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| 1. Who is AER Advisors? |
| AER Advisors, U.S. registered investment advisor,is a private financial services firm located in North Hampton, NH, co-founded by President, Carol O'Leary and Chief Investment Officer David O'Leary. The firm was founded to utilize the unique stock screening methodology developed by Mr. O'Leary in a variety of formats. This research formula has been widely recognized and used by the institutional investment community as a valuable research tool for nearly 15 years. The firm manages two actively managed equity exchange-traded funds, (ETFs) in the U.S., traded on the NYSE. The ETFs are based on a flexible universe of over 3,000 U.S. exchange listed stocks and attempt to outperform traditional index ETFs. AER Advisors provides advisory services to Separately Managed Accounts (SMA) for banks, institutions, other RIA's and high net worth individuals, while continuing to offer institutional research to mutual funds and hedge funds. |
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| 2. What are the core philosophies of AER's investment process? |
| Value-added stock selection based on positive money flow, strong earnings growth and low valuation. |
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| 3. What is money flow? |
| AER has a unique and proprietary process by which it tracks whether individual stocks are being accumulated or being distributed. This measures whether demand is increasing or decreasing. |
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| 4. What is the Master Stock List? |
| The Master List is developed from a universe of over 3,000 U.S. traded stocks and ADR's. This defines our group of investable stocks and is the framework of our research. It is updated on a weekly basis with current earnings, sales and revenue growth and money flow data. |
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| 5. How does AER define its universe for stock selection? |
| AER tracks and rates the stocks of companies with a market capitalization of over $400 million that are traded in the U.S with an average trading volume of at least 100,000 shares per day. On a weekly basis, AER generates its "Master Stock List," which ranks a universe of approximately 3,000 stocks, segmented by market capitalization. |
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| 6. What are ETFs? |
| Evidence suggests that ETFs are among the fastest growing investment products in the worldwide financial marketplace today. Generally, ETFs are funds that trade like individual stocks on all of the major exchanges, similar to securities of publicly held companies. Up until now, ETFs have been based on indexes. Now the ETF marketplace has revolutionary new actively managed funds. The ETFs we manage are based on the flexible stock universe selected by AER Advisors. |
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| 7. What is an Index? |
| An index is a statistical indicator providing a representation of the value of the securities that constitute it, such as, the S&P 400, S&P 500 and the S&P 600. |
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| 8. How do traditional ETFs differ from actively managed ETFs? |
| All existing ETFs are based on an index, while the ETFs subadvised by AER are based on stock selection and are managed through a proprietary stock screening research methodology that employs both fundamental and quantitative criteria. This methodology was developed by the Funds' Portfolio Manager, David O'Leary. |
| Every Friday, Mr. O'Leary reviews the universe of each fund to generally maintain the portfolio in the highest ranking stocks. AER Advisors maintains the option to eliminate up to three stocks each week and replace those with the highest ranked stocks in our universe not currently held in the Fund. |
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| 9. What are the benefits of actively managed ETFs? |
| Active ETFs offer the following possible benefits: |
| 1. potential for out-performance |
| 2. diversification |
| 3. continuous trading throughout the day |
| 4. possible tax benefits in comparison to mutual funds |
| 5. active investment management |
| Until now, all ETFs were tied to indexes which only make changes on a mostly annual basis, and sometimes quarterly. Thus, stocks that are underperforming and therefore pulling the index down, remain in that index longer than they would in the flexible universe of AER Advisors. We have the ability to remove underperforming stocks on a weekly basis. |
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| 10. When was the first ETF introduced to the market? |
| The American Stock Exchange LLC, through its subsidiary PDR Services LLC and the Standard and Poor's Depository Receipt (SPDR) Trust, petitioned for and received an SEC Order that in 1992 authorized a stand-alone S&P 500 Index-based ETF as a unit investment trust. |
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| 11. When were the first actively managed equity ETFs introduced to the market? |
| April 14, 2008 on the NYSE Arca. |
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| 12. How many actively managed equity ETFs are currently available? |
| At this time, there are three actively managed equity ETFs. |
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| 13. How do ETFs manage Capital Gains? |
| ETFs create new shares or redeem existing shares, generally through a unique in-kind transfer process. While retail investors are largely unaware of this process, it contributes to the tax efficiency of ETFs that is not available to Mutual Funds. |
| Through the use of special redemption baskets, entities called Authorized Participants, or APs (usually large institutional traders), may remove capital gains from funds so they don't have to be distributed to existing shareholders. |
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| 14. Who is the Portfolio Manager of the actively managed Active Alpha ETFs? |
| David O'Leary, Chief Investment Officer of AER Advisors has primary responsibility for managing the Funds' portfolio. The investment process utilized by the Funds has been in existence since 1998 when it was developed by Mr. O'Leary, who has over 35 years of experience in the financial services industry. |
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| 15. How often do the Funds trade? |
| The Fund's holdings may be changed only once per week on the last business day of each week. These changes will be reflected on the Fund's website prior to the opening of business on the next business day. |
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