price of ether. Ether is subject to the risk of fraud, theft, manipulation or security failures, operational or other problems that impact digital asset trading venues. Additionally, if one or a coordinated group of validators were to gain control of two-thirds of staked ether, they would have the ability to manipulate transactions and fraudulently obtain ether. If such a validator or group of validators were to gain control of one-third of staked ether, they could halt payments. A significant portion of ether is held by a small number of holders sometimes referred to as "whales". Transactions of these holders may influence the price of ether.

Unlike the exchanges for more traditional assets, such as equity securities and futures contracts, ether and digital asset trading venues are largely unregulated and highly fragmented. Due to the fragmentation, regulatory non-compliance and lack of oversight of these trading venues there is a heightened potential for fraud and manipulation. Digital asset trading platforms on which ether is traded, and which may serve as a pricing source for the calculation of the reference rate that is used for the purposes of valuing the Fund's investments, are or may become subject to enforcement actions by regulatory authorities, and such enforcement actions may have a material adverse impact on the Fund, its investments, and its ability to implement its investment strategy.

As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote ether in a way that artificially increases the price of ether). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Over the past several years, a number of digital asset trading venues have been closed due to fraud, failure or security breaches. Investors in ether may have little or no recourse should such theft, fraud or manipulation occur and could suffer significant losses. New or changing laws and regulations may affect the use of blockchain technology and/or investments in crypto assets or crypto asset-related investments. Legal or regulatory changes may negatively impact the operation of the Ethereum Network or restrict the use of ether. The realization of any of these risks could result in a decline in the acceptance of ether and consequently a reduction in the value of ether, ether futures, and the Fund. Finally, the creation of a "fork" or a substantial giveaway of ether (sometimes referred to as an "air drop") may result in significant and unexpected declines in the value of ether, ether futures, and the Fund. A fork may be intentional, such as the "Merge." The "Merge" refers to protocol changes altering the method by which transactions are validated.

Depending on its characteristics, a digital asset may be considered a "security", or offered and sold as a "security", under the federal securities laws. The test for determining whether a particular digital asset is a "security", or offered and sold as a "security", is complex and difficult to apply, and the outcome is difficult to predict. The SEC has taken no official position on whether ether is a security under the federal securities laws. On the other hand, the SEC has brought enforcement actions against the issuers and promoters of several other digital assets on the basis that the digital assets in question are securities. Any enforcement action by the SEC or a state securities regulator asserting that ether is a security, or a court decision, to that effect would be expected to have an immediate material adverse impact on the trading value of ether, as well as the Shares. This is because the business models behind most digital assets are incompatible with regulations applying to transactions in securities. If a digital asset is determined or asserted to be a security, it is likely to become difficult or impossible for the digital asset to be traded, cleared or custodied in the United States through the same channels used by non-security digital assets, which in addition to materially and adversely affecting the trading value of the digital asset is likely to significantly impact its liquidity and market participants' ability to convert the digital asset into U.S. dollars.

All networked systems are vulnerable to various kinds of attacks. As with any computer network, the Ethereum Network contains certain flaws. For example, the Ethereum Network is currently vulnerable to several types of attacks, including:

● ">33% attack" where, if a validator or group of validators were to gain control of more than 33% of the staked ether, a malicious actor could cause a temporary fork in the blockchain.

● ">50% attack" where, if a validator or group of validators acting in concert were to gain control of more than 50% of the staked ether, a malicious actor would be able to gain full control of the network and the ability to manipulate the blockchain, potentially for an extended period of time or even permanently.

● ">66% attack" where, if a validator or group of validators acting in concert were to gain control of more than 66% of the staked ether, a malicious actor could permanently and irreversibly manipulate the blockchain.

The success of these types of attacks depends on the malicious actors ability to gather an enormous amount of ether and other resources, which serves as the primary practical defense of the network. A successful attack could lead to temporary or permanent disruption of the network, which would have a negative effect on the price of ether and the value of the Shares.

**Futures Contracts Risk.** Risks of futures contracts include: (i) an imperfect correlation between the value of the futures contract and the underlying asset; (ii) possible lack of a liquid secondary market; (iii) the inability to close a futures contract when desired; (iv) losses caused by unanticipated market movements, which may be unlimited; (v) an obligation for the Fund to make daily cash payments to maintain its required margin, particularly at times when the Fund may have insufficient cash; and (vi) unfavorable execution prices from rapid selling. Unlike equities, which typically entitle the holder to a continuing stake in a corporation, futures contracts normally specify a certain date for settlement in cash based on the reference asset. As the futures contracts approach expiration, they may be replaced by similar contracts that have a later expiration. This process is referred to as "rolling." If the market for these contracts is in "contango," meaning that the prices of futures contracts in the nearer months are lower than the price of contracts in the distant months, the sale of the near-term month contract would be at a lower price than the longer-term contract, resulting in a cost to "roll" the futures contract. The actual realization of a potential roll cost will be dependent upon the difference in price of the near and distant contract. The costs associated with rolling Bitcoin and Ether Futures Contracts typically are substantially higher than the costs associated with other futures contracts and may have a significant adverse impact on the performance of the Fund. Because the margin requirement for futures contracts is less than the value of the assets underlying the futures contract, futures trading involves a degree of leverage. As a result, a relatively small price movement in a futures contract may result in immediate and substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 40% of the value of the futures contract is deposited as margin, a subsequent 20% decrease in the value of the futures contract would result in a loss of half of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A decrease in excess of 40% would result in a loss exceeding the original margin deposit, if the futures contract were closed out. Thus, a purchase or sale of a futures contract may result in losses in excess of the amount initially invested in the futures contract. However, the Fund would presumably have sustained comparable losses if, instead of investing in the futures contract, it had invested in the underlying financial instrument and sold it after the decline.

**Bitcoin and Ether Futures Contracts Risk.** In addition to the risks of futures contracts generally, the markets for Bitcoin and Ether Futures Contracts have additional unique risks. The markets for Bitcoin and Ether Futures Contracts may be less developed, less liquid and more volatile than more established futures markets. While the Bitcoin and Ether Futures Contracts markets has grown substantially since they commenced trading, there can be no assurance that this growth will continue. Bitcoin and Ether Futures Contracts are subject to collateral requirements and daily limits may impact the Fund's ability to achieve the desired exposure. If the Fund is unable to meet its investment objective, the Fund's returns may be lower than expected. Additionally, these collateral requirements may require the Fund to liquidate its position when it otherwise would not do so.

**Cost of Futures Investment Risk.** When a Bitcoin or Ether Futures Contract is nearing expiration, the Fund will generally sell it and use the proceeds to buy a Bitcoin and Ether Futures Contract with a later expiration date. This is commonly referred to as "rolling". The costs associated with rolling Bitcoin and Ether Futures Contracts typically are substantially higher than the costs associated with other futures contracts and may have a significant adverse impact on the performance of the Fund.

**Futures/Spot Correlation Risk.** The markets for bitcoin and ether, on the one hand, and Bitcoin and Ether Futures Contracts, on the other, are related but separate markets. These markets may exhibit imperfectly correlation, or even no correlation, between price movements of either a Bitcoin or Ether Futures Contract and price movements of the bitcoin or ether, respectively. This might occur due to factors unrelated to the value of bitcoin or ether, such as speculative or other pressures on the markets in which these assets are traded.

**Forked Digital Asset Risk.** The Bitcoin Network and Ethereum Network operate using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and validators adopt the modification. When a modification is introduced and a substantial majority of users and validators consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and validators consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a "hard fork" of the Bitcoin Network or Ethereum Network, as applicable, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of the Bitcoin Network or the Ethereum Network running in parallel, yet lacking interchangeability. For example, in August 2017, bitcoin "forked" into Bitcoin and a new digital asset, Bitcoin Cash, as a result of a several-year dispute over how to increase the rate of transactions that the Bitcoin Network can process.

Forks may also occur as a network community's response to a significant security breach. For example, in June 2016, an anonymous hacker exploited a smart contract running on the Ethereum Network to syphon approximately $60 million of ether held by The DAO, a distributed autonomous organization, into a segregated account. In response to the hack, most participants in the Ethereum community elected to adopt a "fork" that effectively reversed the hack. However, a minority of users continued to develop the original blockchain, now referred to as "Ethereum Classic" with the digital asset on that blockchain now referred to as Ether Classic, or ETC. ETC now trades on several digital asset trading platforms. A fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Such a fork could lead to users and validators abandoning the digital asset with the flawed software. It is possible, however, that a substantial number of users and validators could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This could result in a permanent fork, as in the case of ether and ether classic.

In addition, many developers have previously initiated hard forks in the Blockchain to launch new digital assets, such as Bitcoin Gold and Bitcoin Diamond. To the extent such digital assets compete with bitcoin or ether, such competition could impact demand for bitcoin or ether and could adversely impact the value of the Shares.

Furthermore, a hard fork can lead to new security concerns. For example, when the Ethereum and Ethereum Classic networks split in July 2016. Replay attacks, in which transactions from one network were rebroadcast to nefarious effect on the other network, plagued digital asset trading platforms through at least October 2016. A digital asset trading platforms announced in July 2016 that it had lost 40,000 Ether Classic, worth about $100,000 at that time, as a result of replay attacks. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of mining/validating power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual validator or validator pool's power to exceed levels necessary to execute an attack on the network

A future fork in the Bitcoin Network or Ethereum Network could adversely affect the value of the Shares.

**Digital Asset Industry Risk.** The digital asset industry has recently been subject to a number of high-profile regulatory events as well as the introduction of new products and services. This has led to volatility and disruption in the digital asset markets and financial difficulties for several prominent industry participants, including digital asset trading platforms, hedge funds and lending platforms. For example, in the first half of 2022, digital asset lenders Celsius Network LLC and Voyager Digital Ltd. and digital asset hedge fund Three Arrows Capital each declared bankruptcy, and the stablecoin TerraUSD collapsed. These events caused a loss of confidence in participants in the digital asset ecosystem, negative publicity surrounding digital assets more broadly and market-wide declines in digital asset trading prices and liquidity.

Thereafter, in November 2022, FTX Trading Ltd. (*"FTX"*), the third largest digital asset trading platform by volume at the time, halted customer withdrawals amid rumors of the company's liquidity issues and likely insolvency. Shortly thereafter, FTX's CEO resigned and FTX and numerous affiliates of FTX filed for bankruptcy. The U.S. Department of Justice (*"DOJ"*) subsequently brought criminal charges, including charges of fraud, violations of federal securities laws, money laundering, and campaign finance offenses, against FTX's former CEO and others. In November 2023, FTX's former CEO was convicted of fraud and money laundering. Similar charges related to violations of anti-money laundering laws were brought in November 2023 against Binance and its former CEO. FTX is also under investigation by the SEC, the Justice Department, and the Commodity Futures Trading Commission, as well as by various regulatory authorities in the Bahamas, Europe and other jurisdictions. In response to these events, the digital asset markets have experienced extreme price volatility and declines in liquidity, and regulatory and enforcement scrutiny has increased, including from the DOJ, the SEC, the CFTC, the White House and Congress. In addition, several other entities in the digital asset industry filed for bankruptcy following FTX's bankruptcy filing, such as BlockFi Inc. and Genesis Global Capital, LLC. The SEC also brought charges against Genesis Global Capital, LLC and Gemini Trust Company, LLC on January 12, 2023, for their alleged unregistered offer and sale of securities to retail investors. In October 2023, the New York Attorney General brought charges against Gemini, Genesis Global Capital and numerous affiliates of Genesis Global Capital, and Digital Currency Group alleging violations of law relating to the Gemini Earn program. In May 2024, the Bankruptcy Court of the Southern District of New York approved a settlement of the charges with the Genesis entities.

These events resulted in calls for heightened scrutiny and regulation of the digital asset industry, with a specific focus on digital asset trading platforms, and custodians. For example, in June 2023, the SEC brought charges against Binance (the *"Binance Complaint"*) and Coinbase (the *"Coinbase Complaint"*), two of the largest digital asset trading platforms, alleging that they solicited U.S. investors to buy, sell, and trade "crypto asset securities" through their unregistered trading platforms and operated unregistered securities exchanges, brokerages and clearing agencies. Binance subsequently announced that it would be suspending USD deposits and withdrawals on Binance.US and that it plans to delist its USD trading pairs. In addition, in November 2023, the SEC brought similar charges against Kraken (the *"Kraken Complaint"*), alleging that it operated as an unregistered securities exchange, brokerage and clearing agency. The Binance Complaint, the Coinbase Complaint and the Kraken Complaint led to further volatility in digital asset prices. In January 2025, the SEC launched the Crypto Task Force dedicated to developing a comprehensive and clear regulatory framework for digital assets led by Commissioner Hester Peirce. Subsequently, Commissioner Peirce announced a list of specific priorities to further that initiative, which included pursuing final rules related to a digital asset's security status, a revised path to registered offerings and listings for digital asset-based investment vehicles, and clarity regarding digital asset custody, lending and staking. In February 2025, Coinbase and the SEC entered into a joint stipulation to dismiss the SEC's lawsuit with prejudice, subject to the court's approval. Kraken has also announced that it reached an agreement in principle with the SEC to dismiss the SEC's lawsuit, subject to formal approval by the SEC's Commissioners. In May 2025, the SEC voluntarily dismissed its lawsuit against Binance. Several other digital asset market participants have also announced that the SEC informed them that the SEC was terminating its investigation or enforcement action into their firm. The final outcome of these lawsuits (to the extent not yet dismissed), their effect on the broader digital asset ecosystem and the reputational impact on industry participants, remain uncertain.

A wide range of U.S. regulators, including the Federal Reserve Board, the SEC, the CFTC, FinCEN, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Bureau of Investigation, as well as the White House, have issued a growing number of reports and releases concerning digital assets and digital asset markets. In addition, the U.S. Congress has enacted and proposed a number of bills that will have significant impacts on the U.S. digital asset market. However, the extent and content of any forthcoming laws and regulations are not yet ascertainable with certainty, and it may not be ascertainable in the near future. It is possible that new laws and increased regulation and regulatory scrutiny may require the Fund to comply with certain regulatory regimes, which could result in new costs for the Fund. The Fund may have to devote increased time and attention to regulatory matters, which could increase costs to the Fund.

In 2025, Congress undertook significant legislative efforts to address the rapidly evolving landscape of digital assets and cryptocurrencies, culminating in the passage of a landmark bill: the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the *"GENIUS Act"*). This legislative action represents the first comprehensive federal framework for the regulation of stablecoins in the United States.

The GENIUS Act, signed into law in July 2025, establishes the first federal regulatory framework for the issuance and operation of payment stablecoins—digital assets designed to maintain a stable value relative to a fiat currency, such as the U.S. dollar. The GENIUS Act requires that all payment stablecoins be fully backed on a one-to-one basis by high-quality liquid assets, such as U.S. dollars or short-term U.S. Treasury securities, and subjects issuers to rigorous reserve, audit, and disclosure requirements. The GENIUS Act introduces a dual licensing regime, allowing stablecoin issuers to operate under either federal or state regulatory oversight, provided that state regimes are "substantially similar" to federal standards. Issuers with more than $10 billion in outstanding stablecoins must obtain a federal license. The GENIUS Act also imposes strict AML, sanctions compliance, and consumer protection obligations, including prioritizing stablecoin holders' claims in the event of issuer insolvency. Notably, the Act prohibits non-financial public companies from issuing stablecoins without special approval and restricts the payment of interest or yield on stablecoins.

In addition, the Digital Asset Market Clarity Act of 2025 (the *"CLARITY Act"*) was passed by the U.S. House of Representatives in July 2025. The CLARITY Act was designed to resolve longstanding regulatory uncertainty regarding the classification and oversight of digital assets. The CLARITY Act establishes a clear framework for distinguishing between digital assets that are securities, commodities, or payment stablecoins. It delineates the respective jurisdictions of the SEC and the CFTC, granting the CFTC exclusive authority over "digital commodities" and the SEC authority over "digital securities." The CLARITY Act also introduces criteria for determining when a digital asset is sufficiently decentralized to be treated as a commodity rather than a security. In addition, the CLARITY Act imposes registration requirements and operational standards for digital asset intermediaries, including exchanges, brokers, and dealers. It mandates consumer protection measures, anti-money laundering *("AML"*) and countering the financing of terrorism (*"CFT"*) compliance, and enhanced disclosure obligations. The Act aims to foster innovation while providing market participants with greater regulatory certainty and aligning U.S. policy with emerging international standards. Similar market structure legislation is currently under consideration by the U.S. Senate but there is no certainty whether the legislation will be enacted in 2026 or what form final legislation will take.

These legislative efforts were accompanied by additional measures, such as the Anti-CBDC Surveillance State Act, which prohibits the Federal Reserve from issuing a retail central bank digital currency without congressional authorization. While the GENIUS Act represents significant progress toward a comprehensive regulatory regime for digital assets, substantial uncertainty remains regarding the implementation and interpretation of this new law. The effectiveness of this framework, and the framework proposed under the CLARITY Act, if passed by Congress, will depend on subsequent rulemaking by federal and state regulators, interagency coordination, and the evolving approach to enforcement. Market participants may face transitional risks as regulatory standards are developed and applied, and there is potential for further legislative or regulatory changes as the digital asset ecosystem continues to evolve.

These events are continuing to develop at a rapid pace and it is not possible to predict at this time all of the risks that they may pose to the Fund, the Fund's third-party service providers, or to the digital asset industry as a whole. Continued disruption and instability in the digital asset markets as these events develop, including further declines in the trading prices and liquidity of the digital assets tracked by the Index, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.

**Digital Asset Competition Risk.** Bitcoin was the first digital asset to gain global adoption and critical mass, and as a result, it has a "first to market" advantage over other digital assets, and remains the largest digital asset by market capitalization. As of December 31, 2025, ether was the second largest digital asset by market capitalization as tracked by CoinMarketCap.com. As of December 31, 2025, bitcoin and ether comprised 71.4% of the total market capitalization of the digital asset ecosystem tracked by CoinMarketCap.com. Alternative digital assets tracked by CoinMarketCap.com had a total market capitalization of approximately $1.32 trillion as of December 31, 2025. Each such asset competes directly and indirectly with every other digital asset for developer mindshare, institutional and retail adoption, network effects, exchange listings, liquidity, and ultimately market value. Because none of these alternative digital assets currently enjoys a dominant share of the market, incremental changes in perceived technological superiority, scalability, security, regulatory treatment, or utility can cause rapid, material shifts in user adoption, capital flows, and market price.

Layer 2 scaling solutions present an additional dimension of competitive risk. So-called "Layer 2" solutions are protocols built on top of an underlying smart contract platform blockchain, and intended to provide scalability to the underlying blockchain by increasing transaction efficiency. For example, Polygon is a smart contract platform protocol built on top of the Ethereum blockchain; it is intended to provide scalability to Ethereum by allowing users to transact on a variety of blockchains deployed on the Ethereum Network. Under this model, Ethereum functions as the base layer, or "Layer 1" blockchain. The Polygon protocol offers developers sidechain, roll-ups and other Layer 2 solutions which can be tailored to an individual developer's intended use case. Such solutions are intended to improve upon the transaction speed, cost and efficiency of transactions on their respective Layer 1. However, Layer 2 solutions have only been recently developed and may not function as intended. For example, smart contracts deployed on one Layer 2 solution may not be interoperable with smart contracts deployed on other Layer 2 solutions. In particular, the advent of Layer 2 solutions presents the possibility of fracturing liquidity of DeFi dApps on a smart contract platform's mainchain by splitting such liquidity among multiple, non-interoperable Layer 2 solutions, which could limit their use case or reduce efficiency. Layer 2 solutions also rely, to various degrees, on the functionality of the underlying Layer 1 blockchain. To the extent that the Ethereum Network is viewed as an unreliable Layer 1 solution, or that other networks provide better speed, costs, efficiency and features than the Ethereum Network, use of the Ethereum Network as a Layer 1 solution may decline with a corresponding reduction in the demand for, and price of, ether. In addition, DeFi dApps have been the frequent target of numerous hacking and manipulation attempts, with some such attempts resulting in irreversible losses to their users. There is also considerable regulatory uncertainty regarding DeFi dApps status and compliance with a variety of legal regimes, including federal securities law, anti-money laundering laws, and federal and state money service business laws. To the extent that DeFi dApps continue to experience hacking events or adverse regulatory events, the Ethereum Network's value as a Layer 1 solution may decline with a corresponding reduction in the demand for, and price of, ether.

**Investment Strategy Risk.** The Fund, through the Subsidiary, invests in Bitcoin and Ether Futures Contracts. The Fund does not invest directly in or hold bitcoin or ether. The price of Bitcoin and Ether Futures Contracts may differ, sometimes significantly, from the current cash price of bitcoin and ether, which is sometimes referred to as the "spot" price of bitcoin or ether. Consequently, the performance of the Fund is likely to perform differently from the spot price of bitcoin and ether.

**Liquidity Risk.** The market for Bitcoin and Ether Futures Contracts is still developing and may be subject to periods of illiquidity. During such times it may be difficult or impossible to buy or sell a position at the desired price. Market disruptions or volatility can also make it difficult to find a counterparty willing to transact at a reasonable price and sufficient size. Illiquid markets may cause losses, which could be significant. The large size of the positions which the Fund may acquire increases the risk of illiquidity, may make its positions more difficult to liquidate, and increase the losses incurred while trying to do so.

**Collateral Investments Risk.** The Fund's use of Collateral Investments may include obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities, including bills, notes and bonds issued by the U.S. Treasury, money market funds and corporate debt securities, such as commercial paper.

Some securities issued or guaranteed by federal agencies and U.S. Government-sponsored instrumentalities may not be backed by the full faith and credit of the United States, in which case the investor must look principally to the agency or instrumentality issuing or guaranteeing the security for ultimate repayment, and may not be able to assert a claim against the United States itself in the event that the agency or instrumentality does not meet its commitment. The U.S. Government, its agencies and instrumentalities do not guarantee the market value of their securities, and consequently, the value of such securities may fluctuate. Although the Fund may hold securities that carry U.S. Government guarantees, these guarantees do not extend to shares of the Fund.

Money market funds are subject to management fees and other expenses. Therefore, investments in money market funds will cause the Fund to bear indirectly a proportional share of the fees and costs of the money market funds in which it invests. At the same time, the Fund will continue to pay its own management fees and expenses with respect to all of its assets, including any portion invested in the shares of the money market fund. It is possible to lose money by investing in money market funds.

Corporate debt securities such as commercial paper generally are short-term unsecured promissory notes issued by businesses. Corporate debt may carry variable or floating rates of interest. Corporate debt securities carry both credit risk and interest rate risk. Credit risk is the risk that the Fund could lose money if the issuer of a corporate debt security is unable to pay interest or repay principal when it is due.

**Reverse Repurchase Agreements Risk.** The Fund may invest in reverse repurchase agreements. Reverse repurchase agreements are transactions in which the Fund sells portfolio securities to financial institutions such as banks and broker-dealers, and agrees to repurchase them at a mutually agreed-upon date and price which is higher than the original sale price. Reverse repurchase agreements are a form of leverage and the use of reverse repurchase agreements by the Fund may increase the Fund's volatility. The Fund incurs costs, including interest expense, in connection with the opening and closing of reverse repurchase agreements that will be borne by the shareholders.

Reverse repurchase agreements are also subject to the risk that the other party to the reverse repurchase agreement will be unable or unwilling to complete the transaction as scheduled, which may result in losses to the Fund. In situations where the Fund is required to post collateral with a counterparty, the counterparty may fail to segregate the collateral or may commingle the collateral with the counterparty's own assets. As a result, in the event of the counterparty's bankruptcy or insolvency, the Fund's collateral may be subject to the conflicting claims of the counterparty's creditors, and the Fund may be exposed to the risk of a court treating the Fund as a general unsecured creditor of the counterparty, rather than as the owner of the collateral. There can be no assurance that a counterparty will not default and that the Fund will not sustain a loss on a transaction as a result.

Reverse repurchase agreements also involve the risk that the market value of the securities sold by the Fund may decline below the price at which it is obligated to repurchase the securities. In addition, when the Fund invests the proceeds it receives in a reverse repurchase transaction, there is a risk that those investments may decline in value. In this circumstance, the Fund could be required to sell other investments in order to meet its obligations to repurchase the securities.

**Debt Securities Risk.** Investments in debt securities subject the holder to the credit risk of the issuer. Credit risk refers to the possibility that the issuer or other obligor of a security will not be able or willing to make payments of interest and principal when due. Generally, the value of debt securities will change inversely with changes in interest rates. To the extent that interest rates rise, certain underlying obligations may be paid off substantially slower than originally anticipated and the value of those securities may fall sharply. During periods of falling interest rates, the income received by the Fund may decline. If the principal on a debt security is prepaid before expected, the prepayments of principal may have to be reinvested in obligations paying interest at lower rates. Debt securities generally do not trade on a securities exchange making them generally less liquid and more difficult to value than common stock.

**Valuation Risk.** The Fund or the Subsidiary may hold securities or other assets that may be valued on the basis of factors other than market quotations. This may occur because the asset or security does not trade on a centralized exchange, or in times of market turmoil or reduced liquidity. There are multiple methods that can be used to value a portfolio holding when market quotations are not readily available. The value established for any portfolio holding at a point in time might differ from what would be produced using a different methodology or if it had been priced using market quotations. Portfolio holdings that are valued using techniques other than market quotations, including "fair valued" assets or securities, may be subject to greater fluctuation in their valuations from one day to the next than if market quotations were used. In addition, there is no assurance that the Fund or the Subsidiary could sell or close out a portfolio position for the value established for it at any time, and it is possible that the Fund or the Subsidiary would incur a loss because a portfolio position is sold or closed out at a discount to the valuation established by the Fund or the Subsidiary at that time. The Fund's ability to value investments may be impacted by technological issues or errors by pricing services or other third-party service providers.

**Subsidiary Investment Risk.** Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary are organized, respectively, could result in the inability of the Fund to operate as intended and could negatively affect the Fund and its shareholders. The Subsidiary is not registered under the 1940 Act and is not subject to all the investor protections of the 1940 Act. However, as the Subsidiary is wholly-owned by the Fund, and the investors of the Fund will have the investor protections of the 1940 Act, the Fund as a whole—including the Subsidiary—will provide investors with 1940 protections.

**Target Exposure and Rebalancing Risks.** The Fund will normally seek to maintain aggregate notional exposure to bitcoin and ether equal to 100% of the net assets of the Fund. However, in order to comply with certain tax qualification tests at the end of each tax quarter, the Fund may reduce its exposure to Bitcoin and Ether Futures Contracts on or about such dates. If the value of Bitcoin and Ether Futures Contracts rises during such periods that the Fund has reduced its exposure, the performance of the Fund will be less than it would have been had the Fund maintained is exposure through such period.

**Commodity Regulatory Risk.** The Fund's use of commodity futures subject to regulation by the CFTC has caused the Fund to be classified as a "commodity pool" and this designation requires that the Fund comply with CFTC rules, which may impose additional regulatory requirements and compliance obligations. The Fund's investment decisions may need to be modified, and commodity contract positions held by the Fund may have to be liquidated at disadvantageous times or prices, to avoid exceeding any applicable position limits established by the CFTC, potentially subjecting the Fund to substantial losses. The regulation of commodity transactions in the United States is subject to ongoing modification by government, self-regulatory and judicial action. The effect of any future regulatory change with respect to any aspect of the Fund is impossible to predict, but could be substantial and adverse to the Fund.

**Volatility Risk.** Volatility is the characteristic of a security or other asset, an index or a market to fluctuate significantly in price within a short time period. The prices of bitcoin, ether and Bitcoin and Ether Futures Contracts have historically been highly volatile. The value of the Fund's investments in Bitcoin and Ether Futures Contracts—and therefore the value of an investment in the Fund—could decline significantly and without warning, including to zero. If you are not prepared to accept significant and unexpected changes in the value of the Fund and the possibility that you could lose your entire investment in the Fund, you should not invest in the Fund.

**Interest Rate Risk.** Interest rate risk is the risk that the value of the debt securities in the Fund's portfolio will decline because of rising market interest rates. Interest rate risk is generally lower for shorter term debt securities and higher for longer-term debt securities. The Fund may be subject to a greater risk of rising interest rates than would normally be the case due to the current period of historically low rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives. Duration is a reasonably accurate measure of a debt security's price sensitivity to changes in interest rates and a common measure of interest rate risk. Duration measures a debt security's expected life on a present value basis, taking into account the debt security's yield, interest payments and final maturity. In general, duration represents the expected percentage change in the value of a security for an immediate 1% change in interest rates. For example, the price of a debt security with a three-year duration would be expected to drop by approximately 3% in response to a 1% increase in interest rates. Therefore, prices of debt securities with shorter durations tend to be less sensitive to interest rate changes than debt securities with longer durations. As the value of a debt security changes over time, so will its duration.

**Capital Gains Distribution Risk**. The Fund may realize and distribute significant net capital gains due to its use of rolling futures contracts. Such capital gains distributions may represent a significant percentage of the Fund's net asset value. Each capital gains distribution will typically reduce the Fund's net asset value by approximately the amount of the distribution on the ex-dividend date (i.e., the date by which you need to own a dividend-paying stock in order to receive the upcoming dividend payment). The repeated payment of distributions by the Fund, if any, may significantly erode the Fund's net asset value and trading price over time. As a result, an investor may suffer significant losses to their investment. Short-term and long-term realized capital gains distributions paid by the Fund are taxable to its shareholders.

**Cash Transaction Risk.** Most ETFs generally make in-kind redemptions to avoid being taxed at the fund level on gains on the distributed portfolio securities. However, unlike most ETFs, the Fund currently intends to effect some or all redemptions for cash, rather than in-kind, because of the nature of the Fund's investments. The Fund may be required to sell portfolio securities to obtain the cash needed to distribute redemption proceeds, which involves transaction costs that the Fund may not have incurred had it effected redemptions entirely in kind. These costs may include brokerage costs and/or taxable gains or losses, which may be imposed on the Fund and decrease the Fund's net asset value to the extent such costs are not offset by a transaction fee payable to an AP. If the Fund recognizes gain on these sales, this generally will cause the Fund to recognize gain it might not otherwise have recognized if it were to distribute portfolio securities in-kind, or to recognize such gain sooner than would otherwise be required. This may decrease the tax efficiency of the Fund compared to ETFs that utilize an in-kind redemption process, and there may be a substantial difference in the after-tax rate of return between the Fund and other ETFs.

**Clearing Broker Risk.** The Fund's investments in exchange-traded futures contracts expose it to the risks of a clearing broker (or a futures commission merchant ("FCM")). Under current regulations, a clearing broker or FCM maintains customers' assets in a bulk segregated account. There is a risk that Fund assets deposited with the clearing broker to serve as margin may be used to satisfy the broker's own obligations or the losses of the broker's other clients. In the event of default, the Fund could experience lengthy delays in recovering some or all of its assets and may not see any recovery at all. Furthermore, the Fund is subject to the risk that no FCM is willing or able to clear the Fund's transactions or maintain the Fund's assets. If the Fund's FCMs are unable or unwilling to clear the Fund's transactions, or if the FCM refuses to maintain the Fund's assets, the Fund will be unable have its orders for Bitcoin and Ether Futures Contracts fulfilled or assets custodied. In such a circumstance, the performance of the Fund will likely deviate from the performance of bitcoin and ether and may result in the proportion of Bitcoin and Ether Futures Contracts in the Fund's portfolio relative to the total assets of the Fund to decrease.

**Investment Capacity Risk.** If the Fund's ability to obtain exposure to Bitcoin and Ether Futures Contracts consistent with its investment objective is disrupted for any reason, including but not limited to, limited liquidity in the Bitcoin and Ether Futures Contracts markets, a disruption to the Bitcoin and Ether Futures Contracts market, or as a result of margin requirements or position limits imposed by the Fund's FCMs, the exchanges on which the Bitcoin and Ether Futures Contracts trade, or the CFTC, the Fund would not be able to achieve its investment objective and may experience significant losses.

**Frequent Trading Risk.** The Fund regularly purchases and subsequently sells (*i.e.*, "rolls") individual futures contracts throughout the year so as to maintain a fully invested position. As the contracts near their expiration dates, the Fund rolls them over into new contracts. This frequent trading of contracts may increase the amount of commissions or mark-ups to broker-dealers that the Fund pays when it buys and sells contracts, which may detract from the Fund's performance. High portfolio turnover may result in the Fund paying higher levels of transaction costs and may generate greater tax liabilities for shareholders. Frequent trading risk may cause the Fund's performance to be less than expected.

**Credit Risk.** An issuer or other obligated party of a debt security may be unable or unwilling to make dividend, interest and/or principal payments when due. In addition, the value of a debt security may decline because of concerns about the issuer's ability or unwillingness to make such payments.

**Leverage Risk.** The Fund seeks to achieve and maintain the exposure to the price of bitcoin and ether by using leverage inherent in futures contracts. Therefore, the Fund is subject to leverage risk. When the Fund purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction, it creates leverage, which can result in the Fund losing more than it originally invested. As a result, these investments may magnify losses to the Fund, and even a small market movement may result in significant losses to the Fund. Leverage may also cause a Fund to be more volatile because it may exaggerate the effect of any increase or decrease in the value of the Fund's portfolio securities. Futures trading involves a degree of leverage and as a result, a relatively small price movement in futures instruments may result in immediate and substantial losses to the Fund. The Fund may at times be required to liquidate portfolio positions, including when it is not advantageous to do so, in order to comply with guidance from the Securities and Exchange Commission (the *"SEC"*) regarding asset segregation requirements to cover certain leveraged positions.

**Active Management Risk.** The Fund is actively managed and its performance reflects the application of investment techniques and risk analyses in the investment decisions that the Sub-Adviser and Adviser make for the Fund. Such judgments about the Fund's investments may prove to be incorrect. If the investments selected and the strategies employed by the Fund fail to produce the intended results, the Fund could underperform as compared to other funds with similar investment objectives and/or strategies, or could have negative returns.

**Active Market Risk.** Although the Shares are listed for trading on the Exchange, there can be no assurance that an active trading market for the Shares will develop or be maintained. Shares trade on the Exchange at market prices that may be below, at or above the Fund's net asset value. Securities, including the Shares, are subject to market fluctuations and liquidity constraints that may be caused by such factors as economic, political, or regulatory developments, changes in interest rates, and/or perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments.

**Asset Concentration Risk.** Since the Fund may take concentrated positions in Bitcoin and Ether Futures Contracts, the Fund's performance may be disproportionately and significantly impacted by the poor performance of those positions to which it has significant exposure. Concentration in Bitcoin and Ether Futures Contracts makes the Fund more susceptible to any single occurrence affecting the underlying positions and may subject the Fund to greater market risk than more diversified funds.

**Authorized Participant Concentration Risk.** Only an authorized participant may engage in creation or redemption transactions directly with the Fund. The Fund has a limited number of institutions that act as authorized participants on an agency basis (*i.e.* on behalf of other market participants). To the extent that these institutions exit the business or are unable to proceed with creation and/or redemption orders with respect to the Fund and no other authorized participant is able to step forward to create or redeem, in either of these cases, Shares may trade at a discount to the Fund's net asset value and possibly face delisting.

**Cyber Security Risk.** The Fund is susceptible to operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund's digital information systems through "hacking" or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition, cyber security breaches of the Fund's third-party service providers, such as its administrator, transfer agent, custodian, or sub-adviser, as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. While the Fund has established business continuity plans and risk management systems designed to reduce the risks associated with cyber security, there are inherent limitations in such plans and systems. Additionally, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third-party service providers.

**Inflation Risk.** Inflation may reduce the intrinsic value of increases in the value of the Fund. Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Fund's assets can decline as can the value of the Fund's distributions.

**Market Maker Risk.** If the Fund has lower average daily trading volumes, it may rely on a small number of third-party market makers to provide a market for the purchase and sale of Shares. Any trading halt or other problem relating to the trading activity of these market makers could result in a dramatic change in the spread between the Fund's net asset value and the price at which the Shares are trading on the Exchange, which could result in a decrease in value of the Shares. In addition, decisions by market makers or authorized participants to reduce their role or step away from these activities in times of market stress could inhibit the effectiveness of the arbitrage process in maintaining the relationship between the underlying values of the Fund's portfolio securities and the Fund's market price. This reduced effectiveness could result in Shares trading at a discount to net asset value and also in greater than normal intra-day bid-ask spreads for Shares.

**Non-Diversification Risk.** The Fund is classified as "non-diversified" under the 1940 Act. As a result, the Fund is only limited as to the percentage of its assets which may be invested in the securities of any one issuer by the diversification requirements imposed by the Code. The Fund may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the Fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly invested in certain issuers.

**Operational Risk.** The Fund is exposed to operational risks arising from a number of factors, including, but not limited to, human error, processing and communication errors, errors of the Fund's service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. The Fund, Adviser and Sub-Adviser seek to reduce these operational risks through controls and procedures. However, these measures do not address every possible risk and may be inadequate to address these risks.

**Premium/Discount Risk.** The market price of the Fund's Shares will generally fluctuate in accordance with changes in the Fund's net asset value as well as the relative supply of and demand for Shares on the Exchange. The Fund's market price may deviate from the value of the Fund's underlying portfolio holdings, particularly in time of market stress, with the result that investors may pay more or receive less than the underlying value of the Fund shares bought or sold. The Adviser and Sub-Adviser cannot predict whether Shares will trade below, at or above their net asset value because the Shares trade on the Exchange at market prices and not at net asset value. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for Shares will be closely related, but not identical, to the same forces influencing the prices of the holdings of the Fund trading individually or in the aggregate at any point in time. However, given that Shares can only be purchased and redeemed in Creation Units, and only to and from broker-dealers and large institutional investors that have entered into participation agreements (unlike shares of closed-end funds, which frequently trade at appreciable discounts from, and sometimes at premiums to, their net asset value), the Adviser and Sub-Adviser believe that large discounts or premiums to the net asset value of Shares should not be sustained. During stressed market conditions, the market for the Fund's Shares may become less liquid in response to deteriorating liquidity in the market for the Fund's underlying portfolio holdings, which could in turn lead to differences between the market price of the Fund's Shares and their net asset value. This can be reflected as a spread between the bid and ask prices for the Fund quoted during the day or a premium or discount in the closing price from the Fund's net asset value.

**Small Fund Risk.** The Fund currently has fewer assets than larger funds, and like other smaller funds, large inflows and outflows may impact the Fund's market exposure for limited periods of time. This impact may be positive or negative, depending on the direction of market movement during the period affected. If the Fund fails to attract a large amount of assets, shareholders of the Fund may incur higher expenses as the Fund's fixed costs would be allocated over a smaller number of shareholders. Failure to grow and large outflows may be factors the Board considers in any determination to cease the Fund's operations and dissolve.

**Tax Risk.** The Fund intends to elect and to qualify each year to be treated as a RIC under Subchapter M of the Code. As a RIC, the Fund will not be subject to U.S. federal income tax on the portion of its net investment income and net capital gain that it distributes to Shareholders, provided that it satisfies certain requirements of the Code. If the Fund does not qualify as a RIC for any taxable year and certain relief provisions are not available, the Fund's taxable income will be subject to tax at the Fund level and to a further tax at the shareholder level when such income is distributed. Additionally, buying securities shortly before the record date for a taxable dividend or capital gain distribution is commonly known as "buying the dividend." In the event a shareholder purchases Shares shortly before such a distribution, the entire distribution may be taxable to the shareholder even though a portion of the distribution effectively represents a return of the purchase price. To comply with the asset diversification test applicable to a RIC, the Fund must limit its investments in the Subsidiary to 25% of the Fund's total assets at the end of each tax quarter or cure any non-compliance during the grace period. The investment strategy of the Fund may cause the Fund to hold more than 25% of the Fund's total assets in investments in the Subsidiary the majority of the time. The Fund intends to manage the exposure to the Subsidiary so that the Fund's investments in the Subsidiary do not exceed 25% of the total assets at the end of any tax quarter. If the Fund's investments in the Subsidiary were to exceed 25% of the Fund's total assets at the end of a tax quarter, the Fund, generally, has a grace period to cure such lack of compliance. If the Fund fails to timely cure, it may no longer be eligible to be treated as a RIC.

Because Bitcoin and Ether Futures Contracts produce non-qualifying income for purposes of qualifying as a RIC, the Fund makes its investments in Bitcoin and Ether Futures Contracts through the Subsidiary. The Fund intends to treat any income it may derive from the futures contracts received by the Subsidiary as "qualifying income" under the provisions of the Code applicable to RICs. The Internal Revenue Service (the *"IRS"*) has issued numerous Private Letter Rulings ("PLRs") provided to third parties not associated with the Fund or its affiliates (which only those parties may rely on as precedent) concluding that similar arrangements resulted in qualifying income. Many of such PLRs have now been revoked by the IRS. In March of 2019, the Internal Revenue Service published Regulations that concluded that income from a corporation similar to the Subsidiary would be qualifying income, if the income is related to the Fund's business of investing in stocks or securities. Although the Regulations do not require distributions from the Subsidiary, the Fund intends to cause the Subsidiary to make distributions that would allow the Fund to make timely distributions to its shareholders. The Fund generally will be required to include in its own taxable income the income of the Subsidiary for a tax year, regardless of whether the Fund receives a distribution of the Subsidiary's income in that tax year, and this income would nevertheless be subject to the distribution requirement for qualification as a regulated investment company and would be taken into account for purposes of the 4% excise tax.

If, in any year, the Fund were to fail to qualify for the special tax treatment accorded a RIC and its shareholders, and were ineligible to or were not to cure such failure, the Fund would be taxed in the same manner as an ordinary corporation subject to U.S. federal income tax on all its income at the fund level. The resulting taxes could substantially reduce the Fund's net assets and the amount of income available for distribution. In addition, in order to requalify for taxation as a RIC, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make certain distributions.

**Trading Issues Risk.** Trading in Fund Shares on the Exchange may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in Shares inadvisable. In addition, trading in Fund Shares on the Exchange is subject to trading halts caused by extraordinary market volatility pursuant to the Exchange's "circuit breaker" rules. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of the Fund will continue to be met or will remain unchanged. The Fund may have difficulty maintaining its listing on the Exchange in the event the Fund's assets are small, the Fund does not have enough shareholders, or if the Fund is unable to proceed with creation and/or redemption orders.

Non-Principal Risks.

**Legislation and Litigation Risk.** Legislation or litigation that affects the value of securities held by the Fund may reduce the value of the Fund. From time to time, various legislative initiatives are proposed that may have a negative impact on certain securities in which the Fund invests. In addition, litigation regarding any of the securities owned by the Fund may negatively impact the value of the Shares. Such legislation or litigation may cause the Fund to lose value or may result in higher portfolio turnover if the Adviser determines to sell such a holding.

**Management of the Fund**

The Fund is a series of Valkyrie ETF Trust II, an investment company registered under the 1940 Act. The Fund is treated as a separate fund with its own investment objectives and policies. The Trust is organized as a Delaware statutory trust. The Board is responsible for the overall management and direction of the Trust. The Board elects the Trust's officers and approves all significant agreements, including those with the Adviser, custodian and fund administrative and accounting agent.

Investment Adviser

Valkyrie Funds LLC, 437 Madison Avenue, 28th Floor, New York, NY 10022, serves as the Fund's investment adviser pursuant to an investment management agreement (the *"Investment Advisory Agreement"*). In its capacity as Adviser, Valkyrie manages the Fund's investments subject to the supervision of the Board. The Adviser also arranges for sub-advisory, transfer agency, custody, fund administration, distribution and all other services necessary for the Fund to operate. Further, the Adviser continuously reviews, supervises, and administers the Fund's investment program. In particular, the Adviser provides investment and operational oversight of the Sub-Adviser.

Investment Sub-Adviser

Vident Advisory, LLC (d/b/a Vident Asset Management), 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009, serves as the Fund's investment sub-adviser pursuant to an investment sub-advisory agreement (*"Investment Sub-Advisory Agreement"*). In this capacity, Vident is responsible for trading portfolio securities for the Fund, including selecting broker-dealers to execute purchase and sale transactions or in connection with any rebalancing, subject to the supervision of the Adviser and the Board. For its services, the Sub-Adviser is entitled to a fee paid by the Adviser. The Fund does not directly compensate the Sub-Adviser. The Sub-Adviser offers both high net worth individuals and institutional clients portfolio management services in a variety of alternative investment offerings, and is a registered investment adviser. As of December 31, 2025, the Sub-Adviser had approximately $21.2 billion in assets under management.

Portfolio Managers

*Bill Cannon, Head of ETF Portfolio Management at Valkyrie*, Prior to joining Valkyrie, Bill was a Managing Director at Guggenheim Partners Investment Management, where he was member of the insurance portfolio management division responsible for $80 billion of assets under management. Before that, Mr. Cannon worked at the Chicago Mercantile Exchange and the Chicago Board Options Exchange as a derivatives broker for equity index and interest rate futures and options. Mr. Cannon earned a BA in Chemistry from the University of Vermont and an MBA from the Quinlan School of Business at Loyola University Chicago.

*Rafael Zayas, CFA, Senior Vice President and Head of Portfolio Management and Trading of Vident.* Mr. Zayas has over 15 years of trading and portfolio management experience in global equity products and ETFs. He is SVP, Head of Portfolio Management and Trading, specializing in managing and trading of developed, emerging, and frontier market portfolios. Prior to joining Vident, he was a Portfolio Manager at Russell Investments where he oversaw over $5 billion in quantitative strategies across global markets, including emerging, developed and frontier markets and listed alternatives. Before that, he was an equity Portfolio Manager at BNY Mellon Asset Management, where he was responsible for $150 million in internationally listed global equity ETFs and assisted in managing $3 billion of global ETF assets. Mr. Zayas holds a BS in Electrical Engineering from Cornell University. He also holds the Chartered Financial Analyst designation.

*Austin Wen, Portfolio Manager of Vident*, Mr. Wen has eight years of investment management experience. He is a Portfolio Manager at Vident Investment Advisory, specializing in portfolio management and trading of equity portfolios and commodities-based portfolios, as well as risk monitoring and investment analysis. Previously, he was an analyst for Vident Financial, working on the development and review of investment solutions. He began his career as a State Examiner for the Georgia Department of Banking and Finance. Mr. Wen obtained a BA in Finance from the University of Georgia and holds the Chartered Financial Analyst designation.

For additional information concerning Valkyrie, including a description of the services provided to the Fund, please see the Fund's statement of additional information. Additional information regarding the portfolio managers' compensation, other accounts managed by the portfolio managers and the portfolio managers' ownership of Shares may also be found in the statement of additional information.

*<u>Management of the Subsidiary</u>*

The Subsidiary is a wholly-owned subsidiary of the Fund. The Subsidiary is organized under the laws of the Cayman Islands and overseen by its own board of directors. The Fund is the sole shareholder of the Subsidiary, and it is currently expected that shares of the Subsidiary will not be sold or offered to other investors. The Fund and the Subsidiary in the aggregate are managed to comply with the compliance policies and procedures of the Fund. As a result, in managing the Fund's and the Subsidiary's portfolios, the Sub-Adviser will comply with the investment policies and restrictions that apply to the management of the Fund and the Subsidiary (on a consolidated basis), and, in particular, to the requirements relating to leverage, liquidity, brokerage, capital structure and the timing and method of the valuation of the Fund's and the Subsidiary's portfolio investments. The Trust's Chief Compliance Officer oversees implementation of the Subsidiary's policies and procedures and makes periodic reports to the Trust's Board of Trustees regarding the Subsidiary's compliance with its policies and procedures. Valkyrie serves as the investment adviser of the Subsidiary and oversees Vident's, who acts as sub-adviser for the Subsidiary, management of the investments of the Subsidiary's assets on a discretionary basis. The Subsidiary does not pay Vident or Valkyrie a management fee for its services. The Subsidiary has also entered into separate contracts for the provision of custody, transfer agency and audit services. U.S. Bank, N.A. serves as the custodian to the Subsidiary. The Subsidiary will comply with the provisions relating to affiliated transactions and custody set forth in Section 17 of the 1940 Act.

Management Fee

Pursuant to the Investment Advisory Agreement between Valkyrie and the Trust, on behalf of the Fund, Valkyrie oversees Vident's management of the Fund's assets and pays Vident for its services as Sub-Adviser. Valkyrie is paid an annual management fee of 0.95% of the Fund's average daily net assets and is responsible for the Fund's and the Subsidiary's expenses, including the cost of transfer agency, custody, fund administration, legal, audit and other services, but excluding fee payments under the Investment Management Agreement, interest, taxes, acquired fund fees and expenses, if any, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution and service fees pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses.

Pursuant to the Sub-Advisory Agreement, Vident receives an annual fee based on the average daily net assets of the Fund. The Adviser is responsible for paying the entire amount of the Sub-Adviser's fee for the Fund. The Fund does not directly pay the Sub-Adviser.

A discussion regarding the basis for the Board's approval of the Investment Advisory Agreement and Investment Sub-Advisory Agreement on behalf of the Fund is available in the Fund's Annual Report to shareholders for the year ended September 30, 2025.

**How to Buy and Sell Shares**

The Fund will issue or redeem its Shares at net asset value per Share only in Creation Units. Most investors will buy and sell Shares in secondary market transactions through brokers. Shares will be listed for trading on the secondary market on the Exchange. Shares can be bought and sold throughout the trading day like other publicly traded shares. Share prices are reported in dollars and cents per Share. There is no minimum investment. When buying or selling Shares through a broker, you will incur customary brokerage commissions and charges, and you may pay some or all of the spread between the bid and the offered price in the secondary market on each leg of a round trip (purchase and sale) transaction. Because Shares trade at market price rather than net asset value, an investor may pay more than net asset value when purchasing Shares and receive less than net asset value when selling Shares.

APs may acquire Shares directly from the Fund, and APs may tender their Shares for redemption directly to the Fund, at net asset value per Share only in Creation Units or Creation Unit Aggregations, and in accordance with the procedures described in the SAI.

Book Entry

Shares are held in book-entry form, which means that no stock certificates are issued. The Depository Trust Company ("DTC") or its nominee is the record owner of all outstanding Shares and is recognized as the owner of all Shares for all purposes.

Investors owning Shares are beneficial owners as shown on the records of DTC or its participants. DTC serves as the securities depository for all Shares. Participants in DTC include securities brokers and dealers, banks, trust companies, clearing corporations and other institutions that directly or indirectly maintain a custodial relationship with DTC. As a beneficial owner of Shares, you are not entitled to receive physical delivery of stock certificates or to have Shares registered in your name, and you are not considered a registered owner of Shares. Therefore, to exercise any right as an owner of Shares, you must rely upon the procedures of DTC and its participants. These procedures are the same as those that apply to any other stocks that you hold in book entry or "street name" form.

Share Trading Prices

The trading prices of Shares on the Exchange may differ from the Fund's daily net asset value. Market forces of supply and demand, economic conditions and other factors may affect the trading prices of Shares.

The approximate value of Shares, an amount representing on a per Share basis the sum of the current market price of the securities held by the Fund, will be disseminated every 15 seconds throughout the trading day through the facilities of the Consolidated Tape Association. This approximate value should not be viewed as a "real-time" update of the net asset value per Share of the Fund because the approximate value may not be calculated in the same manner as the net asset value, which is computed once a day, generally at the end of the business day. The Fund is not involved in, or responsible for, the calculation or dissemination of the approximate value and the Fund does not make any warranty as to its accuracy.

Frequent Purchases and Redemptions of Shares

Shares may be purchased and redeemed directly from the Fund only in Creation Units by APs that have entered into agreements with the Fund's distributor. The vast majority of trading in Shares occurs on the secondary market and does not involve the Fund directly. Cash trades on the secondary market are unlikely to cause many of the harmful effects of frequent purchases and/or redemptions of Shares. Cash purchases and/or redemptions of Creation Units, however, can result in disruption of portfolio management, dilution to the Fund and increased transaction costs, which could negatively impact the Fund's ability to achieve its investment objectives, and may lead to the realization of capital gains. These consequences may increase as the frequency of cash purchases and redemptions of Creation Units by APs increases. However, direct trading by APs is critical to ensuring that Shares trade at or close to net asset value.

To minimize these potential consequences of frequent purchases and redemptions of Shares, the Fund imposes transaction fees on purchases and redemptions of Creation Units to cover the custodial and other costs the Fund incurs in effecting trades. For these reasons, the Board has not adopted policies and procedures with respect to frequent purchases and redemptions of Shares.

**Dividends, Distributions and Taxes**

Ordinarily, dividends from net investment income, if any, are declared and paid at least annually by the Fund. The Fund distributes its net realized capital gains, if any, to shareholders annually.

Distributions in cash may be reinvested automatically in additional whole Shares only if the broker through whom you purchased Shares makes such option available.

Taxes

This section summarizes some of the main U.S. federal income tax consequences of owning shares of the Fund. This section is current as of the date of this prospectus. Tax laws and interpretations change frequently, and these summaries do not describe all of the tax consequences to all taxpayers. For example, these summaries generally do not describe your situation if you are a corporation, a non-U.S. person, a broker-dealer, or other investor with special circumstances. In addition, this section does not describe your state, local or non-U.S. tax consequences.

This federal income tax summary is based in part on the advice of counsel to the Fund. The Internal Revenue Service could disagree with any conclusions set forth in this section. In addition, counsel to the Fund was not asked to review, and has not reached a conclusion with respect to, the federal income tax treatment of the assets to be included in the Fund. This may not be sufficient for you to use as the purpose of avoiding penalties under federal tax law.

As with any investment, you should seek advice based on your individual circumstances from your own tax adviser.

The Fund intends to continue to qualify as a "regulated investment company" under the federal tax laws. If the Fund qualifies as a regulated investment company and distributes its income as required by the tax law, the Fund generally will not pay federal income taxes.

As with any investment, you should consider how your investment in Shares will be taxed. The tax information in this prospectus is provided as general information. You should consult your own tax professional about the tax consequences of an investment in Shares.

Unless your investment in Shares is made through a tax-exempt entity or tax-deferred retirement account, such as an IRA plan, you need to be aware of the possible tax consequences when:

● Your Fund makes distributions,

● You sell your Shares listed on the Exchange, and

● You purchase or redeem Creation Units.

Taxes on Distributions

The Fund's distributions are generally taxable. After the end of each year, you will receive a tax statement that separates the distributions of the Fund into two categories, ordinary income distributions and capital gain dividends. Ordinary income distributions are generally taxed at your ordinary tax rate; however, as further discussed below, certain ordinary income distributions received from the Fund may be taxed at the capital gains tax rates. Generally, you will treat all capital gain dividends as long-term capital gains regardless of how long you have owned your Shares. To determine your actual tax liability for your capital gain dividends, you must calculate your total net capital gain or loss for the tax year after considering all of your other taxable transactions, as described below. In addition, the Fund may make distributions that represent a return of capital for tax purposes and thus will generally not be taxable to you; however, such distributions may reduce your tax basis in your Shares, which could result in you having to pay higher taxes in the future when Shares are sold, even if you sell the Shares at a loss from your original investment. The tax status of your distributions from the Fund is not affected by whether you reinvest your distributions in additional Shares or receive them in cash. The income from the Fund that you must take into account for federal income tax purposes is not reduced by amounts used to pay a deferred sales fee, if any. The tax laws may require you to treat distributions made to you in January as if you had received them on December 31 of the previous year.

Income from the Fund may also be subject to a 3.8% "Medicare tax." This tax generally applies to your net investment income if your adjusted gross income exceeds certain threshold amounts, which are $250,000 in the case of married couples filing joint returns and $200,000 in the case of single individuals.

A corporation that owns Shares generally will not be entitled to the dividends received deduction with respect to many dividends received from the Fund because the dividends received deduction is generally not available for distributions from regulated investment companies.

If you are an individual, the maximum marginal stated federal tax rate for net capital gain is generally 20% (15% or 0% for taxpayers with taxable incomes below certain thresholds). Capital gains may also be subject to the Medicare tax described above.

Net capital gain equals net long-term capital gain minus net short-term capital loss for the taxable year. Capital gain or loss is long-term if the holding period for the asset is more than one year and is short-term if the holding period for the asset is one year or less. You must exclude the date you purchase your Shares to determine your holding period. However, if you receive a capital gain dividend from the Fund and sell your Shares at a loss after holding it for six months or less, the loss will be recharacterized as long-term capital loss to the extent of the capital gain dividend received. The tax rates for capital gains realized from assets held for one year or less are generally the same as for ordinary income. The Code treats certain capital gains as ordinary income in special situations.

An election may be available to Shareholders to defer recognition of the gain attributable to a capital gain dividend if they make certain qualifying investments within a limited time. Shareholders should talk to their tax adviser about the availability of this deferral election and its requirements.

Ordinary income dividends received by an individual shareholder from a regulated investment company such as the Fund are generally taxed at higher rates than capital gains. The Fund will provide notice to its shareholders of the amount of any distribution which must be taken into account as a dividend which is to ordinary income tax rates.

Taxes on Exchange Listed Shares

If you sell or redeem your Shares, you will generally recognize a taxable gain or loss. To determine the amount of this gain or loss, you must subtract your tax basis in your Shares from the amount you receive in the transaction. Your tax basis in your Shares is generally equal to the cost of your Shares, generally including sales charges. In some cases, however, you may have to adjust your tax basis after you purchase your Shares.

Taxes and Purchases and Redemptions of Creation Units

If you exchange securities for Creation Units you will generally recognize a gain or a loss. The gain or loss will be equal to the difference between the market value of the Creation Units at the time and your aggregate basis in the securities surrendered and the cash component paid. If you exchange Creation Units for securities, you will generally recognize a gain or loss equal to the difference between your basis in the Creation Units and the aggregate market value of the securities received and any cash redemption amount. The Internal Revenue Service, however, may assert that a loss realized upon an exchange of securities for Creation Units or Creation Units for securities cannot be deducted currently under the rules governing "wash sales," or on the basis that there has been no significant change in economic position.

**Treatment of Fund Expenses**

Expenses incurred and deducted by the Fund will generally not be treated as income taxable to you. In some cases, however, you may be required to treat your portion of these Fund expenses as income. You may not be able to take a deduction for some or all of these expenses, even if the cash you receive is reduced by such expenses.

**Backup Withholding**

The Fund may be required to withhold U.S. federal income tax ("backup withholding") from dividends and capital gains distributions paid to Shareholders. Federal tax will be withheld if (1) the Shareholder fails to furnish the Fund with the Shareholder's correct taxpayer identification number or social security number, (2) the IRS notifies the Shareholder or the Fund that the shareholder has failed to report properly certain interest and dividend income to the IRS and to respond to notices to that effect, or (3) when required to do so, the Shareholder fails to certify to the Fund that he or she is not subject to backup withholding. The current backup withholding rate is 24%. Any amounts withheld under the backup withholding rules may be credited against the Shareholder's U.S. federal income tax liability.

**Non-U.S. Investors**

If you are a non-U.S. investor (*i.e.*, an investor other than a U.S. citizen or resident or a U.S. corporation, partnership, estate or trust), you should be aware that, generally, subject to applicable tax treaties, distributions from the Fund will generally be characterized as dividends for U.S. federal income tax purposes (other than dividends which the Fund properly reports as capital gain dividends) and will be subject to U.S. federal income taxes, including withholding taxes, subject to certain exceptions described below.

However, distributions received by a non-U.S. investor from the Fund that are properly reported by the Fund as capital gain dividends may not be subject to U.S. federal income taxes, including withholding taxes, provided that the Fund makes certain elections and certain other conditions are met. Distributions from the Fund that are properly reported by the Fund as an interest-related dividend attributable to certain interest income received by the Fund or as a short-term capital gain dividend attributable to certain net short-term capital gain income received by the Fund may not be subject to U.S. federal income taxes, including withholding taxes when received by certain non-U.S. investors, provided that the Fund makes certain elections and certain other conditions are met.

Distributions to, and gross proceeds from dispositions of Shares by, (i) certain non-U.S. financial institutions that have not entered into an agreement with the U.S. Treasury to collect and disclose certain information and are not resident in a jurisdiction that has entered into such an agreement with the U.S. Treasury and (ii) certain other non-U.S. entities that do not provide certain certifications and information about the entity's U.S. owners may be subject to a U.S. withholding tax of 30%. However, proposed regulations may eliminate the requirement to withhold on payments of gross proceeds from dispositions.

The foregoing discussion summarizes some of the possible consequences under current federal tax law of an investment in the Fund. It is not a substitute for personal tax advice. You also may be subject to state and local taxes on Fund distributions and sales of Shares.

Consult your personal tax adviser about the potential tax consequences of an investment in Shares under all applicable tax laws. See "Distributions and Taxes" in the statement of additional information for more information.

**Investments in the Subsidiary**

One of the requirements for qualification as a RIC is that the Fund must derive at least 90% of its gross income for each taxable year from "qualifying income." Qualifying income includes dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies or other income derived with respect to its business of investing in such stock, securities or currencies.

The Fund intends to treat any income it may derive from the futures contracts received by the Subsidiary as "qualifying income" under the provisions of the Code applicable to RICs. The IRS had issued numerous PLRs provided to third parties not associated with the Fund or its affiliates (which only those parties may rely on as precedent) concluding that similar arrangements resulted in qualifying income. Many of such PLRs have now been revoked by the Internal Revenue Service. In March of 2019, the Internal Revenue Service published Regulations that concluded that income from a corporation similar to the Subsidiary would be qualifying income, if the income is related to the Fund's business of investing in stocks or securities. Although the Regulations do not require distributions from the Subsidiary, the Fund intends to cause the Subsidiary to make distributions that would allow the Fund to make timely distributions to its shareholders.

If the Fund did not qualify as a RIC for any taxable year and certain relief provisions were not available, the Fund's taxable income would be subject to tax at the Fund level and to a further tax at the shareholder level when such income is distributed. In such event, in order to re-qualify for taxation as a RIC, the Fund might be required to recognize unrealized gains, pay substantial taxes and interest and make certain distributions. This would cause investors to incur higher tax liabilities than they otherwise would have incurred and would have a negative impact on Fund returns. In such event, the Fund's Board of Trustees may determine to reorganize or close the Fund or materially change the Fund's investment objective and strategies.

The Subsidiary intends to conduct its affairs in a manner such that it will not be subject to U.S. federal income tax. It will, however, be considered a controlled foreign corporation, and the Fund will be required to include as income annually amounts earned by the Subsidiary during that year, whether or not distributed by the Subsidiary. Furthermore, the Fund will be subject to the RIC qualification distribution requirements with respect to the Subsidiary's income, whether or not the Subsidiary makes a distribution to the Fund during the taxable year and thus the Fund may not have sufficient cash on hand to make such distribution.

Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary is organized, respectively, could result in the inability of the Fund and/or the Subsidiary to operate as described in this prospectus and could negatively affect the Fund and its shareholders. For example, Cayman Islands law does not currently impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax on the Subsidiary. If Cayman Islands law changes such that the Subsidiary must pay

Cayman Islands governmental authority taxes, the Fund's shareholders would likely suffer decreased investment returns. There remains a risk that the tax treatment of futures and contracts may be affected by future regulatory or legislative changes that could affect the character, timing and/or amount of the Fund's taxable income or gains and distributions.

**Distributor**

ALPS Distributors, Inc. serves as the distributor of Creation Units for the Fund on an agency basis. The Distributor does not maintain a secondary market in Shares.

**Net Asset Value**

The Fund's net asset value is determined as of the close of trading (normally 4:00 p.m., Eastern time) on each day the New York Stock Exchange is open for business. Net asset value is calculated for the Fund by taking the market price of the Fund's total assets, including interest or dividends accrued but not yet collected, less all liabilities, and dividing such amount by the total number of Shares outstanding. The result, rounded to the nearest cent, is the net asset value per Share. The Board of Trustees has designated the Adviser as "valuation designee" to perform fair value determinations for all of the Funds' investments pursuant to Rule 2a-5 under the Investment Company Act of 1940, as amended.

The Fund's investments are valued daily in accordance with valuation procedures adopted by the Board, and in accordance with provisions of the 1940 Act. The Board of Trustees will oversee the Adviser's fair value determinations and its performance as valuation designee. Certain securities in which the Fund may invest are not listed on any securities exchange or board of trade. Such securities are typically bought and sold by institutional investors in individually negotiated private transactions that function in many respects like an over-the-counter secondary market, although typically no formal market makers exist. Certain securities, particularly debt securities, have few or no trades, or trade infrequently, and information regarding a specific security may not be widely available or may be incomplete. Accordingly, determinations of the fair value of debt securities may be based on infrequent and dated information. Because there is less reliable, objective data available, elements of judgment may play a greater role in valuation of debt securities than for other types of securities. As explained below, any fair value determination will be made in accordance with Valkyrie's "Valuation Procedures." Typically, debt securities are valued using information provided by a third-party pricing service. The third-party pricing service primarily uses broker quotes to value the securities.

The Fund's investments, including Bitcoin and Ether Futures Contracts, will be valued daily at market value or, in the absence of market value with respect to any securities or futures contracts, at fair value in accordance with valuation procedures adopted by the Board and in accordance with the 1940 Act. Market value prices represent last sale or official closing prices from a national or foreign exchange (*i.e.*, a regulated market) and are primarily obtained from third-party pricing services.

In calculating the net asset value of the Fund, Bitcoin and Ether Futures Contracts traded on a U.S. exchange are valued using the last traded price before the net asset value calculation time on the date with respect to which the net asset value is being determined. If a Bitcoin and Ether Futures Contract traded on a U.S. exchange could not be liquidated on such day, due to the operation of daily limits or other rules of the exchange upon which that position is traded or otherwise, the Adviser may, subject to the policies and procedures approved by the Board, choose to determine a fair value price as the basis for determining the market value of such position for such day. Such fair value prices would generally be determined based on available inputs about the current value of the Bitcoin and Ether Futures Contracts and would be based on principles that the Adviser deems fair and equitable so long as such principles are consistent with normal industry standards.

Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by Valkyrie (subject to the supervision of the Board) at fair value. The use of fair value pricing by the Fund is governed by valuation procedures adopted by Valkyrie and approved by, and subject to the oversight of, the Board and in accordance with the provisions of the 1940 Act. Investments will be fair valued as determined in good faith in accordance with the policies and procedures established by Valkyrie as Valuation Designee pursuant to Rule 2a-5. These securities generally include, but are not limited to, certain restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended (the "Securities Act")) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of the Fund's net asset value or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, does not reflect the security's "fair value." As a general principle, the current "fair value" of a security would appear to be the amount which the owner might reasonably expect to receive for the security upon its current sale. The use of fair value prices by the Fund generally results in the prices used by the Fund that may differ from current market quotations or official closing prices on the applicable exchange. A variety of factors may be considered in determining the fair value of such securities. Valuing the Fund's securities using fair value pricing will result in using prices for those securities that may differ from current market valuations.

Even when market quotations are available for portfolio securities, they may be stale or unreliable because the security is not traded frequently, trading on the security ceased before the close of the trading market or issuer-specific events occurred after the security ceased trading or because of the passage of time between the close of the market on which the security trades and the close of the Exchange and when the Fund calculates its net asset value. Events that may cause the last market quotation to be unreliable include a merger or insolvency, events which affect a geographical area or an industry segment, such as political events or natural disasters, or market events, such as a significant movement in the U.S. market. Where market quotations are not readily available, including where the Adviser determines that the closing price of the security is unreliable, the Adviser will value the security at fair value in good faith using procedures approved by the Board. Fair value pricing involves subjective judgments and it is possible that a fair value determination for a security is materially different than the value that could be realized upon the sale of the security.

For more information about how the Fund's net asset value is determined, please see the section in the statement of information entitled "Determination of Net Asset Value."

**Fund Service Providers**

U.S. Bancorp Fund Services LLC is the administrator and transfer agent for the Trust. U.S. Bank, N.A. serves as the custodian for the Trust.

Chapman and Cutler LLP, 320 South Canal Street, Chicago, Illinois 60606, serves as legal counsel to the Trust.

Cohen & Company, Ltd., 342 North Water Street, Suite 830, Milwaukee, Wisconsin 53202, serves as the Fund's independent registered public accounting firm and is responsible for auditing the annual financial statements of the Fund.

**Financial Highlights**

The financial highlights table is intended to help you understand the Fund's financial performance for the fiscal year ended September 30, 2025. Certain information reflects financial results for a single share of the Fund. The total return in the table represents the rate that an investor would have earned (or lost) or an investment in the Fund (assuming reinvestment of all dividends and distributions). The information for the fiscal year ended September 30, 2025 has been derived from the Fund's financial statements, which have been audited by Cohen & Company, Ltd., the Fund's independent registered public accounting firm, whose report, along with this information and additional Fund performance and portfolio information appears in the Fund's Form N-CSR dated September 30, 2025.

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| | | | | |
|:---|:---|:---|:---|:---|
| **CoinShares Bitcoin and Ether ETF**<br> **(*formerly*, CoinShares Valkyrie Bitcoin and Ether Strategy ETF)**<br> For a Share Outstanding Throughout Each Period<br>**Consolidated Financial Highlights** | | | | |
| **Per Share Data:** |<br>**Year Ended<br> September 30,<br> 2025** |<br>**Year Ended<br> September 30,<br> 2024** |<br>**Year Ended<br> September 30,<br> 2023** |<br>**For the Period**<br> **October 21,**<br> **2021<sup>(1)</sup>**<br> **Through**<br> **September 30,**<br> **2022** |
| **Net Asset Value, Beginning of Period** | $16.35 | $9.99 | $7.49 | $25.00 |
| **Income from Investment Operations:** |  |  |  |  |
| Net Investment Income/(Loss)<sup>(2)</sup> | 0.27 | 0.42 | 0.19 | (0.09) |
| Net Realized and Unrealized Gain/(Loss) on Investments and Futures Contracts | 8.32 | 8.22 | 2.50 | (17.42) |
| &nbsp;&nbsp;&nbsp;Total from Investment Operations | 8.59 | 8.64 | 2.69 | (17.51) |
| **Less Distributions:** |  |  |  |  |
| Dividends from Net Investment Income | (7.59) | (2.28) | (0.19) |  |
| &nbsp;&nbsp;&nbsp;Total Distributions | (7.59) | (2.28) | (0.19) |  |
| **Net Asset Value, End of Period** | $17.35 | $16.35 | $9.99 | $7.49 |
| Total Return at NAV | 58.79% | 91.06% | 35.75% | (70.05)%<sup>(3)</sup> |
| **Supplemental Data and Ratios:** |  |  |  |  |
| Net Assets, End of Period (Thousands) | $40765 | $39661 | $24973 | $20775 |
| Ratio of Expenses to Average Net Assets (Gross) | 1.24%<sup>(6)</sup> | 1.31%<sup>(7)</sup> | 1.24% | 0.95%<sup>(4)</sup> |
| Ratio of Expenses to Average Net Assets (Net) | 1.24%<sup>(6)</sup> | 1.31%<sup>(7)</sup> | 1.01%<sup>(8)</sup> | 0.95%<sup>(4)</sup> |
| Ratio of Net Investment Income/(Loss) to Average Net Assets | 1.78% | 2.51% | 2.04% | (0.68)%<sup>(4)</sup> |
| Portfolio Turnover Rate<sup>(5)</sup> | 0% | 0% | 0% | 0%<sup>(3)</sup> |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Commencement
 of operations.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Based
 on average shares outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Not
 annualized.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Annualized.

&nbsp;&nbsp;&nbsp;&nbsp;(5) Excludes
 impact of derivative instruments.

&nbsp;&nbsp;&nbsp;&nbsp;(6) Includes
 interest expense of 0.07%.

&nbsp;&nbsp;&nbsp;&nbsp;(7) Includes
 interest expense of 0.15%.

&nbsp;&nbsp;&nbsp;&nbsp;(8) Includes
 interest expense of 0.06% and excludes futures commission merchant fees of 0.23% voluntarily
 reimbursed by the Adviser.

**Premium/Discount Information**

The market prices of the Shares generally will fluctuate in accordance with changes in net asset value, as well as the relative supply of and demand for Shares on the Exchange. Valkyrie cannot predict whether the Shares will trade below, at or above their net asset value. The approximate value of the Shares, which is an amount representing on a per Share basis the sum of the current market price of the securities held by the Fund, will be disseminated every 15 seconds throughout the trading day through the facilities of the Consolidated Tape Association. This approximate value should not be viewed as a "real-time" update of the net asset value per Share of the Fund because the approximate value may not be calculated in the same manner as the net asset value, which is computed once a day, generally at the end of the business day. The Fund is not involved with, or responsible for, the calculation or dissemination of the approximate value, and the Fund does not make any warranty as to its accuracy.

Information showing the number of days the market price of the Fund's Shares was greater (at a premium) and less (at a discount) than the Fund's net asset value for the most recently completed calendar year, and the most recently completed calendar quarters since that year (or the life of the Fund, if shorter), is available at https://coinshares.com/us/etf/btf/.

**Investments by Other Investment Companies**

Section 12(d)(1) of the 1940 Act restricts investments by investment companies in the securities of other investment companies. Registered investment companies are permitted to invest in the Fund beyond the limits set forth in Section 12(d)(1), subject to certain SEC rules, including Rule 12d1-4. Rule 12d1-4 allows, subject to certain conditions, the Fund to invest in other registered investment companies and other registered investment companies to invest in the Fund beyond the limits contained in Section 12(d)(1) of the 1940 Act. In order for a registered investment company to invest in shares of the Fund beyond the limitations of Section 12(d)(1), the registered investment company must enter into an agreement with the Trust and comply with certain terms and conditions set forth in Rule 12d1-4.

![](coinshares485bpos001.jpg)

**CoinShares Bitcoin and Ether ETF**

For more detailed information on the Fund, several additional sources of information are available to you. The Statement of Additional Information, incorporated by reference into this Prospectus, contains detailed information on the Fund's policies and operation. Additional information about the Fund's investments is available in the annual and semi-annual reports to shareholders. In the Fund's annual reports, you will find a discussion of the market conditions and investment strategies that significantly impacted the Fund's performance during the last fiscal year. The Fund's most recent Statement of Additional Information, annual or semi-annual reports and certain other information are available free of charge by calling the Fund at **1-800-617-0004**, on the Fund's website at https://coinshares.com/us/etf/btf/ or through your financial adviser. Shareholders may call the toll-free number above with any inquiries.

You may obtain this and other information regarding the Fund, including the Statement of Additional Information and Codes of Ethics adopted by the Adviser, Distributor and the Trust, directly from the Securities and Exchange Commission (the *"SEC"*). Information on the SEC's website is free of charge. Visit the SEC's on-line EDGAR database at http://www.sec.gov. You may also request information regarding the Fund by sending an electronic request to publicinfo@sec.gov.

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|:---|:---|
| Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor<br> New York, NY 10022<br> **1-800-617-0004**<br> https://coinshares.com/us/etf/btf/ | SEC File #: 333-258722<br> 811-23725 |

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**Statement of Additional Information**

**VALKYRIE ETF TRUST II**

**Investment Company Act File No** **. 811-23725**

![](coinshares485bpos003.jpg)

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|:---|:---|:---|
|  | **Ticker Symbol** | **Exchange** |
| **CoinShares Bitcoin and Ether ETF**<br>(*formerly* CoinShares Valkyrie Bitcoin and Ether Strategy ETF)<br>| **BTF** | **Nasdaq** |

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**Dated January 22, 2026**

This Statement of Additional Information (*"SAI"*) is not a prospectus. It should be read in conjunction with the prospectus dated January 22, 2026, as it may be revised from time to time (the *"Prospectus"*), for the CoinShares Bitcoin and Ether ETF (*formerly* CoinShares Valkyrie Bitcoin and Ether Strategy ETF) (the *"Fund"*), a series of the Valkyrie ETF Trust II (the *"Trust"*). Capitalized terms used herein that are not defined have the same meanings as in the Prospectus, unless otherwise noted. A copy of the Prospectus may be obtained without charge by writing to the Trust's distributor, ALPS Distributors, Inc., at 1290 Broadway, Suite 1000, Denver, Colorado 80203, or by calling toll free at (303) 623-2577.

**TABLE OF CONTENTS**

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| | |
|:---|:---|
| [General Description of the Trust and the Fund](#coinshares485bposb001) | A-1 |
| [Exchange Listing and Trading](#coinshares485bposb002) | A-1 |
| [Investment Objective and Policies](#coinshares485bposb003) | A-1 |
| [Investment Strategies](#coinshares485bposb004) | A-2 |
| [Investment Risks](#coinshares485bposb005) | A-7 |
| [Management of the Fund](#coinshares485bposb006) | A-11 |
| [Control Persons and Principal Holders of Securities](#coinshares485bposb007) | A-15 |
| [Investment Adviser and Other Service Providers](#coinshares485bposb008) | A-16 |
| [Brokerage Allocations](#coinshares485bposb009) | A-20 |
| [Additional Information](#coinshares485bposb010) | A-21 |
| [Proxy Voting Policies and Procedures](#coinshares485bposb011) | A-22 |
| [Creation and Redemption of Creation Units](#coinshares485bposb012) | A-22 |
| [Certain U.S. Federal Tax Matters](#coinshares485bposb013) | A-24 |
| [Determination of Net Asset Value](#coinshares485bposb014) | A-28 |
| [Dividends and Distributions](#coinshares485bposb015) | A-29 |
| [Miscellaneous Information](#coinshares485bposb016) | A-29 |
| [Performance Information](#coinshares485bposb017) | A-30 |
| [Financial Statements](#coinshares485bposb018) | A-30 |

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The audited financial statements for the Fund's most recent fiscal year appear in the Funds' Annual Report to Shareholders dated September 30, 2025, which was filed with the Securities and Exchange Commission (the "SEC") on December 8, 2025. <u>The financial statements from the Annual Report are incorporated herein by reference</u>. The Annual Report is available without charge by calling (855) 267-3837 or by visiting the SEC's website at www.sec.gov.

**GENERAL DESCRIPTION OF THE TRUST AND THE FUND**

The Trust is a Delaware statutory trust organized on December 11, 2020. The Trust is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the *"1940 Act"*). The Trust currently offers shares of three separate series, representing separate portfolios of investments. This SAI relates solely to the Fund, which is non-diversified.

The Fund is advised by Valkyrie Funds LLC (d/b/a CoinShares Valkyrie) (*"CoinShares Valkyrie"* or the "*Adviser"*). Vident Advisory, LLC (d/b/a Vident Asset Management) (*"Vident"* or the *"Sub-Adviser"*) serves as investment sub-adviser to the Fund.

The shares of the Fund (*"Shares"*) list and principally trade on the Nasdaq Stock Market LLC (the *"Exchange"*). The Shares will trade on the Exchange at market prices that may be below, at or above net asset value (*"NAV"*). ETFs, such as the Fund, do not sell or redeem individual shares of the Fund. Instead, the Fund offers, issues and redeems Shares at NAV only in aggregations of a specified number of Shares (each a "*Creation Unit"*). Financial entities known as "authorized participants" or "APs" (which are discussed in greater detail below) have contractual arrangements with the Fund or the Distributor to purchase and redeem Fund Shares directly with the Fund in Creation Units in exchange for the securities comprising the Fund and/or cash, or some combination thereof. An authorized participant that purchases a Creation Unit of Fund Shares deposits with the Fund a "basket" of securities and other assets identified by the Fund that day, and then receives the Creation Unit of Fund Shares in return for those assets. The redemption process is the reverse of the purchase process: the authorized participant redeems a Creation Unit of Fund Shares for a basket of securities and/or other assets. The basket is generally representative of the Fund's portfolio, and together with a cash balancing amount, it is equal to the NAV of the Fund Shares comprising the Creation Unit. Pursuant to Rule 6c-11 of the 1940 Act, the Fund may utilize baskets that are not representative of the Fund's portfolio. Such "custom baskets" are discussed in the section entitled "Creations and Redemptions of Creation Units." Transaction fees and other costs associated with creations or redemptions that include cash may be higher than the transaction fees and other costs associated with in-kind creations or redemptions. In all cases, conditions with respect to creations and redemptions of shares and fees will be limited in accordance with the requirements of SEC rules and regulations applicable to management investment companies offering redeemable securities.

The Fund is a separate series of the Trust, and each Share represents an equal proportionate interest in the Fund. All consideration received by the Trust for Shares and all assets of the Fund belong solely to the Fund and would be subject to liabilities related thereto. The Board of Trustees of the Trust (the "*Board of Trustees"* or the "*Trustees"*) has the right to establish additional series in the future, to determine the preferences, voting powers, rights and privileges thereof and to modify such preferences, voting powers, rights and privileges without shareholder approval. Shares of any series may also be divided into one or more classes at the discretion of the Trustees. The Trust or any series or class thereof may be terminated at any time by the Board of Trustees upon written notice to the shareholders.

**EXCHANGE LISTING AND TRADING**

The Exchange may, but is not required to, remove the Shares of the Fund from listing if: (1) following the initial twelve-month period beginning upon the commencement of trading of the Fund, there are fewer than 50 beneficial holders of the Shares; (2) the Exchange becomes aware that the Fund is no longer eligible to operate in reliance on Rule 6c-11 under the 1940 Act; (3) the Fund no longer complies with certain listing exchange rules; or (4) such other event shall occur or condition exists that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. In addition, the Exchange will remove the Shares of the Fund from listing and trading upon termination of the Trust or the Fund.

As in the case of other stocks traded on the Exchange, brokers' commissions on transactions will be based on negotiated commission rates at customary levels.

The Fund reserves the right to adjust the price levels of Shares in the future to help maintain convenient trading ranges for investors. Any adjustments would be accomplished through stock splits or reverse stock splits, which would have no effect on the net assets of the Fund.

The Fund is required by the Exchange to comply with certain listing standards (which includes certain investment parameters) in order to maintain its listing on the Exchange. Compliance with these listing standards may compel the Fund to sell securities at an inopportune time or for a price other than the security's then-current market value. The sale of securities in such circumstances could limit the Fund's profit or require the Fund to incur a loss, and as a result, the Fund's performance could be impacted.

**INVESTMENT OBJECTIVE AND POLICIES**

The Prospectus describes the investment objective and certain policies of the Fund. The following supplements the information contained in the Prospectus concerning the investment objective and policies of the Fund.

The Fund is subject to the following fundamental policies, which may not be changed without approval of the holders of a majority of the outstanding voting securities (as such term is defined in the 1940 Act) of the Fund:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The
 Fund may not issue senior securities, except as permitted under the 1940 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The
 Fund may not borrow money, except as permitted under the 1940 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The
 Fund will not underwrite the securities of other issuers except to the extent the Fund
 may be considered an underwriter under the 1933 Act in connection with the purchase and
 sale of portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The
 Fund will not purchase or sell real estate or interests therein, unless acquired as a
 result of ownership of securities or other instruments (but this shall not prohibit the
 Fund from purchasing or selling securities or other instruments backed by real estate
 or of issuers engaged in real estate activities).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The
 Fund may not make loans, except as permitted under the 1940 Act and exemptive orders
 granted thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) The
 Fund may not purchase or sell physical commodities unless acquired as a result of ownership
 of securities or other instruments (but this shall not prevent the Fund from purchasing
 or selling options, futures contracts, forward contracts or other derivative instruments,
 or from investing in securities or other instruments backed by physical commodities).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) The
 Fund will not concentrate (i.e., hold more than 25% of its assets in the stocks of a
 single industry or group of industries) its investments in issuers of one or more particular
 industries, except that the Fund may invest more than 25% of its total assets in investments
 that provide exposure to bitcoin and/or bitcoin futures contracts.

For purposes of applying restriction (1) above, under the 1940 Act as currently in effect, the Fund is not permitted to issue senior securities, except that the Fund may borrow from any bank if immediately after such borrowing the value of the Fund's total assets is at least 300% of the principal amount of all of the Fund's borrowings (*i.e.*, the principal amount of the borrowings may not exceed 33 1/3% of the Fund's total assets). In the event that such asset coverage shall at any time fall below 300% the Fund shall, within three days thereafter (not including Sundays and holidays), reduce the amount of its borrowings to an extent that the asset coverage of such borrowings shall be at least 300%. The fundamental investment limitations set forth above limit the Fund's ability to engage in certain investment practices and purchase securities or other instruments to the extent permitted by, or consistent with, applicable law. As such, these limitations will change as the statute, rules, regulations or orders (or, if applicable, interpretations) change, and no shareholder vote will be required or sought.

Except for restriction (2), if a percentage restriction is adhered to at the time of investment, a later increase in percentage resulting from a change in market value of the investment or the total assets will not constitute a violation of that restriction. With respect to restriction (2), if the limitations are exceeded as a result of a change in market value then the Fund will reduce the amount of borrowings within three days thereafter to the extent necessary to comply with the limitations (not including Sundays and holidays).

For purposes of applying restriction (5) above, the Fund may not make loans to other persons, except through (i) the purchase of debt securities permissible under the Fund's investment policies, (ii) repurchase agreements, or (iii) the lending of portfolio securities, provided that no such loan of portfolio securities may be made by the Fund if, as a result, the aggregate of such loans would exceed 33-1/3% of the value of the Fund's total assets.

The foregoing fundamental policies of the Fund may not be changed without the affirmative vote of the majority of the outstanding voting securities of the Fund. The 1940 Act defines a majority vote as the vote of the lesser of (i) 67% or more of the voting securities represented at a meeting at which more than 50% of the outstanding securities are represented; or (ii) more than 50% of the outstanding voting securities. With respect to the submission of a change in an investment policy to the holders of outstanding voting securities of the Fund, such matter shall be deemed to have been effectively acted upon with respect to the Fund if a majority of the outstanding voting securities of the Fund vote for the approval of such matter, notwithstanding that such matter has not been approved by the holders of a majority of the outstanding voting securities of any other series of the Trust affected by such matter.

In addition to the foregoing fundamental policies, the Fund is also subject to strategies and policies discussed herein which, unless otherwise noted, are non-fundamental policies and may be changed by the Board of Trustees. The Fund's investment objective is a non-fundamental policy that the Board may change without approval by shareholders upon 60 days' prior written notice to shareholders.

**INVESTMENT STRATEGIES**

The following information supplements the discussion of the Fund's investment objective, policies and strategies that appear in the Fund's Prospectus.

An investment in the Fund also should be made with an understanding of the risks inherent in an investment in futures contracts, securities and other assets, including the risk that the financial condition of issuers may become impaired or that the general condition of the market may deteriorate (either of which may cause a decrease in the value of the Fund's portfolio holdings and thus in the value of Shares). The Fund's portfolio holdings are susceptible to general market fluctuations and to volatile increases and decreases in value as market confidence and investor emotions and perceptions change. Investor perceptions are based on various and unpredictable factors, including expectations regarding governmental, economic, monetary and fiscal policies, inflation and interest rates, weather and climate conditions, economic expansion or contraction, and global or regional political, economic or banking crises.

*Types of Investments*

*Cayman Subsidiary.* The Fund may invest a portion of its total assets in the Subsidiary. The Subsidiary may invest in Futures Instruments as described under "Futures Instruments" below. Only the Subsidiary, not the Fund, may invest in commodities. Because the Fund may invest a substantial portion of its assets in the Subsidiary, which may hold certain of the investments described in the Prospectus and this SAI, the Fund may be considered to be investing indirectly in those investments through the Subsidiary. Therefore, except as otherwise noted, for purposes of this disclosure, references to the Fund's investments may also be deemed to include the Fund's indirect investments through the Subsidiary.

The Subsidiary is not registered under the 1940 Act and is not directly subject to its investor protections, except as noted in the Prospectus or this SAI. However, the Subsidiary is wholly-owned and controlled by the Fund and is advised by CoinShares Valkyrie and sub-advised by Vident. The Trust's Board of Trustees has oversight responsibility for the investment activities of the Fund, including its investment in the Subsidiary, and the Fund's role as the sole shareholder of the Subsidiary. CoinShares Valkyrie receives no additional compensation for managing the assets of the Subsidiary. The Subsidiary will also enter into separate contracts for the provision of custody, transfer agency, and accounting agent services with the same service providers or with affiliates of the same service providers that provide those services to the Fund.

Changes in the laws of the United States (where the Fund is organized) and/or the Cayman Islands (where the Subsidiary is incorporated) could prevent the Fund and/or the Subsidiary from operating as described in the Prospectus and this SAI and could negatively affect the Fund and its shareholders. For example, the Cayman Islands currently does not impose certain taxes on the Subsidiary, including income and capital gains tax, among others. If Cayman Islands laws were changed to require the Subsidiary to pay Cayman Islands taxes, the investment returns of the Fund would likely decrease.

The financial statements of the Subsidiary will be consolidated with the Fund's financial statements in the Fund's Annual Report.

*Fixed Income Investments and Cash Equivalents.* Fixed income Investments and cash equivalents held by the Fund may include, without limitation, the types of investments set forth below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Fund may invest in U.S. government securities, including bills, notes and bonds differing as to maturity and rates of interest, which are either issued or guaranteed by the U.S. Treasury or by U.S. government agencies or instrumentalities. U.S. government securities include securities that are issued or guaranteed by the United States Treasury, by various agencies of the U.S. government, or by various instrumentalities that have been established or sponsored by the U.S. government. U.S. Treasury securities are backed by the "full faith and credit" of the United States. Securities issued or guaranteed by federal agencies and U.S. government-sponsored instrumentalities may or may not be backed by the full faith and credit of the United States. Some of the U.S. government agencies that issue or guarantee securities include the Export-Import Bank of the United States, the Farmers Home Administration, the Federal Housing Administration, the Maritime Administration, the Small Business Administration and the Tennessee Valley Authority. An instrumentality of the U.S. government is a government agency organized under federal charter with government supervision. Instrumentalities issuing or guaranteeing securities include, among others, the Federal Home Loan Banks, the Federal Land Banks, the Central Bank for Cooperatives, Federal Intermediate Credit Banks and Federal National Mortgage Association (*"FNMA"*). In the case of those U.S. government securities not backed by the full faith and credit of the United States, the investor must look principally to the agency or instrumentality issuing or guaranteeing the security for ultimate repayment, and may not be able to assert a claim against the United States itself in the event that the agency or instrumentality does not meet its commitment. The U.S. government, its agencies and instrumentalities do not guarantee the market value of their securities, and consequently, the value of such securities may fluctuate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Fund may invest in certificates of deposit issued against funds deposited in a bank or savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return, and are normally negotiable. If such certificates of deposit are non-negotiable, they will be considered illiquid securities and be subject to the Fund's 15% restriction on investments in illiquid securities. Pursuant to the certificate of deposit, the issuer agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Under current FDIC regulations, the maximum insurance payable as to any one certificate of deposit is $250,000; therefore, certificates of deposit purchased by the Fund may not be fully insured. The Fund may only invest in certificates of deposit issued by U.S. banks with at least $1 billion in assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The Fund may invest in bankers' acceptances, which are short-term credit instruments used to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then "accepted" by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an asset or it may be sold in the secondary market at the going rate of interest for a specific maturity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The Fund may invest in bank time deposits, which are monies kept on deposit with banks or savings and loan associations for a stated period of time at a fixed rate of interest. There may be penalties for the early withdrawal of such time deposits, in which case the yields of these investments will be reduced.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The Fund may invest in commercial paper, which are short-term unsecured promissory notes, including variable rate master demand notes issued by corporations to finance their current operations. Master demand notes are direct lending arrangements between the Fund and a corporation. There is no secondary market for the notes. However, they are redeemable by the Fund at any time. The Fund's portfolio managers will consider the financial condition of the corporation (e.g., earning power, cash flow and other liquidity ratios) and will continuously monitor the corporation's ability to meet all of its financial obligations, because the Fund's liquidity might be impaired if the corporation were unable to pay principal and interest on demand. The Fund may invest in commercial paper only if it has received the highest rating from at least one nationally recognized statistical rating organization or, if unrated, judged by Vident to be of comparable quality.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) The Fund may invest in shares of money market funds, as consistent with its investment objective and policies. Shares of money market funds are subject to management fees and other expenses of those funds. Therefore, investments in money market funds will cause the Fund to bear proportionately the costs incurred by the money market funds' operations. At the same time, the Fund will continue to pay its own management fees and expenses with respect to all of its assets, including any portion invested in the shares of other investment companies. It is possible for the Fund to lose money by investing in money market funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) The Fund may invest in corporate debt securities, as consistent with its investment objective and policies. Corporate debt may be rated investment-grade or below investment-grade and may carry variable or floating rates of interest. Some corporate debt securities that are rated below investment-grade generally are considered speculative because they present a greater risk of loss, including default, than higher quality debt securities. The Fund could lose money if the issuer of a corporate debt security is unable to pay interest or repay principal when it is due.

*Futures Instruments.* The Fund may purchase and sell Futures Instruments, including exchange-listed bitcoin and ether futures contracts. Only the Subsidiary may hold futures contracts on commodities.

Transaction costs are incurred when a futures contract is bought or sold and margin deposits must be maintained. A futures contract may be satisfied by delivery or purchase, as the case may be, of the instrument or by payment of the change in the cash value of the reference asset or index. More commonly, futures contracts are closed out prior to delivery by entering into an offsetting transaction in a matching futures contract. Although the value of a reference asset or index might be a function of the value of certain specified securities, no physical delivery of those securities is made. If the offsetting purchase price is less than the original sale price, a gain will be realized; if it is more, a loss will be realized. Conversely, if the offsetting sale price is more than the original purchase price, a gain will be realized; if it is less, a loss will be realized. The transaction costs must also be included in these calculations. There can be no assurance, however, that the Fund will be able to enter into an offsetting transaction with respect to a particular futures contract at a particular time. If the Fund is not able to enter into an offsetting transaction, the Fund will continue to be required to maintain the margin deposits on the futures contract.

Margin is the amount of funds that must be deposited by the Fund with its custodian in a segregated account in the name of the futures commission merchant in order to initiate futures trading and to maintain the Fund's and the Subsidiary's open positions in futures contracts. A margin deposit is intended to ensure the Fund's or the Subsidiary's performance of the futures contract. The margin required for a particular futures contract is set by the exchange on which the futures contract is traded and may be significantly modified from time to time by the exchange during the term of the futures contract. Futures contracts are customarily purchased and sold on margins that may range upward from less than 5% of the value of the futures contract being traded to as much as approximately 50% of the notional value of the futures contract. The margin on bitcoin and ether futures contracts has historically been significantly higher than many other Futures Instruments.

If the price of an open futures contract changes (by increase in the case of a sale or by decrease in the case of a purchase) so that the loss on the futures contract reaches a point at which the margin on deposit does not satisfy margin requirements, the broker will require an increase in the margin. However, if the value of a position increases because of favorable price changes in the futures contract so that the margin deposit exceeds the required margin, the broker will pay the excess to the Fund or the Subsidiary. In computing daily net asset value, the Fund will mark to market the current value of its open futures contracts. The Fund expects to earn interest income on its margin deposits.

Because the margin requirement for futures contracts is less than the value of the assets underlying the futures contract, futures trading involves a degree of leverage. As a result, a relatively small price movement in a futures contract may result in immediate and substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 40% of the value of the futures contract is deposited as margin, a subsequent 20% decrease in the value of the futures contract would result in a loss of half of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A decrease in excess of 40% would result in a loss exceeding the original margin deposit, if the futures contract were closed out. Thus, a purchase or sale of a futures contract may result in losses in excess of the amount initially invested in the futures contract. However, the Fund would presumably have sustained comparable losses if, instead of investing in the futures contract, it had invested in the underlying financial instrument and sold it after the decline.

Most U.S. futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The day limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of futures contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of Futures positions and subjecting some Futures traders to substantial losses. Despite the daily price limits on various futures exchanges, the price volatility of commodity futures contracts has been historically greater than that for traditional securities such as stocks and bonds. To the extent that the Subsidiary invests in commodity futures contracts, the assets of the Fund and the Subsidiary, and therefore the prices of Fund shares, may be subject to greater volatility.

There can be no assurance that a liquid market will exist at a time when the Fund seeks to close out a futures contract. The Fund would continue to be required to meet margin requirements until the position is closed, possibly resulting in a decline in the Fund's net asset value. In addition, many of the contracts discussed above are relatively new instruments without a significant trading history. As a result, there can be no assurance that an active secondary market will develop or continue to exist.

*Bitcoin and Ether Futures.* The price of bitcoin and ether futures is based on the expected price of bitcoin and ether on certain exchanges on the expiration date of the bitcoin and ether futures contract. Bitcoin and ether futures prices reflect the price of bitcoin and ether on certain exchanges only, and not the bitcoin and ether cash markets. The liquidity of the markets for bitcoin and ether futures depends on, among other things: the supply and demand for bitcoin and ether futures; the supply and demand for bitcoin and ether; the adoption of bitcoin and ether for commercial uses; the anticipated increase of investments in bitcoin and ether-related investment products by retail and institutional investors; speculative interest in bitcoin, ether, bitcoin and ether futures, and bitcoin and ether-related investment products; regulatory or other restrictions on investors' ability to invest in bitcoin and ether futures; and the potential ability to hedge against the price of bitcoin/ether with bitcoin/ether futures (and vice versa).

The markets for bitcoin and ether futures may be illiquid. This means that the Subsidiary may not be able to buy and sell bitcoin and ether futures quickly or at the desired price. For example, it is difficult to execute a trade at a specific price when there is a relatively small volume of buy and sell orders in a market. A materially adverse development in one or more of the factors on which the liquidity of the market for bitcoin and ether futures depends may cause the market to become illiquid, for short or long periods. In such markets, the Subsidiary may not be able to buy and sell bitcoin and ether futures quickly (or at all) or at the desired price. Market illiquidity may cause losses for the Fund. Additionally, the large size of the futures positions which the Subsidiary may acquire increases the risk of illiquidity, as larger positions may be more difficult to fully liquidate, may take longer to liquidate, and, as a result of their size, may expose the Fund to potentially more significant losses while trying to do so.

Limits imposed by counterparties, exchanges or other regulatory organizations, such as accountability levels, position limits and daily price fluctuation limits, may contribute to a lack of liquidity with respect to some financial instruments and have a negative impact on Fund performance. During periods of market illiquidity, including periods of market disruption and volatility, it may be difficult or impossible for the Fund to buy or sell futures contracts or other financial instruments.

*Regulatory Aspects of Investments in Futures.* CoinShares Valkyrie is registered as a "commodity pool operator" and Vident is registered as a "commodity trading adviser" with the National Futures Association (the *"NFA"*) pursuant to the rules and regulations of the Commodity Futures Trading Commission (the *"CFTC"*). Vident's investment decisions may need to be modified, and commodity contract positions held by the Fund and/or the Subsidiary may have to be liquidated at disadvantageous times or prices, to avoid exceeding position limits established by the CFTC, potentially subjecting the Fund to substantial losses. The regulation of commodity transactions in the United States is a rapidly changing area of the law and is subject to ongoing modification by government, self-regulatory and judicial action. The effect of any future regulatory change on the Fund is impossible to predict, but could be substantial and adverse to the Fund.

*Asset Coverage For Futures Positions.* The Fund and Subsidiary will comply with SEC guidance with respect to coverage of futures positions by registered investment companies. SEC guidance may require the Fund, in certain circumstances, to segregate cash or liquid securities on its books and records, or engage in other appropriate measures to "cover" its obligations under certain futures or derivative contracts. For example, with respect to futures that are not cash settled, the Fund is required to segregate liquid assets equal to the full notional value of the futures contract. For futures contracts that are cash settled, the Fund is required to segregate liquid assets in an amount equal to the Fund's daily mark-to-market (net) obligation (i.e., the Fund's daily net liability) under the contract. Securities earmarked or held in a segregated account cannot be sold while the Fund's futures position is outstanding, unless replaced with other permissible assets (or otherwise covered), and will be marked-to-market daily. As an alternative to segregating assets, for any futures contract held by the Fund, the Fund could purchase a put option on that same futures contract with a strike price as high or higher than the price of the contract held. The Fund may not enter into futures positions if such positions will require the Fund to set aside or earmark more than 100% of its net assets.

*Federal Income Tax Treatment of Exchange-Listed Commodity Futures and Investments in the Subsidiary.* The Subsidiary's transactions in exchange-listed commodity futures contracts will be subject to special provisions of the Internal Revenue Code of 1986, as amended (the "*Code*") that, among other things, may affect the character of gains and losses realized by the Subsidiary (i.e., may affect whether gains or losses are ordinary or capital, or short-term or long-term), may accelerate recognition of income to the Subsidiary and may defer Subsidiary losses. Because the Subsidiary is a controlled foreign corporation for U.S. federal income tax purposes, this treatment of the Subsidiary's income will affect the income the Fund must recognize. These rules could, therefore, affect the character, amount and timing of distributions to shareholders. These provisions also (a) will require the Subsidiary to mark-to-market certain types of the positions in its portfolio (i.e., treat them as if they were closed out), and (b) may cause the Subsidiary and the Fund to recognize income without the Fund receiving cash with which to make distributions in amounts necessary to satisfy the 90% distribution requirement for qualifying to be taxed as a regulated investment company and the distribution requirement for avoiding excise taxes.

The Fund intends to treat any income it may derive from Futures Instruments received by the Subsidiary as "qualifying income" under the provisions of the Code applicable to "regulated investment companies" ("*RICs*"). The Internal Revenue Service had issued numerous private letter rulings ("*PLRs*") provided to third parties not associated with the Fund or its affiliates (which only those parties may rely on as precedent) concluding that similar arrangements resulted in qualifying income. Many of such PLRs have now been revoked by the Internal Revenue Service. In March of 2019, the Internal Revenue Service published Regulations that concluded that income from a corporation similar to the Subsidiary would be qualifying income, if the income is related to the Fund's business of investing in stocks or securities. Although the Regulations do not require distributions from the Subsidiary, the Fund intends to cause the Subsidiary to make distributions that would allow the Fund to make timely distributions to its shareholders. The Fund generally will be required to include in its own taxable income the income of the Subsidiary for a tax year, regardless of whether the Fund receives a distribution of the Subsidiary's income in that tax year, and this income would nevertheless be subject to the distribution requirement for qualification as a regulated investment company and would be taken into account for purposes of the 4% excise tax.

*Illiquid Investments.* Pursuant to Rule 22e-4 under the 1940 Act, the Fund may not acquire any "illiquid investment" if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid investments that are assets. An "illiquid investment" is any investment that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Illiquid investments include repurchase agreements with a notice or demand period of more than seven days, certain stripped mortgage-backed securities, certain municipal leases, certain over-the-counter derivative instruments, securities and other financial instruments that are not readily marketable, and restricted securities unless, based upon a review of the relevant market, trading and investment-specific considerations, those investments are determined not to be illiquid. The Trust has implemented a liquidity risk management program and related procedures to identify illiquid investments pursuant to Rule 22e-4, and the Board of Trustees has approved the designation of the certain officers of the Trust to administer the Trust's liquidity risk management program and related procedures. In determining whether an investment is an illiquid investment, the designated officers of the Trust will take into account actual or estimated daily transaction volume of an investment, group of related investments or asset class and other relevant market, trading, and investment-specific considerations. In addition, in determining the liquidity of an investment, the designated officers of the Trust must determine whether trading varying portions of a position in a particular portfolio investment or asset class, in sizes that the Fund would reasonably anticipate trading, is reasonably expected to significantly affect its liquidity, and if so, the Fund must take this determination into account when classifying the liquidity of that investment or asset class.

In addition to actual or estimated daily transaction volume of an investment, group of related investments or asset class and other relevant market, trading, and investment-specific considerations, the following factors, among others, will generally impact the classification of an investment as an "illiquid investment": (i) any investment that is placed on the Adviser's restricted trading list; and (ii) any investment that is delisted or for which there is a trading halt at the close of the trading day on the primary listing exchange at the time of classification (and in respect of which no active secondary market exists). Investments purchased by the Fund that are liquid at the time of purchase may subsequently become illiquid due to these and other events and circumstances. If one or more investments in the Fund's portfolio become illiquid, the Fund may exceed the 15% limitation in illiquid investments. In the event that changes in the portfolio or other external events cause the Fund to exceed this limit, the Fund must take steps to bring its illiquid investments that are assets to or below 15% of its net assets within a reasonable period of time. This requirement would not force the Fund to liquidate any portfolio instrument where the Fund would suffer a loss on the sale of that instrument.

*Portfolio Turnover*

The Fund buys and sells portfolio securities in the normal course of its investment activities. The proportion of the Fund's investment portfolio that is bought and sold during a year is known as the Fund's portfolio turnover rate. A turnover rate of 100% would occur, for example, if the Fund bought and sold securities valued at 100% of its net assets within one year. A high portfolio turnover rate could result in the payment by the Fund of increased brokerage costs, expenses and taxes. Significant variations in portfolio turnover from year-to-year are generally the result of fluctuations in the size of a Fund or changes to a Fund's portfolio holdings. During the fiscal year ended September 30, 2024 and the fiscal year ended September 30, 2025, the Fund's portfolio turnover rate was 0% of the average value of its portfolio.

**INVESTMENT RISKS**

*Overview*

An investment in the Fund should be made with an understanding of the risks that an investment in the Fund's shares entails, including the risk that the financial condition of the issuers of the securities or the general condition of the securities market may worsen and the value of the securities and therefore the value of the Fund may decline. The Fund may not be an appropriate investment for those who are unable or unwilling to assume the risks involved generally with such an investment. In addition, investors should be aware of the risks associated with an investment in both bitcoin, ether and bitcoin and ether futures contracts. The past market and earnings performance of any of the securities included in the Fund is not predictive of their future performance.

*Borrowing and Leverage Risk*

When the Fund borrows money, it must pay interest and other fees, which will reduce the Fund's returns if such costs exceed the returns on the portfolio securities purchased or retained with such borrowings. Any such borrowings are intended to be temporary. However, under certain market conditions, including periods of low demand or decreased liquidity, such borrowings might be outstanding for longer periods of time. As prescribed by the 1940 Act, the Fund will be required to maintain specified asset coverage of at least 300% with respect to any bank borrowing immediately following such borrowing. The Fund may be required to dispose of assets on unfavorable terms if market fluctuations or other factors reduce the Fund's asset coverage to less than the prescribed amount.

*Cyber Security Risk*

As the use of Internet technology has become more prevalent in the course of business, the Fund has become more susceptible to potential operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund's digital information systems through "hacking" or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition, cyber security breaches of the Fund's third-party service providers, such as its administrator, transfer agent, custodian, or sub-adviser, as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security. However, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third-party service providers.

*Derivatives Risk*

The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. Among the risks presented are market risk, credit risk, management risk and liquidity risk. The Fund will only invest in exchange-traded futures contracts and will not invest in any over-the-counter derivatives. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives. In addition, when the Fund invests in certain derivative securities, including, but not limited to, when-issued securities, forward commitments, futures contracts and interest rate swaps, the Fund is effectively leveraging its investments, which could result in exaggerated changes in the net asset value of the Fund's shares and can result in losses that exceed the amount originally invested. The success of the Sub-Adviser's derivatives strategies will depend on its ability to assess and predict the impact of market or economic developments on the underlying asset, index or rate and the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions. Liquidity risk exists when a security cannot be purchased or sold at the time desired, or cannot be purchased or sold without adversely affecting the price. Certain specific risks associated with an investment in derivatives may include: market risk, credit risk, correlation risk, liquidity risk, legal risk and systemic or "interconnection" risk, as specified below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) **Market Risk.** Market risk is the risk that the value of the underlying assets may go up or down. Adverse movements in the value of an underlying asset can expose the Fund to losses. Market risk is the primary risk associated with derivative transactions. Derivative instruments may include elements of leverage and, accordingly, fluctuations in the value of the derivative instrument in relation to the underlying asset may be magnified. The successful use of derivative instruments depends upon a variety of factors, particularly the portfolio manager's ability to predict movements of the securities, currencies and commodities markets, which may require different skills than predicting changes in the prices of individual securities. There can be no assurance that any particular strategy adopted will succeed. A decision to engage in a derivative transaction will reflect the portfolio managers' judgment that the derivative transaction will provide value to the Fund and its shareholders and is consistent with the Fund's objective, investment limitations and operating policies. In making such a judgment, the portfolio managers will analyze the benefits and risks of the derivative transactions and weigh them in the context of the Fund's overall investments and investment objective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) **Credit Risk.** Credit risk is the risk that a loss may be sustained as a result of the failure of a counterparty to comply with the terms of a derivative instrument. Specifically, the FCM or the clearing house could fail to perform its obligations, causing significant losses to the Fund. For example, the Fund could lose margin payments it has deposited with an FCM as well as any gains owed but not paid to the Fund, if the FCM or clearing house becomes insolvent or otherwise fails to perform its obligations. Credit risk of market participants with respect to derivatives that are centrally cleared is concentrated in a few clearing houses and it is not clear how an insolvency proceeding of a clearing house would be conducted and what impact an insolvency of a clearing house would have on the financial system. Under current CFTC regulations, a FCM maintains customers' assets in a bulk segregated account. If a FCM fails to do so, or is unable to satisfy a substantial deficit in a customer account, its other customers may be subject to risk of loss of their funds in the event of that FCM's bankruptcy. In that event, in the case of futures and options on futures, the FCM's customers are entitled to recover, even in respect of property specifically traceable to them, only a proportional share of all property available for distribution to all of that FCM's customers. In addition, if the FCM does not comply with the applicable regulations, or in the event of a fraud or misappropriation of customer assets by the FCM, the Fund could have only an unsecured creditor claim in an insolvency of the FCM with respect to the margin held by the FCM. FCMs are also required to transfer to the clearing house the amount of margin required by the clearing house, which amount is generally held in an omnibus account at the clearing house for all customers of the FCM.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) **Correlation Risk.** Correlation risk is the risk that there might be an imperfect correlation, or even no correlation, between price movements of a derivative instrument and price movements of the underlying reference asset. This might occur due to factors unrelated to the value of the investments underlying reference asset, such as speculative or other pressures on the markets in which these instruments are traded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) **Liquidity Risk.** Liquidity risk is the risk that a derivative instrument cannot be sold, closed out or replaced quickly at or very close to its fundamental value. Generally, exchange contracts are very liquid because the exchange clearing house is the counterparty of every contract. The Fund might be required by applicable regulatory requirements to maintain assets as "cover," maintain segregated accounts and/or make margin payments when it takes positions in derivative instruments involving obligations to third parties (i.e., instruments other than purchase options). If the Fund is unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expires, matures or is closed out. These requirements might impair the Fund's ability to sell a security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time. The Fund's ability to sell or close out a position in an instrument prior to expiration or maturity depends upon the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the counterparty to enter into a transaction closing out the position. Due to liquidity risk, there is no assurance that any derivatives position can be sold or closed out at a time and price that is favorable to the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) **Legal Risk.** Legal risk is the risk of loss caused by the unenforceability of a party's obligations under the derivative. While a party seeking price certainty agrees to surrender the potential upside in exchange for downside protection, the party taking the risk is looking for a positive payoff. Despite this voluntary assumption of risk, a counterparty that has lost money in a derivative transaction may try to avoid payment by exploiting various legal uncertainties about certain derivative products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) **Systemic or "Interconnection" Risk.** Systemic or "interconnection" risk is the risk that a disruption in the financial markets will cause difficulties for all market participants. In other words, a disruption in one market will spill over into other markets, perhaps creating a chain reaction.

To the extent the Fund enters into derivatives transactions, it will do so pursuant to Rule 18f-4 under the 1940 Act. Rule 18f-4 requires the Fund to implement certain policies and procedures designed to manage its derivatives risks, dependent upon the Fund's level of exposure to derivative instruments.

*Failure to Qualify as a Regulated Investment Company Risk*

If, in any year, the Fund fails to qualify as a regulated investment company under the applicable tax laws, the Fund would be taxed as an ordinary corporation. In such circumstances, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as a regulated investment company that is accorded special tax treatment. If the Fund fails to qualify as a regulated investment company, distributions to the Fund's shareholders generally would be eligible for the dividends received deduction in the case of corporate shareholders.

*Legal and Litigation Risk*

In certain frontier and emerging markets, fraud and corruption may be more prevalent than in developed market countries. Securities and issuers that the Fund may invest in are exposed to these risks, which could have a negative impact on a security's value. It may be difficult for the Fund to obtain or enforce judgments against parties located outside of the U.S. It may be difficult or impossible to obtain or enforce remedies against non-U.S. governments, their agencies, quasi-sovereign entities, other non-U.S. issuers or counterparties.

*Listing Standards Risk*

The Fund is required by the Exchange to comply with certain listing standards (which includes certain investment parameters) in order to maintain its listing on the Exchange. Compliance with these listing standards may compel the Fund to sell securities at an inopportune time or for a price other than the security's then-current market value. The sale of securities in such circumstances could limit the Fund's profit or require the Fund to incur a loss, and as a result, the Fund's performance could be impacted.

*Liquidity Risk*

With respect to the Fund's investments in Collateral Investments, whether or not the securities held by the Fund are listed on a securities exchange, the principal trading market for certain of the securities may be in the OTC market. As a result, the existence of a liquid trading market for such securities may depend on whether dealers will make a market in the securities. There can be no assurance that a market will be made for any of the securities, that any market for such securities will be maintained or that there will be sufficient liquidity of the securities in any markets made. The price at which such securities are held by the Fund will be adversely affected if trading markets for the securities are limited or absent.

*Market Events Risk*

Turbulence in the economic, political and financial system has historically resulted, and may continue to result, in an unusually high degree of volatility in the capital markets. Both domestic and non-U.S. capital markets have been experiencing increased volatility and turmoil, with issuers that have exposure to the real estate, mortgage and credit markets particularly affected, and it is uncertain whether or for how long these conditions could continue. Reduced liquidity in equity, credit and fixed-income markets may adversely affect many issuers worldwide. This reduced liquidity may result in less money being available to purchase raw materials, goods and services from emerging markets, which may, in turn, bring down the prices of these economic staples. It may also result in small or emerging market issuers having more difficulty obtaining financing, which may, in turn, cause a decline in their security prices. These events and possible continued market turbulence may have an adverse effect on the Fund.

In addition, local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more significantly than others. Such events could adversely affect the prices and liquidity of the Fund's portfolio securities or other instruments and could result in disruptions in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund's Shares and result in increased market volatility. During any such events, the Fund's Shares may trade at increased premiums or discounts to their NAV.

Health crises caused by the outbreak of infectious diseases or other public health issues, may exacerbate other pre-existing political, social, economic, market and financial risks. The impact of any such events could negatively affect the global economy, as well as the economies of individual countries or regions, the financial performance of individual companies, sectors and industries, and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the prices and liquidity of the securities and other instruments in which the Fund invests and negatively impact the Fund's investment return.

*Swap Agreements Risk*

The Fund may enter into swap agreements to obtain exposure to bitcoin. Swap agreements are two-party contracts entered into for a set period of time in which the parties agree to exchange payments based on some underlying reference or asset (such as interest rates). The use of swaps is a highly specialized activity that involves investment techniques, risk analyses and tax planning different from those associated with ordinary portfolio securities transactions. Swap agreements may involve greater risks than direct investment in securities as they may be leveraged and are subject to credit risk, counterparty risk and valuation risk. A swap agreement could result in losses if the underlying reference or asset does not perform as anticipated. In addition, many swaps trade over-the-counter and may be considered illiquid. It may not be possible for the Fund to liquidate a swap position at an advantageous time or price, which may result in significant losses. Because they are two-party contracts and may have terms of greater than seven days, certain swap transactions may be considered to be illiquid. Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap counterparty. Some swaps may be complex and difficult to value. Swaps may also be subject to pricing or "basis" risk, which exists when a particular swap becomes extraordinarily expensive relative to historical prices or the price of corresponding cash market instruments. Under certain market conditions it may not be economically feasible to initiate a transaction or liquidate a position in time to avoid a loss or take advantage of an opportunity. If a swap transaction is particularly large or if the relevant market is illiquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. The prices of swaps can be very volatile, and a variance in the degree of volatility or in the direction of the price of the reference asset from the sub-adviser's expectations may produce significant losses in the Fund's investments in swaps. In addition, a perfect correlation between a swap and an investment position may be impossible to achieve.

*Rolling, Backwardation and Contango Risk*

When purchasing stocks or bonds, the buyer acquires ownership in the security; however, buyers of futures contracts are not entitled to ownership of the underlying reference asset until and unless they decide to accept delivery at expiration of the contract. In practice, delivery of the underlying reference asset to satisfy a futures contract rarely occurs because most futures traders use the liquidity of the central marketplace to sell their exchange-traded futures contract before expiration. The ether futures contracts in which the fund invests are entirely cash-settled. As futures contracts approach expiration, they may be replaced by similar contracts that have a later expiration. For example, a contract purchased and held in June 2025 may have an expiration date in August 2025. As this contract nears expiration, a long position in the contract may be replaced by selling the August 2025 contract and purchasing a contract expiring in October 2025. This process is referred to as "rolling." The price of a futures contract is generally higher or lower than the spot price of the underlying asset when there is significant time to expiration of the contract due to various factors within the market. As a futures contract nears expiration, the futures price will tend to converge to the spot price. In some circumstances, the prices of some futures contracts with near-term expirations may be higher than the prices for futures contracts with longer-term expirations. This circumstance is referred to as "backwardation." If the market for futures contracts is in "backwardation," the sale of the near-term month contract would be at a higher price than the longer-term contract, and futures investors generally will earn positive returns. Conversely, a "contango" market is one in which the price of futures contracts in the near-term months are lower than the price of futures contracts in the longer-term months. If the market for futures contacts is in "contango," it would create a cost to "roll" the futures contract. The actual realization of a potential roll cost will depend on the difference in price of the near and distant contracts. The Fund will not "roll" futures contracts on a predefined schedule as they approach expiration; instead the Sub-Adviser may determine to roll to another futures contract in an attempt to generate maximum yield. There can be no guarantee that such a strategy will produce the desired results.

*Additional Market Disruption Risk.*

In late February 2022, Russia launched a large scale military attack on Ukraine. The invasion significantly amplified already existing geopolitical tensions among Russia, Ukraine, Europe, NATO and the West, including the U.S. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia. Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, large financial institutions, officials and oligarchs; a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (*"SWIFT"*), the electronic banking network that connects banks globally; and restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions.

Additional sanctions may be imposed in the future. Such sanctions (and any future sanctions) and other actions against Russia may adversely impact, among other things, the Russian economy and various sectors of the economy, including but not limited to, financials, energy, metals and mining, engineering and defense and defense-related materials sectors; result in a decline in the value and liquidity of Russian securities; result in boycotts, tariffs, and purchasing and financing restrictions on Russia's government, companies and certain individuals; weaken the value of the ruble; downgrade the country's credit rating; freeze Russian securities and/or funds invested in prohibited assets and impair the ability to trade in Russian securities and/or other assets; and have other adverse consequences on the Russian government, economy, companies and region. Further, several large corporations and U.S. states have announced plans to divest interests or otherwise curtail business dealings with certain Russian businesses.

The ramifications of the hostilities and sanctions, however, may not be limited to Russia and Russian companies but may spill over to and negatively impact other regional and global economic markets of the world (including Europe and the United States), companies in other countries (particularly those that have done business with Russia) and on various sectors, industries and markets for securities and commodities globally, such as oil and natural gas. Accordingly, the actions discussed above and the potential for a wider conflict could increase financial market volatility, cause severe negative effects on regional and global economic markets, industries, and companies and have a negative effect on a Fund's investments and performance beyond any direct exposure to Russian issuers or those of adjoining geographic regions. In addition, Russia may take retaliatory actions and other countermeasures, including cyberattacks and espionage against other countries and companies in the world, which may negatively impact such countries and the securities in which the Fund invests. Accordingly, there may be heightened risk of cyberattacks which may result in, among other things, disruptions in the functioning and operations of industries or companies around the world, including in the United States and Europe.

Further, ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain Fund investments as well as Fund performance and liquidity.

The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on Fund performance and the value of an investment in the Fund.

**MANAGEMENT OF THE FUND**

*Trustees and Officers*

The general supervision of the duties performed for the Fund under the Investment Management Agreement (as defined below) is the responsibility of the Board of Trustees. There are three Trustees of the Trust, all of whom are Trustees who are not officers or employees of CoinShares Valkyrie or any of its affiliates (each an *"Independent Trustee"* and collectively the *"Independent Trustees"*). The Trustees serve for indefinite terms until their resignation, death or removal. The Trust has not established a lead Independent Trustee position. The Trustees set broad policies for the Fund, choose the Trust's officers and hired the Fund's investment adviser. Annemarie Tierney is deemed an Interested Trustee of the Trust due to her positions as Principal Executive Officer and President of the Trust. The officers of the Trust manage its day-to-day operations, are responsible to the Board of Trustees and serve indefinite terms. The following is a list of the Trustees and executive officers of the Trust and a statement of their present positions and principal occupations during the past five years, the number of portfolios each Trustee oversees and the other directorships they have held during the past five years, if applicable.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address**<br> **and Year of Birth** | **Position and**<br> **Offices**<br> **with Trust** | **Term of**<br> **Office**<br> **and Year**<br> **First Elected**<br> **or**<br> **Appointed** | **Principal**<br> **Occupations**<br> **During Past 5**<br> **Years** | **Number**<br> **of**<br> **Portfolios**<br> **in the**<br> **CoinShares Valkyrie**<br> **Fund**<br> **Complex**<br> **Overseen**<br> **by Trustee** | **Other**<br> **Trusteeships or**<br> **Directorships**<br> **Held by Trustee**<br> **During the Past**<br> **5 Years** |
| **Interested Trustees** | **Interested Trustees** | **Interested Trustees** | **Interested Trustees** | **Interested Trustees** | **Interested Trustees** |
| &nbsp;&nbsp;Annemarie Tierney<sup>(1)</sup><br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor,<br> New York, New York 10022<br> YOB: 1964  | &nbsp;&nbsp;Trustee | &nbsp;&nbsp;Indefinite term (Since December 2025) | &nbsp;&nbsp;Principal, Liquid Advisors Inc. (November 2019-present) | &nbsp;&nbsp;3 | &nbsp;&nbsp;CEA Industries Inc. (November 2025-present); Sharps Technologies, Inc. (October 2025-December 2025) |
| **Independent Trustees** | **Independent Trustees** | **Independent Trustees** | **Independent Trustees** | **Independent Trustees** | **Independent Trustees** |
| &nbsp;&nbsp;Keith Fletcher <br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor<br> New York, New York 10022<br> YOB: 1958 | &nbsp;&nbsp;Trustee | &nbsp;&nbsp;Indefinite term Since inception | &nbsp;&nbsp;Principal and Chief Executive Officer, JAHFT Solutions LLC (2017-Present); Partner, Neos Investments (2023-Present) | &nbsp;&nbsp;3 | &nbsp;&nbsp;Tortoise Capital Series Trust (2024-Present); Uncommon Portfolio Design Core Equity ETF (2020-2022) |
| &nbsp;&nbsp;Steve Lehman <br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor<br> New York, New York 10022<br> YOB: 1952 | &nbsp;&nbsp;Trustee | &nbsp;&nbsp;Indefinite term Since inception | &nbsp;&nbsp;Executive Chairman, Vymedic Biotech (2019-Present) & CoFoundersLab<br> (2018-Present) | &nbsp;&nbsp;3 |  |
| &nbsp;&nbsp;Mark Osterheld <br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor<br> New York, New York 10022<br> YOB: 1955 | &nbsp;&nbsp;Trustee | &nbsp;&nbsp;Indefinite term Since inception | &nbsp;&nbsp;Adjunct Lecturer, Bentley University (2016-2022); Adjunct Lecturer, Clarkson University (2022-2023) | &nbsp;&nbsp;3 | &nbsp;&nbsp;Steward Funds (2024-Present); Crossmark ETF Trust (2025-Present)<br>|

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address**<br> **and Year of Birth** | **Position and**<br> **Offices**<br> **with Trust** | **Term of**<br> **Office**<br> **and Year**<br> **First Elected**<br> **or**<br> **Appointed** | **Principal**<br> **Occupations**<br> **During Past 5**<br> **Years** | **Number**<br> **of**<br> **Portfolios**<br> **in the**<br> **CoinShares Valkyrie**<br> **Fund**<br> **Complex**<br> **Overseen**<br> **by Trustee** | **Other**<br> **Trusteeships or**<br> **Directorships**<br> **Held by Trustee**<br> **During the Past**<br> **5 Years** |
| **Officers of the Trust** | **Officers of the Trust** | **Officers of the Trust** | **Officers of the Trust** | **Officers of the Trust** | **Officers of the Trust** |
| &nbsp;&nbsp;Annemarie Tierney<sup>(1)</sup><br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor,<br> New York, New York 10022<br> YOB: 1964 | &nbsp;&nbsp;Principal Executive Officer and President | &nbsp;&nbsp;Indefinite term (Since November 2025) | &nbsp;&nbsp;Principal, Liquid Advisors Inc. (November 2019-present) | &nbsp;&nbsp;N/A | &nbsp;&nbsp;CEA Industries Inc. (November 2025-present); Sharps Technologies, Inc. (October 2025-December 2025) |
| &nbsp;&nbsp;John Canning<br> c/o Chenery Compliance Group<br> Devon Square II, 744 W Lancaster,<br> Suite 104 Wayne, Pennsylvania 19087<br> YOB: 1970 | &nbsp;&nbsp;Chief Compliance Officer | &nbsp;&nbsp;Indefinite term (Since August 2022) | &nbsp;&nbsp;Director of Chenery Compliance Group, LLC (March 2021-present); Senior Consultant of Foreside (August 2020-March 2021); Chief Compliance Officer & Chief Operating Officer of Schneider Capital Management (May 2019-July 2020) | &nbsp;&nbsp;N/A | &nbsp;&nbsp;N/A |
| &nbsp;&nbsp;Ben Gaffey<br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor,<br> New York, New York 10022<br> YOB: 1985 | &nbsp;&nbsp;Treasurer, Chief Financial Officer and Chief Accounting Officer | &nbsp;&nbsp;Indefinite term Since inception | &nbsp;&nbsp;Controller – US Operations, CoinShares Co. (2024-present); Controller, Valkyrie Investments Inc. (2021-2024); Assurance Senior Manager, Ernst & Young LLP (2016-2021) | &nbsp;&nbsp;N/A | &nbsp;&nbsp;N/A |
| &nbsp;&nbsp;Jeri-Lea Brown<br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor,<br> New York, New York 10022<br> YOB: 1992 | &nbsp;&nbsp;Secretary | &nbsp;&nbsp;Indefinite term (Since January 2026) | &nbsp;&nbsp;Group Company Secretary of CoinShares Group (April 2018-present) | &nbsp;&nbsp;N/A | &nbsp;&nbsp;N/A |

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(1) Annemarie Tierney is deemed an "interested person" of the Trust due to her position as Principal Executive Officer and President of the Trust.

*Unitary Board Leadership Structure*

It is anticipated that each Trustee will serve as a trustee of all funds in the CoinShares Valkyrie Fund Complex (as defined below), which is known as a "unitary" board leadership structure. Each Trustee currently serves as a trustee of the Fund and is anticipated to serve as a trustee for future Funds advised by CoinShares Valkyrie (each, a *"CoinShares Valkyrie Fund"* and collectively, the *"CoinShares Valkyrie Fund Complex"*). None of the Trustees who are not "interested persons" of the Trust, nor any of their immediate family members, have ever been a director, officer or employee of, or consultant to, CoinShares Valkyrie or any of its affiliates. Keith Fletcher, an Independent Trustee, serves as the Chair of the Board for each Fund in the CoinShares Valkyrie Fund Complex.

The same four persons serve as Trustees on the Board and are anticipated to serve on the Boards of all other CoinShares Valkyrie Funds. The unitary board structure was adopted for the CoinShares Valkyrie Funds because of the efficiencies it achieves with respect to the governance and oversight of the CoinShares Valkyrie Funds. Each CoinShares Valkyrie Fund is subject to the rules and regulations of the 1940 Act (and other applicable securities laws), which means that many of the CoinShares Valkyrie Funds face similar issues with respect to certain of their fundamental activities, including risk management, portfolio liquidity, portfolio valuation and financial reporting. Because of the similar and often overlapping issues facing the CoinShares Valkyrie Funds, including among any such ETFs, the Board of Trustees believes that maintaining a unitary board structure promotes efficiency and consistency in the governance and oversight of all CoinShares Valkyrie Funds and reduces the costs, administrative burdens and possible conflicts that may result from having multiple boards. In adopting a unitary board structure, the Trustees seek to provide effective governance through establishing a board the overall composition of which, as a body, possesses the appropriate skills, diversity, independence and experience to oversee the Fund's business.

Annually, the Board of Trustees will review its governance structure and the committee structures, its performance and functions and any processes that would enhance board governance over the business of the CoinShares Valkyrie Funds. The Board of Trustees has determined that its leadership structure, including the unitary board and committee structure, is appropriate based on the characteristics of the funds it serves and the characteristics of the CoinShares Valkyrie Fund Complex as a whole.

*Board Committees*

The Board of Trustees has established two standing committees (as described below) and has delegated certain of its responsibilities to those committees. The Board of Trustees and its committees meet frequently throughout the year to oversee the activities of the Fund, review contractual arrangements with and the performance of service providers, oversee compliance with regulatory requirements and review Fund performance. The Independent Trustees are represented by independent legal counsel at all Board and committee meetings. Generally, the Board of Trustees acts by majority vote of the Trustees present at a meeting, assuming a quorum is present, unless otherwise required by applicable law.

The two standing committees of the Board of Trustees are the Nominating and Governance Committee and the Audit Committee.

The Nominating and Governance Committee is responsible for appointing and nominating non-interested persons to the Board of Trustees. Messrs. Fletcher, Lehman and Osterheld are members of the Nominating and Governance Committee. If there is no vacancy on the Board of Trustees, the Board of Trustees will not actively seek recommendations from other parties, including shareholders. The Nominating and Governance Committee will not consider new trustee candidates who are 70 years of age or older or will turn 70 years old during the initial term. When a vacancy on the Board of Trustees occurs and nominations are sought to fill such vacancy, the Nominating and Governance Committee may seek nominations from those sources it deems appropriate in its discretion, including shareholders of the Fund. To submit a recommendation for nomination as a candidate for a position on the Board of Trustees, shareholders of the Fund should mail such recommendation to Jeri-Lea Brown, Secretary, at the Trust's address, 437 Madison Avenue, 28th Floor New York, New York 10022. Such recommendation shall include the following information: (i) a statement in writing setting forth (A) the name, age, date of birth, business address, residence address and nationality of the person or persons to be nominated; (B) the class or series and number of all Shares of the Fund owned of record or beneficially by each such person or persons, as reported to such shareholder by such nominee(s); (C) any other information regarding each such person required by paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A) under the 1934 Act; (D) any other information regarding the person or persons to be nominated that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitation of proxies for election of trustees or directors pursuant to Section 14 of the 1934 Act and the rules and regulations promulgated thereunder; and (E) whether such shareholder believes any nominee is or will be an "interested person" of the Fund (as defined in the 1940 Act) and, if not an "interested person," information regarding each nominee that will be sufficient for the Fund to make such determination; and (ii) the written and signed consent of any person to be nominated to be named as a nominee and to serve as a trustee if elected. In addition, the Trustees may require any proposed nominee to furnish such other information as they may reasonably require or deem necessary to determine the eligibility of such proposed nominee to serve as a Trustee. The Nominating and Governance Committee met one time during the fiscal year ended September 30, 2025.

The Audit Committee is responsible for overseeing the Fund's accounting and financial reporting process, the system of internal controls and audit process and for evaluating and appointing independent auditors (subject also to approval of the Board of Trustees). Messrs. Fletcher, Lehman and Osterheld serve on the Audit Committee. The Audit Committee met two times during the fiscal year ended September 30, 2025.

*Risk Oversight*

As part of the general oversight of the Fund, the Board of Trustees is involved in the risk oversight of the Fund. The Board of Trustees has adopted and periodically reviews policies and procedures designed to address the Fund's risks. Oversight of investment and compliance risk, including, if applicable, oversight of any Sub-Adviser, is performed primarily at the Board level in conjunction with the Adviser's investment oversight group and the Trust's Chief Compliance Officer (*"CCO"*), John Canning.

Oversight of other risks also occurs at the committee level. The Adviser's investment oversight group reports to the Board of Trustees at quarterly meetings regarding, among other things, Fund performance and the various drivers of such performance as well as information related to the Adviser and its operations and processes. The Board of Trustees reviews reports on the Fund's and the service providers' compliance policies and procedures at each quarterly Board meeting and receives an annual report from the CCO regarding the operations of the Fund's and the service providers' compliance programs. In addition, the Independent Trustees meet privately each quarter with the CCO. The Audit Committee reviews with the Adviser the Fund's major financial risk exposures and the steps the Adviser has taken to monitor and control these exposures, including the Fund's risk assessment and risk management policies and guidelines. The Audit Committee also, as appropriate, reviews in a general manner the processes other Board committees have in place with respect to risk assessment and risk management. The Nominating and Governance Committee monitors all matters related to the corporate governance of the Trust.

Not all risks that may affect the Fund can be identified nor can controls be developed to eliminate or mitigate their occurrence or effects. It may not be practical or cost effective to eliminate or mitigate certain risks, the processes and controls employed to address certain risks may be limited in their effectiveness, and some risks are simply beyond the reasonable control of the Fund or the Adviser or other service providers. Moreover, it is necessary to bear certain risks (such as investment-related risks) to achieve the Fund's goals. As a result of the foregoing and other factors, the Fund's ability to manage risk is subject to substantial limitations.

*Board Diversification and Trustee Qualifications*

As described above, the Nominating and Governance Committee of the Board of Trustees oversees matters related to the nomination of Trustees. The Nominating and Governance Committee seeks to establish an effective Board with an appropriate range of skills and diversity, including, as appropriate, differences in background, professional experience, education, vocations, and other individual characteristics and traits in the aggregate. Each Trustee must meet certain basic requirements, including relevant skills and experience, time availability and, if qualifying as an Independent Trustee, independence from the Adviser, underwriters or other service providers, including any affiliates of these entities.

Listed below for each current Trustee are the experiences, qualifications and attributes that led to the conclusion, as of the date of this SAI, that each current Trustee should serve as a Trustee in light of the Trust's business and structure.

*Independent Trustees.* Keith Fletcher is currently the Principal and CEO of JAHFT Solutions LLC, a role he has been in since 2017. Additionally, he served as the Principal and Chief Distribution Officer at RiskX Investments from 2012 to 2017, following his role of Chief Marketing Officer at Guggenheim Investments/Rydex SGI from 2008 to 2012. Other experiences include Managing Director, Lyster Watson (2007-2008), President and Chief Executive Officer, Fletcher Financial Group Inc. (2004-2007), and Chief Marketing Officer, Executive Vice President, Van Eck Global (1992-2004). Mr. Fletcher has served as a Trustee of the CoinShares Valkyrie Funds since 2021.

Steve Lehman is an executive chairman to Vymedic Biotech, a role he has been in since 2019. He also currently serves as the executive chairman of CoFoundersLab. In addition, Mr. Lehman has previously served as Chairman & CEO of both NASDAQ and the New York Stock Exchange. Mr. Lehman has served as a Trustee of the CoinShares Valkyrie Funds since 2021. He currently serves as the chair of the Nominating Committee (since 2021) of the CoinShares Valkyrie Funds.

Mark Osterheld currently serves as the Chair of the Board of Trustees and chair of the Audit Committee (since 2021) of the CoinShares Valkyrie Funds. He served as an Adjunct Lecturer in Accountancy at Bentley University in Waltham, Massachusetts, and Clarkson University in Potsdam, New York. He has been a principal consultant for a consulting firm since 2013. In addition, Mr. Osterheld previously held various leadership roles at Fidelity Investments from 1992 to 2013, including Fund President and Treasurer of the Fidelity Strategic Advisers mutual funds and Vice President – Treasury Oversight. He is a Certified Public Accountant (CPA) and a member of the American Institute of Certified Public Accountants. Mr. Osterheld has served as a Trustee of the CoinShares Valkyrie Funds since 2021.

*Interested Trustees.* Tierney is the Principal Executive Officer and President of Valkyrie ETF Trust II and the Chief Executive Officer of the Adviser. She is the Founder and Principal of Liquid Advisors Inc., a strategic advisory firm serving financial services and digital asset industry clients, a position she has held since November 2019. Through Liquid Advisors, she provides strategic consulting and expert witness services to private investment funds, broker-dealers, policy organizations, national stock exchanges, and private company liquidity service providers, with a focus on securities law, market structure, risk assessment, and governance. Liquid Advisors has provided services to an affiliate of CoinShares Valkyrie since 2021. From September 2018 to September 2019, Ms. Tierney served as Head of Strategy and General Counsel at Templum, Inc., a broker-dealer and alternative trading system focused on primary offerings and secondary trading of unregistered digital securities. Prior to that, she held senior roles at Nasdaq Private Market and SecondMarket Holdings, Inc. (now Digital Currency Group), and previously served in legal and regulatory roles at NYSE Euronext, Skadden, Arps, Slate, Meagher & Flom LLP, and the U.S. Securities and Exchange Commission. She is a long-standing member of the Board of Directors of the Association of SEC Alumni (ASECA), for which she served as President from 2023 to 2025. Ms. Tierney holds FINRA Series 7, 63, and 24 licenses.

For the 2026 calendar year, each Independent Trustee is paid a fixed annual retainer of $25,000. The fixed annual retainer is allocated equally among each Fund in the CoinShares Valkyrie Fund Complex. Trustees are also reimbursed for travel and out-of-pocket expenses incurred in connection with all meetings.

The following table sets forth the compensation earned by each Independent Trustee (including reimbursement for travel and out-of-pocket expenses) for services to the Fund and the aggregate compensation paid to them for services to the CoinShares Valkyrie Fund Complex, for the fiscal year ended September 30, 2025. The Trust has no retirement or pension plans. The officers and Trustees who are "interested persons" as designated above serve without any compensation from the Trust. The Trust has no employees. Its officers are compensated by CoinShares Valkyrie.

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| | | |
|:---|:---|:---|
| **Name of Trustee** | **Compensation<br> from the<br> Fund** | **Total<br> Compensation<br> from the<br> CoinShares Valkyrie Fund<br> Complex** |
| Keith Fletcher | $8333.33 | $25000 |
| Steven Lehman | $8333.33 | $25000 |
| Mark Osterheld | $8333.33 | $25000 |

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*Interested and Independent Trustees*

The following table sets forth the dollar range of equity securities beneficially owned by the Interested and Independent Trustees in the Fund and all funds overseen by the Trustees in the CoinShares Valkyrie Fund Complex as of December 31, 2025:

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| | | |
|:---|:---|:---|
| **Trustee** | **Dollar Range**<br> **of**<br> **Equity**<br> **Securities**<br> **in the Fund** | **Aggregate Dollar**<br> **Range of**<br> **Equity Securities**<br> **in**<br> **All Registered**<br> **Investment**<br> **Companies**<br> **Overseen by**<br> **Trustee**<br> **in the CoinShares Valkyrie**<br> **Fund Complex** |
| *Interested Trustees* |  |  |
| Annemarie Tierney | None | None |
| *Independent Trustees* |  |  |
| Keith Fletcher | None | None |
| Steven Lehman | None | None |
| Mark Osterheld | None | None |

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As of December 31, 2025, the Independent Trustees of the Trust and immediate family members did not own beneficially or of record any class of securities of an investment adviser or principal underwriter of the Fund or any person directly or indirectly controlling, controlled by, or under common control with an investment adviser or principal underwriter of the Fund.

As of December 31, 2025, the officers and Trustees, in the aggregate, owned less than 1% of the shares of the Fund.

**CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES**

A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the outstanding shares of a fund. A control person is one who owns, either directly or indirectly, more than 25% of the voting securities of a company or acknowledges the existence of control. The table set forth below shows the percentage ownership of each person or "group" (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended) who, as of January 15, 2026, owned of record, or is known by the Trust to have owned of record or beneficially, 5% or more of the Shares of the Fund.

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| | |
|:---|:---|
| **Shareholders Name and Address** | **Percentage** |
| Charles Schwab & Co Inc.<br> 211 Main Street<br> San Francisco, California 94105-1905 | 39.21% |
| National Financial Services LLC<br> 499 Washington Boulevard<br> Jersey City, New Jersey 07310-1995 | 15.94% |
| Morgan Stanley Smith Barney LLC<br> 1300 Thames Street, 6th Floor<br> Baltimore, Maryland 21231 | 9.76% |

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**INVESTMENT ADVISER AND OTHER SERVICE PROVIDERS**

***Investment Adviser.*** Valkyrie Funds LLC, 437 Madison Avenue, 28th Floor New York, New York 10022, serves as the investment adviser to the Fund. CoinShares Valkyrie is a Tennessee limited liability company and a wholly-owned subsidiary of CoinShares Co. CoinShares Valkyrie discharges its responsibilities subject to the policies of the Board of Trustees. CoinShares Valkyrie also administers the Trust's business affairs, provides office facilities and equipment and certain clerical, bookkeeping and administrative services, and permits any of its officers or employees to serve without compensation as Trustees or officers of the Trust if elected to such positions.

Pursuant to an investment management agreement between CoinShares Valkyrie and the Trust, on behalf of the Fund (the *"Investment Management Agreement"*), CoinShares Valkyrie oversees the investment of the Fund's assets and is responsible for paying all expenses of the Fund, excluding the fee payments under the Investment Management Agreement, interest, taxes, brokerage commissions, acquired fund fees and expenses and other expenses connected with the execution of portfolio transactions, distribution and service fees payable pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses. The Fund has agreed to pay CoinShares Valkyrie an annual management fee equal to a percentage of its daily net assets, as detailed in the below table.

***Management Fee***

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| | |
|:---|:---|
| **Fund** | **Fee** |
| CoinShares Bitcoin and Ether ETF | 0.95% |

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For the services rendered during the fiscal year ended September 30, 2023, the Adviser received an amount of $242,173, in management fees paid by the Fund. For the services rendered during the fiscal year ended September 30, 2024, the Adviser received an amount of $407,099, in management fees paid by the Fund. For the services rendered during the fiscal year ended September 30, 2025, the Adviser received an amount of $353,789, in management fees paid by the Fund.

Under the Investment Management Agreement, CoinShares Valkyrie shall not be liable for any loss sustained by reason of the purchase, sale or retention of any security, whether or not such purchase, sale or retention shall have been based upon the investigation and research made by any other individual, firm or corporation, if such recommendation shall have been selected with due care and in good faith, except loss resulting from willful misfeasance, bad faith, or gross negligence on the part of CoinShares Valkyrie in the performance of its obligations and duties, or by reason of its reckless disregard of its obligations and duties. The Investment Management Agreement is in place for the original initial two year term, and thereafter only if approved annually by the Board of Trustees, including a majority of the Independent Trustees. The Investment Management Agreement terminates automatically upon assignment and is terminable at any time without penalty as to the Fund by the Board of Trustees, including a majority of the Independent Trustees, or by vote of the holders of a majority of the Fund's outstanding voting securities on 60 days' written notice to CoinShares Valkyrie, or by CoinShares Valkyrie on 60 days' written notice to the Fund.

***Investment Sub-Adviser.*** CoinShares Valkyrie has retained Vident Advisory, LLC (d/b/a Vident Asset Management), 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009, to act as sub-adviser to the Fund pursuant to a sub-advisory agreement (the "Sub-Advisory Agreement"). Vident was formed in 2016 and provides sub-advisory services to multiple ETFs. Vident is owned by Vident Capital Holdings, LLC which is controlled by MM VAM, LLC. MM VAM, LLC is owned by Casey Crawford.

Pursuant to the Sub-Advisory Agreement, CoinShares Valkyrie has agreed to pay for the services provided by the Sub-Adviser through sub-advisory fees. Vident receives a sub-advisory fee equal to the greater of (1) $75,000 per annum or (2) 0.09% per annum of the average daily net assets of the Fund on the first $500 million in assets, 0.08% on the next $500 million in assets, and 0.07% on all assets over $1 billion, calculated daily and paid monthly. CoinShares Valkyrie is responsible for paying the entire amount of the Vident's fee for the Fund. Vident Investment Advisory, LLC (the "*Prior Sub-Adviser"*) received an amount of $59,281 in sub-advisory fees for the fiscal year ended September 30, 2023. Vident received an amount of $15,719 in sub-advisory fees for the fiscal period ended September 30, 2023, which represents the amount for the fiscal period subsequent to the change in control of Vident Asset Management. Vident received $75,241 in sub-advisory fees for the fiscal year ended September 30, 2024, and $74,964.34 in sub-advisory fees for the fiscal year ended September 30, 2025.

***Portfolio Managers.*** The portfolio managers are primarily responsible for the day-to-day management of the Fund. There are currently three portfolio managers, as follows:

*Bill Cannon, ETF Portfolio Manager at CoinShares Valkyrie*. Prior to joining CoinShares Valkyrie, Bill was a Managing Director at Guggenheim Partners Investment Management, where he was member of the insurance portfolio management division responsible for $80 billion of assets under management. Before that, Mr. Cannon worked at the Chicago Mercantile Exchange and the Chicago Board Options Exchange as a derivatives broker for equity index and interest rate futures and options. Mr. Cannon earned a BA in Chemistry from the University of Vermont and an MBA from the Quinlan School of Business at Loyola University Chicago.

*Rafael Zayas, CFA, Senior Vice President, Head of Portfolio Management and Trading of Vident.* Mr. Zayas has over 15 years of trading and portfolio management experience in global equity products and ETFs. He is SVP, Head of Portfolio Management and, specializing in managing and trading of developed, emerging, and frontier market portfolios. Prior to joining Vident, he was a Portfolio Manager at Russell Investments where he oversaw over $5 billion in quantitative strategies across global markets, including emerging, developed and frontier markets and listed alternatives. Before that, he was an equity Portfolio Manager at BNY Mellon Asset Management, where he was responsible for $150 million in internationally listed global equity ETFs and assisted in managing $3 billion of global ETF assets. Mr. Zayas holds a BS in Electrical Engineering from Cornell University. He also holds the Chartered Financial Analyst designation.

*Austin Wen, Senior Portfolio Manager of Vident*. Mr. Wen has eight years of investment management experience. He is a Portfolio Manager at Vident Investment Advisory, specializing in portfolio management and trading of equity portfolios and commodities-based portfolios, as well as risk monitoring and investment analysis. Previously, he was an analyst for Vident Financial, working on the development and review of investment solutions. He began his career as a State Examiner for the Georgia Department of Banking and Finance. Mr. Wen obtained a BA in Finance from the University of Georgia and holds the Chartered Financial Analyst designation.

*Compensation.* Bill Cannon is compensated by CoinShares Valkyrie and receives a competitive salary. He may receive bonuses based on qualitative considerations, such as his contribution to the organization, and performance reviews in relation to job responsibilities. Messrs. Zayas and Wen are compensated by Vident. Each is paid a fixed salary and discretionary bonus that is not based on the performance of the Fund.

*Ownership of Fund Securities.* The following table sets forth the dollar range of equity securities beneficially owned by each of the portfolio managers of the Fund as of September 30, 2025:

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| | |
|:---|:---|
| **Portfolio Manager** | **Dollar Range of Equity Securities in the Fund** |
| Bill Cannon | None |
| Rafael Zayas | None |
| Austin Wen | None |

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*Accounts Managed by the Portfolio Managers.* In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of September 30, 2025.

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| | | | |
|:---|:---|:---|:---|
| **Portfolio Managers** | **Registered**<br> **Investment**<br> **Companies**<br> **Number of**<br> **Accounts**<br> **($ Assets)** | **Other Pooled**<br> **Investment Vehicles**<br> **Number of**<br> **Accounts**<br> **($ Assets)** | **Other Accounts**<br> **Number of**<br> **Accounts**<br> **($ Assets)** |
| Bill Cannon | 2 ($300.7 million) | 0 ($0) | 0 ($0) |
| Rafael Zayas | 65 ($9.25 billion) | 18 ($5.15 billion) | 0 ($0) |
| Austin Wen | 74 ($8.88 billion) | 21 ($5.18 billion) | 0 ($0) |

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*Conflicts of Interest.* The Sub-Adviser's portfolio managers' management of other accounts may give rise to potential conflicts of interest in connection with their management of the Fund's investments, on the one hand, and the investments of the other accounts, on the other. The other accounts might have similar investment objectives as the Fund or hold, purchase or sell securities that are eligible to be held, purchased or sold by the Fund. While the portfolio managers' management of other accounts may give rise to the following potential conflicts of interest, the Sub-Adviser does not believe that the conflicts, if any, are material or, to the extent any such conflicts are material, the Sub-Adviser believes that it has designed policies and procedures to manage those conflicts in an appropriate way.

***Fund Administration.*** The administrator, fund accountant and transfer agent for the Fund is U.S. Bancorp Fund Services, LLC (*"USBFS", "Administrator"*, *"Fund Accountant"* or *"Transfer Agent"*), which has its principal office at 615 East Michigan Street, Milwaukee, WI 53202 and is primarily in the business of providing administrative, fund accounting and stock transfer services to retail and institutional mutual funds. USBFS performs these services pursuant to three separate agreements, a fund administration servicing agreement, a fund accounting servicing agreement and a transfer agent servicing agreement.

*Administration Agreement.* Pursuant to the fund administration servicing agreement with the Trust (*"Administration Agreement"*), USBFS provides all administrative services necessary for the Fund, other than those provided by CoinShares Valkyrie, subject to the supervision of the Board of Trustees. USBFS employees generally will not be officers of the Fund for which they provide services.

The Administration Agreement is terminable by the Board or CoinShares Valkyrie on ninety (90) days' written notice and may be assigned provided the non-assigning party provides prior written consent. The Administration Agreement shall remain in effect for three years from the date of its initial approval, unless amended, and its renewal is subject to approval of the Board for periods thereafter. The Administration Agreement provides that in the absence of the USBFS's refusal or willful failure to comply with the Agreement or bad faith, negligence or willful misconduct on the part of USBFS, USBFS shall not be liable for any action or failure to act in accordance with its duties thereunder.

Under the Administration Agreement, USBFS provides all administrative services, including, without limitation: (i) providing services of persons competent to perform such administrative and clerical functions as are necessary to provide effective administration of the Fund; (ii) overseeing the performance of administrative and professional services to the Fund by others, including the Fund's custodian, as applicable; (iii) preparing, but not paying for, the periodic updating of the Fund's Registration Statement, Prospectus and Statement of Additional Information in conjunction with Fund counsel, including the printing of such documents for the purpose of filings with the SEC and state securities administrators, preparing the Fund's tax returns, and preparing reports to the Fund's shareholders and the SEC; (iv) calculation of yield and total return for the Fund; (v) monitoring and evaluating daily income and expense accruals, and sales and redemptions of Shares of the Fund; (vi) preparing in conjunction with Fund counsel, but not paying for, all filings under the securities or "Blue Sky" laws of such states or countries as are designated by the Distributor, which may be required to register or qualify, or continue the registration or qualification, of the Fund and/or its Shares under such laws; (vii) preparing notices and agendas for meetings of the Fund's Board and minutes of such meetings in all matters required by the 1940 Act to be acted upon by the Board; and (viii) monitoring periodic compliance with respect to all requirements and restrictions of the 1940 Act, the Internal Revenue Code and the Prospectus.

*Accounting Agreement.* Pursuant to the fund accounting servicing agreement with the Trust (the *"Fund Accounting Agreement"*), USBFS provides the Fund with all accounting services, including, without limitation: (i) daily computation of NAV; (ii) maintenance of security ledgers and books and records as required by the 1940 Act; (iii) production of the Fund's listing of portfolio securities and general ledger reports; (iv) reconciliation of accounting records; and (v) maintaining certain books and records described in Rule 31a-1 under the 1940 Act, and reconciling account information and balances among the custodian and CoinShares Valkyrie.

For the administrative and fund accounting services rendered to the Fund by USBFS, USBFS is paid an annual fee based on the average net assets of the Fund, subject to a minimum annual fee. Pursuant to the Fund's unitary management fee structure, CoinShares Valkyrie is responsible for paying for the services provided by USBFS, and the Fund does not directly pay USBFS.

*Transfer and Dividend Agent.* USBFS acts as the Fund's transfer and dividend agent. The Fund pays USBFS for its services as its transfer and dividend agent.

***Custodian.*** U.S. Bank National Association, 1555 North Rivercenter Drive, Suite 302, Milwaukee, WI 53212, serves as custodian (the *"Custodian"*) for the Fund's cash and securities. Pursuant to a custodian servicing agreement with the Fund (the *"Custodian Agreement"*), it is responsible for maintaining the books and records of the Fund's portfolio securities and cash. The Custodian does not assist in, and is not responsible for, investment decisions involving the assets of the Fund.

***Securities Lending Agent.*** The Fund may participate in securities lending arrangements whereby the Fund lends certain of its portfolio securities to brokers, dealers, and financial institutions (not with individuals) to receive additional income and increase the rate of return of its portfolio. U.S. Bank, N.A. serves as the Fund's securities lending agent and is responsible for (i) negotiating the fees (rebates) of securities loans within parameters approved by the Board; (ii) delivering loaned securities to the applicable borrower(s), a list of which has been approved by the Board; (iii) investing any cash collateral received for a securities loan in investments pre-approved by the Board; (iv) receiving the returned securities at the expiration of a loan's term; (v) daily monitoring of the value of the loaned securities and the collateral received; (vi) notifying borrowers to make additions to the collateral, when required; (vii) accounting and recordkeeping services as necessary for the operation of the securities lending program, and (viii) establishing and operating a system of controls and procedures to ensure compliance with its obligations under the Fund's securities lending program.

The Fund did not engage in securities lending activities during the fiscal year ended September 30, 2025.

***Distributor.*** ALPS Distributors, Inc. (the *"Distributor"*) serves as distributor and principal underwriter of the Creation Units of the Fund. Its principal address is 1290 Broadway, Suite 1000, Denver, Colorado 80203. The Distributor has entered into a Distribution Agreement with the Trust pursuant to which it distributes Fund shares. Shares are continuously offered for sale by the Fund through the Distributor only in Creation Units, as described below under the heading "Creation and Redemption of Creation Units."

CoinShares Valkyrie may, from time to time and from its own resources, pay, defray or absorb costs relating to distribution, including payments out of its own resources to the Distributor, or to otherwise promote the sale of shares. CoinShares Valkyrie's available resources to make these payments include profits from advisory fees received from the Fund. The services CoinShares Valkyrie may pay for include, but are not limited to, advertising and attaining access to certain conferences and seminars, as well as being presented with the opportunity to address investors and industry professionals through speeches and written marketing materials.

Since the inception of the Fund, there has been no underwriting commissions with respect to the sale of Fund Shares, and the Distributor did not receive compensation on redemptions for the Fund for that period.

*Aggregations.* Shares of the Fund in less than Creation Units are not distributed by the Distributor. The Distributor will deliver the Prospectus and, upon request, this SAI to Authorized Participants purchasing Creation Units and will maintain records of both orders placed with it and confirmations of acceptance furnished by it. The Distributor is a broker-dealer registered under the 1934 Act and a member of the Financial Industry Regulatory Authority (*"FINRA"*).

The Distribution Agreement provides that it may be terminated at any time, without the payment of any penalty, on at least 60 days' written notice by the Trust to the Distributor (i) by vote of a majority of the Independent Trustees; or (ii) by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund. The Distribution Agreement will terminate automatically in the event of its assignment (as defined in the 1940 Act).

The Distributor may also enter into agreements with participants that utilize the facilities of the Depository Trust Company (the *"DTC Participants"*), which have international, operational, capabilities and place orders for Creation Units of the Fund's shares. Participating Parties (as defined in "Procedures for Creation of Creation Units" below) shall be DTC Participants (as defined in "DTC Acts as Securities Depository for Fund Shares" below).

**BROKERAGE ALLOCATIONS**

The Sub-Adviser is responsible for decisions to buy and sell securities for the Fund and for the placement of the Fund's securities business, the negotiation of the commissions to be paid on brokered transactions, the prices for principal trades in securities, and the allocation of portfolio brokerage and principal business. It is the policy of CoinShares Valkyrie to seek the best execution at the best security price available with respect to each transaction, and with respect to brokered transactions in light of the overall quality of brokerage and research services provided to CoinShares Valkyrie and its clients. The best price to the Fund means the best net price without regard to the mix between purchase or sale price and commission, if any. Purchases may be made from underwriters, dealers, and, on occasion, the issuers. Commissions will be paid on the Fund's futures transactions, if any. The purchase price of portfolio securities purchased from an underwriter or dealer may include underwriting commissions and dealer spreads. The Fund may pay mark-ups on principal transactions. In selecting broker-dealers and in negotiating commissions, the Sub-Adviser considers, among other things, the firm's reliability, the quality of its execution services on a continuing basis and its financial condition.

Section 28(e) of the Securities Exchange Act of 1934, as amended (the *"1934 Act"*) permits an investment adviser, under certain circumstances, to cause an account to pay a broker or dealer who supplies brokerage and research services a commission for effecting a transaction in excess of the amount of commission another broker or dealer would have charged for effecting the transaction. Brokerage and research services include (i) furnishing advice as to the value of securities, the advisability of investing, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; (ii) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts; and (iii) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement, and custody). Such brokerage and research services are often referred to as "soft dollars." CoinShares Valkyrie has advised the Board of Trustees that it does not currently intend to use soft dollars.

Notwithstanding the foregoing, in selecting brokers, the Sub-Adviser may in the future consider investment and market information and other research, such as economic, securities and performance measurement research, provided by such brokers, and the quality and reliability of brokerage services, including execution capability, performance, and financial responsibility. Accordingly, the commissions charged by any such broker may be greater than the amount another firm might charge if the Sub-Adviser determines in good faith that the amount of such commissions is reasonable in relation to the value of the research information and brokerage services provided by such broker to the Sub-Adviser or the Trust. In addition, the Sub-Adviser must determine that the research information received in this manner provides the Fund with benefits by supplementing the research otherwise available to the Fund. The Investment Management Agreement provides that such higher commissions will not be paid by the Fund unless the Adviser determines in good faith that the amount is reasonable in relation to the services provided. The investment advisory fees paid by the Fund to CoinShares Valkyrie under the Investment Management Agreement would not be reduced as a result of receipt by CoinShares Valkyrie of research services.

The Sub-Adviser places portfolio transactions for other advisory accounts advised by it, and research services furnished by firms through which the Fund effects securities transactions may be used by the Sub-Adviser in servicing all of its accounts; not all of such services may be used by the Sub-Adviser in connection with the Fund. The Sub-Adviser believes it is not possible to measure separately the benefits from research services to each of the accounts (including the Fund) advised by it. Because the volume and nature of the trading activities of the accounts are not uniform, the amount of commissions in excess of those charged by another broker paid by each account for brokerage and research services will vary. However, the Sub-Adviser believes such costs to the Fund will not be disproportionate to the benefits received by the Fund on a continuing basis. The Sub-Adviser seeks to allocate portfolio transactions equitably whenever concurrent decisions are made to purchase or sell securities by the Fund and another advisory account. In some cases, this procedure could have an adverse effect on the price or the amount of securities available to the Fund. In making such allocations between the Fund and other advisory accounts, the main factors considered by the Sub-Adviser are the respective investment objectives, the relative size of portfolio holding of the same or comparable securities, the availability of cash for investment and the size of investment commitments generally held.

The following table sets forth the amount the Fund paid in brokerage commissions for the three most recent fiscal years:

***Brokerage Commissions***

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| | |
|:---|:---|
| Fiscal Year Ended September 30, 2023 | $86801 |
| Fiscal Year Ended September 30, 2024 | $98832 |
| Fiscal Year Ended September 30, 2025 | $72957 |

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For the fiscal year ended September 30, 2023, the fiscal year ended September 30, 2024 and the fiscal year ended September 30, 2025, the Fund did not pay commissions to any affiliated brokers.

*Research Services.* During the fiscal year ended September 30, 2025, the Fund did not pay commissions to brokers in return for research services.

**ADDITIONAL INFORMATION**

*Book Entry Only System.* The following information supplements and should be read in conjunction with the Prospectus.

*DTC Acts as Securities Depository for Fund Shares.* Shares of the Fund are represented by securities registered in the name of The Depository Trust Company (*"DTC"*) or its nominee, Cede & Co., and deposited with, or on behalf of, DTC.

DTC, a limited-purpose trust company, was created to hold securities of its participants (the *"DTC Participants"*) and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities, certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the New York Stock Exchange (the *"NYSE"*) and FINRA. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the *"Indirect Participants"*).

Beneficial ownership of Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to herein as *"Beneficial Owners"*) is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through the DTC Participant a written confirmation relating to their purchase and sale of Shares.

Conveyance of all notices, statements and other communications to Beneficial Owners is effected as follows. Pursuant to a letter agreement between DTC and the Trust, DTC is required to make available to the Trust upon request and for a fee to be charged to the Trust a listing of the Shares of the Fund held by each DTC Participant. The Trust shall inquire of each such DTC Participant as to the number of Beneficial Owners holding Shares, directly or indirectly, through such DTC Participant. The Trust shall provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners. In addition, the Trust shall pay to each such DTC Participants a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements.

Fund distributions shall be made to DTC or its nominee, as the registered holder of all Fund Shares. DTC or its nominee, upon receipt of any such distributions, shall immediately credit DTC Participants' accounts with payments in amounts proportionate to their respective beneficial interests in shares of the Fund as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a "street name," and will be the responsibility of such DTC Participants.

The Trust has no responsibility or liability for any aspect of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in such shares, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests, or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.

DTC may decide to discontinue providing its service with respect to shares at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action to find a replacement for DTC to perform its functions at a comparable cost.

*Policy Regarding Disclosure of Portfolio Holdings.* The Trust has adopted a policy regarding the disclosure of information about the Fund's portfolio holdings. The Board of Trustees must approve all material amendments to this policy. The Fund's portfolio holdings are publicly disseminated each day the Fund is open for business through financial reporting and news services, including publicly accessible Internet websites. In addition, a basket composition file, which includes the security names and share quantities to deliver in exchange for Fund Shares, together with estimates and actual cash components, is publicly disseminated each day the Exchange is open for trading via the National Securities Clearing Corporation (*"NSCC"*). The basket represents one Creation Unit of the Fund. The Fund's portfolio holdings are also available on the Fund's website at https://coinshares.com/us/etf/btf/. The Trust, CoinShares Valkyrie, Vident and the Distributor will not disseminate non-public information concerning the Trust.

*Quarterly Portfolio Schedule.* The Trust is required to disclose on a quarterly basis the complete schedule of the Fund's portfolio holdings with the SEC on Form N-PORT. Form N-PORT for the Trust is available on the SEC's website at https://www.sec.gov. The Fund's Form N-PORT may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Trust's Forms N-PORT are available without charge, upon request, by calling 1-800-617-0004 or by writing to Valkyrie ETF Trust II, 437 Madison Avenue, 28th Floor New York, New York 10022.

*Codes of Ethics.* In order to mitigate the possibility that the Fund will be adversely affected by personal trading, the Trust, CoinShares Valkyrie, Vident and the Distributor have adopted Codes of Ethics under Rule 17j-1 of the 1940 Act. These Codes of Ethics contain policies restricting securities trading in personal accounts of access persons, Trustees and others who normally come into possession of information on portfolio transactions. Personnel subject to the Codes of Ethics may invest in securities that may be purchased or held by the Fund; however, the Codes of Ethics require that each transaction in such securities be reviewed by the Compliance Department. These Codes of Ethics are on public file with, and are available from, the SEC.

**PROXY VOTING POLICIES AND PROCEDURES**

The Board of Trustees has adopted proxy voting policies and procedures ("Proxy Policies") wherein the Trust has delegated to the Adviser the responsibility for voting proxies relating to portfolio securities held by the Fund as part of its investment advisory services, subject to the supervision and oversight of the Board of Trustees. Notwithstanding this delegation of responsibilities, however, the Fund retains the right to vote proxies relating to its portfolio securities. The fundamental purpose of the Proxy Policies is to ensure that each vote will be in a manner that reflects the best interest of the Fund and its shareholders, taking into account the value of the Fund's investments.

The actual voting records relating to portfolio securities during the most recent 12-month period ended June 30 will be available without charge, upon request, by calling toll-free, (800) SEC-0330 or by accessing the SEC's website at www.sec.gov.

The Fund invests exclusively in non-voting securities and as such, the Adviser does not have any policies or procedures concerning proxy voting.

**CREATION AND REDEMPTION OF CREATION UNITS**

*<u>General</u>*. ETFs, such as the Fund, generally issue and redeem their shares in primary market transactions through a creation and redemption mechanism and do not sell or redeem individual shares. Instead, financial entities known as "Authorized Participants" that have contractual arrangements with an ETF or one of the ETF's service providers to purchase and redeem ETF shares directly with the ETF in large blocks of shares known as "Creation Units." Prior to start of trading on every business day, an ETF publishes through the National Securities Clearing Corporation (*"NSCC"*) the "basket" of securities, cash or other assets that it will accept in exchange for a Creation Unit of the ETF's shares. An Authorized Participant that wishes to effectuate a creation of an ETF's shares deposits with the ETF the "basket" of securities, cash or other assets identified by the ETF that day, and then receives the Creation Unit of the ETF's shares in return for those assets. After purchasing a Creation Unit, the Authorized Participant may continue to hold the ETF's shares or sell them in the secondary market. The redemption process is the reverse of the purchase process: the authorized participant redeems a Creation Unit of ETF shares for a basket of securities, cash or other assets. The combination of the creation and redemption process with secondary market trading in ETF shares and underlying securities provides arbitrage opportunities that are designed to help keep the market price of ETF shares at or close to the NAV per share of the ETF.

*<u>Authorized Participants</u>*. An "Authorized Participant" is a member or participant of a clearing agency registered with the SEC that has a written agreement with the Fund or one of its service providers that allows the Authorized Participant to place orders for the purchase or redemption of Creation Units (a *"Participant Agreement"*). Orders to purchase Creation Units must be delivered through an Authorized Participant that has executed a Participant Agreement and must comply with the applicable provisions of such Participant Agreement. Investors wishing to purchase or sell shares generally do so on an exchange. Institutional investors other than Authorized Participants are responsible for making arrangements for a redemption request to be made through an Authorized Participant.

*<u>Business Day</u>*. A "Business Day" is generally any day on which the New York Stock Exchange (*"NYSE"*), the Exchange and the Trust are open for business. As of the date of this SAI, the NYSE observes the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Business Day on which an order to purchase or redeem Creation Units is received in proper form is referred to as the *"Transmittal Date."*

*<u>Basket Composition</u>*. Rule 6c-11(c)(3) under of the 1940 Act requires an ETF relying on the exemptions offered by Rule 6c-11 to adopt and implement written policies and procedures governing the construction of baskets and the process that the ETF will use for the acceptance of baskets. In general, in connection with the construction and acceptance of baskets, the Adviser may consider various factors, including, but not limited to: (1) whether the securities, assets and other positions comprising a basket are consistent with the ETF's investment objective(s), policies and disclosure; (2) whether the securities, assets and other positions can legally and readily be acquired, transferred and held by the ETF and/or Authorized Participant(s), as applicable; (3) whether to utilize cash, either in lieu of securities or other instruments or as a cash balancing amount; and (4) in the case of an ETF that tracks an index, whether the securities, assets and other positions aid index tracking.

The Fund may utilize a pro-rata basket or a custom basket in reliance on Rule 6c-11. A "pro-rata basket" is a basket that is a pro rata representation of the ETF's portfolio holdings, except for minor deviations when it is not operationally feasible to include a particular instrument within the basket, except to the extent that the Fund utilized different baskets in transactions on the same Business Day.

Rule 6c-11 defines "custom baskets" to include two categories of baskets. First, a basket containing a non-representative selection of the ETF's portfolio holdings would constitute a custom basket. These types of custom baskets include, but are not limited to, baskets that do not reflect: (i) a pro rata representation of the Fund's portfolio holdings; (ii) a representative sampling of an ETF's portfolio holdings; or (iii) changes due to a rebalancing or reconstitution of an ETF's securities market index, if applicable. Second, if different baskets are used in transactions on the same Business Day, each basket after the initial basket would constitute a custom basket. For example, if an ETF exchanges a basket with either the same or another Authorized Participant that reflects a representative sampling that differs from the initial basket, that basket (and any such subsequent baskets) would be a custom basket. Similarly, if an ETF substitutes cash in lieu of a portion of basket assets for a single Authorized Participant, that basket would be a custom basket.

Under a variety of circumstances, an ETF and its shareholders may benefit from the flexibility afforded by custom baskets. In general terms, the use of custom baskets may reduce costs, increase efficiency and improve trading. Because utilizing custom baskets provides a way for an ETF to add, remove and re-weight portfolio securities without transacting in the market, it may help the ETF to avoid transaction costs and adverse tax consequences. Rule 6c-11 provides an ETF with flexibility to use "custom baskets" if the ETF has adopted written policies and procedures that: (1) set forth detailed parameters for the construction and acceptance of custom baskets that are in the best interests of the ETF and its shareholders, including the process for any revisions to, or deviations from, those parameters; and (2) specify the titles or roles of employees of the ETF's investment adviser who are required to review each custom basket for compliance with those parameters.

The use of baskets that do not correspond to pro rata to an ETF's portfolio holdings has historically created concern that an Authorized Participant could take advantage of its relationship with an ETF and pressure the ETF to construct a basket that favors an Authorized Participant to the detriment of the ETF's shareholders. For example, because ETFs rely on Authorized Participants to maintain the secondary market by promoting an effective arbitrage mechanism, an Authorized Participant holding less liquid or less desirable securities potentially could pressure an ETF into accepting those securities in its basket in exchange for liquid ETF shares (*i.e.*, dumping). An Authorized Participant also could pressure the ETF into including in its basket certain desirable securities in exchange for ETF shares tendered for redemption (*i.e.*, cherry-picking). In either case, the ETF's other investors would be disadvantaged and would be left holding shares of an ETF with a less liquid or less desirable portfolio of securities. The Adviser has adopted policies and procedures designed to mitigate these concerns but there is ultimately no guarantee that such policies and procedures will be effective.

*<u>Basket Dissemination</u>*. Basket files are published for consumption through the NSCC, a subsidiary of Depository Trust & Clearing Corporation, and can be utilized for pricing, creations, redemptions, rebalancing and custom scenarios. In most instances, pro rata baskets are calculated and supplied by the ETF's custodial bank based on ETF holdings, whereas non-pro rata, custom and forward-looking pro rata baskets are calculated by the Fund's investment adviser and disseminated by the ETF's custodial bank through the NSCC process.

*<u>Placement of Creation or Redemption Orders</u>*. All orders to purchase or redeem Creation Units are to be governed according to the applicable Participant Agreement that each Authorized Participant has executed. In general, all orders to purchase or redeem Creation Units must be received by the transfer agent in the proper form required by the Participant Agreement no later 2:00 p.m. Eastern Standard Time on each day the NYSE is open for business (the *"Closing Time"*) in order for the purchase or redemption of Creation Units to be effected based on the NAV of shares of the Fund as next determined on such date after receipt of the order in proper form. Notwithstanding the foregoing, the Fund may, but is not required to permit orders until 4:00 p.m., Eastern time, or until the market closes (in the event the Exchange closes early). However, at its discretion, the Fund may require an Authorized Participant to submit orders to purchase or redeem Creation Units be placed earlier in the day (such as instances where an applicable market for a security comprising a creation or redemption basket closes earlier than usual).

*<u>Delivery of Redemption Proceeds</u>*. Deliveries of securities to Authorized Participants in connection with redemption orders are generally expected to be made within two Business Days. Due to the schedule of holidays in certain countries, however, the delivery of in-kind redemption proceeds for the Fund may take longer than two Business Days after the day on which the redemption request is received in proper form. Section 22(e) of the 1940 Act generally prohibits a registered open-end management investment company from postponing the date of satisfaction of redemption requests for more than seven days after the tender of a security for redemption. This prohibition can cause operational difficulties for ETFs that hold foreign investments and exchange in-kind baskets for Creation Units. For example, local market delivery cycles for transferring foreign investments to redeeming investors, together with local market holiday schedules, can sometimes require a delivery process in excess of seven days. However, Rule 6c-11 grants relief from Section 22(e) to permit an ETF to delay satisfaction of a redemption request for more than seven days if a local market holiday, or series of consecutive holidays, or the extended delivery cycles for transferring foreign investments to redeeming Authorized Participants, or the combination thereof prevents timely delivery of the foreign investment included in the ETF's basket. Under this exemption, an ETF must deliver foreign investments as soon as practicable, but in no event later than 15 days after the tender to the ETF. The exemption therefore will permit a delay only to the extent that additional time for settlement is actually required, when a local market holiday, or series of consecutive holidays, or the extended delivery cycles for transferring foreign investments to redeeming authorized participants prevents timely delivery of the foreign investment included in the ETF's basket. If a foreign investment settles in less than 15 days, Rule 6c-11 requires an ETF to deliver it pursuant to the standard settlement time of the local market where the investment trades. Rule 6c-11 defines "foreign investment" as any security, asset or other position of the ETF issued by a foreign issuer (as defined by Rule 3b-4 under the 1934 Act), and that is traded on a trading market outside of the United States. This definition is not limited to "foreign securities," but also includes other investments that may not be considered securities. Although these other investments may not be securities, they may present the same challenges for timely settlement as foreign securities if they are transferred in kind.

*<u>Creation Transaction Fees</u>*. The Fund imposes fees in connection with the purchase of Creation Units. These fees may vary based upon various facts-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price for each Creation Unit will equal the daily NAV per share of the Fund times the number of shares in a Creation Unit, plus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the creation basket.

*<u>Redemption Transaction Fees</u>*. The Fund also imposes fees in connection with the redemption of Creation Units. These fees may vary based upon various facts-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price received for each Creation Unit will equal the daily NAV per share of the Fund times the number of shares in a Creation Unit, minus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the redemption basket. Investors who use the services of a broker or other such intermediary in addition to an Authorized Participant to effect a redemption of a Creation Unit may also be assessed an amount to cover the cost of such services. The redemption fee charged by the Fund will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no more than 2% of the value of the shares redeemed.

*<u>Acceptance of Creation Orders</u>*. The Fund will accept all orders for Creation Units that are in good order. Circumstances under which the Fund may not accept a creation order include, but are not limited to: (i) the order is not in proper form; (ii) the purchaser or group of related purchasers, upon obtaining the Creation Units of Fund shares ordered, would own 80% or more of the currently outstanding shares of the Fund; (iii) the required consideration is not delivered; (iv) the acceptance of the Fund Deposit would, in the opinion of the Fund, be unlawful; or (v) there exist circumstances outside the control of the Fund that make it impossible to process orders of Creation Units for all practical purposes. Examples of such circumstances include: acts of God or public service or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Fund, CoinShares Valkyrie, the Distributor, DTC, NSCC, the transfer agent, the custodian, any sub-custodian or any other participant in the purchase process; and similar extraordinary events. The Transfer Agent shall notify a prospective creator of a Creation Unit and/or the Authorized Participant acting on behalf of such prospective creator of the rejection of the order of such person. The Trust, the Fund, the Transfer Agent, the custodian, any sub-custodian and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits, nor shall any of them incur any liability for the failure to give any such notification.

*<u>Acceptance of Redemption Orders</u>*. An ETF may suspend the redemption of Creation Units only in accordance with Section 22(e) of the 1940 Act. Section 22(e) stipulates that no registered investment company shall suspend the right of redemption, or postpone the date of payment or satisfaction upon redemption of any redeemable security in accordance with its terms for more than seven days after the tender of such security to the company or its agent designated for that purpose for redemption, except (1) for any period (A) during which the NYSE is closed other than customary week-end and holiday closings or (B) during which trading on the NYSE is restricted; (2) for any period during which an emergency exists as a result of which (A) disposal by the investment company of securities owned by it is not reasonably practicable or (B) it is not reasonably practicable for such company fairly to determine the value of its net assets; or (3) for such other periods as the SEC may by order permit for the protection of security holders of the investment company.

*<u>Exceptions to Use of Creation Units</u>*. Under Rule 6c-11 of the 1940 Act, ETFs are permitted to sell or redeem individual shares on the day of consummation of a reorganization, merger, conversion, or liquidation. In these limited circumstances, an ETF may need to issue or redeem individual shares and may need to transact without utilizing Authorized Participants.

**CERTAIN U.S. FEDERAL TAX MATTERS**

This section summarizes some of the main U.S. federal income tax consequences of owning Shares of the Fund. This section is current as of the date of this SAI. Tax laws and interpretations change frequently, and these summaries do not describe all of the tax consequences to all taxpayers. For example, these summaries generally do not describe your situation if you are a corporation, a non-U.S. person, a broker-dealer, or other investor with special circumstances. In addition, this section does not describe your state, local or foreign tax consequences.

This federal income tax summary is based in part on the advice of counsel to the Fund. The Internal Revenue Service could disagree with any conclusions set forth in this section. In addition, our counsel was not asked to review, and has not reached a conclusion with respect to the federal income tax treatment of the assets to be deposited in the Fund. This may not be sufficient for prospective investors to use for the purpose of avoiding penalties under federal tax law.

As with any investment, prospective investors should seek advice based on their individual circumstances from their own tax adviser.

The Fund intends to qualify annually and to elect to be treated as a regulated investment company under the Internal Revenue Code of 1986, as amended (the *"Code"*).

To qualify for the favorable U.S. federal income tax treatment generally accorded to regulated investment companies, the Fund must, among other things, (i) derive in each taxable year at least 90% of its gross income from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of stock, securities or foreign currencies or other income derived with respect to its business of investing in such stock, securities or currencies, or net income derived from interests in certain publicly traded partnerships; (ii) diversify its holdings so that, at the end of each quarter of the taxable year, (a) at least 50% of the market value of the Fund's assets is represented by cash and cash items (including receivables), U.S. government securities, the securities of other regulated investment companies and other securities, with such other securities of any one issuer generally limited for the purposes of this calculation to an amount not greater than 5% of the value of the Fund's total assets and not greater than 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the value of its total assets is invested in the securities (other than U.S. government securities or the securities of other regulated investment companies) of any one issuer, or two or more issuers which the Fund controls which are engaged in the same, similar or related trades or businesses, or the securities of one or more of certain publicly traded partnerships; and (iii) distribute at least 90% of its investment company taxable income (which includes, among other items, dividends, interest and net short-term capital gains in excess of net long-term capital losses) and at least 90% of its net tax-exempt interest income each taxable year. There are certain exceptions for failure to qualify if the failure is for reasonable cause or is *de minimis*, and certain corrective action is taken and certain tax payments are made by the Fund.

As a regulated investment company, the Fund generally will not be subject to U.S. federal income tax on its investment company taxable income (as that term is defined in the Code, but without regard to the deduction for dividends paid) and net capital gain (the excess of net long-term capital gain over net short-term capital loss), if any, that it distributes to shareholders. The Fund intends to distribute to its shareholders, at least annually, substantially all of its investment company taxable income and net capital gain. If the Fund retains any net capital gain or investment company taxable income, it will generally be subject to federal income tax at regular corporate rates on the amount retained. In addition, amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% excise tax unless, generally, the Fund distributes during each calendar year an amount equal to the sum of (1) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (2) at least 98.2% of its capital gains in excess of its capital losses (adjusted for certain ordinary losses) for the one-year period ending October 31 of the calendar year, and (3) any ordinary income and capital gains for previous years that were not distributed during those years. In order to prevent application of the excise tax, the Fund intends to make its distributions in accordance with the calendar year distribution requirement. A distribution will be treated as paid on December 31 of the current calendar year if it is declared by the Fund in October, November or December with a record date in such a month and paid by the Fund during January of the following calendar year. Such distributions will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received.

Income from commodities is generally not qualifying income for RICs. The Fund intends to treat any income it may derive from bitcoin and ether futures contracts received by the Subsidiary as "qualifying income" under the provisions of the Code applicable to RICs. The IRS had issued numerous PLRs provided to third parties not associated with the Fund or its affiliates (which only those parties may rely on as precedent) concluding that similar arrangements resulted in qualifying income. Many of such PLRs have now been revoked by the Internal Revenue Service. In March of 2019, the Internal Revenue Service published Regulations that concluded that income from a corporation similar to the Subsidiary would be qualifying income, if the income is related to the Fund's business of investing in stocks or securities. Although the Regulations do not require distributions from the Subsidiary, the Fund intends to cause the Subsidiary to make distributions that would allow the Fund to make timely distributions to its shareholders. The Fund generally will be required to include in its own taxable income the income of the Subsidiary for a tax year, regardless of whether the Fund receives a distribution of the Subsidiary's income in that tax year, and this income would nevertheless be subject to the distribution requirement for qualification as a regulated investment company and would be taken into account for purposes of the 4% excise tax.

The Fund has undertaken to not hold more than 25% of its assets in the Subsidiary at the end of any quarter. If the Fund fails to limit itself to the 25% ceiling and fails to correct the issue within 30 days after the end of the quarter, the Fund may fail the RIC diversification tests described above.

Subject to certain reasonable cause and *de minimis* exceptions, if the Fund fails to qualify as a regulated investment company or failed to satisfy the 90% distribution requirement in any taxable year, the Fund would be taxed as an ordinary corporation on its taxable income (even if such income were distributed to its shareholders) and all distributions out of earnings and profits would be taxed to shareholders as ordinary income.

*Distributions*

Dividends paid out of the Fund's investment company taxable income are generally taxable to a shareholder as ordinary income to the extent of the Fund's earnings and profits, whether paid in cash or reinvested in additional shares. However, certain ordinary income distributions received from the Fund may be taxed at capital gains tax rates. In particular, ordinary income dividends received by an individual shareholder from a regulated investment company such as the Fund are generally taxed at the same rates that apply to net capital gain, *provided* that certain holding period requirements are satisfied and provided the dividends are attributable to qualifying dividends received by the Fund itself.

The Fund will provide notice to its shareholders of the amount of any distributions that may be taken into account as a dividend, which is eligible for the capital gains tax rates. The Fund cannot make any guarantees as to the amount of any distribution, which will be regarded as a qualifying dividend.

Income from the Fund may also be subject to a 3.8% "Medicare tax." This tax generally applies to net investment income if the taxpayer's adjusted gross income exceeds certain threshold amounts, which are $250,000 in the case of married couples filing joint returns and $200,000 in the case of single individuals.

A corporation that owns Shares generally will not be entitled to the dividends received deduction with respect to many dividends received from the Fund because the dividends received deduction is generally not available for distributions from regulated investment companies. However, certain ordinary income dividends on Shares that are attributable to qualifying dividends received by the Fund from certain domestic corporations may be reported by the Fund as being eligible for the dividends received deduction.

Distributions of net capital gain (the excess of net long-term capital gain over net short-term capital loss), if any, properly reported as capital gain dividends are taxable to a shareholder as long-term capital gains, regardless of how long the shareholder has held Fund Shares. An election may be available to you to defer recognition of the gain attributable to a capital gain dividend if you make certain qualifying investments within a limited time. You should talk to your tax adviser about the availability of this deferral election and its requirements. Shareholders receiving distributions in the form of additional Shares, rather than cash, generally will have a tax basis in each such share equal to the value of a Share of the Fund on the reinvestment date. A distribution of an amount in excess of the Fund's current and accumulated earnings and profits will be treated by a shareholder as a return of capital which is applied against and reduces the shareholder's basis in his or her Shares. To the extent that the amount of any such distribution exceeds the shareholder's basis in his or her Shares, the excess will be treated by the shareholder as gain from a sale or exchange of the Shares.

Shareholders will be notified annually as to the U.S. federal income tax status of distributions, and shareholders receiving distributions in the form of additional shares will receive a report as to the value of those Shares.

*Sale or Exchange of Fund Shares*

Upon the sale or other disposition of Shares of the Fund, which a shareholder holds as a capital asset, such a shareholder may realize a capital gain or loss, which will be long-term or short-term, depending upon the shareholder's holding period for the Shares. Generally, a shareholder's gain or loss will be a long-term gain or loss if the Shares have been held for more than one year.

Any loss realized on a sale or exchange will be disallowed to the extent that Shares disposed of are replaced (including through reinvestment of dividends) within a period of 61 days beginning 30 days before and ending 30 days after disposition of shares or to the extent that the shareholder, during such period, acquires or enters into an option or contract to acquire, substantially identical stock or securities. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss. Any loss realized by a shareholder on a disposition of Fund Shares held by the shareholder for six months or less will be treated as a long-term capital loss to the extent of any distributions of long-term capital gain received by the shareholder with respect to such Shares.

*Taxes on Purchase and Redemption of Creation Units*

If a shareholder exchanges securities for Creation Units the shareholder will generally recognize a gain or a loss. The gain or loss will be equal to the difference between the market value of the Creation Units at the time and the shareholder's aggregate basis in the securities surrendered and the Cash Component paid. If a shareholder exchanges Creation Units for securities, then the shareholder will generally recognize a gain or loss equal to the difference between the shareholder's basis in the Creation Units and the aggregate market value of the securities received and the Cash Redemption Amount. The Internal Revenue Service, however, may assert that a loss realized upon an exchange of securities for Creation Units or Creation Units for securities cannot be deducted currently under the rules governing "wash sales," or on the basis that there has been no significant change in economic position.

*Nature of Fund Investments*

Certain of the Fund's investment practices are subject to special and complex federal income tax provisions that may, among other things, (i) disallow, suspend or otherwise limit the allowance of certain losses or deductions; (ii) convert lower taxed long-term capital gain into higher taxed short-term capital gain or ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited); (iv) cause the Fund to recognize income or gain without a corresponding receipt of cash; (v) adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur; and (vi) adversely alter the characterization of certain complex financial transactions.

*Futures Contracts*

The Fund's transactions in futures contracts will be subject to special provisions of the Code that, among other things, may affect the character of gains and losses realized by the Fund (*i.e.*, may affect whether gains or losses are ordinary or capital, or short-term or long-term), may accelerate recognition of income to the Fund and may defer Fund losses. These rules could, therefore, affect the character, amount and timing of distributions to shareholders. These provisions also (a) will require the Fund to mark-to-market certain types of the positions in its portfolio (i.e., treat them as if they were closed out), and (b) may cause the Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the 90% distribution requirement for qualifying to be taxed as a regulated investment company and the distribution requirements for avoiding excise taxes.

*Investments in Certain Non-U.S. Corporations*

If the Fund holds an equity interest in any "passive foreign investment companies" (*"PFICs"*), which are generally certain non-U.S. corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, certain rents and royalties or capital gains) or that hold at least 50% of their assets in investments producing such passive income, the Fund could be subject to U.S. federal income tax and additional interest charges on gains and certain distributions with respect to those equity interests, even if all the income or gain is timely distributed to its shareholders. The Fund will not be able to pass through to its shareholders any credit or deduction for such taxes. The Fund may be able to make an election that could ameliorate these adverse tax consequences. In this case, the Fund would recognize as ordinary income any increase in the value of such PFIC shares, and as ordinary loss any decrease in such value to the extent it did not exceed prior increases included in income. Under this election, the Fund might be required to recognize in a year income in excess of its distributions from PFICs and its proceeds from dispositions of PFIC stock during that year, and such income would nevertheless be subject to the distribution requirement and would be taken into account for purposes of the 4% excise tax (described above). Dividends paid by PFICs are not treated as qualified dividend income.

*Backup Withholding*

The Fund may be required to withhold U.S. federal income tax from all taxable distributions and sale proceeds payable to shareholders who fail to provide the Fund with their correct taxpayer identification number or fail to make required certifications, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. Corporate shareholders and certain other shareholders specified in the Code generally are exempt from such backup withholding. This withholding is not an additional tax. Any amounts withheld may be credited against the shareholder's U.S. federal income tax liability.

*Non-U.S. Shareholders*

U.S. taxation of a shareholder who, as to the United States, is a nonresident alien individual, a non-U.S. trust or estate, a non-U.S. corporation or non-U.S. partnership (*"non-U.S. shareholder"*) depends on whether the income of the Fund is "effectively connected" with a U.S. trade or business carried on by the shareholder.

In addition to the rules described in this section concerning the potential imposition of withholding on distributions to non-U.S. persons, distributions to non-U.S. persons that are "financial institutions" may be subject to a withholding tax of 30% unless an agreement is in place between the financial institution and the U.S. Treasury to collect and disclose information about accounts, equity investments, or debt interests in the financial institution held by one or more U.S. persons or the institution is resident in a jurisdiction that has entered into such an agreement with the U.S. Treasury. For these purposes, a "financial institution" means any entity that (i) accepts deposits in the ordinary course of a banking or similar business; (ii) holds financial assets for the account of others as a substantial portion of its business; or (iii) is engaged (or holds itself out as being engaged) primarily in the business of investing, reinvesting or trading in securities, partnership interests, commodities or any interest (including a futures contract or option) in such securities, partnership interests or commodities. This withholding tax is also currently scheduled to apply to the gross proceeds from the disposition of securities that produce U.S. source interest or dividends. However, proposed regulations may eliminate the requirement to withhold on payments of gross proceeds from dispositions.

Distributions to non-financial non-U.S. entities (other than publicly traded non-U.S. entities, entities owned by residents of U.S. possessions, non-U.S. governments, international organizations, or non-U.S. central banks), will also be subject to a withholding tax of 30% if the entity does not certify that the entity does not have any substantial U.S. owners or provide the name, address and TIN of each substantial U.S. owner. This withholding tax is also currently scheduled to apply to the gross proceeds from the disposition of securities that produce U.S. source interest or dividends. However, proposed regulations may eliminate the requirement to withhold on payments of gross proceeds from dispositions.

*Income Not Effectively Connected.* If the income from the Fund is not "effectively connected" with a U.S. trade or business carried on by the non-U.S. shareholder, distributions of investment company taxable income will generally be subject to a U.S. tax of 30% (or lower treaty rate), which tax is generally withheld from such distributions.

Distributions of capital gain dividends and any amounts retained by the Fund which are properly reported by the Fund as undistributed capital gains will not be subject to U.S. tax at the rate of 30% (or lower treaty rate) unless the non-U.S. shareholder is a nonresident alien individual and is physically present in the United States for more than 182 days during the taxable year and meets certain other requirements. However, this 30% tax on capital gains of nonresident alien individuals who are physically present in the United States for more than the 182 day period only applies in exceptional cases because any individual present in the United States for more than 182 days during the taxable year is generally treated as a resident for U.S. income tax purposes; in that case, he or she would be subject to U.S. income tax on his or her worldwide income at the graduated rates applicable to U.S. citizens, rather than the 30% U.S. tax. In the case of a non-U.S. shareholder who is a nonresident alien individual, the Fund may be required to withhold U.S. income tax from distributions of net capital gain unless the non-U.S. shareholder certifies his or her non-U.S. status under penalties of perjury or otherwise establishes an exemption. If a non-U.S. shareholder is a nonresident alien individual, any gain such shareholder realizes upon the sale or exchange of such shareholder's Shares of the Fund in the United States will ordinarily be exempt from U.S. tax unless the gain is U.S. source income and such shareholder is physically present in the United States for more than 182 days during the taxable year and meets certain other requirements.

Distributions from the Fund that are properly reported by the Fund as an interest-related dividend attributable to certain interest income received by the Fund or as a short-term capital gain dividend attributable to certain net short-term capital gain income received by the Fund may not be subject to U.S. federal income taxes, including withholding taxes when received by certain non-U.S. investors, provided that the Fund makes certain elections and certain other conditions are met.

In addition, capital gain distributions attributable to gains from U.S. real property interests (including certain U.S. real property holding corporations) will generally be subject to United States withholding tax and will give rise to an obligation on the part of the non-U.S. shareholder to file a United States tax return.

*Income Effectively Connected.* If the income from the Fund is "effectively connected" with a U.S. trade or business carried on by a non-U.S. shareholder, then distributions of investment company taxable income and capital gain dividends, any amounts retained by the Fund which are properly reported by the Fund as undistributed capital gains and any gains realized upon the sale or exchange of Shares of the Fund will be subject to U.S. income tax at the graduated rates applicable to U.S. citizens, residents and domestic corporations. Non-U.S. corporate shareholders may also be subject to the branch profits tax imposed by the Code. The tax consequences to a non-U.S. shareholder entitled to claim the benefits of an applicable tax treaty may differ from those described herein. Non-U.S. shareholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in the Fund.

*Other Taxation*

Fund shareholders may be subject to state, local and foreign taxes on their Fund distributions. Shareholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in the Fund.

*Capital Loss Carryforward*

As of September 30, 2025, for federal income tax purposes, the Fund had capital loss carryforwards available to offset future capital gains as indicated in the table below.

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| | | | |
|:---|:---|:---|:---|
| **Fund** | **Short-Term** | **Long-Term** | **Expires** |
| CoinShares Bitcoin and Ether ETF | $11799 |  |  |

---

**DETERMINATION OF NET ASSET VALUE**

The following information supplements and should be read in conjunction with the section in the Prospectus entitled "Net Asset Value."

The per Share NAV of the Fund is determined by dividing the total value of the securities and other assets, less liabilities, by the total number of shares outstanding. Market value prices represent last sale or official closing prices from a national or foreign exchange (*i.e.*, a regulated market) and are primarily obtained from third party pricing services. Under normal circumstances, daily calculation of the net asset value will utilize the last closing price of each security held by the Fund at the close of the market on which such security is principally listed. In determining NAV, portfolio securities for the Fund for which accurate market quotations are readily available will be valued by the Fund accounting agent as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Common stocks and other equity securities listed on any national or foreign exchange other than NASDAQ and the London Stock Exchange Alternative Investment Market (*"AIM"*) will be valued at the last sale price on the business day as of which such value is being determined. Securities listed on NASDAQ or AIM are valued at the official closing price on the business day as of which such value is being determined. If there has been no sale on such day, or no official closing price in the case of securities traded on NASDAQ and AIM, the securities are valued at the midpoint between the most recent bid and ask prices on such day. Portfolio securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Securities traded in the OTC market are valued at the midpoint between the bid and asked price, if available, and otherwise at their closing bid prices.

In addition, the following types of securities will be valued as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Fixed income securities will be valued by the fund accounting agent using a pricing service. When price quotes are not available, fair value is based on prices of comparable securities.

The value of any portfolio security held by the Fund for which market quotations are not readily available will be determined by CoinShares Valkyrie in a manner that most fairly reflects fair market value of the security on the valuation date, based on a consideration of all available information.

Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Board of Trustees or its delegate at fair value. These securities generally include but are not limited to, restricted securities (securities which may not be publicly sold without registration under the 1933 Act) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of Fund net asset value (as may be the case in foreign markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, does not reflect the security's "fair value." As a general principle, the current "fair value" of an issue of securities would appear to be the amount, that the owner might reasonably expect to receive for them upon their current sale. A variety of factors may be considered in determining the fair value of such securities. Rule 2a-5 addresses a board's valuation policies and the role of the board with respect to the fair value of a fund's investments. It further provides requirements for determining fair value in good faith under the 1940 Act. The Board of Trustees has designated the Adviser as "valuation designee" to perform fair value determinations for all of the Funds' investments pursuant to Rule 2a-5 under the Investment Company Act of 1940, as amended. The Board of Trustees will oversee the Adviser's fair value determinations and its performance as valuation designee.

Valuing the Fund's investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Use of fair value prices and certain current market valuations could result in a difference between the prices used to calculate the Fund's NAV and the prices used in secondary market transactions.

Because foreign markets may be open on different days than the days during which a shareholder may purchase the shares of the Fund, the value of the Fund's investments may change on the days when shareholders are not able to purchase the shares of the Fund.

The Fund may suspend the right of redemption for the Fund only under the following unusual circumstances: (i) when the NYSE is closed (other than weekends and holidays) or trading is restricted; (ii) when trading in the markets normally utilized is restricted, or when an emergency exists as determined by the SEC so that disposal of the Fund's investments or determination of its net assets is not reasonably practicable; or (iii) during any period when the SEC may permit.

**DIVIDENDS AND DISTRIBUTIONS**

The following information supplements and should be read in conjunction with the section in the Prospectus entitled "Dividends, Distributions and Taxes."

*General Policies.* Dividends from net investment income of the Fund, if any, are declared and paid at least annually. Distributions of net realized securities gains, if any, generally are declared and paid once a year, but the Trust may make distributions on a more frequent basis. The Trust reserves the right to declare special distributions if, in its reasonable discretion, such action is necessary or advisable to preserve the status of the Fund as a regulated investment company or to avoid imposition of income or excise taxes on undistributed income.

Dividends and other distributions of Fund shares are distributed, as described below, on a pro rata basis to Beneficial Owners of such shares. Dividend payments are made through DTC Participants and Indirect Participants to Beneficial Owners then of record with proceeds received from the Fund.

*Dividend Reinvestment Service.* No reinvestment service is provided by the Trust. Broker-dealers may make available the DTC book-entry Dividend Reinvestment Service for use by Beneficial Owners of the Fund for reinvestment of their dividend distributions. Beneficial Owners should contact their brokers in order to determine the availability and costs of the service and the details of participation therein. Brokers may require Beneficial Owners to adhere to specific procedures and timetables. If this service is available and used, dividend distributions of both income and realized gains will be automatically reinvested in additional whole shares of the Fund purchased in the secondary market.

**MISCELLANEOUS INFORMATION**

*Counsel.* Chapman and Cutler LLP, 320 South Canal Street, Chicago, Illinois 60606, is counsel to the Trust.

*Independent Registered Public Accounting Firm.* Cohen & Company, Ltd., 342 North Water Street, Suite 830, Milwaukee, Wisconsin 53202, serves as the Fund's independent registered public accounting firm. The firm audits the Fund's financial statements. Cohen & Co. Advisory, LLC, an affiliate of Cohen & Company, Ltd., provides tax services as requested.

**PERFORMANCE INFORMATION**

To obtain the Fund's most current performance information, please call 1-800-617-0004 or visit the Fund's website at https://coinshares.com/us/etf/btf/. From time to time, the Fund's performance information, such as yield or total return, may be quoted in advertisements or in communications to present or prospective shareholders. Performance quotations represent the Fund's past performance and should not be considered as representative of future results. The Fund will calculate its performance in accordance with the requirements of the rules and regulations under the 1940 Act, as they may be revised from time to time.

**FINANCIAL STATEMENTS**

The audited financial statements and notes thereto in the <u>Fund's Annual Report</u> to Shareholders for the fiscal year ended September 30, 2025 (the "Annual Report") are incorporated by reference into this SAI. No other parts of the Annual Report are incorporated by reference herein. The financial statements included in the Annual Report have been audited by Cohen & Company, Ltd., each Fund's independent registered public accounting firm, whose report thereon also appears in the Annual Report and is incorporated by reference into this SAI. A copy of the Annual Report for the fiscal year ended September 30, 2025 may be obtained upon request and without charge by writing Valkyrie Funds LLC at 437 Madison Avenue, 28th Floor, New York, New York 10022 or by calling 1-800-617-0004.

**PROSPECTUS**

**CoinShares Bitcoin Mining ETF**

(*formerly* CoinShares Valkyrie Bitcoin Miners ETF)

**(Ticker: WGMI)**

![](coinshares485bpos004.jpg)

**January 22, 2026**

CoinShares Bitcoin Mining ETF (*formerly*, CoinShares Valkyrie Bitcoin Miners ETF) (the *"Fund"*), a series of Valkyrie ETF Trust II, is listed and principally trades its shares on Nasdaq Stock Market LLC (the *"Exchange"). Shares of the Fund trade on the Exchange at market prices that may be below, at or above the Fund's net asset value.*

**The U.S. Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.**

&nbsp;&nbsp;**TABLE OF CONTENTS**

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| | |
|:---|:---|
| [Summary Information](#coinshares485bposc001) | 1 |
| [Additional Information About the Fund's Principal Investment Strategies](#coinshares485bposc002) | 11 |
| [Additional Risks of Investing in the Fund](#coinshares485bposc003) | 12 |
| [Management of the Fund](#coinshares485bposc004) | 19 |
| [How to Buy and Sell Shares](#coinshares485bposc005) | 20 |
| [Dividends, Distributions and Taxes](#coinshares485bposc006) | 21 |
| [Distributor](#coinshares485bposc007) | 23 |
| [Net Asset Value](#coinshares485bposc008) | 23 |
| [Fund Service Providers](#coinshares485bposc009) | 24 |
| [Financial Highlights](#coinshares485bposc010) | 25 |
| [Premium/Discount Information](#coinshares485bposc011) | 26 |
| [Investments by Other Investment Companies](#coinshares485bposc012) | 26 |

---

&nbsp;&nbsp;**CoinShares Bitcoin Mining ETF**

**I** **nvestment Objective**

The Fund seeks to provide investors with total return.

**F** **ees and Expenses of the fund**

This table describes the fees and expenses that you may pay if you buy, hold or sell shares of the Fund (*"Shares"*). **Investors may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example set forth below.**

**Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)**

---

| | |
|:---|:---|
| Management Fees | 0.75% |
| Distribution and Service (12b-1) Fees | 0.00% |
| Other Expenses | 0.00% |
| Total Annual Fund Operating Expenses | 0.75% |

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**EXAMPLE**

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds.

This example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain at current levels. This example does not include the brokerage commissions that investors may pay to buy and sell Shares.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Although your actual costs may be higher or lower, your costs, based on these assumptions, would be: | $77 | $240 | $417 | $930 |

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***Portfolio Turnover***

The Fund pays transaction costs, such as commissions, when it purchases and sells securities (or "turns over" its portfolio). A higher portfolio turnover will cause the Fund to incur additional transaction costs and may result in higher taxes when Shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the example, may affect the Fund's performance. During the fiscal year ended September 30, 2025, the Fund's portfolio turnover rate was 40% of the average value of its portfolio.

**P** **rincipal Investment Strategies**

The Fund is an actively-managed exchange-traded fund (*"ETF"*) that will invest at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenue or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. **The Fund will not directly invest in bitcoin, or indirectly through the use of derivatives or through investments in funds or trusts that hold bitcoin.** Valkyrie Funds LLC (*"Valkyrie"* or the *"Adviser"*) serves as the Fund's investment adviser and Vident Advisory, LLC (d/b/a Vident Asset Management) (*"Vident"* or the *"Sub-Adviser"*) serves as the Fund's investment sub-adviser.

The Fund's selection universe includes common stock and American Depositary Receipts (*"ADRs"*) listed on global securities exchanges, including U.S. dollar denominated and non-U.S. dollar denominated securities issued by U.S. and non-U.S. companies, including companies operating in emerging market countries (as defined by the FTSE Emerging Index). The Fund may also invest no more than 5% of the Fund's net assets in the debt instruments of bitcoin mining companies. A significant portion of the Fund's investments may be in issuers with small market capitalizations. The Adviser evaluates all companies comprising the selection universe and identifies eligible bitcoin mining companies. From these companies, the Fund will invest at least 80% of its net assets in those bitcoin mining companies that the Adviser believes are well positioned to succeed and provide the best opportunity for capital appreciation. The Fund may also invest up to 20% of its net assets in companies that (i) hold a significant portion of their net assets in bitcoin on their balance sheet as can be reasonably determined by the company's annual filings (e.g., filings on Form 10-K or foreign equivalents) from the past 12 months; and/or (ii) derive a significant portion of their revenue or profits directly from mining, lending, transacting in bitcoin, or manufacturing bitcoin mining equipment as can be reasonably determined by the company's annual filings from the past 12 months.

Bitcoin is a digital asset, sometimes referred to as a digital currency or a "cryptocurrency." The ownership and behavior of bitcoin is determined by participants in an online, peer-to-peer network that connects computers that run publicly accessible, or "open source," software that follows the rules and procedures governing the Bitcoin Network. The Bitcoin Network is a peer-to-peer payment network that operates on a cryptographic protocol, commonly referred to as the "Bitcoin Protocol." The value of bitcoin is not backed by any government, corporation or other identified body. Its value is determined, in part, by the supply and demand in markets created to facilitate the trading of bitcoin. Ownership and the ability to transfer or take other actions with respect to bitcoin is protected through public-key cryptography. Public-key cryptography, or asymmetric cryptography, is an encryption scheme that uses two mathematically related, but not identical, keys — a public key and a private key. Unlike symmetric key algorithms that rely on one key to both encrypt and decrypt, each key performs a unique function. The public key is used to encrypt and the private key is used to decrypt.

The supply of bitcoin is constrained formulaically by the Bitcoin Protocol instead of being explicitly delegated to an identified body (e.g., a central bank or corporate treasury) to control. Units of bitcoin are treated as mutually interchangeable (i.e., fungible). No single entity owns or operates the Bitcoin Network, which is collectively maintained by (1) a decentralized group of participants who run computer software that results in the recording and validation of transactions (commonly referred to as "miners"), (2) developers who propose improvements to the Bitcoin Protocol and the software that enforces the Bitcoin Protocol and (3) users who choose what bitcoin software to run. From time to time, the developers suggest changes to the bitcoin software, and if a sufficient number of users and miners elect not to adopt the changes, a new digital asset, operating on the earlier version of the bitcoin software, may be created, commonly referred to as a "fork". The price of the bitcoin, including companies in which the Fund invests that have exposure to bitcoin, may reflect the impact of these forks. Bitcoin was released in 2009 and there is little data on its long-term investment potential. Bitcoin is not backed by a government-issued legal tender or other assets or currency.

Bitcoin may be regarded as a currency or digital commodity depending on its specific use in particular transactions. Bitcoin may be used as a medium of exchange or unit of account. Although a number of large and small retailers accept bitcoin as a form of payment in the United States and foreign markets, there is relatively limited use of bitcoin for commercial and retail payments. Similarly, bitcoin may be used as a store of value (i.e., an asset that maintains its value rather than depreciating), although it has experienced significant periods of price volatility.

The process by which bitcoins are created and bitcoin transactions are verified is called mining. To begin mining, a user, or "miner," uses a bitcoin application-specific integrated circuit (ASIC) to access the mining client that is embedded in the ASIC firmware, and which, like regular Bitcoin Network software, turns the user's computer into a "node" on the Bitcoin Network that validates blocks. Each time transactions are validated and bundled into new blocks added to the Blockchain, the Bitcoin Network awards the miner solving such blocks with newly issued bitcoin and any transaction fees paid by bitcoin transaction senders. This reward system is the method by which new bitcoins enter into circulation to the public. Over time, the size of the fixed reward of new bitcoin decreases, and miners increasingly rely on transaction fees to compensate them for exerting computational power in solving blocks.

Each block contains the details of some or all of the most recent transactions that are not memorialized in prior blocks, as well as a record of the award of bitcoins to the miner who solved the new block. In order to add blocks to the Blockchain, a miner must map an input data set (*i.e.*, the Blockchain, plus a block of the most recent Bitcoin Network transactions and an arbitrary number called a "nonce") to a desired output data set of a predetermined length (the "hash value") using the SHA 256 cryptographic hash algorithm. Cryptographic hash algorithms operate as a "signature" for a text or data file, with the SHA 256 cryptographic hash algorithm generating an almost unique 256-bit signature for a text. Each unique block can only be solved and added to the Blockchain by one miner; therefore, all individual miners and mining pools on the Bitcoin Network are engaged in a competitive process of constantly increasing their computing power to improve their likelihood of solving for new blocks. If two miners solve the same block at the same time, the miner whose transaction is broadcast and propagated first wins. As more miners join the Bitcoin Network and its processing power increases, the Bitcoin Network adjusts the complexity of the block solving equation to maintain a predetermined pace of adding a new block to the Blockchain approximately every ten minutes. The complexity of the bitcoin solving equation is known as difficulty.

In addition, the competitiveness in bitcoin mining has increased such that traditional central processing units (CPUs), graphics processing units (GPUs) and field programmable gate arrays (FPGAs) are no longer competitive. Miners must invest in ASICs in order to compete. The Fund will invest in companies that provide this and other specialized hardware, software and services for bitcoin mining.

The Fund is classified as "non-diversified" under the Investment Company Act of 1940 (the *"1940 Act"*). The Fund's investments will be concentrated in the industry or group of industries comprising the information technology sector.

**P** **rincipal Risks**

As with all investments, there are certain risks of investing in the Fund. The Fund's Shares will change in value and you could lose money by investing in the Fund. An investment in the Fund does not represent a complete investment program. An investment in the Fund is not a bank deposit and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency, the Adviser, Sub-Adviser or any of their affiliates. You should consider carefully the following risks before investing in the Fund.

Each risk summarized below is considered a "principal risk" of investing in the Fund, regardless of the order in which it appears.

**Market Risk.** Market risk is the risk that a particular security, or Shares of the Fund in general, may fall in value. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more significantly than others. These events also adversely affect the prices and liquidity of the Fund's portfolio securities or other instruments and could result in disruptions in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund's Shares and result in increased market volatility. During any such events, the Fund's Shares may trade at increased premiums or discounts to their net asset value.

**Bitcoin Risk.** Bitcoin is a relatively new innovation and the market for bitcoin is subject to rapid price swings, changes and uncertainty. Trading prices of bitcoin and other digital assets have experienced significant volatility in recent periods and may continue to do so. For instance, there were steep increases in the value of certain digital assets, including bitcoin, over the course of 2021, and multiple market observers asserted that digital assets were experiencing a "bubble." These increases were followed by steep drawdowns throughout 2022 in digital asset trading prices, including for bitcoin. These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout bitcoin's history, including in 2011, 2013-2014, and 2017-2018, before repeating again in 2021-2022. Throughout 2023, 2024 and 2025, bitcoin prices continued to exhibit extreme volatility. Such volatility may persist.

The further development of the Bitcoin Network and the acceptance and use of bitcoin are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development of the Bitcoin Network or the acceptance of bitcoin may adversely affect the price of bitcoin. Bitcoin is subject to the risk of fraud, theft, manipulation or security failures, operational or other problems that impact digital asset trading venues. Additionally, if one or a coordinated group of miners were to gain control of 51% of the Bitcoin Network, they would have the ability to manipulate transactions, halt payments and fraudulently obtain bitcoin. A significant portion of bitcoin is held by a small number of holders sometimes referred to as "whales." Transactions of these holders may influence the price of bitcoin.

Unlike the exchanges for more traditional assets, such as equity securities and futures contracts, bitcoin and digital asset trading venues are largely unregulated and highly fragmented. Due to the fragmentation, regulatory non-compliance and lack of oversight of these trading venues there is a heightened potential for fraud and manipulation. Digital asset trading platforms on which bitcoin is traded, and which may serve as a pricing source for the calculation of the reference rate that is used for the purposes of valuing the Fund's investments, are or may become subject to enforcement actions by regulatory authorities, and such enforcement actions may have a material adverse impact on the Fund, its investments, and its ability to implement its investment strategy.

As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote bitcoin in a way that artificially increases the price of bitcoin). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Over the past several years, a number of digital asset trading venues have been closed due to fraud, failure or security breaches. Investors in bitcoin may have little or no recourse should such theft, fraud or manipulation occur and could suffer significant losses. New or changing laws and regulations may affect the use of blockchain technology and/or investments in crypto assets or crypto asset-related investments. In addition, digital asset trading venues, bitcoin miners, and other participants may have significant exposure to other cryptocurrencies. Instability in the price, availability or legal or regulatory status of those instruments may adversely impact the operation of the digital asset trading venues and the Bitcoin Network. The realization of any of these risks could result in a decline in the acceptance of bitcoin and consequently a reduction in the value of bitcoin, bitcoin futures, and the Fund. Finally, the creation of a "fork" (as described above) or a substantial giveaway of bitcoin (sometimes referred to as an "air drop") may result in significant and unexpected declines in the value of bitcoin, bitcoin futures, and the Fund.

**Mining Risk.** Bitcoin miners and other necessary hardware are subject to malfunction, technological obsolescence, the global supply chain and difficulty and cost in obtaining new hardware. Bitcoin miners are subject to malfunctions and normal wear and tear, and, at any point in time, a certain number of bitcoin miners are typically off-line for maintenance or repair. The physical degradation of miners will require replacement of miners that are no longer functional. If there is a model wide component malfunction whether in the hardware or the software that powers these miners, the percentage of offline miners could increase substantially, disrupting mining operations. Any major bitcoin miner malfunction out of the typical range of downtime for normal maintenance and repair could cause significant economic damage. Additionally, as technology evolves, there may be a need to acquire newer models of miners to remain competitive in the market. New miners can be costly and may be in short supply. Given the long production period to manufacture and assemble bitcoin miners and the current global semiconductor chip shortage, there can be no assurance that miners can acquire enough bitcoin mining computers or replacement parts on a cost-effective basis for the maintenance and expansion necessary for efficient bitcoin mining operations. Many engaged in mining rely on third parties, principally located in China, to supply bitcoin miners and shortages of bitcoin miners or their component parts, material increases in bitcoin miner costs, or delays in delivery of orders, including due to trade restrictions and COVID-19 supply chain disruptions, could significantly interrupt plans for expanding bitcoin mining capacity in the near term and future. Shortages of bitcoin mining computers could result in reduced bitcoin mining capacity and increased operating costs, which could materially delay the completion of any planned bitcoin mining capacity expansion and result in a competitive disadvantage.

Global bitcoin supply, which is influenced by similar factors as global bitcoin demand, in addition to fiat currency (i.e., government currency not backed by an asset such as gold) may be effected by miners and taxpayers who may liquidate bitcoin holdings to meet tax obligations. In addition, the dedication of mining power to the Bitcoin Network and the willingness of bitcoin miners to clear bitcoin transactions for relatively low fees may impact the supply and price. An acute cessation of mining operations would reduce the collective processing power on the blockchain, which would adversely affect the transaction verification process by temporarily decreasing the speed at which blocks are added to the blockchain and make the blockchain more vulnerable to a malicious actor obtaining control in excess of 50 percent of the processing power on the blockchain. Reductions in processing power could result in material, though temporary, delays in transaction confirmation time. Any reduction in confidence in the transaction verification process or mining processing power may adversely impact the price of bitcoin and the value of an investment in the Fund. Furthermore, the block reward will decrease over time and eventually cease entirely. As the block reward continues to decrease over time, the mining incentive structure will transition to a higher reliance on transaction verification fees in order to incentivize miners to continue to dedicate processing power to the blockchain. If transaction verification fees become too high, the marketplace may be reluctant to use bitcoin.

Miners may cease expanding processing power to create blocks and verify transactions if they are not adequately compensated. Miners generate revenue from both newly created bitcoin (known as the "block reward") and from fees taken upon verification of transactions. If the aggregate revenue from transaction fees and the block reward is below a miner's cost, the miner may cease operations. An acute cessation of mining operations would reduce the collective processing power on the Blockchain, which would adversely affect the transaction verification process by temporarily decreasing the speed at which blocks are added to the Blockchain and make the Blockchain more vulnerable to a malicious actor obtaining control in excess of 50 percent of the processing power on the Blockchain. Reductions in processing power could result in material, though temporary, delays in transaction confirmation time. Any reduction in confidence in the transaction verification process or mining processing power may adversely impact the price of bitcoin. Furthermore, the block reward will decrease over time. In April 2024, the block reward was reduced from 6.25 to 3.125 bitcoin, and it is estimated that the block reward will further halve again in 2028. As the block reward continues to decrease over time, the mining incentive structure will transition to a higher reliance on transaction verification fees in order to incentivize miners to continue to dedicate processing power to the Blockchain. If transaction verification fees become too high, the marketplace may be reluctant to use bitcoin. Decreased demand for bitcoin may adversely affect its price, which may adversely affect an investment in the Fund.

Miners may also transition processing power from bitcoin mining to support artificial intelligence ("AI") workloads. Due to the rapid development and increasingly widespread use of certain AI technologies, including machine learning models and generative AI, there has been a significant increase in demand for high-performance computing and GPU-based infrastructure to support AI workloads. High levels of competition in the bitcoin mining industry, bitcoin price volatility, and the perpetual reduction of bitcoin mining rewards due to halving events may make providing processing power for AI workloads more attractive to miners. As a result, miners may convert a portion of their bitcoin mining operations to provide processing power to support AI workloads or cease to provide processing power for bitcoin mining entirely.

Bitcoin mining activities are inherently energy-intensive and electricity costs account for a significant portion of the overall mining costs. The availability and cost of electricity will restrict the geographic locations of mining activities. High costs of electricity may incentivize miners to redirect their resources to other validation protocols, such a proof-of-stake blockchains, or abandon their validation activities entirely. A significant decrease in the computational resources dedicated to the Bitcoin Network's validation protocol could reduce the security of the network which may erode bitcoin's viability as a store of value or means of exchange. In addition, the significant consumption of electricity may have a negative environmental impact, including contribution to climate change, which may give rise to public opinion against allowing the use of electricity for bitcoin mining activities or government measures restricting or prohibiting the use of electricity for bitcoin mining activities. Any such developments could lower the demand for bitcoin and have a material and adverse effect on the price of bitcoin.

Concerns have been raised about the electricity required to secure and maintain digital asset networks. For example, as of January 15, 2026, over 1 billion tera hashes were performed every second in connection with mining on the Bitcoin Network. Although measuring the electricity consumed by this process is difficult because these operations are performed by various machines with varying levels of efficiency, the process consumes a significant amount of energy. Further, in addition to the direct energy costs of performing calculations on any given digital asset network, there are indirect costs that impact a network's total energy consumption, including the costs of cooling the machines that perform these calculations.

Driven by concerns around energy consumption and the impact on public utility companies, various states and cities have implemented, or are considering implementing, moratoriums on mining activity in their jurisdictions. A significant reduction in mining activity as a result of such actions could adversely affect the security of the Bitcoin Network by making it easier for a malicious actor or botnet to manipulate the Bitcoin Network. If regulators or public utilities take action that restricts or otherwise impacts mining activities, such actions could result in decreased security of a digital asset network, including the Bitcoin Network, and consequently adversely impact the value of the Shares.

**Miner Collusion Risk.** Miners, functioning in their transaction confirmation capacity, collect fees for each transaction they confirm. Miners validate unconfirmed transactions by adding the previously unconfirmed transactions to new blocks in the Blockchain. Miners are not forced to confirm any specific transaction, but they are economically incentivized to confirm valid transactions as a means of collecting fees. Miners have historically accepted relatively low transaction confirmation fees, because miners have a very low marginal cost of validating unconfirmed transactions. In addition, most iterations of mining software will prioritize transactions recorded based on (i) thresholds selected by the user, (ii) the transaction fee paid with the transaction, (iii) the value attached to the transaction and (iv) the time the transaction was received by the mining software.

If miners collude in an anticompetitive manner to not record transactions that pay low transaction fees, then bitcoin users would be required to wait for their transaction to be included in a block by a miner not requiring such transaction fees. Such a scenario would require that users pay higher fees to ensure their transactions are recorded promptly, thus reducing the attractiveness of the bitcoin network. Bitcoin mining occurs globally and it may be difficult for authorities to apply antitrust regulations across multiple jurisdictions. Any collusion among miners may adversely impact an investment in the Shares or the ability of the Trust to operate.

If the number of outstanding transactions yet to be recorded in the Blockchain (commonly referred to as "transactions in the mempool") are significantly above the capacity which can be recorded in any single block, miners are likely to prioritize recording transactions that pay significant transaction fees. This would result in transactions with low or no fees remaining in the mempool for extended periods. Such a scenario would require that users pay higher fees to ensure their transactions are recorded promptly, thus reducing the attractiveness of the Bitcoin Network. An extended period of large numbers of transactions in the mempool could result from high levels of use of the Bitcoin Network or from a malicious spam attack intending to increase the transactions in the mempool. Any extended period with large numbers of transactions in the mempool may adversely impact an investment in the Shares or the ability of the Trust to operate.

Additionally, the coinbase reward for successfully mining transactions (called the "block reward" or "coinbase") will decrease over time. In April 2024, the block reward was reduced from 6.25 to 3.125 bitcoin, and will further be reduced by half approximately every four years (e.g., to 1.5625 bitcoin in 2028). As the block reward continues to decrease over time, the mining incentive structure may transition to a higher reliance on transaction confirmation fees in order to incentivize miners to continue to dedicate processing power to the blockchain. If transaction confirmation fees become too high, the marketplace may be reluctant to use bitcoin. Conversely, if the combination of the block reward and transaction fees are too low, miners may not be incentivized to expend processing power to solve blocks and confirmations of transactions on the Blockchain could be temporarily slowed. A reduction in the processing power expended by miners on the Bitcoin Network could increase the likelihood of a malicious actor or botnet obtaining control. Any reduction in infrastructure security may reduce confidence in the Bitcoin Network or expose the Bitcoin Network to a malicious actor or botnet obtaining a majority of processing power on the Bitcoin Network, reducing the confidence in and security of the Blockchain. Decreased demand for bitcoin or reduced security on the Bitcoin Network may adversely impact an investment in the Shares.

**Equity Securities Risk.** The value of the Shares will fluctuate with changes in the value of the equity securities in which it invests. Equity securities prices fluctuate for several reasons, including changes in investors' perceptions of the financial condition of an issuer or the general condition of the relevant stock market, such as the current market volatility, or when political or economic events affecting the issuers occur.

**Industry Concentration Risk.** The Fund concentrates its investments in the industry or group of industries comprising the information technology sector. This concentration subjects the Fund to greater risk of loss as a result of adverse economic, business, political, environmental or other developments than if its investments were diversified across different industries.

**Information Technology Companies Risk.** Information technology companies produce and provide hardware, software and information technology systems and services. Information technology companies are generally subject to the following risks: rapidly changing technologies and existing produce obsolescence, short product life cycles, fierce competition, aggressive pricing and reduced profit margins, the loss of patent, copyright and trademark protections, cyclical market patterns, evolving industry standards and frequent new product introductions and new market entrants. Information technology companies may be smaller and less experienced companies, with limited product lines, markets or financial resources and fewer experienced management or marketing personnel. Information technology company stocks, particularly those involved with the internet, have experienced extreme price and volume fluctuations that are often unrelated to their operating performance. In addition, information technology companies are particularly vulnerable to federal, state and local government regulation, and competition and consolidation, both domestically and internationally, including competition from foreign competitors with lower production costs. Information technology companies are facing increased government and regulatory scrutiny and may be subject to adverse government or regulatory action. Information technology companies also face competition for services of qualified personnel and heavily rely on patents and intellectual property rights and the ability to enforce such rights to maintain a competitive advantage.

**Semiconductor Companies Risk.** The Fund invests in companies primarily involved in the design, distribution, manufacture and sale of semiconductors. Semiconductor companies are significantly affected by rapid obsolescence, intense competition and global demand. The Fund is also subject to the risk that the securities of such issuers will underperform the market as a whole due to legislative or regulatory changes. The prices of the securities of semiconductor companies may fluctuate widely in response to such events.

**Smaller Companies Risk.** Small and/or mid-capitalization companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than larger, more established companies as a result of several factors, including limited trading volumes, products or financial resources, management inexperience and less publicly available information. Accordingly, such companies are generally subject to greater market risk than larger, more established companies.

**Blockchain Technology Risk.** Blockchain technology is a new and relatively untested technology which operates as a distributed ledger. The risks associated with blockchain technology may not emerge until the technology is widely used. Blockchain systems could be vulnerable to fraud, particularly if a significant minority of participants colluded to defraud the rest. Access to a given blockchain requires an individualized key, which, if compromised, could result in loss due to theft, destruction or inaccessibility. There is little regulation of blockchain technology other than the intrinsic public nature of the blockchain system. Any future regulatory developments could affect the viability and expansion of the use of blockchain technology. Because blockchain technology systems may operate across many national boundaries and regulatory jurisdictions, it is possible that blockchain technology may be subject to widespread and inconsistent regulation. Currently, blockchain technology is primarily used for the recording of transactions in digital currency, which are extremely speculative, unregulated and volatile. Problems in digital currency markets could have a wider effect on companies associated with blockchain technology. There are currently a number of competing blockchain platforms with competing intellectual property claims. The uncertainty inherent in these competing technologies could cause companies to use alternatives to blockchain. Finally, because digital assets registered in a blockchain do not have a standardized exchange, like a stock market, there is less liquidity for such assets and greater possibility of fraud or manipulation.

**Digital Asset Industry Risk.** The digital asset industry has recently been subject to a number of high-profile regulatory events as well as the introduction of new products and services. This has led to volatility and disruption in the digital asset markets and financial difficulties for several prominent industry participants, including digital asset trading platforms, hedge funds and lending platforms. For example, in the first half of 2022, digital asset lenders Celsius Network LLC and Voyager Digital Ltd. and digital asset hedge fund Three Arrows Capital each declared bankruptcy, and the stablecoin TerraUSD collapsed. These events caused a loss of confidence in participants in the digital asset ecosystem, negative publicity surrounding digital assets more broadly and market-wide declines in digital asset trading prices and liquidity.

Thereafter, in November 2022, FTX Trading Ltd. (*"FTX"*), the third largest digital asset trading platform by volume at the time, halted customer withdrawals amid rumors of the company's liquidity issues and likely insolvency. Shortly thereafter, FTX's CEO resigned and FTX and numerous affiliates of FTX filed for bankruptcy. The U.S. Department of Justice (*"DOJ"*) subsequently brought criminal charges, including charges of fraud, violations of federal securities laws, money laundering, and campaign finance offenses, against FTX's former CEO and others. In November 2023, FTX's former CEO was convicted of fraud and money laundering. Similar charges related to violations of anti-money laundering laws were brought in November 2023 against Binance and its former CEO. FTX is also under investigation by the SEC, the Justice Department, and the Commodity Futures Trading Commission, as well as by various regulatory authorities in the Bahamas, Europe and other jurisdictions. In response to these events, the digital asset markets have experienced extreme price volatility and declines in liquidity, and regulatory and enforcement scrutiny has increased, including from the DOJ, the SEC, the CFTC, the White House and Congress. In addition, several other entities in the digital asset industry filed for bankruptcy following FTX's bankruptcy filing, such as BlockFi Inc. and Genesis Global Capital, LLC. The SEC also brought charges against Genesis Global Capital, LLC and Gemini Trust Company, LLC on January 12, 2023, for their alleged unregistered offer and sale of securities to retail investors. In October 2023, the New York Attorney General brought charges against Gemini, Genesis Global Capital and numerous affiliates of Genesis Global Capital, and Digital Currency Group alleging violations of law relating to the Gemini Earn program. In May 2024, the Bankruptcy Court of the Southern District of New York approved a settlement of the charges with the Genesis entities.

These events resulted in calls for heightened scrutiny and regulation of the digital asset industry, with a specific focus on digital asset trading platforms, and custodians. For example, in June 2023, the SEC brought charges against Binance (the *"Binance Complaint"*) and Coinbase (the *"Coinbase Complaint"*), two of the largest digital asset trading platforms, alleging that they solicited U.S. investors to buy, sell, and trade "crypto asset securities" through their unregistered trading platforms and operated unregistered securities exchanges, brokerages and clearing agencies. Binance subsequently announced that it would be suspending USD deposits and withdrawals on Binance.US and that it plans to delist its USD trading pairs. In addition, in November 2023, the SEC brought similar charges against Kraken (the *"Kraken Complaint"*), alleging that it operated as an unregistered securities exchange, brokerage and clearing agency. The Binance Complaint, the Coinbase Complaint and the Kraken Complaint led to further volatility in digital asset prices. In January 2025, the SEC launched the Crypto Task Force dedicated to developing a comprehensive and clear regulatory framework for digital assets led by Commissioner Hester Peirce. Subsequently, Commissioner Peirce announced a list of specific priorities to further that initiative, which included pursuing final rules related to a digital asset's security status, a revised path to registered offerings and listings for digital asset-based investment vehicles, and clarity regarding digital asset custody, lending and staking. In February 2025, Coinbase and the SEC entered into a joint stipulation to dismiss the SEC's lawsuit with prejudice, subject to the court's approval. Kraken has also announced that it reached an agreement in principle with the SEC to dismiss the SEC's lawsuit, subject to formal approval by the SEC's Commissioners. In May 2025, the SEC voluntarily dismissed its lawsuit against Binance. Several other digital asset market participants have also announced that the SEC informed them that the SEC was terminating its investigation or enforcement action into their firm. The final outcome of these lawsuits (to the extent not yet dismissed), their effect on the broader digital asset ecosystem and the reputational impact on industry participants, remain uncertain.

A wide range of U.S. regulators, including the Federal Reserve Board, the SEC, the CFTC, FinCEN, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Bureau of Investigation, as well as the White House, have issued a growing number of reports and releases concerning digital assets and digital asset markets. In addition, the U.S. Congress has enacted and proposed a number of bills that will have significant impacts on the U.S. digital asset market. However, the extent and content of any forthcoming laws and regulations are not yet ascertainable with certainty, and it may not be ascertainable in the near future. It is possible that new laws and increased regulation and regulatory scrutiny may require the Fund to comply with certain regulatory regimes, which could result in new costs for the Fund. The Fund may have to devote increased time and attention to regulatory matters, which could increase costs to the Fund.

In 2025, Congress undertook significant legislative efforts to address the rapidly evolving landscape of digital assets and cryptocurrencies, culminating in the passage of a landmark bill: the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the *"GENIUS Act"*). This legislative action represents the first comprehensive federal framework for the regulation of stablecoins in the United States.

The GENIUS Act, signed into law in July 2025, establishes the first federal regulatory framework for the issuance and operation of payment stablecoins—digital assets designed to maintain a stable value relative to a fiat currency, such as the U.S. dollar. The GENIUS Act requires that all payment stablecoins be fully backed on a one-to-one basis by high-quality liquid assets, such as U.S. dollars or short-term U.S. Treasury securities, and subjects issuers to rigorous reserve, audit, and disclosure requirements. The GENIUS Act introduces a dual licensing regime, allowing stablecoin issuers to operate under either federal or state regulatory oversight, provided that state regimes are "substantially similar" to federal standards. Issuers with more than $10 billion in outstanding stablecoins must obtain a federal license. The GENIUS Act also imposes strict AML, sanctions compliance, and consumer protection obligations, including prioritizing stablecoin holders' claims in the event of issuer insolvency. Notably, the Act prohibits non-financial public companies from issuing stablecoins without special approval and restricts the payment of interest or yield on stablecoins.

In addition, the Digital Asset Market Clarity Act of 2025 (the *"CLARITY Act"*) was passed by the U.S. House of Representatives in July 2025. The CLARITY Act was designed to resolve longstanding regulatory uncertainty regarding the classification and oversight of digital assets. The CLARITY Act establishes a clear framework for distinguishing between digital assets that are securities, commodities, or payment stablecoins. It delineates the respective jurisdictions of the SEC and the CFTC, granting the CFTC exclusive authority over "digital commodities" and the SEC authority over "digital securities." The CLARITY Act also introduces criteria for determining when a digital asset is sufficiently decentralized to be treated as a commodity rather than a security. In addition, the CLARITY Act imposes registration requirements and operational standards for digital asset intermediaries, including exchanges, brokers, and dealers. It mandates consumer protection measures, anti-money laundering *("AML"*) and countering the financing of terrorism (*"CFT"*) compliance, and enhanced disclosure obligations. The Act aims to foster innovation while providing market participants with greater regulatory certainty and aligning U.S. policy with emerging international standards. Similar market structure legislation is currently under consideration by the U.S. Senate but there is no certainty whether the legislation will be enacted in 2026 or what form final legislation will take.

These legislative efforts were accompanied by additional measures, such as the Anti-CBDC Surveillance State Act, which prohibits the Federal Reserve from issuing a retail central bank digital currency without congressional authorization. While the GENIUS Act represents significant progress toward a comprehensive regulatory regime for digital assets, substantial uncertainty remains regarding the implementation and interpretation of this new law. The effectiveness of this framework, and the framework proposed under the CLARITY Act, if passed by Congress, will depend on subsequent rulemaking by federal and state regulators, interagency coordination, and the evolving approach to enforcement. Market participants may face transitional risks as regulatory standards are developed and applied, and there is potential for further legislative or regulatory changes as the digital asset ecosystem continues to evolve.

These events are continuing to develop at a rapid pace and it is not possible to predict at this time all of the risks that they may pose to the Fund, the Fund's third-party service providers, or to the digital asset industry as a whole. Continued disruption and instability in the digital asset markets as these events develop, including further declines in the trading prices and liquidity of the digital assets tracked by the Index, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.

**Non-U.S. Securities Risk.** Securities issued by non-U.S. companies present risks beyond those of securities of U.S. issuers. Risks of investing in the securities of non-U.S. companies include: different accounting standards; expropriation, nationalization or other adverse political or economic developments; currency devaluation, blockages or transfer restrictions; changes in foreign currency exchange rates; taxes; restrictions on non-U.S. investments and exchange of securities; and less government supervision and regulation of issuers in non-U.S. countries. Prices of non-U.S. securities also may be more volatile.

**Depositary Receipts Risk.** Depositary receipts may be less liquid than the underlying shares in their primary trading market. Any distributions paid to the holders of depositary receipts are usually subject to a fee charged by the depositary. Holders of depositary receipts may have limited voting rights, and investment restrictions in certain countries may adversely impact the value of depositary receipts because such restrictions may limit the ability to convert the equity shares into depositary receipts and vice versa. Such restrictions may cause the equity shares of the underlying issuer to trade at a discount or premium to the market price of the depositary receipts.

**Emerging Markets Risk.** Investments in securities issued by governments and companies operating in emerging market countries involve additional risks relating to political, economic, or regulatory conditions not associated with investments in securities and instruments issued by U.S. companies or by companies operating in other developed market countries. This is due to, among other things, the potential for greater market volatility, lower trading volume, a lack of liquidity, potential for market manipulation, higher levels of inflation, political and economic instability, greater risk of a market shutdown and more governmental limitations on foreign investments in emerging market countries than are typically found in more developed market countries. Moreover, emerging market countries often have less uniformity in accounting and reporting requirements, unsettled securities laws, less reliable securities valuations and greater risks associated with custody of securities than developed markets. In addition, the Public Company Accounting Oversight Board, which regulates auditors of U.S. public companies, is unable to inspect audit work papers in certain emerging market countries. Emerging market countries often have greater risk of capital controls through such measures as taxes or interest rate control than developed markets. Certain emerging market countries may also lack the infrastructure necessary to attract large amounts of foreign trade and investment. Local securities markets in emerging market countries may trade a small number of securities and may be unable to respond effectively to increases in trading volume, potentially making prompt liquidation of holdings difficult or impossible. Settlement procedures in emerging market countries are frequently less developed and reliable than those in the U.S. and other developed market countries. In addition, significant delays may occur in registering the transfer of securities. Settlement or registration problems may make it more difficult for the Fund to value its portfolio securities and could cause the Fund to miss attractive investment opportunities. Investing in emerging market countries involves a higher risk of expropriation, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested by certain emerging market countries. Enforcing legal rights may be made difficult, costly and slow in emerging markets as there may be additional problems enforcing claims against non-U.S. governments. As such, the rights and remedies associated with emerging market investment securities may be different than those available for investments in more developed markets. For example, it may be more difficult for shareholders to bring derivative litigation or for U.S. regulators to bring enforcement actions against issuers in emerging markets. In addition, due to the differences in regulatory, accounting, audit and financial recordkeeping standards, including financial disclosures, less information about emerging market companies is publicly available and information that is available may be unreliable or outdated.

**Currency Risk.** Changes in currency exchange rates affect the value of investments denominated in a foreign currency, and therefore the value of such investments in the Fund's portfolio. The Fund's net asset value could decline if a currency to which the Fund has exposure depreciates against the U.S. dollar or if there are delays or limits on repatriation of such currency. Currency exchange rates can be very volatile and can change quickly and unpredictably. As a result, the value of an investment in the Fund may change quickly and without warning.

**Active Management Risk.** The Fund is actively managed and its performance reflects the application of investment techniques and risk analyses in the investment decisions that the Sub-Adviser and Adviser make for the Fund. Such judgments about the Fund's investments may prove to be incorrect. If the investments selected and the strategies employed by the Fund fail to produce the intended results, the Fund could underperform as compared to other funds with similar investment objectives and/or strategies, or could have negative returns.

**Active Market Risk.** Although the Shares are listed for trading on the Exchange, there can be no assurance that an active trading market for the Shares will develop or be maintained. Shares trade on the Exchange at market prices that may be below, at or above the Fund's net asset value. Securities, including the Shares, are subject to market fluctuations and liquidity constraints that may be caused by such factors as economic, political, or regulatory developments, changes in interest rates, and/or perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments.

**Asset Concentration Risk.** Since the Fund may take concentrated positions in certain securities, the Fund's performance may be disproportionately and significantly impacted by the poor performance of those positions to which it has significant exposure. Asset concentration makes the Fund more susceptible to any single occurrence affecting the underlying positions and may subject the Fund to greater market risk than more diversified funds.

**Authorized Participant Concentration Risk.** Only an authorized participant may engage in creation or redemption transactions directly with the Fund. The Fund has a limited number of institutions that act as authorized participants on an agency basis (*i.e.* on behalf of other market participants). To the extent that these institutions exit the business or are unable to proceed with creation and/or redemption orders with respect to the Fund and no other authorized participant is able to step forward to create or redeem, in either of these cases, Shares may trade at a discount to the Fund's net asset value and possibly face delisting.

**Cyber Security Risk.** The Fund is susceptible to operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund's digital information systems through "hacking" or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition, cyber security breaches of the Fund's third-party service providers, such as its administrator, transfer agent, custodian, or sub-adviser, as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. While the Fund has established business continuity plans and risk management systems designed to reduce the risks associated with cyber security, there are inherent limitations in such plans and systems. Additionally, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third-party service providers.

**Inflation Risk.** Inflation may reduce the intrinsic value of increases in the value of the Fund. Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Fund's assets can decline as can the value of the Fund's distributions.

**Market Maker Risk.** If the Fund has lower average daily trading volumes, it may rely on a small number of third-party market makers to provide a market for the purchase and sale of Shares. Any trading halt or other problem relating to the trading activity of these market makers could result in a dramatic change in the spread between the Fund's net asset value and the price at which the Shares are trading on the Exchange, which could result in a decrease in value of the Shares. In addition, decisions by market makers or authorized participants to reduce their role or step away from these activities in times of market stress could inhibit the effectiveness of the arbitrage process in maintaining the relationship between the underlying values of the Fund's portfolio securities and the Fund's market price. This reduced effectiveness could result in Shares trading at a discount to net asset value and also in greater than normal intra-day bid-ask spreads for Shares.

**Non-Diversification Risk.** The Fund is classified as "non-diversified" under the 1940 Act. As a result, the Fund is only limited as to the percentage of its assets which may be invested in the securities of any one issuer by the diversification requirements imposed by the Internal Revenue Code of 1986, as amended (the *"Code"*). The Fund may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the Fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly invested in certain issuers.

**Operational Risk.** The Fund is exposed to operational risks arising from a number of factors, including, but not limited to, human error, processing and communication errors, errors of the Fund's service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. The Fund, Adviser and Sub-Adviser seek to reduce these operational risks through controls and procedures. However, these measures do not address every possible risk and may be inadequate to address these risks.

**Premium/Discount Risk.** The market price of the Fund's Shares will generally fluctuate in accordance with changes in the Fund's net asset value as well as the relative supply of and demand for Shares on the Exchange. The Fund's market price may deviate from the value of the Fund's underlying portfolio holdings, particularly in time of market stress, with the result that investors may pay more or receive less than the underlying value of the Fund shares bought or sold. The Adviser and Sub-Adviser cannot predict whether Shares will trade below, at or above their net asset value because the Shares trade on the Exchange at market prices and not at net asset value. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for Shares will be closely related, but not identical, to the same forces influencing the prices of the holdings of the Fund trading individually or in the aggregate at any point in time. However, given that Shares can only be purchased and redeemed in Creation Units, and only to and from broker-dealers and large institutional investors that have entered into participation agreements (unlike shares of closed-end funds, which frequently trade at appreciable discounts from, and sometimes at premiums to, their net asset value), the Adviser and Sub-Adviser believe that large discounts or premiums to the net asset value of Shares should not be sustained. During stressed market conditions, the market for the Fund's Shares may become less liquid in response to deteriorating liquidity in the market for the Fund's underlying portfolio holdings, which could in turn lead to differences between the market price of the Fund's Shares and their net asset value. This can be reflected as a spread between the bid and ask prices for the Fund quoted during the day or a premium or discount in the closing price from the Fund's net asset value.

**Small Fund Risk.** The Fund currently has fewer assets than larger funds, and like other smaller funds, large inflows and outflows may impact the Fund's market exposure for limited periods of time. This impact may be positive or negative, depending on the direction of market movement during the period affected. If the Fund fails to attract a large amount of assets, shareholders of the Fund may incur higher expenses as the Fund's fixed costs would be allocated over a smaller number of shareholders. Failure to grow and large outflows may be factors the Board considers in any determination to cease the Fund's operations and dissolve.

**Tax Risk.** The Fund intends to elect and to qualify each year to be treated as a regulated investment company (*"RIC"*) under Subchapter M of the Code. As a RIC, the Fund will not be subject to U.S. federal income tax on the portion of its net investment income and net capital gain that it distributes to Shareholders, provided that it satisfies certain requirements of the Code. If the Fund does not qualify as a RIC for any taxable year and certain relief provisions are not available, the Fund's taxable income will be subject to tax at the Fund level and to a further tax at the shareholder level when such income is distributed. Additionally, buying securities shortly before the record date for a taxable dividend or capital gain distribution is commonly known as "buying the dividend." In the event a shareholder purchases Shares shortly before such a distribution, the entire distribution may be taxable to the shareholder even though a portion of the distribution effectively represents a return of the purchase price.

**Trading Issues Risk.** Trading in Fund Shares on the Exchange may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in Shares inadvisable. In addition, trading in Fund Shares on the Exchange is subject to trading halts caused by extraordinary market volatility pursuant to the Exchange's "circuit breaker" rules. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of the Fund will continue to be met or will remain unchanged. The Fund may have difficulty maintaining its listing on the Exchange in the event the Fund's assets are small, the Fund does not have enough shareholders, or if the Fund is unable to proceed with creation and/or redemption orders.

**Volatility Risk.** Volatility is the characteristic of a security, an index or a market to fluctuate significantly in price within a short time period. The Fund may invest in securities that exhibit more volatility than the market as a whole. Such exposures could cause the Fund's net asset value to experience significant increases or declines in value over short periods of time.

**The Shares will change in value, and you could lose money by investing in the Fund. The Fund may not achieve its investment objective.**

**PERFORMANCE**

The bar chart and table below illustrate the annual calendar year returns of the Fund based on net asset value as well as the average annual Fund returns. The bar chart and table provide an indication of the risks of investing in the Fund by showing changes in the Fund's performance from year-to-year and by showing how the Fund's average annual total returns based on net asset value compare to those of a broad-based market index. The Fund's performance information is accessible on the Fund's website at https://https://coinshares.com/us/etf/wgmi/.

![](coinshares485bpos005.jpg)

The Fund's highest quarterly return was 106.97% (quarter ended March 31, 2023) and the Fund's lowest quarterly return was -42.36% (quarter ended March 31, 2025).

---

| | | |
|:---|:---|:---|
| **Average Annual Total Return as of December 31, 2025** | **Average Annual Total Return as of December 31, 2025** | **Average Annual Total Return as of December 31, 2025** |
| **CoinShares Bitcoin Mining ETF** | **1 Year** | **Since Inception**<br> **(2/7/2022)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return Before Taxes | 72.17% | 10.36% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return After Taxes on Distributions | 72.17% | 10.30% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return After Taxes on Distributions and Sale of Fund Shares | 42.72% | 8.11% |
| **S&P 500 Total Return Index** (reflects no deduction for fees, expenses or taxes) | 17.88% | 13.15% |

---

The Fund's past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.

Returns before taxes do not reflect the effects of any income or capital gains taxes. All after-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local tax. Returns after taxes on distributions reflect the taxed return on the payment of dividends and capital gains.

Your own actual after-tax returns will depend on your specific tax situation and may differ from what is shown here. After-tax returns are not relevant to investors who hold Shares in tax-deferred accounts such as individual retirement accounts (IRAs) or employee-sponsored retirement plans.

**M** **anagement**

*<u>Investment Adviser</u>*

Valkyrie Funds LLC

*<u>Investment Sub-Adviser</u>*

Vident Asset Management

*<u>Portfolio Managers</u>*

The following persons serve as portfolio managers of the Fund.

● Bill Cannon, Head of ETF Portfolio Management at Valkyrie

● Rafael Zayas, CFA, Senior Vice President and Head of Portfolio Management and Trading of Vident

● Austin Wen, CFA, Portfolio Manager at Vident

Each of the portfolio managers is primarily and jointly responsible for the day-to-day management of the Fund and has served in such capacity since the Fund's inception in 2022.

**P** **urchase and Sale of Shares**

The Fund issues and redeems Shares on a continuous basis, at net asset value, only in large blocks of shares called "Creation Units." Individual Shares of the Fund may only be purchased and sold on the secondary market through a broker-dealer. Since Shares of the Fund trade on securities exchanges in the secondary market at their market price rather than their net asset value, the Fund's Shares may trade at a price greater than (premium) or less than (discount) the Fund's net asset value. An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase Shares of the Fund (bid) and the lowest price a seller is willing to accept for Shares of the Fund (ask) when buying or selling Shares in the secondary market (the *"bid-ask spread"*). Recent information, including the Fund's net asset value, market price, premiums and discounts, and bid-ask spreads, is available online at https://coinshares.com/us/etf/wgmi/.

**T** **ax Information**

The Fund's distributions will generally be taxable as ordinary income, returns of capital or capital gains. A sale of Shares may result in capital gain or loss.

**P** **ayments to Broker-Dealers and Other Financial Intermediaries**

If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank), Valkyrie and ALPS Distributors, Inc. (the "Distributor"), the Fund's distributor, may pay the intermediary for the sale of Shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

**Additional Information About the Fund's Principal Investment Strategies**

The Fund is a series of Valkyrie ETF Trust II and is regulated as an "investment company" under the Investment Company Act of 1940, as amended (the *"1940 Act"*). The Fund is actively managed and does not seek to track the performance of an index. The Fund's investment objective is non-fundamental and may be changed without approval by the holders of a majority of the outstanding voting securities of the Fund. Unless an investment policy is identified as being fundamental, all investment policies included in this prospectus and the Fund's Statement of Additional Information (*"SAI"*) are non-fundamental and may be changed by the Board of Trustees of the Trust (the *"Board"*) without shareholder approval. If there is a material change to the Fund's investment objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will achieve its investment objective.

**D** **isclosure of Portfolio Holdings**

A description of the Trust's policies and procedures with respect to the disclosure of the Fund's portfolio holdings is available in the Fund's SAI, which is available at https://coinshares.com/us/etf/wgmi/.

**A** **dditional Information Regarding the Fund's Strategy**

The Fund is an actively-managed ETF that will invest at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenue or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining.

**Additional Risks of Investing in the Fund**

Risk is inherent in all investing. Investing in the Fund involves risk, including the risk that you may lose all or part of your investment. There can be no assurance that the Fund will meet its stated objective. Before you invest, you should consider the following supplemental disclosure pertaining to the Principal Risks set forth above as well as additional Non-Principal Risks set forth below in this prospectus.

**<u>Principal Risks</u>**

**Market Risk.** Market risk is the risk that a particular security, or Shares of the Fund in general, may fall in value. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more significantly than others. These events also adversely affect the prices and liquidity of the Fund's portfolio securities or other instruments and could result in disruptions in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund's Shares and result in increased market volatility. During any such events, the Fund's Shares may trade at increased premiums or discounts to their net asset value.

**Bitcoin Risk.** Bitcoin is a relatively new innovation and the market for bitcoin is subject to rapid price swings, changes and uncertainty. Trading prices of bitcoin and other digital assets have experienced significant volatility in recent periods and may continue to do so. For instance, there were steep increases in the value of certain digital assets, including bitcoin, over the course of 2021, and multiple market observers asserted that digital assets were experiencing a "bubble." These increases were followed by steep drawdowns throughout 2022 in digital asset trading prices, including for bitcoin. These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout bitcoin's history, including in 2011, 2013-2014, and 2017-2018, before repeating again in 2021-2022. Throughout 2023, 2024 and 2025, bitcoin prices continued to exhibit extreme volatility. Such volatility may persist.

The further development of the Bitcoin Network and the acceptance and use of bitcoin are subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development of the Bitcoin Network or the acceptance of bitcoin may adversely affect the price of bitcoin. Bitcoin is subject to the risk of fraud, theft, manipulation or security failures, operational or other problems that impact digital asset trading venues. Additionally, if one or a coordinated group of miners were to gain control of 51% of the Bitcoin Network, they would have the ability to manipulate transactions, halt payments and fraudulently obtain bitcoin. A significant portion of bitcoin is held by a small number of holders sometimes referred to as "whales." Transactions of these holders may influence the price of bitcoin.

Unlike the exchanges for more traditional assets, such as equity securities and futures contracts, bitcoin and digital asset trading venues are largely unregulated and highly fragmented. Due to the fragmentation, regulatory non-compliance and lack of oversight of these trading venues there is a heightened potential for fraud and manipulation. Digital asset trading platforms on which bitcoin is traded, and which may serve as a pricing source for the calculation of the reference rate that is used for the purposes of valuing the Fund's investments, are or may become subject to enforcement actions by regulatory authorities, and such enforcement actions may have a material adverse impact on the Fund, its investments, and its ability to implement its investment strategy.

As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote bitcoin in a way that artificially increases the price of bitcoin). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Over the past several years, a number of digital asset trading venues have been closed due to fraud, failure or security breaches. Investors in bitcoin may have little or no recourse should such theft, fraud or manipulation occur and could suffer significant losses. New or changing laws and regulations may affect the use of blockchain technology and/or investments in crypto assets or crypto asset-related investments. In addition, digital asset trading venues, bitcoin miners, and other participants may have significant exposure to other cryptocurrencies. Instability in the price, availability or legal or regulatory status of those instruments may adversely impact the operation of the digital asset trading venues and the Bitcoin Network. The realization of any of these risks could result in a decline in the acceptance of bitcoin and consequently a reduction in the value of bitcoin, bitcoin futures, and the Fund. Finally, the creation of a "fork" (as described above) or a substantial giveaway of bitcoin (sometimes referred to as an "air drop") may result in significant and unexpected declines in the value of bitcoin, bitcoin futures, and the Fund.

**Mining Risk.** Bitcoin miners and other necessary hardware are subject to malfunction, technological obsolescence, the global supply chain and difficulty and cost in obtaining new hardware. Bitcoin miners are subject to malfunctions and normal wear and tear, and, at any point in time, a certain number of bitcoin miners are typically off-line for maintenance or repair. The physical degradation of miners will require replacement of miners that are no longer functional. If there is a model wide component malfunction whether in the hardware or the software that powers these miners, the percentage of offline miners could increase substantially, disrupting mining operations. Any major bitcoin miner malfunction out of the typical range of downtime for normal maintenance and repair could cause significant economic damage. Additionally, as technology evolves, there may be a need to acquire newer models of miners to remain competitive in the market. New miners can be costly and may be in short supply. Given the long production period to manufacture and assemble bitcoin miners and the current global semiconductor chip shortage, there can be no assurance that miners can acquire enough bitcoin mining computers or replacement parts on a cost-effective basis for the maintenance and expansion necessary for efficient bitcoin mining operations. Many engaged in mining rely on third parties, principally located in China, to supply bitcoin miners and shortages of bitcoin miners or their component parts, material increases in bitcoin miner costs, or delays in delivery of orders, including due to trade restrictions and COVID-19 supply chain disruptions, could significantly interrupt plans for expanding bitcoin mining capacity in the near term and future. Shortages of bitcoin mining computers could result in reduced bitcoin mining capacity and increased operating costs, which could materially delay the completion of any planned bitcoin mining capacity expansion and result in a competitive disadvantage.

Global bitcoin supply, which is influenced by similar factors as global bitcoin demand, in addition to fiat currency (i.e., government currency not backed by an asset such as gold) may be effected by miners and taxpayers who may liquidate bitcoin holdings to meet tax obligations. In addition, the dedication of mining power to the Bitcoin Network and the willingness of bitcoin miners to clear bitcoin transactions for relatively low fees may impact the supply and price. An acute cessation of mining operations would reduce the collective processing power on the blockchain, which would adversely affect the transaction verification process by temporarily decreasing the speed at which blocks are added to the blockchain and make the blockchain more vulnerable to a malicious actor obtaining control in excess of 50 percent of the processing power on the blockchain. Reductions in processing power could result in material, though temporary, delays in transaction confirmation time. Any reduction in confidence in the transaction verification process or mining processing power may adversely impact the price of bitcoin and the value of an investment in the Fund. Furthermore, the block reward will decrease over time and eventually cease entirely. As the block reward continues to decrease over time, the mining incentive structure will transition to a higher reliance on transaction verification fees in order to incentivize miners to continue to dedicate processing power to the blockchain. If transaction verification fees become too high, the marketplace may be reluctant to use bitcoin.

Miners may cease expanding processing power to create blocks and verify transactions if they are not adequately compensated. Miners generate revenue from both newly created bitcoin (known as the "block reward") and from fees taken upon verification of transactions. If the aggregate revenue from transaction fees and the block reward is below a miner's cost, the miner may cease operations. An acute cessation of mining operations would reduce the collective processing power on the Blockchain, which would adversely affect the transaction verification process by temporarily decreasing the speed at which blocks are added to the Blockchain and make the Blockchain more vulnerable to a malicious actor obtaining control in excess of 50 percent of the processing power on the Blockchain. Reductions in processing power could result in material, though temporary, delays in transaction confirmation time. Any reduction in confidence in the transaction verification process or mining processing power may adversely impact the price of bitcoin. Furthermore, the block reward will decrease over time. In April 2024, the block reward was reduced from 6.25 to 3.125 bitcoin, and it is estimated that the block reward will further halve again in 2028. As the block reward continues to decrease over time, the mining incentive structure will transition to a higher reliance on transaction verification fees in order to incentivize miners to continue to dedicate processing power to the Blockchain. If transaction verification fees become too high, the marketplace may be reluctant to use bitcoin. Decreased demand for bitcoin may adversely affect its price, which may adversely affect an investment in the Fund.

Miners may also transition processing power from bitcoin mining to support AI workloads. Due to the rapid development and increasingly widespread use of certain AI technologies, including machine learning models and generative AI, there has been a significant increase in demand for high-performance computing and GPU-based infrastructure to support AI workloads. High levels of competition in the bitcoin mining industry, bitcoin price volatility, and the perpetual reduction of bitcoin mining rewards due to halving events may make providing processing power for AI workloads more attractive to miners. As a result, miners may convert a portion of their bitcoin mining operations to provide processing power to support AI workloads or cease to provide processing power for bitcoin mining entirely.

Bitcoin mining activities are inherently energy-intensive and electricity costs account for a significant portion of the overall mining costs. The availability and cost of electricity will restrict the geographic locations of mining activities. High costs of electricity may incentivize miners to redirect their resources to other validation protocols, such a proof-of-stake blockchains, or abandon their validation activities entirely. A significant decrease in the computational resources dedicated to the Bitcoin Network's validation protocol could reduce the security of the network which may erode bitcoin's viability as a store of value or means of exchange. In addition, the significant consumption of electricity may have a negative environmental impact, including contribution to climate change, which may give rise to public opinion against allowing the use of electricity for bitcoin mining activities or government measures restricting or prohibiting the use of electricity for bitcoin mining activities. Any such developments could lower the demand for bitcoin and have a material and adverse effect on the price of bitcoin.

Concerns have been raised about the electricity required to secure and maintain digital asset networks. For example, as of January 15, 2026, over 1 billion tera hashes were performed every second in connection with mining on the Bitcoin Network. Although measuring the electricity consumed by this process is difficult because these operations are performed by various machines with varying levels of efficiency, the process consumes a significant amount of energy. Further, in addition to the direct energy costs of performing calculations on any given digital asset network, there are indirect costs that impact a network's total energy consumption, including the costs of cooling the machines that perform these calculations.

Driven by concerns around energy consumption and the impact on public utility companies, various states and cities have implemented, or are considering implementing, moratoriums on mining activity in their jurisdictions. A significant reduction in mining activity as a result of such actions could adversely affect the security of the Bitcoin Network by making it easier for a malicious actor or botnet to manipulate the Bitcoin Network. If regulators or public utilities take action that restricts or otherwise impacts mining activities, such actions could result in decreased security of a digital asset network, including the Bitcoin Network, and consequently adversely impact the value of the Shares.

**Miner Collusion Risk.** Miners, functioning in their transaction confirmation capacity, collect fees for each transaction they confirm. Miners validate unconfirmed transactions by adding the previously unconfirmed transactions to new blocks in the Blockchain. Miners are not forced to confirm any specific transaction, but they are economically incentivized to confirm valid transactions as a means of collecting fees. Miners have historically accepted relatively low transaction confirmation fees, because miners have a very low marginal cost of validating unconfirmed transactions. In addition, most iterations of mining software will prioritize transactions recorded based on (i) thresholds selected by the user, (ii) the transaction fee paid with the transaction, (iii) the value attached to the transaction and (iv) the time the transaction was received by the mining software.

If miners collude in an anticompetitive manner to not record transactions that pay low transaction fees, then bitcoin users would be required to wait for their transaction to be included in a block by a miner not requiring such transaction fees. Such a scenario would require that users pay higher fees to ensure their transactions are recorded promptly, thus reducing the attractiveness of the bitcoin network. Bitcoin mining occurs globally and it may be difficult for authorities to apply antitrust regulations across multiple jurisdictions. Any collusion among miners may adversely impact an investment in the Shares or the ability of the Trust to operate.

If the number of outstanding transactions yet to be recorded in the Blockchain (commonly referred to as "transactions in the mempool") are significantly above the capacity which can be recorded in any single block, miners are likely to prioritize recording transactions that pay significant transaction fees. This would result in transactions with low or no fees remaining in the mempool for extended periods. Such a scenario would require that users pay higher fees to ensure their transactions are recorded promptly, thus reducing the attractiveness of the Bitcoin Network. An extended period of large numbers of transactions in the mempool could result from high levels of use of the Bitcoin Network or from a malicious spam attack intending to increase the transactions in the mempool. Any extended period with large numbers of transactions in the mempool may adversely impact an investment in the Shares or the ability of the Trust to operate.

Additionally, the coinbase reward for successfully mining transactions (called the "block reward" or "coinbase") will decrease over time. In April 2024, the block reward was reduced from 6.25 to 3.125 bitcoin, and will further be reduced by half approximately every four years (e.g., to 1.5625 bitcoin in 2028). As the block reward continues to decrease over time, the mining incentive structure may transition to a higher reliance on transaction confirmation fees in order to incentivize miners to continue to dedicate processing power to the blockchain. If transaction confirmation fees become too high, the marketplace may be reluctant to use bitcoin. Conversely, if the combination of the block reward and transaction fees are too low, miners may not be incentivized to expend processing power to solve blocks and confirmations of transactions on the Blockchain could be temporarily slowed. A reduction in the processing power expended by miners on the Bitcoin Network could increase the likelihood of a malicious actor or botnet obtaining control. Any reduction in infrastructure security may reduce confidence in the Bitcoin Network or expose the Bitcoin Network to a malicious actor or botnet obtaining a majority of processing power on the Bitcoin Network, reducing the confidence in and security of the Blockchain. Decreased demand for bitcoin or reduced security on the Bitcoin Network may adversely impact an investment in the Shares.

**Equity Securities Risk.** The value of the Shares will fluctuate with changes in the value of the equity securities in which it invests. Equity securities prices fluctuate for several reasons, including changes in investors' perceptions of the financial condition of an issuer or the general condition of the relevant stock market, such as the current market volatility, or when political or economic events affecting the issuers occur.

**Industry Concentration Risk.** The Fund concentrates its investments in the industry or group of industries comprising the information technology sector. This concentration subjects the Fund to greater risk of loss as a result of adverse economic, business, political, environmental or other developments than if its investments were diversified across different industries.

**Information Technology Companies Risk.** Information technology companies produce and provide hardware, software and information technology systems and services. Information technology companies are generally subject to the following risks: rapidly changing technologies and existing produce obsolescence, short product life cycles, fierce competition, aggressive pricing and reduced profit margins, the loss of patent, copyright and trademark protections, cyclical market patterns, evolving industry standards and frequent new product introductions and new market entrants. Information technology companies may be smaller and less experienced companies, with limited product lines, markets or financial resources and fewer experienced management or marketing personnel. Information technology company stocks, particularly those involved with the internet, have experienced extreme price and volume fluctuations that are often unrelated to their operating performance. In addition, information technology companies are particularly vulnerable to federal, state and local government regulation, and competition and consolidation, both domestically and internationally, including competition from foreign competitors with lower production costs. Information technology companies are facing increased government and regulatory scrutiny and may be subject to adverse government or regulatory action. Information technology companies also face competition for services of qualified personnel and heavily rely on patents and intellectual property rights and the ability to enforce such rights to maintain a competitive advantage.

**Semiconductor Companies Risk.** The Fund invests in companies primarily involved in the design, distribution, manufacture and sale of semiconductors. Semiconductor companies are significantly affected by rapid obsolescence, intense competition and global demand. The Fund is also subject to the risk that the securities of such issuers will underperform the market as a whole due to legislative or regulatory changes. The prices of the securities of semiconductor companies may fluctuate widely in response to such events.

**Smaller Companies Risk.** Small and/or mid-capitalization companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than larger, more established companies as a result of several factors, including limited trading volumes, products or financial resources, management inexperience and less publicly available information. Accordingly, such companies are generally subject to greater market risk than larger, more established companies.

**Blockchain Technology Risk.** Blockchain technology is a new and relatively untested technology which operates as a distributed ledger. The risks associated with blockchain technology may not emerge until the technology is widely used. Blockchain systems could be vulnerable to fraud, particularly if a significant minority of participants colluded to defraud the rest. Access to a given blockchain requires an individualized key, which, if compromised, could result in loss due to theft, destruction or inaccessibility. There is little regulation of blockchain technology other than the intrinsic public nature of the blockchain system. Any future regulatory developments could affect the viability and expansion of the use of blockchain technology. Because blockchain technology systems may operate across many national boundaries and regulatory jurisdictions, it is possible that blockchain technology may be subject to widespread and inconsistent regulation. Currently, blockchain technology is primarily used for the recording of transactions in digital currency, which are extremely speculative, unregulated and volatile. Problems in digital currency markets could have a wider effect on companies associated with blockchain technology. There are currently a number of competing blockchain platforms with competing intellectual property claims. The uncertainty inherent in these competing technologies could cause companies to use alternatives to blockchain. Finally, because digital assets registered in a blockchain do not have a standardized exchange, like a stock market, there is less liquidity for such assets and greater possibility of fraud or manipulation.

**Digital Asset Industry Risk.** The digital asset industry has recently been subject to a number of high-profile regulatory events as well as the introduction of new products and services. This has led to volatility and disruption in the digital asset markets and financial difficulties for several prominent industry participants, including digital asset trading platforms, hedge funds and lending platforms. For example, in the first half of 2022, digital asset lenders Celsius Network LLC and Voyager Digital Ltd. and digital asset hedge fund Three Arrows Capital each declared bankruptcy, and the stablecoin TerraUSD collapsed. These events caused a loss of confidence in participants in the digital asset ecosystem, negative publicity surrounding digital assets more broadly and market-wide declines in digital asset trading prices and liquidity.

Thereafter, in November 2022, FTX Trading Ltd. (*"FTX"*), the third largest digital asset trading platform by volume at the time, halted customer withdrawals amid rumors of the company's liquidity issues and likely insolvency. Shortly thereafter, FTX's CEO resigned and FTX and numerous affiliates of FTX filed for bankruptcy. The U.S. Department of Justice (*"DOJ"*) subsequently brought criminal charges, including charges of fraud, violations of federal securities laws, money laundering, and campaign finance offenses, against FTX's former CEO and others. In November 2023, FTX's former CEO was convicted of fraud and money laundering. Similar charges related to violations of anti-money laundering laws were brought in November 2023 against Binance and its former CEO. FTX is also under investigation by the SEC, the Justice Department, and the Commodity Futures Trading Commission, as well as by various regulatory authorities in the Bahamas, Europe and other jurisdictions. In response to these events, the digital asset markets have experienced extreme price volatility and declines in liquidity, and regulatory and enforcement scrutiny has increased, including from the DOJ, the SEC, the CFTC, the White House and Congress. In addition, several other entities in the digital asset industry filed for bankruptcy following FTX's bankruptcy filing, such as BlockFi Inc. and Genesis Global Capital, LLC. The SEC also brought charges against Genesis Global Capital, LLC and Gemini Trust Company, LLC on January 12, 2023, for their alleged unregistered offer and sale of securities to retail investors. In October 2023, the New York Attorney General brought charges against Gemini, Genesis Global Capital and numerous affiliates of Genesis Global Capital, and Digital Currency Group alleging violations of law relating to the Gemini Earn program. In May 2024, the Bankruptcy Court of the Southern District of New York approved a settlement of the charges with the Genesis entities.

These events resulted in calls for heightened scrutiny and regulation of the digital asset industry, with a specific focus on digital asset trading platforms, and custodians. For example, in June 2023, the SEC brought charges against Binance (the *"Binance Complaint"*) and Coinbase (the *"Coinbase Complaint"*), two of the largest digital asset trading platforms, alleging that they solicited U.S. investors to buy, sell, and trade "crypto asset securities" through their unregistered trading platforms and operated unregistered securities exchanges, brokerages and clearing agencies. Binance subsequently announced that it would be suspending USD deposits and withdrawals on Binance.US and that it plans to delist its USD trading pairs. In addition, in November 2023, the SEC brought similar charges against Kraken (the *"Kraken Complaint"*), alleging that it operated as an unregistered securities exchange, brokerage and clearing agency. The Binance Complaint, the Coinbase Complaint and the Kraken Complaint led to further volatility in digital asset prices. In January 2025, the SEC launched the Crypto Task Force dedicated to developing a comprehensive and clear regulatory framework for digital assets led by Commissioner Hester Peirce. Subsequently, Commissioner Peirce announced a list of specific priorities to further that initiative, which included pursuing final rules related to a digital asset's security status, a revised path to registered offerings and listings for digital asset-based investment vehicles, and clarity regarding digital asset custody, lending and staking. In February 2025, Coinbase and the SEC entered into a joint stipulation to dismiss the SEC's lawsuit with prejudice, subject to the court's approval. Kraken has also announced that it reached an agreement in principle with the SEC to dismiss the SEC's lawsuit, subject to formal approval by the SEC's Commissioners. In May 2025, the SEC voluntarily dismissed its lawsuit against Binance. Several other digital asset market participants have also announced that the SEC informed them that the SEC was terminating its investigation or enforcement action into their firm. The final outcome of these lawsuits (to the extent not yet dismissed), their effect on the broader digital asset ecosystem and the reputational impact on industry participants, remain uncertain.

A wide range of U.S. regulators, including the Federal Reserve Board, the SEC, the CFTC, FinCEN, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Bureau of Investigation, as well as the White House, have issued a growing number of reports and releases concerning digital assets and digital asset markets. In addition, the U.S. Congress has enacted and proposed a number of bills that will have significant impacts on the U.S. digital asset market. However, the extent and content of any forthcoming laws and regulations are not yet ascertainable with certainty, and it may not be ascertainable in the near future. It is possible that new laws and increased regulation and regulatory scrutiny may require the Fund to comply with certain regulatory regimes, which could result in new costs for the Fund. The Fund may have to devote increased time and attention to regulatory matters, which could increase costs to the Fund.

In 2025, Congress undertook significant legislative efforts to address the rapidly evolving landscape of digital assets and cryptocurrencies, culminating in the passage of a landmark bill: the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the *"GENIUS Act"*). This legislative action represents the first comprehensive federal framework for the regulation of stablecoins in the United States.

The GENIUS Act, signed into law in July 2025, establishes the first federal regulatory framework for the issuance and operation of payment stablecoins—digital assets designed to maintain a stable value relative to a fiat currency, such as the U.S. dollar. The GENIUS Act requires that all payment stablecoins be fully backed on a one-to-one basis by high-quality liquid assets, such as U.S. dollars or short-term U.S. Treasury securities, and subjects issuers to rigorous reserve, audit, and disclosure requirements. The GENIUS Act introduces a dual licensing regime, allowing stablecoin issuers to operate under either federal or state regulatory oversight, provided that state regimes are "substantially similar" to federal standards. Issuers with more than $10 billion in outstanding stablecoins must obtain a federal license. The GENIUS Act also imposes strict AML, sanctions compliance, and consumer protection obligations, including prioritizing stablecoin holders' claims in the event of issuer insolvency. Notably, the Act prohibits non-financial public companies from issuing stablecoins without special approval and restricts the payment of interest or yield on stablecoins.

In addition, the Digital Asset Market Clarity Act of 2025 (the *"CLARITY Act"*) was passed by the U.S. House of Representatives in July 2025. The CLARITY Act was designed to resolve longstanding regulatory uncertainty regarding the classification and oversight of digital assets. The CLARITY Act establishes a clear framework for distinguishing between digital assets that are securities, commodities, or payment stablecoins. It delineates the respective jurisdictions of the SEC and the CFTC, granting the CFTC exclusive authority over "digital commodities" and the SEC authority over "digital securities." The CLARITY Act also introduces criteria for determining when a digital asset is sufficiently decentralized to be treated as a commodity rather than a security. In addition, the CLARITY Act imposes registration requirements and operational standards for digital asset intermediaries, including exchanges, brokers, and dealers. It mandates consumer protection measures, anti-money laundering *("AML"*) and countering the financing of terrorism (*"CFT"*) compliance, and enhanced disclosure obligations. The Act aims to foster innovation while providing market participants with greater regulatory certainty and aligning U.S. policy with emerging international standards. Similar market structure legislation is currently under consideration by the U.S. Senate but there is no certainty whether the legislation will be enacted in 2026 or what form final legislation will take.

These legislative efforts were accompanied by additional measures, such as the Anti-CBDC Surveillance State Act, which prohibits the Federal Reserve from issuing a retail central bank digital currency without congressional authorization. While the GENIUS Act represents significant progress toward a comprehensive regulatory regime for digital assets, substantial uncertainty remains regarding the implementation and interpretation of this new law. The effectiveness of this framework, and the framework proposed under the CLARITY Act, if passed by Congress, will depend on subsequent rulemaking by federal and state regulators, interagency coordination, and the evolving approach to enforcement. Market participants may face transitional risks as regulatory standards are developed and applied, and there is potential for further legislative or regulatory changes as the digital asset ecosystem continues to evolve.

These events are continuing to develop at a rapid pace and it is not possible to predict at this time all of the risks that they may pose to the Fund, the Fund's third-party service providers, or to the digital asset industry as a whole. Continued disruption and instability in the digital asset markets as these events develop, including further declines in the trading prices and liquidity of the digital assets tracked by the Index, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.

**Non-U.S. Securities Risk.** Securities issued by non-U.S. companies present risks beyond those of securities of U.S. issuers. Risks of investing in the securities of non-U.S. companies include: different accounting standards; expropriation, nationalization or other adverse political or economic developments; currency devaluation, blockages or transfer restrictions; changes in foreign currency exchange rates; taxes; restrictions on non-U.S. investments and exchange of securities; and less government supervision and regulation of issuers in non-U.S. countries. Prices of non-U.S. securities also may be more volatile.

**Depositary Receipts Risk.** Depositary receipts may be less liquid than the underlying shares in their primary trading market. Any distributions paid to the holders of depositary receipts are usually subject to a fee charged by the depositary. Holders of depositary receipts may have limited voting rights, and investment restrictions in certain countries may adversely impact the value of depositary receipts because such restrictions may limit the ability to convert the equity shares into depositary receipts and vice versa. Such restrictions may cause the equity shares of the underlying issuer to trade at a discount or premium to the market price of the depositary receipts.

**Emerging Markets Risk.** Investments in securities issued by governments and companies operating in emerging market countries involve additional risks relating to political, economic, or regulatory conditions not associated with investments in securities and instruments issued by U.S. companies or by companies operating in other developed market countries. This is due to, among other things, the potential for greater market volatility, lower trading volume, a lack of liquidity, potential for market manipulation, higher levels of inflation, political and economic instability, greater risk of a market shutdown and more governmental limitations on foreign investments in emerging market countries than are typically found in more developed market countries. Moreover, emerging market countries often have less uniformity in accounting and reporting requirements, unsettled securities laws, less reliable securities valuations and greater risks associated with custody of securities than developed markets. In addition, the Public Company Accounting Oversight Board, which regulates auditors of U.S. public companies, is unable to inspect audit work papers in certain emerging market countries. Emerging market countries often have greater risk of capital controls through such measures as taxes or interest rate control than developed markets. Certain emerging market countries may also lack the infrastructure necessary to attract large amounts of foreign trade and investment. Local securities markets in emerging market countries may trade a small number of securities and may be unable to respond effectively to increases in trading volume, potentially making prompt liquidation of holdings difficult or impossible. Settlement procedures in emerging market countries are frequently less developed and reliable than those in the U.S. and other developed market countries. In addition, significant delays may occur in registering the transfer of securities. Settlement or registration problems may make it more difficult for the Fund to value its portfolio securities and could cause the Fund to miss attractive investment opportunities. Investing in emerging market countries involves a higher risk of expropriation, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested by certain emerging market countries. Enforcing legal rights may be made difficult, costly and slow in emerging markets as there may be additional problems enforcing claims against non-U.S. governments. As such, the rights and remedies associated with emerging market investment securities may be different than those available for investments in more developed markets. For example, it may be more difficult for shareholders to bring derivative litigation or for U.S. regulators to bring enforcement actions against issuers in emerging markets. In addition, due to the differences in regulatory, accounting, audit and financial recordkeeping standards, including financial disclosures, less information about emerging market companies is publicly available and information that is available may be unreliable or outdated.

**Currency Risk.** Changes in currency exchange rates affect the value of investments denominated in a foreign currency, the value of dividends and interest earned from such securities and gains and losses realized on the sale of such securities. The Fund's net asset value could decline if a currency to which the Fund has exposure depreciates against the U.S. dollar or if there are delays or limits on repatriation of such currency. Currency exchange rates can be very volatile and can change quickly and unpredictably. Changes in currency exchange rates may affect the Fund's net asset value, the value of dividends and interest earned, and gains and losses realized on the sale of securities. An increase in the strength of the U.S. dollar relative to other currencies may cause the value of the Fund to decline. Certain non-U.S. currencies may be particularly volatile, and non-U.S. governments may intervene in the currency markets, causing a decline in value or liquidity in the Fund's non-U.S. holdings whose value is tied to the affected non-U.S. currency. Additionally, the prices of non-U.S. securities that are traded in U.S. dollars are often indirectly influenced by current fluctuations.

**Active Management Risk.** The Fund is actively managed and its performance reflects the application of investment techniques and risk analyses in the investment decisions that the Sub-Adviser and Adviser make for the Fund. Such judgments about the Fund's investments may prove to be incorrect. If the investments selected and the strategies employed by the Fund fail to produce the intended results, the Fund could underperform as compared to other funds with similar investment objectives and/or strategies, or could have negative returns.

**Active Market Risk.** Although the Shares are listed for trading on the Exchange, there can be no assurance that an active trading market for the Shares will develop or be maintained. Shares trade on the Exchange at market prices that may be below, at or above the Fund's net asset value. Securities, including the Shares, are subject to market fluctuations and liquidity constraints that may be caused by such factors as economic, political, or regulatory developments, changes in interest rates, and/or perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments.

**Asset Concentration Risk.** Since the Fund may take concentrated positions in certain securities, the Fund's performance may be hurt disproportionately and significantly by the poor performance of those positions to which it has significant exposure. Asset concentration makes the Fund more susceptible to any single occurrence affecting the underlying positions and may subject the Fund to greater market risk than more diversified funds.

**Authorized Participant Concentration Risk.** Only an authorized participant may engage in creation or redemption transactions directly with the Fund. The Fund has a limited number of institutions that act as authorized participants on an agency basis (*i.e.* on behalf of other market participants). To the extent that these institutions exit the business or are unable to proceed with creation and/or redemption orders with respect to the Fund and no other authorized participant is able to step forward to create or redeem, in either of these cases, Shares may trade at a discount to the Fund's net asset value and possibly face delisting.

**Cyber Security Risk.** The Fund is susceptible to operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund's digital information systems through "hacking" or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition, cyber security breaches of the Fund's third-party service providers, such as its administrator, transfer agent, custodian, or sub-adviser, as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. While the Fund has established business continuity plans and risk management systems designed to reduce the risks associated with cyber security, there are inherent limitations in such plans and systems. Additionally, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third-party service providers.

**Inflation Risk.** Inflation may reduce the intrinsic value of increases in the value of the Fund. Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Fund's assets can decline as can the value of the Fund's distributions.

**Market Maker Risk.** If the Fund has lower average daily trading volumes, it may rely on a small number of third-party market makers to provide a market for the purchase and sale of Shares. Any trading halt or other problem relating to the trading activity of these market makers could result in a dramatic change in the spread between the Fund's net asset value and the price at which the Shares are trading on the Exchange, which could result in a decrease in value of the Shares. In addition, decisions by market makers or authorized participants to reduce their role or step away from these activities in times of market stress could inhibit the effectiveness of the arbitrage process in maintaining the relationship between the underlying values of the Fund's portfolio securities and the Fund's market price. This reduced effectiveness could result in Shares trading at a discount to net asset value and also in greater than normal intra-day bid-ask spreads for Shares.

**Non-Diversification Risk.** The Fund is classified as "non-diversified" under the 1940 Act. As a result, the Fund is only limited as to the percentage of its assets which may be invested in the securities of any one issuer by the diversification requirements imposed by the Code. The Fund may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the Fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly invested in certain issuers.

**Operational Risk.** The Fund is exposed to operational risks arising from a number of factors, including, but not limited to, human error, processing and communication errors, errors of the Fund's service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. The Fund, Adviser and Sub-Adviser seek to reduce these operational risks through controls and procedures. However, these measures do not address every possible risk and may be inadequate to address these risks.

**Premium/Discount Risk.** The market price of the Fund's Shares will generally fluctuate in accordance with changes in the Fund's net asset value as well as the relative supply of and demand for Shares on the Exchange. The Fund's market price may deviate from the value of the Fund's underlying portfolio holdings, particularly in time of market stress, with the result that investors may pay more or receive less than the underlying value of the Fund shares bought or sold. The Adviser and Sub-Adviser cannot predict whether Shares will trade below, at or above their net asset value because the Shares trade on the Exchange at market prices and not at net asset value. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for Shares will be closely related, but not identical, to the same forces influencing the prices of the holdings of the Fund trading individually or in the aggregate at any point in time. However, given that Shares can only be purchased and redeemed in Creation Units, and only to and from broker-dealers and large institutional investors that have entered into participation agreements (unlike shares of closed-end funds, which frequently trade at appreciable discounts from, and sometimes at premiums to, their net asset value), the Adviser and Sub-Adviser believe that large discounts or premiums to the net asset value of Shares should not be sustained. During stressed market conditions, the market for the Fund's Shares may become less liquid in response to deteriorating liquidity in the market for the Fund's underlying portfolio holdings, which could in turn lead to differences between the market price of the Fund's Shares and their net asset value. This can be reflected as a spread between the bid and ask prices for the Fund quoted during the day or a premium or discount in the closing price from the Fund's net asset value.

**Small Fund Risk.** The Fund currently has fewer assets than larger funds, and like other smaller funds, large inflows and outflows may impact the Fund's market exposure for limited periods of time. This impact may be positive or negative, depending on the direction of market movement during the period affected. If the Fund fails to attract a large amount of assets, shareholders of the Fund may incur higher expenses as the Fund's fixed costs would be allocated over a smaller number of shareholders. Failure to grow and large outflows may be factors the Board considers in any determination to cease the Fund's operations and dissolve.

**Tax Risk.** The Fund intends to elect and to qualify each year to be treated as a RIC under Subchapter M of the Code. As a RIC, the Fund will not be subject to U.S. federal income tax on the portion of its net investment income and net capital gain that it distributes to shareholders, provided that it satisfies certain requirements of the Code. If the Fund does not qualify as a RIC for any taxable year and certain relief provisions are not available, the Fund's taxable income will be subject to tax at the Fund level and to a further tax at the shareholder level when such income is distributed. Additionally, buying securities shortly before the record date for a taxable dividend or capital gain distribution is commonly known as "buying the dividend." In the event a shareholder purchases Shares shortly before such a distribution, the entire distribution may be taxable to the shareholder even though a portion of the distribution effectively represents a return of the purchase price.

**Trading Issues Risk.** Trading in Fund Shares on the Exchange may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in Shares inadvisable. In addition, trading in Fund Shares on the Exchange is subject to trading halts caused by extraordinary market volatility pursuant to the Exchange's "circuit breaker" rules. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of the Fund will continue to be met or will remain unchanged. The Fund may have difficulty maintaining its listing on the Exchange in the event the Fund's assets are small, the Fund does not have enough shareholders, or if the Fund is unable to proceed with creation and/or redemption orders.

**Volatility Risk.** Volatility is the characteristic of a security, an index or a market to fluctuate significantly in price within a short time period. The Fund may invest in securities that exhibit more volatility than the market as a whole. Such exposures could cause the Fund's net asset value to experience significant increases or declines in value over short periods of time. Volatility can be caused by many factors, including changes in the economy or financial markets or for reasons specific to a particular issuer.

**<u>Non-Principal Risks</u>**

**Legislation and Litigation Risk.** Legislation or litigation that affects the value of securities held by the Fund may reduce the value of the Fund. From time to time, various legislative initiatives are proposed that may have a negative impact on certain securities in which the Fund invests. In addition, litigation regarding any of the securities owned by the Fund may negatively impact the value of the Shares. Such legislation or litigation may cause the Fund to lose value or may result in higher portfolio turnover if the Adviser determines to sell such a holding.

**Management of the Fund**

The Fund is a series of Valkyrie ETF Trust II, an investment company registered under the 1940 Act. The Fund is treated as a separate fund with its own investment objectives and policies. The Trust is organized as a Delaware statutory trust. The Board is responsible for the overall management and direction of the Trust. The Board elects the Trust's officers and approves all significant agreements, including those with the Adviser, custodian and fund administrative and accounting agent.

Investment Adviser

Valkyrie Funds LLC, 437 Madison Avenue, 28th Floor, New York, NY 10022, serves as the Fund's investment adviser pursuant to an investment management agreement (the *"Investment Advisory Agreement"*). In its capacity as Adviser, Valkyrie manages the Fund's investments subject to the supervision of the Board. The Adviser also arranges for sub-advisory, transfer agency, custody, fund administration, distribution and all other services necessary for the Fund to operate. Further, the Adviser continuously reviews, supervises, and administers the Fund's investment program. In particular, the Adviser provides investment and operational oversight of the Sub-Adviser.

Investment Sub-Adviser

Vident Advisory, LLC (d/b/a Vident Asset Management), 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009, serves as the Fund's investment sub-adviser pursuant to an investment sub-advisory agreement (*"Investment Sub-Advisory Agreement"*). In this capacity, Vident is responsible for trading portfolio securities for the Fund, including selecting broker-dealers to execute purchase and sale transactions or in connection with any rebalancing, subject to the supervision of the Adviser and the Board. For its services, the Sub-Adviser is entitled to a fee paid by the Adviser. The Fund does not directly compensate the Sub-Adviser. The Sub-Adviser offers both high net worth individuals and institutional clients portfolio management services in a variety of alternative investment offerings, and is a registered investment adviser. As of December 31, 2025, the Sub-Adviser had approximately $21.2 billion in assets under management.

Portfolio Managers

*Rafael Zayas, CFA, Senior Vice President and Head of Portfolio Management and Trading of Vident.* Mr. Zayas has over 15 years of trading and portfolio management experience in global equity products and ETFs. He is SVP, Head of Portfolio Management and Trading, specializing in managing and trading of developed, emerging, and frontier market portfolios. Prior to joining Vident, he was a Portfolio Manager at Russell Investments where he oversaw over $5 billion in quantitative strategies across global markets, including emerging, developed and frontier markets and listed alternatives. Before that, he was an equity Portfolio Manager at BNY Mellon Asset Management, where he was responsible for $150 million in internationally listed global equity ETFs and assisted in managing $3 billion of global ETF assets. Mr. Zayas holds a BS in Electrical Engineering from Cornell University. He also holds the Chartered Financial Analyst designation.

*Bill Cannon, Head of ETF Portfolio Management at Valkyrie*. Prior to joining Valkyrie, Bill was a Managing Director at Guggenheim Partners Investment Management, where he was member of the insurance portfolio management division responsible for $80 billion of assets under management. Before that, Mr. Cannon worked at the Chicago Mercantile Exchange and the Chicago Board Of Options Exchange as a derivatives broker for equity index and interest rate futures and options. Mr. Cannon earned a BA in Chemistry from the University of Vermont and an MBA from the Quinlan School of Business at Loyola University Chicago.

*Austin Wen, CFA, Portfolio Manager at Vident.* Mr. Wen has eight years of investment management experience. He joined Vident in 2014 and is a Portfolio Manager, specializing in portfolio management and trading of equity portfolios and commodities-based portfolios, as well as risk monitoring and investment analysis. Mr. Wen obtained a BA in Finance from the University of Georgia and holds the Chartered Financial Analyst designation.

For additional information concerning Valkyrie, including a description of the services provided to the Fund, please see the Fund's statement of additional information. Additional information regarding the portfolio managers' compensation, other accounts managed by the portfolio managers and the portfolio managers' ownership of Shares may also be found in the statement of additional information.

Management Fee

Pursuant to the Investment Management Agreement between Valkyrie and the Trust, on behalf of the Fund, Valkyrie oversees Vident's management of the Fund's assets and pays Vident for its services as Sub-Adviser. Valkyrie is paid an annual management fee of 0.75% of the Fund's average daily net assets and is responsible for the Fund's expenses, including the cost of transfer agency, custody, fund administration, audit and other services, but excluding fee payments under the Investment Management Agreement, interest, taxes, legal expenses, acquired fund fees and expenses, if any, brokerage commission and other expenses connected with the execution of portfolio transactions, distribution and service fees pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses.

A discussion regarding the basis for the Board's approval of the Investment Advisory Agreement and Investment Sub-Advisory Agreement on behalf of the Fund is available in the Fund's Annual Report to shareholders for the period ended September 30, 2025.

&nbsp;&nbsp;**How to Buy and Sell Shares**

The Fund will issue or redeem its Shares at net asset value per Share only in Creation Units. Most investors will buy and sell Shares in secondary market transactions through brokers. Shares will be listed for trading on the secondary market on the Exchange. Shares can be bought and sold throughout the trading day like other publicly traded shares. Share prices are reported in dollars and cents per Share. There is no minimum investment. When buying or selling Shares through a broker, you will incur customary brokerage commissions and charges, and you may pay some or all of the spread between the bid and the offered price in the secondary market on each leg of a round trip (purchase and sale) transaction. Because Shares trade at market price rather than net asset value, an investor may pay more than net asset value when purchasing Shares and receive less than net asset value when selling Shares.

APs may acquire Shares directly from the Fund, and APs may tender their Shares for redemption directly to the Fund, at net asset value per Share only in Creation Units or Creation Unit Aggregations, and in accordance with the procedures described in the SAI.

Book Entry

Shares are held in book-entry form, which means that no stock certificates are issued. The Depository Trust Company (*"DTC"*) or its nominee is the record owner of all outstanding Shares and is recognized as the owner of all Shares for all purposes.

Investors owning Shares are beneficial owners as shown on the records of DTC or its participants. DTC serves as the securities depository for all Shares. Participants in DTC include securities brokers and dealers, banks, trust companies, clearing corporations and other institutions that directly or indirectly maintain a custodial relationship with DTC. As a beneficial owner of Shares, you are not entitled to receive physical delivery of stock certificates or to have Shares registered in your name, and you are not considered a registered owner of Shares. Therefore, to exercise any right as an owner of Shares, you must rely upon the procedures of DTC and its participants. These procedures are the same as those that apply to any other stocks that you hold in book entry or "street name" form.

Share Trading Prices

The trading prices of Shares on the Exchange may differ from the Fund's daily net asset value. Market forces of supply and demand, economic conditions and other factors may affect the trading prices of Shares.

The approximate value of Shares, an amount representing on a per Share basis the sum of the current market price of the securities held by the Fund, will be disseminated every 15 seconds throughout the trading day through the facilities of the Consolidated Tape Association. This approximate value should not be viewed as a "real-time" update of the net asset value per Share of the Fund because the approximate value may not be calculated in the same manner as the net asset value, which is computed once a day, generally at the end of the business day. The Fund is not involved in, or responsible for, the calculation or dissemination of the approximate value and the Fund does not make any warranty as to its accuracy.

Frequent Purchases and Redemptions of Shares

Shares may be purchased and redeemed directly from the Fund only in Creation Units by APs that have entered into agreements with the Fund's distributor. The vast majority of trading in Shares occurs on the secondary market and does not involve the Fund directly. Cash trades on the secondary market are unlikely to cause many of the harmful effects of frequent purchases and/or redemptions of Shares. Cash purchases and/or redemptions of Creation Units, however, can result in disruption of portfolio management, dilution to the Fund and increased transaction costs, which could negatively impact the Fund's ability to achieve its investment objectives, and may lead to the realization of capital gains. These consequences may increase as the frequency of cash purchases and redemptions of Creation Units by APs increases. However, direct trading by APs is critical to ensuring that Shares trade at or close to net asset value.

To minimize these potential consequences of frequent purchases and redemptions of Shares, the Fund imposes transaction fees on purchases and redemptions of Creation Units to cover the custodial and other costs the Fund incurs in effecting trades. For these reasons, the Board has not adopted policies and procedures with respect to frequent purchases and redemptions of Shares.

**Dividends, Distributions and Taxes**

Ordinarily, dividends from net investment income, if any, are declared and paid at least annually by the Fund. The Fund distributes its net realized capital gains, if any, to shareholders annually.

Distributions in cash may be reinvested automatically in additional whole Shares only if the broker through whom you purchased Shares makes such option available.

Taxes

This section summarizes some of the main U.S. federal income tax consequences of owning shares of the Fund. This section is current as of the date of this prospectus. Tax laws and interpretations change frequently, and these summaries do not describe all of the tax consequences to all taxpayers. For example, these summaries generally do not describe your situation if you are a corporation, a non-U.S. person, a broker-dealer, or other investor with special circumstances. In addition, this section does not describe your state, local or non-U.S. tax consequences.

This federal income tax summary is based in part on the advice of counsel to the Fund. The Internal Revenue Service could disagree with any conclusions set forth in this section. In addition, counsel to the Fund was not asked to review, and has not reached a conclusion with respect to, the federal income tax treatment of the assets to be included in the Fund. This may not be sufficient for you to use as the purpose of avoiding penalties under federal tax law.

As with any investment, you should seek advice based on your individual circumstances from your own tax adviser.

The Fund intends to continue to qualify as a "regulated investment company" under the federal tax laws. If the Fund qualifies as a regulated investment company and distributes its income as required by the tax law, the Fund generally will not pay federal income taxes.

As with any investment, you should consider how your investment in Shares will be taxed. The tax information in this prospectus is provided as general information. You should consult your own tax professional about the tax consequences of an investment in Shares.

Unless your investment in Shares is made through a tax-exempt entity or tax-deferred retirement account, such as an IRA plan, you need to be aware of the possible tax consequences when:

● Your Fund makes distributions,

● You sell your Shares listed on the Exchange, and

● You purchase or redeem Creation Units.

Taxes on Distributions

The Fund's distributions are generally taxable. After the end of each year, you will receive a tax statement that separates the distributions of the Fund into two categories, ordinary income distributions and capital gain dividends. Ordinary income distributions are generally taxed at your ordinary tax rate; however, as further discussed below, certain ordinary income distributions received from the Fund may be taxed at the capital gains tax rates. Generally, you will treat all capital gain dividends as long-term capital gains regardless of how long you have owned your Shares. To determine your actual tax liability for your capital gain dividends, you must calculate your total net capital gain or loss for the tax year after considering all of your other taxable transactions, as described below. In addition, the Fund may make distributions that represent a return of capital for tax purposes and thus will generally not be taxable to you; however, such distributions may reduce your tax basis in your Shares, which could result in you having to pay higher taxes in the future when Shares are sold, even if you sell the Shares at a loss from your original investment. The tax status of your distributions from the Fund is not affected by whether you reinvest your distributions in additional Shares or receive them in cash. The income from the Fund that you must take into account for federal income tax purposes is not reduced by amounts used to pay a deferred sales fee, if any. The tax laws may require you to treat distributions made to you in January as if you had received them on December 31 of the previous year.

Income from the Fund may also be subject to a 3.8% "Medicare tax." This tax generally applies to your net investment income if your adjusted gross income exceeds certain threshold amounts, which are $250,000 in the case of married couples filing joint returns and $200,000 in the case of single individuals.

A corporation that owns Shares generally will not be entitled to the dividends received deduction with respect to many dividends received from the Fund because the dividends received deduction is generally not available for distributions from regulated investment companies.

If you are an individual, the maximum marginal stated federal tax rate for net capital gain is generally 20% (15% or 0% for taxpayers with taxable incomes below certain thresholds). Capital gains may also be subject to the Medicare tax described above.

Net capital gain equals net long-term capital gain minus net short-term capital loss for the taxable year. Capital gain or loss is long-term if the holding period for the asset is more than one year and is short-term if the holding period for the asset is one year or less. You must exclude the date you purchase your Shares to determine your holding period. However, if you receive a capital gain dividend from the Fund and sell your Shares at a loss after holding it for six months or less, the loss will be recharacterized as long-term capital loss to the extent of the capital gain dividend received. The tax rates for capital gains realized from assets held for one year or less are generally the same as for ordinary income. The Code treats certain capital gains as ordinary income in special situations.

An election may be available to Shareholders to defer recognition of the gain attributable to a capital gain dividend if they make certain qualifying investments within a limited time. Shareholders should talk to their tax adviser about the availability of this deferral election and its requirements.

Ordinary income dividends received by an individual shareholder from a regulated investment company such as the Fund are generally taxed at the same rates that apply to net capital gain (as discussed above), provided certain holding period requirements are satisfied and provided the dividends are attributable to qualifying dividends received by the Fund itself. The Fund will provide notice to its shareholders of the amount of any distribution which may be taken into account as a dividend which is eligible for the capital gains tax rates.

Taxes on Exchange Listed Shares

If you sell or redeem your Shares, you will generally recognize a taxable gain or loss. To determine the amount of this gain or loss, you must subtract your tax basis in your Shares from the amount you receive in the transaction. Your tax basis in your Shares is generally equal to the cost of your Shares, generally including sales charges. In some cases, however, you may have to adjust your tax basis after you purchase your Shares.

Taxes and Purchases and Redemptions of Creation Units

If you exchange securities for Creation Units you will generally recognize a gain or a loss. The gain or loss will be equal to the difference between the market value of the Creation Units at the time and your aggregate basis in the securities surrendered and the cash component paid. If you exchange Creation Units for securities, you will generally recognize a gain or loss equal to the difference between your basis in the Creation Units and the aggregate market value of the securities received and any cash redemption amount. The Internal Revenue Service, however, may assert that a loss realized upon an exchange of securities for Creation Units or Creation Units for securities cannot be deducted currently under the rules governing "wash sales," or on the basis that there has been no significant change in economic position.

**T** **reatment of Fund Expenses**

Expenses incurred and deducted by the Fund will generally not be treated as income taxable to you. In some cases, however, you may be required to treat your portion of these Fund expenses as income. You may not be able to take a deduction for some or all of these expenses, even if the cash you receive is reduced by such expenses.

**B** **ackup Withholding**

The Fund may be required to withhold U.S. federal income tax (*"backup withholding"*) from dividends and capital gains distributions paid to Shareholders. Federal tax will be withheld if (1) the Shareholder fails to furnish the Fund with the Shareholder's correct taxpayer identification number or social security number, (2) the IRS notifies the Shareholder or the Fund that the shareholder has failed to report properly certain interest and dividend income to the IRS and to respond to notices to that effect, or (3) when required to do so, the Shareholder fails to certify to the Fund that he or she is not subject to backup withholding. The current backup withholding rate is 24%. Any amounts withheld under the backup withholding rules may be credited against the Shareholder's U.S. federal income tax liability.

**N** **on-U.S. Investors**

If you are a non-U.S. investor (*i.e.*, an investor other than a U.S. citizen or resident or a U.S. corporation, partnership, estate or trust), you should be aware that, generally, subject to applicable tax treaties, distributions from the Fund will generally be characterized as dividends for U.S. federal income tax purposes (other than dividends which the Fund properly reports as capital gain dividends) and will be subject to U.S. federal income taxes, including withholding taxes, subject to certain exceptions described below.

However, distributions received by a non-U.S. investor from the Fund that are properly reported by the Fund as capital gain dividends may not be subject to U.S. federal income taxes, including withholding taxes, provided that the Fund makes certain elections and certain other conditions are met. Distributions from the Fund that are properly reported by the Fund as an interest-related dividend attributable to certain interest income received by the Fund or as a short-term capital gain dividend attributable to certain net short-term capital gain income received by the Fund may not be subject to U.S. federal income taxes, including withholding taxes when received by certain non-U.S. investors, provided that the Fund makes certain elections and certain other conditions are met.

Distributions to, and gross proceeds from dispositions of Shares by, (i) certain non-U.S. financial institutions that have not entered into an agreement with the U.S. Treasury to collect and disclose certain information and are not resident in a jurisdiction that has entered into such an agreement with the U.S. Treasury and (ii) certain other non-U.S. entities that do not provide certain certifications and information about the entity's U.S. owners may be subject to a U.S. withholding tax of 30%. However, proposed regulations may eliminate the requirement to withhold on payments of gross proceeds from dispositions.

The foregoing discussion summarizes some of the possible consequences under current federal tax law of an investment in the Fund. It is not a substitute for personal tax advice. You also may be subject to state and local taxes on Fund distributions and sales of Shares.

Consult your personal tax adviser about the potential tax consequences of an investment in Shares under all applicable tax laws. See "Distributions and Taxes" in the statement of additional information for more information.

**Distributor**

ALPS Distributors, Inc. (the *"Distributor*") serves as the distributor of Creation Units for the Fund on an agency basis. The Distributor does not maintain a secondary market in Shares.

**Net Asset Value**

The Fund's net asset value is determined as of the close of trading (normally 4:00 p.m., Eastern time) on each day the New York Stock Exchange is open for business. Net asset value is calculated for the Fund by taking the market price of the Fund's total assets, including interest or dividends accrued but not yet collected, less all liabilities, and dividing such amount by the total number of Shares outstanding. The result, rounded to the nearest cent, is the net asset value per Share. The Board of Trustees has designated the Adviser as "valuation designee" to perform fair value determinations for all of the Funds' investments pursuant to Rule 2a-5 under the 1940 Act.

The Fund's investments are valued daily in accordance with valuation procedures adopted by the Board, and in accordance with provisions of the 1940 Act. The Board of Trustees will oversee the Adviser's fair value determinations and its performance as valuation designee. Certain securities in which the Fund may invest are not listed on any securities exchange or board of trade. Such securities are typically bought and sold by institutional investors in individually negotiated private transactions that function in many respects like an over-the-counter secondary market, although typically no formal market makers exist. Certain securities, particularly debt securities, have few or no trades, or trade infrequently, and information regarding a specific security may not be widely available or may be incomplete. Accordingly, determinations of the fair value of debt securities may be based on infrequent and dated information. Because there is less reliable, objective data available, elements of judgment may play a greater role in valuation of debt securities than for other types of securities. As explained below, any fair value determination will be made in accordance with Valkyrie's "Valuation Procedures." Typically, debt securities are valued using information provided by a third-party pricing service. The third-party pricing service primarily uses broker quotes to value the securities.

The Fund's investments will be valued daily at market value or, in the absence of market value with respect to any securities, at fair value in accordance with valuation procedures adopted by the Board and in accordance with the 1940 Act. Market value prices represent last sale or official closing prices from a national or foreign exchange (*i.e.*, a regulated market) and are primarily obtained from third-party pricing services.

Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by Valkyrie (subject to the supervision of the Board) at fair value. The use of fair value pricing by the Fund is governed by valuation procedures adopted by Valkyrie and approved by, and subject to the oversight of, the Board and in accordance with the provisions of the 1940 Act. Investments will be fair valued as determined in good faith in accordance with the policies and procedures established by Valkyrie as Valuation Designee pursuant to Rule 2a-5. These securities generally include, but are not limited to, certain restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended (the "Securities Act")) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of the Fund's net asset value or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, does not reflect the security's "fair value." As a general principle, the current "fair value" of a security would appear to be the amount which the owner might reasonably expect to receive for the security upon its current sale. The use of fair value prices by the Fund generally results in the prices used by the Fund that may differ from current market quotations or official closing prices on the applicable exchange. A variety of factors may be considered in determining the fair value of such securities. Valuing the Fund's securities using fair value pricing will result in using prices for those securities that may differ from current market valuations.

Even when market quotations are available for portfolio securities, they may be stale or unreliable because the security is not traded frequently, trading on the security ceased before the close of the trading market or issuer-specific events occurred after the security ceased trading or because of the passage of time between the close of the market on which the security trades and the close of the Exchange and when the Fund calculates its net asset value. Events that may cause the last market quotation to be unreliable include a merger or insolvency, events which affect a geographical area or an industry segment, such as political events or natural disasters, or market events, such as a significant movement in the U.S. market. Where market quotations are not readily available, including where the Adviser determines that the closing price of the security is unreliable, the Adviser will value the security at fair value in good faith using procedures approved by the Board. Fair value pricing involves subjective judgments and it is possible that a fair value determination for a security is materially different than the value that could be realized upon the sale of the security.

For more information about how the Fund's net asset value is determined, please see the section in the statement of information entitled "Determination of Net Asset Value."

**Fund Service Providers**

U.S. Bancorp Fund Services LLC is the administrator and transfer agent for the Trust. U.S. Bank, N.A. serves as the custodian for the Trust.

Chapman and Cutler LLP, 320 South Canal Street, Chicago, Illinois 60606, serves as legal counsel to the Trust.

Cohen & Company, Ltd., 342 North Water Street, Suite 830, Milwaukee, Wisconsin 53202, serves as the Fund's independent registered public accounting firm and is responsible for auditing the annual financial statements of the Fund.

**Financial Highlights**

The financial highlights table is intended to help you understand the Fund's financial performance for the fiscal year ended September 30, 2025. Certain information reflects financial results for a single share of the Fund. The total return in the table represents the rate that an investor would have earned (or lost) or an investment in the Fund (assuming reinvestment of all dividends and distributions). The information for the fiscal year ended September 30, 2025 has been derived from the Fund's financial statements, which have been audited by Cohen & Company, Ltd., the Fund's independent registered public accounting firm, whose report, along with this information and additional Fund performance and portfolio information appears in the Fund's N-CSR dated September 30, 2025.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **CoinShares Bitcoin Mining ETF**<br> **(*formerly*, CoinShares Valkyrie Bitcoin Miners ETF)**<br> For a Share Outstanding Throughout Each Period | | | | |
| **Consolidated Financial Highlights**<br>**Per Share Data:** |<br>**Year Ended<br> September 30,<br> 2025** |<br>**Year Ended<br> September 30,<br> 2024** |<br>**Year Ended<br> September 30,<br> 2023** |<br>**For the Period**<br> **February 7,**<br> **2022<sup>(1)</sup>**<br> **Through**<br> **September 30,**<br> **2022** |
| **Net Asset Value, Beginning of Period** | $18.96 | $9.32 | $8.55 | $26.18 |
| **Income from Investment Operations:** |  |  |  |  |
| Net Investment Loss<sup>(2)</sup> | (0.16) | (0.13) | (0.08) | (0.06) |
| Net Realized and Unrealized Gain/(Loss) on Investments | 25.49 | 9.83 | 0.85<sup>(6)</sup> | (17.57) |
| &nbsp;&nbsp;&nbsp;Total from Investment Operations | 25.33 | 9.70 | 0.77 | (17.63) |
| **Less Distributions:** |  |  |  |  |
| Dividends from Net Investment Income | (0.05) | (0.06) |  |  |
| &nbsp;&nbsp;&nbsp;Total Distributions | (0.05) | (0.06) |  |  |
| **Net Asset Value, End of Period** | $44.24 | $18.96 | $9.32 | $8.55 |
| Total Return at NAV | 133.72% | 104.03% | 9.04% | (67.33)%<sup>(3)</sup> |
| **Supplemental Data and Ratios:** |  |  |  |  |
| Net Assets, End of Period (Thousands) | $259897 | $128960 | $13754 | $2779 |
| Ratio of Expenses to Average Net Assets | 0.75% | 0.75% | 0.75% | 0.75%<sup>(4)</sup> |
| Ratio of Net Investment Loss to Average Net Assets | (0.74)% | (0.74)% | (0.70)% | (0.57)%<sup>(4)</sup> |
| Portfolio Turnover Rate<sup>(5)</sup> | 40% | 45% | 74% | 37%<sup>(3)</sup> |

---

(1) Commencement
 of operations.

(2) Based
 on average shares outstanding.

(3) Not
 annualized.

(4) Annualized.

(5) Excludes
 impact of in-kind transactions.

(6) As
 required by the SEC standard per share data calculation methodology, this represents
 a balancing figure derived from the other amounts in the financial highlights tables
 that captures all other changes affecting net asset value per share. This per share gain
 amount does not correlate to the aggregate of the net realized and unrealized loss in
 the Statement of Operations, primarily due to the
 timing of sales and repurchases of the Fund's shares in relation to fluctuating
 market values of the Fund's portfolio.

**Premium/Discount Information**

The market prices of the Shares generally will fluctuate in accordance with changes in net asset value, as well as the relative supply of and demand for Shares on the Exchange. Valkyrie cannot predict whether the Shares will trade below, at or above their net asset value. The approximate value of the Shares, which is an amount representing on a per Share basis the sum of the current market price of the securities held by the Fund, will be disseminated every 15 seconds throughout the trading day through the facilities of the Consolidated Tape Association. This approximate value should not be viewed as a "real-time" update of the net asset value per Share of the Fund because the approximate value may not be calculated in the same manner as the net asset value, which is computed once a day, generally at the end of the business day. The Fund is not involved with, or responsible for, the calculation or dissemination of the approximate value, and the Fund does not make any warranty as to its accuracy.

Information showing the number of days the market price of the Fund's Shares was greater (at a premium) and less (at a discount) than the Fund's net asset value for the most recently completed calendar year, and the most recently completed calendar quarters since that year (or the life of the Fund, if shorter), is available at https://coinshares.com/us/etf/wgmi/.

**Investments by Other Investment Companies**

Section 12(d)(1) of the 1940 Act restricts investments by investment companies in the securities of other investment companies. Registered investment companies are permitted to invest in the Fund beyond the limits set forth in Section 12(d)(1), subject to certain SEC rules, including Rule 12d1-4. Rule 12d1-4 allows, subject to certain conditions, the Fund to invest in other registered investment companies and other registered investment companies to invest in the Fund beyond the limits contained in Section 12(d)(1) of the 1940 Act. In order for a registered investment company to invest in shares of the Fund beyond the limitations of Section 12(d)(1), the registered investment company must enter into an agreement with the Trust and comply with certain terms and conditions set forth in Rule 12d1-4.

![](coinshares485bpos001.jpg)

**C** **oinShares Bitcoin Mining ETF**

For more detailed information on the Fund, several additional sources of information are available to you. The Statement of Additional Information, incorporated by reference into this Prospectus, contains detailed information on the Fund's policies and operation. Additional information about the Fund's investments is available in the annual and semi-annual reports to shareholders. In the Fund's annual reports, you will find a discussion of the market conditions and investment strategies that significantly impacted the Fund's performance during the last fiscal year. The Fund's most recent Statement of Additional Information, annual or semi-annual reports and certain other information are available free of charge by calling the Fund at **1-800-617-0004**, on the Fund's website at https://coinshares.com/us/etf/wgmi/ or through your financial adviser. Shareholders may call the toll-free number above with any inquiries.

You may obtain this and other information regarding the Fund, including the Statement of Additional Information and Codes of Ethics adopted by the Adviser, Distributor and the Trust, directly from the Securities and Exchange Commission (the *"SEC"*). Information on the SEC's website is free of charge. Visit the SEC's on-line EDGAR database at http://www.sec.gov. You may also request information regarding the Fund by sending an electronic request to publicinfo@sec.gov.

---

| | |
|:---|:---|
| Valkyrie Funds LLC<br> 437 Madison Avenue, 28<sup>th</sup> Floor<br> New York, NY 10022<br> **1-800-617-0004**<br> https://coinshares.com/us/etf/wgmi/ | SEC File #: 333-258722<br> 811-23725 |

---

**Statement of Additional Information**

**VALKYRIE ETF TRUST II**

**Investment Company Act File No. 811-23725**

![](coinshares485bpos001.jpg)

---

| | | |
|:---|:---|:---|
|  | **Ticker Symbol** | **Exchange** |
| **CoinShares Bitcoin Mining ETF**<br>(*formerly* CoinShares Valkyrie Bitcoin Miners ETF)  | **WGMI** | **Nasdaq** |

---

**Dated January 22, 2026**

This Statement of Additional Information (*"SAI"*) is not a prospectus. It should be read in conjunction with the prospectus dated January 22, 2026, as it may be revised from time to time (the *"Prospectus"*), for the CoinShares Bitcoin Mining ETF (the *"Fund"*), a series of the Valkyrie ETF Trust II (the *"Trust"*). Capitalized terms used herein that are not defined have the same meanings as in the Prospectus, unless otherwise noted. A copy of the Prospectus may be obtained without charge by writing to the Trust's distributor, ALPS Distributors, Inc., at 1290 Broadway, Suite 1000, Denver, Colorado 80203, or by calling toll free at (303)-623-2577.

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [General Description of the Trust and the Fund](#coinshares485bposd001) | A-1 |
| [Exchange Listing and Trading](#coinshares485bposd002) | A-1 |
| [Investment Objective and Policies](#coinshares485bposd003) | A-1 |
| [Investment Strategies](#coinshares485bposd004) | A-2 |
| [Investment Risks](#coinshares485bposd005) | A-5 |
| [Management of the Fund](#coinshares485bposd006) | A-8 |
| [Control Persons and Principal Holders of Securities](#coinshares485bposd007) | A-12 |
| [Investment Adviser and Other Service Providers](#coinshares485bposd008) | A-12 |
| [Brokerage Allocations](#coinshares485bposd009) | A-16 |
| [Additional Information](#coinshares485bposd010) | A-17 |
| [Proxy Voting Policies and Procedures](#coinshares485bposd011) | A-18 |
| [Creation and Redemption of Creation Units](#coinshares485bposd012) | A-18 |
| [Certain U.S. Federal Tax Matters](#coinshares485bposd013) | A-21 |
| [Determination of Net Asset Value](#coinshares485bposd014) | A-24 |
| [Dividends and Distributions](#coinshares485bposd015) | A-25 |
| [Miscellaneous Information](#coinshares485bposd016) | A-25 |
| [Performance Information](#coinshares485bposd017) | A-25 |
| [Financial Statements](#coinshares485bposd018) | A-26 |

---

The audited financial statements for the Fund's most recent fiscal year appear in the Funds' Annual Report to Shareholders dated September 30, 2025, which was filed with the Securities and Exchange Commission (the "SEC") on December 8, 2025. <u>The financial statements from the Annual Report are incorporated herein by reference</u>. The Annual Report is available without charge by calling (855) 267-3837 or by visiting the SEC's website at www.sec.gov.

**GENERAL DESCRIPTION OF THE TRUST AND THE FUND**

The Trust is a Delaware statutory trust organized on December 11, 2020. The Trust is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the "*1940 Act"*). The Trust currently offers shares of three separate series, representing separate portfolios of investments. This SAI relates solely to the Fund, which is non-diversified.

The Fund is advised by Valkyrie Funds LLC (d/b/a CoinShares Valkyrie) (*"CoinShares Valkyrie"* or the "*Adviser"*). Vident Advisory, LLC (d/b/a Vident Asset Management) (*"Vident"* or the "*Sub-Adviser"*) serves as investment sub-adviser to the Fund.

The shares of the Fund (*"Shares"*) list and principally trade on the Nasdaq Stock Market LLC (the *"Exchange"*). The Shares will trade on the Exchange at market prices that may be below, at or above net asset value (*"NAV"*). ETFs, such as the Fund, do not sell or redeem individual shares of the Fund. Instead, the Fund offers, issues and redeems Shares at NAV only in aggregations of a specified number of Shares (each a "*Creation Unit"*). Financial entities known as "authorized participants" or "APs" (which are discussed in greater detail below) have contractual arrangements with the Fund or the Distributor to purchase and redeem Fund Shares directly with the Fund in Creation Units in exchange for the securities comprising the Fund and/or cash, or some combination thereof. An authorized participant that purchases a Creation Unit of Fund Shares deposits with the Fund a "basket" of securities and other assets identified by the Fund that day, and then receives the Creation Unit of Fund Shares in return for those assets. The redemption process is the reverse of the purchase process: the authorized participant redeems a Creation Unit of Fund Shares for a basket of securities and/or other assets. The basket is generally representative of the Fund's portfolio, and together with a cash balancing amount, it is equal to the NAV of the Fund Shares comprising the Creation Unit. Pursuant to Rule 6c-11 of the 1940 Act, the Fund may utilize baskets that are not representative of the Fund's portfolio. Such "custom baskets" are discussed in the section entitled "Creations and Redemptions of Creation Units." Transaction fees and other costs associated with creations or redemptions that include cash may be higher than the transaction fees and other costs associated with in-kind creations or redemptions. In all cases, conditions with respect to creations and redemptions of shares and fees will be limited in accordance with the requirements of SEC rules and regulations applicable to management investment companies offering redeemable securities.

The Fund is a separate series of the Trust, and each Share represents an equal proportionate interest in the Fund. All consideration received by the Trust for Shares and all assets of the Fund belong solely to the Fund and would be subject to liabilities related thereto. The Board of Trustees of the Trust (the "*Board of Trustees"* or the "*Trustees"*) has the right to establish additional series in the future, to determine the preferences, voting powers, rights and privileges thereof and to modify such preferences, voting powers, rights and privileges without shareholder approval. Shares of any series may also be divided into one or more classes at the discretion of the Trustees. The Trust or any series or class thereof may be terminated at any time by the Board of Trustees upon written notice to the shareholders.

**EXCHANGE LISTING AND TRADING**

The Exchange may, but is not required to, remove the Shares of the Fund from listing if: (1) following the initial twelve-month period beginning upon the commencement of trading of the Fund, there are fewer than 50 beneficial holders of the Shares; (2) the Exchange becomes aware that the Fund is no longer eligible to operate in reliance on Rule 6c-11 under the 1940 Act; (3) the Fund no longer complies with certain listing exchange rules; or (4) such other event shall occur or condition exists that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. In addition, the Exchange will remove the Shares of the Fund from listing and trading upon termination of the Trust or the Fund.

As in the case of other stocks traded on the Exchange, brokers' commissions on transactions will be based on negotiated commission rates at customary levels.

The Fund reserves the right to adjust the price levels of Shares in the future to help maintain convenient trading ranges for investors. Any adjustments would be accomplished through stock splits or reverse stock splits, which would have no effect on the net assets of the Fund.

The Fund is required by the Exchange to comply with certain listing standards (which includes certain investment parameters) in order to maintain its listing on the Exchange. Compliance with these listing standards may compel the Fund to sell securities at an inopportune time or for a price other than the security's then-current market value. The sale of securities in such circumstances could limit the Fund's profit or require the Fund to incur a loss, and as a result, the Fund's performance could be impacted.

**INVESTMENT OBJECTIVE AND POLICIES**

The Prospectus describes the investment objective and certain policies of the Fund. The following supplements the information contained in the Prospectus concerning the investment objective and policies of the Fund.

The Fund is subject to the following fundamental policies, which may not be changed without approval of the holders of a majority of the outstanding voting securities (as such term is defined in the 1940 Act) of the Fund:

&nbsp;&nbsp;&nbsp;&nbsp;(1) The
 Fund may not issue senior securities, except as permitted under the 1940 Act.

&nbsp;&nbsp;&nbsp;&nbsp;(2) The
 Fund may not borrow money, except as permitted under the 1940 Act.

&nbsp;&nbsp;&nbsp;&nbsp;(3) The
 Fund will not underwrite the securities of other issuers except to the extent the Fund
 may be considered an underwriter under the 1933 Act in connection with the purchase and
 sale of portfolio securities.

&nbsp;&nbsp;&nbsp;&nbsp;(4) The
 Fund will not purchase or sell real estate or interests therein, unless acquired as a
 result of ownership of securities or other instruments (but this shall not prohibit the
 Fund from purchasing or selling securities or other instruments backed by real estate
 or of issuers engaged in real estate activities).

&nbsp;&nbsp;&nbsp;&nbsp;(5) The
 Fund may not make loans, except as permitted under the 1940 Act and exemptive orders
 granted thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;(6) The
 Fund may not purchase or sell physical commodities unless acquired as a result of ownership
 of securities or other instruments (but this shall not prevent the Fund from purchasing
 or selling options, futures contracts, forward contracts or other derivative instruments,
 or from investing in securities or other instruments backed by physical commodities).

&nbsp;&nbsp;&nbsp;&nbsp;(7) The
 Fund will concentrate its investments in securities of issuers in the industry or group
 of industries comprising the information technology sector. This restriction does not
 apply to obligations issued or guaranteed by the U.S. government, its agencies or
 instrumentalities, or securities of other investment companies.

For purposes of applying restriction (1) above, under the 1940 Act as currently in effect, the Fund is not permitted to issue senior securities, except that the Fund may borrow from any bank if immediately after such borrowing the value of the Fund's total assets is at least 300% of the principal amount of all of the Fund's borrowings (*i.e.*, the principal amount of the borrowings may not exceed 33 1/3% of the Fund's total assets). In the event that such asset coverage shall at any time fall below 300% the Fund shall, within three days thereafter (not including Sundays and holidays), reduce the amount of its borrowings to an extent that the asset coverage of such borrowings shall be at least 300%. The fundamental investment limitations set forth above limit the Fund's ability to engage in certain investment practices and purchase securities or other instruments to the extent permitted by, or consistent with, applicable law. As such, these limitations will change as the statute, rules, regulations or orders (or, if applicable, interpretations) change, and no shareholder vote will be required or sought.

Except for restriction (2), if a percentage restriction is adhered to at the time of investment, a later increase in percentage resulting from a change in market value of the investment or the total assets will not constitute a violation of that restriction. With respect to restriction (2), if the limitations are exceeded as a result of a change in market value then the Fund will reduce the amount of borrowings within three days thereafter to the extent necessary to comply with the limitations (not including Sundays and holidays).

For purposes of applying restriction (5) above, the Fund may not make loans to other persons, except through (i) the purchase of debt securities permissible under the Fund's investment policies, (ii) repurchase agreements, or (iii) the lending of portfolio securities, provided that no such loan of portfolio securities may be made by the Fund if, as a result, the aggregate of such loans would exceed 33-1/3% of the value of the Fund's total assets.

The foregoing fundamental policies of the Fund may not be changed without the affirmative vote of the majority of the outstanding voting securities of the Fund. The 1940 Act defines a majority vote as the vote of the lesser of (i) 67% or more of the voting securities represented at a meeting at which more than 50% of the outstanding securities are represented; or (ii) more than 50% of the outstanding voting securities. With respect to the submission of a change in an investment policy to the holders of outstanding voting securities of the Fund, such matter shall be deemed to have been effectively acted upon with respect to the Fund if a majority of the outstanding voting securities of the Fund vote for the approval of such matter, notwithstanding that such matter has not been approved by the holders of a majority of the outstanding voting securities of any other series of the Trust affected by such matter.

In addition to the foregoing fundamental policies, the Fund is also subject to strategies and policies discussed herein which, unless otherwise noted, are non-fundamental policies and may be changed by the Board of Trustees.

**INVESTMENT STRATEGIES**

Under normal circumstances, the Fund will invest principally in the securities of companies engaged in bitcoin mining operations or those companies providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. The Fund may invest in companies of any market capitalization, as well as in non-U.S. securities (including securities issued by companies operating in emerging market countries) either directly or through the use of American depositary receipts.

*Types of Investments*

*Common Stocks.* Common stock represents an ownership position in a company. Common stock may or may not pay dividends and may or may not carry voting rights. Common stock occupies the most junior position in a company's capital structure. Holders of common stocks incur more risk than holders of preferred stocks and debt obligations because common stockholders, as owners of the issuer, generally have inferior rights to receive payments from the issuer in comparison with the rights of creditors, or holders of debt obligations or preferred stocks. Unlike debt securities, which typically have a stated principal amount payable at maturity (whose value, however, is subject to market fluctuations prior thereto), or preferred stocks, which typically have a liquidation preference and which may have stated optional or mandatory redemption provisions, common stocks have neither a fixed principal amount nor a maturity.

*Depositary Receipts.* The Fund may invest in securities of non-U.S. issuers in the form of sponsored or unsponsored American Depositary Receipts (*"ADRs"*), Global Depositary Receipts (*"GDRs"*) and European Depositary Receipts (*"EDRs"*) (collectively *"Depositary Receipts"*). ADRs are Depositary Receipts normally issued by a U.S. bank or trust company that evidence ownership of underlying securities issued by a non-U.S. corporation. EDRs and GDRs are typically issued by non-U.S. banks or trust companies, although they also may be issued by U.S. banks or trust companies, and evidence ownership of underlying securities issued by either a non-U.S. or a U.S. corporation. Generally, Depositary Receipts in registered form are designed for use in the U.S. securities market. Depositary Receipts in bearer form are designed for use in securities markets outside the United States. Depositary Receipts may not necessarily be denominated in the same currency as the underlying securities into which they may be converted. Ownership of unsponsored Depositary Receipts may not entitle the Fund to financial or other reports from the issuer of the underlying security, to which it would be entitled as the owner of sponsored Depositary Receipts. The issuers of unsponsored Depositary Receipts are not obligated to disclose material information in the United States; therefore, there may be less information available regarding such issuers and there may not be a correlation between such information and the market value of the Depositary Receipts.

*Illiquid Investments.* Pursuant to Rule 22e-4 under the 1940 Act, the Fund may not acquire any "illiquid investment" if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid investments that are assets. An "illiquid investment" is any investment that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Illiquid investments include repurchase agreements with a notice or demand period of more than seven days, certain stripped mortgage-backed securities, certain municipal leases, certain over-the-counter derivative instruments, securities and other financial instruments that are not readily marketable, and restricted securities unless, based upon a review of the relevant market, trading and investment-specific considerations, those investments are determined not to be illiquid. The Trust has implemented a liquidity risk management program and related procedures to identify illiquid investments pursuant to Rule 22e-4, and the Board of Trustees has approved the designation of the certain officers of the Trust to administer the Trust's liquidity risk management program and related procedures. In determining whether an investment is an illiquid investment, the designated officers of the Trust will take into account actual or estimated daily transaction volume of an investment, group of related investments or asset class and other relevant market, trading, and investment-specific considerations. In addition, in determining the liquidity of an investment, the designated officers of the Trust must determine whether trading varying portions of a position in a particular portfolio investment or asset class, in sizes that the Fund would reasonably anticipate trading, is reasonably expected to significantly affect its liquidity, and if so, the Fund must take this determination into account when classifying the liquidity of that investment or asset class.

In addition to actual or estimated daily transaction volume of an investment, group of related investments or asset class and other relevant market, trading, and investment-specific considerations, the following factors, among others, will generally impact the classification of an investment as an "illiquid investment": (i) any investment that is placed on the Adviser's restricted trading list; and (ii) any investment that is delisted or for which there is a trading halt at the close of the trading day on the primary listing exchange at the time of classification (and in respect of which no active secondary market exists). Investments purchased by the Fund that are liquid at the time of purchase may subsequently become illiquid due to these and other events and circumstances. If one or more investments in the Fund's portfolio become illiquid, the Fund may exceed the 15% limitation in illiquid investments. In the event that changes in the portfolio or other external events cause the Fund to exceed this limit, the Fund must take steps to bring its illiquid investments that are assets to or below 15% of its net assets within a reasonable period of time. This requirement would not force the Fund to liquidate any portfolio instrument where the Fund would suffer a loss on the sale of that instrument.

*Non-U.S. Securities*. The Fund may have exposure to non-U.S. securities. Non-U.S. securities include securities issued or guaranteed by companies organized under the laws of countries other than the United States (including emerging markets), securities issued or guaranteed by foreign, national, provincial, state, municipal or other governments with taxing authority or by their agencies or instrumentalities and debt obligations of supranational governmental entities such as the World Bank or European Union. Foreign securities may also include U.S. dollar-denominated debt obligations, such as "Yankee Dollar" obligations, of non-U.S. issuers and of supra-national government entities. Yankee Dollar obligations are U.S. dollar-denominated obligations issued in the U.S. capital markets by foreign corporations, banks and governments. Foreign securities also may be traded on foreign securities exchanges or in over-the-counter (*"OTC"*) capital markets.

Certain of the Fund's investment in foreign securities may be denominated in currencies other than the U.S. dollar. To the extent the Fund invests in such instruments, the value of the assets of the Fund as measured in U.S. dollars will be affected by changes in exchange rates. Generally, the Fund's currency exchange transactions will be conducted on a spot (*i.e.*, cash) basis at the spot rate prevailing in the currency exchange market. The cost of the Fund's currency exchange transactions will generally be the difference between the bid and offer spot rate of the currency being purchased or sold. In order to protect against uncertainty in the level of future currency exchange rates, the Fund is authorized to enter into various currency exchange transactions.

*Securities Lending.* The Fund may lend portfolio securities in an amount up to one-third of its total assets to brokers, dealers and other financial institutions. In a portfolio securities lending transaction, the Fund receives from the borrower an amount equal to the interest paid or the dividends declared on the loaned securities during the term of the loan as well as the interest on the collateral securities, less any fees (such as finders or administrative fees) the Fund pays in arranging the loan. The Fund may share the interest it receives on the collateral securities with the borrower. The terms of the Fund's loans permit the Fund to reacquire loaned securities on five business days' notice or in time to vote on any important matter. Loans are subject to termination at the option of the Fund or borrower at any time, and the borrowed securities must be returned when the loan is terminated. The Fund may pay fees to arrange for securities loans.

The SEC currently requires that the following conditions must be met whenever the Fund's portfolio securities are loaned: (1) the Fund must receive at least 100% cash collateral from the borrower; (2) the borrower must increase such collateral whenever the market value of the securities rises above the level of such collateral; (3) the Fund must be able to terminate the loan at any time; (4) the Fund must receive reasonable interest on the loan, as well as any dividends, interest or other distributions on the loaned securities, and any increase in market value; (5) the Fund may pay only reasonable custodian fees approved by the Board in connection with the loan; (6) while voting rights on the loaned securities may pass to the borrower, the Board must terminate the loan and regain the right to vote the securities if a material event adversely affecting the investment occurs, and (7) the Fund may not loan its portfolio securities so that the value of the loaned securities is more than one-third of its total asset value, including collateral received from such loans. These conditions may be subject to future modification. Such loans will be terminable at any time upon specified notice. The Fund might experience the risk of loss if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund. In addition, the Fund will not enter into any portfolio security lending arrangement having a duration of longer than one year. The principal risk of portfolio lending is potential default or insolvency of the borrower. In either of these cases, the Fund could experience delays in recovering securities or collateral or could lose all or part of the value of the loaned securities. As part of participating in a lending program, the Fund may be required to invest in collateralized debt or other securities that bear the risk of loss of principal. In addition, all investments made with the collateral received are subject to the risks associated with such investments. If such investments lose value, the Fund will have to cover the loss when repaying the collateral.

Any loans of portfolio securities are fully collateralized based on values that are marked-to-market daily. Any securities that the Fund may receive as collateral will not become part of the Fund's investment portfolio at the time of the loan and, in the event of a default by the borrower, the Fund will, if permitted by law, dispose of such collateral except for such part thereof that is a security in which the Fund is permitted to invest. During the time securities are on loan, the borrower will pay the Fund any accrued income on those securities, and the Fund may invest the cash collateral and earn income or receive an agreed-upon fee from a borrower that has delivered cash-equivalent collateral.

*Short-Term Instruments and Temporary Investments.* The Fund may invest in short-term instruments, including money market instruments, on an ongoing basis to provide liquidity, in connection with collateral received by the Fund in its securities lending activities, or for other reasons. Money market instruments are generally short-term investments that may include, but are not limited to: (i) shares of money market funds; (ii) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities (including government-sponsored enterprises); (iii) negotiable certificates of deposit, bankers' acceptances, fixed-time deposits and other obligations of U.S. and non-U.S. banks (including non-U.S. branches) and similar institutions; (iv) commercial paper rated, at the date of purchase, "Prime-1" by Moody's<sup>®</sup> Investors Service, Inc., "F-1" by Fitch Ratings, Inc., or "A-1" by Standard & Poor's<sup>®</sup> Financial Services LLC, a subsidiary of S&P Global, Inc., or if unrated, of comparable quality as determined by the Adviser and/or Sub-Adviser; (v) non-convertible corporate debt securities (*e.g.*, bonds and debentures) with remaining maturities at the date of purchase of not more than 397 days and that satisfy the rating requirements set forth in Rule 2a-7 under the 1940 Act; (vi) repurchase agreements; and (vii) short-term U.S. dollar denominated obligations of non-U.S. banks (including U.S. branches) that, in the opinion of the Adviser and/or Sub-Adviser, are of comparable quality to obligations of U.S. banks that may be purchased by the Fund. Any of these instruments may be purchased on a current or forward-settled basis. Time deposits are non-negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. Bankers' acceptances are time drafts drawn on commercial banks by borrowers, usually in connection with international transactions.

*Portfolio Turnover*

The Fund buys and sells portfolio securities in the normal course of its investment activities. The proportion of the Fund's investment portfolio that is bought and sold during a year is known as the Fund's portfolio turnover rate. A turnover rate of 100% would occur, for example, if the Fund bought and sold securities valued at 100% of its net assets within one year. A high portfolio turnover rate could result in the payment by the Fund of increased brokerage costs, expenses and taxes. Significant variations in portfolio turnover from year-to-year are generally the result of fluctuations in the size of a Fund or changes to a Fund's portfolio holdings. During the fiscal year ended September 30, 2024, the Fund's portfolio turnover rate was 45% of the average value of its portfolio. During the fiscal year ended September 30, 2025, the Fund's portfolio turnover rate was 40% of the average value of its portfolio.

**INVESTMENT RISKS**

*Overview*

An investment in the Fund should be made with an understanding of the risks that an investment in the Fund shares entails, including the risk that the financial condition of the issuers of the equity securities or the general condition of the securities market may worsen and the value of the securities and therefore the value of the Fund may decline. The Fund may not be an appropriate investment for those who are unable or unwilling to assume the risks involved generally with such an investment. The past market and earnings performance of any of the securities included in the Fund is not predictive of their future performance.

*Borrowing and Leverage Risk*

When the Fund borrows money, it must pay interest and other fees, which will reduce the Fund's returns if such costs exceed the returns on the portfolio securities purchased or retained with such borrowings. Any such borrowings are intended to be temporary. However, under certain market conditions, including periods of low demand or decreased liquidity, such borrowings might be outstanding for longer periods of time. As prescribed by the 1940 Act, the Fund will be required to maintain specified asset coverage of at least 300% with respect to any bank borrowing immediately following such borrowing. The Fund may be required to dispose of assets on unfavorable terms if market fluctuations or other factors reduce the Fund's asset coverage to less than the prescribed amount.

*Common Stocks Risk*

Common stocks are especially susceptible to general market movements and to volatile increases and decreases of value as market confidence in and perceptions of the issuers change. These perceptions are based on unpredictable factors including expectations regarding government, economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic or banking crises. Neither the Adviser nor Sub-Adviser can predict the direction or scope of any of these factors. Shareholders of common stocks have rights to receive payments from the issuers of those common stocks that are generally subordinate to those of creditors of, or holders of debt obligations or preferred stocks of, such issuers.

Shareholders of common stocks of the type held by the Fund have a right to receive dividends only when and if, and in the amounts, declared by the issuer's board of directors and have a right to participate in amounts available for distribution by the issuer only after all other claims on the issuer have been paid. Common stocks do not represent an obligation of the issuer and, therefore, do not offer any assurance of income or provide the same degree of protection of capital as do debt securities. The issuance of additional debt securities or preferred stock will create prior claims for payment of principal, interest and dividends which could adversely affect the ability and inclination of the issuer to declare or pay dividends on its common stock or the rights of holders of common stock with respect to assets of the issuer upon liquidation or bankruptcy. The value of common stocks is subject to market fluctuations for as long as the common stocks remain outstanding, and thus the value of the equity securities in the Fund will fluctuate over the life of the Fund and may be more or less than the price at which they were purchased by the Fund. The equity securities held in the Fund may appreciate or depreciate in value (or pay dividends) depending on the full range of economic and market influences affecting these securities, including the impact of the Fund's purchase and sale of the equity securities and other factors.

Holders of common stocks incur more risk than holders of preferred stocks and debt obligations because common stockholders, as owners of the entity, have generally inferior rights to receive payments from the issuer in comparison with the rights of creditors of, or holders of debt obligations or preferred stocks issued by, the issuer. Cumulative preferred stock dividends must be paid before common stock dividends and any cumulative preferred stock dividend omitted is added to future dividends payable to the holders of cumulative preferred stock. Preferred stockholders are also generally entitled to rights on liquidation, which are senior to those of common stockholders.

*Cyber Security Risk*

As the use of Internet technology has become more prevalent in the course of business, the Fund has become more susceptible to potential operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund's digital information systems through "hacking" or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition, cyber security breaches of the Fund's third-party service providers, such as its administrator, transfer agent, custodian, or sub-adviser, as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security. However, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third-party service providers.

*Depositary Receipts Risk*

Investing in Depositary Receipts involves the same risks as direct investments in non-U.S. securities. In addition, the underlying issuers of certain Depositary Receipts are under no obligation to distribute shareholder communications or pass through any voting rights with respect to the deposited securities to the holders of such receipts. The Fund may therefore receive less timely information or have less control than if it invested directly in the non-U.S. issuer.

*Failure to Qualify as a Regulated Investment Company Risk*

If, in any year, the Fund fails to qualify as a regulated investment company under the applicable tax laws, the Fund would be taxed as an ordinary corporation. In such circumstances, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as a regulated investment company that is accorded special tax treatment. If the Fund fails to qualify as a regulated investment company, distributions to the Fund's shareholders generally would be eligible for the dividends received deduction in the case of corporate shareholders.

*Legal and Litigation Risk*

In certain frontier and emerging markets, fraud and corruption may be more prevalent than in developed market countries. Securities and issuers that the Fund may invest in are exposed to these risks, which could have a negative impact on a security's value. It may be difficult for the Fund to obtain or enforce judgments against parties located outside of the U.S. It may be difficult or impossible to obtain or enforce remedies against non-U.S. governments, their agencies, quasi-sovereign entities, other non-U.S. issuers or counterparties.

*Listing Standards Risk*

The Fund is required by the Exchange to comply with certain listing standards (which includes certain investment parameters) in order to maintain its listing on the Exchange. Compliance with these listing standards may compel the Fund to sell securities at an inopportune time or for a price other than the security's then-current market value. The sale of securities in such circumstances could limit the Fund's profit or require the Fund to incur a loss, and as a result, the Fund's performance could be impacted.

*Market Events Risk*

Turbulence in the economic, political and financial system has historically resulted, and may continue to result, in an unusually high degree of volatility in the capital markets. Both domestic and non-U.S. capital markets have been experiencing increased volatility and turmoil, with issuers that have exposure to the real estate, mortgage and credit markets particularly affected, and it is uncertain whether or for how long these conditions could continue. Reduced liquidity in equity, credit and fixed-income markets may adversely affect many issuers worldwide. This reduced liquidity may result in less money being available to purchase raw materials, goods and services from emerging markets, which may, in turn, bring down the prices of these economic staples. It may also result in small or emerging market issuers having more difficulty obtaining financing, which may, in turn, cause a decline in their security prices. These events and possible continued market turbulence may have an adverse effect on the Fund.

In addition, local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more significantly than others. Such events could adversely affect the prices and liquidity of the Fund's portfolio securities or other instruments and could result in disruptions in the trading markets. Any of such circumstances could have a materially negative impact on the value of the Fund's Shares and result in increased market volatility. During any such events, the Fund's Shares may trade at increased premiums or discounts to their NAV.

Health crises caused by the outbreak of infectious diseases or other public health issues, may exacerbate other pre-existing political, social, economic, market and financial risks. The impact of any such events could negatively affect the global economy, as well as the economies of individual countries or regions, the financial performance of individual companies, sectors and industries, and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the prices and liquidity of the securities and other instruments in which the Fund invests and negatively impact the Fund's investment return.

*Additional Market Disruption Risk.*

In late February 2022, Russia launched a large scale military attack on Ukraine. The invasion significantly amplified already existing geopolitical tensions among Russia, Ukraine, Europe, NATO and the West, including the U.S. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia. Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, large financial institutions, officials and oligarchs; a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (*"SWIFT"*), the electronic banking network that connects banks globally; and restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. Additional sanctions may be imposed in the future. Such sanctions (and any future sanctions) and other actions against Russia may adversely impact, among other things, the Russian economy and various sectors of the economy, including but not limited to, financials, energy, metals and mining, engineering and defense and defense-related materials sectors; result in a decline in the value and liquidity of Russian securities; result in boycotts, tariffs, and purchasing and financing restrictions on Russia's government, companies and certain individuals; weaken the value of the ruble; downgrade the country's credit rating; freeze Russian securities and/or funds invested in prohibited assets and impair the ability to trade in Russian securities and/or other assets; and have other adverse consequences on the Russian government, economy, companies and region. Further, several large corporations and U.S. states have announced plans to divest interests or otherwise curtail business dealings with certain Russian businesses.

The ramifications of the hostilities and sanctions, however, may not be limited to Russia and Russian companies but may spill over to and negatively impact other regional and global economic markets of the world (including Europe and the United States), companies in other countries (particularly those that have done business with Russia) and on various sectors, industries and markets for securities and commodities globally, such as oil and natural gas. Accordingly, the actions discussed above and the potential for a wider conflict could increase financial market volatility, cause severe negative effects on regional and global economic markets, industries, and companies and have a negative effect on a Fund's investments and performance beyond any direct exposure to Russian issuers or those of adjoining geographic regions. In addition, Russia may take retaliatory actions and other countermeasures, including cyberattacks and espionage against other countries and companies in the world, which may negatively impact such countries and the securities in which the Fund invests. Accordingly, there may be heightened risk of cyberattacks which may result in, among other things, disruptions in the functioning and operations of industries or companies around the world, including in the United States and Europe.

Further, ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain Fund investments as well as Fund performance and liquidity.

The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on Fund performance and the value of an investment in the Fund.

*Non-U.S. Securities Risk*

The Fund's non-U.S. investments may be adversely affected by political and social instability, changes in economic or taxation policies, difficulty in enforcing obligations, decreased liquidity or increased volatility. Non-U.S. investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer or non-U.S. deposits (in which an underlying fund could lose its entire investments in a certain market) and the possible adoption of non-U.S. governmental restrictions such as exchange controls. Unless the Fund has hedged its non-U.S. securities risk, non-U.S. securities risk also involves the risk of negative non-U.S. currency rate fluctuations, which may cause the value of securities denominated in such non-U.S. currency (or other instruments through which an underlying fund has exposure to non-U.S. currencies) to decline in value. Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not always successful.

**MANAGEMENT OF THE FUND**

*Trustees and Officers*

The general supervision of the duties performed for the Fund under the Investment Management Agreement (as defined below) is the responsibility of the Board of Trustees. There are three Trustees of the Trust, all of whom are Trustees who are not officers or employees of CoinShares Valkyrie or any of its affiliates (each an *"Independent Trustee"* and collectively the *"Independent Trustees"*). The Trustees serve for indefinite terms until their resignation, death or removal. The Trust has not established a lead Independent Trustee position. The Trustees set broad policies for the Fund, choose the Trust's officers and hired the Fund's investment adviser. Annemarie Tierney is deemed an Interested Trustee of the Trust due to her positions as Principal Executive Officer and President of the Trust. The officers of the Trust manage its day-to-day operations, are responsible to the Board of Trustees and serve indefinite terms. The following is a list of the Trustees and executive officers of the Trust and a statement of their present positions and principal occupations during the past five years, the number of portfolios each Trustee oversees and the other directorships they have held during the past five years, if applicable.

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|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Name, Address**<br> **and Year of Birth** | &nbsp;&nbsp;**Position and**<br> **Offices**<br> **with Trust** | &nbsp;&nbsp;**Term of**<br> **Office**<br> **and Year**<br> **First Elected**<br> **or**<br> **Appointed** | &nbsp;&nbsp;**Principal**<br> **Occupations**<br> **During Past 5**<br> **Years** | &nbsp;&nbsp;**Number**<br> **of**<br> **Portfolios**<br> **in the**<br> **CoinShares Valkyrie**<br> **Fund**<br> **Complex**<br> **Overseen**<br> **by Trustee** | &nbsp;&nbsp;**Other**<br> **Trusteeships or**<br> **Directorships**<br> **Held by Trustee**<br> **During the Past**<br> **5 Years** |
| &nbsp;&nbsp;**Interested Trustees** | &nbsp;&nbsp;**Interested Trustees** | &nbsp;&nbsp;**Interested Trustees** | &nbsp;&nbsp;**Interested Trustees** | &nbsp;&nbsp;**Interested Trustees** | &nbsp;&nbsp;**Interested Trustees** |
| &nbsp;&nbsp;Annemarie Tierney<sup>(1)</sup><br>c/o Valkyrie Funds LLC <br> 437 Madison Avenue, 28th Floor,<br>New York, New York 10022 <br> YOB: 1964<br>| &nbsp;&nbsp;Trustee | &nbsp;&nbsp;Indefinite term (Since December 2025) | &nbsp;&nbsp;Principal, Liquid Advisors Inc. (November 2019-present) | &nbsp;&nbsp;3 | &nbsp;&nbsp;CEA Industries Inc. (November 2025-present); Sharps Technologies, Inc. (October 2025-December 2025) |
| &nbsp;&nbsp;**Independent Trustees** | &nbsp;&nbsp;**Independent Trustees** | &nbsp;&nbsp;**Independent Trustees** | &nbsp;&nbsp;**Independent Trustees** | &nbsp;&nbsp;**Independent Trustees** | &nbsp;&nbsp;**Independent Trustees** |
| &nbsp;&nbsp;Keith Fletcher<br>c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor<br> New York, New York 10022<br> YOB: 1958<br>| &nbsp;&nbsp;Trustee | &nbsp;&nbsp;Indefinite term Since inception | &nbsp;&nbsp;Principal and Chief Executive Officer, JAHFT Solutions LLC (2017-Present); Partner, Neos Investments (2023-Present) | &nbsp;&nbsp;3 | &nbsp;&nbsp;Tortoise Capital Series Trust (2024-Present); Uncommon Portfolio Design Core Equity ETF (2020-2022) |
| &nbsp;&nbsp;Steve Lehman<br>c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor<br> New York, New York 10022<br> YOB: 1952<br>| &nbsp;&nbsp;Trustee | &nbsp;&nbsp;Indefinite term Since inception | &nbsp;&nbsp;Executive Chairman, Vymedic Biotech (2019-Present) & CoFoundersLab<br> (2018-Present) | &nbsp;&nbsp;3 |  |
| &nbsp;&nbsp;Mark Osterheld<br>c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor<br> New York, New York 10022<br> YOB: 1955<br>| &nbsp;&nbsp;Trustee | &nbsp;&nbsp;Indefinite term Since inception | &nbsp;&nbsp;Adjunct Lecturer, Bentley University (2016-2022); Adjunct Lecturer, Clarkson University (2022-2023) | &nbsp;&nbsp;3 | &nbsp;&nbsp;Steward Funds (2024-Present); Crossmark ETF Trust (2025-Present) |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Name, Address**<br> **and Year of Birth** | &nbsp;&nbsp;**Position and**<br> **Offices**<br> **with Trust** | &nbsp;&nbsp;**Term of**<br> **Office**<br> **and Year**<br> **First Elected**<br> **or**<br> **Appointed** | &nbsp;&nbsp;**Principal**<br> **Occupations**<br> **During Past 5**<br> **Years** | &nbsp;&nbsp;**Number**<br> **of**<br> **Portfolios**<br> **in the**<br> **CoinShares Valkyrie**<br> **Fund**<br> **Complex**<br> **Overseen**<br> **by Trustee** | &nbsp;&nbsp;**Other**<br> **Trusteeships or**<br> **Directorships**<br> **Held by Trustee**<br> **During the Past**<br> **5 Years** |
| &nbsp;&nbsp;**Officers of the Trust** | &nbsp;&nbsp;**Officers of the Trust** | &nbsp;&nbsp;**Officers of the Trust** | &nbsp;&nbsp;**Officers of the Trust** | &nbsp;&nbsp;**Officers of the Trust** | &nbsp;&nbsp;**Officers of the Trust** |
| &nbsp;&nbsp;Annemarie Tierney<sup>(1)</sup><br>c/o Valkyrie Funds LLC <br> 437 Madison Avenue, 28th Floor,<br>New York, New York 10022 <br> YOB: 1964<br>| &nbsp;&nbsp;Principal Executive Officer and President | &nbsp;&nbsp;Indefinite term (Since November 2025) | &nbsp;&nbsp;Principal, Liquid Advisors Inc. (November 2019-present) | &nbsp;&nbsp;N/A | &nbsp;&nbsp;CEA Industries Inc. (November 2025-present); Sharps Technologies, Inc. (October 2025-December 2025) |
| &nbsp;&nbsp;John Canning<br> c/o Chenery Compliance Group<br> Devon Square II, 744 W Lancaster,<br> Suite 104 Wayne, Pennsylvania 19087<br> YOB: 1970 | &nbsp;&nbsp;Chief Compliance Officer | &nbsp;&nbsp;Indefinite term (Since August 2022) | &nbsp;&nbsp;Director of Chenery Compliance Group, LLC (March 2021-present); Senior Consultant of Foreside (August 2020-March 2021); Chief Compliance Officer & Chief Operating Officer of Schneider Capital Management (May 2019-July 2020) | &nbsp;&nbsp;N/A | &nbsp;&nbsp;N/A |
| &nbsp;&nbsp;Ben Gaffey<br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor,<br>New York, New York 10022<br> YOB: 1985  | &nbsp;&nbsp;Treasurer, Chief Financial Officer and Chief Accounting Officer | &nbsp;&nbsp;Indefinite term Since inception | &nbsp;&nbsp;Controller – US Operations, CoinShares Co. (2024-present); Controller, Valkyrie Investments Inc. (2021-2024); Assurance Senior Manager, Ernst & Young LLP (2016-2021) | &nbsp;&nbsp;N/A | &nbsp;&nbsp;N/A |
| &nbsp;&nbsp;Jeri-Lea Brown<br> c/o Valkyrie Funds LLC<br> 437 Madison Avenue, 28th Floor,<br>New York, New York 10022<br> YOB: 1992  | &nbsp;&nbsp;Secretary | &nbsp;&nbsp;Indefinite term (Since January 2026) | &nbsp;&nbsp;Group Company Secretary of CoinShares Group (April 2018-present) | &nbsp;&nbsp;N/A | &nbsp;&nbsp;N/A |

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<sup>(1)</sup> Annemarie Tierney is deemed an "interested person" of the Trust due to her position as Principal Executive Officer and President of the Trust.

*Unitary Board Leadership Structure*

It is anticipated that each Trustee will serve as a trustee of all funds in the CoinShares Valkyrie Fund Complex (as defined below), which is known as a "unitary" board leadership structure. Each Trustee currently serves as a trustee of the Fund and is anticipated to serve as a trustee for future Funds advised by CoinShares Valkyrie (each, a *"CoinShares Valkyrie Fund"* and collectively, the *"CoinShares Valkyrie Fund Complex"*). None of the Trustees who are not "interested persons" of the Trust, nor any of their immediate family members, have ever been a director, officer or employee of, or consultant to, CoinShares Valkyrie or any of its affiliates. Keith Fletcher, an Independent Trustee, serves as the Chair of the Board for each Fund in the CoinShares Valkyrie Fund Complex.

The same four persons serve as Trustees on the Board and are anticipated to serve on the Boards of all other CoinShares Valkyrie Funds. The unitary board structure was adopted for the CoinShares Valkyrie Funds because of the efficiencies it achieves with respect to the governance and oversight of the CoinShares Valkyrie Funds. Each CoinShares Valkyrie Fund is subject to the rules and regulations of the 1940 Act (and other applicable securities laws), which means that many of the CoinShares Valkyrie Funds face similar issues with respect to certain of their fundamental activities, including risk management, portfolio liquidity, portfolio valuation and financial reporting. Because of the similar and often overlapping issues facing the CoinShares Valkyrie Funds, including among any such ETFs, the Board of Trustees believes that maintaining a unitary board structure promotes efficiency and consistency in the governance and oversight of all CoinShares Valkyrie Funds and reduces the costs, administrative burdens and possible conflicts that may result from having multiple boards. In adopting a unitary board structure, the Trustees seek to provide effective governance through establishing a board the overall composition of which, as a body, possesses the appropriate skills, diversity, independence and experience to oversee the Fund's business.

Annually, the Board of Trustees will review its governance structure and the committee structures, its performance and functions and any processes that would enhance board governance over the business of the CoinShares Valkyrie Funds. The Board of Trustees has determined that its leadership structure, including the unitary board and committee structure, is appropriate based on the characteristics of the funds it serves and the characteristics of the CoinShares Valkyrie Fund Complex as a whole.

*Board Committees*

The Board of Trustees has established two standing committees (as described below) and has delegated certain of its responsibilities to those committees. The Board of Trustees and its committees meet frequently throughout the year to oversee the activities of the Fund, review contractual arrangements with and the performance of service providers, oversee compliance with regulatory requirements and review Fund performance. The Independent Trustees are represented by independent legal counsel at all Board and committee meetings. Generally, the Board of Trustees acts by majority vote of the Trustees present at a meeting, assuming a quorum is present, unless otherwise required by applicable law.

The two standing committees of the Board of Trustees are the Nominating and Governance Committee and the Audit Committee.

The Nominating and Governance Committee is responsible for appointing and nominating non-interested persons to the Board of Trustees. Messrs. Fletcher, Lehman and Osterheld are members of the Nominating and Governance Committee. If there is no vacancy on the Board of Trustees, the Board of Trustees will not actively seek recommendations from other parties, including shareholders. The Nominating and Governance Committee will not consider new trustee candidates who are 70 years of age or older or will turn 70 years old during the initial term. When a vacancy on the Board of Trustees occurs and nominations are sought to fill such vacancy, the Nominating and Governance Committee may seek nominations from those sources it deems appropriate in its discretion, including shareholders of the Fund. To submit a recommendation for nomination as a candidate for a position on the Board of Trustees, shareholders of the Fund should mail such recommendation to Jeri-Lea Brown, Secretary, at the Trust's address, 437 Madison Avenue, 28th Floor New York, New York 10022. Such recommendation shall include the following information: (i) a statement in writing setting forth (A) the name, age, date of birth, business address, residence address and nationality of the person or persons to be nominated; (B) the class or series and number of all Shares of the Fund owned of record or beneficially by each such person or persons, as reported to such shareholder by such nominee(s); (C) any other information regarding each such person required by paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A) under the 1934 Act; (D) any other information regarding the person or persons to be nominated that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitation of proxies for election of trustees or directors pursuant to Section 14 of the 1934 Act and the rules and regulations promulgated thereunder; and (E) whether such shareholder believes any nominee is or will be an "interested person" of the Fund (as defined in the 1940 Act) and, if not an "interested person," information regarding each nominee that will be sufficient for the Fund to make such determination; and (ii) the written and signed consent of any person to be nominated to be named as a nominee and to serve as a trustee if elected. In addition, the Trustees may require any proposed nominee to furnish such other information as they may reasonably require or deem necessary to determine the eligibility of such proposed nominee to serve as a Trustee. The Nominating and Governance Committee met one time during the fiscal year ended September 30, 2025.

The Audit Committee is responsible for overseeing the Fund's accounting and financial reporting process, the system of internal controls and audit process and for evaluating and appointing independent auditors (subject also to approval of the Board of Trustees). Messrs. Fletcher, Lehman and Osterheld serve on the Audit Committee. The Audit Committee met two times during the fiscal year ended September 30, 2025.

*Risk Oversight*

As part of the general oversight of the Fund, the Board of Trustees is involved in the risk oversight of the Fund. The Board of Trustees has adopted and periodically reviews policies and procedures designed to address the Fund's risks. Oversight of investment and compliance risk, including, if applicable, oversight of any Sub-Adviser, is performed primarily at the Board level in conjunction with the Adviser's investment oversight group and the Trust's Chief Compliance Officer (*"CCO"*), John Canning.

Oversight of other risks also occurs at the committee level. The Adviser's investment oversight group reports to the Board of Trustees at quarterly meetings regarding, among other things, Fund performance and the various drivers of such performance as well as information related to the Adviser and its operations and processes. The Board of Trustees reviews reports on the Fund's and the service providers' compliance policies and procedures at each quarterly Board meeting and receives an annual report from the CCO regarding the operations of the Fund's and the service providers' compliance programs. In addition, the Independent Trustees meet privately each quarter with the CCO. The Audit Committee reviews with the Adviser the Fund's major financial risk exposures and the steps the Adviser has taken to monitor and control these exposures, including the Fund's risk assessment and risk management policies and guidelines. The Audit Committee also, as appropriate, reviews in a general manner the processes other Board committees have in place with respect to risk assessment and risk management. The Nominating and Governance Committee monitors all matters related to the corporate governance of the Trust.

Not all risks that may affect the Fund can be identified nor can controls be developed to eliminate or mitigate their occurrence or effects. It may not be practical or cost effective to eliminate or mitigate certain risks, the processes and controls employed to address certain risks may be limited in their effectiveness, and some risks are simply beyond the reasonable control of the Fund or the Adviser or other service providers. Moreover, it is necessary to bear certain risks (such as investment-related risks) to achieve the Fund's goals. As a result of the foregoing and other factors, the Fund's ability to manage risk is subject to substantial limitations.

*Board Diversification and Trustee Qualifications*

As described above, the Nominating and Governance Committee of the Board of Trustees oversees matters related to the nomination of Trustees. The Nominating and Governance Committee seeks to establish an effective Board with an appropriate range of skills and diversity, including, as appropriate, differences in background, professional experience, education, vocations, and other individual characteristics and traits in the aggregate. Each Trustee must meet certain basic requirements, including relevant skills and experience, time availability and, if qualifying as an Independent Trustee, independence from the Adviser, underwriters or other service providers, including any affiliates of these entities.

Listed below for each current Trustee are the experiences, qualifications and attributes that led to the conclusion, as of the date of this SAI, that each current Trustee should serve as a Trustee in light of the Trust's business and structure.

*Independent Trustees.* Keith Fletcher is currently the Principal and CEO of JAHFT Solutions LLC, a role he has been in since 2017. Additionally, he served as the Principal and Chief Distribution Officer at RiskX Investments from 2012 to 2017, following his role of Chief Marketing Officer at Guggenheim Investments/Rydex SGI from 2008 to 2012. Other experiences include Managing Director, Lyster Watson (2007-2008), President and Chief Executive Officer, Fletcher Financial Group Inc. (2004-2007), and Chief Marketing Officer, Executive Vice President, Van Eck Global (1992-2004). Mr. Fletcher has served as a Trustee of the CoinShares Valkyrie Funds since 2021.

Steve Lehman is an executive chairman to Vymedic Biotech, a role he has been in since 2019. He also currently serves as the executive chairman of CoFoundersLab. In addition, Mr. Lehman has previously served as Chairman & CEO of both NASDAQ and the New York Stock Exchange. Mr. Lehman has served as a Trustee of the CoinShares Valkyrie Funds since 2021. He currently serves as the chair of the Nominating Committee (since 2021) of the CoinShares Valkyrie Funds.

Mark Osterheld currently serves as the Chair of the Board of Trustees and chair of the Audit Committee (since 2021) of the CoinShares Valkyrie Funds. He served as an Adjunct Lecturer in Accountancy at Bentley University in Waltham, Massachusetts, and Clarkson University in Potsdam, New York. He has been a principal consultant for a consulting firm since 2013. In addition, Mr. Osterheld previously held various leadership roles at Fidelity Investments from 1992 to 2013, including Fund President and Treasurer of the Fidelity Strategic Advisers mutual funds and Vice President – Treasury Oversight. He is a Certified Public Accountant (CPA) and a member of the American Institute of Certified Public Accountants. Mr. Osterheld has served as a Trustee of the CoinShares Valkyrie Funds since 2021.

*Interested Trustees.* Annemarie Tierney is the Principal Executive Officer and President of Valkyrie ETF Trust II and the Chief Executive Officer of the Adviser. She is the Founder and Principal of Liquid Advisors Inc., a strategic advisory firm serving financial services and digital asset industry clients, a position she has held since November 2019. Through Liquid Advisors, she provides strategic consulting and expert witness services to private investment funds, broker-dealers, policy organizations, national stock exchanges, and private company liquidity service providers, with a focus on securities law, market structure, risk assessment, and governance. Liquid Advisors has provided services to an affiliate of CoinShares Valkyrie since 2021. From September 2018 to September 2019, Ms. Tierney served as Head of Strategy and General Counsel at Templum, Inc., a broker-dealer and alternative trading system focused on primary offerings and secondary trading of unregistered digital securities. Prior to that, she held senior roles at Nasdaq Private Market and SecondMarket Holdings, Inc. (now Digital Currency Group), and previously served in legal and regulatory roles at NYSE Euronext, Skadden, Arps, Slate, Meagher & Flom LLP, and the U.S. Securities and Exchange Commission. She is a long-standing member of the Board of Directors of the Association of SEC Alumni (ASECA), for which she served as President from 2023 to 2025. Ms. Tierney holds FINRA Series 7, 63, and 24 licenses.

For the 2026 calendar year, each Independent Trustee is paid a fixed annual retainer of $25,000. The fixed annual retainer is allocated equally among each Fund in the CoinShares Valkyrie Fund Complex. Trustees are also reimbursed for travel and out-of-pocket expenses incurred in connection with all meetings.

The following table sets forth the compensation earned by each Independent Trustee (including reimbursement for travel and out-of-pocket expenses) for services to the Fund and the aggregate compensation paid to them for services to the CoinShares Valkyrie Fund Complex, for the fiscal year ended September 30, 2025. The Trust has no retirement or pension plans. The officers and Trustees who are "interested persons" as designated above serve without any compensation from the Trust. The Trust has no employees. Its officers are compensated by CoinShares Valkyrie.

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| | | |
|:---|:---|:---|
| **Name of Trustee** | **Compensation**<br> **from the**<br> **Fund** | **Total**<br> **Compensation**<br> **from the**<br> **CoinShares Valkyrie Fund**<br> **Complex** |
| Keith Fletcher | $8333.33 | $25000 |
| Steven Lehman | $8333.33 | $25000 |
| Mark Osterheld | $8333.33 | $25000 |

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*Interested and Independent Trustees*

The following table sets forth the dollar range of equity securities beneficially owned by the Interested and Independent Trustees in the Fund and all funds overseen by the Trustees in the CoinShares Valkyrie Fund Complex as of December 31, 2025:

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| | | |
|:---|:---|:---|
| **Trustee** | **Dollar Range**<br> **of**<br> **Equity**<br> **Securities**<br> **in the Fund** | **Aggregate Dollar**<br> **Range of**<br> **Equity Securities**<br> **in**<br> **All Registered**<br> **Investment**<br> **Companies**<br> **Overseen by**<br> **Trustee**<br> **in the CoinShares Valkyrie**<br> **Fund Complex** |
| *Interested Trustees* |  |  |
| Annemarie Tierney | None | None |
| *Independent Trustees* |  |  |
| Keith Fletcher | None | None |
| Steven Lehman | None | None |
| Mark Osterheld | None | None |

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As of December 31, 2025, the Independent Trustees of the Trust and immediate family members did not own beneficially or of record any class of securities of an investment adviser or principal underwriter of the Fund or any person directly or indirectly controlling, controlled by, or under common control with an investment adviser or principal underwriter of the Fund.

As of December 31, 2025, the officers and Trustees, in the aggregate, owned less than 1% of the shares of the Fund.

**CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES**

A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the outstanding shares of a fund. A control person is one who owns, either directly or indirectly, more than 25% of the voting securities of a company or acknowledges the existence of control. The table set forth below shows the percentage ownership of each person or "group" (as that term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended) who, as of January 15, 2026, owned of record, or is known by the Trust to have owned of record or beneficially, 5% or more of the Shares of the Fund.

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| | |
|:---|:---|
| **Shareholders Name and Address** | **Percentage** |
| Charles Schwab & Co Inc.<br>211 Main Street <br> San Francisco, California 94105-1905<br>| 18.00% |
| National Financial Services LLC <br> 499 Washington Boulevard<br>Jersey City, New Jersey 07310-1995  | 14.98% |
| Morgan Stanley Smith Barney LLC<br>1300 Thames Street, 6th Floor <br> Baltimore, Maryland 21231<br>| 14.39% |
| Interactive Brokers Group<br>209 South LaSalle Street <br> Chicago, Illinois 60604<br>| 10.74% |
| JP Morgan Chase Bank, National Association<br>14201 Dallas Parkway, Chase International Plaza <br> Dallas, TX 75254-2916<br>| 8.78% |

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**INVESTMENT ADVISER AND OTHER SERVICE PROVIDERS**

***Investment Adviser.*** Valkyrie Funds LLC, 437 Madison Avenue, 28th Floor, New York, New York 10022, serves as the investment adviser to the Fund. CoinShares Valkyrie is a Tennessee limited liability company and a wholly-owned subsidiary of CoinShares Co. CoinShares Valkyrie discharges its responsibilities subject to the policies of the Board of Trustees. CoinShares Valkyrie also administers the Trust's business affairs, provides office facilities and equipment and certain clerical, bookkeeping and administrative services, and permits any of its officers or employees to serve without compensation as Trustees or officers of the Trust if elected to such positions.

Pursuant to an investment management agreement between CoinShares Valkyrie and the Trust, on behalf of the Fund (the *"Investment Management Agreement"*), CoinShares Valkyrie oversees the investment of the Fund's assets and is responsible for paying all expenses of the Fund, excluding the fee payments under the Investment Management Agreement, interest, taxes, brokerage commissions, acquired fund fees and expenses and other expenses connected with the execution of portfolio transactions, distribution and service fees payable pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses. The Fund has agreed to pay CoinShares Valkyrie an annual management fee equal to a percentage of its daily net assets, as detailed in the below table.

***Management Fee***

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| | |
|:---|:---|
| **Fund** | **Fee** |
| CoinShares Bitcoin Mining ETF | 0.75% |

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For the services rendered during the fiscal year ended September 30, 2023, the Adviser received an amount of $64,862 in management fees paid by the Fund. For the services rendered during the fiscal year ended September 30, 2024, the Adviser received an amount of $620,126, in management fees paid by the Fund. For the services rendered during the fiscal year ended September 30, 2025, the Adviser received an amount of $1,324,905, in management fees paid by the Fund.

Under the Investment Management Agreement, CoinShares Valkyrie shall not be liable for any loss sustained by reason of the purchase, sale or retention of any security, whether or not such purchase, sale or retention shall have been based upon the investigation and research made by any other individual, firm or corporation, if such recommendation shall have been selected with due care and in good faith, except loss resulting from willful misfeasance, bad faith, or gross negligence on the part of CoinShares Valkyrie in the performance of its obligations and duties, or by reason of its reckless disregard of its obligations and duties. The Investment Management Agreement is in place for the original initial two year term, and thereafter only if approved annually by the Board of Trustees, including a majority of the Independent Trustees. The Investment Management Agreement terminates automatically upon assignment and is terminable at any time without penalty as to the Fund by the Board of Trustees, including a majority of the Independent Trustees, or by vote of the holders of a majority of the Fund's outstanding voting securities on 60 days' written notice to CoinShares Valkyrie, or by CoinShares Valkyrie on 60 days' written notice to the Fund.

***Investment Sub-Adviser.*** CoinShares Valkyrie has retained Vident Advisory, LLC (d/b/a Vident Asset Management), 1125 Sanctuary Parkway, Suite 515, Alpharetta, Georgia 30009, to act as sub-adviser to the Fund pursuant to a sub-advisory agreement (the "*Sub-Advisory Agreement"*). Vident was formed in 2016 and provides sub-advisory services to multiple ETFs. Vident is owned by Vident Capital Holdings, LLC which is controlled by MM VAM, LLC. MM VAM, LLC is owned by Casey Crawford.

Pursuant to the Sub-Advisory Agreement, CoinShares Valkyrie has agreed to pay for the services provided by Vident through sub-advisory fees, which fee is calculated daily and paid monthly, equal to the greater of (1) $30,000 per annum or (2) 0.05% on the first $250 million in assets, 0.045% on the next $250 million in assets, and 0.04% on all assets thereafter. CoinShares Valkyrie is responsible for paying the entire amount of Vident's fee for the Fund. Vident Investment Advisory, LLC (the *"Prior Sub-Adviser"*) received an amount of $24,986 in sub-advisory fees for the fiscal year ended September 30, 2023. Vident received an amount of $20,550 in sub-advisory fees for the fiscal period ended September 30, 2023, which represents the amount for the fiscal period subsequent to the change in control of Vident Asset Management, an amount of $48,600 in sub-advisory fees for the fiscal year ended September 30, 2024, and $99,198.96 in sub-advisory fees for the fiscal year ended September 30, 2025.

***Portfolio Managers.*** The portfolio managers are primarily responsible for the day-to-day management of the Fund. There are currently three portfolio managers, as follows:

*Bill Cannon, ETF Portfolio Manager at CoinShares Valkyrie*. Prior to joining CoinShares Valkyrie, Bill was a Managing Director at Guggenheim Partners Investment Management, where he was member of the insurance portfolio management division responsible for $80 billion of assets under management. Before that, Mr. Cannon worked at the Chicago Mercantile Exchange and the Chicago Board Options Exchange as a derivatives broker for equity index and interest rate futures and options. Mr. Cannon earned a BA in Chemistry from the University of Vermont and an MBA from the Quinlan School of Business at Loyola University Chicago.

*Rafael Zayas, CFA, Senior Vice President, Head of Portfolio Management and Trading of Vident.* Mr. Zayas has over 15 years of trading and portfolio management experience in global equity products and ETFs. He is SVP, Head of Portfolio Management and, specializing in managing and trading of developed, emerging, and frontier market portfolios. Prior to joining Vident, he was a Portfolio Manager at Russell Investments where he oversaw over $5 billion in quantitative strategies across global markets, including emerging, developed and frontier markets and listed alternatives. Before that, he was an equity Portfolio Manager at BNY Mellon Asset Management, where he was responsible for $150 million in internationally listed global equity ETFs and assisted in managing $3 billion of global ETF assets. Mr. Zayas holds a BS in Electrical Engineering from Cornell University. He also holds the Chartered Financial Analyst designation.

*Austin Wen, Senior Portfolio Manager of Vident*. Mr. Wen has eight years of investment management experience. He is a Portfolio Manager at Vident Investment Advisory, specializing in portfolio management and trading of equity portfolios and commodities-based portfolios, as well as risk monitoring and investment analysis. Previously, he was an analyst for Vident Financial, working on the development and review of investment solutions. He began his career as a State Examiner for the Georgia Department of Banking and Finance. Mr. Wen obtained a BA in Finance from the University of Georgia and holds the Chartered Financial Analyst designation.

*Compensation.* Bill Cannon is compensated by CoinShares Valkyrie and receives a competitive salary. He may receive bonuses based on qualitative considerations, such as his contribution to the organization, and performance reviews in relation to job responsibilities. Messrs. Zayas and Wen are compensated by Vident. Each is paid a fixed salary and discretionary bonus that is not based on the performance of the Fund.

*Ownership of Fund Securities.* The following table sets forth the dollar range of equity securities beneficially owned by each of the portfolio managers of the Fund as of September 30, 2025:

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| | |
|:---|:---|
| &nbsp;&nbsp;**Portfolio Manager** | &nbsp;&nbsp;**Dollar Range of Equity Securities in the Fund** |
| &nbsp;&nbsp;Bill Cannon | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Rafael Zayas | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Austin Wen | &nbsp;&nbsp;None |

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*Accounts Managed by the Portfolio Managers.* In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of September 30, 2025.

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| | | | |
|:---|:---|:---|:---|
| **Portfolio Managers** | **Registered**<br> **Investment**<br> **Companies**<br> **Number of**<br> **Accounts**<br> **($ Assets)** | **Other Pooled**<br> **Investment Vehicles**<br> **Number of**<br> **Accounts**<br> **($ Assets)** | **Other Accounts**<br> **Number of**<br> **Accounts**<br> **($ Assets)** |
| Bill Cannon | 2 ($55.9 million) | 0 ($0) | 0 ($0) |
| Rafael Zayas | 65 ($9.02 billion) | 18 ($5.15 billion) | 0 ($0) |
| Austin Wen | 74 ($8.65 billion) | 21 ($5.18 billion) | 0 ($0) |

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*Conflicts of Interest.* The Sub-Adviser's portfolio managers' management of other accounts may give rise to potential conflicts of interest in connection with their management of the Fund's investments, on the one hand, and the investments of the other accounts, on the other. The other accounts might have similar investment objectives as the Fund or hold, purchase or sell securities that are eligible to be held, purchased or sold by the Fund. While the portfolio managers' management of other accounts may give rise to the following potential conflicts of interest, the Sub-Adviser does not believe that the conflicts, if any, are material or, to the extent any such conflicts are material, the Sub-Adviser believes that it has designed policies and procedures to manage those conflicts in an appropriate way.

***Fund Administration.*** The administrator, fund accountant and transfer agent for the Fund is U.S. Bancorp Fund Services, LLC (*"USBFS", "Administrator"*, *"Fund Accountant"* or *"Transfer Agent"*), which has its principal office at 615 East Michigan Street, Milwaukee, WI 53202 and is primarily in the business of providing administrative, fund accounting and stock transfer services to retail and institutional mutual funds. USBFS performs these services pursuant to three separate agreements, a fund administration servicing agreement, a fund accounting servicing agreement and a transfer agent servicing agreement.

*Administration Agreement.* Pursuant to the fund administration servicing agreement with the Trust (*"Administration Agreement"*), USBFS provides all administrative services necessary for the Fund, other than those provided by CoinShares Valkyrie, subject to the supervision of the Board of Trustees. USBFS employees generally will not be officers of the Fund for which they provide services.

The Administration Agreement is terminable by the Board or CoinShares Valkyrie on ninety (90) days' written notice and may be assigned provided the non-assigning party provides prior written consent. The Administration Agreement shall remain in effect for three years from the date of its initial approval, unless amended, and its renewal is subject to approval of the Board for periods thereafter. The Administration Agreement provides that in the absence of the USBFS's refusal or willful failure to comply with the Agreement or bad faith, negligence or willful misconduct on the part of USBFS, USBFS shall not be liable for any action or failure to act in accordance with its duties thereunder.

Under the Administration Agreement, USBFS provides all administrative services, including, without limitation: (i) providing services of persons competent to perform such administrative and clerical functions as are necessary to provide effective administration of the Fund; (ii) overseeing the performance of administrative and professional services to the Fund by others, including the Fund's custodian, as applicable; (iii) preparing, but not paying for, the periodic updating of the Fund's Registration Statement, Prospectus and Statement of Additional Information in conjunction with Fund counsel, including the printing of such documents for the purpose of filings with the SEC and state securities administrators, preparing the Fund's tax returns, and preparing reports to the Fund's shareholders and the SEC; (iv) calculation of yield and total return for the Fund; (v) monitoring and evaluating daily income and expense accruals, and sales and redemptions of Shares of the Fund; (vi) preparing in conjunction with Fund counsel, but not paying for, all filings under the securities or "Blue Sky" laws of such states or countries as are designated by the Distributor, which may be required to register or qualify, or continue the registration or qualification, of the Fund and/or its Shares under such laws; (vii) preparing notices and agendas for meetings of the Fund's Board and minutes of such meetings in all matters required by the 1940 Act to be acted upon by the Board; and (viii) monitoring periodic compliance with respect to all requirements and restrictions of the 1940 Act, the Internal Revenue Code and the Prospectus.

*Accounting Agreement.* Pursuant to the fund accounting servicing agreement with the Trust (the *"Fund Accounting Agreement"*), USBFS provides the Fund with all accounting services, including, without limitation: (i) daily computation of NAV; (ii) maintenance of security ledgers and books and records as required by the 1940 Act; (iii) production of the Fund's listing of portfolio securities and general ledger reports; (iv) reconciliation of accounting records; and (v) maintaining certain books and records described in Rule 31a-1 under the 1940 Act, and reconciling account information and balances among the custodian and CoinShares Valkyrie.

For the administrative and fund accounting services rendered to the Fund by USBFS, USBFS is paid an annual fee based on the average net assets of the Fund, subject to a minimum annual fee. Pursuant to the Fund's unitary management fee structure, CoinShares Valkyrie is responsible for paying for the services provided by USBFS, and the Fund does not directly pay USBFS.

*Transfer and Dividend Agent.* USBFS acts as the Fund's transfer and dividend agent. The Fund pays USBFS for its services as its transfer and dividend agent.

***Custodian.*** U.S. Bank National Association, 1555 North Rivercenter Drive, Suite 302, Milwaukee, WI 53212, serves as custodian (the *"Custodian"*) for the Fund's cash and securities. Pursuant to a custodian servicing agreement with the Fund (the *"Custodian Agreement"*), it is responsible for maintaining the books and records of the Fund's portfolio securities and cash. The Custodian does not assist in, and is not responsible for, investment decisions involving the assets of the Fund.

***Securities Lending Agent.*** The Fund may participate in securities lending arrangements whereby the Fund lends certain of its portfolio securities to brokers, dealers, and financial institutions (not with individuals) to receive additional income and increase the rate of return of its portfolio. U.S. Bank, N.A. serves as the Fund's securities lending agent and is responsible for (i) negotiating the fees (rebates) of securities loans within parameters approved by the Board; (ii) delivering loaned securities to the applicable borrower(s), a list of which has been approved by the Board; (iii) investing any cash collateral received for a securities loan in investments pre-approved by the Board; (iv) receiving the returned securities at the expiration of a loan's term; (v) daily monitoring of the value of the loaned securities and the collateral received; (vi) notifying borrowers to make additions to the collateral, when required; (vii) accounting and recordkeeping services as necessary for the operation of the securities lending program, and (viii) establishing and operating a system of controls and procedures to ensure compliance with its obligations under the Fund's securities lending program.

The Fund did not engage in securities lending activities during the fiscal year ended September 30, 2025.

***Distributor.*** ALPS Distributors, Inc. (the *"Distributor"*) serves as distributor and principal underwriter of the Creation Units of the Fund. Its principal address is 1290 Broadway, Suite 1000, Denver, Colorado 80203. The Distributor has entered into a Distribution Agreement with the Trust pursuant to which it distributes Fund shares. Shares are continuously offered for sale by the Fund through the Distributor only in Creation Units, as described below under the heading "Creation and Redemption of Creation Units."

CoinShares Valkyrie may, from time to time and from its own resources, pay, defray or absorb costs relating to distribution, including payments out of its own resources to the Distributor, or to otherwise promote the sale of shares. CoinShares Valkyrie's available resources to make these payments include profits from advisory fees received from the Fund. The services CoinShares Valkyrie may pay for include, but are not limited to, advertising and attaining access to certain conferences and seminars, as well as being presented with the opportunity to address investors and industry professionals through speeches and written marketing materials.

Since the inception of the Fund, there has been no underwriting commissions with respect to the sale of Fund Shares, and the Distributor did not receive compensation on redemptions for the Fund for that period.

*12b-1 Plan.* The Trust has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act (the *"Plan"*) pursuant to which the Fund may reimburse the Distributor up to a maximum annual rate of 0.25% of its average daily net assets. The Fund does not currently pay, and the Fund has no current intention to pay, 12b-1 fees.

However, in the event 12b-1 fees are charged in the future, under the Plan and as required by Rule 12b-1, the Trustees will receive and review after the end of each calendar quarter a written report provided by the Distributor of the amounts expended under the Plan and the purpose for which such expenditures were made. With the exception of the Distributor and its affiliates, no "interested person" of the Trust (as that term is defined in the 1940 Act) and no Trustee of the Trust has a direct or indirect financial interest in the operation of the Plan or any related agreement.

*Aggregations.* Shares of the Fund in less than Creation Units are not distributed by the Distributor. The Distributor will deliver the Prospectus and, upon request, this SAI to Authorized Participants purchasing Creation Units and will maintain records of both orders placed with it and confirmations of acceptance furnished by it. The Distributor is a broker-dealer registered under the 1934 Act and a member of the Financial Industry Regulatory Authority (*"FINRA"*).

The Distribution Agreement provides that it may be terminated at any time, without the payment of any penalty, on at least 60 days' written notice by the Trust to the Distributor (i) by vote of a majority of the Independent Trustees; or (ii) by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund. The Distribution Agreement will terminate automatically in the event of its assignment (as defined in the 1940 Act).

The Distributor may also enter into agreements with participants that utilize the facilities of the Depository Trust Company (the *"DTC Participants"*), which have international, operational, capabilities and place orders for Creation Units of the Fund's shares. Participating Parties (as defined in "Procedures for Creation of Creation Units" below) shall be DTC Participants (as defined in "DTC Acts as Securities Depository for Fund Shares" below).

**BROKERAGE ALLOCATIONS**

The Sub-Adviser is responsible for decisions to buy and sell securities for the Fund and for the placement of the Fund's securities business, the negotiation of the commissions to be paid on brokered transactions, the prices for principal trades in securities, and the allocation of portfolio brokerage and principal business. It is the policy of CoinShares Valkyrie to seek the best execution at the best security price available with respect to each transaction, and with respect to brokered transactions in light of the overall quality of brokerage and research services provided to CoinShares Valkyrie and its clients. The best price to the Fund means the best net price without regard to the mix between purchase or sale price and commission, if any. Purchases may be made from underwriters, dealers, and, on occasion, the issuers. Commissions will be paid on the Fund's futures transactions, if any. The purchase price of portfolio securities purchased from an underwriter or dealer may include underwriting commissions and dealer spreads. The Fund may pay mark-ups on principal transactions. In selecting broker-dealers and in negotiating commissions, the Sub-Adviser considers, among other things, the firm's reliability, the quality of its execution services on a continuing basis and its financial condition.

Section 28(e) of the Securities Exchange Act of 1934, as amended (the *"1934 Act"*) permits an investment adviser, under certain circumstances, to cause an account to pay a broker or dealer who supplies brokerage and research services a commission for effecting a transaction in excess of the amount of commission another broker or dealer would have charged for effecting the transaction. Brokerage and research services include (i) furnishing advice as to the value of securities, the advisability of investing, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; (ii) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts; and (iii) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement, and custody). Such brokerage and research services are often referred to as "soft dollars." CoinShares Valkyrie has advised the Board of Trustees that it does not currently intend to use soft dollars.

Notwithstanding the foregoing, in selecting brokers, the Sub-Adviser may in the future consider investment and market information and other research, such as economic, securities and performance measurement research, provided by such brokers, and the quality and reliability of brokerage services, including execution capability, performance, and financial responsibility. Accordingly, the commissions charged by any such broker may be greater than the amount another firm might charge if the Sub-Adviser determines in good faith that the amount of such commissions is reasonable in relation to the value of the research information and brokerage services provided by such broker to the Sub-Adviser or the Trust. In addition, the Sub-Adviser must determine that the research information received in this manner provides the Fund with benefits by supplementing the research otherwise available to the Fund. The Investment Management Agreement provides that such higher commissions will not be paid by the Fund unless the Adviser determines in good faith that the amount is reasonable in relation to the services provided. The investment advisory fees paid by the Fund to CoinShares Valkyrie under the Investment Management Agreement would not be reduced as a result of receipt by CoinShares Valkyrie of research services.

The Sub-Adviser places portfolio transactions for other advisory accounts advised by it, and research services furnished by firms through which the Fund effects securities transactions may be used by the Sub-Adviser in servicing all of its accounts; not all of such services may be used by the Sub-Adviser in connection with the Fund. The Sub-Adviser believes it is not possible to measure separately the benefits from research services to each of the accounts (including the Fund) advised by it. Because the volume and nature of the trading activities of the accounts are not uniform, the amount of commissions in excess of those charged by another broker paid by each account for brokerage and research services will vary. However, the Sub-Adviser believes such costs to the Fund will not be disproportionate to the benefits received by the Fund on a continuing basis. The Sub-Adviser seeks to allocate portfolio transactions equitably whenever concurrent decisions are made to purchase or sell securities by the Fund and another advisory account. In some cases, this procedure could have an adverse effect on the price or the amount of securities available to the Fund. In making such allocations between the Fund and other advisory accounts, the main factors considered by the Sub-Adviser are the respective investment objectives, the relative size of portfolio holding of the same or comparable securities, the availability of cash for investment and the size of investment commitments generally held.

The following table sets forth the amount the Fund paid in brokerage commissions for the three most recent fiscal years:

***Brokerage Commissions***

---

| | |
|:---|:---|
| &nbsp;&nbsp;Fiscal Year ended September 30, 2023 | &nbsp;&nbsp;$7581 |
| &nbsp;&nbsp;Fiscal Year ended September 30, 2024 | &nbsp;&nbsp;$36051 |
| &nbsp;&nbsp;Fiscal Year ended September 30, 2025 | &nbsp;&nbsp;$60812 |

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For the fiscal year ended September 30, 2023, the fiscal year ended September 30, 2024, and the fiscal year ended September 30, 2025, the Fund did not pay commissions to any affiliated brokers.

*Research Services.* During the fiscal year ended September 30, 2025, the Fund did not pay commissions to brokers in return for research services.

**ADDITIONAL INFORMATION**

*Book Entry Only System.* The following information supplements and should be read in conjunction with the Prospectus.

*DTC Acts as Securities Depository for Fund Shares.* Shares of the Fund are represented by securities registered in the name of The Depository Trust Company (*"DTC"*) or its nominee, Cede & Co., and deposited with, or on behalf of, DTC.

DTC, a limited-purpose trust company, was created to hold securities of its participants (the *"DTC Participants"*) and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities, certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the New York Stock Exchange (the *"NYSE"*) and FINRA. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the *"Indirect Participants"*).

Beneficial ownership of Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to herein as *"Beneficial Owners"*) is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through the DTC Participant a written confirmation relating to their purchase and sale of Shares.

Conveyance of all notices, statements and other communications to Beneficial Owners is effected as follows. Pursuant to a letter agreement between DTC and the Trust, DTC is required to make available to the Trust upon request and for a fee to be charged to the Trust a listing of the Shares of the Fund held by each DTC Participant. The Trust shall inquire of each such DTC Participant as to the number of Beneficial Owners holding Shares, directly or indirectly, through such DTC Participant. The Trust shall provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners. In addition, the Trust shall pay to each such DTC Participants a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements.

Fund distributions shall be made to DTC or its nominee, as the registered holder of all Fund Shares. DTC or its nominee, upon receipt of any such distributions, shall immediately credit DTC Participants' accounts with payments in amounts proportionate to their respective beneficial interests in shares of the Fund as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a "street name," and will be the responsibility of such DTC Participants.

The Trust has no responsibility or liability for any aspect of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in such shares, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests, or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.

DTC may decide to discontinue providing its service with respect to shares at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action to find a replacement for DTC to perform its functions at a comparable cost.

*Policy Regarding Disclosure of Portfolio Holdings.* The Trust has adopted a policy regarding the disclosure of information about the Fund's portfolio holdings. The Board of Trustees must approve all material amendments to this policy. The Fund's portfolio holdings are publicly disseminated each day the Fund is open for business through financial reporting and news services, including publicly accessible Internet websites. In addition, a basket composition file, which includes the security names and share quantities to deliver in exchange for Fund Shares, together with estimates and actual cash components, is publicly disseminated each day the Exchange is open for trading via the National Securities Clearing Corporation (*"NSCC"*). The basket represents one Creation Unit of the Fund. The Fund's portfolio holdings are also available on the Fund's website at https://coinshares.com/us/etf/wgmi/. The Trust, CoinShares Valkyrie, Vident and the Distributor will not disseminate non-public information concerning the Trust.

*Quarterly Portfolio Schedule.* The Trust is required to disclose on a quarterly basis the complete schedule of the Fund's portfolio holdings with the SEC on Form N-PORT. Form N-PORT for the Trust is available on the SEC's website at https://www.sec.gov. The Fund's Form N-PORT may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Trust's Forms N-PORT are available without charge, upon request, by calling 1-800-617-0004 or by writing to Valkyrie ETF Trust II, 437 Madison Avenue, 28th Floor New York, New York 10022.

*Codes of Ethics.* In order to mitigate the possibility that the Fund will be adversely affected by personal trading, the Trust, CoinShares Valkyrie, Vident and the Distributor have adopted Codes of Ethics under Rule 17j-1 of the 1940 Act. These Codes of Ethics contain policies restricting securities trading in personal accounts of access persons, Trustees and others who normally come into possession of information on portfolio transactions. Personnel subject to the Codes of Ethics may invest in securities that may be purchased or held by the Fund; however, the Codes of Ethics require that each transaction in such securities be reviewed by the Compliance Department. These Codes of Ethics are on public file with, and are available from, the SEC.

**PROXY VOTING POLICIES AND PROCEDURES**

The Trust has adopted a proxy voting policy that seeks to ensure that proxies for securities held by the Fund are voted consistently with the best interests of the Fund.

The Board has delegated to CoinShares Valkyrie the proxy voting responsibilities for the Fund and has directed CoinShares Valkyrie to vote proxies consistent with the Fund's best interests. CoinShares Valkyrie has engaged the services of Institutional Shareholder Services Inc. ("ISS") to make recommendations to CoinShares Valkyrie on the voting of proxies relating to securities held by the Fund. The services provided to CoinShares Valkyrie through ISS include access to ISS' research analysis and their voting recommendations.

The fundamental guideline followed by CoinShares Valkyrie in voting proxies is to make every effort to confirm that the manner in which shares are voted is in the best interest of clients and the value of the investment. Absent special circumstances of the types described below, it is the policy of CoinShares Valkyrie to exercise its proxy voting discretion in accordance with the ISS Proxy Voting Guidelines set forth in Exhibit A.

Information regarding how the Fund voted proxies (if any) relating to portfolio securities during the most recent 12-month period ended June 30 is available upon request and without charge on the Fund's website at https://coinshares.com/us/etf/wgmi/, by calling 1-202-854-1343 or by accessing the SEC's website at https://www.sec.gov.

**CREATION AND REDEMPTION OF CREATION UNITS**

*<u>General</u>*. ETFs, such as the Fund, generally issue and redeem their shares in primary market transactions through a creation and redemption mechanism and do not sell or redeem individual shares. Instead, financial entities known as "Authorized Participants" that have contractual arrangements with an ETF or one of the ETF's service providers to purchase and redeem ETF shares directly with the ETF in large blocks of shares known as "Creation Units." Prior to start of trading on every business day, an ETF publishes through the National Securities Clearing Corporation (*"NSCC"*) the "basket" of securities, cash or other assets that it will accept in exchange for a Creation Unit of the ETF's shares. An Authorized Participant that wishes to effectuate a creation of an ETF's shares deposits with the ETF the "basket" of securities, cash or other assets identified by the ETF that day, and then receives the Creation Unit of the ETF's shares in return for those assets. After purchasing a Creation Unit, the Authorized Participant may continue to hold the ETF's shares or sell them in the secondary market. The redemption process is the reverse of the purchase process: the authorized participant redeems a Creation Unit of ETF shares for a basket of securities, cash or other assets. The combination of the creation and redemption process with secondary market trading in ETF shares and underlying securities provides arbitrage opportunities that are designed to help keep the market price of ETF shares at or close to the NAV per share of the ETF.

*<u>Authorized Participants</u>*. An "Authorized Participant" is a member or participant of a clearing agency registered with the SEC that has a written agreement with the Fund or one of its service providers that allows the Authorized Participant to place orders for the purchase or redemption of Creation Units (a *"Participant Agreement"*). Orders to purchase Creation Units must be delivered through an Authorized Participant that has executed a Participant Agreement and must comply with the applicable provisions of such Participant Agreement. Investors wishing to purchase or sell shares generally do so on an exchange. Institutional investors other than Authorized Participants are responsible for making arrangements for a redemption request to be made through an Authorized Participant.

*<u>Business Day</u>*. A "Business Day" is generally any day on which the New York Stock Exchange (*"NYSE"*), the Exchange and the Trust are open for business. As of the date of this SAI, the NYSE observes the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Business Day on which an order to purchase or redeem Creation Units is received in proper form is referred to as the *"Transmittal Date."*

*<u>Basket Composition</u>*. Rule 6c-11(c)(3) under of the 1940 Act requires an ETF relying on the exemptions offered by Rule 6c-11 to adopt and implement written policies and procedures governing the construction of baskets and the process that the ETF will use for the acceptance of baskets. In general, in connection with the construction and acceptance of baskets, the Adviser may consider various factors, including, but not limited to: (1) whether the securities, assets and other positions comprising a basket are consistent with the ETF's investment objective(s), policies and disclosure; (2) whether the securities, assets and other positions can legally and readily be acquired, transferred and held by the ETF and/or Authorized Participant(s), as applicable; (3) whether to utilize cash, either in lieu of securities or other instruments or as a cash balancing amount; and (4) in the case of an ETF that tracks an index, whether the securities, assets and other positions aid index tracking.

The Fund may utilize a pro-rata basket or a custom basket in reliance on Rule 6c-11. A "pro-rata basket" is a basket that is a pro rata representation of the ETF's portfolio holdings, except for minor deviations when it is not operationally feasible to include a particular instrument within the basket, except to the extent that the Fund utilized different baskets in transactions on the same Business Day.

Rule 6c-11 defines "custom baskets" to include two categories of baskets. First, a basket containing a non-representative selection of the ETF's portfolio holdings would constitute a custom basket. These types of custom baskets include, but are not limited to, baskets that do not reflect: (i) a pro rata representation of the Fund's portfolio holdings; (ii) a representative sampling of an ETF's portfolio holdings; or (iii) changes due to a rebalancing or reconstitution of an ETF's securities market index, if applicable. Second, if different baskets are used in transactions on the same Business Day, each basket after the initial basket would constitute a custom basket. For example, if an ETF exchanges a basket with either the same or another Authorized Participant that reflects a representative sampling that differs from the initial basket, that basket (and any such subsequent baskets) would be a custom basket. Similarly, if an ETF substitutes cash in lieu of a portion of basket assets for a single Authorized Participant, that basket would be a custom basket.

Under a variety of circumstances, an ETF and its shareholders may benefit from the flexibility afforded by custom baskets. In general terms, the use of custom baskets may reduce costs, increase efficiency and improve trading. Because utilizing custom baskets provides a way for an ETF to add, remove and re-weight portfolio securities without transacting in the market, it may help the ETF to avoid transaction costs and adverse tax consequences. Rule 6c-11 provides an ETF with flexibility to use "custom baskets" if the ETF has adopted written policies and procedures that: (1) set forth detailed parameters for the construction and acceptance of custom baskets that are in the best interests of the ETF and its shareholders, including the process for any revisions to, or deviations from, those parameters; and (2) specify the titles or roles of employees of the ETF's investment adviser who are required to review each custom basket for compliance with those parameters.

The use of baskets that do not correspond to pro rata to an ETF's portfolio holdings has historically created concern that an Authorized Participant could take advantage of its relationship with an ETF and pressure the ETF to construct a basket that favors an Authorized Participant to the detriment of the ETF's shareholders. For example, because ETFs rely on Authorized Participants to maintain the secondary market by promoting an effective arbitrage mechanism, an Authorized Participant holding less liquid or less desirable securities potentially could pressure an ETF into accepting those securities in its basket in exchange for liquid ETF shares (*i.e.*, dumping). An Authorized Participant also could pressure the ETF into including in its basket certain desirable securities in exchange for ETF shares tendered for redemption (*i.e.*, cherry-picking). In either case, the ETF's other investors would be disadvantaged and would be left holding shares of an ETF with a less liquid or less desirable portfolio of securities. The Adviser has adopted policies and procedures designed to mitigate these concerns but there is ultimately no guarantee that such policies and procedures will be effective.

*<u>Basket Dissemination</u>*. Basket files are published for consumption through the NSCC, a subsidiary of Depository Trust & Clearing Corporation, and can be utilized for pricing, creations, redemptions, rebalancing and custom scenarios. In most instances, pro rata baskets are calculated and supplied by the ETF's custodial bank based on ETF holdings, whereas non-pro rata, custom and forward-looking pro rata baskets are calculated by the Fund's investment adviser and disseminated by the ETF's custodial bank through the NSCC process.

*<u>Placement of Creation or Redemption Orders</u>*. All orders to purchase or redeem Creation Units are to be governed according to the applicable Participant Agreement that each Authorized Participant has executed. In general, all orders to purchase or redeem Creation Units must be received by the transfer agent in the proper form required by the Participant Agreement no later than the closing time of the regular trading session of the NYSE (ordinarily 4:00 p.m. Eastern Standard Time) on each day the NYSE is open for business (the *"Closing Time"*) in order for the purchase or redemption of Creation Units to be effected based on the NAV of shares of the Fund as next

determined on such date after receipt of the order in proper form. Notwithstanding the foregoing, the Fund may, but is not required to permit orders until 4:00 p.m., Eastern time, or until the market closes (in the event the Exchange closes early). However, at its discretion, the Fund may require an Authorized Participant to submit orders to purchase or redeem Creation Units be placed earlier in the day (such as instances where an applicable market for a security comprising a creation or redemption basket closes earlier than usual).

*<u>Delivery of Redemption Proceeds</u>*. Deliveries of securities to Authorized Participants in connection with redemption orders are generally expected to be made within two Business Days. Due to the schedule of holidays in certain countries, however, the delivery of in-kind redemption proceeds for the Fund may take longer than two Business Days after the day on which the redemption request is received in proper form. Section 22(e) of the 1940 Act generally prohibits a registered open-end management investment company from postponing the date of satisfaction of redemption requests for more than seven days after the tender of a security for redemption. This prohibition can cause operational difficulties for ETFs that hold foreign investments and exchange in-kind baskets for Creation Units. For example, local market delivery cycles for transferring foreign investments to redeeming investors, together with local market holiday schedules, can sometimes require a delivery process in excess of seven days. However, Rule 6c-11 grants relief from Section 22(e) to permit an ETF to delay satisfaction of a redemption request for more than seven days if a local market holiday, or series of consecutive holidays, or the extended delivery cycles for transferring foreign investments to redeeming Authorized Participants, or the combination thereof prevents timely delivery of the foreign investment included in the ETF's basket. Under this exemption, an ETF must deliver foreign investments as soon as practicable, but in no event later than 15 days after the tender to the ETF. The exemption therefore will permit a delay only to the extent that additional time for settlement is actually required, when a local market holiday, or series of consecutive holidays, or the extended delivery cycles for transferring foreign investments to redeeming authorized participants prevents timely delivery of the foreign investment included in the ETF's basket. If a foreign investment settles in less than 15 days, Rule 6c-11 requires an ETF to deliver it pursuant to the standard settlement time of the local market where the investment trades. Rule 6c-11 defines "foreign investment" as any security, asset or other position of the ETF issued by a foreign issuer (as defined by Rule 3b-4 under the 1934 Act), and that is traded on a trading market outside of the United States. This definition is not limited to "foreign securities," but also includes other investments that may not be considered securities. Although these other investments may not be securities, they may present the same challenges for timely settlement as foreign securities if they are transferred in kind.

*<u>Creation Transaction Fees</u>*. The Fund imposes fees in connection with the purchase of Creation Units. These fees may vary based upon various facts-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price for each Creation Unit will equal the daily NAV per share of the Fund times the number of shares in a Creation Unit, plus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the creation basket.

*<u>Redemption Transaction Fees</u>*. The Fund also imposes fees in connection with the redemption of Creation Units. These fees may vary based upon various facts-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price received for each Creation Unit will equal the daily NAV per share of the Fund times the number of shares in a Creation Unit, minus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the redemption basket. Investors who use the services of a broker or other such intermediary in addition to an Authorized Participant to effect a redemption of a Creation Unit may also be assessed an amount to cover the cost of such services. The redemption fee charged by the Fund will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no more than 2% of the value of the shares redeemed.

*<u>Acceptance of Creation Orders</u>*. The Fund will accept all orders for Creation Units that are in good order. Circumstances under which the Fund may not accept a creation order include, but are not limited to: (i) the order is not in proper form; (ii) the purchaser or group of related purchasers, upon obtaining the Creation Units of Fund shares ordered, would own 80% or more of the currently outstanding shares of the Fund; (iii) the required consideration is not delivered; (iv) the acceptance of the Fund Deposit would, in the opinion of the Fund, be unlawful; or (v) there exist circumstances outside the control of the Fund that make it impossible to process orders of Creation Units for all practical purposes. Examples of such circumstances include: acts of God or public service or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Fund, CoinShares Valkyrie, the Distributor, DTC, NSCC, the transfer agent, the custodian, any sub-custodian or any other participant in the purchase process; and similar extraordinary events. The Transfer Agent shall notify a prospective creator of a Creation Unit and/or the Authorized Participant acting on behalf of such prospective creator of the rejection of the order of such person. The Trust, the Fund, the Transfer Agent, the custodian, any sub-custodian and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits, nor shall any of them incur any liability for the failure to give any such notification.

*<u>Acceptance of Redemption Orders</u>*. An ETF may suspend the redemption of Creation Units only in accordance with Section 22(e) of the 1940 Act. Section 22(e) stipulates that no registered investment company shall suspend the right of redemption, or postpone the date of payment or satisfaction upon redemption of any redeemable security in accordance with its terms for more than seven days after the tender of such security to the company or its agent designated for that purpose for redemption, except (1) for any period (A) during which the NYSE is closed other than customary week-end and holiday closings or (B) during which trading on the NYSE is restricted; (2) for any period during which an emergency exists as a result of which (A) disposal by the investment company of securities owned by it is not reasonably practicable or (B) it is not reasonably practicable for such company fairly to determine the value of its net assets; or (3) for such other periods as the SEC may by order permit for the protection of security holders of the investment company.

*<u>Exceptions to Use of Creation Units</u>*. Under Rule 6c-11 of the 1940 Act, ETFs are permitted to sell or redeem individual shares on the day of consummation of a reorganization, merger, conversion, or liquidation. In these limited circumstances, an ETF may need to issue or redeem individual shares and may need to transact without utilizing Authorized Participants.

**CERTAIN U.S. FEDERAL TAX MATTERS**

This section summarizes some of the main U.S. federal income tax consequences of owning Shares of the Fund. This section is current as of the date of this SAI. Tax laws and interpretations change frequently, and these summaries do not describe all of the tax consequences to all taxpayers. For example, these summaries generally do not describe your situation if you are a corporation, a non-U.S. person, a broker-dealer, or other investor with special circumstances. In addition, this section does not describe your state, local or foreign tax consequences.

This federal income tax summary is based in part on the advice of counsel to the Fund. The Internal Revenue Service could disagree with any conclusions set forth in this section. In addition, our counsel was not asked to review, and has not reached a conclusion with respect to the federal income tax treatment of the assets to be deposited in the Fund. This may not be sufficient for prospective investors to use for the purpose of avoiding penalties under federal tax law.

As with any investment, prospective investors should seek advice based on their individual circumstances from their own tax adviser.

The Fund intends to qualify annually and to elect to be treated as a regulated investment company under the Internal Revenue Code of 1986, as amended (the *"Code"*).

To qualify for the favorable U.S. federal income tax treatment generally accorded to regulated investment companies, the Fund must, among other things, (i) derive in each taxable year at least 90% of its gross income from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of stock, securities or foreign currencies or other income derived with respect to its business of investing in such stock, securities or currencies, or net income derived from interests in certain publicly traded partnerships; (ii) diversify its holdings so that, at the end of each quarter of the taxable year, (a) at least 50% of the market value of the Fund's assets is represented by cash and cash items (including receivables), U.S. government securities, the securities of other regulated investment companies and other securities, with such other securities of any one issuer generally limited for the purposes of this calculation to an amount not greater than 5% of the value of the Fund's total assets and not greater than 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the value of its total assets is invested in the securities (other than U.S. government securities or the securities of other regulated investment companies) of any one issuer, or two or more issuers which the Fund controls which are engaged in the same, similar or related trades or businesses, or the securities of one or more of certain publicly traded partnerships; and (iii) distribute at least 90% of its investment company taxable income (which includes, among other items, dividends, interest and net short-term capital gains in excess of net long-term capital losses) and at least 90% of its net tax-exempt interest income each taxable year. There are certain exceptions for failure to qualify if the failure is for reasonable cause or is *de minimis*, and certain corrective action is taken and certain tax payments are made by the Fund.

As a regulated investment company, the Fund generally will not be subject to U.S. federal income tax on its investment company taxable income (as that term is defined in the Code, but without regard to the deduction for dividends paid) and net capital gain (the excess of net long-term capital gain over net short-term capital loss), if any, that it distributes to shareholders. The Fund intends to distribute to its shareholders, at least annually, substantially all of its investment company taxable income and net capital gain. If the Fund retains any net capital gain or investment company taxable income, it will generally be subject to federal income tax at regular corporate rates on the amount retained. In addition, amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% excise tax unless, generally, the Fund distributes during each calendar year an amount equal to the sum of (1) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (2) at least 98.2% of its capital gains in excess of its capital losses (adjusted for certain ordinary losses) for the one-year period ending October 31 of the calendar year, and (3) any ordinary income and capital gains for previous years that were not distributed during those years. In order to prevent application of the excise tax, the Fund intends to make its distributions in accordance with the calendar year distribution requirement. A distribution will be treated as paid on December 31 of the current calendar year if it is declared by the Fund in October, November or December with a record date in such a month and paid by the Fund during January of the following calendar year. Such distributions will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received.

Subject to certain reasonable cause and *de minimis* exceptions, if the Fund fails to qualify as a regulated investment company or failed to satisfy the 90% distribution requirement in any taxable year, the Fund would be taxed as an ordinary corporation on its taxable income (even if such income were distributed to its shareholders) and all distributions out of earnings and profits would be taxed to shareholders as ordinary income.

*Distributions*

Dividends paid out of the Fund's investment company taxable income are generally taxable to a shareholder as ordinary income to the extent of the Fund's earnings and profits, whether paid in cash or reinvested in additional shares. However, certain ordinary income distributions received from the Fund may be taxed at capital gains tax rates. In particular, ordinary income dividends received by an individual shareholder from a regulated investment company such as the Fund are generally taxed at the same rates that apply to net capital gain, *provided* that certain holding period requirements are satisfied and provided the dividends are attributable to qualifying dividends received by the Fund itself.

The Fund will provide notice to its shareholders of the amount of any distributions that may be taken into account as a dividend, which is eligible for the capital gains tax rates. The Fund cannot make any guarantees as to the amount of any distribution, which will be regarded as a qualifying dividend.

Income from the Fund may also be subject to a 3.8% "Medicare tax." This tax generally applies to net investment income if the taxpayer's adjusted gross income exceeds certain threshold amounts, which are $250,000 in the case of married couples filing joint returns and $200,000 in the case of single individuals.

A corporation that owns Shares generally will not be entitled to the dividends received deduction with respect to many dividends received from the Fund because the dividends received deduction is generally not available for distributions from regulated investment companies. However, certain ordinary income dividends on Shares that are attributable to qualifying dividends received by the Fund from certain domestic corporations may be reported by the Fund as being eligible for the dividends received deduction.

Distributions of net capital gain (the excess of net long-term capital gain over net short-term capital loss), if any, properly reported as capital gain dividends are taxable to a shareholder as long-term capital gains, regardless of how long the shareholder has held Fund Shares. An election may be available to you to defer recognition of the gain attributable to a capital gain dividend if you make certain qualifying investments within a limited time. You should talk to your tax adviser about the availability of this deferral election and its requirements. Shareholders receiving distributions in the form of additional Shares, rather than cash, generally will have a tax basis in each such share equal to the value of a Share of the Fund on the reinvestment date. A distribution of an amount in excess of the Fund's current and accumulated earnings and profits will be treated by a shareholder as a return of capital which is applied against and reduces the shareholder's basis in his or her Shares. To the extent that the amount of any such distribution exceeds the shareholder's basis in his or her Shares, the excess will be treated by the shareholder as gain from a sale or exchange of the Shares.

Shareholders will be notified annually as to the U.S. federal income tax status of distributions, and shareholders receiving distributions in the form of additional shares will receive a report as to the value of those Shares.

*Sale or Exchange of Fund Shares*

Upon the sale or other disposition of Shares of the Fund, which a shareholder holds as a capital asset, such a shareholder may realize a capital gain or loss, which will be long-term or short-term, depending upon the shareholder's holding period for the Shares. Generally, a shareholder's gain or loss will be a long-term gain or loss if the Shares have been held for more than one year.

Any loss realized on a sale or exchange will be disallowed to the extent that Shares disposed of are replaced (including through reinvestment of dividends) within a period of 61 days beginning 30 days before and ending 30 days after disposition of shares or to the extent that the shareholder, during such period, acquires or enters into an option or contract to acquire, substantially identical stock or securities. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss. Any loss realized by a shareholder on a disposition of Fund Shares held by the shareholder for six months or less will be treated as a long-term capital loss to the extent of any distributions of long-term capital gain received by the shareholder with respect to such Shares.

*Taxes on Purchase and Redemption of Creation Units*

If a shareholder exchanges securities for Creation Units the shareholder will generally recognize a gain or a loss. The gain or loss will be equal to the difference between the market value of the Creation Units at the time and the shareholder's aggregate basis in the securities surrendered and the Cash Component paid. If a shareholder exchanges Creation Units for securities, then the shareholder will generally recognize a gain or loss equal to the difference between the shareholder's basis in the Creation Units and the aggregate market value of the securities received and the Cash Redemption Amount. The Internal Revenue Service, however, may assert that a loss realized upon an exchange of securities for Creation Units or Creation Units for securities cannot be deducted currently under the rules governing "wash sales," or on the basis that there has been no significant change in economic position.

*Nature of Fund Investments*

Certain of the Fund's investment practices are subject to special and complex federal income tax provisions that may, among other things, (i) disallow, suspend or otherwise limit the allowance of certain losses or deductions; (ii) convert lower taxed long-term capital gain into higher taxed short-term capital gain or ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited); (iv) cause the Fund to recognize income or gain without a corresponding receipt of cash; (v) adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur; and (vi) adversely alter the characterization of certain complex financial transactions.

*Futures Contracts and Options*

The Fund's transactions in futures contracts and options will be subject to special provisions of the Code that, among other things, may affect the character of gains and losses realized by the Fund (*i.e.*, may affect whether gains or losses are ordinary or capital, or short-term or long-term), may accelerate recognition of income to the Fund and may defer Fund losses. These rules could, therefore, affect the character, amount and timing of distributions to shareholders. These provisions also (a) will require the Fund to mark-to-market certain types of the positions in its portfolio (i.e., treat them as if they were closed out), and (b) may cause the Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the 90% distribution requirement for qualifying to be taxed as a regulated investment company and the distribution requirements for avoiding excise taxes.

*Investments in Certain Non-U.S. Corporations*

If the Fund holds an equity interest in any "passive foreign investment companies" (*"PFICs"*), which are generally certain non-U.S. corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, certain rents and royalties or capital gains) or that hold at least 50% of their assets in investments producing such passive income, the Fund could be subject to U.S. federal income tax and additional interest charges on gains and certain distributions with respect to those equity interests, even if all the income or gain is timely distributed to its shareholders. The Fund will not be able to pass through to its shareholders any credit or deduction for such taxes. The Fund may be able to make an election that could ameliorate these adverse tax consequences. In this case, the Fund would recognize as ordinary income any increase in the value of such PFIC shares, and as ordinary loss any decrease in such value to the extent it did not exceed prior increases included in income. Under this election, the Fund might be required to recognize in a year income in excess of its distributions from PFICs and its proceeds from dispositions of PFIC stock during that year, and such income would nevertheless be subject to the distribution requirement and would be taken into account for purposes of the 4% excise tax (described above). Dividends paid by PFICs are not treated as qualified dividend income.

*Backup Withholding*

The Fund may be required to withhold U.S. federal income tax from all taxable distributions and sale proceeds payable to shareholders who fail to provide the Fund with their correct taxpayer identification number or fail to make required certifications, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. Corporate shareholders and certain other shareholders specified in the Code generally are exempt from such backup withholding. This withholding is not an additional tax. Any amounts withheld may be credited against the shareholder's U.S. federal income tax liability.

*Non-U.S. Shareholders*

U.S. taxation of a shareholder who, as to the United States, is a nonresident alien individual, a non-U.S. trust or estate, a non-U.S. corporation or non-U.S. partnership (*"non-U.S. shareholder"*) depends on whether the income of the Fund is "effectively connected" with a U.S. trade or business carried on by the shareholder.

In addition to the rules described in this section concerning the potential imposition of withholding on distributions to non-U.S. persons, distributions to non-U.S. persons that are "financial institutions" may be subject to a withholding tax of 30% unless an agreement is in place between the financial institution and the U.S. Treasury to collect and disclose information about accounts, equity investments, or debt interests in the financial institution held by one or more U.S. persons or the institution is resident in a jurisdiction that has entered into such an agreement with the U.S. Treasury. For these purposes, a "financial institution" means any entity that (i) accepts deposits in the ordinary course of a banking or similar business; (ii) holds financial assets for the account of others as a substantial portion of its business; or (iii) is engaged (or holds itself out as being engaged) primarily in the business of investing, reinvesting or trading in securities, partnership interests, commodities or any interest (including a futures contract or option) in such securities, partnership interests or commodities. This withholding tax is also currently scheduled to apply to the gross proceeds from the disposition of securities that produce U.S. source interest or dividends. However, proposed regulations may eliminate the requirement to withhold on payments of gross proceeds from dispositions.

Distributions to non-financial non-U.S. entities (other than publicly traded non-U.S. entities, entities owned by residents of U.S. possessions, non-U.S. governments, international organizations, or non-U.S. central banks), will also be subject to a withholding tax of 30% if the entity does not certify that the entity does not have any substantial U.S. owners or provide the name, address and TIN of each substantial U.S. owner. This withholding tax is also currently scheduled to apply to the gross proceeds from the disposition of securities that produce U.S. source interest or dividends. However, proposed regulations may eliminate the requirement to withhold on payments of gross proceeds from dispositions.

*Income Not Effectively Connected.* If the income from the Fund is not "effectively connected" with a U.S. trade or business carried on by the non-U.S. shareholder, distributions of investment company taxable income will generally be subject to a U.S. tax of 30% (or lower treaty rate), which tax is generally withheld from such distributions.

Distributions of capital gain dividends and any amounts retained by the Fund which are properly reported by the Fund as undistributed capital gains will not be subject to U.S. tax at the rate of 30% (or lower treaty rate) unless the non-U.S. shareholder is a nonresident alien individual and is physically present in the United States for more than 182 days during the taxable year and meets certain other requirements. However, this 30% tax on capital gains of nonresident alien individuals who are physically present in the United States for more than the 182 day period only applies in exceptional cases because any individual present in the United States for more than 182 days during the taxable year is generally treated as a resident for U.S. income tax purposes; in that case, he or she would be subject to U.S. income tax on his or her worldwide income at the graduated rates applicable to U.S. citizens, rather than the 30% U.S. tax. In the case of a non-U.S. shareholder who is a nonresident alien individual, the Fund may be required to withhold U.S. income tax from distributions of net capital gain unless the non-U.S. shareholder certifies his or her non-U.S. status under penalties of perjury or otherwise establishes an exemption. If a non-U.S. shareholder is a nonresident alien individual, any gain such shareholder realizes upon the sale or exchange of such shareholder's Shares of the Fund in the United States will ordinarily be exempt from U.S. tax unless the gain is U.S. source income and such shareholder is physically present in the United States for more than 182 days during the taxable year and meets certain other requirements.

Distributions from the Fund that are properly reported by the Fund as an interest-related dividend attributable to certain interest income received by the Fund or as a short-term capital gain dividend attributable to certain net short-term capital gain income received by the Fund may not be subject to U.S. federal income taxes, including withholding taxes when received by certain non-U.S. investors, provided that the Fund makes certain elections and certain other conditions are met.

In addition, capital gain distributions attributable to gains from U.S. real property interests (including certain U.S. real property holding corporations) will generally be subject to United States withholding tax and will give rise to an obligation on the part of the non-U.S. shareholder to file a United States tax return.

*Income Effectively Connected.* If the income from the Fund is "effectively connected" with a U.S. trade or business carried on by a non-U.S. shareholder, then distributions of investment company taxable income and capital gain dividends, any amounts retained by the Fund which are properly reported by the Fund as undistributed capital gains and any gains realized upon the sale or exchange of Shares of the Fund will be subject to U.S. income tax at the graduated rates applicable to U.S. citizens, residents and domestic corporations. Non-U.S. corporate shareholders may also be subject to the branch profits tax imposed by the Code. The tax consequences to a non-U.S. shareholder entitled to claim the benefits of an applicable tax treaty may differ from those described herein. Non-U.S. shareholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in the Fund.

*Other Taxation*

Fund shareholders may be subject to state, local and foreign taxes on their Fund distributions. Shareholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in the Fund.

*Capital Loss Carryforward*

As of September 30, 2025, for federal income tax purposes, the Fund had capital loss carryforwards available to offset future capital gains as indicated in the table below.

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| | | | |
|:---|:---|:---|:---|
| **Fund** | **Short-Term** | **Long-Term** | **Expires** |
| CoinShares Bitcoin Mining ETF | $16477551 | $2893105 |  |

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**DETERMINATION OF NET ASSET VALUE**

The following information supplements and should be read in conjunction with the section in the Prospectus entitled "Net Asset Value."

The per Share NAV of the Fund is determined by dividing the total value of the securities and other assets, less liabilities, by the total number of shares outstanding. Market value prices represent last sale or official closing prices from a national or foreign exchange (*i.e.*, a regulated market) and are primarily obtained from third party pricing services. Under normal circumstances, daily calculation of the net asset value will utilize the last closing price of each security held by the Fund at the close of the market on which such security is principally listed. In determining NAV, portfolio securities for the Fund for which accurate market quotations are readily available will be valued by the Fund accounting agent as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Common stocks and other equity securities listed on any national or foreign exchange other than NASDAQ and the London Stock Exchange Alternative Investment Market (*"AIM"*) will be valued at the last sale price on the business day as of which such value is being determined. Securities listed on NASDAQ or AIM are valued at the official closing price on the business day as of which such value is being determined. If there has been no sale on such day, or no official closing price in the case of securities traded on NASDAQ and AIM, the securities are valued at the midpoint between the most recent bid and ask prices on such day. Portfolio securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Securities traded in the OTC market are valued at the midpoint between the bid and asked price, if available, and otherwise at their closing bid prices.

In addition, the following types of securities will be valued as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Fixed income securities will be valued by the fund accounting agent using a pricing service. When price quotes are not available, fair value is based on prices of comparable securities.

The value of any portfolio security held by the Fund for which market quotations are not readily available will be determined by CoinShares Valkyrie in a manner that most fairly reflects fair market value of the security on the valuation date, based on a consideration of all available information.

Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Board of Trustees or its delegate at fair value. These securities generally include but are not limited to, restricted securities (securities which may not be publicly sold without registration under the 1933 Act) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of Fund net asset value (as may be the case in foreign markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, does not reflect the security's "fair value." As a general principle, the current "fair value" of an issue of securities would appear to be the amount, that the owner might reasonably expect to receive for them upon their current sale. A variety of factors may be considered in determining the fair value of such securities. Rule 2a-5 addresses a board's valuation policies and the role of the board with respect to the fair value of a fund's investments. It further provides requirements for determining fair value in good faith under the 1940 Act. The Board of Trustees has designated the Adviser as "valuation designee" to perform fair value determinations for all of the Funds' investments pursuant to Rule 2a-5 under the Investment Company Act of 1940, as amended. The Board of Trustees will oversee the Adviser's fair value determinations and its performance as valuation designee.

Valuing the Fund's investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Use of fair value prices and certain current market valuations could result in a difference between the prices used to calculate the Fund's NAV and the prices used in secondary market transactions.

Because foreign markets may be open on different days than the days during which a shareholder may purchase the shares of the Fund, the value of the Fund's investments may change on the days when shareholders are not able to purchase the shares of the Fund.

The Fund may suspend the right of redemption for the Fund only under the following unusual circumstances: (i) when the NYSE is closed (other than weekends and holidays) or trading is restricted; (ii) when trading in the markets normally utilized is restricted, or when an emergency exists as determined by the SEC so that disposal of the Fund's investments or determination of its net assets is not reasonably practicable; or (iii) during any period when the SEC may permit.

**DIVIDENDS AND DISTRIBUTIONS**

The following information supplements and should be read in conjunction with the section in the Prospectus entitled "Dividends, Distributions and Taxes."

*General Policies.* Dividends from net investment income of the Fund, if any, are declared and paid at least annually. Distributions of net realized securities gains, if any, generally are declared and paid once a year, but the Trust may make distributions on a more frequent basis. The Trust reserves the right to declare special distributions if, in its reasonable discretion, such action is necessary or advisable to preserve the status of the Fund as a regulated investment company or to avoid imposition of income or excise taxes on undistributed income.

Dividends and other distributions of Fund shares are distributed, as described below, on a pro rata basis to Beneficial Owners of such shares. Dividend payments are made through DTC Participants and Indirect Participants to Beneficial Owners then of record with proceeds received from the Fund.

*Dividend Reinvestment Service.* No reinvestment service is provided by the Trust. Broker-dealers may make available the DTC book-entry Dividend Reinvestment Service for use by Beneficial Owners of the Fund for reinvestment of their dividend distributions. Beneficial Owners should contact their brokers in order to determine the availability and costs of the service and the details of participation therein. Brokers may require Beneficial Owners to adhere to specific procedures and timetables. If this service is available and used, dividend distributions of both income and realized gains will be automatically reinvested in additional whole shares of the Fund purchased in the secondary market.

**MISCELLANEOUS INFORMATION**

*Counsel.* Chapman and Cutler LLP, 320 South Canal Street, Chicago, Illinois 60606, is counsel to the Trust.

*Independent Registered Public Accounting Firm.* Cohen & Company, Ltd., 342 North Water Street, Suite 830, Milwaukee, Wisconsin 53202, serves as the Fund's independent registered public accounting firm. The firm audits the Fund's financial statements. Cohen & Co. Advisory, LLC, an affiliate of Cohen & Company, Ltd., provides tax services as requested.

Cohen & Company, Ltd., 342 North Water Street, Suite 830, Milwaukee, Wisconsin 53202, serves as the Fund's independent registered public accounting firm. The firm audits the Fund's financial statements and performs other related audit services.

**PERFORMANCE INFORMATION**

To obtain the Fund's most current performance information, please call 1-800-617-0004 or visit the Fund's website at https://coinshares.com/us/etf/wgmi/. From time to time, the Fund's performance information, such as yield or total return, may be quoted in advertisements or in communications to present or prospective shareholders. Performance quotations represent the Fund's past performance and should not be considered as representative of future results. The Fund will calculate its performance in accordance with the requirements of the rules and regulations under the 1940 Act, as they may be revised from time to time.

**FINANCIAL STATEMENTS**

The audited financial statements and notes thereto in the <u>Fund's Annual Report</u> to Shareholders for the fiscal year ended September 30, 2025 (the "Annual Report") are incorporated by reference into this SAI. No other parts of the Annual Report are incorporated by reference herein. The financial statements included in the Annual Report have been audited by Cohen & Company, Ltd., each Fund's independent registered public accounting firm, whose report thereon also appears in the Annual Report and is incorporated by reference into this SAI. A copy of the Annual Report for the fiscal year ended September 30, 2025 may be obtained upon request and without charge by writing Valkyrie Funds LLC at 437 Madison Avenue, 28th Floor, New York, New York 10022 or by calling 1-800-617-0004.

**Exhibit A – Proxy Voting Guidelines**

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**TABLE OF CONTENTS**

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| | |
|:---|:---|
| **Introduction** | **9** |
| **1. Routine/Miscellaneous** | **10** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjourn Meeting | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amend Quorum Requirements | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amend Minor Bylaws | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change Company Name | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change Date, Time, or Location of Annual Meeting | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Business | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;Audit-Related | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Auditor Indemnification and Limitation of Liability | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Auditor Ratification | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposals Limiting Non-Audit Services | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposals on Audit Firm Rotation | 12 |
| **2. Board of Directors** | **13** |
| &nbsp;&nbsp;&nbsp;&nbsp;Voting on Director Nominees in Uncontested Elections | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accountability | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Problematic Takeover Defenses, Capital Structure, and Governance Structures | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Problematic Audit-Related Practices | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Problematic Compensation Practices | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Environmental, Social and Governance (ESG) Failures | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Climate Risk Mitigation and Net Zero | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Responsiveness | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Composition | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gender Diversity | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Racial and/or Ethnic Diversity | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Independence | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sustainability Policy Classification of Directors – U.S. | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other Board-Related Proposals | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Board Refreshment | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Board Size | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Classification/Declassification of the Board | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CEO Succession Planning | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cumulative Voting | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Director and Officer Indemnification, Liability Protection, and Exculpation | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Establish/Amend Nominee Qualifications | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Establish Other Board Committee Proposals | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Filling Vacancies/Removal of Directors | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Independent Board Chair | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Majority of Independent Directors/Establishment of Independent Committees | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Majority Vote Standard for the Election of Directors | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proxy Access | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Require More Nominees than Open Seats | 27 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Engagement Policy (Shareholder Advisory Committee) | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proxy Contests/Proxy Access - Voting for Director Nominees in Contested Elections | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vote-No Campaigns | 28 |
| **3. Shareholder Rights & Defenses** | **29** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance Notice Requirements for Shareholder Proposals/Nominations | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amend Bylaws without Shareholder Consent | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control Share Acquisition Provisions | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control Share Cash-Out Provisions | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Disgorgement Provisions | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair Price Provisions | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Freeze-Out Provisions | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Greenmail | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Litigation Rights | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal Forum Selection Provisions | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exclusive Forum Provisions for State Law Matters | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fee Shifting | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Operating Loss (NOL) Protective Amendments | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;Poison Pills (Shareholder Rights Plans) | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management Proposals to Ratify a Poison Pill | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs) | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proxy Voting Disclosure, Confidentiality, and Tabulation | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reimbursing Proxy Solicitation Expenses | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reincorporation Proposals | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Ability to Act by Written Consent | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Ability to Call Special Meetings | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stakeholder Provisions | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;State Antitakeover Statutes | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supermajority Vote Requirements | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Virtual Shareholder Meetings | 36 |
| **4.&nbsp;&nbsp;&nbsp;&nbsp;Capital/Restructuring** | **37** |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to Par Value of Common Stock | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common Stock Authorization | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General Authorization Requests | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specific Authorization Requests | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dual Class Structure | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issue Stock for Use with Rights Plan | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preemptive Rights | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred Stock Authorization | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General Authorization Requests | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specific Authorization Requests | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recapitalization Plans | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reverse Stock Splits | 40 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share Repurchase Programs | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Distributions: Splits and Dividends | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tracking Stock | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S. | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Appraisal Rights | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Asset Purchases | 41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Asset Sales | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bundled Proposals | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conversion of Securities | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Formation of Holding Company | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs) | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Joint Ventures | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liquidations | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mergers and Acquisitions | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Private Placements/Warrants/Convertible Debentures | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reorganization/Restructuring Plan (Bankruptcy) | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special Purpose Acquisition Corporations (SPACs) | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Spin-offs | 47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Value Maximization Shareholder Proposals | 47 |
| **5. Compensation** | **48** |
| &nbsp;&nbsp;&nbsp;&nbsp;Executive Pay Evaluation | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advisory Votes on Executive Compensation—Management Proposals (Management Say-on-Pay) | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pay-for-Performance Evaluation | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Problematic Pay Practices | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation Committee Communications and Responsiveness | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Frequency of Advisory Vote on Executive Compensation ("Say When on Pay") | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity-Based and Other Incentive Plans | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Value Transfer (SVT) | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Three-Year Value-Adjusted Burn Rate | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Egregious Factors | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liberal Change in Control Definition | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repricing Provisions | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Problematic Pay Practices or Significant Pay-for-Performance Disconnect | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specific Treatment of Certain Award Types in Equity Plan Evaluations | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividend Equivalent Rights | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs) | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other Compensation Plans | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;401(k) Employee Benefit Plans | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee Stock Ownership Plans (ESOPs) | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee Stock Purchase Plans—Qualified Plans | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee Stock Purchase Plans—Non-Qualified Plans | 55 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m)) | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Option Exchange Programs/Repricing Options | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Plans in Lieu of Cash | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transfer Stock Option (TSO) Programs | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;Director Compensation | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder Ratification of Director Pay Programs | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity Plans for Non-Employee Directors | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Employee Director Retirement Plans | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposals on Compensation | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adopt Anti-Hedging/Pledging/Speculative Investments Policy | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bonus Banking/Bonus Banking "Plus" | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation Consultants—Disclosure of Board or Company's Utilization | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Disclosure/Setting Levels or Types of Compensation for Executives and Directors | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Golden Coffins/Executive Death Benefits | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hold Equity Past Retirement or for a Significant Period of Time | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pay Disparity | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pay for Performance/Performance-Based Awards | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pay for Superior Performance | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-Arranged Trading Plans (10b5-1 Plans) | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prohibit Outside CEOs from Serving on Compensation Committees | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoupment of Incentive or Stock Compensation in Specified Circumstances | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Severance Agreements for Executives/Golden Parachutes | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share Buyback Proposals | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplemental Executive Retirement Plans (SERPs) | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax Gross-Up Proposals | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity | 63 |
| **6. Social and Environmental Issues** | **64** |
| &nbsp;&nbsp;&nbsp;&nbsp;Global Approach | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;Animal Welfare | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Animal Welfare Policies | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Animal Testing | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Animal Slaughter | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Issues | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Genetically Modified Ingredients | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reports on Potentially Controversial Business/Financial Practices | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer Lending | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pharmaceutical Pricing, Access to Medicines, Product Reimportation and Health Pandemics | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Health Pandemics | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Product Safety and Toxic/Hazardous Materials | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tobacco-Related Proposals | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;Climate Change | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Climate Change/Greenhouse Gas (GHG) Emissions | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Say on Climate (SoC) Management Proposals | 68 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Say on Climate (SoC) Shareholder Proposals | 68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Energy Efficiency | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Renewable Energy | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diversity | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Board Diversity | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equality of Opportunity | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gender Identity, Sexual Orientation, and Domestic Partner Benefits | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gender, Race/Ethnicity Pay Gap | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Racial Equity and/or Civil Rights Audits | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;Environment and Sustainability | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Facility and Workplace Safety | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hydraulic Fracturing | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operations in Protected Areas | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recycling | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sustainability Reporting | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Water Issues | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equator Principles | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;General Corporate Issues | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charitable Contributions | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Data Security, Privacy, and Internet Issues | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Environmental, Social, and Governance (ESG) Compensation-Related Proposals | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;Human Rights, Labor Issues, and International Operations | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Human Rights Proposals | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mandatory Arbitration | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MacBride Principles | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Community Social and Environmental Impact Assessments | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operations in High-Risk Markets | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Outsourcing/Offshoring | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sexual Harassment | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weapons and Military Sales | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;Political Activities | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lobbying | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Political Contributions | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Political Ties | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Political Expenditures and Lobbying Congruency | 76 |
| **7. Mutual Fund Proxies** | **77** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Election of Directors | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Converting Closed-end Fund to Open-end Fund | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proxy Contests | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment Advisory Agreements | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approving New Classes or Series of Shares | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred Stock Proposals | 78 |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1940 Act Policies | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changing a Fundamental Restriction to a Nonfundamental Restriction | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change Fundamental Investment Objective to Nonfundamental | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name Change Proposals | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in Fund's Subclassification | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Disposition of Assets/Termination/Liquidation | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes to the Charter Document | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changing the Domicile of a Fund | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distribution Agreements | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Master-Feeder Structure | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mergers | 81 |
| &nbsp;&nbsp;&nbsp;&nbsp;Shareholder Proposals for Mutual Funds | 81 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Establish Director Ownership Requirement | 81 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reimburse Shareholder for Expenses Incurred | 81 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Terminate the Investment Advisor | 81 |
| **8. Foreign Private Issuers Listed on U.S. Exchanges** | **82** |

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**Introduction**

ISS recognizes the growing view among investment professionals that sustainability or environmental, social, and corporate governance (ESG) factors could present material risks to portfolio investments. Whereas investment managers have traditionally analyzed topics such as board accountability and executive compensation to mitigate risk, greater numbers are incorporating ESG performance into their investment making decisions in order to have a more comprehensive understanding of the overall risk profile of the companies in which they invest and ensure sustainable long-term profitability for their beneficiaries.

Investors concerned with portfolio value preservation and enhancement through the incorporation of sustainability factors can also carry out this active ownership approach through their proxy voting activity. In voting their shares, sustainability-minded investors are concerned not only with economic returns to shareholders and good corporate governance, but also with ensuring corporate activities and practices are aligned with the broader objectives of society. These investors seek standardized reporting on ESG issues, request information regarding an issuer's adoption of, or adherence to, relevant norms, standards, codes of conduct or universally recognized international initiatives including affirmative support for related shareholder resolutions advocating enhanced disclosure and transparency.

**ISS' Sustainability Proxy Voting Guidelines**

ISS has, therefore, developed proxy voting guidelines that are consistent with the objectives of sustainability-minded investors and fiduciaries. On matters of ESG import, ISS' Sustainability Policy seeks to promote support for recognized global governing bodies promoting sustainable business practices advocating for stewardship of environment, fair labor practices, non-discrimination, and the protection of human rights. Generally, ISS' Sustainability Policy will take as its frame of reference internationally recognized sustainability-related initiatives such as the United Nations Environment Programme Finance Initiative (UNEP FI), United Nations Principles for Responsible Investment (UNPRI), United Nations Global Compact, Global Reporting Initiative (GRI), Carbon Principles, International Labour Organization Conventions (ILO), Ceres Roadmap 2030, Global Sullivan Principles, MacBride Principles, and environmental and social European Union Directives. Each of these efforts promote a fair, unified and productive reporting and compliance environment which advances positive corporate ESG actions that promote practices that present new opportunities or that mitigate related financial and reputational risks.

On matters of corporate governance, executive compensation, and corporate structure, the Sustainability Policy guidelines are based on a commitment to create and preserve economic value and to advance principles of good corporate governance.

These guidelines provide an overview of how ISS approaches proxy voting issues for subscribers of the Sustainability Policy. We note there may be cases in which the final vote recommendation at a particular company varies from the voting guidelines due to the fact that we closely examine the merits of each proposal and consider relevant information and company-specific circumstances in arriving at our decisions. To that end, ISS engages with both interested shareholders as well as issuers to gain further insight into contentious issues facing the company. Where ISS acts as voting agent for clients, it follows each client's voting policy, which may differ in some cases from the policies outlined in this document. ISS updates its guidelines on an annual basis to take into account emerging issues and trends on environmental, social and corporate governance topics, as well as the evolution of market standards, regulatory changes and client feedback.

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1. Routine/Miscellaneous

**Adjourn Meeting**

**Sustainability Policy Recommendation:** Generally vote against proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.

■ Vote
 for proposals that relate specifically to soliciting votes for a merger or transaction
 if supporting that merger or transaction.

■ Vote
 against proposals if the wording is too vague or if the proposal includes "other
 business."

**Amend Quorum Requirements**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding, taking into consideration:

■ The
 new quorum threshold requested;

■ The
 rationale presented for the reduction;

■ The
 market capitalization of the company (size, inclusion in indices);

■ The
 company's ownership structure;

■ Previous
 voter turnout or attempts to achieve quorum;

■ Any
 provisions or commitments to restore quorum to a majority of shares outstanding, should
 voter turnout improve sufficiently; and

■ Other
 factors as appropriate.

In general, a quorum threshold kept as close to a majority of shares outstanding as is achievable is preferred.

Vote case-by-case on directors who unilaterally lower the quorum requirements below a majority of the shares outstanding, taking into consideration the factors listed above.

**Amend Minor Bylaws**

**Sustainability Policy Recommendation:** Vote for bylaw or charter changes that are of a housekeeping nature (updates or corrections).

**Change Company Name**

**Sustainability Policy Recommendation:** Vote for proposals to change the corporate name unless there is compelling evidence that the change would adversely impact shareholder value.

**Change Date, Time, or Location of Annual Meeting**

**Sustainability Policy Recommendation:** Vote for management proposals to change the date, time, or location of the annual meeting unless the proposed change is unreasonable.

Vote against shareholder proposals to change the date, time, or location of the annual meeting unless the current scheduling or location is unreasonable.

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**Other Business**

**Sustainability Policy Recommendation:** Vote against proposals to approve other business when it appears as voting item.

Audit-Related

**Auditor Indemnification and Limitation of Liability**

**Sustainability Policy Recommendation:** Vote case-by-case on the issue of auditor indemnification and limitation of liability. Factors to be assessed include, but are not limited to:

■ The
 terms of the auditor agreement--the degree to which these agreements impact shareholders'
 rights;

■ The
 motivation and rationale for establishing the agreements;

■ The
 quality of the company's disclosure; and

■ The
 company's historical practices in the audit area.

Vote against or withhold from members of an audit committee in situations where there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

**Auditor Ratification**

**Sustainability Policy Recommendation:** Vote for proposals to ratify auditors unless any of the following apply:

■ An
 auditor has a financial interest in or association with the company, and is therefore
 not independent;

■ There
 is reason to believe that the independent auditor has rendered an opinion that is neither
 accurate nor indicative of the company's financial position;

■ Poor
 accounting practices are identified that rise to a serious level of concern, such as:
 fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures;
 or

■ Fees
 for non-audit services ("Other" fees) are excessive.

Non-audit fees are excessive if:

■ Non-audit
 ("other") fees > audit fees + audit-related fees + tax compliance/preparation
 fees

Tax compliance and preparation include the preparation of original and amended tax returns and refund claims, and tax payment planning. All other services in the tax category, such as tax advice, planning, or consulting, should be added to "Other" fees. If the breakout of tax fees cannot be determined, add all tax fees to "Other" fees.

In circumstances where "Other" fees include fees related to significant one-time capital structure events (such as initial public offerings, bankruptcy emergence, and spin-offs) and the company makes public disclosure of the amount and nature of those fees that are an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.

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**Shareholder Proposals Limiting Non-Audit Services**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals asking companies to prohibit or limit their auditors from engaging in non-audit services.

**Shareholder Proposals on Audit Firm Rotation**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals asking for audit firm rotation, taking into account:

■ The
 tenure of the audit firm;

■ The
 length of rotation specified in the proposal;

■ Any
 significant audit-related issues at the company;

■ The
 number of audit committee meetings held each year;

■ The
 number of financial experts serving on the committee; and

■ Whether
 the company has a periodic renewal process where the auditor is evaluated for both audit
 quality and competitive price.

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2. Board of Directors

Voting on Director Nominees in Uncontested Elections

Four fundamental principles apply when determining votes on director nominees:

■ *<u>Accountability</u>* :
 Boards should be sufficiently accountable to shareholders, including through transparency
 of the company's governance practices and regular board elections, by the provision
 of sufficient information for shareholders to be able to assess directors and board composition,
 and through the ability of shareholders to remove directors.

■ *<u>Responsiveness</u>* :
 Directors should respond to investor input, such as that expressed through significant
 opposition to management proposals, significant support for shareholder proposals (whether
 binding or non-binding), and tender offers where a majority of shares are tendered.

■ *<u>Composition</u>* :
 Companies should seek directors who can add value to the board through specific skills
 or expertise and who can devote sufficient time and commitment to serve effectively.
 Boards should be of a size appropriate to accommodate diversity, expertise, and independence,
 while ensuring active and collaborative participation by all members. Boards should be
 sufficiently diverse to ensure consideration of a wide range of perspectives.

■ *<u>Independence</u>* :
 Boards should be sufficiently independent from management (and significant shareholders)
 so as to ensure that they are able and motivated to effectively supervise management's
 performance for the benefit of all shareholders, including in setting and monitoring
 the execution of corporate strategy, with appropriate use of shareholder capital, and
 in setting and monitoring executive compensation programs that support that strategy.
 The chair of the board should ideally be an independent director, and all boards should
 have an independent leadership position or a similar role in order to help provide appropriate
 counterbalance to executive management, as well as having sufficiently independent committees
 that focus on key governance concerns such as audit, compensation, and nomination of
 directors.

**Sustainability Policy Recommendation:** Generally vote for director nominees, except under the following circumstances (with new nominees**<sup>1</sup>** considered on a case-by-case basis):

**Accountability**

**Problematic Takeover Defenses, Capital Structure, and Governance Structures**

**Classified Board Structure:** The board is classified, and a continuing director responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote recommendation is not up for election. All appropriate nominees (except new) may be held accountable.

**Removal of Shareholder Discretion on Classified Boards:** The company has opted into, or failed to opt out of, state laws requiring a classified board structure.

**<sup>1</sup>** A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question.

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**Director Performance Evaluation:** The board lacks mechanisms to promote accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three-, and five-year total shareholder returns in the bottom half of a company's four-digit GICS industry group (Russell 3000 companies only). Take into consideration the company's operational metrics and other factors as warranted. Problematic provisions include but are not limited to:

■ A
 classified board structure;

■ A
 supermajority vote requirement;

■ Either
 a plurality vote standard in uncontested director elections or a majority vote standard
 with no plurality carve-out for contested elections;

■ The
 inability of shareholders to call special meetings;

■ The
 inability of shareholders to act by written consent;

■ A
 multi-class capital structure; and/or

■ A
 non–shareholder-approved poison pill.

**Poison Pills:** Generally vote against or withhold from all nominees (except new nominees**<sup>1</sup>**, who should be considered case-by-case) if:

■ The
 company has a poison pill with a deadhand or slowhand feature **<sup>2</sup>**;

■ The
 board makes a material adverse modification to an existing pill, including, but not limited
 to, extension, renewal, or lowering the trigger, without shareholder approval; or

■ The
 company has a long-term poison pill (with a term of over one year) that was not approved
 by the public shareholders **<sup>3</sup>**.

Vote case-by-case on nominees if the board adopts an initial short-term pill**<sup>3</sup>** (with a term of one year or less) without shareholder approval, taking into consideration:

■ The
 disclosed rationale for the adoption;

■ The
 trigger;

■ The
 company's market capitalization (including absolute level and sudden changes);

■ A
 commitment to put any renewal to a shareholder vote; and

■ Other
 factors as relevant.

**Unilateral Bylaw/Charter Amendments:** Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees<sup>2</sup>, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:

■ The
 board's rationale for adopting the bylaw/charter amendment without shareholder
 ratification;

■ Disclosure
 by the company of any significant engagement with shareholders regarding the amendment;

■ The
 level of impairment of shareholders' rights caused by the board's unilateral
 amendment to the bylaws/charter;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 board's track record with regard to unilateral board action on bylaw/charter amendments
 or other entrenchment provisions;

■ The
 company's ownership structure;

■ The
 company's existing governance provisions;

■ The
 timing of the board's amendment to the bylaws/charter in connection with a significant
 business development; and,

■ Other
 factors, as deemed appropriate, that may be relevant to determine the impact of the amendment
 on shareholders.

**<sup>2</sup>** If the short-term pill with a deadhand or slowhand feature is enacted but expires before the next shareholder vote, ISS will generally still recommend withhold/against nominees at the next shareholder meeting following its adoption.

**<sup>3</sup>** Approval prior to, or in connection, with a company's becoming publicly-traded, or in connection with a de-SPAC transaction, is insufficient.

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Unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years vote case-by-case on director nominees.

Generally vote against (except new nominees, who should be considered case-by-case) if the directors:

■ Classified
 the board;

■ Adopted
 supermajority vote requirements to amend the bylaws or charter;

■ Eliminated
 shareholders' ability to amend bylaws;

■ Adopted
 a fee-shifting provision; or

■ Adopted
 another provision deemed egregious.

**Problematic Governance Structure:** For companies that hold or held their first annual meeting**<sup>7</sup>** of public shareholders after Feb. 1, 2015, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees<sup>1</sup>, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights

■ Supermajority
 vote requirements to amend the bylaws or charter;

■ A
 classified board structure; or

■ Other
 egregious provisions.

A provision which specifies that the problematic structure(s) will be sunset within seven years of the date of going public will be considered a mitigating factor.

Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.

**Unequal Voting Rights:** Generally vote withhold or against directors individually, committee members, or the entire board (except new nominees<sup>1</sup>, who should be considered case-by-case), if the company employs a common stock structure with unequal voting rights**<sup>5</sup>**.

Exceptions to this policy will generally be limited to:

■ Newly-public
 companies **<sup>6</sup>** with a sunset provision of no more than seven years from
 the date of going public;

■ Limited
 Partnerships and the Operating Partnership (OP) unit structure of REITs;

■ Situations
 where the unequal voting rights are considered *de minimis*; or

■ The
 company provides sufficient protections for minority shareholders, such as allowing minority
 shareholders a regular binding vote on whether the capital structure should be maintained.

**Management Proposals to Ratify Existing Charter or Bylaw Provisions:** Vote against/withhold from individual directors, members of the governance committee, or the full board, where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:

■ The
 presence of a shareholder proposal addressing the same issue on the same ballot;

■ The
 board's rationale for seeking ratification;

■ Disclosure
 of actions to be taken by the board should the ratification proposal fail;

**<sup>4</sup>** Includes companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

**<sup>5</sup>** This generally includes classes of common stock that have additional votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; or stock with time-phased voting rights ("loyalty shares").

**<sup>6</sup>** Newly-public companies generally include companies that emerge from bankruptcy, SPAC transactions, spin-offs, direct listings, and those who complete a traditional initial public offering.

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■ Disclosure
 of shareholder engagement regarding the board's ratification request;

■ The
 level of impairment to shareholders' rights caused by the existing provision;

■ The
 history of management and shareholder proposals on the provision at the company's
 past meetings;

■ Whether
 the current provision was adopted in response to the shareholder proposal;

■ The
 company's ownership structure; and

■ Previous
 use of ratification proposals to exclude shareholder proposals.

**Restricting Binding Shareholder Proposals:** Generally vote against or withhold from members of the governance committee if:

■ The
 company's governing documents impose undue restrictions on shareholders'
 ability to amend the bylaws. Such restrictions include but are not limited to: outright
 prohibition on the submission of binding shareholder proposals, or share ownership requirements,
 subject matter restrictions, or time holding requirement in excess of SEC Rule 14a-8.
 Vote against or withhold on an ongoing basis.

Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Generally, continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.

**Problematic Audit-Related Practices**

Generally, vote against or withhold from the members of the audit committee if:

■ The
 non-audit fees paid to the auditor are excessive (see discussion under "Auditor
 Ratification");

■ The
 company receives an adverse opinion on the company's financial statements from
 its auditor; or

■ There
 is persuasive evidence that the audit committee entered into an inappropriate indemnification
 agreement with its auditor that limits the ability of the company, or its shareholders,
 to pursue legitimate legal recourse against the audit firm.

Vote case-by-case on members of the audit committee and potentially the full board if:

■ Poor
 accounting practices are identified that rise to a level of serious concern, such as:
 fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures.
 Examine the severity, breadth, chronological sequence, and duration, as well as the company's
 efforts at remediation or corrective actions, in determining whether withhold/against
 votes are warranted.

**Problematic Compensation Practices**

In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item or in egregious situations, vote against or withhold from the members of the compensation committee and potentially the full board if:

■ There
 is a significant misalignment between CEO pay and company performance (pay
 for performance);

■ The
 company maintains significant problematic pay practices ;

■ The
 board exhibits a significant level of poor communication
 and responsiveness to shareholders;

■ The
 company fails to include a Say on Pay ballot item when required under SEC provisions,
 or under the company's declared frequency of say on pay; or

■ The
 company fails to include a Frequency of Say on Pay ballot item when required under SEC
 provisions.

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Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.

**Problematic Pledging of Company Stock:** Vote against the members of the committee that oversees risks related to pledging, or the full board, where a significant level of pledged company stock by executives or directors raises concerns. The following factors will be considered:

■ The
 presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits
 future pledging activity;

■ The
 magnitude of aggregate pledged shares in terms of total common shares outstanding, market
 value, and trading volume;

■ Disclosure
 of progress or lack thereof in reducing the magnitude of aggregate pledged shares over
 time;

■ Disclosure
 in the proxy statement that shares subject to stock ownership and holding requirements
 do not include pledged company stock; and

■ Any
 other relevant factors.

**Environmental, Social and Governance (ESG) Failures**

Under extraordinary circumstances, vote against or withhold from directors individually, committee members, or the entire board, due to:

■ Material
 failures of governance, stewardship, risk oversight **<sup>7</sup>**, or fiduciary
 responsibilities at the company, including failure to adequately guard against or manage
 ESG risks;

■ A
 lack of sustainability reporting in the company's public documents and/or website
 in conjunction with a failure to adequately manage or mitigate ESG risks;

■ Failure
 to replace management as appropriate; or

■ Egregious
 actions related to a director's service on other boards that raise substantial
 doubt about his or her ability to effectively oversee management and serve the best interests
 of shareholders at any company.

**Climate Risk Mitigation and Net Zero**

For companies that are significant greenhouse gas (GHG) emitters, through their operations or value chain**<sup>8</sup>**, generally vote against or withhold from the incumbent chair of the responsible committee (or other directors on a case-by-case basis) in cases where Sustainability Advisory Services determines that the company is not taking the minimum steps need to be aligned with a Net Zero by 2050 trajectory.

For **2023**, the minimum steps needed to be considered to be aligned with a Net Zero by 2050 trajectory are (all minimum criteria will be required to be in alignment with the policy):

■ The
 company has detailed disclosure of climate-related risks, such as according to the framework
 established by the Task Force on Climate-related Financial Disclosures (TCFD), including:

&nbsp;&nbsp;&nbsp;&nbsp;■ Board
 governance measures;

&nbsp;&nbsp;&nbsp;&nbsp;■ Corporate
 strategy;

&nbsp;&nbsp;&nbsp;&nbsp;■ Risk
 management analyses; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Metrics
 and targets.

**<sup>7</sup>** Examples of failure of risk oversight include, but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; demonstrably poor risk oversight of environmental and social issues, including climate change; significant environmental incidents including spills and pollution; large scale or repeat workplace fatalities or injuries; significant adverse legal judgments or settlements; or hedging of company stock.

**<sup>8</sup>** For 2023, companies defined as "significant GHG emitters" will be those on the current Climate Action 100+ Focus Group list.

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■ The
 company has declared a Net Zero target by 2050 or sooner and the target includes scope
 1, 2, and relevant scope 3 emissions.

■ The
 company has set a medium-term target for reducing its GHG emissions.

Expectations about what constitutes "minimum steps needed to be aligned with a Net Zero by 2050 trajectory" will increase over time.

**Responsiveness**

Vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:

■ The
 board failed to act on a shareholder proposal that received the support of a majority
 of the shares cast in the previous year or failed to act on a management proposal seeking
 to ratify an existing charter/bylaw provision that received opposition of a majority
 of the shares cast in the previous year. Factors that will be considered are:

&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosed
 outreach efforts by the board to shareholders in the wake of the vote;

&nbsp;&nbsp;&nbsp;&nbsp;■ Rationale
 provided in the proxy statement for the level of implementation;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 subject matter of the proposal;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 level of support for and opposition to the resolution in past meetings;

&nbsp;&nbsp;&nbsp;&nbsp;■ Actions
 taken by the board in response to the majority vote and its engagement with shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 continuation of the underlying issue as a voting item on the ballot (as either shareholder
 or management proposals); and

&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 factors as appropriate.

■ The
 board failed to act on takeover offers where the majority of shares are tendered;

■ At
 the previous board election, any director received more than 50 percent withhold/against
 votes of the shares cast and the company has failed to address the issue(s) that caused
 the high withhold/against vote.

Vote case-by-case on compensation committee members (or, in exceptional cases, the full board) and the Say on Pay proposal if:

■ The
 company's previous say-on-pay received the support of less than 70 percent of votes
 cast. Factors that will be considered are:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's response, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of engagement efforts with major institutional investors regarding the issues that contributed
 to the low level of support (including the timing and frequency of engagements and whether
 independent directors participated);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of the specific concerns voiced by dissenting shareholders that led to the say-on-pay
 opposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of specific and meaningful actions taken to address shareholders' concerns;

&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 recent compensation actions taken by the company;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the issues raised are recurring or isolated;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's ownership structure; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the support level was less than 50 percent, which would warrant the highest degree of
 responsiveness.

■ The
 board implements an advisory vote on executive compensation on a less frequent basis
 than the frequency that received the plurality of votes cast.

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**Composition**

**Attendance at Board and Committee Meetings:** Generally vote against or withhold from directors (except nominees who served only part of the fiscal year**<sup>9</sup>**) who attend less than 75 percent of the aggregate of their board and committee meetings for the period for which they served, unless an acceptable reason for absences is disclosed in the proxy or another SEC filing. Acceptable reasons for director absences are generally limited to the following:

■ Medical
 issues/illness;

■ Family
 emergencies; and

■ Missing
 only one meeting (when the total of all meetings is three or fewer).

■ In
 cases of chronic poor attendance without reasonable justification, in addition to voting
 against the director(s) with poor attendance, generally vote against or withhold from
 appropriate members of the nominating/governance committees or the full board.

If the proxy disclosure is unclear and insufficient to determine whether a director attended at least 75 percent of the aggregate of his/her board and committee meetings during his/her period of service, vote against or withhold from the director(s) in question.

**Overboarded Directors:** Generally, vote against or withhold from individual directors who:

■ Sit
 on more than five public company boards; or

■ Are
 CEOs of public companies who sit on the boards of more than two public companies besides
 their own — withhold only at their outside boards **<sup>10</sup>**.

**Gender Diversity**

**Sustainability Policy Recommendation:** Generally vote against or withhold from the chair of the nominating committee, or other nominees on a case-by-case basis, if the board lacks at least one director of an underrepresented gender identity**<sup>11</sup>**.

**Racial and/or Ethnic Diversity**

**Sustainability Policy Recommendation:** Generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members**<sup>12</sup>**.

**<sup>9</sup>** Nominees who served for only part of the fiscal year are generally exempted from the attendance policy.

**<sup>10</sup>** Although all of a CEO's subsidiary boards will be counted as separate boards, Sustainability Advisory Services will not recommend a withhold vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent, but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

**<sup>11</sup>** Underrepresented gender identity includes directors who identify as women or as non-binary.

**<sup>12</sup>** Aggregate diversity statistics provided by the board will only be considered if specific to racial and/or ethnic diversity.

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**Independence**

Vote against or withhold from non-independent directors (Executive Directors and Non-Independent Non-Executive Directors per Sustainability Advisory Services' Classification of Directors) when:

■ Independent
 directors comprise 50 percent or less of the board;

■ The
 non-independent director serves on the audit, compensation, or nominating committee;

■ The
 company lacks an audit, compensation, or nominating committee so that the full board
 functions as that committee; or

■ The
 company lacks a formal nominating committee, even if the board attests that the independent
 directors fulfill the functions of such a committee.

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**Sustainability Policy Classification of Directors – U.S.**

1. Executive
Director

&nbsp;&nbsp;&nbsp;&nbsp;1.1. Current
 officer  ***<sup>[1]</sup>*** of the company or one of its affiliates  ***<sup>[2]</sup>*** .

2. **Non-Independent Non-Executive Director** Board Identification

&nbsp;&nbsp;&nbsp;&nbsp;2.1. Director
 identified as not independent by the board.

Controlling/Significant Shareholder

&nbsp;&nbsp;&nbsp;&nbsp;2.2. Beneficial
 owner of more than 50 percent of the company's voting power (this may be aggregated
 if voting power is distributed among more than one member of a group).

Current Employment at Company or Partnership

&nbsp;&nbsp;&nbsp;&nbsp;2.3. Non-officer
 employee of the firm (including employee representatives).

&nbsp;&nbsp;&nbsp;&nbsp;2.4. Officer  ***<sup>[1]</sup>*** ,
 former officer, or general or limited partner of a joint venture or partnership with
 the company.

Former Employment

&nbsp;&nbsp;&nbsp;&nbsp;2.5. Former
 CEO of the company.  ***<sup>[3],[4]</sup>*** 

&nbsp;&nbsp;&nbsp;&nbsp;2.6. Former
 non-CEO officer  ***<sup>[1]</sup>*** of the company or an affiliate  ***<sup>[2]</sup>*** within the past five years.

&nbsp;&nbsp;&nbsp;&nbsp;2.7. Former
 officer *<sup>[1]</sup>* of an acquired company within the past five years  ***<sup>[4]</sup>*** .

&nbsp;&nbsp;&nbsp;&nbsp;2.8. Officer  ***<sup>[1]</sup>*** of a former parent or predecessor firm at the time the company
 was sold or split off within the past five years.

&nbsp;&nbsp;&nbsp;&nbsp;2.9. Former
 interim officer if the service was longer than 18 months. If the service was between
 12 and 18 months an assessment of the interim officer's employment agreement will
 be made.  ***<sup>[5]</sup>*** 

Family Members

&nbsp;&nbsp;&nbsp;&nbsp;2.10. Immediate
 family member  ***<sup>[6]</sup>*** of a current or former officer  ***<sup>[1]</sup>*** of the company or its affiliates  ***<sup>[2]</sup>*** within the
 last five years.

&nbsp;&nbsp;&nbsp;&nbsp;2.11. Immediate
 family member  ***<sup>[6]</sup>*** of a current employee of company or its affiliates  ***<sup>[2]</sup>*** where additional factors raise concern (which may include, but are not
 limited to, the following: a director related to numerous employees; the company or its
 affiliates employ relatives of numerous board members; or a non-Section 16 officer in
 a key strategic role).

Professional, Transactional, and Charitable Relationships

&nbsp;&nbsp;&nbsp;&nbsp;2.12. Director
 who (or whose immediate family member  ***<sup>[6]</sup>***) currently provides
 professional services  ***<sup>[7]</sup>*** in excess of $10,000 per year to: the
 company, an affiliate  ***<sup>[2]</sup>*** , or an individual officer of the company
 or an affiliate; either directly or is (or whose family member is) a partner, employee,
 or controlling shareholder of an organization which provides the services.

&nbsp;&nbsp;&nbsp;&nbsp;2.13. Director
 who (or whose immediate family member  ***<sup>[6]</sup>***) currently has any
 material transactional relationship  ***<sup>[8]</sup>*** with the company or its
 affiliates  ***<sup>[2]</sup>*** ; or who is (or whose immediately family member *<sup>[6]</sup>* is) a partner in, or a controlling shareholder or an executive officer of,
 an organization which has the material transactional relationship *<sup>[8]</sup>* (excluding investments in the company through a private placement).

&nbsp;&nbsp;&nbsp;&nbsp;2.14. Director
 who (or whose immediate family member  ***<sup>[6]</sup>***) is a trustee, director,
 or employee of a charitable or non-profit organization that receives material grants
 or endowments  ***<sup>[8]</sup>*** from the company or its affiliates  ***<sup>[2]</sup>*** .

Other Relationships

&nbsp;&nbsp;&nbsp;&nbsp;2.15. Party
 to a voting agreement  ***<sup>[9]</sup>*** to vote in line with management on
 proposals being brought to shareholder vote.

&nbsp;&nbsp;&nbsp;&nbsp;2.16. Has
 (or an immediate family member  ***<sup>[6]</sup>*** has) an interlocking relationship
 as defined by the SEC involving members of the board of directors or its Compensation
 Committee  ***<sup>[10]</sup>*** .

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&nbsp;&nbsp;&nbsp;&nbsp;2.17. Founder  ***<sup>[11]</sup>*** of the company but not currently an employee.

&nbsp;&nbsp;&nbsp;&nbsp;2.18. Director
 with pay comparable to Named Executive Officers.

&nbsp;&nbsp;&nbsp;&nbsp;2.19. Any
 material  ***<sup>[12]</sup>*** relationship with the company.

3. **Independent Director** 

&nbsp;&nbsp;&nbsp;&nbsp;3.1. No
 material  ***<sup>[12]</sup>*** connection to the company other than a board seat.

**Footnotes:**

***<sup>[1]</sup>***The definition of officer will generally follow that of a "Section 16 officer" (officers subject to Section 16 of the Securities and Exchange Act of 1934) and includes the chief executive, operating, financial, legal, technology, and accounting officers of a company (including the president, treasurer, secretary, controller, or any vice president in charge of a principal business unit, division, or policy function). Current interim officers are included in this category. For private companies, the equivalent positions are applicable. A non-employee director serving as an officer due to statutory requirements (e.g. corporate secretary) will be classified as an Affiliated Outsider under "Any material relationship with the company." However, if the company provides explicit disclosure that the director is not receiving additional compensation in excess of $10,000 per year for serving in that capacity, then the director will be classified as an Independent Outsider.

***<sup>[2]</sup>*** "Affiliate" includes a subsidiary, sibling company, or parent company. Sustainability Advisory Services uses 50 percent control ownership by the parent company as the standard for applying its affiliate designation. The manager/advisor of an externally managed issuer (EMI) is considered an affiliate.

***<sup>[3]</sup>*** Includes any former CEO of the company prior to the company's initial public offering (IPO).

***<sup>[4]</sup>*** When there is a former CEO of a special purpose acquisition company (SPAC) serving on the board of an acquired company, Sustainability Advisory Services will generally classify such directors as independent unless determined otherwise taking into account the following factors: the applicable listing standards determination of such director's independence; any operating ties to the firm; and the existence of any other conflicting relationships or related party transactions.

***<sup>[5]</sup>*** Sustainability Advisory Services will look at the terms of the interim officer's employment contract to determine if it contains severance pay, long-term health and pension benefits, or other such standard provisions typically contained in contracts of permanent, non-temporary CEOs. Sustainability Advisory Services will also consider if a formal search process was under way for a full-time officer at the time.

***<sup>[6]</sup>*** "Immediate family member" follows the SEC's definition of such and covers spouses, parents, children, step-parents, step-children, siblings, in-laws, and any person (other than a tenant or employee) sharing the household of any director, nominee for director, executive officer, or significant shareholder of the company.

***<sup>[7]</sup>*** Professional services can be characterized as advisory in nature, generally involve access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment structure. Professional services generally include, but are not limited to the following: investment banking/financial advisory services; commercial banking (beyond deposit services); investment services; insurance services; accounting/audit services; consulting services; marketing services; legal services; property management services; realtor services; lobbying services; executive search services; and IT consulting services. The following would generally be considered transactional relationships and not professional services: deposit services; IT tech support services; educational services; and construction services. The case of participation in a banking syndicate by a non-lead bank should be considered a transactional (and hence subject to the associated materiality test) rather than a professional relationship. "Of Counsel" relationships are only considered immaterial if the individual does not receive any form of compensation (in excess of $10,000 per year) from, or is a retired partner of, the firm providing the professional service. The case of a company providing a professional service to one of its directors or to an entity with which one of its directors is affiliated, will be considered a transactional rather than a professional relationship. Insurance services and marketing services are assumed to be professional services unless the company explains why such services are not advisory.

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***<sup>[8]</sup>*** A material transactional relationship, including grants to non-profit organizations, exists if the company makes annual payments to, or receives annual payments from, another entity exceeding the greater of $200,000 or 5 percent of the recipient's gross revenues, in the case of a company which follows NASDAQ listing standards; or the greater of $1,000,000 or 2 percent of the recipient's gross revenues, in the case of a company which follows NYSE listing standards. In the case of a company which follows neither of the preceding standards, Sustainability Advisory Services will apply the NASDAQ-based materiality test. (The recipient is the party receiving the financial proceeds from the transaction).

***<sup>[9]</sup>*** Dissident directors who are parties to a voting agreement pursuant to a settlement or similar arrangement may be classified as independent outsiders if an analysis of the following factors indicates that the voting agreement does not compromise their alignment with all shareholders' interests: the terms of the agreement; the duration of the standstill provision in the agreement; the limitations and requirements of actions that are agreed upon; if the dissident director nominee(s) is subject to the standstill; and if there any conflicting relationships or related party transactions.

***<sup>[10]</sup>*** Interlocks include: executive officers serving as directors on each other's compensation or similar committees (or, in the absence of such a committee, on the board); or executive officers sitting on each other's boards and at least one serves on the other's compensation or similar committees (or, in the absence of such a committee, on the board).

***<sup>[11]</sup>*** The operating involvement of the founder with the company will be considered; if the founder was never employed by the company, Sustainability Advisory Services may deem him or her an independent outsider.

***<sup>[12]</sup>*** For purposes of Sustainability Advisory Services' director independence classification, "material" will be defined as a standard of relationship (financial, personal or otherwise) that a reasonable person might conclude could potentially influence one's objectivity in the boardroom in a manner that would have a meaningful impact on an individual's ability to satisfy requisite fiduciary standards on behalf of shareholders.

Other Board-Related Proposals

**Board Refreshment**

Board refreshment is best implemented through an ongoing program of individual director evaluations, conducted annually, to ensure the evolving needs of the board are met and to bring in fresh perspectives, skills, and diversity as needed.

**Term/Tenure Limits**

**Sustainability Policy Recommendation:** Vote case-by-case on management proposals regarding director term/tenure limits, considering:

■ The
 rationale provided for adoption of the term/tenure limit;

■ The
 robustness of the company's board evaluation process;

■ Whether
 the limit is of sufficient length to allow for a broad range of director tenures;

■ Whether
 the limit would disadvantage independent directors compared to non-independent directors;
 and

■ Whether
 the board will impose the limit evenly, and not have the ability to waive it in a discriminatory
 manner.

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Vote case-by-case on shareholder proposals asking for the company to adopt director term/tenure limits, considering:

■ The
 scope of the shareholder proposal; and

■ Evidence
 of problematic issues at the company combined with, or exacerbated by, a lack of board
 refreshment.

**Age Limits**

**Sustainability Policy Recommendation:** Generally vote against management and shareholder proposals to limit the tenure of independent directors through mandatory retirement ages. Vote for proposals to remove mandatory age limits.

**Board Size**

**Sustainability Policy Recommendation:** Vote for proposals seeking to fix the board size or designate a range for the board size.

Vote against proposals that give management the ability to alter the size of the board outside of a specified range without shareholder approval.

**Classification/Declassification of the Board**

**Sustainability Policy Recommendation:** Vote against proposals to classify (stagger) the board.

Vote for proposals to repeal classified boards and to elect all directors annually.

**CEO Succession Planning**

**Sustainability Policy Recommendation:** Generally vote for proposals seeking disclosure on a CEO succession planning policy, considering, at a minimum, the following factors:

■ The
 reasonableness/scope of the request; and

■ The
 company's existing disclosure on its current CEO succession planning process.

**Cumulative Voting**

**Sustainability Policy Recommendation:** Generally vote against management proposals to eliminate cumulate voting, and for shareholder proposals to restore or provide for cumulative voting, unless:

■ The
 company has proxy access, thereby allowing shareholders to nominate directors to the
 company's ballot; and

■ The
 company has adopted a majority vote standard, with a carve-out for plurality voting in
 situations where there are more nominees than seats, and a director resignation policy
 to address failed elections.

Vote for proposals for cumulative voting at controlled companies (insider voting power > 50%).

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**Director and Officer Indemnification, Liability Protection, and Exculpation**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals on director and officer indemnification liability protection, and exculpation**<sup>13</sup>.**

Consider the stated rationale for the proposed change. Also consider, among other factors, the extent to which the proposal would:

■ Eliminate
 entirely directors' and officers' liability for monetary damages for violating
 the duty of care.

■ Eliminate
 directors' and officers' liability for monetary damages for violating the
 duty of loyalty.

■ Expand
 coverage beyond just legal expenses to liability for acts that are more serious violations
 of fiduciary obligation than mere carelessness.

■ Expand
 the scope of indemnification to provide for mandatory indemnification of company officials
 in connection with acts that previously the company was permitted to provide indemnification
 for, at the discretion of the company's board (i.e., "permissive indemnification"),
 but that previously the company was not required to indemnify.

Vote for only those proposals providing such expanded coverage in cases when a director's or officer's legal defense was unsuccessful if both of the following apply:

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 the individual was found to have acted in good faith and in a manner that the individual
 reasonably believed was in the best interests of the company; and

■ If
 only the director's legal expenses would be covered.

**Establish/Amend Nominee Qualifications**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and the degree to which they may preclude dissident nominees from joining the board.

Vote case-by-case on shareholder resolutions seeking a director nominee who possesses a particular subject matter expertise, considering:

■ The
 company's board committee structure, existing subject matter expertise, and board
 nomination provisions relative to that of its peers;

■ The
 company's existing board and management oversight mechanisms regarding the issue
 for which board oversight is sought;

■ The
 company's disclosure and performance relating to the issue for which board oversight
 is sought and any significant related controversies; and

■ The
 scope and structure of the proposal.

**<sup>13</sup> Indemnification**: the condition of being secured against loss or damage.

**Limited liability**: a person's financial liability is limited to a fixed sum, or personal financial assets are not at risk if the individual loses a lawsuit that results in financial award/damages to the plaintiff.

**Exculpation**: to eliminate or limit the personal liability of a director or officer to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director or officer.

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**Establish Other Board Committee Proposals**

**Sustainability Policy Recommendation:** Generally vote against shareholder proposals to establish a new board committee, as such proposals seek a specific oversight mechanism/structure that potentially limits a company's flexibility to determine an appropriate oversight mechanism for itself. However, the following factors will be considered:

■ Existing
 oversight mechanisms (including current committee structure) regarding the issue for
 which board oversight is sought;

■ Level
 of disclosure regarding the issue for which board oversight is sought;

■ Company
 performance related to the issue for which board oversight is sought;

■ Board
 committee structure compared to that of other companies in its industry sector; and

■ The
 scope and structure of the proposal.

**Filling Vacancies/Removal of Directors**

**Sustainability Policy Recommendation:** Vote against proposals that provide that directors may be removed only for cause.

■ Vote
 for proposals to restore shareholders' ability to remove directors with or without
 cause.

■ Vote
 against proposals that provide that only continuing directors may elect replacements
 to fill board vacancies.

■ Vote
 for proposals that permit shareholders to elect directors to fill board vacancies.

**Independent Board Chair**

One of the principal functions of the board is to monitor and evaluate the performance of the CEO and other executive officers. The board chair's duty to oversee management may be compromised when he/she is connected to or a part of the management team. Generally, Sustainability Advisory Services recommends supporting shareholder proposals that would require that the position of board chair be held by an individual with no materials ties to the company other than their board seat.

**Sustainability Policy Recommendation:** Generally, support shareholder proposals that would require the board chair to be independent of management.

**Majority of Independent Directors/Establishment of Independent Committees**

**Sustainability Policy Recommendation:** Vote for shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by the Sustainability policy's definition of independent outsider. (See Sustainability Policy Classification of Directors – U.S.)

Vote for shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors unless they currently meet that standard.

**Majority Vote Standard for the Election of Directors**

**Sustainability Policy Recommendation:** Generally vote for management proposals to adopt a majority of votes cast standard for directors in uncontested elections. Vote against if no carve-out for a plurality vote standard in contested elections is included.

Generally vote for precatory and binding shareholder resolutions requesting that the board change the company's bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.

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Companies are strongly encouraged to also adopt a post-election policy (also known as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

**Proxy Access**

**Sustainability Policy Recommendation:** Generally vote for management and shareholder proposals for proxy access with the following provisions:

■ **Ownership threshold:** maximum requirement not more than three percent (3%) of the voting power;

■ **Ownership duration:** maximum requirement not longer than three (3) years of continuous ownership
 for each member of the nominating group;

■ **Aggregation:** minimal or no limits on the number of shareholders permitted to form a nominating
 group;

■ **Cap:** cap on nominees of generally twenty-five percent (25%) of the board.

Review for reasonableness any other restrictions on the right of proxy access.

Generally vote against proposals that are more restrictive than these guidelines.

**Require More Nominees than Open Seats**

**Sustainability Policy Recommendation:** Vote against shareholder proposals that would require a company to nominate more candidates than the number of open board seats.

**Shareholder Engagement Policy (Shareholder Advisory Committee)**

**Sustainability Policy Recommendation:** Generally vote for shareholder proposals requesting that the board establish an internal mechanism/process, which may include a committee, in order to improve communications between directors and shareholders, unless the company has the following features, as appropriate:

■ Established
 a communication structure that goes beyond the exchange requirements to facilitate the
 exchange of information between shareholders and members of the board;

■ Effectively
 disclosed information with respect to this structure to its shareholders;

■ Company
 has not ignored majority-supported shareholder proposals or a majority withhold vote
 on a director nominee; and

■ The
 company has an independent chair or a lead director, according to ISS' Sustainability
 policy definition. This individual must be made available for periodic consultation and
 direct communication with major shareholders.

**Proxy Contests/Proxy Access -Voting for Director Nominees in Contested Elections**

**Sustainability Policy Recommendation:** Vote case-by-case on the election of directors in contested elections, considering the following factors:

■ Long-term
 financial performance of the company relative to its industry;

■ Management's
 track record;

■ Background
 to the contested election;

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■ Nominee
 qualifications and any compensatory arrangements;

■ Strategic
 plan of dissident slate and quality of the critique against management;

■ Likelihood
 that the proposed goals and objectives can be achieved (both slates); and

■ Stock
 ownership positions.

In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed above or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether or not there are more candidates than board seats).

**Vote-No Campaigns**

**Sustainability Policy Recommendation:** In cases where companies are targeted in connection with public "vote-no" campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information.

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3. Shareholder Rights & Defenses

**Advance Notice Requirements for Shareholder Proposals/Nominations**

**Sustainability Policy Recommendation:** Vote case-by-case on advance notice proposals, giving support to those proposals which allow shareholders to submit proposals/nominations as close to the meeting date as reasonably possible and within the broadest window possible, recognizing the need to allow sufficient notice for company, regulatory, and shareholder review.

To be reasonable, the company's deadline for shareholder notice of a proposal/nominations must be no earlier than 120 days prior to the anniversary of the previous year's meeting and have a submittal window of no shorter than 30 days from the beginning of the notice period (also known as a 90-120 day window). The submittal window is the period under which shareholders must file their proposal/nominations prior to the deadline.

In general, support additional efforts by companies to ensure full disclosure in regard to a proponent's economic and voting position in the company so long as the informational requirements are reasonable and aimed at providing shareholders with the necessary information to review such proposals.

**Amend Bylaws without Shareholder Consent**

**Sustainability Policy Recommendation:** Vote against proposals giving the board exclusive authority to amend the bylaws.

Vote for proposals giving the board the ability to amend the bylaws in addition to shareholders.

**Control Share Acquisition Provisions**

Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.

**Sustainability Policy Recommendation:** Vote for proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.

Vote against proposals to amend the charter to include control share acquisition provisions.

Vote for proposals to restore voting rights to the control shares.

**Control Share Cash-Out Provisions**

Control share cash-out statutes give dissident shareholders the right to "cash-out" of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.

**Sustainability Policy Recommendation:** Vote for proposals to opt out of control share cash-out statutes.

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**Disgorgement Provisions**

Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company's stock to disgorge, or pay back, to the company any profits realized from the sale of that company's stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor's gaining control status are subject to these recapture-of-profits provisions.

**Sustainability Policy Recommendation:** Vote for proposals to opt out of state disgorgement provisions.

**Fair Price Provisions**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to adopt fair price provisions (provisions that stipulate that an acquirer must pay the same price to acquire all shares as it paid to acquire the control shares), evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.

Generally vote against fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.

**Freeze-Out Provisions**

**Sustainability Policy Recommendation:** Vote for proposals to opt out of state freeze-out provisions. Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.

**Greenmail**

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of its shares, the practice discriminates against all other shareholders.

**Sustainability Policy Recommendation:** Vote for proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company's ability to make greenmail payments.

Vote case-by-case on anti-greenmail proposals when they are bundled with other charter or bylaw amendments.

**Shareholder Litigation Rights**

**Federal Forum Selection Provisions**

Federal forum selection provisions require that U.S. federal courts be the sole forum for shareholders to litigate claims arising under federal securities law.

**Sustainability Policy Recommendation:** Generally vote for federal forum selection provisions in the charter or bylaws that specify "the district courts of the United States" as the exclusive forum for federal securities law matters, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

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Vote against provisions that restrict the forum to a particular federal district court; unilateral adoption (without a shareholder vote) of such a provision will generally be considered a one-time failure under the <u>Unilatera</u>l <u>Bylaw/Charter Amendments</u> policy.

**Exclusive Forum Provisions for State Law Matters**

Exclusive forum provisions in the charter or bylaws restrict shareholders' ability to bring derivative lawsuits against the company, for claims arising out of state corporate law, to the courts of a particular state (generally the state of incorporation).

**Sustainability Policy Recommendation:** Generally vote for charter or bylaw provisions that specify courts located within the state of Delaware as the exclusive forum for corporate law matters for Delaware corporations, in the absence of serious concerns about corporate governance or board responsiveness to shareholders.

For states other than Delaware, vote case-by-case on exclusive forum provisions, taking into consideration:

■ The
 company's stated rationale for adopting such a provision;

■ Disclosure
 of past harm from duplicative shareholder lawsuits in more than one forum;

■ The
 breadth of application of the charter or bylaw provision, including the types of lawsuits
 to which it would apply and the definition of key terms; and

■ Governance
 features such as shareholders' ability to repeal the provision at a later date
 (including the vote standard applied when shareholders attempt to amend the charter or
 bylaws) and their ability to hold directors accountable through annual director elections
 and a majority vote standard in uncontested elections.

Generally vote against provisions that specify a state other than the state of incorporation as the exclusive forum for corporate law matters, or that specify a particular local court within the state; unilateral adoption of such a provision will generally be considered a one-time failure under the Unilateral Bylaw/Charter Amendments policy.

**Fee Shifting**

Fee-shifting provisions in the charter or bylaws require that a shareholder who sues a company unsuccessfully pay all litigation expenses of the defendant corporation and its directors and officers.

**Sustainability Policy Recommendation:** Generally vote against provisions that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., including cases where the plaintiffs are partially successful).

Unilateral adoption of a fee-shifting provision will generally be considered an ongoing failure under the Unilateral Bylaw/Charter Amendments and Problematic Capital Structures policy.

**Net Operating Loss (NOL) Protective Amendments**

**Sustainability Policy Recommendation:** Vote against proposals to adopt a protective amendment for the stated purpose of protecting a company's net operating losses (NOL) if the effective term of the protective amendment would exceed the shorter of three years and the exhaustion of the NOL.

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Vote case-by-case, considering the following factors, for management proposals to adopt an NOL protective amendment that would remain in effect for the shorter of three years (or less) and the exhaustion of the NOL:

■ The
 ownership threshold (NOL protective amendments generally prohibit stock ownership transfers
 that would result in a new 5-percent holder or increase the stock ownership percentage
 of an existing 5-percent holder);

■ The
 value of the NOLs;

■ Shareholder
 protection mechanisms (sunset provision or commitment to cause expiration of the protective
 amendment upon exhaustion or expiration of the NOL);

■ The
 company's existing governance structure including: board independence, existing
 takeover defenses, track record of responsiveness to shareholders, and any other problematic
 governance concerns; and

■ Any
 other factors that may be applicable.

Poison Pills (Shareholder Rights Plans)

**Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy**

**Sustainability Policy Recommendation:** Vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it unless the company has: (1) A shareholder approved poison pill in place; or (2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

■ Shareholders
 have approved the adoption of the plan; or

■ The
 board, in its exercise of its fiduciary responsibilities, determines that it is in the
 best interest of shareholders under the circumstances to adopt a pill without the delay
 in adoption that would result from seeking stockholder approval (*i.e.*, the "fiduciary
 out" provision). A poison pill adopted under this fiduciary out will be put to
 a shareholder ratification vote within 12 months of adoption or expire. If the pill is
 not approved by a majority of the votes cast on this issue, the plan will immediately
 terminate.

If the shareholder proposal calls for a time period of less than 12 months for shareholder ratification after adoption, vote for the proposal, but add the caveat that a vote within 12 months would be considered sufficient implementation.

**Management Proposals to Ratify a Poison Pill**

**Sustainability Policy Recommendation:** Vote case-by-case on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

■ No
 lower than a 20% trigger, flip-in or flip-over;

■ A
 term of no more than three years;

■ No
 dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future
 board to redeem the pill;

■ Shareholder
 redemption feature (qualifying offer clause); if the board refuses to redeem the pill
 90 days after a qualifying offer is announced, 10 percent of the shares may call a special
 meeting or seek a written consent to vote on rescinding the pill.

In addition, the rationale for adopting the pill should be thoroughly explained by the company. In examining the request for the pill, take into consideration the company's existing governance structure, including: board independence, existing takeover defenses, and any problematic governance concerns.

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**Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)**

**Sustainability Policy Recommendation:** Vote against proposals to adopt a poison pill for the stated purpose of protecting a company's net operating losses (NOL) if the term of the pill would exceed the shorter of three years and the exhaustion of the NOL.

Vote case-by-case on management proposals for poison pill ratification, considering the following factors, if the term of the pill would be the shorter of three years (or less) and the exhaustion of the NOL:

■ The
 ownership threshold to transfer (NOL pills generally have a trigger slightly below 5
 percent);

■ The
 value of the NOLs;

■ Shareholder
 protection mechanisms (sunset provision, or commitment to cause expiration of the pill
 upon exhaustion or expiration of NOLs);

■ The
 company's existing governance structure including: board independence, existing
 takeover defenses, track record of responsiveness to shareholders, and any other problematic
 governance concerns; and

■ Any
 other factors that may be applicable.

**Proxy Voting Disclosure, Confidentiality, and Tabulation**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals regarding proxy voting mechanics, taking into consideration whether implementation of the proposal is likely to enhance or protect shareholder rights. Specific issues covered under the policy include, but are not limited to, confidential voting of individual proxies and ballots, confidentiality of running vote tallies, and the treatment of abstentions and/or broker non-votes in the company's vote-counting methodology.

While a variety of factors may be considered in each analysis, the guiding principles are: transparency, consistency, and fairness in the proxy voting process. The factors considered, as applicable to the proposal, may include:

■ The
 scope and structure of the proposal;

■ The
 company's stated confidential voting policy (or other relevant policies) and whether
 it ensures a "level playing field" by providing shareholder proponents with
 equal access to vote information prior to the annual meeting;

■ The
 company's vote standard for management and shareholder proposals and whether it
 ensures consistency and fairness in the proxy voting process and maintains the integrity
 of vote results;

■ Whether
 the company's disclosure regarding its vote counting method and other relevant
 voting policies with respect to management and shareholder proposals are consistent and
 clear;

■ Any
 recent controversies or concerns related to the company's proxy voting mechanics;

■ Any
 unintended consequences resulting from implementation of the proposal; and

■ Any
 other factors that may be relevant.

**Ratification Proposals: Management Proposals to Ratify Existing Charter or Bylaw Provisions**

**Sustainability Policy Recommendation:** Generally vote against management proposals to ratify provisions of the company's existing charter or bylaws, unless these governance provisions align with best practice.

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In addition, voting against/withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:

■ The
 presence of a shareholder proposal addressing the same issue on the same ballot;

■ The
 board's rationale for seeking ratification;

■ Disclosure
 of actions to be taken by the board should the ratification proposal fail;

■ Disclosure
 of shareholder engagement regarding the board's ratification request;

■ The
 level of impairment to shareholders' rights caused by the existing provision;

■ The
 history of management and shareholder proposals on the provision at the company's
 past meetings;

■ Whether
 the current provision was adopted in response to the shareholder proposal;

■ The
 company's ownership structure; and

■ Previous
 use of ratification proposals to exclude shareholder proposals.

**Reimbursing Proxy Solicitation Expenses**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to reimburse proxy solicitation expenses.

When voting in conjunction with support of a dissident slate, vote for the reimbursement of all appropriate proxy solicitation expenses associated with the election.

Generally vote for shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:

■ The
 election of fewer than 50% of the directors to be elected is contested in the election;

■ One
 or more of the dissident's candidates is elected;

■ Shareholders
 are not permitted to cumulate their votes for directors; and

■ The
 election occurred, and the expenses were incurred, after the adoption of this bylaw.

**Reincorporation Proposals**

**Sustainability Policy Recommendation:** Management or shareholder proposals to change a company's state of incorporation should be evaluated case-by-case, giving consideration to both financial and corporate governance concerns including the following:

■ Reasons
 for reincorporation;

■ Comparison
 of company's governance practices and provisions prior to and following the reincorporation;
 and

■ Comparison
 of corporation laws of original state and destination state.

■ Vote
 for reincorporation when the economic factors outweigh any neutral or negative governance
 changes.

**Shareholder Ability to Act by Written Consent**

**Sustainability Policy Recommendation:** Generally vote against management and shareholder proposals to restrict or prohibit shareholders' ability to act by written consent.

Generally vote for management and shareholder proposals that provide shareholders with the ability to act by written consent, taking into account the following factors:

■ Shareholders'
 current right to act by written consent;

■ The
 consent threshold;

■ The
 inclusion of exclusionary or prohibitive language;

■ Investor
 ownership structure; and

■ Shareholder
 support of, and management's response to, previous shareholder proposals.

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Vote case-by-case on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions:

■ An
 unfettered **<sup>14</sup>** right for shareholders to call special meetings at a 10
 percent threshold;

■ A
 majority vote standard in uncontested director elections;

■ No
 non-shareholder-approved pill; and

■ An
 annually elected board.

**Shareholder Ability to Call Special Meetings**

**Sustainability Policy Recommendation:** Vote against management or shareholder proposals to restrict or prohibit shareholders' ability to call special meetings.

Generally vote for management or shareholder proposals that provide shareholders with the ability to call special meetings taking into account the following factors:

■ Shareholders'
 current right to call special meetings;

■ Minimum
 ownership threshold necessary to call special meetings (10% preferred);

■ The
 inclusion of exclusionary or prohibitive language;

■ Investor
 ownership structure; and

■ Shareholder
 support of, and management's response to, previous shareholder proposals.

**Stakeholder Provisions**

**Sustainability Policy Recommendation:** Vote against proposals that ask the board to consider non-shareholder constituencies or other non-financial effects when evaluating a merger or business combination.

**State Antitakeover Statutes**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to opt in or out of state takeover statutes (including fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, and anti-greenmail provisions).

**Supermajority Vote Requirements**

**Sustainability Policy Recommendation:** Vote against proposals to require a supermajority shareholder vote.

Vote for management or shareholder proposals to reduce supermajority vote requirements. However, for companies with shareholder(s) who have significant ownership levels, vote case-by-case, taking into account:

■ Ownership
 structure;

■ Quorum
 requirements; and

■ Vote
 requirements.

****

**<sup>14</sup>** "Unfettered" means no restrictions on agenda items, no restrictions on the number of shareholders who can group together to reach the 10 percent threshold, and only reasonable limits on when a meeting can be called: no greater than 30 days after the last annual meeting and no greater than 90 prior to the next annual meeting.

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**Virtual Shareholder Meetings**

**Sustainability Policy Recommendation:** Generally vote for management proposals allowing for the convening of shareholder meetings by electronic means, so long as they do not preclude in-person meetings. Companies are encouraged to disclose the circumstances under which virtual-only**<sup>15</sup>** meetings would be held, and to allow for comparable rights and opportunities for shareholders to participate electronically as they would have during an in-person meeting.

Vote case-by-case on shareholder proposals concerning virtual-only meetings, considering:

■ Scope
 and rationale of the proposal; and

■ Concerns
 identified with the company's prior meeting practices.

**<sup>15</sup>** Virtual-only shareholder meeting" refers to a meeting of shareholders that is held exclusively using technology without a corresponding in-person meeting.

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4. Capital/Restructuring

Capital

**Adjustments to Par Value of Common Stock**

**Sustainability Policy Recommendation:** Vote for management proposals to reduce the par value of common stock unless the action is being taken to facilitate an anti-takeover device or some other negative corporate governance action.

Vote for management proposals to eliminate par value.

**Common Stock Authorization**

**General Authorization Requests**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to increase the number of authorized shares of common stock that are to be used for general corporate purposes:

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 share usage (outstanding plus reserved) is less than 50% of the current authorized shares,
 vote for an increase of up to **50** % of current authorized shares.

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 share usage is 50% to 100% of the current authorized, vote for an increase of up to **100** %
 of current authorized shares.

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 share usage is greater than current authorized shares, vote for an increase of up to
 the current share usage.

&nbsp;&nbsp;&nbsp;&nbsp;■ In
 the case of a stock split, the allowable increase is calculated (per above) based on
 the post-split adjusted authorization.

Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 proposal seeks to increase the number of authorized shares of the class of common stock
 that has superior voting rights to other share classes;

&nbsp;&nbsp;&nbsp;&nbsp;■ On
 the same ballot is a proposal for a reverse split for which support is warranted despite
 the fact that it would result in an excessive increase in the share authorization;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company has a non-shareholder approved poison pill (including an NOL pill); or

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company has previous sizeable placements (within the past 3 years) of stock with insiders
 at prices substantially below market value, or with problematic voting rights, without
 shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

&nbsp;&nbsp;&nbsp;&nbsp;■ In,
 or subsequent to, the company's most recent 10-K filing, the company discloses
 that there is substantial doubt about its ability to continue as a going concern;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company states that there is a risk of imminent bankruptcy or imminent liquidation if
 shareholders do not approve the increase in authorized capital; or

&nbsp;&nbsp;&nbsp;&nbsp;■ A
 government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

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**Specific Authorization Requests**

**Sustainability Policy Recommendation:** Generally vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

&nbsp;&nbsp;&nbsp;&nbsp;■ twice
 the amount needed to support the transactions on the ballot, and

&nbsp;&nbsp;&nbsp;&nbsp;■ the
 allowable increase as calculated for general issuances above.

**Dual Class Structure**

**Sustainability Policy Recommendation:** Generally vote against proposals to create a new class of common stock unless:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company discloses a compelling rationale for the dual-class capital structure, such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's auditor has concluded that there is substantial doubt about the company's
 ability to continue as a going concern; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 new class of shares will be transitory;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 new class is intended for financing purposes with minimal or no dilution to current shareholders
 in both the short term and long term; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 new class is not designed to preserve or increase the voting power of an insider or significant
 shareholder.

**Issue Stock for Use with Rights Plan**

**Sustainability Policy Recommendation:** Vote against proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder- approved shareholder rights plan (poison pill).

**Preemptive Rights**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals that seek preemptive rights, taking into consideration:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 size of the company;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 shareholder base; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 liquidity of the stock.

**Preferred Stock Authorization**

**General Authorization Requests**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to increase the number of authorized shares of preferred stock that are to be used for general corporate purposes:

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 share usage (outstanding plus reserved) is less than 50% of the current authorized shares,
 vote for an increase of up to **50** % of current authorized shares.

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 share usage is 50% to 100% of the current authorized, vote for an increase of up to **100** %
 of current authorized shares.

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 share usage is greater than current authorized shares, vote for an increase of up to
 the current share usage.

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&nbsp;&nbsp;&nbsp;&nbsp;■ In
 the case of a stock split, the allowable increase is calculated (per above) based on
 the post-split adjusted authorization.

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 no preferred shares are currently issued and outstanding, vote against the request, unless
 the company discloses a specific use for the shares.

Generally vote against proposed increases, even if within the above ratios, if the proposal or the company's prior or ongoing use of authorized shares is problematic, including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 the shares requested are blank check preferred shares that can be used for antitakeover
 purposes; **<sup>16</sup>** 

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company seeks to increase a class of non-convertible preferred shares entitled to more
 than one vote per share on matters that do not solely affect the rights of preferred
 stockholders "supervoting shares");

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company seeks to increase a class of convertible preferred shares entitled to a number
 of votes greater than the number of common shares into which they're convertible
 ("supervoting shares") on matters that do not solely affect the rights of
 preferred stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 stated intent of the increase in the general authorization is to allow the company to
 increase an existing designated class of supervoting preferred shares;

&nbsp;&nbsp;&nbsp;&nbsp;■ On
 the same ballot is a proposal for a reverse split for which support is warranted despite
 the fact that it would result in an excessive increase in the share authorization;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company has a non-shareholder approved poison pill (including an NOL pill); or

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company has previous sizeable placements (within the past 3 years) of stock with insiders
 at prices substantially below market value, or with problematic voting rights, without
 shareholder approval.

However, generally vote for proposed increases beyond the above ratios or problematic situations when there is disclosure of specific and severe risks to shareholders of not approving the request, such as:

&nbsp;&nbsp;&nbsp;&nbsp;■ In,
 or subsequent to, the company's most recent 10-K filing, the company discloses
 that there is substantial doubt about its ability to continue as a going concern;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company states that there is a risk of imminent bankruptcy or imminent liquidation if
 shareholders do not approve the increase in authorized capital; or

&nbsp;&nbsp;&nbsp;&nbsp;■ A
 government body has in the past year required the company to increase its capital ratios.

For companies incorporated in states that allow increases in authorized capital without shareholder approval, generally vote withhold or against all nominees if a unilateral capital authorization increase does not conform to the above policies.

**Specific Authorization Requests**

**Sustainability Policy Recommendation:** Generally vote for proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with transaction(s) (such as acquisitions, SPAC transactions, private placements, or similar transactions) on the same ballot, or disclosed in the proxy statement, that warrant support. For such transactions, the allowable increase will be the greater of:

&nbsp;&nbsp;&nbsp;&nbsp;■ twice
 the amount needed to support the transactions on the ballot, and

&nbsp;&nbsp;&nbsp;&nbsp;■ the
 allowable increase as calculated for general issuances above.

**<sup>16</sup>** To be acceptable, appropriate disclosure would be needed that the shares are "declawed": i.e., representation by the board that it will not, without prior stockholder approval, issue or use the preferred stock for any defensive or anti-takeover purpose or for the purpose of implementing any stockholder rights plan.

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**Recapitalization Plans**

**Sustainability Policy Recommendation:** Vote case-by-case on recapitalizations (reclassifications of securities), taking into account the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ More
 simplified capital structure;

&nbsp;&nbsp;&nbsp;&nbsp;■ Enhanced
 liquidity;

&nbsp;&nbsp;&nbsp;&nbsp;■ Fairness
 of conversion terms;

&nbsp;&nbsp;&nbsp;&nbsp;■ Impact
 on voting power and dividends;

&nbsp;&nbsp;&nbsp;&nbsp;■ Reasons
 for the reclassification;

&nbsp;&nbsp;&nbsp;&nbsp;■ Conflicts
 of interest; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 alternatives considered.

**Reverse Stock Splits**

**Sustainability Policy Recommendation:** Vote for management proposals to implement a reverse stock split if:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 number of authorized shares will be proportionately reduced; or

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 effective increase in authorized shares is equal to or less than the allowable increase
 calculated in accordance with Sustainability Advisory Services' Common Stock Authorization
 policy.

Vote case-by-case on proposals that do not meet either of the above conditions, taking into consideration the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Stock
 exchange notification to the company of a potential delisting;

&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of substantial doubt about the company's ability to continue as a going concern
 without additional financing;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's rationale; or

&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 factors as applicable.

**Share Repurchase Programs**

**Sustainability Policy Recommendation:** For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:

&nbsp;&nbsp;&nbsp;&nbsp;■ Greenmail,

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 use of buybacks to inappropriately manipulate incentive compensation metrics,

&nbsp;&nbsp;&nbsp;&nbsp;■ Threats
 to the company's long-term viability, or

&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 company-specific factors as warranted.

Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.

**Stock Distributions: Splits and Dividends**

**Sustainability Policy Recommendation:** Generally vote for management proposals to increase the common share authorization for stock split or stock dividend, provided that the effective increase in authorized shares is equal to or is less than the allowable increase calculated in accordance with Sustainability Advisory Services' Common Stock Authorization policy.

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**Tracking Stock**

**Sustainability Policy Recommendation:** Vote case-by-case on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:

&nbsp;&nbsp;&nbsp;&nbsp;■ Adverse
 governance changes;

&nbsp;&nbsp;&nbsp;&nbsp;■ Excessive
 increases in authorized capital stock;

&nbsp;&nbsp;&nbsp;&nbsp;■ Unfair
 method of distribution;

&nbsp;&nbsp;&nbsp;&nbsp;■ Diminution
 of voting rights;

&nbsp;&nbsp;&nbsp;&nbsp;■ Adverse
 conversion features;

&nbsp;&nbsp;&nbsp;&nbsp;■ Negative
 impact on stock option plans; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Alternatives
 such as spin-off.

**Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.**

**Sustainability Policy Recommendation:** For U.S. domestic issuers incorporated outside the U.S. and listed <u>solely</u> on a U.S. exchange, generally vote for resolutions to authorize the issuance of common shares up to 20 percent of currently issued common share capital, where not tied to a specific transaction or financing proposal.

For pre-revenue or other early-stage companies that are heavily reliant on periodic equity financing, generally vote for resolutions to authorize the issuance of common shares up to 50 percent of currently issued common share capital. The burden of proof will be on the company to establish that it has a need for the higher limit.

Renewal of such mandates should be sought at each year's annual meeting.

Vote case-by-case on share issuances for a specific transaction or financing proposal.

Restructuring

**Appraisal Rights**

**Sustainability Policy Recommendation:** Vote for proposals to restore or provide shareholders with rights of appraisal.

**Asset Purchases**

**Sustainability Policy Recommendation:** Vote case-by-case on asset purchase proposals, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Purchase
 price;

&nbsp;&nbsp;&nbsp;&nbsp;■ Fairness
 opinion;

&nbsp;&nbsp;&nbsp;&nbsp;■ Financial
 and strategic benefits;

&nbsp;&nbsp;&nbsp;&nbsp;■ How
 the deal was negotiated;

&nbsp;&nbsp;&nbsp;&nbsp;■ Conflicts
 of interest;

&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 alternatives for the business;

&nbsp;&nbsp;&nbsp;&nbsp;■ Non-completion
 risk.

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**Asset Sales**

**Sustainability Policy Recommendation:** Vote case-by-case on asset sales, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Impact
 on the balance sheet/working capital;

&nbsp;&nbsp;&nbsp;&nbsp;■ Potential
 elimination of diseconomies;

&nbsp;&nbsp;&nbsp;&nbsp;■ Anticipated
 financial and operating benefits;

&nbsp;&nbsp;&nbsp;&nbsp;■ Anticipated
 use of funds;

&nbsp;&nbsp;&nbsp;&nbsp;■ Value
 received for the asset;

&nbsp;&nbsp;&nbsp;&nbsp;■ Fairness
 opinion;

&nbsp;&nbsp;&nbsp;&nbsp;■ How
 the deal was negotiated;

&nbsp;&nbsp;&nbsp;&nbsp;■ Conflicts
 of interest.

**Bundled Proposals**

**Sustainability Policy Recommendation:** Vote case-by-case on bundled or "conditional" proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders' best interests, vote against the proposals. If the combined effect is positive, support such proposals.

**Conversion of Securities**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals regarding conversion of securities. When evaluating these proposals, the investor should review the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote for the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.

**Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan, after evaluating:

&nbsp;&nbsp;&nbsp;&nbsp;■ Dilution
 to existing shareholders' positions;

&nbsp;&nbsp;&nbsp;&nbsp;■ Terms
 of the offer - discount/premium in purchase price to investor, including any fairness
 opinion; termination penalties; exit strategy;

&nbsp;&nbsp;&nbsp;&nbsp;■ Financial
 issues - company's financial situation; degree of need for capital; use of proceeds;
 effect of the financing on the company's cost of capital;

&nbsp;&nbsp;&nbsp;&nbsp;■ Management's
 efforts to pursue other alternatives;

&nbsp;&nbsp;&nbsp;&nbsp;■ Control
 issues - change in management; change in control, guaranteed board and committee seats;
 standstill provisions; voting agreements; veto power over certain corporate actions;
 and

&nbsp;&nbsp;&nbsp;&nbsp;■ Conflict
 of interest - arm's length transaction, managerial incentives.

Vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.

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**Formation of Holding Company**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals regarding the formation of a holding company, taking into consideration the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 reasons for the change;

&nbsp;&nbsp;&nbsp;&nbsp;■ Any
 financial or tax benefits;

&nbsp;&nbsp;&nbsp;&nbsp;■ Regulatory
 benefits;

&nbsp;&nbsp;&nbsp;&nbsp;■ Increases
 in capital structure; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Changes
 to the articles of incorporation or bylaws of the company.

Absent compelling financial reasons to recommend for the transaction, vote against the formation of a holding company if the transaction would include either of the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ Increases
 in common or preferred stock in excess of the allowable maximum (see discussion under
 "Capital"); or

&nbsp;&nbsp;&nbsp;&nbsp;■ Adverse
 changes in shareholder rights.

**Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)**

**Sustainability Policy Recommendation:** Vote case-by-case on going private transactions, taking into account the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ Offer
 price/premium;

&nbsp;&nbsp;&nbsp;&nbsp;■ Fairness
 opinion;

&nbsp;&nbsp;&nbsp;&nbsp;■ How
 the deal was negotiated;

&nbsp;&nbsp;&nbsp;&nbsp;■ Conflicts
 of interest;

&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 alternatives/offers considered; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Non-completion
 risk.

Vote case-by-case on going dark transactions, determining whether the transaction enhances shareholder value by taking into consideration:

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has attained benefits from being publicly-traded (examination of trading
 volume, liquidity, and market research of the stock);

&nbsp;&nbsp;&nbsp;&nbsp;■ Balanced
 interests of continuing vs. cashed-out shareholders, taking into account the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Are
 all shareholders able to participate in the transaction?

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Will
 there be a liquid market for remaining shareholders following the transaction?

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Does
 the company have strong corporate governance?

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Will
 insiders reap the gains of control following the proposed transaction?

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Does
 the state of incorporation have laws requiring continued reporting that may benefit shareholders?

**Joint Ventures**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to form joint ventures, taking into account the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ Percentage
 of assets/business contributed;

&nbsp;&nbsp;&nbsp;&nbsp;■ Percentage
 ownership;

&nbsp;&nbsp;&nbsp;&nbsp;■ Financial
 and strategic benefits;

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&nbsp;&nbsp;&nbsp;&nbsp;■ Governance
 structure;

&nbsp;&nbsp;&nbsp;&nbsp;■ Conflicts
 of interest;

&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 alternatives; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Non-completion
 risk.

**Liquidations**

**Sustainability Policy Recommendation:** Vote case-by-case on liquidations, taking into account the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ Management's
 efforts to pursue other alternatives;

&nbsp;&nbsp;&nbsp;&nbsp;■ Appraisal
 value of assets; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 compensation plan for executives managing the liquidation.

Vote for the liquidation if the company will file for bankruptcy if the proposal is not approved.

**Mergers and Acquisitions**

**Sustainability Policy Recommendation:** Vote case-by-case on mergers and acquisitions. Review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Valuation</u>* - Is the value to be received by the target shareholders (or paid by the acquirer)
 reasonable? While the fairness opinion may provide an initial starting point for assessing
 valuation reasonableness, emphasis is placed on the offer premium, market reaction and
 strategic rationale.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Market reaction</u>* - How has the market responded to the proposed deal? A negative market
 reaction should cause closer scrutiny of a deal.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Strategic rationale</u>* - Does the deal make sense strategically? From where is the value derived?
 Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably
 achievable. Management should also have a favorable track record of successful integration
 of historical acquisitions.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Negotiations and process</u>* - Were the terms of the transaction negotiated at arm's-length?
 Was the process fair and equitable? A fair process helps to ensure the best price for
 shareholders. Significant negotiation "wins" can also signify the deal makers'
 competency. The comprehensiveness of the sales process (*e.g.*, full auction, partial
 auction, no auction) can also affect shareholder value.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Conflicts of interest</u>* - Are insiders benefiting from the transaction disproportionately
 and inappropriately as compared to non-insider shareholders? As the result of potential
 conflicts, the directors and officers of the company may be more likely to vote to approve
 a merger than if they did not hold these interests. Consider whether these interests
 may have influenced these directors and officers to support or recommend the merger.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Governance</u>* - Will the combined company have a better or worse governance profile than the
 current governance profiles of the respective parties to the transaction? If the governance
 profile is to change for the worse, the burden is on the company to prove that other
 issues (such as valuation) outweigh any deterioration in governance.

**Private Placements/Warrants/Convertible Debentures**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals regarding private placements, warrants, and convertible debentures taking into consideration:

&nbsp;&nbsp;&nbsp;&nbsp;■ Dilution
 to existing shareholders' position: The amount and timing of shareholder ownership
 dilution should be weighed against the needs and proposed shareholder benefits of the
 capital infusion. Although newly issued common stock, absent preemptive rights, is typically
 dilutive to existing shareholders, share price appreciation
is often the necessary event to trigger the exercise of "out of the money" warrants and convertible debt. In these
instances from a value standpoint, the negative impact of dilution is mitigated by the increase in the company's stock price
that must occur to trigger the dilutive event.

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&nbsp;&nbsp;&nbsp;&nbsp;■ Terms
 of the offer (discount/premium in purchase price to investor, including any fairness
 opinion, conversion features, termination penalties, exit strategy):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 terms of the offer should be weighed against the alternatives of the company and in light
 of company's financial condition. Ideally, the conversion price for convertible
 debt and the exercise price for warrants should be at a premium to the then prevailing
 stock price at the time of private placement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ When
 evaluating the magnitude of a private placement discount or premium, consider factors
 that influence the discount or premium, such as, liquidity, due diligence costs, control
 and monitoring costs, capital scarcity, information asymmetry and anticipation of future
 performance.

&nbsp;&nbsp;&nbsp;&nbsp;■ Financial
 issues:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's financial condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Degree
 of need for capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Use
 of proceeds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Effect
 of the financing on the company's cost of capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Current
 and proposed cash burn rate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Going
 concern viability and the state of the capital and credit markets.

&nbsp;&nbsp;&nbsp;&nbsp;■ Management's
 efforts to pursue alternatives and whether the company engaged in a process to evaluate
 alternatives: A fair, unconstrained process helps to ensure the best price for shareholders.
 Financing alternatives can include joint ventures, partnership, merger or sale of part
 or all of the company.

&nbsp;&nbsp;&nbsp;&nbsp;■ Control
 issues:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Change
 in management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Change
 in control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Guaranteed
 board and committee seats;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Standstill
 provisions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Voting
 agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Veto
 power over certain corporate actions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Minority
 versus majority ownership and corresponding minority discount or majority control premium

&nbsp;&nbsp;&nbsp;&nbsp;■ Conflicts
 of interest:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Conflicts
 of interest should be viewed from the perspective of the company and the investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Were
 the terms of the transaction negotiated at arm's length? Are managerial incentives
 aligned with shareholder interests?

&nbsp;&nbsp;&nbsp;&nbsp;■ Market
 reaction:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 market's response to the proposed deal. A negative market reaction is a cause for
 concern. Market reaction may be addressed by analyzing the one day impact on the unaffected
 stock price.

Vote for the private placement, or for the issuance of warrants and/or convertible debentures in a private placement, if it is expected that the company will file for bankruptcy if the transaction is not approved.

**Reorganization/Restructuring Plan (Bankruptcy)**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;■ Estimated
 value and financial prospects of the reorganized company;

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&nbsp;&nbsp;&nbsp;&nbsp;■ Percentage
 ownership of current shareholders in the reorganized company;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 shareholders are adequately represented in the reorganization process (particularly through
 the existence of an official equity committee);

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization
 addresses the cause(s);

&nbsp;&nbsp;&nbsp;&nbsp;■ Existence
 of a superior alternative to the plan of reorganization; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Governance
 of the reorganized company.

**Special Purpose Acquisition Corporations (SPACs)**

**Sustainability Policy Recommendation:** Vote case-by-case on SPAC mergers and acquisitions taking into account the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Valuation</u>* —Is
 the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness
 opinion and the financials on the target may be limited. Compare the conversion price
 with the intrinsic value of the target company provided in the fairness opinion. Also,
 evaluate the proportionate value of the combined entity attributable to the SPAC IPO
 shareholders versus the pre-merger value of SPAC. Additionally, a private company discount
 may be applied to the target, if it is a private entity.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Market reaction</u>* —How has the market responded to the proposed deal? A negative
 market reaction may be a cause for concern. Market reaction may be addressed by analyzing
 the one-day impact on the unaffected stock price.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Deal timing</u>* —A main driver for most transactions is that the SPAC charter typically
 requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated.
 Evaluate the valuation, market reaction, and potential conflicts of interest for deals
 that are announced close to the liquidation date.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Negotiations and process</u>* —What was the process undertaken to identify potential target
 companies within specified industry or location specified in charter? Consider the background
 of the sponsors.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Conflicts of interest</u>* —How are sponsors benefiting from the transaction compared to
 IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by
 the insiders to qualify the deal rather than a third party or if management is encouraged
 to pay a higher price for the target because of an 80% rule (the charter requires that
 the fair market value of the target is at least equal to 80% of net assets of the SPAC).
 Also, there may be sense of urgency by the management team of the SPAC to close the deal
 since its charter typically requires a transaction to be completed within the 18-24 month
 timeframe.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Voting agreements</u>* —Are the sponsors entering into enter into any voting agreements/
 tender offers with shareholders who are likely to vote against the proposed merger or
 exercise conversion rights?

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Governance</u>* —What
 is the impact of having the SPAC CEO or founder on key committees following the proposed
 merger?

**Special Purpose Acquisition Corporations (SPACs) - Proposals for Extensions**

**Sustainability Policy Recommendation:** Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Length of request</u>* : Typically, extension requests range from two to six months, depending
 on the progression of the SPAC's acquistion process.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Pending transaction(s)</u>* <u>or *progression of the acquisition process*</u> *:* Sometimes
 an intial business combination was already put to a shareholder vote, but, for varying
 reasons, the transaction could not be consummated by the termination date and the SPAC
 is requesting an extension. Other times, the SPAC has entered into a definitive transaction
 agreement, but needs additional time to consummate or hold the shareholder meeting.

&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Added incentive for non-redeeming shareholders</u>* : Sometimes the SPAC sponsor (or other
 insiders) will contribute, typically as a loan to the company, additional funds that
 will be added to the redemption value of each public share as long as such shares are
 not redeemed in connection with the extension request. The purpose
of the "equity kicker" is to incentivize shareholders to hold their shares through the end of the requested extension
or until the time the transaction is put to a shareholder vote, rather than electing redeemption at the extension proposal meeting.

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&nbsp;&nbsp;&nbsp;&nbsp;■ *<u>Prior extension requests</u>* : Some SPACs request additional time beyond the extension period
 sought in prior extension requests.

**Spin-offs**

**Sustainability Policy Recommendation:** Vote case-by-case on spin-offs, considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ Tax
 and regulatory advantages;

&nbsp;&nbsp;&nbsp;&nbsp;■ Planned
 use of the sale proceeds;

&nbsp;&nbsp;&nbsp;&nbsp;■ Valuation
 of spinoff;

&nbsp;&nbsp;&nbsp;&nbsp;■ Fairness
 opinion;

&nbsp;&nbsp;&nbsp;&nbsp;■ Benefits
 to the parent company;

&nbsp;&nbsp;&nbsp;&nbsp;■ Conflicts
 of interest;

&nbsp;&nbsp;&nbsp;&nbsp;■ Managerial
 incentives;

&nbsp;&nbsp;&nbsp;&nbsp;■ Corporate
 governance changes;

&nbsp;&nbsp;&nbsp;&nbsp;■ Changes
 in the capital structure.

**Value Maximization Shareholder Proposals**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals seeking to maximize shareholder value by:

&nbsp;&nbsp;&nbsp;&nbsp;■ Hiring
 a financial advisor to explore strategic alternatives;

&nbsp;&nbsp;&nbsp;&nbsp;■ Selling
 the company; or

&nbsp;&nbsp;&nbsp;&nbsp;■ Liquidating
 the company and distributing the proceeds to shareholders.

These proposals should be evaluated based on the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Prolonged
 poor performance with no turnaround in sight;

&nbsp;&nbsp;&nbsp;&nbsp;■ Signs
 of entrenched board and management (such as the adoption of takeover defenses);

&nbsp;&nbsp;&nbsp;&nbsp;■ Strategic
 plan in place for improving value;

&nbsp;&nbsp;&nbsp;&nbsp;■ Likelihood
 of receiving reasonable value in a sale or dissolution; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company actively exploring its strategic options, including retaining a financial advisor.

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5. Compensation

Executive Pay Evaluation

Underlying all evaluations are five global principles that most investors expect corporations to adhere to in designing and administering executive and director compensation programs:

&nbsp;&nbsp;&nbsp;&nbsp;1. Maintain
 appropriate pay-for-performance alignment, with emphasis on long-term shareholder value:
 This principle encompasses overall executive pay practices, which must be designed to
 attract, retain, and appropriately motivate the key employees who drive shareholder value
 creation over the long term. It will take into consideration, among other factors, the
 link between pay and performance; the mix between fixed and variable pay; performance
 goals; and equity-based plan costs;

&nbsp;&nbsp;&nbsp;&nbsp;2. Avoid
 arrangements that risk "pay for failure": This principle addresses the appropriateness
 of long or indefinite contracts, excessive severance packages, and guaranteed compensation;

&nbsp;&nbsp;&nbsp;&nbsp;3. Maintain
 an independent and effective compensation committee: This principle promotes oversight
 of executive pay programs by directors with appropriate skills, knowledge, experience,
 and a sound process for compensation decision-making (*e.g.*, including access to
 independent expertise and advice when needed);

&nbsp;&nbsp;&nbsp;&nbsp;4. Provide
 shareholders with clear, comprehensive compensation disclosures: This principle underscores
 the importance of informative and timely disclosures that enable shareholders to evaluate
 executive pay practices fully and fairly;

&nbsp;&nbsp;&nbsp;&nbsp;5. Avoid
 inappropriate pay to non-executive directors: This principle recognizes the interests
 of shareholders in ensuring that compensation to outside directors does not compromise
 their independence and ability to make appropriate judgments in overseeing managers'
 pay and performance. At the market level, it may incorporate a variety of generally accepted
 best practices.

**Advisory Votes on Executive Compensation—Management Proposals (Management Say-on-Pay)**

**Sustainability Policy Recommendation:** Vote case-by-case on ballot items related to executive pay and practices, as well as certain aspects of outside director compensation.

Vote against Advisory Votes on Executive Compensation (Say-on-Pay or "SOP") if:

&nbsp;&nbsp;&nbsp;&nbsp;■ There
 is an unmitigated misalignment between CEO pay and company performance (pay
 for performance);

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company maintains significant problematic pay practices ;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 board exhibits a significant level of poor communication
 and responsiveness to shareholders.

Vote against or withhold from the members of the compensation committee and potentially the full board if:

&nbsp;&nbsp;&nbsp;&nbsp;■ There
 is no SOP on the ballot, and an against vote on an SOP is warranted due to pay for performance
 misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation
 issues raised previously, or a combination thereof;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 board fails to respond adequately to a previous SOP proposal that received less than
 70 percent support of votes cast;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company has recently practiced or approved problematic pay practices, such as option
 repricing or option backdating; or

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 situation is egregious.

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***Primary Evaluation Factors for Executive Pay***

**Pay-for-Performance Evaluation**

Sustainability Advisory Services annually conducts a pay-for-performance analysis to identify strong or satisfactory alignment between pay and performance over a sustained period. With respect to companies in the Russell 3000 or Russell 3000E Indices**<sup>17</sup>**, this analysis considers the following:

&nbsp;&nbsp;&nbsp;&nbsp;1. Peer
 Group **<sup>18</sup>** Alignment:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 degree of alignment between the company's annualized TSR rank and the CEO's
 annualized total pay rank within a peer group, each measured over a three-year period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 rankings of CEO total pay and company financial performance within a peer group, each
 measured over a three-year period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 multiple of the CEO's total pay relative to the peer group median in the most recent
 fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;2. Absolute
 Alignment **<sup>19</sup>** – the absolute alignment between the trend in CEO
 pay and company TSR over the prior five fiscal years – i.e., the difference between
 the trend in annual pay changes and the trend in annualized TSR during the period.

If the above analysis demonstrates significant unsatisfactory long-term pay-for-performance alignment or, in the case of companies outside the Russell indices, misaligned pay and performance are otherwise suggested, our analysis may include any of the following qualitative factors, as relevant to evaluating how various pay elements may work to encourage or to undermine long-term value creation and alignment with shareholder interests:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 ratio of performance- to time-based incentive awards;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 overall ratio of performance-based compensation;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 rigor of performance goals;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 complexity and risks around pay program design;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 transparency and clarity of disclosure;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's peer group benchmarking practices;

&nbsp;&nbsp;&nbsp;&nbsp;■ Financial/operational
 results, both absolute and relative to peers;

&nbsp;&nbsp;&nbsp;&nbsp;■ Special
 circumstances related to, for example, a new CEO in the prior FY or anomalous equity
 grant practices (e.g., bi-annual awards);

&nbsp;&nbsp;&nbsp;&nbsp;■ Realizable
 pay **<sup>20</sup>** compared to grant pay; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Any
 other factors deemed relevant.

**<sup>17</sup>** The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities.

**<sup>18</sup>** The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group, and company's selected peers' GICS industry group, with size constraints, via a process designed to select peers that are comparable to the subject company in terms of revenue/assets and industry, and also within a market cap bucket that is reflective of the company's. For Oil, Gas & Consumable Fuels companies, market cap is the only size determinant.

**<sup>19</sup>** Only Russell 3000 Index companies are subject to the Absolute Alignment analysis.

**<sup>20</sup>** Sustainability Advisory Services research reports include realizable pay for S&P1500 companies.

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**Problematic Pay Practices**

Problematic pay elements are generally evaluated case-by-case considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The focus is on executive compensation practices that contravene the global pay principles, including:

&nbsp;&nbsp;&nbsp;&nbsp;■ Problematic
 practices related to non-performance-based compensation elements;

&nbsp;&nbsp;&nbsp;&nbsp;■ Incentives
 that may motivate excessive risk-taking or present a windfall risk; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Pay
 decisions that circumvent pay-for-performance, such as options backdating or waiving
 performance requirements.

The list of examples below highlights certain problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Repricing
 or replacing of underwater stock options/SARs without prior shareholder approval (including
 cash buyouts and voluntary surrender of underwater options);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Extraordinary
 perquisites or tax gross-ups;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ New
 or materially amended agreements that provide for:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Excessive
 termination or CIC severance payments (generally exceeding 3 times base salary and average/target/most
 recent bonus);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ CIC
 severance payments without involuntary job loss or substantial diminution of duties ("single"
 or "modified single" triggers) or in connection with a problematic Good Reason
 definition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ CIC
 excise tax gross-up entitlements (including "modified" gross-ups);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Multi-year
 guaranteed awards that are not at risk due to rigorous performance conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Liberal
 CIC definition combined with any single-trigger CIC benefits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Severance
 payments made when the termination is not clearly disclosed as involuntary (for example,
 a termination without cause or resignation for good reason);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Insufficient
 executive compensation disclosure by externally-managed issuers (EMIs) such that a reasonable
 assessment of pay programs and practices applicable to the EMI's executives is
 not possible;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Any
 other provision or practice deemed to be egregious and present a significant risk to
 investors.

The above examples are not an exhaustive list. Please refer to ISS' U.S. Compensation Policies FAQ document for additional detail on specific pay practices that have been identified as problematic and may lead to negative vote recommendations.

**Options Backdating**

The following factors should be examined case-by-case to allow for distinctions to be made between "sloppy" plan administration versus deliberate action or fraud:

&nbsp;&nbsp;&nbsp;&nbsp;■ Reason
 and motive for the options backdating issue, such as inadvertent vs. deliberate grant
 date changes;

&nbsp;&nbsp;&nbsp;&nbsp;■ Duration
 of options backdating;

&nbsp;&nbsp;&nbsp;&nbsp;■ Size
 of restatement due to options backdating;

&nbsp;&nbsp;&nbsp;&nbsp;■ Corrective
 actions taken by the board or compensation committee, such as canceling or re-pricing
 backdated options, the recouping of option gains on backdated grants; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Adoption
 of a grant policy that prohibits backdating, and creates a fixed grant schedule or window
 period for equity grants in the future.

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**Compensation Committee Communications and Responsiveness**

Consider the following factors case-by-case when evaluating ballot items related to executive pay on the board's responsiveness to investor input and engagement on compensation issues:

&nbsp;&nbsp;&nbsp;&nbsp;■ Failure
 to respond to majority-supported shareholder proposals on executive pay topics; or

&nbsp;&nbsp;&nbsp;&nbsp;■ Failure
 to adequately respond to the company's previous say-on-pay proposal that received
 the support of less than 70 percent of votes cast, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's response, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of engagement efforts with major institutional investors regarding the issues that contributed
 to the low level of support (including the timing and frequency of engagements and whether
 independent directors participated);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of the specific concerns voiced by dissenting shareholders that led to the say-on-pay
 opposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of specific and meaningful actions taken to address shareholders' concerns;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Other
 recent compensation actions taken by the company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the issues raised are recurring or isolated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's ownership structure; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the support level was less than 50 percent, which would warrant the highest degree of
 responsiveness.

**Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")**

**Sustainability Policy Recommendation:** Vote for annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.

**Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale**

**Sustainability Policy Recommendation:** Vote case-by-case on say on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers rather than focusing primarily on new or extended arrangements.

Features that may result in an "against" recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):

&nbsp;&nbsp;&nbsp;&nbsp;■ Single-
 or modified-single-trigger cash severance;

&nbsp;&nbsp;&nbsp;&nbsp;■ Single-trigger
 acceleration of unvested equity awards;

&nbsp;&nbsp;&nbsp;&nbsp;■ Full
 acceleration of equity awards granted shortly before the change in control;

&nbsp;&nbsp;&nbsp;&nbsp;■ Acceleration
 of performance awards above the target level of performance without compelling rationale;

&nbsp;&nbsp;&nbsp;&nbsp;■ Excessive
 cash severance (>3x base salary and bonus);

&nbsp;&nbsp;&nbsp;&nbsp;■ Excise
 tax gross-ups triggered and payable;

&nbsp;&nbsp;&nbsp;&nbsp;■ Excessive
 golden parachute payments (on an absolute basis or as a percentage of transaction equity
 value); or

&nbsp;&nbsp;&nbsp;&nbsp;■ Recent
 amendments that incorporate any problematic features (such as those above) or recent
 actions (such as extraordinary equity grants) that may make packages so attractive as
 to influence merger agreements that may not be in the best interests of shareholders;
 or

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's assertion that a proposed transaction is conditioned on shareholder approval
 of the golden parachute advisory vote.

Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.

In cases where the golden parachute vote is incorporated into a company's advisory vote on compensation (management say-on-pay), the say-on-pay proposal will be evaluated in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.

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Equity-Based and Other Incentive Plans

Please refer to ISS' U.S. Equity Compensation Plans FAQ document for additional details on the Equity Plan Scorecard policy.

**Sustainability Policy Recommendation:** Vote case-by-case on certain equity-based compensation plans**<sup>21</sup>** depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "Equity Plan Scorecard" (EPSC) approach with three pillars:

&nbsp;&nbsp;&nbsp;&nbsp;■ **Plan Cost:** The total estimated cost of the company's equity plans relative to industry/market
 cap peers, measured by the company's estimated Shareholder Value Transfer (SVT)
 in relation to peers and considering both:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ SVT
 based on new shares requested plus shares remaining for future grants, plus outstanding
 unvested/unexercised grants; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ SVT
 based only on new shares requested plus shares remaining for future grants.

&nbsp;&nbsp;&nbsp;&nbsp;■ **Plan Features:** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Quality
 of disclosure around vesting upon a change in control (CIC);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Discretionary
 vesting authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Liberal
 share recycling on various award types;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Lack
 of minimum vesting period for grants made under the plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Dividends
 payable prior to award vesting.

&nbsp;&nbsp;&nbsp;&nbsp;■ **Grant Practices:** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's three year burn rate relative to its industry/market cap peers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Vesting
 requirements in CEO'S recent equity grants (3-year look-back);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 estimated duration of the plan (based on the sum of shares remaining available and the
 new shares requested, divided by the average annual shares granted in the prior three
 years);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 proportion of the CEO's most recent equity grants/awards subject to performance
 conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company maintains a sufficient claw-back policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company maintains sufficient post exercise/vesting share-holding requirements.

Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders' interests, or if any of the following egregious factors ("overriding factors") apply:

&nbsp;&nbsp;&nbsp;&nbsp;■ Awards
 may vest in connection with a liberal change-of-control definition;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 plan would permit repricing or cash buyout of underwater options without shareholder
 approval (either by expressly permitting it – for NYSE and NASDAQ listed companies
 -- or by not prohibiting it when the company has a history of repricing – for non-listed
 companies);

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 plan is a vehicle for problematic pay practices or a significant pay-for-performance
 disconnect under certain circumstances;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 plan is excessively dilutive to shareholders' holdings;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 plan contains an evergreen (automatic share replenishment) feature; or

&nbsp;&nbsp;&nbsp;&nbsp;■ Any
 other plan features are determined to have a significant negative impact on shareholder
 interests.

**<sup>21</sup>** Proposals evaluated under the EPSC policy generally include those to approve or amend (1) stock option plans for employees and/or employees and directors, (2) restricted stock plans for employees and/or employees and directors, and (3) omnibus stock incentive plans for employees and/or employees and directors; amended plans will be further evaluated case-by-case.

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***Further Information on certain EPSC Factors***

**Shareholder Value Transfer (SVT)**

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders' equity flowing out of the company to employees and directors. SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed, shares available under existing plans, and shares granted but unexercised (using two measures, in the case of plans subject to the Equity Plan Scorecard evaluation, as noted above). All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full value awards), the assumption is made that all awards to be granted will be the most expensive types.

For proposals subject to Equity Plan Scorecard evaluation, Shareholder Value Transfer is reasonable if it falls below a company-specific benchmark. The benchmark is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard: GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers' historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size and cash compensation into the industry cap equations to arrive at the company's benchmark.**<sup>22</sup>**

**Three-Year Value-Adjusted Burn Rate**

A "Value-Adjusted Burn Rate" is used for stock plan evaluations. Value-Adjusted Burn Rate benchmarks are calculated as the greater of: (1) an industry-specific threshold based on three-year burn rates within the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P 500) and non-Russell 3000 index; and (2) a *de minimis* threshold established separately for each of the S&P 500, the Russell 3000 index less the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year's burn-rate benchmark.

The Value-Adjusted Burn Rate will be calculated as follows:

Value-Adjusted Burn Rate = ((# of options \* option's dollar value using a Black-Scholes model) + (# of full-value awards \* stock price)) / (Weighted average common shares \* stock price).

**Egregious Factors**

**Liberal Change in Control Definition**

Generally vote against equity plans if the plan has a liberal definition of change in control and the equity awards could vest upon such liberal definition of change-in-control, even though an actual change in control may not occur. Examples of such a definition include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a "potential" takeover, shareholder approval of a merger or other transactions, or similar language.

**<sup>22</sup>** For plans evaluated under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.

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**Repricing Provisions**

Vote against plans that expressly permit the repricing or exchange of underwater stock options/stock appreciate rights (SARs) without prior shareholder approval. "Repricing" includes the ability to do any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ Amend
 the terms of outstanding options or SARs to reduce the exercise price of such outstanding
 options or SARs;

&nbsp;&nbsp;&nbsp;&nbsp;■ Cancel
 outstanding options or SARs in exchange for options or SARs with an exercise price that
 is less than the exercise price of the original options or SARs;

&nbsp;&nbsp;&nbsp;&nbsp;■ Cancel
 underwater options in exchange for stock awards; or

&nbsp;&nbsp;&nbsp;&nbsp;■ Provide
 cash buyouts of underwater options.

While the above cover most types of repricing, Sustainability Advisory Services may view other provisions as akin to repricing depending on the facts and circumstances.

Also, vote against or withhold from members of the Compensation Committee who approved repricing (as defined above or otherwise determined by Sustainability Advisory Services) without prior shareholder approval, even if such repricings are allowed in their equity plan.

Vote against plans that do not expressly prohibit repricing or cash buyout of underwater options without shareholder approval if the company has a history of repricing/buyouts without shareholder approval, and the applicable listing standards would not preclude them from doing so.

**Problematic Pay Practices or Significant Pay-for-Performance Disconnect**

If the equity plan on the ballot is a vehicle for problematic pay practices, vote against the plan.

If a significant portion of the CEO's misaligned pay is attributed to non-performance-based equity awards, and there is an equity plan on the ballot with the CEO as one of the participants, Sustainability Advisory Services may recommend a vote against the equity plan. Considerations in voting against the equity plan may include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;■ Magnitude
 of pay misalignment;

&nbsp;&nbsp;&nbsp;&nbsp;■ Contribution
 of non–performance-based equity grants to overall pay; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 proportion of equity awards granted in the last three fiscal years concentrated at the
 named executive officer level.

**Specific Treatment of Certain Award Types in Equity Plan Evaluations**

**Dividend Equivalent Rights**

Options that have Dividend Equivalent Rights (DERs) associated with them will have a higher calculated award value than those without DERs under the binomial model, based on the value of these dividend streams. The higher value will be applied to new shares, shares available under existing plans, and shares awarded but not exercised per the plan specifications. DERS transfer more shareholder equity to employees and non-employee directors and this cost should be captured.

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**Operating Partnership (OP) Units in Equity Plan Analysis of Real Estate Investment Trusts (REITs)**

For Real Estate Investment Trusts (REITS), include the common shares issuable upon conversion of outstanding Operating Partnership (OP) units in the share count for the purposes of determining: (1) market capitalization in the Shareholder Value Transfer (SVT) analysis and (2) shares outstanding in the burn rate analysis.

Other Compensation Plans

**401(k) Employee Benefit Plans**

**Sustainability Policy Recommendation:** Vote for proposals to implement a 401(k) savings plan for employees.

**Employee Stock Ownership Plans (ESOPs)**

**Sustainability Policy Recommendation:** Vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

**Employee Stock Purchase Plans—Qualified Plans**

**Sustainability Policy Recommendation:** Vote case-by-case on qualified employee stock purchase plans. Vote for employee stock purchase plans where all of the following apply:

&nbsp;&nbsp;&nbsp;&nbsp;■ Purchase
 price is at least 85 percent of fair market value;

&nbsp;&nbsp;&nbsp;&nbsp;■ Offering
 period is 27 months or less; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 number of shares allocated to the plan is 10 percent or less of the outstanding shares.

Vote against qualified employee stock purchase plans where any of the following apply:

&nbsp;&nbsp;&nbsp;&nbsp;■ Purchase
 price is less than 85 percent of fair market value; or

&nbsp;&nbsp;&nbsp;&nbsp;■ Offering
 period is greater than 27 months; or

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 number of shares allocated to the plan is more than ten percent of the outstanding shares.

**Employee Stock Purchase Plans—Non-Qualified Plans**

**Sustainability Policy Recommendation:** Vote case-by-case on nonqualified employee stock purchase plans. Vote for nonqualified employee stock purchase plans with all the following features:

&nbsp;&nbsp;&nbsp;&nbsp;■ Broad-based
 participation (*i.e.*, all employees of the company with the exclusion of individuals
 with 5 percent or more of beneficial ownership of the company);

&nbsp;&nbsp;&nbsp;&nbsp;■ Limits
 on employee contribution, which may be a fixed dollar amount or expressed as a percent
 of base salary;

&nbsp;&nbsp;&nbsp;&nbsp;■ Company
 matching contribution up to 25 percent of employee's contribution, which is effectively
 a discount of 20 percent from market value;

&nbsp;&nbsp;&nbsp;&nbsp;■ No
 discount on the stock price on the date of purchase when there is a company matching
 contribution.

Vote against nonqualified employee stock purchase plans when any of the plan features do not meet the above criteria. If the company matching contribution or effective discount exceeds the above, Sustainability Advisory Services may evaluate the SVT cost as part of the assessment.

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**Amending Cash and Equity Plans (including Approval for Tax Deductibility (162(m))**

**Sustainability Policy Recommendation:** Vote case-by-case on amendments to cash and equity incentive plans.

Generally vote for proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

&nbsp;&nbsp;&nbsp;&nbsp;■ Addresses
 administrative features only; or

&nbsp;&nbsp;&nbsp;&nbsp;■ Seeks
 approval for Section 162(m) purposes <u>only</u>, and the plan administering committee
 consists entirely of independent outsiders, per Sustainability Advisory Services'
 Classification of Directors. Note that if the company is presenting the plan to shareholders
 for the first time after the company's initial public offering (IPO), or if the
 proposal is bundled with other material plan amendments, then the recommendation will
 be case-by-case (see below).

Vote against such proposals to amend executive cash, stock, or cash and stock incentive plans if the proposal:

&nbsp;&nbsp;&nbsp;&nbsp;■ Seeks
 approval for Section 162(m) purposes only, and the plan administering committee does
 not consist entirely of independent outsiders, per Sustainability
 Advisory Services' Classification of Directors .

Vote case-by-case on all other proposals to amend <u>cash</u> incentive plans. This includes plans presented to shareholders for the first time after the company's IPO and/or proposals that bundle material amendment(s) other than those for Section 162(m) purposes

Vote case-by-case on all other proposals to amend <u>equity</u> incentive plans, considering the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 the proposal requests additional shares and/or the amendments may potentially increase
 the transfer of shareholder value to employees, the recommendation will be based on the
 Equity Plan Scorecard evaluation as well as an analysis of the overall impact of the
 amendments.

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 the plan is being presented to shareholders for the first time after the company's
 IPO, whether or not additional shares are being requested, the recommendation will be
 based on the Equity Plan Scorecard evaluation as well as an analysis of the overall impact
 of any amendments.

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 there is no request for additional shares and the amendments are not deemed to potentially
 increase the transfer of shareholder value to employees, then the recommendation will
 be based entirely on an analysis of the overall impact of the amendments, and the EPSC
 evaluation will be shown for informational purposes.

**Option Exchange Programs/Repricing Options**

**Sustainability Policy Recommendation:** Vote case-by-case on management proposals seeking approval to exchange/reprice options taking into consideration:

&nbsp;&nbsp;&nbsp;&nbsp;■ Historic
 trading patterns--the stock price should not be so volatile that the options are likely
 to be back "in-the-money" over the near term;

&nbsp;&nbsp;&nbsp;&nbsp;■ Rationale
 for the re-pricing--was the stock price decline beyond management's control?

&nbsp;&nbsp;&nbsp;&nbsp;■ Is
 this a value-for-value exchange?

&nbsp;&nbsp;&nbsp;&nbsp;■ Are
 surrendered stock options added back to the plan reserve?

&nbsp;&nbsp;&nbsp;&nbsp;■ Timing--repricing
 should occur at least one year out from any precipitous drop in company's stock
 price;

&nbsp;&nbsp;&nbsp;&nbsp;■ Option
 vesting--does the new option vest immediately or is there a black-out period?

&nbsp;&nbsp;&nbsp;&nbsp;■ Term
 of the option--the term should remain the same as that of the replaced option;

&nbsp;&nbsp;&nbsp;&nbsp;■ Exercise
 price--should be set at fair market or a premium to market;

&nbsp;&nbsp;&nbsp;&nbsp;■ Participants--executive
 officers and directors must be excluded.

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If the surrendered options are added back to the equity plans for re-issuance, then also take into consideration the company's total cost of equity plans and its three-year average burn rate.

In addition to the above considerations, evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company's stock price demonstrates poor timing. and warrants additional scrutiny. Also, consider the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Vote for shareholder proposals to put option repricings to a shareholder vote.

**Stock Plans in Lieu of Cash**

**Sustainability Policy Recommendation:** Vote case-by-case on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.

Vote for non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.

Vote case-by-case on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, no adjustments will be made to carve out the in-lieu-of cash compensation.

**Transfer Stock Option (TSO) Programs**

**Sustainability Policy Recommendation:** One-time Transfers: Vote against or withhold from compensation committee members if they fail to submit one-time transfers to shareholders for approval.

Vote case-by-case on one-time transfers. Vote for if:

&nbsp;&nbsp;&nbsp;&nbsp;■ Executive
 officers and non-employee directors are excluded from participating;

&nbsp;&nbsp;&nbsp;&nbsp;■ Stock
 options are purchased by third-party financial institutions at a discount to their fair
 value using option pricing models such as Black-Scholes or a Binomial Option Valuation
 or other appropriate financial models;

&nbsp;&nbsp;&nbsp;&nbsp;■ There
 is a two-year minimum holding period for sale proceeds (cash or stock) for all participants.

Additionally, management should provide a clear explanation of why options are being transferred to a third-party institution and whether the events leading up to a decline in stock price were beyond management's control. A review of the company's historic stock price volatility should indicate if the options are likely to be back "in-the-money" over the near term.

Ongoing TSO program: Vote against equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ Eligibility;

&nbsp;&nbsp;&nbsp;&nbsp;■ Vesting;

&nbsp;&nbsp;&nbsp;&nbsp;■ Bid-price;

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&nbsp;&nbsp;&nbsp;&nbsp;■ Term
 of options;

&nbsp;&nbsp;&nbsp;&nbsp;■ Cost
 of the program and impact of the TSOs on company's total option expense

&nbsp;&nbsp;&nbsp;&nbsp;■ Option
 repricing policy.

Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.

Director Compensation

**Shareholder Ratification of Director Pay Programs**

**Sustainability Policy Recommendation:** Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 the equity plan under which non-employee director grants are made is on the ballot, whether
 or not it warrants support; and

&nbsp;&nbsp;&nbsp;&nbsp;■ An
 assessment of the following qualitative factors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 relative magnitude of director compensation as compared to companies of a similar profile;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 presence of problematic pay practices relating to director compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Director
 stock ownership guidelines and holding requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Equity
 award vesting schedules;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 mix of cash and equity-based compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Meaningful
 limits on director compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 availability of retirement benefits or perquisites; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ The
 quality of disclosure surrounding director compensation.

**Equity Plans for Non-Employee Directors**

**Sustainability Policy Recommendation:** Vote case-by-case on compensation plans for non-employee directors, based on:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 total estimated cost of the company's equity plans relative to industry/market
 cap peers, measured by the company's estimated Shareholder Value Transfer (SVT)
 based on new shares requested plus shares remaining for future grants, plus outstanding
 unvested/unexercised grants;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's three-year burn rate relative to its industry/market cap peers; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 presence of any egregious plan features (such as an option repricing provision or liberal
 CIC vesting risk).

On occasion, director stock plans will exceed the plan cost or burn rate benchmarks when combined with employee or executive stock plans. In such cases, vote case-by-case on the plan taking into consideration the following qualitative factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 relative magnitude of director compensation as compared to companies of a similar profile;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 presence of problematic pay practices relating to director compensation;

&nbsp;&nbsp;&nbsp;&nbsp;■ Director
 stock ownership guidelines and holding requirements;

&nbsp;&nbsp;&nbsp;&nbsp;■ Equity
 award vesting schedules;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 mix of cash and equity-based compensation;

&nbsp;&nbsp;&nbsp;&nbsp;■ Meaningful
 limits on director compensation;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 availability of retirement benefits or perquisites; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 quality of disclosure surrounding director compensation.

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**Non-Employee Director Retirement Plans**

**Sustainability Policy Recommendation:** Vote against retirement plans for non-employee directors.

Vote for shareholder proposals to eliminate retirement plans for non-employee directors.

Shareholder Proposals on Compensation

**Adopt Anti-Hedging/Pledging/Speculative Investments Policy**

**Sustainability Policy Recommendation:** Generally vote for proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan. However, the company's existing policies regarding responsible use of company stock will be considered.

**Bonus Banking/Bonus Banking "Plus"**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees), taking into account the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's past practices regarding equity and cash compensation;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has a holding period or stock ownership requirements in place, such as a
 meaningful retention ratio (at least 50 percent for full tenure); and

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has a rigorous claw-back policy in place.

**Compensation Consultants—Disclosure of Board or Company's Utilization**

**Sustainability Policy Recommendation:** Generally vote for shareholder proposals seeking disclosure regarding the company, board, or compensation committee's use of compensation consultants, such as company name, business relationship(s), and fees paid.

**Disclosure/Setting Levels or Types of Compensation for Executives and Directors**

**Sustainability Policy Recommendation:** Generally vote for shareholder proposals seeking additional disclosure of executive and director pay information, provided the information requested is relevant to shareholders' needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company.

Vote against shareholder proposals seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation.

Vote against shareholder proposals seeking to eliminate stock options or any other equity grants to employees or directors.

Vote against shareholder proposals requiring director fees be paid in stock only.

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Generally vote against shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

Vote case-by-case on all other shareholder proposals regarding executive and director pay, taking into account company performance, pay level versus peers, pay level versus industry, and long-term corporate outlook.

**Golden Coffins/Executive Death Benefits**

**Sustainability Policy Recommendation:** Generally vote for proposals calling companies to adopt a policy of obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. This would not apply to any benefit programs or equity plan proposals that the broad-based employee population is eligible.

**Hold Equity Past Retirement or for a Significant Period of Time**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans.

The following factors will be taken into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 percentage/ratio of net shares required to be retained;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 time period required to retain the shares;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has equity retention, holding period, and/or stock ownership requirements
 in place and the robustness of such requirements;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has any other policies aimed at mitigating risk taking by executives;

&nbsp;&nbsp;&nbsp;&nbsp;■ Executives'
 actual stock ownership and the degree to which it meets or exceeds the proponent's
 suggested holding period/retention ratio or the company's existing requirements;
 and

**Pay Disparity**

**Sustainability Policy Recommendation:** Generally vote case-by-case on proposals calling for an analysis of the pay disparity between corporate executives and other non-executive employees.

**Pay for Performance/Performance-Based Awards**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:

&nbsp;&nbsp;&nbsp;&nbsp;■ First,
 vote for shareholder proposals advocating the use of performance-based equity awards,
 such as performance contingent options or restricted stock, indexed options or premium-priced
 options, unless the proposal is overly restrictive or if the company has demonstrated
 that it is using a "substantial" portion of performance-based awards for
 its top executives. Standard stock options and performance-accelerated awards do not
 meet the criteria to be considered as performance-based awards. Further, premium-priced
 options should have a meaningful premium to be considered performance-based awards.

&nbsp;&nbsp;&nbsp;&nbsp;■ Second,
 assess the rigor of the company's performance-based equity program. If the bar
 set for the performance-based program is too low based on the company's historical
 or peer group comparison, generally vote for the proposal. Furthermore, if target performance
 results in an above target payout, vote for the shareholder proposal due to program's
 poor design. If the company does not disclose the performance metric of
the performance-based equity program, vote for the shareholder proposal regardless of the outcome of the first step to the test.

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In general, vote for the shareholder proposal if the company does not meet both of the above two steps.

**Pay for Superior Performance**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals that request the board establish a pay-for-superior performance standard in the company's executive compensation plan for senior executives. These proposals generally include the following principles:

&nbsp;&nbsp;&nbsp;&nbsp;■ Set
 compensation targets for the plan's annual and long-term incentive pay components
 at or below the peer group median;

&nbsp;&nbsp;&nbsp;&nbsp;■ Deliver
 a majority of the plan's target long-term compensation through performance-vested,
 not simply time-vested, equity awards;

&nbsp;&nbsp;&nbsp;&nbsp;■ Provide
 the strategic rationale and relative weightings of the financial and non-financial performance
 metrics or criteria used in the annual and performance-vested long-term incentive components
 of the plan;

&nbsp;&nbsp;&nbsp;&nbsp;■ Establish
 performance targets for each plan financial metric relative to the performance of the
 company's peer companies;

&nbsp;&nbsp;&nbsp;&nbsp;■ Limit
 payment under the annual and performance-vested long-term incentive components of the
 plan to when the company's performance on its selected financial performance metrics
 exceeds peer group median performance.

Consider the following factors in evaluating this proposal:

&nbsp;&nbsp;&nbsp;&nbsp;■ What
 aspects of the company's annual and long-term equity incentive programs are performance
 driven?

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 the annual and long-term equity incentive programs are performance driven, are the performance
 criteria and hurdle rates disclosed to shareholders or are they benchmarked against a
 disclosed peer group?

&nbsp;&nbsp;&nbsp;&nbsp;■ Can
 shareholders assess the correlation between pay and performance based on the current
 disclosure?

&nbsp;&nbsp;&nbsp;&nbsp;■ What
 type of industry and stage of business cycle does the company belong to?

**Pre-Arranged Trading Plans (10b5-1 Plans)**

**Sustainability Policy Recommendation:** Generally vote for shareholder proposals calling for the addition of certain safeguards in prearranged trading plans (10b5-1 plans) for executives. Safeguards may include:

&nbsp;&nbsp;&nbsp;&nbsp;■ Adoption,
 amendment, or termination of a 10b5-1 Plan must be disclosed in a Form 8-K;

&nbsp;&nbsp;&nbsp;&nbsp;■ Amendment
 or early termination of a 10b5-1 Plan allowed only under extraordinary circumstances,
 as determined by the board;

&nbsp;&nbsp;&nbsp;&nbsp;■ Request
 that a certain number of days that must elapse between adoption or amendment of a 10b5-1
 Plan and initial trading under the plan;

&nbsp;&nbsp;&nbsp;&nbsp;■ Reports
 on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;

&nbsp;&nbsp;&nbsp;&nbsp;■ An
 executive may not trade in company stock outside the 10b5-1 Plan;

&nbsp;&nbsp;&nbsp;&nbsp;■ Trades
 under a 10b5-1 Plan must be handled by a broker who does not handle other securities
 transactions for the executive.

**Prohibit Outside CEOs from Serving on Compensation Committees**

**Sustainability Policy Recommendation:** Generally vote against proposals seeking a policy to prohibit any outside CEO from serving on a company's compensation committee, unless the company has demonstrated problematic pay practices that raise concerns about the performance and composition of the committee.

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**Recoupment of Incentive or Stock Compensation in Specified Circumstances**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to recoup incentive cash or stock compensation made to senior executives if it is later determined that the figures upon which incentive compensation is earned turn out to have been in error, or if the senior executive has breached company policy or has engaged in misconduct that may be significantly detrimental to the company's financial position or reputation, or if the senior executive failed to manage or monitor risks that subsequently led to significant financial or reputational harm to the company. Many companies have adopted policies that permit recoupment in cases where an executive's fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation. However, such policies may be narrow given that not all misconduct or negligence may result in significant financial restatements. Misconduct, negligence or lack of sufficient oversight by senior executives may lead to significant financial loss or reputational damage that may have long-lasting impact.

In considering whether to support such shareholder proposals, the following factors will be taken into consideration:

&nbsp;&nbsp;&nbsp;&nbsp;■ If
 the company has adopted a formal recoupment policy;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 rigor of the recoupment policy focusing on how and under what circumstances the company
 may recoup incentive or stock compensation;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has chronic restatement history or material financial problems;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company's policy substantially addresses the concerns raised by the proponent;

&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of recoupment of incentive or stock compensation from senior executives or lack thereof;
 or

&nbsp;&nbsp;&nbsp;&nbsp;■ Any
 other relevant factors.

**Severance Agreements for Executives/Golden Parachutes**

**Sustainability Policy Recommendation:** Vote for shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification, unless the proposal requires shareholder approval *prior* to entering into employment contracts.

Vote case-by-case on proposals to ratify or cancel golden parachutes. An acceptable parachute should include, but is not limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 triggering mechanism should be beyond the control of management;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 amount should not exceed three times base amount (defined as the average annual taxable
 W-2 compensation during the five years prior to the year in which the change of control
 occurs);

&nbsp;&nbsp;&nbsp;&nbsp;■ Change-in-control
 payments should be double-triggered, *i.e.*, (1) after a change in control has taken
 place, and (2)
termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership
structure.

**Share Buyback Proposals**

**Sustainability Policy Recommendation:** Generally vote against shareholder proposals prohibiting executives from selling shares of company stock during periods in which the company has announced that it may or will be repurchasing shares of its stock. Vote for the proposal when there is a pattern of abuse by executives exercising options or selling shares during periods of share buybacks.

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Vote case-by-case on proposals requesting the company exclude the impact of share buybacks from the calculation of incentive program metrics, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 frequency and timing of the company's share buybacks;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 use of per-share metrics in incentive plans;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 effect of recent buybacks on incentive metric results and payouts; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 there is any indication of metric result manipulation.

**Supplemental Executive Retirement Plans (SERPs)**

**Sustainability Policy Recommendation:** Generally vote for shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company's executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

Generally vote for shareholder proposals requesting to limit the executive benefits provided under the company's supplemental executive retirement plan (SERP) by limiting covered compensation to a senior executive's annual salary or those pay elements covered for the general employee population.

**Tax Gross-Up Proposals**

**Sustainability Policy Recommendation:** Generally vote for proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

**Termination of Employment Prior to Severance Payment/Eliminating Accelerated Vesting of Unvested Equity**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals seeking a policy requiring termination of employment prior to severance payment and/or eliminating accelerated vesting of unvested equity.

The following factors will be considered:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's current treatment of equity in change-of-control situations (i.e. is
 it double triggered, does it allow for the assumption of equity by acquiring company,
 the treatment of performance shares, etc.);

&nbsp;&nbsp;&nbsp;&nbsp;■ Current
 employment agreements, including potential poor pay practices such as gross-ups embedded
 in those agreements.

Generally vote for proposals seeking a policy that prohibits acceleration of the vesting of equity awards to senior executives in the event of a change in control (except for pro rata vesting considering the time elapsed and attainment of any related performance goals between the award date and the change in control).

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6. Social and Environmental Issues

Global Approach

Socially responsible shareholder resolutions receive a great deal more attention from institutional shareholders today than in the past. While focusing on value enhancement through risk mitigation and exposure to new sustainability-related opportunities, these resolutions also seek standardized reporting on ESG issues, request information regarding an issuer's adoption of, or adherence to, relevant norms, standards, codes of conduct or universally recognized international initiatives to promote disclosure and transparency. ISS' Sustainability Policy generally supports standards-based ESG shareholder proposals that enhance long-term shareholder and stakeholder value while aligning the interests of the company with those of society at large. In particular, the policy will focus on resolutions seeking greater transparency and/or adherence to internationally recognized standards and principles.

**Sustainability Policy Recommendation:** In determining our vote recommendation on standardized ESG reporting shareholder proposals, we also analyze the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the proposal itself is well framed and reasonable;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 adoption of the proposal would have either a positive or negative impact on the company's
 short-term or long-term share value;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 percentage of sales, assets and earnings affected;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has already responded in some appropriate manner to the request embodied
 in a proposal;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company's analysis and voting recommendation to shareholders is persuasive;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 there are significant controversies, fines, penalties, or litigation associated with
 the company's environmental or social practices;

&nbsp;&nbsp;&nbsp;&nbsp;■ What
 other companies have done in response to the issue addressed in the proposal;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 implementation of the proposal would achieve the objectives sought in the proposal; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 degree to which the company's stated position on the issues raised in the proposal
 could affect its reputation or sales, or leave it vulnerable to a boycott or selective
 purchasing.

Animal Welfare

**Animal Welfare Policies**

**Sustainability Policy Recommendation:** Generally vote for proposals seeking a report on a company's animal welfare standards, or animal welfare-related risks, unless:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company has already published a set of animal welfare standards and monitors compliance;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's standards are comparable to industry peers; and

&nbsp;&nbsp;&nbsp;&nbsp;■ There
 are no recent significant fines, litigation, or controversies related to the company's
 and/or its suppliers' treatment of animals.

**Animal Testing**

**Sustainability Policy Recommendation:** Generally vote against proposals to phase out the use of animals in product testing, unless:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company is conducting animal testing programs that are unnecessary or not required by
 regulation;

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&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company is conducting animal testing when suitable alternatives are commonly accepted
 and used by industry peers; or

&nbsp;&nbsp;&nbsp;&nbsp;■ There
 are recent, significant fines or litigation related to the company's treatment
 of animals.

**Animal Slaughter**

**Sustainability Policy Recommendation:** Generally vote against proposals requesting the implementation of Controlled Atmosphere Killing (CAK) methods at company and/or supplier operations unless such methods are required by legislation or generally accepted as the industry standard.

Vote case-by-case on proposals requesting a report on the feasibility of implementing CAK methods at company and/or supplier operations considering the availability of existing research conducted by the company or industry groups on this topic and any fines or litigation related to current animal processing procedures at the company.

Consumer Issues

**Genetically Modified Ingredients**

**Sustainability Policy Recommendation:** Generally vote against proposals requesting that a company voluntarily label genetically engineered (GE) ingredients in its products. The labeling of products with GE ingredients is best left to the appropriate regulatory authorities.

Vote case-by-case on proposals asking for a report on the feasibility of labeling products containing GE ingredients, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 potential impact of such labeling on the company's business;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 quality of the company's disclosure on GE product labeling, related voluntary initiatives,
 and how this disclosure compares with industry peer disclosure; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Company's
 current disclosure on the feasibility of GE product labeling.

Generally vote FOR proposals seeking a report on the social, health, and environmental effects of genetically modified organism (GMOs).

Generally vote against proposals to eliminate GE ingredients from the company's products, or proposals asking for reports outlining the steps necessary to eliminate GE ingredients from the company's products. Such decisions are more appropriately made by management with consideration of current regulations.

**Reports on Potentially Controversial Business/Financial Practices**

**Sustainability Policy Recommendation:** Vote case-by-case on requests for reports on a company's potentially controversial business or financial practices or products, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has adequately disclosed mechanisms in place to prevent abuses;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has adequately disclosed the financial risks of the products/practices in
 question;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has been subject to violations of related laws or serious controversies;
 and

&nbsp;&nbsp;&nbsp;&nbsp;■ Peer
 companies' policies/practices in this area.

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**Consumer Lending**

**Sustainability Policy Recommendation:** Vote case-by-case on requests for reports on the company's lending guidelines and procedures taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has adequately disclosed mechanisms in place to prevent abusive lending practices;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has adequately disclosed the financial risks of the lending products in question;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has been subject to violations of lending laws or serious lending controversies;
 and

&nbsp;&nbsp;&nbsp;&nbsp;■ Peer
 companies' policies to prevent abusive lending practices.

**Pharmaceutical Pricing, Access to Medicines, Product Reimportation and Health Pandemics**

**Sustainability Policy Recommendation:** Generally vote against proposals requesting that companies implement specific price restraints on pharmaceutical products unless the company fails to adhere to legislative guidelines or industry norms in its product pricing practices.

Vote case-by-case on proposals requesting that a company report on its product pricing or access to medicine policies, considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 potential for reputational, market, and regulatory risk exposure;

&nbsp;&nbsp;&nbsp;&nbsp;■ Existing
 disclosure of relevant policies;

&nbsp;&nbsp;&nbsp;&nbsp;■ Deviation
 from established industry norms;

&nbsp;&nbsp;&nbsp;&nbsp;■ Relevant
 company initiatives to provide research and/or products to disadvantaged consumers;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the proposal focuses on specific products or geographic regions;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 potential burden and scope of the requested report; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Recent
 significant controversies, litigation, or fines at the company.

Generally vote for proposals requesting that a company report on the financial and legal impact of its prescription drug reimportation policies unless such information is already publicly disclosed.

Generally vote against proposals requesting that companies adopt specific policies to encourage or constrain prescription drug reimportation. Such matters are more appropriately the province of legislative activity and may place the company at a competitive disadvantage relative to its peers.

**Health Pandemics**

**Sustainability Policy Recommendation:** Vote case-by-case on requests for reports outlining the impact of health pandemics (such as HIV/AIDS, malaria, tuberculosis, and avian flu) on the company's operations and how the company is responding to the situation, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 scope of the company's operations in the affected/relevant area(s);

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's existing healthcare policies, including benefits and healthcare access;
 and

&nbsp;&nbsp;&nbsp;&nbsp;■ Company
 donations to relevant healthcare providers.

Vote against proposals asking companies to establish, implement, and report on a standard of response to health pandemics (such as HIV/AIDS, malaria, tuberculosis, and avian flu), unless the company has significant operations in the affected markets and has failed to adopt policies and/or procedures to address these issues comparable to those of industry peers.

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**Product Safety and Toxic/Hazardous Materials**

**Sustainability Policy Recommendation:** Generally vote for proposals requesting that a company report on its policies, initiatives/procedures, and oversight mechanisms related to toxic/hazardous materials or product safety in its supply chain.

Generally vote for resolutions requesting that companies develop a feasibility assessment to phase-out of certain toxic/hazardous materials, or evaluate and disclose the potential financial and legal risks associated with utilizing certain materials.

Generally vote against resolutions requiring that a company reformulate its products.

**Tobacco-Related Proposals**

**Sustainability Policy Recommendation:** Vote case-by-case on resolutions regarding the advertisement of tobacco products, considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ Recent
 related fines, controversies, or significant litigation;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company complies with relevant laws and regulations on the marketing of tobacco;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company's advertising restrictions deviate from those of industry peers;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company entered into the Master Settlement Agreement, which restricts marketing of
 tobacco to youth; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 restrictions on marketing to youth extend to foreign countries.

Vote case-by-case on proposals regarding second-hand smoke, considering;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company complies with all laws and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 degree that voluntary restrictions beyond those mandated by law might hurt the company's
 competitiveness; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 risk of any health-related liabilities.

Generally vote against resolutions to cease production of tobacco-related products, to avoid selling products to tobacco companies, to spin-off tobacco-related businesses, or prohibit investment in tobacco equities. Such business decisions are better left to company management or portfolio managers.

Generally vote against proposals regarding tobacco product warnings. Such decisions are better left to public health authorities.

Climate Change

**Climate Change/Greenhouse Gas (GHG) Emissions**

Climate change has emerged as the most significant environmental threat to the planet to date. Scientists agree that gases released by chemical reactions including the burning of fossil fuels contribute to a "greenhouse effect" that traps the planet's heat. Environmentalists claim that the greenhouse gases produced by the industrial age have caused recent weather crises such as heat waves, rainstorms, melting glaciers, rising sea levels and receding coastlines. With notable exceptions, business leaders have described the rise and fall of global temperatures as naturally occurring phenomena and depicted corporate impact on climate change as minimal. Shareholder proposals asking a company to issue a report to shareholders, "at reasonable cost and omitting proprietary information," on greenhouse gas emissions ask that the report include descriptions of efforts within companies to reduce emissions, their financial exposure and potential liability from operations that contribute to global warming, their direct or indirect efforts to promote the view that global warming is not a threat and their goals in reducing these emissions from their operations. Proponents argue that there is scientific proof that the burning of fossil fuels causes global warming, that future legislation may make companies financially liable for their contributions to global warming, and that a report on the company's role in global warming can be assembled at reasonable cost.

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**Sustainability Policy Recommendation:**

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals seeking information on the financial, physical, or regulatory
 risks it faces related to climate change- on its operations and investments, or on how
 the company identifies, measures, and manage such risks.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals calling for the reduction of GHG emissions.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals seeking reports on responses to regulatory and public pressures
 surrounding climate change, and for disclosure of research that aided in setting company
 policies around climate change.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals requesting a report/disclosure of goals on GHG emissions from
 company operations and/or products.

**Say on Climate (SoC) Management Proposals**

**Sustainability Policy Recommendation:** Vote case-by-case on management proposals that request shareholders to approve the company's climate transition action plan**<sup>23</sup>**, taking into account the completeness and rigor of the plan. Information that will be considered where available includes the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 extent to which the company's climate related disclosures are in line with TCFD
 recommendations and meet other market standards;

&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of its operational and supply chain GHG emissions (Scopes 1, 2, and 3);

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 completeness and rigor of company's short-, medium-, and long-term targets for
 reducing operational and supply chain GHG emissions (Scopes 1, 2, and 3 if relevant);

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has sought and received third-party approval that its targets are science-based;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has made a commitment to be "net zero" for operational and supply
 chain emissions (Scopes 1, 2, and 3) by 2050;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company discloses a commitment to report on the implementation of its plan in subsequent
 years;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company's climate data has received third-party assurance;

&nbsp;&nbsp;&nbsp;&nbsp;■ Disclosure
 of how the company's lobbying activities and its capital expenditures align with
 company strategy;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 there are specific industry decarbonization challenges; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's related commitment, disclosure, and performance compared to its industry
 peers.

**Say on Climate (SoC) Shareholder Proposals**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of its GHG emissions reduction plan, taking into account information such as the following:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 completeness and rigor of the company's climate-related disclosure;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's actual GHG emissions performance;

**<sup>23</sup>** Variations of this request also include climate transition related ambitions, or commitment to reporting on the implementation of a climate plan.

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&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has been the subject of recent, significant violations, fines, litigation,
 or controversy related to its GHG emissions; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive.

**Energy Efficiency**

**Sustainability Policy Recommendation:** Generally vote for proposals requesting that a company report on its energy efficiency policies.

**Renewable Energy**

**Sustainability Policy Recommendation:** Generally vote for requests for reports on the feasibility of developing renewable energy resources.

Generally vote for proposals requesting that the company invest in renewable energy resources.

Diversity

**Board Diversity**

**Sustainability Policy Recommendation:** Generally vote for requests for reports on a company's efforts to diversify the board, unless:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 gender and racial minority representation of the company's board is reasonably
 inclusive in relation to companies of similar size and business; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 board already reports on its nominating procedures and gender and racial minority initiatives
 on the board and within the company.

Generally vote for shareholder proposals that ask the company to take reasonable steps to increase the levels of underrepresented gender identities and racial minorities on the board.

**Equality of Opportunity**

**Sustainability Policy Recommendation:** Generally vote for proposals requesting a company disclose its diversity policies or initiatives, or proposals requesting disclosure of a company's comprehensive workforce diversity data, including requests for EEO-1 data.

Generally vote for proposals seeking information on the diversity efforts of suppliers and service providers.

**Gender Identity, Sexual Orientation, and Domestic Partner Benefits**

**Sustainability Policy Recommendation:** Generally vote for proposals seeking to amend a company's EEO statement or diversity policies to prohibit discrimination based on sexual orientation and/or gender identity, unless the change would be unduly burdensome.

Generally vote for proposals to extend company benefits to domestic partners.

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**Gender, Race/Ethnicity Pay Gap**

**Sustainability Policy Recommendation:** Vote case-by-case on requests for reports on a company's pay data by gender or race/ethnicity or a report on a company's policies and goals to reduce any gender or race/ethnicity pay gaps, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's current policies and disclosure related to both its diversity and inclusion
 policies and practices and its compensation philosophy and fair and equitable compensation
 practices;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has been the subject of recent controversy, litigation, or regulatory actions
 related to gender, race, or ethnicity pay gap issues;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's disclosure regarding gender, race, or ethnicity pay gap policies or initiatives
 compared to its industry peers; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Local
 laws regarding categorization of race and/or ethnicity and definitions of ethnic and/or
 racial minorities.

**Racial Equity and/or Civil Rights Audits**

**Sustainability Policy Recommendation:** Generally vote for proposals requesting that a company conduct an independent racial equity and/or civil rights audit, considering company disclosures, policies, actions, and engagements.

Environment and Sustainability

**Facility and Workplace Safety**

**Sustainability Policy Recommendation:** Vote case-by-case on resolutions requesting that a company report on safety and/or security risks associated with its operations and/or facilities, considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's compliance with applicable regulations and guidelines;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's current level of disclosure regarding its security and safety policies,
 procedures, and compliance monitoring; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 existence of recent, significant violations, fines, or controversy regarding the safety
 and security of the company's operations and/or facilities.

**Hydraulic Fracturing**

**Sustainability Policy Recommendation:** Generally vote for proposals requesting greater disclosure of a company's (natural gas) hydraulic fracturing operations, including measures the company has taken to manage and mitigate the potential community and environmental impacts of those operations.

**Operations in Protected Areas**

**Sustainability Policy Recommendation:** Generally vote for requests for reports on potential environmental damage as a result of company operations in protected regions, unless:

&nbsp;&nbsp;&nbsp;&nbsp;■ Operations
 in the specified regions are not permitted by current laws or regulations;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company does not currently have operations or plans to develop operations in these protected
 regions; or

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's disclosure of its operations and environmental policies in these regions
 is comparable to industry peers.

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**Recycling**

**Sustainability Policy Recommendation:** Vote FOR proposals to adopt a comprehensive recycling strategy, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 nature of the company's business;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 current level of disclosure of the company's existing related programs;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 timetable and methods of program implementation prescribed by the proposal;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's ability to address the issues raised in the proposal; and

&nbsp;&nbsp;&nbsp;&nbsp;■ How
 the company's recycling programs compare to similar programs of its industry peers.

**Sustainability Reporting**

The concept of sustainability is commonly understood as meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. Indeed, the term sustainability is complex and poses significant challenges for companies on many levels. Many in the investment community have termed this broader responsibility the "triple bottom line," referring to the triad of performance goals related to economic prosperity, social responsibility and environmental quality. In essence, the concept requires companies to balance the needs and interests of their various stakeholders while operating in a manner that sustains business growth for the long-term, supports local communities and protects the environment and natural capital for future generations.

Shareholders may request general environmental reports or reports on a specific location/operation, often requesting that the company detail the environmental risks and potential liabilities of a specific project. Companies have begun to report on environmental and sustainability issues using the Global Reporting Initiative (GRI) standards. The GRI was established in 1997 with the mission of developing globally applicable guidelines for reporting on economic, environmental, and social performance. The GRI was developed by Ceres (formerly known as the Coalition for Environmentally Responsible Economies, CERES) in partnership with the United Nations Environment Programme (UNEP).

**Sustainability Policy Recommendation:**

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals seeking greater disclosure on the company's environmental
 and social practices, and/or associated risks and liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals asking companies to report in accordance with the Global Reporting
 Initiative (GRI).

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals to prepare a sustainability report.

**Water Issues**

**Sustainability Policy Recommendation:** Generally vote for on proposals requesting a company to report on, or to adopt a new policy on, water-related risks and concerns, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's current disclosure of relevant policies, initiatives, oversight mechanisms,
 and water usage metrics;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 or not the company's existing water-related policies and practices are consistent
 with relevant internationally recognized standards and national/local regulations;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 potential financial impact or risk to the company associated with water-related concerns
 or issues; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Recent,
 significant company controversies, fines, or litigation regarding water use by the company
 and its suppliers.

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**Equator Principles**

The Equator Principles are the financial industry's benchmark for determining, assessing and managing social and environmental risk in project financing. First launched in June 2003, the Principles were ultimately adopted by over forty financial institutions over a three-year implementation period. Since its adoption, the Principles have undergone a number of revisions, expanding the use of performance standards and signatory banks' banks' commitments to social responsibility, including human rights, climate change, and transparency. The fourth iteration of the Principles was launched in November 2019, incorporating amendments and new commitment to human rights, climate change, Indigenous Peoples and biodiversity related topics. Financial institutions adopt these principles to ensure that the projects they finance are developed in a socially responsible manner and reflect sound environmental management practices. As of 2019, 101 financial institutions have officially adopted the Equator Principles.

**Sustainability Policy Recommendation:** Vote for shareholder proposals to study or implement the Equator Principles.

General Corporate Issues

**Charitable Contributions**

**Sustainability Policy Recommendation:** Vote against proposals restricting a company from making charitable contributions. Charitable contributions are generally useful for assisting worthwhile causes and for creating goodwill in the community. In the absence of bad faith, self-dealing, or gross negligence, management should determine which, and if, contributions are in the best interests of the company.

**Data Security, Privacy, and Internet Issues**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals requesting the disclosure or implementation of data security, privacy, or information access and management policies and procedures, considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 level of disclosure of company policies and procedures relating to data security, privacy,
 freedom of speech, information access and management, and Internet censorship;

&nbsp;&nbsp;&nbsp;&nbsp;■ Engagement
 in dialogue with governments or relevant groups with respect to data security, privacy,
 or the free flow of information on the Internet;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 scope of business involvement and of investment in countries whose governments censor
 or monitor the Internet and other telecommunications;

&nbsp;&nbsp;&nbsp;&nbsp;■ Applicable
 market-specific laws or regulations that may be imposed on the company; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Controversies,
 fines, or litigation related to data security, privacy, freedom of speech, or Internet
 censorship.

**Environmental, Social, and Governance (ESG) Compensation-Related Proposals**

**Sustainability Policy Recommendation:** Generally vote for proposals to link, or report on linking, executive compensation to environmental and social criteria (such as corporate downsizings, customer or employee satisfaction, community involvement, human rights, environmental performance, or predatory lending).

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Human Rights, Labor Issues, and International Operations

Investors, international human rights groups, and labor advocacy groups have long been making attempts to safeguard worker rights in the international marketplace. In instances where companies themselves operate factories in developing countries for example, these advocates have asked that the companies adopt global corporate human rights standards that guarantee sustainable wages and safe working conditions for their workers abroad. Companies that contract out portions of their manufacturing operations to foreign companies have been asked to ensure that the products they receive from those contractors have not been made using forced labor, child labor, or sweatshop labor. These companies are asked to adopt formal vendor standards that, among other things, include monitoring or auditing mechanisms. Globalization, relocation of production overseas, and widespread use of subcontractors and vendors, often make it difficult to obtain a complete picture of a company's labor practices in global markets. Many Investors believe that companies would benefit from adopting a human rights policy based on the Universal Declaration of Human Rights and the International Labor Organization's Core Labor Standards. Efforts that seek greater disclosure on a company's labor practices and that seek to establish minimum standards for a company's operations will be supported. In addition, requests for independent monitoring of overseas operations will be supported.

The Sustainability Policy generally supports proposals that call for the adoption and/or enforcement of principles or codes relating to countries in which there are systematic violations of human rights; such as the use of slave, child, or prison labor; a government that is illegitimate; or there is a call by human rights advocates, pro-democracy organizations, or legitimately-elected representatives for economic sanctions. The use of child, sweatshop, or forced labor is unethical and can damage corporate reputations. Poor labor practices can lead to litigation against the company, which can be costly and time consuming.

**Human Rights Proposals**

**Sustainability Policy Recommendation:**

&nbsp;&nbsp;&nbsp;&nbsp;■ Generally
 vote for proposals requesting a report on company or company supplier labor and/or human
 rights standards and policies.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals to implement human rights standards and workplace codes of
 conduct.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals calling for the implementation and reporting on ILO codes of
 conduct, SA 8000 Standards, or the Global Sullivan Principles.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals that call for the adoption and/or enforcement of principles
 or codes relating to countries in which there are systematic violations of human rights.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals that call for independent monitoring programs in conjunction
 with local and respected religious and human rights groups to monitor supplier and licensee
 compliance with codes.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals that seek publication of a "Code of Conduct" to
 the company's foreign suppliers and licensees, requiring they satisfy all applicable
 standards and laws protecting employees' wages, benefits, working conditions, freedom
 of association, and other rights.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals seeking reports on, or the adoption of, vendor standards including:
 reporting on incentives to encourage suppliers to raise standards rather than terminate
 contracts and providing public disclosure of contract supplier reviews on a regular basis.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for shareholder proposals to adopt labor standards for foreign and domestic suppliers
 to ensure that the company will not do business with foreign suppliers that manufacture
 products for sale using forced labor, child labor, or that fail to comply with applicable
 laws protecting employee's wages and working conditions.

&nbsp;&nbsp;&nbsp;&nbsp;■ Vote
 for proposals requesting that a company conduct an assessment of the human rights risks
 in its operations or in its supply chain, or report on its human rights risk assessment
 process.

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**Mandatory Arbitration**

**Sustainability Policy Recommendation:** Vote case-by-case on requests for a report on a company's use of mandatory arbitration on employment-related claims, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's current policies and practices related to the use of mandatory arbitration
 agreements on workplace claims;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has been the subject of recent controversy, litigation, or regulatory actions
 related to the use of mandatory arbitration agreements on workplace claims; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's disclosure of its policies and practices related to the use of mandatory
 arbitration agreements compared to its peers.

**MacBride Principles**

These resolutions have called for the adoption of the MacBride Principles for operations located in Northern Ireland. They request companies operating abroad to support the equal employment opportunity policies that apply in facilities they operate domestically. The principles were established to address the sectarian hiring problems between Protestants and Catholics in Northern Ireland. It is well documented that Northern Ireland's Catholic community faced much higher unemployment figures than the Protestant community. In response to this problem, the U.K. government instituted the New Fair Employment Act of 1989 (and subsequent amendments) to address the sectarian hiring problems.

Many companies believe that the Act adequately addresses the problems and that further action, including adoption of the MacBride Principles, only duplicates the efforts already underway. In evaluating a proposal to adopt the MacBride Principles, shareholders must decide whether the principles will cause companies to divest, and therefore worsen the unemployment problem, or whether the principles will promote equal hiring practices. Proponents believe that the Fair Employment Act does not sufficiently address the sectarian hiring problems. They argue that the MacBride Principles serve to stabilize the situation and promote further investment.

**Sustainability Policy Recommendation:** Support the MacBride Principles for operations in Northern Ireland that request companies to abide by equal employment opportunity policies.

**Community Social and Environmental Impact Assessments**

**Sustainability Policy Recommendation:** Generally vote for requests for reports outlining policies and/or the potential (community) social and/or environmental impact of company operations considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ Current
 disclosure of applicable policies and risk assessment report(s) and risk management procedures;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 impact of regulatory non-compliance, litigation, remediation, or reputational loss that
 may be associated with failure to manage the company's operations in question,
 including the management of relevant community and stakeholder relations;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 nature, purpose, and scope of the company's operations in the specific region(s);

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 degree to which company policies and procedures are consistent with industry norms; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Scope
 of the resolution.

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**Operations in High-Risk Markets**

**Sustainability Policy Recommendation:** Vote case-by-case on requests for a report on a company's potential financial and reputational risks associated with operations in "high-risk" markets, such as a terrorism-sponsoring state or politically/socially unstable region, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 nature, purpose, and scope of the operations and business involved that could be affected
 by social or political disruption;

&nbsp;&nbsp;&nbsp;&nbsp;■ Current
 disclosure of applicable risk assessment(s) and risk management procedures;

&nbsp;&nbsp;&nbsp;&nbsp;■ Compliance
 with U.S. sanctions and laws;

&nbsp;&nbsp;&nbsp;&nbsp;■ Consideration
 of other international policies, standards, and laws; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has been recently involved in recent, significant controversies, fines or
 litigation related to its operations in "high-risk" markets.

**Outsourcing/Offshoring**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals calling for companies to report on the risks associated with outsourcing/plant closures, considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ Controversies
 surrounding operations in the relevant market(s);

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 value of the requested report to shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's current level of disclosure of relevant information on outsourcing and
 plant closure procedures; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's existing human rights standards relative to industry peers.

**Sexual Harassment**

**Sustainability Policy Recommendation:** Vote case-by-case on requests for a report on company actions taken to strengthen policies and oversight to prevent workplace sexual harassment, or a report on risks posed by a company's failure to prevent workplace sexual harassment, taking into account:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's current policies, practices, oversight mechanisms related to preventing
 workplace sexual harassment;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the company has been the subject of recent controversy, litigation, or regulatory actions
 related to workplace sexual harassment issues; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's disclosure regarding workplace sexual harassment policies or initiatives
 compared to its industry peers.

**Weapons and Military Sales**

**Sustainability Policy Recommendation:** Vote against reports on foreign military sales or offsets. Such disclosures may involve sensitive and confidential information. Moreover, companies must comply with government controls and reporting on foreign military sales.

Generally vote against proposals asking a company to cease production or report on the risks associated with the use of depleted uranium munitions or nuclear weapons components and delivery systems, including disengaging from current and proposed contracts. Such contracts are monitored by government agencies, serve multiple military and non-military uses, and withdrawal from these contracts could have a negative impact on the company's business.

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Political Activities

**Lobbying**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals requesting information on a company's lobbying (including direct, indirect, and grassroots lobbying) activities, policies, or procedures, considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's current disclosure of relevant lobbying policies, and management and
 board oversight;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's disclosure regarding trade associations or other groups that it supports,
 or is a member of, that engage in lobbying activities; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Recent
 significant controversies, fines, or litigation regarding the company's lobbying-related
 activities.

**Political Contributions**

**Sustainability Policy Recommendation:** Generally vote for proposals requesting greater disclosure of a company's political contributions and trade association spending policies and activities, considering:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's policies, and management and board oversight related to its direct political
 contributions and payments to trade associations or other groups that may be used for
 political purposes;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's disclosure regarding its support of, and participation in, trade associations
 or other groups that may make political contributions; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Recent
 significant controversies, fines, or litigation related to the company's political
 contributions or political activities.

Vote against proposals barring a company from making political contributions. Businesses are affected by legislation at the federal, state, and local level; barring political contributions can put the company at a competitive disadvantage.

Vote against proposals to publish in newspapers and other media a company's political contributions. Such publications could present significant cost to the company without providing commensurate value to shareholders.

**Political Ties**

**Sustainability Policy Recommendation:** Generally vote against proposals asking a company to affirm political nonpartisanship in the workplace, so long as:

&nbsp;&nbsp;&nbsp;&nbsp;■ There
 are no recent, significant controversies, fines, or litigation regarding the company's
 political contributions or trade association spending; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company has procedures in place to ensure that employee contributions to company-sponsored
 political action committees (PACs) are strictly voluntary and prohibit coercion.

Vote against proposals asking for a list of company executives, directors, consultants, legal counsels, lobbyists, or investment bankers that have prior government service and whether such service had a bearing on the business of the company. Such a list would be burdensome to prepare without providing any meaningful information to shareholders.

**Political Expenditures and Lobbying Congruency**

**Sustainability Policy Recommendation:** Generally vote for proposals requesting greater disclosure of a company's alignment of political contributions, lobbying, and electioneering spending with a company's publicly stated values and policies, unless the terms of the proposal are unduly restrictive. Additionally, Sustainability Advisory Services will consider whether:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's policies, management, board oversight, governance processes, and level
 of disclosure related to direct political contributions, lobbying activities, and payments
 to trade associations, political action committees, or other groups that may be used
 for political purposes;

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&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company's disclosure regarding: the reasons for its support of candidates for public
 offices; the reasons for support of and participation in trade associations or other
 groups that may make political contributions; and other political activities;

&nbsp;&nbsp;&nbsp;&nbsp;■ Any
 incongruencies identified between a company's direct and indirect political expenditures
 and its publicly stated values and priorities;

&nbsp;&nbsp;&nbsp;&nbsp;■ Recent
 significant controversies related to the company's direct and indirect lobbying,
 political contributions, or political activities.

7. Mutual Fund Proxies

**Election of Directors**

**Sustainability Policy Recommendation:** Vote case-by-case on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

**Closed End Funds- Unilateral Opt-In to Control Share Acquisition Statutes**

**Sustainability Policy Recommendation:** For closed-end management investment companies (CEFs), vote against or withhold from nominating/governance committee members (or other directors on a case-by-case basis) at CEFs that have not provided a compelling rationale for opting-in to a Control Share Acquisition statute, nor submitted a by-law amendment to a shareholder vote.

**Converting Closed-end Fund to Open-end Fund**

**Sustainability Policy Recommendation:** Vote case-by-case on conversion proposals, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Past
 performance as a closed-end fund;

&nbsp;&nbsp;&nbsp;&nbsp;■ Market
 in which the fund invests;

&nbsp;&nbsp;&nbsp;&nbsp;■ Measures
 taken by the board to address the discount; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Past
 shareholder activism, board activity, and votes on related proposals.

**Proxy Contests**

**Sustainability Policy Recommendation:** Vote case-by-case on proxy contests, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Past
 performance relative to its peers;

&nbsp;&nbsp;&nbsp;&nbsp;■ Market
 in which fund invests;

&nbsp;&nbsp;&nbsp;&nbsp;■ Measures
 taken by the board to address the issues;

&nbsp;&nbsp;&nbsp;&nbsp;■ Past
 shareholder activism, board activity, and votes on related proposals;

&nbsp;&nbsp;&nbsp;&nbsp;■ Strategy
 of the incumbents versus the dissidents;

&nbsp;&nbsp;&nbsp;&nbsp;■ Independence
 of directors;

&nbsp;&nbsp;&nbsp;&nbsp;■ Experience
 and skills of director candidates;

&nbsp;&nbsp;&nbsp;&nbsp;■ Governance
 profile of the company;

&nbsp;&nbsp;&nbsp;&nbsp;■ Evidence
 of management entrenchment.

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**Investment Advisory Agreements**

**Sustainability Policy Recommendation:** Vote case-by-case on investment advisory agreements, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Proposed
 and current fee schedules;

&nbsp;&nbsp;&nbsp;&nbsp;■ Fund
 category/investment objective;

&nbsp;&nbsp;&nbsp;&nbsp;■ Performance
 benchmarks;

&nbsp;&nbsp;&nbsp;&nbsp;■ Share
 price performance as compared with peers;

&nbsp;&nbsp;&nbsp;&nbsp;■ Resulting
 fees relative to peers;

&nbsp;&nbsp;&nbsp;&nbsp;■ Assignments
 (where the advisor undergoes a change of control).

**Approving New Classes or Series of Shares**

**Sustainability Policy Recommendation:** Vote for the establishment of new classes or series of shares.

**Preferred Stock Proposals**

**Sustainability Policy Recommendation:** Vote case-by-case on the authorization for or increase in preferred shares, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Stated
 specific financing purpose;

&nbsp;&nbsp;&nbsp;&nbsp;■ Possible
 dilution for common shares;

&nbsp;&nbsp;&nbsp;&nbsp;■ Whether
 the shares can be used for antitakeover purposes.

**1940 Act Policies**

**Sustainability Policy Recommendation:** Vote case-by-case on policies under the Investment Advisor Act of 1940, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Potential
 competitiveness;

&nbsp;&nbsp;&nbsp;&nbsp;■ Regulatory
 developments;

&nbsp;&nbsp;&nbsp;&nbsp;■ Current
 and potential returns; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Current
 and potential risk.

Generally vote for these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.

**Changing a Fundamental Restriction to a Nonfundamental Restriction**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 fund's target investments;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 reasons given by the fund for the change; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 projected impact of the change on the portfolio.

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**Change Fundamental Investment Objective to Nonfundamental**

**Sustainability Policy Recommendation:** Vote against proposals to change a fund's fundamental investment objective to non-fundamental.

**Name Change Proposals**

**Sustainability Policy Recommendation:** Vote case-by-case on name change proposals, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Political/economic
 changes in the target market;

&nbsp;&nbsp;&nbsp;&nbsp;■ Consolidation
 in the target market; and

&nbsp;&nbsp;&nbsp;&nbsp;■ Current
 asset composition.

**Change in Fund's Subclassification**

**Sustainability Policy Recommendation:** Vote case-by-case on changes in a fund's sub-classification, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Potential
 competitiveness;

&nbsp;&nbsp;&nbsp;&nbsp;■ Current
 and potential returns;

&nbsp;&nbsp;&nbsp;&nbsp;■ Risk
 of concentration;

&nbsp;&nbsp;&nbsp;&nbsp;■ Consolidation
 in target industry.

**Business Development Companies—Authorization to Sell Shares of Common Stock at a Price below Net Asset Value**

**Sustainability Policy Recommendation:** Vote for proposals authorizing the board to issue shares below Net Asset Value (NAV) if:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 proposal to allow share issuances below NAV has an expiration date no more than one year
 from the date shareholders approve the underlying proposal, as required under the Investment
 Company Act of 1940;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 sale is deemed to be in the best interests of shareholders by (1) a majority of the company's
 independent directors and (2) a majority of the company's directors who have no
 financial interest in the issuance; and

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 company has demonstrated responsible past use of share issuances by either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Outperforming
 peers in its 8-digit GICS group as measured by one- and three-year median TSRs; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Providing
 disclosure that its past share issuances were priced at levels that resulted in only
 small or moderate discounts to NAV and economic dilution to existing non-participating
 shareholders.

**Disposition of Assets/Termination/Liquidation**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to dispose of assets, to terminate or liquidate, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Strategies
 employed to salvage the company;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 fund's past performance;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 terms of the liquidation.

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![](coinshares485bpos007.jpg)

**Changes to the Charter Document**

**Sustainability Policy Recommendation:** Vote case-by-case on changes to the charter document, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 degree of change implied by the proposal;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 efficiencies that could result;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 state of incorporation;

&nbsp;&nbsp;&nbsp;&nbsp;■ Regulatory
 standards and implications.

Vote against any of the following changes:

&nbsp;&nbsp;&nbsp;&nbsp;■ Removal
 of shareholder approval requirement to reorganize or terminate the trust or any of its
 series;

&nbsp;&nbsp;&nbsp;&nbsp;■ Removal
 of shareholder approval requirement for amendments to the new declaration of trust;

&nbsp;&nbsp;&nbsp;&nbsp;■ Removal
 of shareholder approval requirement to amend the fund's management contract, allowing
 the contract to be modified by the investment manager and the trust management, as permitted
 by the 1940 Act;

&nbsp;&nbsp;&nbsp;&nbsp;■ Allow
 the trustees to impose other fees in addition to sales charges on investment in a fund,
 such as deferred sales charges and redemption fees that may be imposed upon redemption
 of a fund's shares;

&nbsp;&nbsp;&nbsp;&nbsp;■ Removal
 of shareholder approval requirement to engage in and terminate subadvisory arrangements;

&nbsp;&nbsp;&nbsp;&nbsp;■ Removal
 of shareholder approval requirement to change the domicile of the fund.

**Changing the Domicile of a Fund**

**Sustainability Policy Recommendation:** Vote case-by-case on re-incorporations, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Regulations
 of both states;

&nbsp;&nbsp;&nbsp;&nbsp;■ Required
 fundamental policies of both states;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 increased flexibility available.

**Authorizing the Board to Hire and Terminate Subadvisers Without Shareholder Approval**

**Sustainability Policy Recommendation:** Vote against proposals authorizing the board to hire or terminate subadvisers without shareholder approval if the investment adviser currently employs only one subadviser.

**Distribution Agreements**

**Sustainability Policy Recommendation:** Vote case-by-case on distribution agreement proposals, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Fees
 charged to comparably sized funds with similar objectives;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 proposed distributor's reputation and past performance;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 competitiveness of the fund in the industry;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 terms of the agreement.

**Master-Feeder Structure**

**Sustainability Policy Recommendation:** Vote for the establishment of a master-feeder structure.

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![](coinshares485bpos007.jpg)

**Mergers**

**Sustainability Policy Recommendation:** Vote case-by-case on merger proposals, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Resulting
 fee structure;

&nbsp;&nbsp;&nbsp;&nbsp;■ Performance
 of both funds;

&nbsp;&nbsp;&nbsp;&nbsp;■ Continuity
 of management personnel;

&nbsp;&nbsp;&nbsp;&nbsp;■ Changes
 in corporate governance and their impact on shareholder rights.

Shareholder Proposals for Mutual Funds

**Establish Director Ownership Requirement**

**Sustainability Policy Recommendation:** Generally vote against shareholder proposals that mandate a specific minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

**Reimburse Shareholder for Expenses Incurred**

**Sustainability Policy Recommendation:** Vote case-by-case on shareholder proposals to reimburse proxy solicitation expenses. When supporting the dissidents, vote for the reimbursement of the proxy solicitation expenses.

**Terminate the Investment Advisor**

**Sustainability Policy Recommendation:** Vote case-by-case on proposals to terminate the investment advisor, considering the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;■ Performance
 of the fund's Net Asset Value (NAV);

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 fund's history of shareholder relations;

&nbsp;&nbsp;&nbsp;&nbsp;■ The
 performance of other funds under the advisor's management.

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![](coinshares485bpos007.jpg)

8. Foreign Private Issuers Listed on U.S. Exchanges

**Sustainability Policy Recommendation:** Vote against (or withhold from) non-independent director nominees at companies which fail to meet the following criteria: a majority-independent board, and the presence of an audit, a compensation, and a nomination committee, each of which is entirely composed of independent directors.

Where the design and disclosure levels of equity compensation plans are comparable to those seen at U.S. companies, U.S. compensation policy will be used to evaluate the compensation plan proposals. Otherwise, they, and all other voting items, will be evaluated using the relevant regional or market approach under the Sustainability proxy voting guidelines.

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![](coinshares485bpos007.jpg)

We empower investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics, and insight.

**G E T S T A R T E D W I T H I S S S O L U T I O N S**

Email sales@issgovernance.com or visit www.issgovernance.com for more information.

Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS' 2,600 employees operate worldwide across 29 global locations in 15 countries. Its approximately 3,400 clients include many of the world's leading institutional investors who rely on ISS' objective and impartial offerings, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS' expertise to help them make informed investment decisions. This document and all of the information contained in it, including without limitation all text, data, graphs, and charts (collectively, the "Information") is the property of Institutional Shareholder Services Inc. (ISS), its subsidiaries, or, in some cases third party suppliers.

The Information has not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), or a promotion or recommendation of, any security, financial product or other investment vehicle or any trading strategy, and ISS does not endorse, approve, or otherwise express any opinion regarding any issuer, securities, financial products or instruments or trading strategies.

The user of the Information assumes the entire risk of any use it may make or permit to be made of the Information.

ISS MAKES NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE INFORMATION AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF ORIGINALITY, ACCURACY, TIMELINESS, NON-INFRINGEMENT, COMPLETENESS, MERCHANTABILITY, AND FITNESS for A PARTICULAR PURPOSE) WITH RESPECT TO ANY OF THE INFORMATION.

Without limiting any of the foregoing and to the maximum extent permitted by law, in no event shall ISS have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits), or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.© 2023 \| Institutional Shareholder Services and/or its affiliates

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**Valkyrie ETF Trust II**

**Part C – Other Information**

Item 28. Exhibits

Exhibit No. Description

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) [Agreement and Declaration of Trust of the Registrant (1)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121009989/ex99-a.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) [By-Laws of the Registrant (2)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121010036/ex99-b.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) (1) [Investment Management Agreement between the Registrant and Valkyrie Funds LLC (2)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121010036/ex99-d1.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) [Investment Management Agreement between the Registrant and Valkyrie Funds LLC (3)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121011841/ex99-d2.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) [Investment Sub-Advisory Agreement between the Registrant, on behalf Valkyrie Funds LLC and Vident Advisory, LLC (d/b/a Vident Asset Management) (4)](http://www.sec.gov/Archives/edgar/data/1877493/000199937124001089/ex99-d3.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) [Schedule A to the Investment Management Agreement between the Registrant and Valkyrie Funds LLC (6)](ex99-d4.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) (1) [Form of Distribution Agreement between the Registrant, Valkyrie Funds LLC and ALPS Distributors, Inc. (2)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121010036/ex99-e.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) [Amended Exhibit A to the Distribution Agreement (6)](ex99-e2.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) (1) [Form of Custodian Agreement between the Registrant and U.S. Bank National Association (1)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121009989/ex99-g.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) [Amended Exhibit A to Custodian Agreement (6)](ex99-g2.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) (1) [Form of Fund Accounting Servicing Agreement by and between the Registrant and U.S. Bancorp Fund Services, LLC. (1)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121009989/ex99-h1.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) [Revised Exhibit A to the Fund Accounting Servicing Agreement (6)](ex99-h2.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) [Form of Fund Administration Servicing Agreement between the Registrant and U.S. Bancorp Fund Services, LLC. (1)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121009989/ex99-h2.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) [Revised Exhibit A to the Fund Administration Servicing Agreement (6)](ex99-h4.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) [Form of Transfer Agent Servicing Agreement by and between the Registrant and U.S. Bancorp Fund Services, LLC. (1)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121009989/ex99-h3.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) [Revised Exhibit A to the Transfer Agent Servicing Agreement (6)](ex99-h6.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) [Form of Authorized Participant Agreement. (2)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121010036/ex99-h4.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) [Form of Subscription Agreement. (1)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121009989/ex99-h5.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) [Consent of Independent Auditing Firm (6)](ex99-j.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) (1) [Code of Ethics of the Registrant (2)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121010036/ex99-p1.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) [Code of Ethics of Valkyrie Funds LLC (2)](http://www.sec.gov/Archives/edgar/data/1877493/000138713121010036/ex99-p2.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) [Code of Ethics for Vident Asset Management (4)](https://www.sec.gov/Archives/edgar/data/1877493/000199937124001089/ex99-p3.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) Powers of Attorney (6)

(1) Previously filed with the Registrant's Registration Statement on Form N-1A (File No. 333-258722)
filed on October 13, 2021.

(2) Previously filed with the Registrant's Registration Statement on Form N-1A (File No. 333-258722)
filed on October 15, 2021.

(3) Previously filed with the Registrant's Registration Statement on Form N-1A (File No. 333-258722)
filed on December 7, 2021.

(4) Previously filed with the Registrant's Registration Statement on Form N-1A (File No. 333-258722)
filed on January 29, 2024.

(5) Previously filed with the Registrant's Registration Statement on Form N-1A (File No. 333-258722)
filed on February 21, 2024.

(6) Filed herewith.

Item 29. Persons Controlled By or Under Common Control with Registrant

Not Applicable.

Item 30. Indemnification

Under the terms of the Delaware Statutory Trust Act ("DSTA") and the Registrant's Agreement and Declaration of Trust ("Declaration of Trust"), no officer or trustee of the Registrant shall have any liability to the Registrant, its shareholders, or any other party for damages, except to the extent such limitation of liability is precluded by Delaware law, the Declaration of Trust or the By-Laws of the Registrant.

Subject to the standards and restrictions set forth in the Declaration of Trust, DSTA, Section 3817, permits a statutory trust to indemnify and hold harmless any trustee, beneficial owner or other person from and against any and all claims and demands whatsoever. DSTA, Section 3803 protects trustees, officers, managers and other employees, when acting in such capacity, from liability to any person other than the Registrant or beneficial owner for any act, omission or obligation of the Registrant or any trustee thereof, except as otherwise provided in the Declaration of Trust.

Item 31. Business and Other Connections of the Investment Adviser

Certain information pertaining to the business and other connections of Valkyrie Funds LLC ("Valkyrie"), the investment adviser to the Fund, is hereby incorporated by reference from the Prospectus and Statement of Additional Information contained herein. The information required by this Item with respect to any director, officer or partner of Valkyrie is incorporated by reference to the Form ADV filed by Valkyrie with the Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940, as amended (File No. 801-122506).

Certain information pertaining to the business and other connections of Vident Advisory, LLC (d/b/a Vident Asset Management) ("Vident"), the investment sub-adviser to the Fund, is hereby incorporated by reference from the Prospectus and Statement of Additional Information contained herein. The information required by this Item with respect to any director, officer or partner of Vident is incorporated by reference to the Form ADV filed by Vident with the Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940, as amended (File No. 801-114538).

Item 32. Principal Underwriter

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp; ALPS Distributors, Inc. acts as the distributor for the Registrant and the following investment companies: 1WS Credit Income Fund, 1290 Funds, Aberdeen Standard Investments ETFs, ALPS Series Trust, Alternative Credit Income Fund, The Arbitrage Funds, AQR Funds, Axonic Alternative Income Fund, Axonic Funds, Barings Funds Trust, BBH Trust, Bluerock Total Income+ Real Estate Fund, Brandes Investment Trust, Bridge Builder Trust, Broadstone Real Estate Access Fund, Brown Advisory Funds, Brown Capital Management Mutual Funds, Cambria ETF Trust, Centre Funds, CIM Real Assets & Credit Fund, CION Ares Diversified Credit Fund, Columbia ETF Trust, Columbia ETF Trust I, Columbia ETF Trust II, CRM Mutual Fund Trust, Cullen Funds Trust, DBX ETF Trust, ETF Series Solutions, Flat Rock Opportunity Fund, Financial Investors Trust, Firsthand Funds, FS Credit Income Fund, FS Energy Total Return Fund, FS Series Trust, FS Multi-Alternative Income Fund, Goehring & Rozencwajg Investment Funds, Goldman Sachs ETF Trust, Graniteshares ETF Trust, Griffin Institutional Access Credit Fund, Griffin Institutional Access Real Estate Fund, Hartford Funds Exchange-Traded Trust, Hartford Funds NextShares Trust, Heartland Group, Inc., IndexIQ Active ETF Trust, Index IQ ETF Trust, James Advantage Funds, Janus Detroit Street Trust, Lattice Strategies Trust, Litman Gregory Funds Trust, Longleaf Partners Funds Trust, Meridian Fund, Inc., Natixis ETF Trust, Natixis ETF Trust II, Popular High Grade Fixed-Income Fund, Inc., Popular Total Return Fund, Inc., Popular Income Plus Fund, Inc., PRIMECAP Odyssey Funds, Principal Exchange-Traded Funds, Reality Shares ETF Trust, Puerto Rico Residents Tax Free Bond Fund I, Inc., Puerto Rico Residents Tax Free Funds, Inc., Puerto Rico Residents Tax Free Funds II, Inc., Puerto Rico Residents Tax Free Funds III, Inc., Puerto Rico Residents Tax Free Funds IV, Inc., Puerto Rico Residents Tax Free Funds V, Inc., Puerto Rico Residents Tax Free Funds VI, Inc. Reaves Utility Income Fund, RiverNorth Funds, RiverNorth Opportunities Fund, Inc., RiverNorth/DoubleLine Strategic Opportunity Fund, Inc., SPDR Dow Jones Industrial Average ETF Trust, SPDR S&P 500 ETF Trust, SPDR S&P MidCap 400 ETF Trust, Sprott Funds Trust, Stone Harbor Investment Funds, Stone Ridge Trust, Stone Ridge Trust II, Stone Ridge Trust III, Stone Ridge Trust IV, Stone Ridge Trust V, Stone Ridge Trust VI, Stone Ridge Residential Real Estate Income Fund I, Inc., USCF ETF Trust, Wasatch Funds, WesMark Funds, Wilmington Funds, XAI Octagon Credit Trust, X-Square Balanced Fund and YieldStreet Prism Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp; To the best of Registrant's knowledge, the directors and executive officers of ALPS Distributors, Inc., are as follows:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Name\*** | &nbsp;&nbsp;**Position with Underwriter** | &nbsp;&nbsp;**Positions with Fund\*\*\*** |
| &nbsp;&nbsp;Stephen Kyllo | &nbsp;&nbsp;President, Chief Operating Officer, Director, Chief Compliance Officer | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Eric T. Parsons | &nbsp;&nbsp;Vice President, Controller and Assistant Treasurer | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Joseph T. Frank\*\* | &nbsp;&nbsp;Secretary | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Patrick J. Pedonti\*\* | &nbsp;&nbsp;Vice President, Treasurer and Assistant Secretary | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Richard C. Noyes | &nbsp;&nbsp;Senior Vice President, General Counsel, Assistant Secretary | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Liza Orr | &nbsp;&nbsp;Vice President, Senior Counsel | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Jed Stahl | &nbsp;&nbsp;Vice President, Senior Counsel | &nbsp;&nbsp;None |
| &nbsp;&nbsp;James Stegall | &nbsp;&nbsp;Vice President | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Gary Ross | &nbsp;&nbsp;Senior Vice President | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Kevin Ireland | &nbsp;&nbsp;Senior Vice President | &nbsp;&nbsp;None |
| &nbsp;&nbsp;Hilary Quinn | &nbsp;&nbsp;Vice President | &nbsp;&nbsp;None |

---

\* Except as otherwise noted, the principal business address for each of the above directors and executive officers is 1290 Broadway, Suite 1000, Denver, Colorado 80203.

\*\* The principal business address for Messrs. Pedonti and Frank is 333 W. 11<sup>th</sup> Street, 5<sup>th</sup> Floor, Kansas City, Missouri 64105.

\*\*\* None of the directors or executive officers of ALPS Distributors, Inc. are employed by the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp; Not Applicable

Item 33. Location of Accounts and Records

Valkyrie Funds LLC, 437 Madison Avenue, 28th Floor, New York, New York 10022, maintains the Registrant's organizational documents, minutes of meetings, contracts of the Registrant and all advisory material of the investment adviser.

Item 34. Management Services

Not Applicable

Item 35. Undertakings

Not Applicable

**Signatures**

Pursuant to the requirements of the Securities Act of 1933, as amended (the "Securities Act") and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement under rule 485(b) under the Securities Act and has duly caused this Registration Statement to be signed on its behalf by the undersigned, duly authorized in the City of New York, and State of New York, on January 22, 2026.

---

| | |
|:---|:---|
| Valkyrie ETF Trust II | Valkyrie ETF Trust II |
| By: | /s/ Annemarie Tierney |
|  | Annemarie Tierney |
|  | President |

---

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated:

---

| | |
|:---|:---|
| &nbsp;&nbsp;Signature | &nbsp;&nbsp;Date |
| &nbsp;&nbsp;/s/ Annemarie Tierney | &nbsp;&nbsp;January 22, 2026 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annemarie Tierney |  |
| &nbsp;&nbsp;/s/ Ben Gaffey | &nbsp;&nbsp;January 22, 2026 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ben Gaffey |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Keith Fletcher\* |  |
|  | &nbsp;&nbsp;By: /s/Annemarie Tierney |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Steven Lehman\* | &nbsp;&nbsp;Annemarie Tierney<br> Attorney-In-Fact |
|  | &nbsp;&nbsp;January 22, 2026 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mark Osterheld\* |  |

---

\* An original power of attorney authorizing Annemarie Tierney to execute this Registration Statement, and amendments thereto, for each of the trustees of the Registrant on whose behalf this Registration Statement is filed, were previously executed, filed hereto as an exhibit.

**Index to Exhibits**

[(d)(4)](ex99-d4.htm) Schedule A to the Investment Management Agreement between the Registrant and Valkyrie Funds LLC

[(e)(2)](ex99-e2.htm) Amended Exhibit A to the Distribution Agreement

[(g)(2)](ex99-g2.htm) Amended Exhibit A to Custodian Agreement

[(h)(2)](ex99-h2.htm) Revised Exhibit A to the Fund Accounting Servicing Agreement

[(h)(4)](ex99-h4.htm) Revised Exhibit A to the Fund Administration Servicing Agreement

[(h)(6)](ex99-h6.htm) Revised Exhibit A to the Transfer Agent Servicing Agreement

[(j)](ex99-j.htm) Consent of Independent Registered Public Accounting Firm

[(q)](ex99-q.htm) Powers of Attorney

## Ex-99.(D)(4)

[Valkyrie ETF Trust II 485BPOS](coinshares-485bpos_012226.htm)

**Exhibit 99.(d)(4)**

**Schedule A**

(As of January 21, 2026)

**Funds**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; Series | &nbsp;&nbsp; Annual Rate<br> of Average<br> Daily Net<br> Assets | &nbsp;&nbsp; Initial Board Approval Date | &nbsp;&nbsp; Shareholder Approval Date | &nbsp;&nbsp; Initial Effective Date | &nbsp;&nbsp; Termination Date |
| &nbsp;&nbsp;CoinShares Bitcoin and Ether ETF | &nbsp;&nbsp;0.95% | &nbsp;&nbsp;October 15, 2021 | &nbsp;&nbsp;October 12, 2021 | &nbsp;&nbsp;October 15, 2021 | &nbsp;&nbsp;September 26, 2026 |
| &nbsp;&nbsp;CoinShares Bitcoin Mining ETF | &nbsp;&nbsp;0.75% | &nbsp;&nbsp;January 4, 2022 | &nbsp;&nbsp;January 14, 2022 | &nbsp;&nbsp;January 18, 2022 | &nbsp;&nbsp;September 26, 2026 |

---

## Ex-99.(E)(2)

[Valkyrie ETF Trust II 485BPOS](coinshares-485bpos_012226.htm)

**Exhibit 99.(e)(2)**

**<u>EXHIBIT A</u>**

**<u>FUNDS</u>**

<u>Name of Series</u>

CoinShares Bitcoin and Ether ETF

CoinShares Bitcoin Mining ETF

## Ex-99.(G)(2)

[Valkyrie ETF Trust II 485BPOS](coinshares-485bpos_012226.htm)

**Exhibit 99.(g)(2)**

**<u>Exhibit A</u>**

**to the Custody Agreement**

**Fund Names**

Separate Series of Valkyrie ETF Trust II

<u>Name of Series</u>

CoinShares Bitcoin and Ether ETF

CoinShares Bitcoin Mining ETF

## Ex-99.(H)(2)

[Valkyrie ETF Trust II 485BPOS](coinshares-485bpos_012226.htm)

**Exhibit 99.(h)(2)**

**Exhibit A to the Fund Accounting Servicing Agreement**

**Fund Names**

Separate Series of Valkyrie ETF Trust II

<u>Name of Series</u>

CoinShares Bitcoin and Ether ETF

CoinShares Bitcoin Mining ETF

## Ex-99.(H)(4)

[Valkyrie ETF Trust II 485BPOS](coinshares-485bpos_012226.htm)

**Exhibit 99.(h)(4)**

**Exhibit A to the Fund Administration Servicing Agreement**

**Fund Names**

Separate Series of Valkyrie ETF Trust II

<u>Name of Series</u>

CoinShares Bitcoin and Ether ETF

CoinShares Bitcoin Mining ETF

## Ex-99.(H)(6)

[Valkyrie ETF Trust II 485BPOS](coinshares-485bpos_012226.htm)

**Exhibit 99.(h)(6)**

**Exhibit A to the Transfer Agent Servicing Agreement – Valkyrie ETF Trust II**

**Fund Names**

Separate Series of Valkyrie ETF Trust II

<u>Name of Series</u>

CoinShares Bitcoin and Ether ETF

CoinShares Bitcoin Mining ETF

## Ex-99.(J)

[Valkyrie ETF Trust II 485BPOS](coinshares-485bpos_012226.htm)

**Exhibit 99.(j)**

![](exj_001.jpg)

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our report dated November 26, 2025, relating to the financial statements and financial highlights CoinShares Bitcoin and Ether ETF (formerly CoinShares Valkyrie Bitcoin and Ether Strategy ETF) and CoinShares Bitcoin Mining ETF (formerly CoinShares Valkyrie Bitcoin Miners ETF), each a series of Valkyrie ETF Trust II, which are included in Form N-CSR for the year ended September 30, 2025, and to the references to our firm under the headings "Fund Service Providers" and "Financial Highlights" in the Prospectuses and "Miscellaneous Information" and "Financial Statements" in the Statements of Additional Information.

/s/ Cohen & Company, Ltd.

COHEN & COMPANY, LTD.

Milwaukee, Wisconsin

January 22, 2026

## Ex-99.(Q)

[Valkyrie ETF Trust II 485BPOS](coinshares-485bpos_012226.htm)

**Exhibit 99.(q)** 

**Valkyrie ETF Trust II**

**Power of Attorney**

Know All Men By These Presents, that the undersigned, a trustee of the above-referenced organization, hereby constitutes and appoints Annemarie Tierney, Ben Gaffey and Jeri-Lea Brown and each of them (with full power to act alone) his true and lawful attorney-in-fact and agent, for him on his behalf and in his name, place and stead, in any and all capacities, to sign and file one or more Registration Statements on Form N-1A under the Securities Act of l933 and the Investment Company Act of l940, including any amendment or amendments thereto, with all exhibits, and any and all other documents required to be filed with any regulatory authority, federal or state, relating to the registration thereof, or the issuance of securities thereof, without limitation, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as she might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

This Power of Attorney is intended to supersede any and all prior Powers of Attorney in connection with the above-mentioned acts and remains in effect until revoked or revised.

In Witness Whereof, the undersigned trustee of the above-referenced organization has hereunto set his hand this 21st day of January, 2026.

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| |
|:---|
| /s/ Keith Fletcher |
| Keith Fletcher |

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**Valkyrie ETF Trust II**

**Power of Attorney**

Know All Men By These Presents, that the undersigned, a trustee of the above-referenced organization, hereby constitutes and appoints Annemarie Tierney, Ben Gaffey and Jeri-Lea Brown and each of them (with full power to act alone) his true and lawful attorney-in-fact and agent, for him on his behalf and in his name, place and stead, in any and all capacities, to sign and file one or more Registration Statements on Form N-1A under the Securities Act of l933 and the Investment Company Act of l940, including any amendment or amendments thereto, with all exhibits, and any and all other documents required to be filed with any regulatory authority, federal or state, relating to the registration thereof, or the issuance of securities thereof, without limitation, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as she might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

This Power of Attorney is intended to supersede any and all prior Powers of Attorney in connection with the above-mentioned acts and remains in effect until revoked or revised.

In Witness Whereof, the undersigned trustee of the above-referenced organization has hereunto set his hand this 21st day of January, 2026.

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| |
|:---|
| /s/ Stephen Lehman |
| Stephen Lehman |

---

**Valkyrie ETF Trust II**

**Power of Attorney**

Know All Men By These Presents, that the undersigned, a trustee of the above-referenced organization, hereby constitutes and appoints Annemarie Tierney, Ben Gaffey and Jeri-Lea Brown and each of them (with full power to act alone) his true and lawful attorney-in-fact and agent, for him on his behalf and in his name, place and stead, in any and all capacities, to sign and file one or more Registration Statements on Form N-1A under the Securities Act of l933 and the Investment Company Act of l940, including any amendment or amendments thereto, with all exhibits, and any and all other documents required to be filed with any regulatory authority, federal or state, relating to the registration thereof, or the issuance of securities thereof, without limitation, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as she might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

This Power of Attorney is intended to supersede any and all prior Powers of Attorney in connection with the above-mentioned acts and remains in effect until revoked or revised.

In Witness Whereof, the undersigned trustee of the above-referenced organization has hereunto set his hand this 21st day of January, 2026.

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| |
|:---|
| /s/ Mark Osterheld |
| Mark Osterheld |

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**Valkyrie ETF Trust II**

**Power of Attorney**

Know All Men By These Presents, that the undersigned, a trustee of the above-referenced organization, hereby constitutes and appoints Jeri-Lea Brown and Ben Gaffey (with full power to act alone) her true and lawful attorney-in-fact and agent, for her on her behalf and in her name, place and stead, in any and all capacities, to sign and file one or more Registration Statements on Form N-1A under the Securities Act of l933 and the Investment Company Act of l940, including any amendment or amendments thereto, with all exhibits, and any and all other documents required to be filed with any regulatory authority, federal or state, relating to the registration thereof, or the issuance of securities thereof, without limitation, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as she might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof.

This Power of Attorney is intended to supersede any and all prior Powers of Attorney in connection with the above-mentioned acts and remains in effect until revoked or revised.

In Witness Whereof, the undersigned trustee of the above-referenced organization has hereunto set her hand this 21st day of January, 2026.

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| |
|:---|
| /s/ Annemarie Tierney |
| Annemarie Tierney |

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