AdvisorShares Pure US Cannabis ETF (MSOS US) – Portfolio Construction Methodology

The investment strategy governing the actively managed AdvisorShares Pure US Cannabis ETF focuses on U.S. cannabis operators and related businesses. Under normal conditions, ≥80% of net assets are invested in securities of companies deriving ≥50% of net revenue from U.S. marijuana or hemp activities and in derivatives with similar economic characteristics. The portfolio primarily holds exchange-listed equities of mid- and small-cap issuers and employs total return swaps to obtain exposure to plant-touching multi-state operators where direct custody is impractical, while also investing in ancillary providers and select real-estate vehicles. Security selection is fundamental and risk-aware, emphasizing regulatory posture, balance-sheet durability, cash-flow visibility, and liquidity. Position sizing reflects trading capacity and issuer-specific risk limits; the fund is industry-concentrated and non-diversified. Rebalancing and trims occur as fundamentals, liquidity, regulatory conditions, or thesis conviction change.

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