Risk & Disclosures

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Overview

ETFTs combine exposure to traditional financial assets with onchain ownership and execution infrastructure. As a result, investors are exposed to both the risks of the underlying investment portfolio and additional risks arising from execution, pricing, counterparties, stablecoins, and blockchain technology. Before buying an ETFT, investors should understand the product methodology, underlying assets, fees, pricing mechanics, and associated risks. The risks described below are not exhaustive. Individual ETFTs may be subject to additional product-specific risks.

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Market Risk

The value of an ETFT is directly affected by the performance of its underlying assets. Changes in equity prices, interest rates, economic conditions, market sentiment, geopolitical events, company-specific developments, and other market factors may cause the value of an ETFT to decline. An ETFT may experience significant volatility even when its portfolio contains multiple underlying assets. Past performance does not guarantee future results.

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Portfolio & Concentration Risk

An ETFT follows a defined portfolio methodology and may allocate a significant portion of its exposure to a limited number of securities, sectors, investment themes, or market factors. For example, a portfolio concentrated in technology companies may be particularly sensitive to developments affecting the technology sector. Diversification within an ETFT does not eliminate the risk of loss. Investors should review the current holdings and portfolio weights of each ETFT before investing.

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Tracking & Methodology Risk

An ETFT is designed to provide exposure according to a defined reference portfolio or investment methodology. Its performance may differ from the performance investors expect from the referenced portfolio, individual, institution, strategy, or investment theme. Tracking differences may arise from:

• Portfolio construction rules
• Timing of portfolio updates
• Rebalancing
• Execution prices
• Transaction costs
• Management fees
• Cash balances
• Corporate actions
• Unavailable or restricted securities
• Data availability

Accordingly, an ETFT should not be expected to perfectly reproduce the performance of any referenced portfolio or strategy.

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Public Information & Data Risk

Certain ETFTs are constructed using publicly available information, including regulatory disclosures, public filings, reported holdings, or other observable market information. Such information may be:

• Delayed
• Incomplete
• Subsequently amended
• Incorrect or inconsistent across sources
• Published after the referenced transaction occurred

As a result, an ETFT may establish, adjust, or remove a position after the referenced individual or institution has already changed its exposure.

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Example — Pelosi ETFT

The Pelosi ETFT is constructed according to Alloco’s methodology using publicly available information associated with disclosed investment activity. It should not be interpreted as a real-time representation of Nancy Pelosi’s current portfolio. Differences may arise between:

• The date an underlying transaction occurred
• The date the information became publicly available
• The date Alloco incorporated the information
• The price at which the ETFT portfolio executed the corresponding position

These timing differences can cause the ETFT’s performance to differ materially from the actual investment results of the referenced person.

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No Affiliation or Endorsement

Unless expressly stated otherwise, ETFTs referencing public figures, investment managers, institutions, brands, indices, or other third parties are independently developed products. The referenced person or organization does not necessarily:

• Sponsor the ETFT
• Endorse the ETFT
• Manage the ETFT
• Advise Alloco
• Participate in portfolio construction
• Approve the ETFT’s methodology

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Indicative Product NAV Risk

Indicative Product NAV (iNAV) is an intraday estimate of Product NAV per Unit, based on the latest available attributable assets, liabilities, valuation prices, and corresponding economic units outstanding. The iNAV:

• Reflects applicable accrued management fees and other recognized product liabilities
• Reflects costs already borne by the product, without deducting them again
• Accounts for pending mint and redemption entitlements consistently with the product’s unit-accounting methodology
• May use delayed or incomplete price, position, liability, or unit records
• May differ from Daily Product NAV, which is calculated for the specified daily valuation point and published after reconciliation

A valuation refresh does not mean that every underlying price or accounting input has been updated. Investors should review the valuation timestamp, data freshness, source, and market status. Neither iNAV nor Daily Product NAV is a guaranteed executable price. A Mint / Redeem Quote provides order-specific estimates and applicable output limits; the Final Mint / Redeem Outcome reflects actual execution, required conversion, applicable costs and fees, and reconciliation. Investors should review the quote and its conditions before minting or redeeming. Amounts already reflected in Product NAV must not be deducted again as the same order-level cost. For additional details, see Pricing & NAV.

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Execution & Liquidity Risk

ETFT transactions require execution of the corresponding underlying assets. Once an investor confirms a Mint or Redeem, underlying orders are routed through the integrated brokerage infrastructure. Execution may be affected by:

• Available market liquidity
• Bid-ask spreads
• Market volatility
• Order size
• Partial fills
• Trading halts
• Market closures
• Price limits
• Broker availability
• Characteristics of individual underlying securities

A portfolio containing multiple securities may also be affected if one or more components cannot be executed as expected. As a result, execution may take longer than anticipated or differ from the market conditions observed when the initial quote was generated.

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Extended-Hours Trading Risk

ETFTs may support trading outside regular U.S. market hours through the underlying brokerage infrastructure. Extended-hours and overnight markets may behave differently from regular trading sessions. Potential risks include:

• Lower liquidity
• Wider bid-ask spreads
• Greater price volatility
• Reduced market depth
• Prices that differ from the following regular session
• Higher execution costs

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Quote & Price Movement Risk

A quote is generated before the entire underlying portfolio has been executed. Market prices may change between: Quote → Confirmation → Underlying Execution The final transaction economics therefore depend on actual market execution. The minimum output displayed in the interface is based on the applicable quote parameters and prevailing market conditions. For additional details, see Pricing & NAV.

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Broker & Counterparty Risk

Execution of underlying securities depends on third-party brokerage, market, clearing, custody, and settlement infrastructure. Disruptions or failures affecting these parties may delay or prevent:

• Order execution
• Portfolio rebalancing
• Settlement
• Pricing
• Asset availability

ETFT holders should not assume that they have the same legal relationship with, or protections available to, a person who directly maintains an individual brokerage account with an underlying broker. The precise legal relationship between the ETFT holder, issuer, broker, and underlying assets is described in the applicable Legal & Compliance documentation.

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Stablecoin Risk

ETFTs currently use USDC as the trading and settlement asset. Although USDC is designed to maintain a stable value relative to the U.S. dollar, its market value may fluctuate. Risks may include:

• Loss of its expected USD value
• Issuer or reserve-related risk
• Blockchain network disruption
• Transfer restrictions or delays
• Changes in regulatory treatment
• Liquidity limitations

A material deviation in the value of USDC may affect ETFT transaction values and settlement.

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Blockchain & Smart Contract Risk

ETFT tokens operate on supported blockchain networks, including Ethereum and BNB Chain. Blockchain-based products may be affected by:

• Smart contract vulnerabilities
• Software bugs
• Network congestion
• Network outages
• Blockchain reorganizations
• Transaction delays
• Changes to network protocols
• Unexpected gas costs
• Cybersecurity incidents

Smart contracts and blockchain networks cannot eliminate investment, operational, or execution risk.

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Wallet Risk

Investors are responsible for maintaining access to and security of their wallets. Loss or compromise of private keys, seed phrases, wallet credentials, or signing devices may result in unauthorized transactions or loss of access to assets. Blockchain transactions are generally irreversible once finalized. Investors should independently verify wallet addresses, networks, transaction details, and smart contract interactions before signing transactions.

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Claim & Settlement Risk

ETFT transactions involve multiple stages: Quote → Processing → Claimable → Completed Completion of the underlying market execution does not necessarily mean that the investor has already received the corresponding ETFT or USDC. Once an order becomes Claimable, the investor may be required to interact with the smart contract and wallet again to complete the claim. Network congestion, wallet issues, smart contract availability, or other technical conditions may delay final settlement.

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Corporate Action Risk

Underlying securities may be affected by corporate actions such as:

• Dividends
• Stock splits and reverse splits
• Mergers
• Acquisitions
• Spin-offs
• Tender offers
• Delistings

Alloco incorporates applicable corporate actions according to the relevant ETFT methodology. However, unusual or complex corporate actions may require methodological adjustments and may affect portfolio composition, valuation, trading, or the timing of execution.

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Operational & Data Risk

ETFT operation depends on multiple technology systems and data sources, including:

• Market data providers
• Brokerage APIs
• Pricing systems
• Portfolio calculation engines
• Blockchain networks
• Smart contracts
• Internal operational systems

Errors, outages, stale data, connectivity failures, calculation errors, or other system disruptions may temporarily affect quotes, iNAV calculations, execution, settlement, or portfolio information.

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Regulatory & Legal Risk

ETFTs combine traditional financial assets with blockchain-based product infrastructure. The legal and regulatory treatment of tokenized investment products may vary by jurisdiction and may change over time. Changes in laws, regulations, regulatory interpretations, market-access rules, sanctions, or distribution requirements may affect:

• Who may access an ETFT
• Where an ETFT may be offered
• Transferability
• Trading availability
• Product structure
• Underlying asset access

Availability of an ETFT in a wallet or on a blockchain does not necessarily mean that the product may lawfully be acquired by every person in every jurisdiction. Refer to Legal & Compliance for applicable eligibility and product-structure information.

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Important Disclosure