provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Junior Silver (Small Cap Miners/Explorers) Index.
Total Annual Fund Operating Expenses: 0.69%
Principal Investment Strategies
Factor Advisors, LLC (the “Adviser”), a newly formed investment adviser, will use a “passive” or indexing approach to try to achieve the Fund’s investment objective. Unlike many investment companies, the Fund does not try to “beat” the Underlying Index and does not seek temporary defensive positions when markets decline or appear overvalued.
The Fund will use a replication strategy. A replication strategy is an indexing strategy that involves investing in the securities of the Underlying Index in approximately the same proportions as in the Underlying Index. However, the Fund may utilize a representative sampling strategy with respect to the Underlying Index when a replication strategy might be detrimental to shareholders, such as when there are practical difficulties or substantial costs involved in compiling a portfolio of equity securities to follow the Underlying Index, in instances in which a security in the Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as a result of legal restrictions or limitations (such as tax diversification requirements) that apply to the Fund but not the Underlying Index.
The Underlying Index tracks the performance of small-capitalization companies actively engaged in some aspect of the silver industry, including companies that mine, explore or refine silver. “Junior” is a common term used in Canada in reference to small capitalization exploration companies that generally have no mining operations. As of November 8, 2012, the Underlying Index had 26 constituents, 24 of which were foreign companies. The three largest stocks were Endeavour Silver Corp. (NYSE:EXK), Fortuna Silver Mines Inc. (NYSE:FSM) and McEwen Mining Inc. (NYSE:MUX) As of November 8, 2012, the largest-weighted constituent security in the Underlying Index represented 11.01% of the Index. The Fund’s investment objective and Underlying Index may be changed without shareholder approval. Shareholders will be given 60 days’ prior notice of any such change.
The Underlying Index is sponsored by an organization (the “Index Provider”) that is independent of the Fund and the Adviser. The Index Provider determines the relative weightings of the securities in the Underlying Index and publishes information regarding the market value of the Underlying Index. The Fund’s Index Provider is International Securities Exchange, LLC (“ISE”).
The Fund will invest at least 80% of its total assets in the securities of the Underlying Index and in American Depositary Receipts and Global Depositary Receipts based on the securities in the Underlying Index. The Fund may invest up to 20% of its total assets in securities that are not in the Fund’s Underlying Index to the extent that the Adviser believes such investments should help the Fund’s overall portfolio track the Underlying Index.
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