UTWO

UTWO is part of the first single-bond ETFs suite. The targeted holding makes this ETF very different from other ETFs holding a basket of 2-year Treasury notes. This is a tool used in portfolio management. The fund tracks an index that holds just the "on-the-run” 2-year US Treasury note, which is the most recently issued and most liquid 2-year Treasury note. To qualify for selection, a note must be auctioned on or before the third business day before the last business day of the month. At each monthly rebalancing, the underlying issue is sold and rolled into a newly selected issue, given that there has been a new public sale or auction by the US Government for 2-year Treasury notes. This roll transition occurs on one day, each month. The fund pays transaction costs when it buys and sells securities. These costs are not reflected in the annual fund operating expenses and should be expected. In addition, the fund will experience very high turnover. This may result in higher taxes, as compared to other ETFs, if the shares are held in a taxable account.