As
filed with the Securities and Exchange Commission on October 29, 2007
File
Nos. 333-136721 and 811-21941
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.
1
|
x
|
and/or
REGISTRATION
STATEMENT
UNDER
|
THE INVESTMENT COMPANY
ACT OF
1940
|
x
|
Amendment
No. 3
(Check
appropriate box or boxes)
Ameristock
ETF Trust
(Exact
Name of Registrant as Specified in Charter)
1320
Harbor Bay Parkway, Suite 145, Alameda, California 94502
(Address
of Principal Executive Office)(Zip Code)
Registrant’s
Telephone Number, including Area Code: (510) 522-3336
Nicholas
D. Gerber, 1320 Harbor Bay Parkway, Suite 145, Alameda, California
94502
(Name
and Address of Agent for Service)
With
Copy to:
W.
Thomas Conner, Esq.
Sutherland
Asbill & Brennan LLP
1275
Pennsylvania Avenue, N.W.
Washington,
DC 20004-2415
It
Is Proposed That This Filing Will Become Effective (Check Appropriate
Box):
o
immediately upon filing
pursuant to paragraph (b)
x
on November 1, 2007
pursuant to paragraph (b)
o
60
days after
filing pursuant to paragraph (a)(1)
o
on (date) pursuant to paragraph
(a)(1)
o
on (date) pursuant to paragraph
(a)(3)
o
75 days after filing pursuant to
paragraph (a)(2)
o
on (date) pursuant to paragraph (a)(2)
of rule 485
If
appropriate, check the following box:
o
this post-effective amendment designates
a new effective date for a previously filed post-effective amendment.
The
Ameristock ETF Trust (the “Trust”) consists of a number of separate investment
portfolios called “Funds.” Each Fund described in this Prospectus seeks
investment results, before fees and expenses, that correspond generally to
the
price and yield performance of a particular U.S. Treasury securities index
owned
and compiled by Ryan Holdings LLC and Ryan ALM, Inc. (collectively, the “Index
Provider”). This Prospectus relates to the following five Funds:
Ameristock/Ryan
1 Year Treasury ETF
Ameristock/Ryan
2 Year Treasury ETF
Ameristock/Ryan
5 Year Treasury ETF
Ameristock/Ryan
10 Year Treasury ETF
Ameristock/Ryan
20 Year Treasury ETF
The
Ameristock Corporation (the “Adviser”) is the investment adviser to each
Fund.
The
Trust
is a registered investment company. The shares of the Trust are listed and
traded at market prices on the American Stock Exchange. Market prices for a
Fund’s shares may be different from its net asset value per share. Each Fund has
its own CUSIP number and exchange-trading symbol.
Each
Fund
issues and redeems shares at net asset value only in blocks of 100,000 shares
or
multiples thereof (“Creation Units”). These transactions are usually in exchange
for a basket of securities and an amount of cash. As a practical matter, only
institutions or large investors purchase or redeem Creation Units.
Except
when aggregated in Creation Units, shares of each Fund are not redeemable
securities.
The
Securities and Exchange Commission (“SEC”) has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation
to
the contrary is a criminal offense.
Prospectus
dated November 1, 2007
TABLE
OF
CONTENTS
|
|
|
Page
|
|
Overview
|
|
|
|
|
Introduction
|
|
|
|
|
Investment
Objective
|
|
|
|
|
Principal
Investment Strategies
|
|
|
|
|
Correlation
|
|
|
|
|
Principal
Risk Factors Common to All Funds
|
|
|
|
|
Portfolio
Holdings Information
|
|
|
|
|
Description
of the Ameristock/Ryan Treasury ETFs
|
|
|
|
|
Ameristock/Ryan
1 Year Treasury ETF
|
|
|
|
|
Ameristock/Ryan
2 Year Treasury ETF
|
|
|
|
|
Ameristock/Ryan
5 Year Treasury ETF
|
|
|
|
|
Ameristock/Ryan
10 Year Treasury ETF
|
|
|
|
|
Ameristock/Ryan
20 Year Treasury ETF
|
|
|
|
|
Portfolio
Turnover
|
|
|
|
|
Management
|
|
|
|
|
Investment
Adviser
|
|
|
|
|
Portfolio
Managers
|
|
|
|
|
Consulting
Agreement
|
|
|
|
|
Administrator,
Custodian and Transfer Agent
|
|
|
|
|
Shareholder
Information
|
|
|
|
|
Buying
and Selling Shares
|
|
|
|
|
Book
Entry
|
|
|
|
|
Share
Prices
|
|
|
|
|
Determination
of Net Asset Value
|
|
|
|
|
Dividends
and Distributions
|
|
|
|
|
Taxes
|
|
|
|
|
Taxes
on Distributions
|
|
|
|
|
Taxes
when Shares are Sold
|
|
|
|
|
Creations
and Redemptions
|
|
|
|
|
Transaction
Fees
|
|
|
|
|
Distribution
|
|
|
|
|
Index
Provider
|
|
|
|
|
Disclaimers
|
|
|
|
|
Financial
Highlights
|
|
|
|
|
Overview
Introduction
This
Prospectus provides the information you need to make an informed decision about
investing in the Trust. It contains important facts about the Trust as a whole
and each Fund in particular.
Each
Fund
is an “index fund” that seeks investment results, before fees and expenses, that
correspond generally to the price and yield performance of a particular index
(its “Underlying Index”). An index is a measure of securities price changes or
returns, with the securities in the index (and their weightings) selected by
an
index provider as representative of a market, market segment or specific
industry sector. The index provider publishes information regarding the value
of
and changes in the index.
The
Index
Provider does not provide advice regarding whether specific securities or
instruments should be purchased by any Fund. This advice is provided by the
Adviser. The Adviser is not affiliated with the Index Provider for the
Funds.
The
Principal
Investment Strategies
and the
Principal
Risk Factors Common to All Funds
sections
discuss the principal strategies and risks applicable to the Funds generally,
while the
Description
of the Ameristock/Ryan Treasury ETFs
section
provides important information about each Fund, including a brief description
of
each Fund’s Underlying Index and principal risks specific to that
Fund.
The
shares of the Trust are listed and traded at market prices on the American
Stock
Exchange. Market prices for a Fund’s shares may be different from its net asset
value per share. Each Fund has its own CUSIP number and exchange-trading
symbol.
Each
Fund
issues and redeems shares at net asset value only in blocks of 100,000 shares
or
multiples thereof (“Creation Units”). These transactions are usually in exchange
for a basket of securities and an amount of cash. As a practical matter, only
institutions or large investors purchase or redeem Creation Units.
Investment
Objective
Each
Fund
seeks investment results, before fees and expenses, that correspond generally
to
the price and yield performance of its Underlying Index.
Principal
Investment Strategies
The
Adviser seeks to match the average dollar-weighted duration of each Fund
closely
to the duration of its Underlying Index (plus or minus a certain number of
months, as described below). Each Fund generally will invest at least 90%
of its
total assets in debt securities issued by the U.S. Treasury and backed by
the
full faith and credit of the U.S. Government, or commitments to acquire such
securities on a “when-issued” basis (“Treasury Securities”). The assets of a
Fund not invested in Treasury Securities (up to 10% of total assets) will
be
invested in futures contracts, options and other derivative instruments,
and
cash and cash items, including repurchase agreements.
Each
Fund
seeks investment results, before fees and expenses, that correspond to
those of its Underlying Index. Unlike many investment companies, the Funds
do
not try to “beat” the markets they track and do not seek temporary defensive
positions when markets decline or appear overvalued. This indexing strategy
may
eliminate some of the risks of active management, such as poor security
selection, and may involve lower fees and expenses than active
management.
Each
Underlying Index is comprised of only one or two Treasury Securities at a given
time. The components of the Underlying Indices change whenever there is a new
public sale by the U.S. Government (referred to as an “auction”) of an Index's
underlying Treasury Security (or Securities). This periodic transition to the
most-recently auctioned Treasury bill, note, or bond of a stated maturity,
which
is referred to as the “on-the-run” or “OTR” security of that maturity, occurs on
one day.
These
characteristics of the Underlying Indices may make it impractical for each
Fund
to invest exclusively in the component securities of its Underlying Index.
First, if a Fund were to invest only in the OTR Treasury Security (or
Securities) in the Underlying Index, it would be required to sell all or
a
substantial portion of its portfolio securities and purchase new securities
on
each day that the component securities of the Underlying Index changed. These
transactions would result in high transaction costs for the Funds. In addition,
in light of demand for OTR Treasury Securities, the OTR Treasury tends to
trade
"special" or at a lower yield/higher price than off-the-run Treasury Securities
of similar maturities. Therefore, in addition to OTR Treasury Securities,
the
Fund will also invest in or hold off-the-run Treasury Securities that the
Adviser believes will help the Fund track its Underlying Index. These
off-the-run securities will include Treasury Securities that were on-the-run
when purchased but are now off-the-run because of a subsequent auction, and
Treasury Securities that had longer maturities when initially issued but
whose
remaining maturities make them appropriate for investment by a particular
Fund.
Unlike
a
more typical index, the Underlying Indices are made up of one or two securities
at a given time, not a substantial number of securities. However, the price
of
the OTR Treasury Security of a given maturity serves as a commonly-used
indicator of changes in the U.S. Government securities market (and, to a certain
degree, changes in the market for other fixed income securities). Therefore,
the
Adviser believes that attempting to track the performance of the Underlying
Indices is an appropriate strategy for investors wishing to gain exposure to
U.S. Government securities of a given maturity range.
The
Funds
use “duration” rather than maturity as a measure of how much the Fund’s net
asset value is likely to change as a result of a change in interest rates,
and
the Adviser attempts to match the average weighted duration of a Fund closely
with that of its Underlying Index. Duration is generally superior to average
weighted maturity, which takes into account only the stated maturity dates
of
the Fund's holdings, as a measure of this volatility, because duration takes
into account the timing of the cash flows (
i.e.
,
interest and principal payments) from the bonds held by a Fund.
In
a
when-issued transaction, a Fund makes a commitment to purchase securities
when
they are issued at some future time (usually a short period after the commitment
is entered into). The purchase price is determined at the time of the
commitment, but payment is made later when the securities are issued and
delivered. A Fund becomes subject to the risk of price fluctuations of the
security to be purchased when it enters into the when-issued
commitment.
Each
Fund
may invest in futures contracts, options and other derivatives instruments
only
in furtherance of the objective of seeking results, before fees and expenses,
that correspond generally to the price and yield performance of that Fund’s
Underlying Index, and not for speculative purposes. These instruments will
be
used primarily as a means to gain exposure to a Fund’s Underlying Index with
respect to cash that the Fund is otherwise unable to invest directly in Treasury
Securities on a cost-effective basis (
e.g.
,
cash
that remains after the Fund has acquired appropriate Treasury Securities
in the
principal amounts in which they are normally traded). In this way, the Adviser
will attempt to minimize the amount of Fund assets held in cash or cash items.
Derivative instruments may also be used to adjust the average duration for
a
Fund so that it more closely approximates the duration of its Underlying
Index,
to facilitate trading or to reduce transaction costs.
Correlation
An
index
is a theoretical financial calculation, while a Fund is an actual investment
portfolio. The performance of a Fund and its Underlying Index will vary somewhat
due to transaction costs, market impact and timing variances.
The
Adviser expects that, over extended periods, the correlation between each Fund’s
performance before fees and expenses and that of its Underlying Index will
be
95% or better. A correlation of 100% would indicate perfect correlation, while
a
correlation of 0% would indicate no relationship between the performance of
a
Fund and its Underlying Index. The Adviser also expects that the performance
of
each Fund will have an annual tracking error of less than 5% relative to its
Underlying Index.
Because
each Fund does not invest exclusively in the securities making up its Underlying
Index, its correlation may be lower than and its tracking error may be greater
than a fund that does invest exclusively in securities in its
index.
Principal
Risk Factors Common to All Funds
Each
Fund
is subject to the principal risks described below. Additional principal risks
associated with a Fund are discussed under the description of that Fund in
the
Description
of the Ameristock/Ryan Treasury ETFs
section.
Some or all of these risks may adversely affect a Fund’s net asset value,
trading price, yield, total return and/or its ability to meet its
objectives.
Market
Risk
Each
Fund’s net asset value and share price will react to movements in the Treasury
Securities market. You could lose money over short periods due to such market
movements, and over longer periods during market downturns.
Asset
Class Risk
Treasury
Securities may underperform as compared to other bonds or to different asset
classes, such as stocks. Different types of bonds tend to go through cycles
of
out-performance and underperformance in comparison to the general securities
markets. Because Treasury Securities generally involve less risk than other
bonds, they will generally pay lower interest rates than other bonds. The amount
of this interest rate differential will vary over time.
Interest
Rate Risk
As
interest rates rise, the value of fixed income securities held by a Fund are
likely to decrease. Securities with longer durations tend to be more sensitive
to interest rate changes, usually making them more volatile than securities
with
shorter durations. To the extent a Fund invests a substantial portion of its
assets in Treasury Securities with longer-term durations, rising interest rates
may cause the value of the Fund’s investments to decline
significantly.
Inflation
Risk
Interest
rates tend to rise, and the value of bonds held by a Fund will tend to fall,
during periods of rising inflation. Furthermore, higher rates of inflation
may
result in the return on a Fund’s securities being lower than the inflation rate,
meaning that an investor in the Fund could lose purchasing power even if the
nominal value of the Fund shares owned by the investor increases.
Credit
Risk
This
is
the chance that any of the Fund’s holdings will have their credit ratings
downgraded or will default (fail to make scheduled interest or principal
payments), potentially reducing a Fund’s income level and share price. Treasury
Securities have virtually no credit risk.
Passive
Investments
The
Funds
are not actively managed. As noted above, each Fund will be affected by a
general decline in the Treasury Securities market. The Adviser does not attempt
to outperform a Fund’s Underlying Index, and does not attempt to take defensive
positions when the Treasury Securities market is declining or when the Adviser
expects it to decline.
Tracking
Error Risk
Imperfect
correlation between a Fund’s securities and those in its Underlying Index,
rounding of prices, changes to the Underlying Indices and regulatory policies
may cause tracking error, where a Fund’s performance does not match the
performance of its Underlying Index. Differences between the performance of
a
Fund and its Underlying Index may also result because the Fund incurs fees
and
expenses while its Underlying Index does not incur such expenses.
Management
Risk
Because
each Fund does not exactly replicate its Underlying Index and may hold
securities not included in its Underlying Index, a Fund is subject to management
risk. This is the risk that the Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may not produce
the intended results. Because the Underlying Indices differ from more typical
securities indices in that they include only one or two securities at any given
time, the managerial expertise and effort required of the Adviser in order
to
track each Fund’s Underlying Index differs from the expertise and effort
required of the managers of more typical ETFs and indexed mutual funds. The
Funds’ portfolio managers do not have experience managing ETFs similar to the
Funds or in attempting to track the performance of the Underlying
Indices.
Market
Trading Risks
Absence
of Prior Active Market
Although
shares of the Funds described in this Prospectus are listed for trading on
a
national securities exchange, there can be no assurance that an active trading
market for such shares will develop or be maintained. There can be no assurance
that the requirements necessary to maintain the listing of the shares of any
Fund will continue to be met or will remain unchanged.
Lack
of Market Liquidity
Secondary
market trading in Fund shares may be halted by a national securities exchange
because of market conditions or for other reasons. In addition, trading in
Fund
shares is subject to trading halts caused by extraordinary market volatility
pursuant to “circuit breaker” rules.
Shares
of the Funds May Trade at Prices Other Than Net Asset Value
Shares
of
the Funds may trade at, above or below their net asset value or “NAV.” The per
share net asset value of each Fund will fluctuate with changes in the market
value of such Fund’s holdings. The trading prices of a Fund’s shares will
reflect market supply and demand for such shares, and therefore may not track
net asset value closely. However, given that shares can be created and redeemed
at net asset value in large “Creation Unit” aggregations, the Adviser believes
that large discounts or premiums in the trading prices of the Fund’s shares as
compared to their net asset value should not occur (unlike shares of many
closed-end funds, which frequently trade at appreciable discounts from, and
sometimes at premiums to, their net asset values).
Lack
of
Governmental Insurance or Guarantee
An
investment in a Fund is not a bank deposit and it is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government
agency.
Portfolio
Holdings Information
A
description of the Funds’ policies and procedures with respect to the disclosure
of the Funds’ portfolio securities is available in the Funds’ Statement of
Additional Information (“SAI”).
Description
of the
Ameristock/Ryan
Treasury ETFs
n
|
|
Ameristock/Ryan
1 Year Treasury ETF
|
n
|
|
Ameristock/Ryan
2 Year Treasury ETF
|
n
|
|
Ameristock/Ryan
5 Year Treasury ETF
|
n
|
|
Ameristock/Ryan
10 Year Treasury ETF
|
n
|
|
Ameristock/Ryan
20 Year Treasury ETF
|
Ameristock/Ryan
1 Year Treasury ETF
Cusip:
03077A
109
Trading
Symbol:
GKA
Underlying
Index:
Ryan
Adjusted 1 Year Treasury Index.
Investment
Objective
The
Ameristock/Ryan 1 Year Treasury ETF seeks results, before fees and expense,
that
correspond generally to the price and yield performance of a particular Treasury
Securities index called the Ryan Adjusted 1 Year Treasury Index (the “Underlying
Index”).
Principal
Investment Strategy
The
Fund
will invest at least 90% of its total assets in Treasury Securities and up
to
10% in the aggregate in futures contracts, options and other derivative
instruments (based on the “notional” or face amount of such instruments). The
Adviser attempts to match the average dollar-weighted duration of the Fund
to
within one month of the duration of the Underlying Index.
The
Underlying Index is based on the return of a portfolio with a 2/3 weighting
in
the most recently auctioned 6 month U.S. Treasury bill and a 1/3 weighting
in
the most recently auctioned 2 year U.S. Treasury note. The Index Provider
determines the composition of the Underlying Index in accordance with its
rules
and procedures (which may change from time to time), and publishes information
regarding the composition, investment characteristics and return of the
Underlying Index.
Because
the Underlying Index is comprised of only two securities, and those securities
change each time an auction of the relevant Treasury Securities occurs, it
is
not practicable for the Fund to invest exclusively in the component securities
of the Underlying Index. Instead, the Fund invests in a limited number of (fewer
than ten) Treasury Securities with an average duration similar to that of the
securities in the Underlying Index. These Treasury Securities may include the
OTR Treasury Securities that are the component securities of the Underlying
Index, off-the-run Treasury Securities that were on-the-run when purchased
by
the Fund but became off-the-run because of a subsequent auction, and Treasury
Securities that, irrespective of their maturities when issued, have remaining
maturities that make them appropriate for investment by the Fund.
The
Fund’s portfolio holdings can be found at www.Ameristock.com. Fund fact sheets
provide information regarding the Fund’s holdings and may be requested by
calling 1-866-821-5592.
Principal
Risks
Since
the
Fund generally will invest essentially all of its assets in Treasury Securities,
the risks associated with investing in Treasury Securities and bonds in general
will affect the Fund and the value of its assets. As described above, some
of
the risks associated with investing in the Fund include:
n
|
|
Prices
of bonds, including Treasury Securities, may fall because of a rise
in
interest rates, issuer quality considerations and other economic
considerations.
|
n
|
|
Prices
of bonds may fall in response to economic events or trends. The longer
a
bond’s duration, the greater the risk that its value may fall in response
to economic events or trends.
|
n
|
|
The
bonds in the Underlying Index may underperform equity investments,
bonds
issued by private entities, and U.S. government securities of different
durations.
|
Because
the Fund generally invests in shorter-term Treasury Securities than the other
Funds described in this Prospectus, it can be expected to be subject to less
risk and share price fluctuation than such other Funds, although it may also
generate lower returns. Assuming that the average duration of the Fund exactly
matches the maximum duration of its Underlying Index, and that the values of
the
securities held by the Fund change only in response to interest rate changes,
the Fund’s net asset value would be expected to decline by approximately 0.94%
when market interest rates increase by 1%, and to increase by approximately
0.96% when market interest rates decline by 1%.
Performance
Information
Performance
information is not required because the Fund commenced operations on June
28,
2007 and has not been operational for a full calendar year.
Fees
and
Expenses
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. Most investors will buy and sell shares of the Fund through
brokers, and will pay brokerage commissions to their broker when buying or
selling shares. No such commissions are reflected in the table below, although
the transaction fees paid by large investors when purchasing or redeeming
Creation Units are.
Shareholder
Fees
(fees
paid directly from an investment)
|
|
|
Creation
Transaction Fee
1
|
|
$1,000
|
Redemption
Transaction Fee
1
|
|
$1,000
|
Annual
Fund Operating Expenses
|
|
|
(expenses
that are deducted from the Fund’s assets)
2
|
|
|
Management
Fees
|
|
0.15%
|
Distribution
and Service (12b-1) Fees
|
|
None
|
Other
Expenses
3
|
|
0.03%
|
Total
Annual Fund Operating Expenses
|
|
0.18%
|
Fee
waiver and/or expense reimbursement
4
|
|
0.03%
|
Net
Annual Fund Operating Expenses
|
|
0.15%
|
|
1
|
|
Per
day on which Creation Units are purchased or redeemed, regardless
of the
number of Creation Units. See the Transaction Fees section
below.
|
|
2
|
|
Expressed
as a percentage of average net assets on an annual
basis.
|
|
3
|
|
Other
Expenses are based on estimated amounts for the Fund’s current fiscal
year. The Trust’s Investment Advisory Agreement provides that the Adviser
will pay all operating expenses of the Trust, except interest expense
and
taxes (both expected to be
de
minimis
),
independent trustee fees and expenses, any brokerage expenses, future
distribution fees or expenses and extraordinary
expenses.
|
|
4
|
|
The
Adviser has agreed contractually to waive its management fees and/or
make
payments to limit Fund expenses in the amount of any independent
trustee
fees and expenses otherwise payable by the Fund, at least until June
30,
2008. As a result of such agreement, the Fund’s net expenses are expected
to equal its management fee of
0.15%.
|
Examples
These
Examples are intended to help you compare the cost of investing in shares of
the
Fund with the cost of investing in other funds.
The
first
Example assumes that you invest $10,000 in the Fund for the time periods
indicated, while the second assumes a $2.5 million Creation Unit investment
for
the same time periods. Both examples assume that you sell all of your shares
at
the end of those periods. The Examples also assume that your investment has
a 5%
return each year and that the contractual waiver noted above remains in effect
only until June 30, 2008, but that the Fund’s operating expenses otherwise
remain the same. Although your actual costs may be higher or lower, based on
the
assumptions, your costs would be:
$10,000
Investment
|
|
1
Year
|
|
3
Years
|
$15
|
|
$55
|
$2,500,000
Investment
|
|
1
Year
|
|
3
Years
|
$5,839
|
|
$15,732
|
Creation
Transaction Fees and Redemption Transaction Fees
The
Fund
issues and redeems shares at net asset value only in blocks of 100,000 shares
or
multiples of 100,000 shares. As a practical matter, only institutions or
large
investors purchase or redeem these Creation Units. The value of a Creation
Unit
as of June 28, 2007, the date the Fund commenced operations, was $2,500,000.
An
investor who holds Creation Units will pay the annual fund operating expenses
described in the table above, and an investor who wishes to redeem Creation
Units at net asset value would also pay a standard transaction fee of $1,000
on
the date of such redemption, regardless of the number of Creation Units redeemed
that day. (See the
Transaction
Fees
section
below.)
Ameristock/Ryan
2 Year Treasury ETF
Cusip:
03077A
208
Trading
Symbol:
GKB
Underlying
Index:
Ryan
2
Year Treasury Index.
Investment
Objective
The
Ameristock/Ryan 2 Year Treasury ETF seeks results, before fees and expenses,
that correspond generally to the price and yield performance of a particular
Treasury Securities index called the Ryan 2 Year Treasury Index (the “Underlying
Index”).
Principal
Investment Strategy
The
Fund
will invest at least 90% of its total assets in Treasury Securities and up
to
10% in the aggregate in futures contracts, options and other derivative
instruments (based on the “notional” or face amount of such instruments). The
Adviser attempts to match the average dollar-weighted duration of the Fund
to
within two months of the duration of the Underlying Index.
The
Underlying Index is based on the return of the most recently auctioned 2-year
U.S. Treasury note. The Index Provider determines the composition of the
Underlying Index in accordance with its rules and procedures (which may
change from time to time), and publishes information regarding the composition,
investment characteristics and return of the
Underlying Index.
Because
the Underlying Index is comprised of only one security, and that security
changes each time an auction of such security occurs, it is not practicable
for
the Fund to invest exclusively in the component securities of the Underlying
Index. Instead, the Fund invests in a limited number of (fewer than ten)
Treasury Securities with an average duration similar to the duration of the
security in the Underlying Index. These Treasury Securities may include the
OTR
Treasury Security that is the component security of the Underlying Index,
off-the-run Treasury Securities that were on-the-run when purchased by the
Fund
but became off-the-run because of a subsequent auction, and Treasury Securities
that, irrespective of their maturities when issued, have remaining maturities
that make them appropriate for investment by the Fund.
The
Fund’s portfolio holdings can be found at www.Ameristock.com. Fund fact sheets
provide information regarding the Fund’s holdings and may be requested by
calling 1-866-821-5592.
Principal
Risks
Since
the
Fund generally will invest essentially all of its assets in Treasury Securities,
the risks associated with investing in Treasury Securities and bonds in general
will affect the Fund and the value of its assets. As described above, some
of
the risks associated with investing in the Fund include:
n
|
|
Prices
of bonds, including Treasury Securities, may fall because of a rise
in
interest rates, issuer quality considerations and other economic
considerations.
|
n
|
|
Prices
of bonds may fall in response to economic events or trends. The longer
a
bond’s duration, the greater the risk that its value may fall in response
to economic events or trends.
|
n
|
|
The
bond in the Underlying Index may underperform equity investments,
bonds
issued by private entities, and U.S. government securities of different
durations.
|
Because
the Fund invests in shorter-term Government Securities as compared to the other
Funds described in this prospectus (except the Ameristock/Ryan 1-Year Treasury
Fund), it can be expected to be subject to less risk and share price fluctuation
than such other Funds, but it may also generate lower returns. Assuming that
the
average duration of the Fund exactly matches the maximum duration of its
Underlying Index, and that the values of the securities held by the Fund change
only in response to interest rate changes, the Fund’s net asset value would be
expected to decline by approximately 1.86% when market interest rates increase
by 1%, and to increase by approximately 1.90% when market interest rates decline
by 1%.
Performance
Information
Performance
information is not required because the Fund commenced operations on June
28,
2007 and has not been operational for a full calendar year.
Fees
and
Expenses
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. Most investors will buy and sell shares of the Fund through
brokers, and will pay brokerage commissions to their broker when buying or
selling shares. No such commissions are reflected in the table below, although
the transaction fees paid by large investors when purchasing or redeeming
Creation Units are.
Shareholder
Fees
(fees
paid directly from an investment)
|
|
|
Creation
Transaction Fee
1
|
|
$1,000
|
Redemption
Transaction Fee
1
|
|
$1,000
|
Annual
Fund Operating Expenses
|
|
|
(expenses
that are deducted from the Fund’s assets)
2
|
|
|
Management
Fees
|
|
0.15%
|
Distribution
and Service (12b-1) Fees
|
|
None
|
Other
Expenses
3
|
|
0.03%
|
Total
Annual Fund Operating Expenses
|
|
0.18%
|
Fee
waiver and/or expense reimbursement
4
|
|
0.03%
|
Net
Annual Fund Operating Expenses
|
|
0.15%
|
|
1
|
|
Per
day on which Creation Units are purchased or redeemed, regardless
of the
number of Creation Units. See the Transaction Fees section
below.
|
|
2
|
|
Expressed
as a percentage of average net assets on an annual
basis.
|
|
3
|
|
Other
Expenses are based on estimated amounts for the Fund’s current fiscal
year. The Trust’s Investment Advisory Agreement provides that the Adviser
will pay all operating expenses of the Trust, except interest expense
and
taxes (both expected to be
de
minimis
),
independent trustee fees and expenses, any brokerage expenses, future
distribution fees or expenses and extraordinary
expenses.
|
|
4
|
|
The
Adviser has agreed contractually to waive its management fees and/or
make
payments to limit Fund expenses in the amount of any independent
trustee
fees and expenses otherwise payable by the Fund, at least until June
30,
2008. As a result of such agreement, the Fund’s net expenses are expected
to equal its management fee of
0.15%.
|
Examples
These
Examples are intended to help you compare the cost of investing in shares of
the
Fund with the cost of investing in other funds.
The
first
Example assumes that you invest $10,000 in the Fund for the time periods
indicated, while the second assumes a $2.5 million Creation Unit investment
for
the same time periods. Both examples assume that you sell all of your shares
at
the end of those periods. The Examples also assume that your investment has
a 5%
return each year and that the contractual waiver noted above remains in effect
only until June 30, 2008, but that the Fund’s operating expenses otherwise
remain the same. Although your actual costs may be higher or lower, based on
the
assumptions, your costs would be:
$10,000
Investment
|
|
1
Year
|
|
3
Years
|
$15
|
|
$55
|
$2,500,000
Investment
|
|
1
Year
|
|
3
Years
|
$5,839
|
|
$15,732
|
Creation
Transaction Fees and Redemption Transaction Fees
The
Fund
issues and redeems shares at net asset value only in blocks of 100,000 shares
or
multiples of 100,000 shares. As a practical matter, only institutions or
large
investors purchase or redeem these Creation Units. The value of a Creation
Unit
as of June 28, 2007, the date the Fund commenced operations, was $2,500,000.
An
investor who holds Creation Units will pay the annual fund operating expenses
described in the table above, and an investor who wishes to redeem Creation
Units at net asset value would also pay a standard transaction fee of $1,000
on
the date of such redemption, regardless of the number of Creation Units redeemed
that day.
Ameristock/Ryan
5 Year Treasury ETF
Cusip:
03077A
307
Trading
Symbol:
GKC
Underlying
Index:
Ryan
5
Year Treasury Index.
Investment
Objective
The
Ameristock/Ryan 5 Year Treasury ETF seeks results, before fees and expenses,
that correspond generally to the price and yield performance of a particular
Treasury Securities index called the Ryan 5 Year Treasury Index (the “Underlying
Index”).
Principal
Investment Strategy
The
Fund
will invest at least 90% of its total assets in Treasury Securities and up
to
10% in the aggregate in futures contracts, options and other derivative
instruments (based on the “notional” or face amount of such instruments). The
Adviser attempts to match the average dollar-weighted duration of the Fund
to
within six months of the duration of the Underlying Index.
The
Underlying Index is based on the return of the most recently auctioned 5-
year
U.S. Treasury note. The Index Provider determines the composition of the
Underlying Index in accordance with its rules and procedures (which may
change from time to time), and publishes information regarding the composition,
investment characteristics and return of the
Underlying Index.
Because
the Underlying Index is comprised of only one security, and that security
changes each time an auction of such security occurs, it is not practicable
for
the Fund to invest exclusively in the component securities of the Underlying
Index. Instead, the Fund invests in a limited number of (fewer than ten)
Treasury Securities with an average duration similar to the duration of the
security in the Underlying Index. These Treasury Securities may include the
OTR
Treasury Security that is the component security of the Underlying Index,
off-the-run Treasury Securities that were on-the-run when purchased by the
Fund
but became off-the-run because of a subsequent auction, and Treasury Securities
that, irrespective of their maturities when issued, have remaining maturities
that make them appropriate for investment by the Fund.
The
Fund’s top portfolio holdings can be found at www.Ameristock.com. Fund fact
sheets provide information regarding the Fund’s top holdings and may be
requested by calling 1-866-821-5592.
Principal
Risks
Since
the
Fund generally will invest essentially all of its assets in Treasury Securities,
the risks associated with investing in Treasury Securities and bonds in general
will affect the Fund and the value of its assets. As described above, some
of
the risks associated with investing in the Fund include:
n
|
|
Prices
of bonds, including Treasury Securities, may fall because of a rise
in
interest rates, issuer quality considerations and other economic
considerations.
|
n
|
|
Prices
of bonds may fall in response to economic events or trends. The longer
a
bond’s duration, the greater the risk that its value may fall in response
to economic events or trends.
|
n
|
|
The
bond in the Underlying Index may underperform equity investments,
bonds
issued by private entities, and U.S. government securities of different
durations.
|
The
Fund
invests in medium-term Treasury Securities as compared to the other Funds
described in this Prospectus, and can be expected to be subject to higher risk
and share price fluctuation (and may generate higher returns) than those Funds
investing in shorter-term securities, and lower risk and share price fluctuation
(and may generate lower returns) than those Funds investing in longer-term
securities. Assuming that the average duration of the Fund exactly matches
the maximum duration of its Underlying Index, and that the values of the
securities held by the Fund change only in response to interest rate changes,
the Fund’s net asset value would be expected to decline by approximately 4.30%
when market interest rates increase by 1%, and to increase by approximately
4.53% when market interest rates decline by 1%.
Performance
Information
Performance
information is not required because the Fund commenced operations on June
28,
2007 and has not been operational for a full calendar year.
Fees
and
Expenses
Shareholder
Fees
(fees
paid directly from an investment)
|
|
|
Creation
Transaction Fee
1
|
|
$1,000
|
Redemption
Transaction Fee
1
|
|
$1,000
|
Annual
Fund Operating Expenses
|
|
|
(expenses
that are deducted from the Fund’s assets)
2
|
|
|
Management
Fees
|
|
0.15%
|
Distribution
and Service (12b-1) Fees
|
|
None
|
Other
Expenses
3
|
|
0.03%
|
Total
Annual Fund Operating Expenses
|
|
0.18%
|
Fee
waiver and/or expense reimbursement
4
|
|
0.03%
|
Net
Annual Fund Operating Expenses
|
|
0.15%
|
|
1
|
|
Per
day on which Creation Units are purchased or redeemed, regardless
of the
number of Creation Units. See the Transaction Fees section
below.
|
|
2
|
|
Expressed
as a percentage of average net assets on an annual
basis.
|
|
3
|
|
Other
Expenses are based on estimated amounts for the Fund’s current fiscal
year. The Trust’s Investment Advisory Agreement provides that the Adviser
will pay all operating expenses of the Trust, except interest expense
and
taxes (both expected to be
de
minimis
),
independent trustee fees and expenses, any brokerage expenses, future
distribution fees or expenses and extraordinary
expenses.
|
|
4
|
|
The
Adviser has agreed contractually to waive its management fees and/or
make
payments to limit Fund expenses in the amount of any independent
trustee
fees and expenses otherwise payable by the Fund, at least until June
30,
2008. As a result of such agreement, the Fund’s net expenses are expected
to equal its management fee of
0.15%.
|
Examples
These
Examples are intended to help you compare the cost of investing in shares of
the
Fund with the cost of investing in other funds.
The
first
Example assumes that you invest $10,000 in the Fund for the time periods
indicated, while the second assumes a $2.5 million Creation Unit investment
for
the same time periods. Both examples assume that you sell all of your shares
at
the end of those periods. The Examples also assume that your investment has
a 5%
return each year and that the contractual waiver noted above remains in effect
only until June 30, 2008, but that the Fund’s operating expenses otherwise
remain the same. Although your actual costs may be higher or lower, based on
the
assumptions, your costs would be:
$10,000
Investment
|
|
1
Year
|
|
3
Years
|
$15
|
|
$55
|
$2,500,000
Investment
|
|
1
Year
|
|
3
Years
|
$5,839
|
|
$15,732
|
Creation
Transaction Fees and Redemption Transaction Fees
The
Fund
issues and redeems shares at net asset value only in blocks of 100,000 shares
or
multiples of 100,000 shares. As a practical matter, only institutions or
large
investors purchase or redeem these Creation Units. The value of a Creation
Unit
as of June 28, 2007, the date the Fund commenced operations, was $2,500,000.
An
investor who holds Creation Units will pay the annual fund operating expenses
described in the table above, and an investor who wishes to redeem Creation
Units at net asset value would also pay a standard transaction fee of $1,000
on
the date of such redemption, regardless of the number of Creation Units redeemed
that day.
Ameristock/Ryan
10 Year Treasury ETF
Cusip:
03077A
406
Trading
Symbol:
GKD
Underlying
Index:
Ryan
10 Year Treasury Index.
Investment
Objective
The
Ameristock/Ryan 10 Year Treasury ETF seeks results, before fees and expenses,
that correspond generally to the price and yield performance of a particular
Treasury Securities index called the Ryan 10 Year Treasury Index (the
“Underlying Index”).
Principal
Investment Strategy
The
Fund
will invest at least 90% of its total assets in Treasury Securities and up
to
10% in the aggregate in futures contracts, options and other derivative
instruments (based on the “notional” or face amount of such instruments). The
Adviser attempts to match the average dollar-weighted duration of the Fund
to
within six months of the duration of the Underlying Index.
The
Underlying Index is based on the return of the most recently auctioned
10-year U.S. Treasury note. The Index Provider determines the composition
of the
Underlying Index in accordance with its rules and procedures (which may
change from time to time), and publishes information regarding the composition,
investment characteristics and return of the Underlying
Index.
Because
the Underlying Index is comprised of only one security, and that security
changes each time an auction of such security occurs, it is not practicable
for
the Fund to invest exclusively in the component securities of the Underlying
Index. Instead, the Fund invests in a limited number of (fewer than ten)
Treasury Securities with an average duration similar to the duration of the
security in the Underlying Index. These Treasury Securities may include the
OTR
Treasury Security that is the component security of the Underlying Index,
off-the-run Treasury Securities that were on-the-run when purchased by the
Fund
but became off-the-run because of a subsequent auction, and Treasury Securities
that, irrespective of their maturities when issued, have remaining maturities
that make them appropriate for investment by the Fund.
The
Fund’s top portfolio holdings can be found at www.Ameristock.com. Fund fact
sheets provide information regarding the Fund’s top holdings and may be
requested by calling 1-866-821-5592.
Principal
Risks
Since
the
Fund generally will invest essentially all of its assets in Treasury Securities,
the risks associated with investing in Treasury Securities and bonds in general
will affect the Fund and the value of its assets. As described above, some
of
the risks associated with investing in the Fund include:
n
|
|
Prices
of bonds, including Treasury Securities, may fall because of a rise
in
interest rates, issuer quality considerations and other economic
considerations.
|
n
|
|
Prices
of bonds may fall in response to economic events or trends. The longer
a
bond’s duration, the greater the risk that its value may fall in response
to economic events or trends.
|
n
|
|
The
bond in the Underlying Index may underperform equity investments,
bonds
issued by private entities, and U.S. government securities of different
durations.
|
Because
the Fund invests in longer-term Treasury Securities as compared to the other
Funds described in this prospectus (except the Ameristock/Ryan 20-Year Treasury
Fund), it can be expected to be subject to higher risk and share price
fluctuation than such other Funds, but it may also generate higher returns.
Assuming that the average duration of the Fund exactly matches the maximum
duration of its Underlying Index, and that the values of the securities held
by
the Fund change only in response to interest rate changes, the Fund’s net asset
value would be expected to decline by approximately 7.49% when market interest
rates increase by 1%, and to increase by approximately 8.23% when market
interest rates decline by 1%.
Performance
Information
Performance
information is not required because the Fund commenced operations on June
28,
2007 and has not been operational for a full calendar year.
Fees
and
Expenses
Shareholder
Fees
(fees
paid directly from an investment)
|
|
|
Creation
Transaction Fee
1
|
|
$1,000
|
Redemption
Transaction Fee
1
|
|
$1,000
|
Annual
Fund Operating Expenses
|
|
|
(expenses
that are deducted from the Fund’s assets)
2
|
|
|
Management
Fees
|
|
0.15%
|
Distribution
and Service (12b-1) Fees
|
|
None
|
Other
Expenses
3
|
|
0.03%
|
Total
Annual Fund Operating Expenses
|
|
0.18%
|
Fee
waiver and/or expense reimbursement
4
|
|
0.03%
|
Net
Annual Fund Operating Expenses
|
|
0.15%
|
|
1
|
|
Per
day on which Creation Units are purchased or redeemed, regardless
of the
number of Creation Units. See the Transaction Fees section
below.
|
|
2
|
|
Expressed
as a percentage of average net assets on an annual
basis.
|
|
3
|
|
Other
Expenses are based on estimated amounts for the Fund’s current fiscal
year. The Trust’s Investment Advisory Agreement provides that the Adviser
will pay all operating expenses of the Trust, except interest expense
and
taxes (both expected to be
de
minimis
),
independent trustee fees and expenses, any brokerage expenses, future
distribution fees or expenses and extraordinary
expenses.
|
|
4
|
|
The
Adviser has agreed contractually to waive its management fees and/or
make
payments to limit Fund expenses in the amount of any independent
trustee
fees and expenses otherwise payable by the Fund, at least until June
30,
2008. As a result of such agreement, the Fund’s net expenses are expected
to equal its management fee of
0.15%.
|
Examples
These
Examples are intended to help you compare the cost of investing in shares of
the
Fund with the cost of investing in other funds.
The
first
Example assumes that you invest $10,000 in the Fund for the time periods
indicated, while the second assumes a $2.5 million Creation Unit investment
for
the same time periods. Both examples assume that you sell all of your shares
at
the end of those periods. The Examples also assume that your investment has
a 5%
return each year and that the contractual waiver noted above remains in effect
only until June 30, 2008, but that the Fund’s operating expenses otherwise
remain the same. Although your actual costs may be higher or lower, based on
the
assumptions, your costs would be:
$10,000
Investment
|
|
1
Year
|
|
3
Years
|
$15
|
|
$55
|
$2,500,000
Investment
|
|
1
Year
|
|
3
Years
|
$5,839
|
|
$15,732
|
Creation
Transaction Fees and Redemption Transaction Fees
The
Fund
issues and redeems shares at net asset value only in blocks of 100,000 shares
or
multiples of 100,000 shares. As a practical matter, only institutions or
large
investors purchase or redeem these Creation Units. The approximate value
of a
Creation Unit as of June 28, 2007 was $2,500,000. An investor who holds Creation
Units will pay the annual fund operating expenses described in the table
above,
and an investor who wishes to redeem Creation Units at net asset value would
also pay a standard transaction fee of $1,000 on the date of such redemption,
regardless of the number of Creation Units redeemed that day.
Ameristock/Ryan
20 Year Treasury ETF
Cusip:
03077A
505
Trading
Symbol:
GKE
Underlying
Index:
Ryan
20 Year Treasury Index.
Investment
Objective
The
Ameristock/Ryan 20 Year Treasury ETF seeks results, before fees and expenses,
that correspond generally to the price and yield performance of a particular
Treasury Securities index called the Ryan 20 Year Treasury Index (the
“Underlying Index”).
Principal
Investment Strategy
The
Fund
will invest at least 90% of its total assets in Treasury Securities and up
to
10% in the aggregate in futures contracts, options and other derivative
instruments (based on the “notional” or face amount of such instruments). The
Adviser attempts to match the average dollar-weighted duration of the Fund
to
within nine months of the duration of the Underlying Index.
The
Underlying Index is based on an equal weighting of the most recently
auctioned 10- and 30- year U.S. Treasury note and bond. The Index Provider
determines the composition of the Underlying Index in accordance with its
rules and procedures (which may change from time to time), and publishes
information regarding the composition, investment characteristics and return
of
the Undelying Index.
Because
the Underlying Index is comprised of only two securities, and those securities
change each time an auction of the relevant Treasury Securities occurs, it
is
not practicable for the Fund to invest exclusively in the component securities
of the Underlying Index. Instead, the Fund invests in a limited number of (fewer
than ten) Treasury Securities with an average duration similar to that of the
securities in the Underlying Index. These Treasury Securities may include the
OTR Treasury Securities that are the component securities of the Underlying
Index, off-the-run Treasury Securities that were on-the-run when purchased
by
the Fund but became off-the-run because of a subsequent auction, and Treasury
Securities that, irrespective of their maturities when issued, have remaining
maturities that make them appropriate for investment by the Fund.
The
Fund’s top portfolio holdings can be found at www.Ameristock.com. Fund fact
sheets provide information regarding the Fund’s top holdings and may be
requested by calling 1-866-821-5592.
Principal
Risks
Since
the
Fund generally will invest essentially all of its assets in Treasury Securities,
the risks associated with investing in Treasury Securities and bonds in general
will affect the Fund and the value of its assets. As described above, some
of
the risks associated with investing in the Fund include:
n
|
|
Prices
of bonds, including Treasury Securities, may fall because of a rise
in
interest rates, issuer quality considerations and other economic
considerations.
|
n
|
|
Prices
of bonds may fall in response to economic events or trends. The longer
a
bond’s duration, the greater the risk that its value may fall in response
to economic events or trends.
|
n
|
|
The
bonds in the Underlying Index may underperform equity investments,
bonds
issued by private entities, and U.S. government securities of different
durations.
|
Because
the Fund generally invests in longer-term Treasury Securities than the other
Funds described in this Prospectus, it can be expected to be subject to higher
risk and share price fluctuation than such other Funds, although it may also
generate higher returns. Assuming that the average duration of the Fund exactly
matches the maximum duration of its Underlying Index, and that the values of
the
securities held by the Fund change only in response to interest rate changes,
the Fund’s net asset value would be expected to decline by approximately 14.14%
when market interest rates increase by 1%, and to increase by approximately
17.76% when market interest rates decline by 1%.
Performance
Information
Performance
information is not required because the Fund commenced operations on June
28,
2007 and has not been operational for a full calendar year.
Fees
and
Expenses
Shareholder
Fees
(fees
paid directly from an investment)
|
|
|
Creation
Transaction Fee
1
|
|
$1,000
|
Redemption
Transaction Fee
1
|
|
$1,000
|
Annual
Fund Operating Expenses
|
|
|
(expenses
that are deducted from the Fund’s assets)
2
|
|
|
Management
Fees
|
|
0.15%
|
Distribution
and Service (12b-1) Fees
|
|
None
|
Other
Expenses
3
|
|
0.03%
|
Total
Annual Fund Operating Expenses
|
|
0.18%
|
Fee
waiver and/or expense reimbursement
4
|
|
0.03%
|
Net
Annual Fund Operating Expenses
|
|
0.15%
|
|
1
|
|
Per
day on which Creation Units are purchased or redeemed, regardless
of the
number of Creation Units. See the Transaction Fees section
below.
|
|
2
|
|
Expressed
as a percentage of average net assets on an annual
basis.
|
|
3
|
|
Other
Expenses are based on estimated amounts for the Fund’s current fiscal
year. The Trust’s Investment Advisory Agreement provides that the Adviser
will pay all operating expenses of the Trust, except interest expense
and
taxes (both expected to be
de
minimis
),
independent trustee fees and expenses, any brokerage expenses, future
distribution fees or expenses and extraordinary
expenses.
|
|
4
|
|
The
Adviser has agreed contractually to waive its management fees and/or
make
payments to limit Fund expenses in the amount of any independent
trustee
fees and expenses otherwise payable by the Fund, at least until June
30,
2008. As a result of such agreement, the Fund’s net expenses are expected
to equal its management fee of
0.15%.
|
Examples
These
Examples are intended to help you compare the cost of investing in shares of
the
Fund with the cost of investing in other funds.
The
first
Example assumes that you invest $10,000 in the Fund for the time periods
indicated, while the second assumes a $2.5 million Creation Unit investment
for
the same time periods. Both examples assume that you sell all of your shares
at
the end of those periods. The Examples also assume that your investment has
a 5%
return each year and that the contractual waiver noted above remains in effect
only until June 30, 2008, but that the Fund’s operating expenses otherwise
remain the same. Although your actual costs may be higher or lower, based on
the
assumptions, your costs would be:
$10,000
Investment
|
|
1
Year
|
|
3
Years
|
$15
|
|
$55
|
$2,500,000
Investment
|
|
1
Year
|
|
3
Years
|
$5,839
|
|
$15,732
|
Creation
Transaction Fees and Redemption Transaction Fees
The
Fund
issues and redeems shares at net asset value only in blocks of 100,000 shares
or
multiples of 100,000 shares. As a practical matter, only institutions or
large
investors purchase or redeem these Creation Units. The value of a Creation
Unit
as of June 28, 2007, the date the Fund commenced operations, was $2,500,000.
An
investor who holds Creation Units will pay the annual fund operating expenses
described in the table above, and an investor who wishes to redeem Creation
Units at net asset value would also pay a standard transaction fee of $1,000
on
the date of such redemption, regardless of the number of Creation Units redeemed
that day.
Portfolio
Turnover
Portfolio
turnover is a measure of the level of trading in portfolio securities by the
Funds, calculated by dividing the lesser of the amount of securities purchased
or sold during a given period (excluding portfolio securities received or
delivered in connection with issuing and redeeming Creation Units as discussed
below under “Shareholder Information - Creations and Redemptions”) by the
monthly average of the market value of the Fund’s portfolio securities during
the period. Because of the rolling nature of the Underlying Indices, the
portfolio turnover of the Funds will likely be higher than that of many other
ETFs and indexed mutual funds, although not as high as that of many
actively-managed funds. Specifically, turnover may approach or exceed 100%
for
at least some of the Funds. A higher turnover rate generally will result in
(1)
greater brokerage and other transaction costs borne by a Fund, and (2) higher
amounts of realized investment gain subject to the payment of taxes by
shareholders. Significant amounts of the Funds’ distributions of realized gains
will be short-term capital gains, taxable to you at ordinary income
rates.
Management
Investment
Adviser
As
investment adviser, Ameristock Corporation (the “Adviser”) has overall
responsibility for the general management and administration of the Trust.
The
Adviser provides an investment program for each Fund and manages the investment
of its assets.
Under
the
Investment Advisory Agreement, the Adviser is responsible for all expenses
of
the Trust, including the cost of transfer agency, custody, fund administration,
legal, audit and other services, except independent trustee fees and expenses,
interest expense, taxes, brokerage expenses, distribution or “12b-1” fees (if
any), and extraordinary expenses.
The
Advisers receives management fees from each Fund based on an annual percentage
rate of each Fund’s average daily net assets, as shown in the following table.
|
|
|
|
Name
of Fund
|
|
Management Fee
|
|
|
|
|
|
Ameristock/Ryan
1 Year Treasury ETF
|
|
0.15
|
%
|
Ameristock/Ryan
2 Year Treasury ETF
|
|
0.15
|
%
|
Ameristock/Ryan
5 Year Treasury ETF
|
|
0.15
|
%
|
Ameristock/Ryan
10 Year Treasury ETF
|
|
0.15
|
%
|
Ameristock/Ryan
20 Year Treasury ETF
|
|
0.15
|
%
|
The
Adviser’s address is 1320 Harbor Bay Parkway, Suite 145, Alameda,
California 94502. The Adviser and its affiliates act as Adviser for another
registered investment company and oil-based and natural
gas-based commodity funds. A discussion regarding the basis for the Board
of Trustees’ approval of the Investment Advisory Agreement between the Adviser
and the Trust with respect to each Fund is available in the Funds’ annual report
to shareholders for the period from commencement of operations until June
30,
2007.
Portfolio
Managers
The
portfolio managers of each Fund are Messrs.
Nicholas
D. Gerber, Andrew Ngim and Andrew Petker. Mr. Gerber, the President of the
Adviser, founded the Adviser in 1995 and has been the lead portfolio manager
of
the Funds since their inception in 2007. He also serves as portfolio manager
of
the Ameristock Mutual Fund, Inc., an investment company that does not operate
as
an exchange-traded fund (the “Mutual Fund”), and United States Oil Fund, LP
(“USO”) and United States Natural Gas Fund, LP (“USNG”), registered commodity
pools that issue partnership units that are traded on the American Stock
Exchange (“AMEX”). Mr. Ngim has been a Managing Director of Ameristock
Corporation since 1999, has been co-portfolio manager of the Funds since their
inception, serves as co-portfolio manager of the Mutual Fund, and serves as
a
management director of the general partner of USO and USNG. Mr. Petker
joined the Adviser as a portfolio manager in 2007, serving as co-portfolio
manager of the Funds since their inception. From 1995 until 2005, Mr. Petker
was
Managing Director of API Consulting, Inc., an investment consulting firm.
The Fund’s Statement of Additional Information (“SAI”) provides additional
information about the portfolio managers’ compensation, other accounts managed
by the portfolio managers, and their ownership of Fund securities.
Consulting
Agreement
The
Adviser has entered into a Consulting Services and Licensing Agreement (the
“Consulting Agreement”) with the Index Provider and its affiliate, Ryan ALM
Advisers, LLC (“Ryan Advisers”). Under the Consulting Agreement, Ryan Advisers
provides consulting services with respect to the Underlying Indices,
including but not limited to general consultation regarding the calculation
and
maintenance of the Underlying Indices, anticipated changes to the Underlying
Indices and the nature of the Underlying Indices’ current or anticipated
component securities. In addition, Ryan Advisers (i) provides general
consultation regarding the markets for and trading in U.S. government
securities, (ii) assists in the preparation of marketing materials for the
Funds, and (iii) makes available speakers for Fund marketing events and persons
to be interviewed by the press who can describe the Indices and their
calculation and maintenance. Ryan Advisers does not, however, have any
decision-making authority with respect to the purchase, sale or holding of
securities or instruments by the Funds, and does not provide advice regarding
whether specific securities or instruments should be purchased, sold or held
by
any Fund.
Administrator,
Custodian and Transfer Agent
Brown
Brothers Harriman & Co. (“BBH”) serves as administrator, custodian and
transfer agent for the Funds. Its principal address is 40 Water Street, Boston,
Massachusetts 02109. Under the Administration Agreement with the Trust, BBH
performs certain administrative and accounting services for the Funds and
prepares certain SEC reports on behalf of the Trust and the Funds. In addition,
BBH makes available the office space, equipment, personnel and facilities
required to provide such services. Also under the Administration Agreement,
BBH
acts as transfer agent for each Fund’s authorized and issued shares of
beneficial interest, and as dividend disbursing agent of the Trust. Under
the
Custodian Agreement with the Trust, BBH maintains in separate accounts cash,
securities and other assets of each Fund, keeps all necessary accounts and
records, and provides other services. BBH is required, upon the order of
the
Trust, to deliver securities held by BBH and to make payments for securities
purchased by the Trust for each Fund. As compensation for the foregoing
services, BBH receives certain out-of-pocket costs, transaction fees, and
asset-based fees which are accrued daily and paid monthly by the Adviser
out of
its management fee.
Shareholder
Information
Additional
shareholder information, including how to buy and sell shares of any Fund,
is
available free of charge by calling toll-free: 1-866-821-5592 or visiting our
website at www.Ameristock.com.
Buying
and Selling Shares
Shares
of
the Funds trade on the AMEX during the trading day and can be bought and sold
throughout the trading day like other shares of publicly traded securities.
There is no minimum investment. Shares are generally purchased and sold in
"round lots" of 100 shares, but investors can purchase or sell shares in
"odd-lots" as small as a single share at no share price differential. When
buying or selling shares of the Funds through a broker, you will incur customary
brokerage commissions and charges.
Shares
of
the Funds may be acquired from or redeemed directly by the Fund only in Creation
Units or multiples thereof, as discussed in the
Creations
and Redemptions
section.
Once created, shares of the Funds generally trade in the secondary market in
amounts less than a Creation Unit.
The
Board
of Trustees has adopted a policy of not monitoring for frequent purchases and
redemptions of Fund shares (“frequent trading”), including frequent trading that
attempts to take advantage of potential arbitrage opportunities presented by
changes in the value of a Fund’s portfolio securities during the time period
between the close of the primary markets for such portfolio securities and
the
reflection of those changes in the Fund’s net asset value. Each Fund sells and
redeems its shares directly through transactions that are in-kind and/or for
cash, with a deadline for placing transaction orders no later than the close
of
the primary markets for the Fund’s portfolio securities. In addition, frequent
trading of Fund shares on the AMEX will not affect the Funds’ cash flows, and
therefore will have little potential to affect the ongoing management of the
Funds or their ability to track the performance of their respective Underlying
Indices.
Shares
of
the Funds trade under the trading symbols listed for each Fund in the
Description
of the Ameristock/Ryan Treasury ETFs
section.
The
AMEX
is generally open Monday through Friday and is closed on weekends and the
following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. However, Creation Units will be available for purchase and
redemption, and each Fund’s net asset value will be calculated, only on days
that (i) the government securities markets in the United States, (ii) the Funds’
custodian (the “Custodian”) and (iii) the NYSE and the AMEX are open for
business. Therefore, shares of the Funds will be available for trading on AMEX
on certain federal holidays when the U.S. government securities markets are
closed, currently Columbus Day and Veterans Day, and each Fund’s net asset value
will not be calculated on those days.
It
is
important to note that the acquisition of Fund shares by an investment company,
whether acquired from the Trust or in the secondary market, shall be subject
to
the restrictions of Section 12(d)(1) of the Investment Company Act of 1940
on
investments by investment companies in the securities of other investment
companies (such as the Funds).
Book
Entry
Shares
of
the Funds 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 of each Fund and is recognized as the owner
of
all shares for all purposes.
Investors
owning shares of the Funds are beneficial owners as shown on the records
of DTC
or its participants. DTC serves as the securities depository for all shares
of
the Funds. Participants include DTC, 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 securities that
you
hold in book entry or “street name” form.
Share
Prices
The
trading prices of shares in the secondary market may differ in varying degrees
from their daily net asset values and can be affected by market forces such
as
supply and demand, economic conditions and other factors.
The
approximate value of shares of each Fund is disseminated every fifteen seconds
throughout the trading day by the national securities exchange on which the
Fund
is listed or by other information providers, such as Bloomberg. This approximate
value should not be viewed as a “real-time” update of the net asset value,
because the approximate value may not be calculated in the same manner as the
net asset value, which is computed once a day. The approximate value is
determined by third-party pricing services using price quotations obtained
from
broker-dealers that may trade in the portfolio securities held by the Funds.
The
Funds are not involved in, or responsible for, the calculation or dissemination
of the approximate value and make no warranty as to its accuracy.
Determination
of Net Asset Value
The
Custodian calculates the net asset value per share for each Fund as of the
close
of regular trading of the Treasury Securities markets (normally 3:00 p.m.
Eastern time) on each day that (i) the Government Securities markets in the
United States, (ii) the Custodian, and (iii) the NYSE and the AMEX are open
for
business. The net asset value per share of each Fund is calculated by dividing
the value of the net assets of such Fund (
i.e.
,
the
value of its total assets less total liabilities) by the total number of
outstanding shares of the Fund, generally rounded to the nearest cent. In
calculating a Fund’s net asset value, a Fund’s investments are generally valued
using market valuations. In the event that current market valuations are not
readily available or such valuations do not reflect current market values,
the
affected investments will be valued using fair value pricing pursuant to the
pricing policy and procedures approved by the Board of Trustees.
Investments
that may be valued using fair value pricing include, but are not limited to:
(i)
restricted securities (i.e., ones that may not be publicly sold without
registration under the Securities Act of 1933); (ii) securities that are thinly
traded; (iii) securities in default or bankruptcy proceedings for which there
are no current market quotations; and (iv) securities affected by significant
events (
i.e.
, events
that occur after the close of the markets on which the security is traded but
before the time as of which the Fund’s net asset value is computed and that may
materially affect the value of the Fund’s investments). Because the Funds invest
principally in Treasury Securities upon which defaults are unlikely and that
generally trade in high volumes in liquid markets, the Trust expects that the
need to value any Fund holdings based on fair value will arise only
infrequently.
Valuing
a
Fund’s investments using fair value pricing will result in using prices for
those investments that may differ from current market valuations. Accordingly,
fair value pricing could result in a difference between the prices used to
calculate a Fund’s net asset value and the prices used by the Fund’s benchmark
index, which, in turn, could result in a difference between the Fund’s
performance and the performance of the Fund’s benchmark index.
Dividends
and Distributions
Each
Fund
earns interest and other income from its investments, and distributes this
income (less expenses) to shareholders as dividends. Each Fund pays out
dividends quarterly and may pay them on a more frequent basis. Each Fund
will
distribute substantially all of its net income to shareholders each fiscal
year.
Each Fund may also realize capital gains on the sale of its investments,
and
each Fund distributes its net realized capital gains, if any, to investors
annually. Fund distributions are expected to consist primarily of dividends,
although capital gains distributions may be made, especially from the Funds
investing in longer-term securities.
Taxes
As
with
any investment, you should consider the tax consequences of your investment
in
shares of the Funds. 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 of the Funds.
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:
n
|
|
A
Fund makes distributions, and
|
Taxes
on
Distributions
Distributions
from a Fund’s net investment income and out of a Fund’s net short-term capital
gains, if any, are taxable to you as ordinary income. Distributions of net
long-term capital gains, if any, in excess of net short-term capital losses, are
taxable as long-term capital gains, regardless of how long you have held the
shares. Distributions from the Funds will not qualify for the lower tax rates
applicable to qualified dividend income or qualify for the dividends received
deduction for corporate investors. In general, your distributions are subject
to
federal income tax for the year when they are paid. Certain distributions paid
in January, however, may be treated as paid on December 31 of the prior
year.
If
you
are neither a resident nor a citizen of the United States or if you are a
foreign entity, a Fund’s ordinary income dividends (which include distributions
of net short-term capital gains) will generally be subject to a 30% U.S.
withholding tax, unless a lower treaty rate applies. However, distributions
with
respect to the Fund’s taxable years beginning before January 1, 2008 that
qualify as “interest-related dividends” or as “short-term capital gain
dividends” generally will not be subject to U.S. withholding tax.
If
you
are a resident or a citizen of the United States, by law, back-up withholding
will apply to your distributions and proceeds if you have not provided a
taxpayer identification number or social security number and made other required
certifications.
Taxes
when Shares are Sold
Currently,
any capital gain or loss realized upon a sale of shares is generally treated
as
a long-term gain or loss if shares have been held for more than one year. Any
capital gain or loss realized upon a sale of shares held for one year or less
is
generally treated as a short-term gain or loss, except that any capital loss
on
the sale of shares held for six months or less is treated as long-term capital
loss to the extent that capital gain dividends were paid with respect to such
shares.
The
foregoing discussion summarizes some of the consequences under current federal
tax law of an investment in a Fund. It is not a substitute for personal tax
advice. You may also be subject to state and local taxation on Fund
distributions and sales of shares. Consult your personal tax adviser about
the
potential tax consequences of an investment in a Fund under all applicable
tax
laws.
Creations
and Redemptions
The
shares that trade in the secondary market are “created” at net asset value by
market makers, large investors and institutions only in block-size Creation
Units, each of which consists of 100,000 shares or multiples thereof. Each
“creator” enters into an authorized participant agreement with ALPS
Distributors, Inc, the Funds’ distributor, and deposits into the applicable Fund
a portfolio of bonds closely approximating the holdings of the Fund and a
specified amount of cash in exchange for a specified number of Creation
Units.
Similarly,
shares can only be redeemed in a specified number of Creation Units, principally
in-kind for a portfolio of bonds held by the Fund and a specified amount of
cash.
Except
when aggregated in Creation Units, shares are not redeemable.
The
prices at which creations and redemptions occur are based on the next
calculation of net asset value after an order is received in a form described
in
the authorized participant agreement.
Creations
and redemptions must be made through a firm that is a DTC participant and has
the ability to clear through the Federal Reserve System. Information about
the
procedures regarding creation and redemption of Creation Units (including the
cut-off times for receipt of creation and redemption orders) is included in
the
SAI.
Because
new shares may be created and issued on an ongoing basis, at any point during
the life of a Fund a “distribution,” as such term is used in the Securities Act
of 1933 (the “Securities Act”), may be occurring. Broker-dealers and other
persons are cautioned that some activities on their part may, depending on
the
circumstances, result in their being deemed participants in a distribution
in a
manner that could render them statutory underwriters and subject to the
prospectus delivery and liability provisions of the Securities Act. Nonetheless,
any determination of whether one is an underwriter must take into account all
the relevant facts and circumstances of each particular case.
Broker-dealers
should also note that dealers who are not “underwriters,” but are participating
in a distribution (as contrasted to ordinary secondary market transactions),
and
thus dealing with shares that are part of an “unsold allotment” within the
meaning of Section 4(3)(C) of the Securities Act, would be unable to take
advantage of the prospectus delivery exemption provided by Section 4(3) of
the
Securities Act. For delivery of prospectuses to exchange members, the prospectus
delivery mechanism of Rule 153 under the Securities Act is only available with
respect to transactions on a national securities exchange.
Transaction
Fees
Each
Fund
may impose a purchase transaction fee and a redemption transaction fee to
offset
transfer and other transaction costs associated with the issuance and redemption
of Creation Units of shares. The standard creation and redemption transaction
fees for the Funds are discussed below. The standard creation transaction
fee is
charged to each purchaser on the day such purchaser creates a Creation Unit.
The
fee is a single charge and will be the amount indicated below regardless
of the
number of Creation Units purchased by an investor on the same day. The Adviser
may from time to time, at its own expense, compensate purchasers of Creation
Units who have purchased substantial amounts of Creation Units and other
financial institutions for administrative or marketing services. Similarly,
the
standard redemption transaction fee will be the amount indicated regardless
of
the number of Creation Units redeemed that day. The standard creation and
redemption transaction fees for creations and redemptions made for cash (when
cash creations and redemptions are available or specified) may be subject
to an
additional variable charge as further described in the SAI. In addition,
purchasers of shares in Creation Units are responsible for payment of the
costs
of transferring the securities to the Fund. Redeemers of shares in Creation
Units are responsible for the costs of transferring securities from the Fund.
Investors who use the services of a broker or other such intermediary may
pay
fees for such services. The following table shows, as of September 28, 2007,
the
approximate value of one Creation Unit per Fund and the standard creation
and
redemption transaction fee.
Name
of Fund
|
|
Approximate
Value
of a
Creation
Unit
|
|
|
Standard
Creation/
Redemption
Transaction
Fee
|
|
|
|
|
|
|
Ameristock/Ryan
1 Year Treasury ETF
|
|
$2,523,000
|
|
|
$1,000
|
Ameristock/Ryan
2 Year Treasury ETF
|
|
$2,548,000
|
|
|
$1,000
|
Ameristock/Ryan
5 Year Treasury ETF
|
|
$2,591,000
|
|
|
$1,000
|
Ameristock/Ryan
10 Year Treasury ETF
|
|
$2,605,000
|
|
|
$1,000
|
Ameristock/Ryan
20 Year Treasury ETF
|
|
$2,625,000
|
|
|
$1,000
|
Distribution
ALPS
Distributors, Inc. (the “Distributor”) is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). The
Distributor acts on an agency basis and is the “principal underwriter” for the
Trust in connection with the issuance of Creation Units of each Fund. The
Distributor is not an affiliated person of the Trust or the
Adviser.
All
orders to purchase Creation Units for each Index Fund must be placed with the
Distributor by or through an Authorized Participant and it is the responsibility
of the Distributor to transmit such orders to the relevant Fund. The Distributor
furnishes to those placing such orders confirmation that the orders have been
accepted, but the Distributor may reject any order that is not submitted in
proper form.
The
Distributor is also responsible for delivering the Prospectus to those persons
creating Creation Units and for maintaining records of both the orders placed
with it and the confirmations of acceptance furnished by it. In addition, the
Distributor will maintain a record of the instructions given to the relevant
Fund to implement the delivery of Creation Units.
The
Distributor has no role in determining the policies of any Fund or the
securities that are purchased or sold by any Fund.
Index
Provider
The
Index
Provider develops, maintains and publishes market indices based on fixed-income
instruments. The Index Provider is not affiliated with the Trust, the Advisor,
the Distributor, or the AMEX. Since 1983, the Index Provider and its
predecessors have calculated and issued indices based on the OTR U.S. Treasury
yield curve. The Underlying Indices for each Fund represent characteristics
and
returns of the OTR Treasury Securities most closely matching the specified
maturity of the Underlying Index. The Ryan OTR Treasury indices are widely
followed by market professionals and are publicly available on their web
site
www.RyanIndex.com
.
Under
the
Consulting Agreement, the Index Provider grants the Adviser a license to use
the
Underlying Indices and marks. The Adviser in turn is granting sub-license rights
at no charge to the Trust to use the Underlying Indices.
Disclaimers
The
Index Provider.
The Underlying Indices were created by Ronald J. Ryan and are the exclusive
property of the Index Provider (specifically, of Ryan Holdings LLC, which
owns
approximately 61% of the Underlying Indices, and Ryan ALM, Inc, which owns
approximately 39% and compiles and maintains the Underlying Indices). The
Index
Provider has licensed the use of certain trademarks, service marks and trade
names of Ryan Holdings LLC, Ryan ALM, Inc. and the Underlying Indices for
use by
the Adviser or the Funds. The Index Provider is solely responsible for
determining the securities included in, and the calculation of, each Underlying
Index. In contrast, neither the Index Provider nor its affiliates determine
or
provide advice with respect to the specific investments of the Funds. Neither
the Index Provider nor its affiliates make any representations regarding
the
appropriateness of the Funds’ investments for the purpose of tracking the
performance of the appropriate Index or otherwise.
AMEX.
Shares
of the Trust are not sponsored, endorsed or promoted by the AMEX. The AMEX
makes
no representation or warranty, express or implied, to the owners of the shares
of the Funds or any member of the public regarding the ability of a Fund
to
track the performance of any Underlying Index or the ability of any Underlying
Index identified herein to track bond market performance. Each Underlying
Index
identified herein is determined, composed and calculated by the Index Provider
without regard to any Fund. The AMEX is not responsible for, nor has it
participated in, the determination of the compilation or the calculation
of any
Underlying Index, nor in the determination of the timing of, prices of, or
quantities of the shares of the Funds to be issued, nor in the determination
or
calculation of the equation by which the shares are redeemable. The AMEX
has no
obligation or liability to owners of the shares of the Funds in connection
with
the administration, marketing or trading of the shares of the
Funds.
The
AMEX
does not guarantee the accuracy and/or the completeness of any Underlying Index
or any data included therein. The AMEX makes no warranty, express or implied,
as
to results to be obtained by the Trust (on behalf of its Funds) as licensee,
licensee’s customers and counterparties, owners of the Funds’ shares, or any
other person or entity from the use of the subject indices or any data included
therein in connection with the rights licensed as described herein or for any
other use. The AMEX makes no express or implied warranties, and hereby expressly
disclaims all warranties of merchantability or fitness for a particular purpose
with respect to any Underlying Index or any data included therein. Without
limiting any of the foregoing, in no event shall the AMEX have any liability
for
any direct, indirect, special, punitive, consequential or any other damages
(including lost profits) even if notified of the possibility of such damages.
The
Adviser.
The
Adviser does not guarantee the accuracy and/or the completeness of any
Underlying Index or any data included therein and the Adviser shall have no
liability for any errors, omissions, or interruptions therein.
The
Adviser makes no warranty, express or implied, as to results to be obtained
by
the Funds, to the owners of the shares of any Fund, or to any other person
or
entity, from the use of any Underlying Index or any data included therein.
The
Adviser makes no express or implied warranties, and expressly disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to any Underlying Index or any data included therein. Without limiting
any of the foregoing, in no event shall the Adviser have any liability for
any
special, punitive, direct, indirect, or consequential damages (including lost
profits), even if notified of the possibility of such damages.
Financial
Highlights
The
Financial Highlights table is intended to help you understand the Funds’
financial performance since the commencement of operations (June 28, 2007).
Certain information reflects financial results for a single Fund share. The
total return in the table represents the rate that an investor would have
earned
(or lost) on an investment in the Funds (assuming reinvestment of all dividends
and distributions). The information in the table has been audited by Cohen
Fund
Audit Services, Ltd., whose report, along with the Funds’ financial statements,
are included in the Funds’ latest Annual Report, which is available upon
request.
|
FINANCIAL
HIGHLIGHTS
|
Selected
Data for a Share Outstanding for the Period from June 28, 2007
(Commencement of Operations) to June 30, 2007.
|
|
|
|
|
Ameristock/Ryan
1
Year
Treasury
ETF
|
Ameristock/Ryan
2
Year
Treasury
ETF
|
Ameristock/Ryan
5
Year
Treasury
ETF
|
Ameristock/Ryan
10
Year
Treasury
ETF
|
Ameristock/Ryan
20
Year
Treasury
ETF
|
Net
Asset Value at Beginning of Period
|
$25.00
|
$
25.00
|
$25.00
|
$25.00
|
$25.00
|
Net
Investment Income
a
|
0.01
|
0.01
|
0.01
|
0.01
|
0.01
|
Net
Gains on Securities -
Realized
and Unrealized
|
0.01
|
0.04
|
0.09
|
0.16
|
0.25
|
Total
From Investment Operations
|
$0.02
|
$0.05
|
$0.10
|
$0.17
|
$0.26
|
Paid
in Capital from ETF Transaction Fees
|
$0.01
|
$0.01
|
$0.01
|
$0.01
|
$0.01
|
Net
Asset Value at End of Period
|
25.03
|
25.06
|
25.11
|
25.18
|
25.27
|
Total
Return
b
|
0.08%
|
0.20%
|
0.40%
|
0.68%
|
1.04%
|
|
|
Ratios/Supplemental
Data
|
|
Net
Assets End of Period (millions)
|
$
2.52
|
$2.53
|
$2.53
|
$2.54
|
$2.55
|
Ratio
of Expenses to Average Net Assets
c
|
0.15%
|
0.15%
|
0.15%
|
0.15%
|
0.15%
|
Ratio
of Net Investment Income to Average Net Assets
c
|
4.86%
|
4.81%
|
4.77%
|
5.02%
|
5.11%
|
Portfolio
Turnover Rate
d
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
|
|
|
a
Based
on Average Shares Outstanding
|
b
Total
investment return is calculated assuming an initial investment
made at the
net asset value at the beginning of the period,
reinvestment
of all dividends and distributions at net asset value during the
period,
and redemption on the last day of the period.
Transaction
fees and brokerage commissions that may be payable on the purchase
and
sale of Fund shares are not reflected in the calculation of total
investment return. Total investment return calculated for a period
of less
than one year is not annualized. Given the very short period covered
by
total investment return calculations, such return likely will not
be
representative of the Funds’ total returns over longer periods.
|
c
Annualized
|
d
Portfolio
turnover is not annualized and does not include securities received
or
delivered from processing creations or
redemptions.
|
|
Total
Return Information
The
table
below presents information about the total return of the Funds and of each
Fund’s Underlying Index. The information presented is for the period since
inception (June 28, 2007) to June 30, 2007. “Total returns” represent the change
in the value of an investment over the period indicated.
Total
returns for the Funds have been calculated based on the Funds’ net asset value
per share. Because market trading of the Funds had not commenced as of June
30,
2007, total return information based on market prices of Fund shares and
data
regarding discounts and premiums of market prices as compared to NAV are
not set
forth below.
An
index
is a statistical composite that tracks a specified financial market or sector.
Unlike the Funds, the Underlying Indices do not actually hold a portfolio
of
securities and therefore do not incur the expenses incurred by the Funds.
These
expenses negatively affect the performance of the Funds. The total returns
shown
in the table below do not include transaction fees and brokerage commission
that
may be payable on the purchase or sale of Fund shares. Also, the returns
shown
do not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption or sale of Fund shares.
The
investment return and principal value of shares of the Funds will vary with
changes in market conditions. Shares of the Funds may be worth more or less
than
their original cost when they are redeemed or sold in the market. The Funds’
past performance in no guarantee of future results. Furthermore, while the
total
returns presented below have not been annualized, given the very short period
covered, such total returns likely will not be representative of the Funds’
total returns over longer periods.
Total
Returns from Inception (June 28, 2007) to June 30,
2007
Ameristock/Ryan
1 Year Treasury ETF
|
0.08%
|
Ryan
Adjusted 1 Year Treasury Index
|
0.07%
|
Ameristock/Ryan
2 Year Treasury ETF
|
0.20%
|
Ryan
2 Year Treasury Index
|
0.15%
|
Ameristock/Ryan
5 Year Treasury ETF
|
0.40%
|
Ryan
5 Year Treasury Index
|
0.38%
|
Ameristock/Ryan
10 Year Treasury ETF
|
0.68%
|
Ryan
10 Year Treasury Index
|
0.68%
|
Ameristock/Ryan
20 Year Treasury ETF
|
1.04%
|
Ryan
20 Year Treasury Index
|
1.05%
|
Copies
of
the Prospectus, SAI, and recent shareholder reports can be found on the
Adviser’s web site at www.Ameristock.com. For more detailed information about
the Trust and shares of the Trust, you may request a copy of the SAI. The SAI
provides detailed information about the Funds, and is incorporated by reference
into this Prospectus. This means that the SAI, for legal purposes, is a part
of
this Prospectus.
Additional
information about a Fund’s investments is available in the Trust’s annual and
semi-annual reports to shareholders. In the Trust’s annual report, you will find
a discussion of the market conditions and investment strategies that
significantly affected a Fund’s performance during its last fiscal
year.
If
you
have questions about the Funds or shares of the Trust or you wish to obtain
the
SAI, semi-annual or annual report free of charge, please:
|
Call:
|
|
1-866-821-5592
|
|
|
|
Monday
through Friday
|
|
|
|
9:00 a.m.
to 7:00 p.m. (Eastern time)
|
|
Write:
|
|
Ameristock
ETF Trust
1320
Harbor Bay Parkway
Suite
145
Alameda,
CA 94502
|
Information
about the Funds (including the SAI) can 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 the SEC at 1-202-942-8090.
Reports and other information about the Funds are available on the EDGAR
Database on the SEC’s Internet site at www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing
the
SEC’s Public Reference Section, Washington, D.C. 20549-0102.
Read
and keep this Prospectus for future reference.
Investment
Company Act File No. 811-21941
Statement
of Additional Information for
Ameristock/Ryan
1 Year Treasury ETF
Ameristock/Ryan
2 Year Treasury ETF
Ameristock/Ryan
5 Year Treasury ETF
Ameristock/Ryan
10 Year Treasury ETF
Ameristock/Ryan
20 Year Treasury ETF
This
Statement of Additional Information (“SAI”) is not a Prospectus. It should be
read in conjunction with the Prospectus dated November 1, 2007 for the
Ameristock ETF Trust (the “Trust”). Capitalized terms used herein that are not
defined have the same meaning as in the Prospectus, unless otherwise noted.
A
copy of the Prospectus may be obtained without charge by writing to the Trust
at
1320 Harbor Bay Parkway, Suite 145, Alameda, CA 94502 or calling
1-866-821-5592.
Table
of
Contents
General
Description of the Trust and its Funds
|
|
|
Exchange
Listing and Trading
|
|
|
Investment
Strategies and Risks
|
|
|
Proxy
Voting Policy
|
|
|
Portfolio
Holdings Information
|
|
|
Descriptions
of the Underlying Indices
|
|
|
Methodology
|
|
|
Index
Construction Methods
|
|
|
Investment
Limitations
|
|
|
Continuous
Offering
|
|
|
Management
|
|
|
Portfolio
Transactions
|
|
|
Additional
Information Concerning the Trust
|
|
|
Creation
and Redemption of Creation Unit Aggregations
|
|
|
Taxes
|
|
|
Determination
of NAV
|
|
|
Dividends
and Distributions
|
|
|
Miscellaneous
Information
|
|
|
Financial
Statements
|
|
|
General
Description of the Trust and its Funds
The
Ameristock ETF Trust (the “Trust”) currently consists of five separate
investment portfolios. The Trust was organized as a Delaware statutory trust
on
June 5, 2006, is authorized to have multiple series or portfolios, and may
establish additional series or portfolios in the future. The Trust is an
open-end management investment company, registered under the Investment Company
Act of 1940, as amended (the “1940 Act”). The offering of the Trust’s shares is
registered under the Securities Act of 1933, as amended (the “Securities Act”).
This SAI relates to the following funds (each a “Fund” and collectively the
“Funds”):
•
|
|
Ameristock/Ryan
1 Year Treasury ETF
|
•
|
|
Ameristock/Ryan
2 Year Treasury ETF
|
•
|
|
Ameristock/Ryan
5 Year Treasury ETF
|
•
|
|
Ameristock/Ryan
10 Year Treasury ETF
|
•
|
|
Ameristock/Ryan
20 Year Treasury ETF
|
The
investment objective of each Fund is to provide investment results that
correspond generally, before fees and expenses, to the price and
yield performance of a specified benchmark index (each an “Underlying
Index”), with each Underlying Index based on the total return on various
maturities of U.S. Treasury Securities. Each Fund is managed by Ameristock
Corporation (the “Adviser”).
Each
Fund
offers and issues shares at their net asset value (“NAV”) only in aggregations
of a specified number of shares (each a “Creation Unit” or a “Creation Unit
Aggregation”), generally in exchange for a basket of fixed income securities
(the “Deposit Securities”), together with the deposit of a specified cash
payment (the “Cash Component”). The shares described in the Prospectus and this
SAI are listed and traded on the American Stock Exchange (“AMEX”). Shares trade
in the secondary market at market prices that may be at, above or below NAV.
Shares are redeemable only in Creation Unit Aggregations, and, generally, in
exchange for portfolio securities and a specified cash payment. A Creation
Unit
consists of 100,000 shares or multiples thereof.
The
Trust
reserves the right to offer a “cash” option for creations and redemptions of
shares (in contrast to the normal procedure of providing or receiving
securities), although it has no current intention of doing so. Shares may be
issued in advance of receipt of Deposit Securities subject to various
conditions, which the Adviser may change from time to time, including a
requirement to maintain on deposit with the Trust cash at least equal to 105%
of
the market value of the missing Deposit Securities. See the
Creation
and Redemption of Creation Unit Aggregations
section
of this SAI. In all cases, such conditions will be limited in accordance with
the requirements of the Securities and Exchange Commission (the “SEC”)
applicable to management investment companies offering redeemable securities.
Exchange
Listing and Trading
A
discussion of exchange listing and trading matters associated with an investment
in each Fund is contained in the Prospectus in the
Shareholder
Information
section.
Shares
of
each Fund are listed on the AMEX and trade throughout the day on the AMEX.
There
can be no assurance that the requirements of the AMEX necessary to maintain
the
listing of shares of any Fund will continue to be met. The AMEX may, but is
not
required to, remove the shares of a Fund from listing if (i) following the
initial 12-month period beginning upon the commencement of trading of a Fund,
there are fewer than 50 beneficial owners of the shares of a Fund for 30 or
more
consecutive trading days; (ii) the value of the Underlying Index on which such
Fund is based is no longer calculated or available; or (iii) such other event
shall occur or condition shall exist that, in the opinion of the AMEX, makes
further dealings on the AMEX inadvisable. The AMEX will remove the shares of
a
Fund from listing and trading upon termination of such Fund.
As
in the
case of other publicly traded securities, brokers’ commissions on transactions
will be based on negotiated commission rates at customary levels.
The
Trust
reserves the right to adjust the share prices of shares in the future to
maintain convenient trading ranges for investors. Any adjustments would be
accomplished through share splits or reverse share splits, which would have
no
effect on the net assets of the applicable Fund.
Investment
Strategies and Risks
Each
Fund
seeks to achieve its objective by investing primarily in both fixed income
securities that comprise the relevant Underlying Index and through transactions
that provide substantially similar exposure to securities in the Underlying
Index. Each Fund operates as an index fund and will not be actively managed.
Adverse performance of a security in a Fund’s portfolio will ordinarily not
result in the elimination of the security from a Fund’s portfolio.
Each
Fund
generally will invest at least 90% of its total assets in debt securities issued
by the U.S. Treasury (“Treasury Securities”) and up to 10% in futures
contracts, options and other derivative instruments. Each Fund also may invest
up to 5% of its assets in repurchase agreements collateralized by U.S.
Government obligations and in cash and cash equivalents.
Diversification.
Each
Fund
is a diversified Fund. With respect to 75% of its total assets, a diversified
fund does not invest more than 5% of its total assets in securities of any
one
issuer and does not acquire more than 10% of the outstanding voting securities
of any one issuer (excluding cash and cash items, government securities, and
securities of other investment companies). The remaining 25% of the Fund’s total
assets may be invested in any manner.
Each
Fund
intends to maintain the required level of diversification and otherwise conduct
its operations so as to qualify as a “regulated investment company” for purposes
of the Internal Revenue Code of 1986, as amended (the “Code”), and to relieve
the Fund of any liability for federal income tax to the extent that its earnings
are distributed to shareholders.
Bonds.
A bond
is an interest-bearing security issued by a company, governmental unit or,
in
some cases, a non-U.S. entity. The Funds will only invest in bonds issued by
a
governmental unit (
i.e.
,
the
United States Treasury). Generally, the issuer of a bond has a contractual
obligation to pay interest at a stated rate on specific dates and to repay
principal (the bond’s face value) periodically or on a specified maturity date.
An
issuer
may have the right to redeem or “call” a bond before maturity, in which case the
investor may have to reinvest the proceeds at lower market rates. Most bonds
bear interest income at a “coupon” rate that is fixed for the life of the bond.
The value of a bond usually rises when market interest rates fall, and falls
when market interest rates rise. Accordingly, a bond’s yield (income as a
percent of the bond’s current value) may differ from its coupon rate as its
value rises or falls.
Treasury
Securities.
The
Funds invest almost exclusively in Treasury Securities. Treasury Securities
are
a type of bond. Treasury Securities are securities issued by the U.S. Treasury
and backed by the full faith and credit of the U.S. Government. As a general
matter, the value of debt instruments, including Treasury Securities, declines
when market interest rates increase and rises when market interest rates
decrease. Certain types of Treasury Securities are subject to fluctuations
in
yield or value due to their structure or contract terms.
Each
Fund
will maintain a portfolio of Treasury Securities whose weighted average duration
closely matches the duration of its Underlying Index, meaning that the Funds
will invest in a range of fixed income instruments based upon the Adviser's
analysis of their duration characteristics to provide a return profile similar
to that of each Fund's Underlying Index. Duration is the weighted average life
of a Fund's debt instruments measured on a present-value basis; it is generally
superior to average weighted maturity as a measure of a Fund's potential
volatility due to changes in interest rates. Unlike a Fund's average weighted
maturity, which takes into account only the stated maturity date of the Fund's
debt instruments, duration represents a weighted average of both interest and
principal payments, discounted by the current yield-to-maturity of the
securities held. For example, a five-year, zero-coupon bond, which pays interest
only upon maturity (along with principal), has both a maturity and duration
of
five years. However, a five-year bond priced at par with a 7% coupon has a
maturity of five years but a duration of 4.3 years, reflecting the bond's
earlier payment of interest. A Treasury Security with a longer duration will
fluctuate more in price than a Treasury Security with a shorter
duration.
Purchase
of “When-Issued” Securities.
Each
Fund
can enter into commitments for the purchase of securities when they are issued
on a specified future date. The Fund becomes liable to purchase the security
when it enters into the commitment and becomes subject to the risk that the
security will decline in price, although delivery and payment occur at a
later
date. For example, a Fund may agree to purchase at a specified yield a specified
face amount of Treasury Securities to be issued in an upcoming auction. If
interest rates rise before the security is auctioned and the auctioned security
has a higher coupon rate than the agreed upon yield, the Fund will be obligated
to pay more than the face amount of the securities so that the Fund’s yield will
be as originally agreed upon. A Fund that enters into a when-issued commitment
is also subject to the risk that the dealer with which it entered into the
commitment will default on its obligation to deliver the securities as
scheduled. During the time that the Fund is obligated to purchase such
securities, it will be required to segregate liquid assets with its custodian
equal in value to the purchase cost of the when-issued
securities.
Short-term
Instruments and Temporary Investments.
Each
Fund may invest in various money market instruments. Money market instruments
are generally short-term investments that may include but are not limited to:
(i) obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (including government-sponsored enterprises); (ii) negotiable
certificates of deposit (“CDs”), bankers’ acceptances, fixed time deposits and
other obligations of domestic banks (including foreign branches); (iii)
commercial paper; (iv) non-convertible corporate debt securities (
e.g.,
bonds
and
debentures); (v) repurchase agreements; and (vi) U.S. dollar-denominated
obligations of foreign banks (including U.S. branches) that, in the opinion
of
the Adviser, are of comparable quality to obligations of U.S. banks which may
be
purchased by the Fund. Any of these instruments may be purchased on a current or
a forward-settled basis. Money market instruments also include shares of money
market mutual funds.
Futures
and Options
.
Each
Fund may enter into futures contracts, options and options on futures contracts.
These futures contracts and options will be used as a means to gain exposure
to
a Fund's Underlying Index with respect to cash that the Fund is otherwise unable
to invest directly in Treasury Securities on a cost-effective basis, to maintain
a weighted average duration for a Fund that closely approximates that of
the Underlying Index, to facilitate trading or to reduce transaction costs.
Each
Fund will only enter into futures contracts and options on futures contracts
that are traded on a U.S. exchange. No Fund will use futures or options for
speculative purposes. Each Fund intends to use futures and options on futures
in
accordance with Rule 4.5 of the Commodity Exchange Act (“CEA”). The Trust, on
behalf of each Fund, has filed a notice of eligibility for exclusion from the
definition of the term “commodity pool operator” in accordance with Rule 4.5 so
that each Fund is not subject to registration or regulation as a commodity
pool
operator under the CEA.
A
call
option gives a holder the right to purchase a specific security at a specified
price (“exercise price”) within a specified period of time. A put option gives a
holder the right to sell a specific security at a specified price within a
specified period of time. The initial purchaser of a call option pays the
“writer” a premium, which is paid at the time of purchase and is retained by the
writer whether or not such option is exercised. Each Fund may purchase put
options to hedge its portfolio against the risk of a decline in the market
value
of securities held and may purchase call options to hedge against an increase
in
the price of securities it is committed to purchase. If a Fund writes a call
option, the premium it receives may serve as a partial hedge, to the extent
of
the premium, against a decrease in the value of the underlying securities or
instruments in its portfolio, although the Fund gives up the ability to profit
from an increase in the value of such securities or instruments above the
exercise price of the option. Writing put options can also provide income,
although a Fund may suffer a loss if the instrument subject to the put option
declines in value so that the Fund is obligated to buy the instrument at a
price
greater than its current market value (plus the premium).
Futures
contracts provide for the future sale by one party and purchase by another
party
of a specified amount of a specific instrument or index at a specified future
time and at a specified price. Assets committed to futures contracts will be
segregated to the extent required by law. An option on a futures contract
generally gives the purchaser the right, in return for the premium paid, to
assume a position in futures contract at a specified exercise price at any
time
prior to the expiration date of the option.
Swap
Agreements
.
Swap
agreements are contracts between parties in which one party agrees to make
periodic payments to the other party based on the change in market value or
level of a specified rate, index or asset. In return, the other party agrees
to
make periodic payments to the first party based on the return of a different
specified rate, index or asset. Swap agreements will usually be done on a net
basis, the Fund receiving or paying only the net amount of the two payments.
The
net amount of the excess, if any, of a Fund’s obligations over its entitlements
with respect to each swap is accrued on a daily basis and an amount of cash
or
liquid securities having an aggregate value at least equal to the accrued excess
will be segregated by the Fund’s custodian.
The
use
of interest-rate and index swaps is a highly specialized activity that involves
investment techniques and risks different from those associated with ordinary
portfolio security transactions. These transactions generally do not involve
the
delivery of securities or other underlying assets or principal.
Investment
Companies.
Each
Fund may invest in the securities of other investment companies (including
money
market funds) to the extent allowed by law. Under the 1940 Act, a Fund’s
investment in investment companies is limited to, subject to certain exceptions,
(i) 3% of the total outstanding voting stock of any one investment company,
(ii)
5% of the Fund’s total assets with respect to any one investment company, and
(iii) 10% of the Fund’s total assets with respect to investment companies in the
aggregate.
Loans
of Portfolio Securities.
Each
Fund may lend portfolio securities to creditworthy brokers, dealers and other
financial institutions desiring to borrow securities to complete transactions
and for other purposes. These loans cannot exceed 33 1/3% of each Fund’s total
assets.
The
borrowers provide collateral that is maintained in an amount at least equal
to
the current market value of the securities loaned. A Fund may terminate a loan
at any time and obtain the return of the securities loaned. Each Fund receives
the value of any interest or cash or non-cash distributions paid on the loaned
securities.
With
respect to loans that are collateralized by cash, the Fund also receives the
difference between the amount earned on the reinvestment of cash collateral
and
the amounts paid to the borrower and to the Fund’s securities lending agent, who
administers the lending program. In the case of collateral other than cash,
the
Fund is compensated by a fee paid by the borrower equal to a percentage of
the
market value of the loaned securities. Any cash collateral may be reinvested
in
certain short-term instruments either directly on behalf of each lending Fund
or
through one or more joint accounts or money market funds.
Securities
lending involves exposure to certain risks, including operational risk (i.e.,
the risk of losses resulting from problems in the settlement and accounting
process), “gap” risk (i.e., the risk of a mismatch between the return on cash
collateral reinvestments and the fees the Fund has agreed to pay a borrower),
and credit, legal, counterparty and market risk. In the event a borrower does
not return a Fund’s securities as agreed, the Fund may experience losses if the
proceeds received from liquidating the collateral does not at least equal the
value of the loaned security at the time the collateral is liquidated plus
the
transaction costs incurred in purchasing replacement securities.
As
noted
above, a Fund may pay a portion of the interest or fees earned from securities
lending to a securities lending agent who administers the lending program in
accordance with guidelines approved by the Fund’s Board of
Trustees.
Repurchase
Agreements.
Each
Fund may enter into repurchase agreements with certain counterparties.
Repurchase agreements involve an agreement to purchase financial instruments
and
to resell those instruments back to the same counterparty at an agreed-upon
price and date (frequently the day following the purchase). The resale price
is
in excess of the purchase price and reflects a rate of interest unrelated to
the
coupon rate or maturity of the purchased instruments. The value of the
instruments purchased may be more or less than the price at which the
counterparty has agreed to repurchase them. As protection against the risk
that
the counterparty will not fulfill its obligation, the instruments are marked
to
market daily and the counterparty is required to deposit additional collateral
with the Fund so that the total market value of the collateral equals or exceeds
the resale amount provided under the repurchase agreement. Delays or losses
could result if the counterparty to the repurchase agreement defaults or becomes
insolvent. The Funds will only engage in repurchase agreements with
counterparties whose creditworthiness has been reviewed and found to be
satisfactory by the Adviser.
Reverse
Repurchase Agreements
.
Each
Fund may enter into reverse repurchase agreements, which involve the sale of
securities with the Fund agreeing to repurchase the securities at an agreed-upon
price, date and interest payment. The securities purchased with the funds
obtained from the agreement and securities collateralizing the agreement will
have maturity dates no later than the repayment date. Generally the effect
of
such transactions is that the Fund can obtain cash equal or nearly equal to
the
value of the portfolio securities involved during the term of the reverse
repurchase agreement, while in many cases the Fund is able to keep some of
the
interest income associated with those securities. Such transactions are only
advantageous if the Fund has an opportunity to earn a greater rate of interest
on the cash derived from these transactions than the interest cost of obtaining
the same amount of cash. Opportunities to realize earnings from the use of
the
proceeds equal to or greater than the interest required to be paid may not
always be available and each Fund intends to use the reverse repurchase
technique only when the Adviser believes it will be advantageous to the Fund.
The use of reverse repurchase agreements may exaggerate any increases or
decreases in the value of each Fund’s assets. The Fund’s exposure to reverse
repurchase agreements will be covered by securities having a value equal to
or
greater than such commitments. Reverse repurchase agreements have the
characteristics of borrowings by the Fund, and are treated as such for certain
purposes under the 1940 Act.
Proxy
Voting Policy
The
Adviser is responsible for voting proxies on securities held by the Funds.
Under
the Adviser's Proxy Voting Guidelines, proxies are voted in the best long-range
financial interest of each Fund as determined by the Funds’ portfolio managers.
In general, routine matters are voted in accordance with management
recommendations. Because the Funds invest almost exclusively in Treasury
Securities, which do not carry voting rights, the Adviser will vote proxies
on
securities held by the Funds only rarely. Further, because the Adviser's
only
clients are investment companies, the Adviser does not expect conflicts between
the interests of the Funds and those of the Adviser to arise frequently.
Information regarding how proxies were voted for the Funds during each 12-month
period ended on June 30 will be available (1) without charge through the
Funds'
website at http://www.ameristock.com and (2) on the Commission's website
at
http://www.sec.gov
.
Portfolio
Holdings Information
The
Trust’s Board of Trustees has adopted a policy regarding the disclosure of the
Funds’ portfolio holdings information that requires that such information be
disclosed in a manner that: (a) is consistent with applicable legal requirements
and in the best interests of each Fund’s respective shareholders; (b) does not
put the interests of the Adviser, the Funds’ distributor (the “Distributor”), or
any affiliated person of the Funds, the Adviser or the Distributor, above those
of Fund shareholders; (c) does not advantage any current or prospective Fund
shareholders over any other current or prospective Fund shareholders, except
to
the extent that certain Entities (as defined below) may receive portfolio
holdings information not available to other current or prospective Fund
shareholders in connection with the dissemination of information necessary
for
transactions in Creation Units, as contemplated by the Ameristock Exemptive
Order (also as defined below); and (d) does not provide selective access to
portfolio holdings information except pursuant to the procedures outlined below
and to the extent appropriate confidentiality arrangements limiting the use
of
such information are in effect. The “Entities” referred to in sub-section (c)
above include National Securities Clearing Corporation (“NSCC”) members and
subscribers to various fee-based subscription services, including those large
institutional investors (known as “Authorized Participants”) that have been
authorized by the Distributor to purchase and redeem Creation Unit aggregations
of Fund shares, and other institutional market participants and entities that
provide information services. The Ameristock Exemptive Order is the exemptive
order granted by the SEC pursuant to which the Funds may offer and redeem their
shares only in Creation Unit aggregations.
Each
business day, Fund portfolio holdings information will be provided to the
Trust's custodian or other agent for dissemination through the facilities
of the
NSCC and/or other fee-based subscription services to NSCC members and/or
subscribers to those other fee-based subscription services, including Authorized
Participants, and to entities that publish and/or analyze such information
in
connection with the process of purchasing or redeeming Creation Units or
trading
shares of Funds in the secondary market. This information typically reflects
each Fund’s anticipated holdings on the following business day. In addition, the
Funds’ holdings will ordinarily be made publicly available on the Fund’s website
on a current basis. (Specifically, a list of the Funds’ holdings as of the prior
Business Day, accompanied by transactions that have taken place on the current
Business Day, will be made available.)
The
Funds’ service providers (and certain of their personnel) that are involved in
portfolio management and in providing administrative, operational, or other
support services (
e.g.
,
the
Adviser and the Trust’s administrator, custodian and distributor) may receive
portfolio holdings information prior to its availability on the Fund’s website
as may be necessary to conduct business in the ordinary course in a manner
consistent with the Ameristock Exemptive Order, the service providers’
agreements with the Funds, and the terms of the Trust’s current registration
statement. From time to time, information concerning Fund portfolio holdings
may
be provided prior to availability on the Fund’s website to broker-dealers
involved in the execution of transactions in securities for the Funds. The
Trust
will provide portfolio holdings information directly to any party other than
those discussed above only if such information is sent so that it will be
received no earlier than the day after the information becomes available on
the
website.
The
Funds’ Chief Compliance Officer must specifically authorize all disclosures of
portfolio holdings information (other than disclosure of updated information
when disclosure of information of a similar nature to the specified recipients
has previously been authorized by the Chief Compliance Officer), and must do
so
pursuant to the above policies and procedures.
The
Funds’ Board of Trustees reviews the policies and procedures for disclosure of
portfolio holdings information at least annually.
Descriptions
of the Underlying Indices
The
Underlying Indices were created by Ronald J. Ryan, are owned by Ryan Holdings
LLC and Ryan ALM, Inc., and are compiled and maintained by Ryan ALM, Inc.
(collectively, "Ryan" or the "Index Provider"). Since 1983, the Index Provider
and its predecessors have calculated and issued indices based on the
"on-the-run" (“OTR”) U.S. Treasury yield curve. The Underlying Indices serve as
the accepted benchmarks of OTR rates. An OTR Treasury Security is the most
recently auctioned Treasury bill, note or bond of a stated
maturity.
Methodology
OTR
Treasury Indices
The
Ryan
OTR indices are the "benchmarks" of benchmarks because the OTR Treasury Security
yield is the base yield for each maturity against which all other Treasury
Securities and most other dollar-denominated fixed income instruments are
evaluated. Other debt instruments are usually traded at a spread to the OTR
Treasury rate. To keep it current, the Ryan 2 Year Treasury Index, for example,
is updated by rolling the OTR position in a two-year note to the new OTR
two-year note at the time of the auction, as described more fully in the
accompanying specifications for the Ryan indices.
Ryan
1 Year Adjusted Treasury Index
Since
May
23, 2001, this Index has been based on (a) the return of the most recently
auctioned 6-Month Treasury bill, weighted two-thirds, and (b) the return of
the
most recently auctioned 2-year Treasury note, weighted one-third. The Index
is
calculated once each day. The original Index was created on December 31, 1988.
The 6-Month Treasury bill is replaced upon each weekly auction of new 6-Month
Treasury bills, and the 2-Year Treasury note is replaced upon each new monthly
auction.
Ryan
2 Year Treasury Index
The
Index
is based on the return of the most recently auctioned 2-year Treasury note.
The
Index is calculated once each day. The Index is available for periods back
to
August 24, 1973. The 2-Year Treasury note is replaced upon each new monthly
auction.
Ryan
5 Year Treasury Index
The
Index
is based on the return of the most recently auctioned 5-year Treasury note.
The
Index is calculated once each day. The Index is available for periods back
to
August 28, 1979. The 5-Year Treasury note is replaced upon each monthly
auction of new 5-Year Treasury notes.
Ryan
10 Year Treasury Index
The
Index
is based on the return of the most recently auctioned 10-year Treasury note.
The
Index is calculated once each day. The Index is available for periods back
to
November 1, 1977. The 10-Year Treasury note is replaced upon each new quarterly
auction.
Ryan
20 Year Treasury Index
The
Index
is based on the return of the most recently auctioned 10-year Treasury note
and
the return of the most recently auctioned 30-year Treasury bond, weighted
equally. The Index is calculated once each day. The Index is available for
periods back to December 31, 1977. The 10-Year Treasury note is replaced upon
each new quarterly auction of such notes, and the 30-Year Treasury bond is
replaced upon each new semi-annual auction.
Except
for the Ryan 1 Year Adjusted Treasury Index, the Indices have been calculated
daily since March 21, 1983; indices for dates prior to March 21, 1983 have
been
constructed from historical databases.
Index
Construction Methods
Single
Maturity OTR Indices (Ryan 6 Month Treasury, Ryan 2 Year Treasury, Ryan 5 Year
Treasury, Ryan 10 Year Treasury, and Ryan 30 Year
Treasury)
1.
|
The
old auction issue at a particular stated maturity (e.g. 2-year note)
is
rolled into the new auction issue on the appropriate auction date
at 3:00
pm Eastern Time for settlement on the new issue's issue
date.
|
2.
|
The
new auction issue (OTR) is purchased at the offer price for settlement
on
its issue date.
|
3.
|
The
old auction issue is sold at the bid price for settlement on the
new
auction issue date (simultaneous
settlement).
|
4.
|
From
auction date to new issue settlement date, the Ryan Indices receive
the
price return of the new OTR auction issue and the income return of
the old
auction issue.
|
5.
|
Each
Ryan Index is priced at the bid side once daily at 3:00 pm ET to
obtain
the daily value most widely published. Intra-day values will be
disseminated every 15 seconds by the AMEX each business
day.
|
6.
|
The
index construction assumes no coupon reinvestment since interest
is paid
semi-annually and all note auctions are either monthly or quarterly.
A
change in the auction schedule may necessitate a change in the treatment
of coupons (i.e., reopenings, longer intervals in the auction
process).
|
Composite
Maturity Indices (Ryan 1 Year Adjusted Treasury and Ryan 20 Year
Treasury)
1.
|
The
Single Maturity Index procedure is followed for each of the 6 Month,
2
Year, 10 Year, and 30 Year
maturities.
|
2.
|
The
1 Year Adjusted Treasury Index is calculated by combining two-thirds
of
the 6 Month return and one-third of the 2 Year return. The 20 Year
Treasury Index is calculated by combining one-half of the 10 Year
return
and one-half of the 30 Year return.
|
Developments
In
the
latter half of the 1990s, the U.S. Treasury changed some previously standard
auction patterns, eliminating some maturities entirely and reducing the auction
frequency of other notes and bonds. At present, the Funds do not expect further
changes in auction patterns to adversely affect the usefulness of the Ryan
Indices selected as benchmarks for the Funds. If further changes in auction
patterns occur, the Trust may modify the benchmarks for the Funds to use an
appropriately weighted average of adjacent benchmark indices.
Investment
Limitations
The
Board has adopted as “fundamental” policies for each Fund the investment
restrictions numbered one through seven below. Fundamental policies cannot
be
changed without the approval of the holders of a majority of that Fund’s
outstanding voting securities. A vote of a majority of the outstanding voting
securities is defined in the 1940 Act as the lesser of (a) 67% or more of the
voting securities present at a fund meeting, if the holders of more than 50%
of
the outstanding voting securities are present or represented by proxy, or (b)
more than 50% of the fund’s outstanding voting securities. The Funds’ investment
objectives and other investment policies are not fundamental policies.
Therefore, each Fund’s investment objective and its Underlying Index may be
changed by the Board of Trustees without a shareholder vote.
No
Fund
will:
1.
|
Concentrate
its investments (
i.e.
,
invest 25% or more of its total assets in the securities of issuers
conducting their principal business activities in a particular industry).
For purposes of this limitation, securities of the U.S. Government
(including its agencies and instrumentalities), repurchase agreements
collateralized by U.S. Government securities, and securities of state
or
municipal governments and their political subdivisions are not considered
to be issued by members of any industry.
|
2.
|
Borrow
money, except that (i) each Fund may borrow from banks for temporary
or
emergency (not leveraging) purposes, including the meeting of redemption
requests which might otherwise require the untimely disposition of
securities, and (ii) each Fund may, to the extent consistent with
its
investment policies, enter into reverse repurchase agreements, forward
roll transactions and similar investment strategies and techniques.
To the
extent that it engages in transactions described in (i) and (ii),
each
Fund will be limited so that no more than 33
1
/3
%
of the value of its total assets (including the amount borrowed)
is
derived from such transactions. Any borrowings which come to exceed
this
amount will be reduced in accordance with applicable law.
|
3.
|
Issue
“senior securities” to the extent such issuance would violate applicable
law.
|
4.
|
Make
loans. This restriction does not apply to: (i) the purchase of debt
obligations in which each Fund may invest consistent with its investment
objectives and policies; (ii) repurchase agreements; and (iii) loans
of
its portfolio securities to the fullest extent permitted by law.
|
5.
|
Purchase
or sell real estate, real estate mortgages, commodities or commodity
contracts, but this restriction shall not prevent each Fund from
purchasing or selling securities or other instruments backed by real
estate or of issuers engaged in real estate activities, nor shall
it
prevent each Fund from trading in futures contracts and options on
futures
contracts.
|
6.
|
Engage
in the business of underwriting securities issued by other persons,
except
to the extent that each Fund may technically be deemed to be an
underwriter under the Securities Act of 1933, as amended (the “Securities
Act”), in disposing of portfolio securities.
|
7.
|
With
respect to 75% of a Fund’s total assets, purchase securities of an issuer
(other than cash, cash items or securities issued or guaranteed by
the
U.S. Government, its agencies, instrumentalities or authorities),
if such
purchase would (a) cause more the 5% of the Fund’s totals assets to be
invested in the securities of such issuer, or (b) result in more
than 10%
of the outstanding voting securities of such issuer being held by
the
Fund.
|
In
addition to the investment restrictions adopted as fundamental policies,
set
forth above, each Fund, as non-fundamental policies, will not invest in the
securities of a company for the purpose of exercising management or control,
and
will not purchase or otherwise acquire any illiquid security except as
permitted under the 1940 Act, which currently permits up to 15% of each Fund’s
net assets to be invested in illiquid securities. Except with regard to
investment limitation two above, if any percentage restriction described
above
is complied with at the time of an investment, a later increase or decrease
in
percentage resulting from a change in values of assets will not constitute
a
violation of such restriction.
The
Adviser will monitor the liquidity of any restricted securities in each
Fund’s portfolio. In reaching liquidity decisions, the Adviser will consider all
relevant factors, including the following:
•
|
|
The
frequency of trades and quotes for the security;
|
•
|
|
The
number of dealers wishing to purchase or sell the security and the
number
of other potential purchasers;
|
•
|
|
Dealer
undertakings to make a market in the security; and
|
•
|
|
The
nature of the security and the nature of the marketplace in which
it
trades (e.g., the time needed to dispose of the security, the method
of
soliciting offers and the mechanics of transfer).
|
Each
Fund
has adopted a non-fundamental investment policy to invest at least 90% of the
value of its total assets in Treasury Securities. In accordance with Rule 35d-1
under the 1940 Act, no Fund will change its policy so that less than 80% of
its
net assets, plus the amount of any borrowings for investment purposes, may
under
normal circumstances be invested in Treasury Securities, unless it provides
its
shareholders with at least 60 days’ prior written notice of any such
change.
Continuous
Offering
The
method by which Creation Unit Aggregations of shares are created and traded
may
raise certain issues under applicable securities laws. Because new Creation
Unit
Aggregations of shares are issued and sold by the Funds on an ongoing basis,
at
any point a “distribution,” as such term is used in the Securities Act, may
occur. Broker-dealers and other persons are cautioned that some activities
on
their part may, depending on the circumstances, result in their being deemed
participants in a distribution in a manner which could render them statutory
underwriters and subject them to the prospectus delivery requirement and
liability provisions of the Securities Act.
For
example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Unit Aggregations after placing an order with
the Distributor, breaks them down into constituent shares, and sells such shares
directly to customers, or if it chooses to couple the creation of a supply
of
new shares with an active selling effort involving solicitation of secondary
market demand for shares. A determination of whether one is an underwriter
for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker-dealer or its client
in
the particular case, and the examples mentioned above should not be considered
a
complete description of all the activities that could lead to a categorization
as an underwriter.
Broker-dealer
firms should also note that dealers who are not “underwriters” but are effecting
transactions in Fund shares, whether or not participating in the distribution
of
such shares, are generally required to deliver a prospectus. This is because
the
prospectus delivery exemption in Section 4(3) of the Securities Act is not
available in respect of such transactions as a result of Section 24(d) of the
1940 Act. The Trust, on behalf of each Fund, however, has received from the
SEC
an exemption from the prospectus delivery requirement in ordinary secondary
market transactions under certain circumstances, on the condition that
purchasers are provided with a product description of the relevant Fund and
its shares. As a result, broker-dealer firms should note that dealers who are
not underwriters but are participating in a distribution (as contrasted with
ordinary secondary market transactions) and thus dealing with Fund shares that
are part of an overallotment within the meaning of Section 4(3)(a) under the
Securities Act would be unable to take advantage of the prospectus delivery
exemption provided by Section 4(3) of the Securities Act. Firms that incur
a
prospectus delivery obligation with respect to shares are reminded that,
pursuant to Rule 153 under the Securities Act, a prospectus delivery obligation
under Section 5(b)(2) of the Securities Act owed to an exchange member in
connection with a sale on the AMEX is satisfied by the fact that the prospectus
is available at the AMEX upon request. The prospectus delivery mechanism
provided in Rule 153 is only available with respect to transactions on an
exchange.
Management
Trustees
and Officers.
The
Board of Trustees has responsibility for the overall management and operations
of the Funds, including general supervision of the duties performed by the
Adviser and other service providers. Each Trustee serves until his or her
successor is duly elected or appointed and qualified. Trustees who are not
deemed to be “interested persons” of the Trust as defined in the Investment
Company Act of 1940 (the “1940 Act”) are referred to as “independent
trustees.” Trustees who are deemed to be interested persons of the Trust
as defined in the 1940 Act are referred to as “interested trustees.” Prior to
the commencement of the Funds’ operations on June 28, 2007, the Board of
Trustees held two Board of Trustee meetings, each of which was attended by
at
least 75% of the currently serving Trustee.
Name,
Address, and Age(1)
|
|
Position(s)
Held
with
the
Trust
|
|
Length
of
Time
Served(2)
|
|
Principal
Occupation(s)
During
Past 5 Years
|
|
Number
of
Funds
in
Fund
Complex
Overseen
by
Trustee(3)
|
|
Other
Directorships
Held
by
Trustee(4)
|
|
|
|
|
|
|
|
|
|
|
|
INDEPENDENT
TRUSTEES
|
Alev
Efendioglu, PhD. (65)
|
|
Trustee
|
|
Since
2007
|
|
Professor
of Management, School of Business and Management, University of
San
Francisco (1977-Present).
|
|
6
|
|
0
|
Stephen
J. Marsh (54)
|
|
Chairman
of the Board of Trustees
|
|
Since
2007
|
|
President,
Bridgeway Cellars, Inc. (winery) (2003-Present). Senior Vice President,
FMV Opinions, Inc. (appraisal firm) (1998-2003).
|
|
6
|
|
0
|
Steven
A. Wood (59)
|
|
Trustee
|
|
Since
2007
|
|
President
and Chief Economist, Insight Economics, LLC (economic consulting
firm)
(2003-Present). Chief Economist, Financial Oxygen (capital markets
technology company) (2001-2003).
|
|
6
|
|
0
|
INTERESTED
TRUSTEES AND OFFICERS
|
Nicholas
D. Gerber (45)(5)
|
|
Trustee,
President, Treasurer and Chief Legal Officer
|
|
Trustee
since 2006; other offices since 2007
|
|
President,
Director and Portfolio Manager of the Adviser (1995-Present); President
and Director, Wainwright Holdings, Inc. (“Wainwright”) (financial
services holding company) (2004-Present); Chief Investment Officer
and
Director, Lyons Gate Reinsurance Ltd. (“Lyons Gate”) (2004-Present);
President, Chief Executive Officer, Chairman, Management Director
and
Portfolio Manager, Victoria Bay Asset Management, LLC (“Victoria
Bay”) (commodities pool operator) (2005-Present).
|
|
6
|
|
0
|
Andrew
F. Ngim (47)(5)
|
|
Trustee
|
|
Since
2007
|
|
Director
and Portfolio Manager of the Adviser (1995-Present);Managing Director
of
the Adviser (1999-Present); Director of Wainwright (2004-Present);
Treasurer and Management Director, Victoria Bay
(2006-Present).
|
|
6
|
|
0
|
Howard
Mah (43)
|
|
Secretary
and Chief Compliance Officer
|
|
Since
2007
|
|
Director
of the Adviser (1995-Present); Chief Compliance Officer of the
Adviser
(2000-Present); Chief Compliance Officer of Ameristock Mutual Fund,
Inc.
(2004-Present); Director of Wainwright (2004-Present); Director
of Lyons
Gate (2004-Present); Secretary, Chief Compliance Officer, Chief
Financial
Officer and Management Director of Victoria Bay (2005-Present);
tax and
financial consultant in private practice (1995-Present).
|
|
N/A
|
|
N/A
|
(1)
|
Each
Trustee or officer may be contacted by writing to the Trustee
or officer,
c/o Ameristock ETF Trust, 1320 Harbor Bay Parkway, Suite 145,
Alameda, CA 94502.
|
(2)
|
Each
Trustee holds office for an indefinite term until the earlier
of
(i) the election of his successor or (ii) the date the Trustee
dies, resigns or is removed.
|
(3)
|
The
Fund Complex includes funds with a common investment adviser or
an adviser
which is an affiliated person. The Fund Complex consists of the
Trust and Ameristock Mutual Fund, Inc.
|
(4)
|
Directorships
of companies required to report to SEC under the Securities Exchange
Act
of 1934 (i.e., “public companies”) or other investment companies
registered under the 1940 Act (other than funds in the Fund
Complex).
|
(5)
|
Nicholas
D. Gerber and Andrew Ngim are “interested persons” by reason of their
positions with the Adviser.
|
Compensation
of the Trustees.
The
Trustees of the Trust who are employees or directors of the Adviser receive
no
compensation from the Trust. Each of the independent trustees is paid
$10,000 per year for his services to the Trust, with an additional $5,000
paid
to the Chairman of the Board of Trustees, and is reimbursed for the expenses
of
attending Board meetings and for certain educational expenses. The
following table sets forth the estimated compensation to be paid by the
Trust
projected through the end of the Trust’s first full fiscal year, ending June 30,
2008. The Fund complex consists of the Trust and Ameristock Mutual Funds,
Inc.
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
Aggregate
|
|
Pension
or
|
|
Estimated
|
|
From
Trust and
|
|
|
|
Compensation
From
|
|
Retirement
|
|
Annual
Benefits
|
|
Fund
Complex
|
|
Trustee
|
|
the
Trust
|
|
Benefits
|
|
upon
Retirement
|
|
Paid
to Trustee
|
|
|
|
|
|
|
|
|
|
|
|
Alev
Efendioglu, PhD.
|
|
$
|
10,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
38,000
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
J. Marsh
|
10,000
|
$
|
15,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
43,000
|
|
|
|
|
|
|
|
|
|
|
|
Steven
A. Wood
|
|
$
|
10,000
|
|
$
|
0
|
|
$
|
0
|
|
$
|
38,000
|
|
Share
Ownership.
The
following table sets forth the dollar range of shares beneficially owned
by each
Trustee as of December 31, 2006:
Director
|
|
Dollar
Range of Equity Securities
in
the Trust
|
|
Aggregate
Dollar Range of Equity
Securities
in All Registered
Investment
Companies overseen
by
Trustee in Family of
Investment
Companies
|
|
Alev
Efendioglu, PhD.
|
|
$0
|
|
$10,001
- $50,000
|
|
Nicholas
D. Gerber
|
|
$0
|
|
Over
$100,000
|
|
Stephen
J. Marsh
|
|
$0
|
|
Over
$100,000
|
|
Andrew
Ngim
|
f
|
$0
|
|
Over
$100,000
|
|
Steven
A. Wood
|
|
$0
|
|
$10,001
- $50,000
|
|
Trustees
and officers of the Trust collectively owned, as of September 30, 2007, 5.44%
of
the outstanding shares of Ameristock/Ryan 1 Year Treasury ETF, 5.67% of the
outstanding shares of Ameristock/Ryan 2 Year Treasury ETF, 4.40% of the
outstanding shares of Ameristock/Ryan 5 Year Treasury ETF, 4.34% of the
outstanding shares of Ameristock/Ryan 10 Year ETF, and 4.73% of the outstanding
shares of Ameristock/Ryan 20 Year Treasury ETF.
Audit
Committee of the Board of Trustees.
Each
independent trustee serves on the Audit Committee of the Board of Trustees.
The
purposes of the Audit Committee are to assist the Board of Trustees (1) its
oversight of the Trust’s accounting and financial reporting principles and
policies and related controls and procedures maintained by or on behalf of
the
Trust; (2) its oversight of the Trust’s financial statements and the independent
audit thereof; (3) selecting, evaluating and, where deemed appropriate,
replacing the independent accountants (or nominating the independent accountants
to be proposed for shareholder approval in any proxy statement); and (4)
evaluating the independence of the independent accountants. During the fiscal
period ended June 30, 2007, the Audit Committee held one meeting.
Control
Persons and Principal Holders of Securities.
Although
the Trust does not have information concerning the beneficial ownership of
shares held in the names of DTC Participants (“DTC Participants”), as of
September 30, 2007, the name and percentage ownership of each DTC Participant
that owned of record 5% or more of a Fund’s outstanding shares, is set forth in
the table below:
Name
of Fund
|
Name
and Address of Record and Beneficial Owner
|
Percent
of Outstanding Shares Owned
|
Ameristock/Ryan
1 Year Treasury ETF
|
Merrill
Lynch
222
Broadway, 6th Floor, New York, NY 10038
|
99.6%
|
Ameristock/Ryan
2 Year Treasury ETF
|
Merrill
Lynch
222
Broadway, 6th Floor, New York, NY 10038
|
99.6%
|
Ameristock/Ryan
5 Year Treasury ETF
|
Merrill
Lynch
222
Broadway, 6th Floor, New York, NY 10038
|
99.6%
|
Ameristock/Ryan
10 Year Treasury ETF
|
Merrill
Lynch
222
Broadway, 6th Floor, New York, NY 10038
|
99.6%
|
Ameristock/Ryan
20 Year Treasury ETF
|
Merrill
Lynch
222
Broadway, 6th Floor, New York, NY 10038
|
99.6%
|
Investment
Adviser.
Ameristock Corporation, 1320 Harbor Bay Parkway, Suite 145, Alameda,
California 94502 (the “Adviser”), serves as investment adviser to each Fund
pursuant to an Investment Advisory Agreement between the Trust and the Adviser.
The Adviser is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended (the “Advisers Act”). The Adviser is a wholly-owned
subsidiary of Wainwright. Nicholas D. Gerber, President of the Adviser,
controls Wainwright by virtue of his ownership of Wainwright’s shares.
Wainwright is a holding company that, in addition to owning the Adviser,
owns an
insurance company organized under Bermuda law and a single member limited
liability company formed in the State of Delaware for the purpose of being
a
commodity pool operator.
Under
the
Investment Advisory Agreement, the Adviser, subject to the supervision of the
Board of Trustees and in conformity with the stated investment policies of
each
Fund, manages and administers the Trust and the investment of each Fund’s
assets. The Adviser is responsible for placing purchase and sale orders and
providing continuous supervision of the investment portfolio of each Fund.
Under
the
Investment Advisory Agreement, the Adviser is responsible for all expenses
of
the Trust, including the cost of transfer agency, custody, fund administration,
legal, audit and other services, except independent trustee compensation and
related expenses, interest, taxes, any brokerage commissions and other expenses
connected with the execution of portfolio transactions, any distribution or
Rule
12b-1 fees that may be instituted, and extraordinary expenses. For its
investment management services to each Fund, the Adviser is paid a management
fee, accrued daily and payable monthly, at an annual rate of 0.15% of each
Fund’s average net assets.
The
Adviser has agreed to waive its management fee and/or make payments to limit
the
Funds’ expenses in the amount of any independent trustee fees and expenses
otherwise payable by the Funds until at least June 30, 2008.
The
Following table provides the actual aggregate advisory fee paid by each Fund
during the fiscal period from June 28, 2007 (commencement of operations)
to June
30, 2007:
Name
of Fund
|
|
Advisory
Fee
|
|
Ameristock/Ryan
1 Year Treasury ETF
|
|
$
|
20
|
|
Ameristock/Ryan
2 Year Treasury ETF
|
|
|
20
|
|
Ameristock/Ryan
5 Year Treasury ETF
|
|
|
20
|
|
Ameristock/Ryan
10 Year Treasury ETF
|
|
|
20
|
|
Ameristock/Ryan
20 Year Treasury ETF
|
|
|
20
|
|
|
|
|
|
|
The
Investment Advisory Agreement with respect to each Fund will continue in effect
until June 30, 2008, and thereafter is subject to annual approval by (i) the
Board or (ii) the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, provided that in either event such
continuance also is approved by a majority of the independent trustees by a
vote
cast in person at a meeting called for the purpose of voting on such approval.
The
Investment Advisory Agreement with respect to each Fund is terminable without
penalty, on 60 days' notice, by the Board or by a vote of the holders of a
majority (as defined in the 1940 Act) of the applicable Fund’s outstanding
voting securities. The Investment Advisory Agreement is also terminable upon
60
days' notice by the Adviser and will terminate automatically in the event of
its
assignment (as defined in the 1940 Act).
Portfolio
Managers.
Messrs. Nicholas D. Gerber, Andrew F. Ngim and Andrew Petker (the
“Portfolio Managers”) serve as the portfolio managers for the Funds. The
tables below provide information on other accounts the day-to-day management
of
which the Portfolio Managers have responsibility for as of June 30, 2007. The
advisory fees for the accounts are not based on the performance of the accounts.
Types
of Accounts
___________
|
|
Number
|
|
Total
Assets
|
Registered
Investment Companies
|
|
1
|
|
$523,228,125
|
Other
Pooled Investment Vehicles
|
|
2
|
|
$736,304,390
|
Other
Accounts
|
|
0
|
|
--
|
Types
of Accounts
|
|
Number
|
|
Total
Assets
|
Registered
Investment Companies
|
|
1
|
|
$523,228,125
|
Other
Pooled Investment Vehicles
|
|
0
|
|
--
|
Other
Accounts
|
|
0
|
|
--
|
Mr.
Petker
|
|
|
|
|
|
Types
of Accounts
|
|
Number
|
|
Total
Assets
|
Registered
Investment Companies
|
|
0
|
|
--
|
Other
Pooled Investment Vehicles
|
|
0
|
|
--
|
Other
Accounts
|
|
0
|
|
--
|
The
Portfolio Managers receive compensation from the Adviser in the form of salary
and ordinary employee benefits, and do not receive bonuses or other compensation
based on the performance of any specific account or the value of the assets
held
by the Funds. However, Messrs. Gerber and Ngim are likely to benefit indirectly
from favorable Fund performance and growth in Fund assets as shareholders
of
Wainwright, the Adviser’s parent company, to the extent that favorable Fund
performance and growth in Fund assets may result in an increase in the value
of
Wainwright and its shares. As of June 30, 2007, the Portfolio Managers owned
shares of the Funds as follows:
Fund
and Portfolio Managers
|
Dollar
Range of Investment in
Each
Fund
1
|
|
|
Ameristock/Ryan
1 Year Treasury ETF
Nicholas
D. Gerber
Andrew
Ngim
Andrew
Petker
|
$10,001-$50,000
None
None
|
Ameristock/Ryan
2 Year Treasury ETF
Nicholas
D. Gerber
Andrew
Ngim
Andrew
Petker
|
$10,001-$50,000
None
None
|
Ameristock/Ryan
5 Year Treasury ETF
Nicholas
D. Gerber
Andrew
Ngim
Andrew
Petker
|
$10,001-$50,000
None
None
|
Ameristock/Ryan
10 Year Treasury ETF
Nicholas
D. Gerber
Andrew
Ngim
Andrew
Petker
|
$10,001-$50,000
None
None
|
Ameristock/Ryan
20 Year Treasury ETF
Nicholas
D. Gerber
Andrew
Ngim
Andrew
Petker
|
$10,001-$50,000
None
None
|
1
This column reflects investments in a Fund’s shares beneficially owned directly
or indirectly (as determined in accordance with Rule 16a-1(a)(2) under
the
Securities Exchange Act of 1934). Public trading of the Funds had not
commenced
as of June 30, 2007. Mr. Gerber owned shares indirectly as a controlling
person
of Lyons Gate, an affiliate of the Adviser that was the initial shareholder
of
the Funds.
Portfolio
Manager Conflicts of Interest.
In certain instances, a particular security or instrument may be
appropriate for investment by more than one Fund, or for a Fund and another
account managed by the Adviser. The Adviser has adopted procedures to help
ensure that each Fund and account is treated equitably in such instances,
including that each Fund and account pay or receive the average price paid
or
received for such securities or instruments, and that each Fund and account
receive an equitable allocation of any securities or instruments. For more
information, see "Portfolio Transactions" below. In addition, the various
Funds and accounts will also compete for the time and attention of the portfolio
managers, who will endeavor to devote the appropriate amount of time and
attention to each Fund and account.
Code
of Ethics.
The
Trust, the Adviser and the Distributor each have adopted a Code of Ethics
pursuant to Rule 17j-1 under the 1940 Act. The Codes of Ethics of the Trust
and
Adviser permit personnel subject to the Codes of Ethics to invest in securities,
including securities that may be purchased or held by the Funds, except that
(i) “access persons” of the Funds or Adviser may not purchase or sell any
security on a day during which, to the person’s knowledge, a Fund has a pending
“buy” or “sell” order in that same security until that order is executed or
withdrawn and (ii) no portfolio manager of a Fund may buy or sell a
security within at least seven calendar days before or after that Fund trades
in
that security. The Code of Ethics of the Distributor permits personnel
subject to such Code to invest in securities that may be purchased or held
by
the Fund, except that any such person may not purchase or sell any security
which he or she knows or should have known at the time of purchase or sale
is
being considered for purchase or sale by a Fund or is being purchased or sold
by
a Fund.
Administrator,
Custodian and Transfer Agent.
Brown Brothers Harriman & Co. (“BBH”)
serves as administrator, custodian and transfer agent for the Funds. Its
principal address is 40 Water Street, Boston, Massachusetts 02109. Under
the
Administration Agreement with the Trust, BBH will perform certain administrative
and accounting services for the Funds and will prepare certain SEC reports
on
behalf of the Trust and the Funds. In addition, BBH makes available the office
space, equipment, personnel and facilities required to provide such services.
Under the Custodian Agreement with the Trust, BBH maintains in separate accounts
cash, securities and other assets of each Fund, keeps all necessary accounts
and
records, and provides other services. BBH is required, upon the order of
the
Trust, to deliver securities held by BBH and to make payments for securities
purchased by the Trust for each Fund. Pursuant to the Administration Agreement,
BBH acts as a transfer agent for each Fund’s authorized and issued shares of
beneficial interest, and as dividend disbursing agent of the Trust. As
compensation for the foregoing services, BBH receives certain out-of-pocket
costs, transaction fees, and asset-based fees which are accrued daily and
paid
monthly by the Adviser out of its management fee.
Distributor.
ALPS
Distributors, Inc. (the “Distributor”) is the distributor of shares of the
Trust. Its principal address is 1290 Broadway, Suite 1100, Denver, CO 80203.The
Distributor has entered into a Distribution Agreement with the Trust pursuant
to
which it distributes shares of each Fund. The Distribution Agreement will
continue for two years from its effective date and is renewable annually
thereafter. Shares are continuously offered for sale by the Funds through the
Distributor only in Creation Unit Aggregations, as described in the Prospectus
and below in the Creation and Redemption of Creation Units Aggregations section.
Shares in less than Creation Unit Aggregations are not distributed by the
Distributor. The Distributor will deliver the relevant Prospectus and, upon
request, the Statement of Additional Information to persons purchasing Creation
Unit Aggregations 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 Exchange Act and a member of the National Association
of
Securities Dealers, Inc.
The
Distribution Agreement for the Funds may be terminated as to any Fund at any
time, without the payment of any penalty, on at least 60-days’ prior written
notice to the other party (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 relevant Fund. The Distribution Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
The
Adviser 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.
Index
Providers.
Each
Fund
is based upon a particular fixed-income market index created by Ryan. Ryan
is
not affiliated with the Trust or with the Adviser or its affiliates. The Indexes
are the exclusive property of Ryan, who has licensed the use of certain
trademarks, service marks and trade names of Ryan and the Indices for use by
the
Adviser, which in turn has entered into a sub-licensing agreement with the
Trust
permitting the Funds to use such marks and names. The Adviser provides the
sub-license without charge to the Funds.
Portfolio
Transactions
Many,
and
possibly most, acquisitions and dispositions of portfolio securities by the
Funds will be effected with Authorized Participants in connection with “in-kind”
creations and redemptions of Creation Unit Aggregations of Shares. Portfolio
transactions with persons in the securities markets at large (i.e., other than
those creating or redeeming Creation Unit Aggregations) are expected to
represent only a portion of portfolio transactions.
The
Adviser is responsible for decisions to buy and sell securities for the Funds,
for the allocation of transactions among various dealer firms, and for the
negotiation of the prices to be paid in those transactions. Portfolio securities
will normally be purchased directly from an issuer or in the over-the-counter
market from the principal dealers in such securities, unless it appears that
a
better price or execution may be obtained elsewhere. Portfolio securities will
not be purchased from the Adviser or its affiliates. The Adviser expects that
most portfolio transactions will be effected on a principal (as opposed to
an
agency) basis and, accordingly, does not expect that the Funds will pay many
brokerage commissions. In principal transactions, dealers are compensated from
the spread between the bid and asked price.
The
Adviser does not normally consider research services provided by dealers as
a
factor in the selection of dealers, although the Adviser may receive such
research services from time to time. While the Adviser will be primarily
responsible for the placement of the portfolio transactions of the Funds with
various dealers, the policies and practices of the Adviser in this regard must
be consistent with the foregoing and will, at all times, be subject to review
by
the Board of Trustees.
The
Adviser reserves the right to manage other investment companies and other
investment accounts for other clients (and does currently manage another
investment company), which may at times invest in the same or similar securities
to those invested in by the Funds. Subject to applicable laws and regulations,
the Adviser will attempt to allocate equitably portfolio transactions among
the
Funds and the portfolios of its other clients purchasing or selling securities
whenever decisions are made to purchase or sell securities for more than
one
Fund or other client simultaneously. In making such allocations the main
factors
to be considered will be the respective investment objectives of the Funds
or other clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Funds
or
other clients, the size of investment commitments generally held by the Funds
or other clients and opinions of the persons responsible for recommending
investments to the Funds or other clients. This procedure could have a
detrimental effect on the price or amount of the securities available to
a Fund
from time to time. However, in other cases, it is possible that the ability
to
participate in volume transactions and to negotiate lower transaction costs
will
be beneficial to the Funds.
The
portfolio turnover rate for each Fund will vary with changes in Treasury auction
frequency, market conditions and other factors. While each Fund's Underlying
Index will turn over completely with every auction (except, in the case of
the
Ryan Adjusted 1 Year Treasury Index and the Ryan 20 Year Treasury Index, which
will turn over completely over the period between auctions of the
less-frequently auctioned security in the Index), the Adviser expects each
Fund's portfolio turnover rate will be significantly less than that of its
Underlying Index. In any event, under normal circumstances, the Adviser
anticipates that the tax consequences of portfolio turnover can be
minimized by the use of in-kind redemptions, although, as noted below under
“Taxes,” in-kind redemptions generally will result in a taxable gain or loss for
the redeeming shareholder.
Additional
Information Concerning the Trust
Shares.
The
Trust currently is comprised of a number of separate investment portfolios
called “Funds.” Each Fund issues shares of beneficial interest, with $0.001
par value. The Board may designate additional Funds in the future. The Trust
is
currently registered with the SEC as an open-end management investment company.
Each
share issued by a Fund has a pro rata interest in the assets of that Fund.
Shares have no preemptive, exchange, subscription or conversion rights and
are
freely transferable. Each share is entitled to participate equally in dividends
and distributions declared by the Board with respect to the relevant Fund,
and
in the net distributable assets of such Fund on liquidation.
Each
share has one vote with respect to matters upon which a shareholder vote is
required consistent with the requirements of the 1940 Act and the rules
promulgated thereunder. On any matter submitted to a vote of the Shareholders,
all Shares shall be voted separately by individual Fund, except: (i) when
required by the 1940 Act, Shares shall be voted in the aggregate and not by
individual Fund; or (ii) when the Trustees have determined that the matter
affects the interests of more than one Fund, then the Shareholders of all such
Funds shall be entitled to vote thereon.
Under
Delaware law, the Trust is not required to hold an annual meeting of
shareholders unless required to do so under the 1940 Act. The policy of the
Trust is not to hold an annual meeting of shareholders unless required to do
so.
All shares (regardless of the Fund) have noncumulative voting rights for the
Board. Under the Trust’s Declaration of Trust, Trustees of the Trust may be
removed by the affirmative vote of the shareholders holding not less than
two-thirds (2/3) of the outstanding shares of the Trust, cast at any meeting
called for that purpose..
Following
the creation of the initial Creation Unit Aggregation(s) of shares of a Fund,
a
purchaser of the Creation Unit Aggregation(s) may be a “control person” of the
Fund, as defined in the 1940 Act. A Fund cannot predict the length of time
for
which one or more shareholders may remain a control person of the Fund.
Shareholders
may make inquiries by writing to the Trust at Ameristock ETF Trust, 1320
Harbor
Bay Parkway, Suite 145, Alameda, CA 94502.
Absent
an
applicable exemption or other relief from the SEC or its staff, beneficial
owners of more than 5% of the shares of a Fund may be subject to the reporting
provisions of section 13 of the Exchange Act and the SEC’s rules promulgated
thereunder. In addition, absent an applicable exemption or other relief from
the
SEC or its staff, officers and Trustees of the Funds and beneficial owners
of
10% of the shares of a Fund (“Insiders”) may be subject to the insider
reporting, short-swing profit and short sale provisions of Section 16 of the
Exchange Act and the SEC’s rules promulgated thereunder. Beneficial owners and
insiders should consult with their own legal counsel concerning their
obligations under Sections 13 and 16 of the Exchange Act.
Termination
of the Trust or a Fund.
The
Trust or a Fund may be terminated by a majority vote of the Board, subject
in
certain circumstances to the affirmative vote of the holders of the Trust or
such Fund entitled to vote on termination. Although the shares are not
automatically redeemable upon the occurrence of any specific event, the Trust’s
organizational documents provide that the Board will have the unrestricted
power
to alter the number of shares in a Creation Unit Aggregation. In the event
of a
termination of the Trust or a Fund, the Board, in its sole discretion, could
determine to permit the shares to be redeemable in aggregations smaller than
Creation Unit Aggregations or to be individually redeemable. In such
circumstance, the Trust may make redemptions in-kind, for cash, or for a
combination of cash or securities.
DTC
Acts as Securities Depository for the Shares of the Trust.
Shares
of each Fund are represented by securities registered in the name of DTC or
its
nominee and deposited with, or on behalf of, DTC.
DTC,
a
limited-purpose trust company, was created to hold securities of its
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 AMEX and the National Association of Securities
Dealers. 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 of shares.
Conveyance
of all notices, statements and other communications to Beneficial Owners is
effected as follows. Pursuant to the Depositary Agreement between the Trust
and
DTC, 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 each 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,
the
Adviser or an affiliate shall pay to each such DTC Participant a fair and
reasonable amount as reimbursement for the expenses attendant to such
transmittal, all subject to applicable statutory and regulatory requirements.
Distributions
on Fund shares shall be made to DTC or its nominee, Cede & Co., as the
registered holder of all shares of the Trust. DTC or its nominee, upon receipt
of any such distributions, shall credit immediately DTC Participants’ accounts
with payments in amounts proportionate to their respective beneficial interests
in shares of each 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 distributions 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 of the Trust
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.
Creation
and Redemption of Creation Unit Aggregations
Creation.
The
Trust issues and sells shares of each Fund only in Creation Unit Aggregations
on
a continuous basis through the Distributor, without a sales load, at the NAV
next determined after receipt, on any Business Day (as defined below), of an
order in proper form.
A
“Business Day” is defined as any day that (i) the Government Securities markets
in the United States, (ii) the Funds’ custodian (BBH) and (iii) the NYSE and the
AMEX are open for business. The term Business Day, therefore, does
not
include
certain federal holidays when banks and the Government Securities market are
closed but national securities exchanges are open, currently Columbus Day and
Veterans Day. In addition, as of the date of this SAI, NYSE and AMEX, as well
as
banks and the Government Securities markets, observe the following holidays:
New
Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Fund
Deposit.
The
consideration for purchase of Creation Unit Aggregations of a Fund generally
consists of the in-kind deposit of a designated portfolio of securities (the
“Deposit Securities”) and an amount of cash (the “Cash Component”) computed as
described below. The Deposit Securities will consist of a portfolio of
particular securities determined and designated by the Adviser in an attempt,
consistent with the particular Fund’s investment objective, to generate
investment results for the Fund that, before fees and expenses, correspond
generally to the price and yield performance of the relevant Underlying Index.
Together, the Deposit Securities and the Cash Component constitute the “Fund
Deposit,” which represents the minimum initial and subsequent investment amount
for a Creation Unit Aggregation of any Fund.
The
Cash
Component is sometimes also referred to as the Balancing Amount. The Cash
Component is equal to, and its function is to compensate for, any difference
between the NAV per Creation Unit Aggregation and the market value of the
Deposit Securities (the “Deposit Amount”). If the Cash Component is a positive
number (
i.e.
,
the NAV
per Creation Unit Aggregation exceeds the Deposit Amount), the creator will
deliver the Cash Component. If the Cash Component is a negative number
(
i.e.
,
the NAV
per Creation Unit Aggregation is less than the Deposit Amount), the creator
will
receive the Cash Component.
BBH,
through the National Securities Clearing Corporation (“NSCC”), makes available
on each Business Day, prior to the opening of business on the AMEX (currently
9:30 a.m., Eastern time), the list of the name and the required number and
maturity of each Deposit Security to be included in the current Fund Deposit
(based on information at the end of the previous Business Day) for each Fund.
Such
Deposit Securities are applicable, subject to any adjustments as described
below, in order to effect creations of Creation Unit Aggregations of a given
Fund until such time as the next-announced composition of the Deposit Securities
is made available.
The
identity, number and/or maturity of the Deposit Securities required for a Fund
Deposit for each Fund changes as rebalancing adjustments and interest payments
on underlying bonds are reflected from time to time by the Adviser. In addition,
the Trust reserves the right to permit or require the substitution an amount
of
cash (
i.e.
,
a “cash
in lieu” amount) to be added to the Cash Component to replace any Deposit
Security that may not be available in sufficient quantity for delivery or that
may not be eligible for transfer through the Federal Reserve System. The Trust
also reserves the right to permit or require a “cash in lieu” amount where the
delivery of the Deposit Security by the Authorized Participant (as defined
below) would be restricted under the securities laws or where the delivery
of
the Deposit Security to the Authorized Participant would result in the
disposition of the Deposit Security by the Authorized Participant being
restricted under the securities laws, or in certain other situations. The
adjustments described above will reflect changes in the composition of the
Fund’s Underlying Index known to the Adviser on the date of announcement to be
in effect by the time of delivery of the Fund Deposit.
Procedures
for Creation of Creation Unit Aggregations.
To be
eligible to place orders with the Distributor and to create a Creation Unit
Aggregation of a Fund, an entity must be a DTC Participant and must have
executed an agreement with the Distributor with respect to creations and
redemptions of Creation Unit Aggregations (a “Participant Agreement”). A DTC
Participant who has executed a Participant Agreement that has been delivered
to
the Fund and accepted by the Distributor is referred to as an “Authorized
Participant.” Investors should contact the Distributor for the names of
Authorized Participants. All shares of a Fund, however created, will be entered
on the records of DTC in the name of Cede & Co. for the account of a DTC
Participant.
Except
as
described below, all orders to create Creation Unit Aggregations of a Fund
must
be received in proper form by the Distributor no later than the closing time
of
the regular trading in the government securities markets in the U.S. (“Closing
Time”) (ordinarily 3:00 p.m., Eastern time) on the date such order is placed in
order for the creation of Creation Unit Aggregations to be effected based on
the
NAV of shares of the Fund determined at the Closing Time on such date. Orders
requesting substitution of a “cash-in-lieu” amount generally must be received by
the Distributor no later than 2:00 p.m. Eastern time to enable the order to
be
effected at the NAV determined at the Closing Time. On days when the government
securities markets close earlier than normal, the Funds may require orders
to
create Creation Unit Aggregations to be placed earlier in the day. The date
on
which an order to create Creation Unit Aggregations (or an order to redeem
Creation Unit Aggregations, as discussed below) is placed is referred to as
the
“Transmittal Date.” Orders must be transmitted by an Authorized Participant by
telephone or other transmission method acceptable to the Distributor pursuant
to
procedures set forth in the Participant Agreement. Economic or market
disruptions or changes, or telephone or other communication failure may impede
the ability to reach the Distributor or an Authorized Participant.
All
orders to create Creation Unit Aggregations on behalf of an investor shall
be
placed with an Authorized Participant, as applicable, in the form required
by
such Authorized Participant. In addition, the Authorized Participant may request
the investor to make certain representations or enter into agreements with
respect to the order (
e.g.
,
to
provide for payments of cash, when required). Investors should be aware that
their particular broker may not have executed a Participant Agreement and that,
therefore, orders to create Creation Unit Aggregations of a Fund have to be
placed by the investor’s broker through an Authorized Participant that has
executed a Participant Agreement. In such cases there may be additional charges
to such investor. At any given time, there may be only a limited number of
broker-dealers that have executed a Participant Agreement.
Placement
of Creation Orders for the Funds.
Fund
Deposits must be delivered through the Federal Reserve System by an Authorized
Participant. The Fund Deposit transfer must be ordered by the DTC Participant
in
a timely fashion so as to ensure the delivery of the requisite number of Deposit
Securities through DTC to the account of the Fund by no later than 1:00 p.m.,
Eastern time, on the Settlement Date. The “Settlement Date” for all Funds is
generally the first Business Day after the Transmittal Date. All questions
as to
the number of Deposit Securities to be delivered, and the validity, form and
eligibility (including time of receipt) for the deposit of any tendered
securities, will be determined by the Trust, whose determination shall be final
and binding. The amount of cash equal to the Cash Component must be transferred
directly to the Custodian through the Federal Reserve Bank wire transfer system
in a timely manner so as to be received by the Custodian no later than 2:00
p.m., Eastern time, on the Settlement Date. If the Cash Component and the
Deposit Securities are not received by 2:00 p.m. and 1:00 p.m., respectively,
the creation order may be cancelled. Upon written notice to the Distributor,
such canceled order may be resubmitted the following Business Day using a Fund
Deposit as newly constituted to reflect the then current NAV of the Fund. The
delivery of Creation Unit Aggregations so created generally will occur no later
than the Settlement Date. Persons creating Creation Unit Aggregations should
observe that this settlement timing differs from the settlement timing used
for
most other open-end exchange-traded funds, and from the settlement timing of
transactions in the Funds in the secondary market.
Creation
Unit Aggregations of the Funds may be created in advance of receipt by the
Trust
of all or a portion of the applicable Deposit Securities as described below.
In
these circumstances, in addition to available Deposit Securities, cash must
be
deposited in an amount equal to the sum of (i) the Cash Component, plus (ii)
at
least 105% of the market value of the undelivered Deposit Securities (the
“Additional Cash Deposit”). The order shall be deemed to be received on the
Transmittal Date provided that the order is placed in proper form prior to
the
applicable cut-off time and the federal funds in the appropriate amount are
deposited with the Custodian by 1:00 p.m., Eastern time, on the Settlement
Date.
If the order is not placed in proper form as required, or federal funds in
the
appropriate amount are not received by 1:00 p.m. on the Settlement Date, then
the order may be deemed to be rejected and the Authorized Participant shall
be
liable to each Fund for losses, if any, resulting therefrom. An additional
amount of cash shall be required to be deposited with the Trust, pending
delivery of the missing Deposit Securities to the extent necessary to maintain
the Additional Cash Deposit with the Trust in an amount at least equal to 105%
of the daily marked to market value of the missing Deposit Securities. The
Trust
may at any time use the cash on deposit to purchase the missing Deposit
Securities in order to complete the purchase order, and will purchase the
missing Deposit Securities if such Deposit Securities are not received by 1:00
p.m., Eastern time, on the third Business Day following the Transmittal Date
or
in the event a marked-to-market payment is not made within one Business Day
following notification by the Distributor that such a payment is required.
Authorized Participants will be liable to the Trust for the costs incurred
by
the Trust in connection with any such purchases. These costs will be deemed
to
include the amount by which the actual purchase price of the Deposit Securities
exceeds the market value of such Deposit Securities on the day the purchase
order was deemed received by the Distributor, plus the brokerage and related
transaction costs associated with such purchases. The Trust will return any
unused portion of the Additional Cash Deposit once all of the missing Deposit
Securities have been properly received by the Custodian or purchased by the
Trust and deposited into the Trust. In addition, a transaction fee, as listed
below, will be charged in all cases. The delivery of Creation Unit Aggregations
so created generally will occur no later than the Settlement Date.
Acceptance
of Orders for Creation Unit Aggregations.
The
Trust reserves the absolute right to reject a creation order transmitted
to it
by the Distributor in respect of any Fund if: (i) the order is not in proper
form; (ii) the investor(s), upon obtaining the shares ordered, would own
80% or
more of the currently outstanding shares of any Fund; (iii) the Deposit
Securities delivered are not as disseminated through the facilities of the
NSCC
for that date by the Adviser, as described above; (iv) acceptance of the
Deposit
Securities would have certain adverse tax consequences to the Fund; (v)
acceptance of the Fund Deposit would, in the opinion of the Trust, be unlawful;
(vi) acceptance of the Fund Deposit would otherwise, in the discretion of
the
Trust or the Adviser, have an adverse effect on the Trust or the rights of
beneficial owners; or (vii) in the event that circumstances outside the control
of the Trust, BBH, the Distributor and the Adviser make it for all practical
purposes impossible to process creation orders. 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 Trust, the Adviser, the Distributor, DTC, NSCC, BBH, or any
other
participant in the creation process, and other extraordinary events. The
Trust
or the Distributor shall notify a prospective creator of a Creation Unit
and/or
the Authorized Participant acting on behalf of the creator of a Creation
Unit
Aggregation of its rejection of the order of such person. The Trust, BBH,
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.
All
questions as to the acceptance for deposit of any securities to be delivered
shall be determined by the Trust, and the Trust’s determination shall be final
and binding.
Creation
Transaction Fee.
To
compensate each Fund for transfer and other transaction costs involved in
creation transactions, investors will be required to pay a fixed creation
transaction fee, described below, payable to each Fund. An additional charge
may
be imposed for full or partial cash creations to offset the Fund's brokerage
and
other transaction costs (including estimated market impact) associated with
using cash to purchase the requisite Deposit Securities. Authorized Participants
are responsible for the costs of transferring the securities constituting the
Deposit Securities to the account of the Fund.
The
standard Creation Transaction Fee for each Fund will be $1,000 for an in-kind
creation ("Creation Transaction Fee"). This fee is charged per day on which
the
investor purchases shares in Creation Unit Aggregations, regardless of the
number of Creation Units being purchased by the investor on that day. In all
cases, such fees will be limited in accordance with the requirements of the
SEC
applicable to management investment companies offering redeemable
securities.
Redemption
of Shares in Creation Units Aggregations.
Shares
may be redeemed only in Creation Unit Aggregations at their NAV next determined
after receipt of a redemption request in proper form by a Fund. A Fund will
not
redeem shares in amounts less than Creation Unit Aggregations. Beneficial Owners
must accumulate enough shares in the secondary market to constitute a Creation
Unit Aggregation in order to have such shares redeemed by the Trust. There
can
be no assurance, however, that there will be sufficient liquidity in the public
trading market at any time to permit assembly of a Creation Unit Aggregation.
In
addition, investors should expect to incur brokerage and other costs in
connection with assembling a sufficient number of shares to constitute a
redeemable Creation Unit Aggregation.
With
respect to each Fund, BBH, through the NSCC, makes available immediately prior
to the opening of business on the AMEX (currently 9:30 a.m., Eastern time)
on
each Business Day, the identity of the fund securities (“Redemption Securities”)
that will be applicable (subject to possible amendment or correction) to
redemption requests received in proper form on that day. Redemption Securities
may not be identical to the Deposit Securities that are applicable at that
time
to creations of Creation Unit Aggregations.
Unless
cash redemptions are available or specified for a Fund, the redemption proceeds
for a Creation Unit Aggregation generally consist of Redemption Securities
— as
announced on the Business Day that the request for redemption is received in
proper form — plus cash in an amount equal to the difference between the NAV of
the shares being redeemed, as next determined after a receipt of a request
in
proper form, and the value of the Redemption Securities (the “Cash Redemption
Amount”), less a redemption transaction fee listed below. In the event that the
Redemption Securities have a value greater than the NAV of the shares, a
compensating cash payment equal to the difference is required to be made by
or
through an Authorized Participant by the redeeming shareholder.
The
right
of redemption may be suspended or the date of payment postponed with respect
to
any Fund (i) for any period during which the AMEX is closed (other than
customary weekend and holiday closings); (ii) for any period during which
trading on the AMEX is suspended or restricted; (iii) for any period during
which an emergency exists as a result of which disposal of the shares of a
Fund
or determination of such Fund’s NAV is not reasonably practicable; or (iv) in
such other circumstances as is permitted by the SEC.
Redemption
Transaction Fee.
A
redemption transaction fee is imposed to offset transfer and other transaction
costs that may be incurred by each Fund. The fee is a single charge per day
on
which an investor redeems shares in Creation Unit Aggregations, and will be
the
same regardless of the number of Creation Units redeemed by the investor on
the
same day. The standard redemption transaction fee for redemptions in kind of
Creation Units of these Funds is $1,000. Investors will also bear the costs
of
transferring the Fund Securities from the Trust to their account or on their
order. Investors who use the services of a broker or other such intermediary
may
be charged a fee for such services.
Placement
of Redemption Orders for the Funds.
To be
eligible to place redemption orders for Creation Unit Aggregations of the Funds,
an entity must be a DTC Participant that has executed a Participant Agreement
and have the ability to transact through the Federal Reserve System. An order
to
redeem Creation Unit Aggregations is deemed received by the Trust on the
Transmittal Date if (i) such order is received no later than 3:00 p.m., Eastern
time, on such Transmittal Date, except as described below; and (ii) all other
procedures set forth in the Participant Agreement are properly followed. Orders
requesting substitution of a “cash-in-lieu” amount generally must be received no
later than 2:00 p.m. Eastern time. On days when the AMEX closes earlier than
normal, the Funds may require orders to redeem Creation Unit Aggregations to
be
placed earlier in the day. After the Trust has deemed an order for redemption
received, the Trust will initiate procedures to transfer the requisite Fund
Securities and the Cash Redemption Amount to the Authorized Participant on
behalf of the redeeming Beneficial Owner by the Settlement Date.
The
calculation of the value of the Redemption Securities and the Cash Redemption
Amount to be delivered upon redemption will be made by BBH according to the
procedures set forth under Determination of NAV, computed on the Business Day
on
which a redemption order is deemed received by the Trust. Therefore, if a
redemption order in proper form is submitted to the Distributor by a DTC
Participant by the specified time on the Transmittal Date, then the value of
the
Redemption Securities and the Cash Redemption Amount to be delivered will be
determined by BBH on such Transmittal Date.
If
it is
not possible to effect deliveries of the Redemption Securities, the Trust may
in
its discretion exercise its option to redeem such shares in cash, and the
redeeming Beneficial Owner will be required to receive its redemption proceeds
in cash. In addition, an investor may request a redemption in cash that the
Fund
may, in its sole discretion, permit. In either case, the investor will receive
a
cash payment equal to the NAV of its shares based on the NAV of shares of the
relevant Fund next determined after the redemption request is received in proper
form (minus the redemption transaction fee and an additional charge for
requested cash redemptions to offset the brokerage and other transaction costs
associated with the disposition of Fund securities). A Fund may also, in its
sole discretion, upon request of a shareholder, provide such redeeming
shareholder a portfolio of securities that differs from the exact composition
of
the Redemption Securities as long as the total value of the securities and
cash
received by the redeeming shareholder does not differ from the value of the
Redemption Securities plus the Cash Redemption Amount that they would have
otherwise received.
Redemptions
of shares for Redemption Securities will be subject to compliance with
applicable federal and state securities laws and each Fund (whether or not
it
otherwise permits cash redemptions) reserves the right to redeem Creation Unit
Aggregations for cash to the extent that the Trust could not lawfully deliver
specific Redemption Securities upon redemptions or could not do so without
first
registering the Redemption Securities under such laws. An Authorized Participant
or an investor for which it is acting subject to a legal restriction with
respect to a particular security included in the Redemption Securities
applicable to the redemption of a Creation Unit Aggregation may be paid an
equivalent amount of cash. The Authorized Participant may request the redeeming
Beneficial Owner of the shares to complete an order form or to enter into
agreements with respect to such matters as compensation for the Authorized
Participant or delivery instructions.
The
Indicative Fund Value.
The
trading prices of shares in the secondary market may differ in varying degrees
from their daily NAVs and can be affected by market forces such as supply and
demand, economic conditions and other factors.
In
order to provide updated information relating to the Trust for use by investors
and market professionals, an
approximate
value of shares of the Trust (the “Indicative Fund Value” or “IFV”) will be
disseminated every fifteen seconds throughout the trading day by the AMEX or
by
other information providers, such as Bloomberg. This IFV should not be viewed
as
a “real-time” update of the NAV, because the IFV may not be calculated in the
same manner as the NAV, which is computed once a day. The IFV is determined
by
third-party pricing services using price quotations obtained from broker-dealers
that may trade in the portfolio securities held by the Trust. The Trust is
not involved in, or responsible for, the calculation or dissemination of the
IFV
and makes no warranty as to its accuracy.
Taxes
Registered
Investment Company Qualifications.
Each
Fund intends to qualify for and to elect treatment as a separate Regulated
Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code (the
“Code”). To qualify for treatment as a RIC, a fund must annually distribute at
least 90% of its net investment company taxable income (which includes
dividends, interest and net short-term capital gains) and meet several other
requirements. Among such other requirements are the following: (i) at least
90%
of the fund’s annual gross income must be derived from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies, or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies,
and net income derived from an interest in a qualified publicly traded
partnership; and (ii) at the close of each quarter of the fund’s taxable year,
(a) at least 50% of the market value of the fund’s total assets must be
represented by cash and cash items, U.S. Government securities, securities
of
other RICs and other securities, with such other securities limited for purposes
of this calculation in respect of any one issuer to an amount not greater than
5% of the value of the fund’s 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 may be invested in the securities of any one issuer or of two
or
more issuers that are controlled by the fund (within the meaning of Section
851(c)(2) of the Code) and that are engaged in the same or similar trades or
businesses or related trades or businesses (other than U.S. Government
securities or the securities of other regulated investment companies) or the
securities of one or more qualified publicly traded partnerships.
Taxation
of RICs.
Although
each Fund intends to distribute substantially all of its net investment income
and its capital gains for each taxable year, each Fund will be subject to
federal income taxation to the extent any such income or gains are not
distributed. If a Fund’s distributions exceed its taxable income and capital
gains realized during a taxable year, all or a portion of the distributions
made
in the taxable year may be recharacterized as a return of capital to
shareholders. A return of capital distribution will not be taxable to the extent
of a shareholder’s adjusted basis but will reduce such basis and result in a
higher capital gain or lower capital loss when those shares on which the
distribution was received are sold. To the extent of a return of capital
distribution exceeds a shareholder’s adjusted basis, the distribution will be
treated as gain from the sale of shares.
If
a Fund
fails to qualify for any taxable year as a RIC, all of its taxable income will
be subject to tax at regular corporate income tax rates without any deduction
for distributions to shareholders, and such distributions generally will be
taxable to shareholders as ordinary dividends to the extent of the Fund’s
current and accumulated earnings and profits. In such event, distributions
to
individuals should qualify as qualified dividend income and distributions to
corporate shareholders generally should be eligible for the dividends-received
deduction.
Excise
Tax.
A Fund
will be subject to a 4% excise tax on certain undistributed income if it does
not distribute to its shareholders in each calendar year at least 98% of its
ordinary income for the calendar year plus 98% of its capital gain net income
for the twelve months ended October 31 of such year, plus 100% of any ordinary
income or capital gain net income not distributed in prior years. Each Fund
intends to declare and distribute dividends and distributions in the amounts
and
at the times necessary to avoid the application of this 4% excise
tax.
Certain
Distributions.
Any
dividend declared by a Fund in October, November, or December of any calendar
year, payable to shareholders of record on a specified date in such a month
and
actually paid during January of the following year, is treated as if it had
been
received by the shareholders on December 31 of the year in which the dividend
was declared.
Back-Up
Withholding.
In
certain cases a Fund will be required to withhold at the applicable withholding
rate, and remit to the U.S. Treasury such amounts withheld from any
distributions paid to a shareholder who: (1) has failed to provide a correct
taxpayer identification number; (2) is subject to backup withholding by the
Internal Revenue Service; (3) has failed to certify to a Fund that such
shareholder is not subject to backup withholding; or (4) has not certified
that
such shareholder is a U.S. person (including a U.S. resident alien).
Redemptions.
An
in-kind redemption of shares generally does not result in the recognition of
taxable gain or loss by the Fund but generally will constitute a taxable event
for the redeeming shareholder. Upon redemption, such shareholder generally
recognizes gain or loss measured by the difference on the date of redemption
between the aggregate value of the cash and other property received
(generally
a
portfolio of securities) and its tax basis in the shares redeemed. Any property
received upon redemption generally will have an initial tax basis equal to
its
fair market value on the date of redemption. Shareholders should consult their
own tax advisors as to the consequences to them of the redemption of shares
in
light of their unique circumstances.
Deposits.
Deposits
of a portfolio of securities in exchange for Creation Units do not result in
the
recognition of taxable gain or loss by a Fund but generally constitute a taxable
event to an investor. The investor generally will recognize gain or loss with
respect to each security deposited equal to the difference between the amount
realized in respect of the security and the investor's tax basis therein.
Investors should consult their own tax advisors as to the tax consequences
to
them of a deposit to a Fund in light of their own unique
circumstances.
Section
351.
The
Trust
on behalf of each Fund has the right to reject an order for a purchase of Fund
shares if the purchaser (or group of purchasers) would, upon obtaining the
shares so ordered, own 80% or more of the outstanding shares of a given Fund
and
if, pursuant to Section 351 of the Code, that Fund would have a basis in the
securities different from the market value of such securities on the date of
deposit. The Trust also has the right to require information necessary to
determine beneficial share ownership for purposes of the 80% determination.
The
foregoing discussion is a summary only and is not intended as a substitute
for
careful tax planning. Purchasers of shares should consult their own tax advisers
as to the tax consequences of investing in such shares, including under state,
local and foreign tax laws. Finally, the foregoing discussion is based on
applicable provisions of the Code, regulations, judicial authority and
administrative interpretations in effect on the date of this Statement of
Additional Information. Changes in applicable authority could materially affect
the conclusions discussed above, and such changes often occur.
Determination
of NAV
The
NAV
for each Fund is calculated by deducting all of a Fund’s liabilities (including
accrued expenses) from the total value of its assets (including the securities
held by the Fund plus any cash or other assets, including interest accrued
but
not yet received) and dividing the result by the number of shares outstanding,
and generally rounded to the nearest cent, although each Fund reserves the
right
to calculate its NAV to more than two decimal places. The NAV is calculated
by
BBH and determined as of the close of the regular trading on the government
securities markets in the United States (ordinarily 3:00 p.m. Eastern time)
on
each day that all of (i) the government securities markets, (ii) BBH, and
(iii)
the NYSE and AMEX are open for business.
In
calculating a Fund’s NAV, the Fund’s investments are generally valued using
market valuations. A market valuation generally means a valuation (i) obtained
from an exchange, a pricing service, or a major market maker (or dealer),
or
(ii) based on a price quotation or other equivalent indication of value supplied
by an exchange, a pricing service, or a major market maker (or dealer). In
the
case of shares of other funds that are not traded on an exchange, a market
valuation means such fund’s published net asset value per share. BBH may use
various pricing services or discontinue the use of any pricing service. A
price
obtained from a pricing service based on such pricing service’s valuation matrix
may be considered a market valuation. In the event that current market
valuations are not readily available or such valuations do not reflect current
market values, the affected investments will be valued using fair value pricing
pursuant to pricing policies and procedures approved by the Board of Trustees.
Dividends
and Distributions
General
Policies.
Dividends from net investment income, if any, are declared and paid at least
quarterly by each Fund. Distributions of net realized securities gains, if
any,
generally are declared and paid once a year. The Trust may pay dividends or
make
distributions on a more frequent basis for certain Funds. 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 each Fund as a RIC
or
to avoid imposition of income or excise taxes on undistributed income.
Dividends
and other distributions on 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 Funds.
Dividend
Reinvestment Service.
No
dividend reinvestment service is currently provided by the Trust. Broker-dealers
may make available the DTC book-entry Dividend Reinvestment Service for use
by
Beneficial Owners of Funds for reinvestment of their dividend distributions.
Beneficial Owners should contact their broker 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 same Fund purchased in the secondary market.
Miscellaneous
Information
Counsel.
Sutherland Asbill & Brennan LLP, Washington, D.C, has provided advice as to
certain matters under the federal securities laws.
Independent
Registered Public Accounting Firm.
Cohen
Fund Audit Services, Ltd. (the “Independent Accountants”) serves as the
independent registered public accounting firm for the Trust. The
Independent Accountants conduct the audit of the Trust’s annual financial
statements and prepare the Trust’s tax returns. The Independent
Accountants have no part in the management or investment decisions of the
Trust.
Financial
Statements
The
audited financial statements for the Trust for the period from commencement
of
operations on June 28, 2007 to June 30, 2007 and the report of Cohen Fund
Audit
Services, Ltd., the Independent Registered Public Accounting Firm, dated
August
13, 2007, are included in the 2007 Annual Report and incorporated by reference
in this SAI.
PART C
OTHER
INFORMATION
Item
23. Exhibits
a(1)
|
|
Declaration
of Trust (1)
|
a(2)
|
|
Amendment
to Declaration of Trust (3)
|
b
|
|
Bylaws
(2)
|
|
|
c
|
|
See
Articles 4 and 8 and Section 9.3 of the Declaration of
Trust.
|
d
|
|
Investment
Advisory Agreement, dated June 28, 2007, is filed
herein.
|
e(1)
|
|
Distribution
Agreement, dated June 28, 2007, is filed
herein.
|
e(2)
|
|
Form
of Authorized Participant Agreement
(3)
|
g
|
|
Custodian
Agreement, dated March 5 2007, is filed
herein.
|
h(1)
|
|
Administrative
Agency Agreement, dated June 22, 2007, is filed
herein.
|
h(2)
|
|
Sublicense
Agreement is filed herein.
|
i(1)
|
|
Opinion
and Consent of Sutherland Asbill & Brennan LLP
(3)
|
i(2)
|
|
Consent
of Sutherland Asbill & Brennan LLP is filed herein.
|
j
|
|
Consent
of Cohen Fund Audit Services, Ltd. is filed herein.
|
l
|
|
Subscription
Agreement, dated May 17, 2007
(3)
|
p(1)
|
|
Code
of Ethics of Trust (3)
|
p(2)
|
|
Code
of Ethics of Adviser (3)
|
q
|
|
Limited
Power of Attorney of Trustees is filed
herein.
|
(1)
Incorporated by reference to the Registrant’s Registration Statement on Form
N-1A (File No. 333-
136721)
filed on August 18, 2006.
(2)
Incorporated by reference to the Registrant’s Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A (File No. 333-136721) filed on March
9,
2007.
(3)
Incorporated by reference to the Registrant’s Pre-Effective Amendment No. 2 to
the Registration Statement on Form N-1A (File No. 333-136721) filed on June
11,
2007.
Item
24.
Persons
Controlled by or Under Common Control with Registrant
.
The
Fund
may be deemed to be under the common control of the Investment Adviser, which
is
a wholly-owned subsidiary of Wainwright Holdings, Inc. (“Wainwright”), a
Delaware corporation. Nicholas D. Gerber, the Chairman of the Fund and
President of the Adviser, owns more than 25% of the outstanding voting shares
of
Wainwright. Wainwright also controls Lyons Gate Reinsurance Ltd., an
insurance company organized under Bermuda law, and Victoria Bay Asset
Management, LLC, a single member limited liability company formed in the State
of Delaware for the purpose of operating as a commodity pool
operator.
Item
25.
Indemnification
.
As
a
Delaware statutory trust, the operations of the Trust are governed by its
Declaration of Trust dated June 5, 2006 (the “Declaration of Trust”). The
Declaration of Trust provides that, subject to certain exceptions and
limitations discussed below, every person who is, or has been, a Trustee,
officer or employee of the Trust (“Covered Persons”) shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against
all
expenses reasonably incurred or paid by him or her in connection with any claim,
action, suit or proceeding in which he or she becomes involved as a party or
otherwise by virtue of his or her being or having been such a Trustee, officer
or employee and against amounts paid or incurred by him or her in settlement
thereof. However, no indemnification shall be provided to a Covered Person:
(a)
for any liability to the Trust or its Shareholders arising out of a final
adjudication by the court or other body before which the proceeding was brought
that the Covered Person engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
or
her office; (b) with respect to any matter as to which the Covered Person shall
have been finally adjudicated not to have acted in good faith in the reasonable
belief that his or her action was in the best interests of the Trust; or (c)
in
the event of a settlement or other disposition not involving a final
adjudication (as provided in (a) or (b) above) and resulting in a payment by
a
Covered Person, unless there has been either a determination that such Covered
Person did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office
by
the court or other body approving the settlement or other disposition, or a
reasonable determination, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that he or she did not engage in such
conduct, such determination being made by (i) a vote of a majority of the
Trustees who are not “interested persons” of the Trust under the 1940 Act and
against whom no such action, suit or other proceeding or another action, suit
or
other proceeding on the same or similar grounds is then or has been pending
(“Disinterested Trustees”) acting on the matter (provided that a majority of
Disinterested Trustees then in office act on the matter); or (ii) a written
opinion of independent legal counsel.
Expenses
of preparation and presentation of a defense to any claim, action, suit or
proceeding subject to a claim for indemnification shall be advanced by the
Trust
prior to final disposition thereof upon receipt of an undertaking by or on
behalf of the recipient to repay such amount if it is ultimately determined
that
he or she is not entitled to indemnification under the Declaration of Trust,
provided that either: (a) such undertaking is secured by a surety bond or some
other appropriate security or the Trust shall be insured against losses arising
out of any such advances; or (b) a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees then
in
office act on the matter) or independent legal counsel in a written opinion
shall determine, based upon a review of the readily available facts, that there
is reason to believe that the recipient ultimately will be found entitled to
indemnification.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to trustees, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the Trust has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Trust of expenses incurred
or
paid by a trustee, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Trust will, unless in the opinion of its counsel the matter
has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in such Act and will be governed by the final adjudication
of such issue.
Item
26.
Business
and Other Connections of Investment Adviser.
In
addition to serving as investment advisers of the Funds of the Trust, the
Adviser serves as investment adviser to the Ameristock Mutual Fund, Inc., an
open-end management investment company that does not operate as an
exchange-traded fund. The directors and officers of the Adviser are Nicholas
D.
Gerber, Andrew F. Ngim and Howard Mah. Information about other businesses,
professions, vocations and employments of these individuals is included in
Part
A of this registration statement under “Management-Portfolio Managers” and in
Part B under “Management-Trustees and Officers.”
Item
27.
Principal
Underwriter
.
|
(a)
|
The
sole principal underwriter for the Fund is ALPS Distributors, Inc.
which acts as
distributor
for the Registrant and the following other funds: Ameristock Mutual
Fund,
Inc.,
Westcore
Trust, Financial Investors Trust, Stonebridge Funds, Inc., SPDR
Trust, MidCap
SPDR
Trust, DIAMONDS Trust, Select Sector SPDR Trust, BLDRS Index Fund
Trust,
Firsthand
Funds, Holland Balanced Fund, Financial Investors Variable Insurance
Trust,
W.P.
Stewart Funds, Williams Capital Liquid Assets Fund, Drake Funds,
Wasatch
Funds,
State
Street Institutional Investment Trust, Milestone Funds, The Henssler
Funds, Inc.,
CornerCap
Group of Funds, AARP Funds, Campbell Multi-Strategy Trust, Forward
Funds,
Laudus
Trust, Utopia Funds, Fifth Third Funds, Scottish Widows Investment
Partnership, Stone Harbor Investment Funds,
Heartland
Group Inc., Powershares QQQ 100 Trust Series 1, Realty Funds, Inc.,
TDAX
Funds,
Inc., and WisdomTree Trust.
|
|
(b)
|
To
the best of Registrant’s knowledge, the directors and executive officers
of ALPS
Distributors, Inc.,
the distributor for Registrant, are as
follows:
|
Name
and Principal Business Address*
|
Positions
and Offices with Registrant
|
Positions
and Offices with Underwriter
|
Thomas
A. Carter
|
None
|
Managing
Director - Business Development; Director
|
Edmund
J. Burke
|
None
|
President;
Director
|
Cameron
L. Miller
|
None
|
Director
|
Jeremy
O. May
|
None
|
Managing
Director - Operations and Client Service; Assistant Secretary;
Director
|
John
C. Donaldson
|
None
|
Chief
Financial Officer
|
Diana
Adams
|
None
|
Vice-President;
Controller; Treasurer
|
Robert
J. Szydlowski
|
None
|
Chief
Technology Officer
|
Tané
T. Tyler
|
None
|
General
Counsel;
Secretary
|
Bradley
J. Swenson
|
None
|
Chief
Compliance Officer
|
*
All
addresses are 1290 Broadway, Suite 1100, Denver, Colorado 80203.
(c)
None.
Item
28.
Location
of Accounts and Records
.
(a)
Ameristock
Corporation, 1320 Harbor Bay Parkway, Suite 145, Alameda, CA 94502 (records
relating to its function as investment adviser for Registrant).
(b)
ALPS
Distributors, Inc., 1290 Broadway, Suite 1100, Denver, Colorado 80203
(records relating to its functions as distributor for Registrant).
(c)
Brown
Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109
(records relating to its function as custodian, administrator and transfer
agent
for Registrant).
Item
29.
Management
Services
.
Not
Applicable.
Item
30.
Undertakings
.
Not
Applicable.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933 and the Investment Company
Act
of 1940, 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, thereunto duly authorized, in the City of
Moraga,
State of California, on the 24
th
day of
October, 2007.
|
AMERISTOCK
ETF TRUST
By:
/s/
Nicholas D. Gerber
Nicholas
D. Gerber
President
|
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed below by the following persons in the capacities
and
on the dates indicated.
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/
Nicholas D. Gerber
|
|
|
October
24, 2007
|
Nicholas
D. Gerber
|
|
President
(Chief Executive Officer), Treasurer (Chief
Financial
Officer), and Trustee
|
|
|
|
|
|
|
|
|
|
|
|
Chairman
of the Board
|
October
24, 2007
|
Stephen
J. Marsh *
|
|
of
Trustees
|
|
|
|
|
|
|
|
|
|
|
|
Trustee
|
October
24, 2007
|
Andrew
Ngim *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustee
|
October
24, 2007
|
Alev
Efendioglu *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustee
|
October
24, 2007
|
Steven
A. Wood *
|
|
|
|
|
|
|
|
|
|
|
|
*By:
Nicholas
D. Gerber
Nicholas
D. Gerber
Attorney
In Fact**
**
Attorney-in-fact pursuant to the powers of attorney as filed
herein.
Exhibit
Index
d
|
Investment
Advisory Agreement
|
e(1)
|
Distribution
Agreement
|
g
|
Custodian
Agreement
|
h(1)
|
Administrative
Agency Agreement
|
h(2)
|
Sublicense
Agreement
|
i
(2)
|
Consent
of Sutherland Asbill & Brennan LLP
|
j
|
Consent
of Cohen Fund Audit Services, Ltd.
|
q
|
Limited
Power of Attorney of Trustees
|
Ameristock/Ryan 1 Year Treasury Etf (AMEX:GKA)
Historical Stock Chart
From Sep 2024 to Oct 2024
Ameristock/Ryan 1 Year Treasury Etf (AMEX:GKA)
Historical Stock Chart
From Oct 2023 to Oct 2024