Mutual Fund Summary Prospectus (497k)
November 08 2012 - 11:28AM
Edgar (US Regulatory)
RANGER EQUITY BEAR ETF (NYSE Arca Ticker:
HDGE)
(Formerly, Active Bear ETF)
SUMMARY PROSPECTUS – October 29.
2012
Before you invest
in the Fund, you may want to review the Fund’s prospectus and statement of additional information, which contain more information
about the Fund and the risks of investing in the Fund. The Fund’s current prospectus and statement of additional information,
each dated October 29, 2012, as supplemented from time to time, are incorporated by reference into this summary prospectus. You
can find the Fund’s prospectus and statement of additional information, as well as other information about the Fund, online
at
http://advisorshares.com/fund/hdge
. You may also obtain this information at no charge
by calling 877.THE.ETF1
(
877.843.3831
)
or by sending an email request to
info@advisorshares.com
.
INVESTMENT OBJECTIVE
The Ranger Equity Bear ETF (the “Fund”)
seeks capital appreciation through short sales of domestically traded equity securities.
FUND 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 incur customary brokerage commissions when buying
or selling shares of the Fund, which are not reflected in the table below.
SHAREHOLDER FEES
(fees paid directly from your investment)
|
|
|
None
|
|
ANNUAL FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your investment)
|
|
|
|
|
MANAGEMENT FEES
|
|
|
1.50
|
%
|
DISTRIBUTION (12b-1) FEES
|
|
|
0.00
|
%
|
TOTAL OTHER EXPENSES
|
|
|
1.56
|
%
|
Short Interest Expense
|
|
|
1.37
|
%
|
Other Expenses
|
|
|
0.19
|
%
|
ACQUIRED FUND FEES AND EXPENSES(a)
|
|
|
0.24
|
%
|
TOTAL ANNUAL FUND OPERATING EXPENSES(b)
|
|
|
3.30
|
%
|
|
(a)
|
As a shareholder in certain ETFs (the “Acquired
Funds”), the Fund will indirectly bear its proportionate share of the fees and expenses of the Acquired Funds. “Acquired
Fund Fees and Expenses” do not reflect the operating expenses of exchange-traded products in which the Fund invests that
are not investment companies, including ETNs and exchange-traded pooled investment vehicles not registered pursuant to the Investment
Company Act of 1940, as amended (the “1940 Act”).
|
|
(b)
|
The Total Annual Fund Operating Expenses in this fee
table may not correlate to the expense ratios in the Fund’s financial highlights (and the Fund’s financial statements)
because the financial highlights include only the Fund’s direct operating expenses and do not include Acquired Fund Fees
and Expenses.
|
EXAMPLE
This Example is intended to help you compare
the cost of investing in the shares of the Fund with the cost of investing in other funds. This Example does not take into account
creation or redemption transaction fees, or the brokerage commissions that you pay when purchasing or selling shares of the Fund.
If the commissions were included, your costs would be higher.
The Example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
|
|
1 YEAR
|
|
|
3 YEARS
|
|
|
5 YEARS
|
|
|
10 YEARS
|
|
Ranger Equity Bear ETF
|
|
$
|
333
|
|
|
$
|
1,016
|
|
|
$
|
1,722
|
|
|
$
|
3,596
|
|
PORTFOLIO TURNOVER
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover may indicate
higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are
not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund’s performance. This rate excludes
the value of portfolio securities received or delivered as a result of in-kind creations or redemptions of the Fund’s shares.
During the most recent fiscal year ended June 30, 2012, the Fund’s portfolio turnover rate was 756% of the average value
of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Ranger Alternative Management, L.P. (the
“Sub-Advisor”) seeks to achieve the Fund’s investment objective by short selling a portfolio of liquid mid- and
large-cap U.S. exchange-traded equity securities, exchange-traded funds (“ETFs”) registered pursuant to the 1940 Act,
exchange-traded notes (“ETNs”) and other exchange-traded products (“ETPs”). The Sub-Advisor implements
a bottom-up, fundamental, research driven security selection process that seeks to identify securities with low earnings quality
or aggressive accounting that may tend to mask operational deterioration and bolster the reported earnings per share over a short
time period. In addition to these issues, the Sub-Advisor seeks to identify earnings driven events that may act as a catalyst to
the price decline of a security, such as downwards earnings revisions or reduced forward earnings outlook. On a day-to-day basis,
the Fund may hold U.S. government securities, short-term high quality fixed income securities, money market instruments, overnight
and fixed-term repurchase agreements, cash and cash equivalents with maturities of one year or less for investment purposes and
to cover its short positions.
In addition to extensive quantitative analysis,
careful consideration is given to qualitative analysis. The assessment of the management team, accounting practices, corporate
governance and the company’s competitive advantage are all key items. Once these quantitative and qualitative characteristics
are thoroughly analyzed, the Sub-Advisor then determines if there is sufficient return to the stock price to warrant an investment.
Once a position is included in the Fund’s portfolio, it is subject to regular fundamental and technical risk management review.
This continual review process seeks to identify problem positions early and enhances performance by removing them before they become
significant issues for the portfolio.
PRINCIPAL RISKS OF INVESTING IN THE FUND
The Fund is subject to a number of risks
that may affect the value of its shares, including:
Early Closing Risk.
An unanticipated
early closing of the NYSE Arca, Inc. (the “Exchange”) may result in a shareholder’s inability to buy or sell
shares of the Fund on that day.
Equity Risk.
The prices of equity
securities in which the Fund holds short positions may rise and fall daily. These price movements may result from factors affecting
individual issuers, industries or the stock market as a whole.
Exchange-Traded Vehicle Risk.
The
Fund may invest in (or short) ETFs, ETNs and ETPs. Through its positions in ETFs, ETNs and ETPs, the Fund will be subject to the
risks associated with such vehicles, investments, or reference assets in the case of ETNs, including the possibility that the value
of the securities or instruments held by an ETF, ETN or ETP could decrease (or increase in the case of short positions). Lack of
liquidity in an ETP, ETN, or ETF can result in its value being more volatile than the underlying portfolio investment. In addition,
certain of the ETPs, ETFs, or ETNs may hold common portfolio positions, thereby reducing any diversification benefits.
Fixed Income Risk.
The Fund may
be exposed to fixed income risk through its short positions in ETFs and ETPs that primarily invest in, or have exposure to, fixed
income securities. The value of an ETF’s or ETP’s portfolio of fixed income securities will change in response to interest
rate changes and other factors, such as the perception of the issuers’ creditworthiness. During periods of falling interest
rates, the value of outstanding fixed income securities generally rise. Conversely, during periods of rising interest rates, the
value of fixed income securities generally decline.
Issuer Risk.
From time to time the
Fund may have exposure via its short positions to a limited number of issuers. During such times, the Fund is more susceptible
to the risk that an issuer’s securities may appreciate in value.
Liquidity Risk.
Trading in shares
of the Fund may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in shares
inadvisable. In addition, trading in listed securities is subject to trading halts caused by extraordinary market volatility pursuant
to “circuit breaker” rules. The Fund’s investments in ETNs and certain other ETPs may be subject to restrictions
on the amount and timing of any redemptions, which may adversely affect the value of the Fund’s portfolio holdings.
Market Risk.
Due to market conditions,
the Fund’s investments may fluctuate significantly from day to day. This volatility may cause the value of your investment
in the Fund to decrease.
Mid-Capitalization and Large-Capitalization
Risk.
The Fund is subject to the risk that medium and large-cap stocks may outperform other segments of the equity market or
the equity market as a whole.
Portfolio Turnover Risk.
The Fund’s
investment strategy may result in relatively high portfolio turnover, which may result in increased transaction costs and may lower
Fund performance.
Short Sales Risk.
Short sales are
transactions in which the Fund sells a security it does not own. To complete the transaction, the Fund must borrow the security
to make delivery to the buyer. The Fund is then obligated to replace the security borrowed by purchasing the security at the market
price at the time of replacement. The price at such time may be higher or lower than the price at which the security was sold by
the Fund. If the underlying security goes down in price between the time the Fund sells the security and buys it back, the Fund
will realize a gain on the transaction. Conversely, if the underlying security goes up in price during the period, the Fund will
realize a loss on the transaction. Any such loss is increased by the amount of premium or interest the Fund must pay to the lender
of the security. Likewise, any gain will be decreased by the amount of premium or interest the Fund must pay to the lender of the
security. Because a short position loses value as the security’s price increases, the loss on a short sale is theoretically
unlimited. Short sales involve leverage because the Fund borrows securities and then sells them, effectively leveraging its assets.
The use of leverage may magnify gains or losses for the Fund.
Trading Risk.
Shares of the Fund
may trade below their net asset value (“NAV”). The NAV of shares will fluctuate with changes in the market value of
the Fund’s holdings. In addition, although the Fund’s shares are currently listed on the Exchange, there can be no
assurance that an active trading market for shares will develop or be maintained.
As with any fund, there is no guarantee
that the Fund will achieve its investment objective.
FUND PERFORMANCE
A comparison of the Fund’s performance
with that of a broad measure of market performance may give some indication of the risks of an investment in the Fund; however,
the Fund is new and, therefore, does not have a performance history for a full calendar year. Of course, once the Fund has performance,
this past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future.
Updated performance information is available
on the Fund’s website at www.advisorshares.com
.
MANAGEMENT
Name
|
|
Title
|
|
|
|
AdvisorShares Investments, LLC
|
|
Advisor
|
|
|
|
Ranger Alternative Management, L.P
.
|
|
Sub-Advisor
|
PORTFOLIO MANAGERS
Name and Title
|
|
Length of Service with Sub-Advisor
|
|
|
|
John Del Vecchio, CFA,
Portfolio Manager
|
|
Since 2008
|
|
|
|
Brad H. Lamensdorf,
Portfolio Manager
|
|
Since 2009
|
PURCHASE AND SALE OF FUND SHARES
The Fund issues and redeems shares on a
continuous basis at their NAV
only
in a large specified number of shares called a “Creation Unit.” The shares
of the Fund that trade on the Exchange are “created” at their NAV by market makers, large investors and institutions
only in block-size Creation Units of at least 25,000 shares. A “creator” enters into an authorized participant agreement
(“Participant Agreement”) with the Distributor or uses a Depository Trust Company (“DTC”) participant who
has executed a Participant Agreement (an “Authorized Participant”), and deposits into the Fund a specified amount of
cash totaling the NAV of the Creation Unit(s), in exchange for 25,000 shares of the Fund (or multiples thereof).
Individual Fund shares may only be purchased
and sold in secondary market transactions through brokers. The shares of the Fund are listed on the Exchange, and because shares
trade at market prices rather than at NAV, shares may trade at a value greater than or less than their NAV.
TAX INFORMATION
The Fund intends to make distributions
that may be taxed as ordinary income or capital gains (or a combination of both), unless you are investing through a tax deferred
arrangement such as a 401(k) plan or an individual retirement account (“IRA”).
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
Investors purchasing shares in the secondary
market through a brokerage account or with the assistance of a broker may be subject to brokerage commissions and charges. If you
purchase Fund shares through a broker-dealer or other financial intermediary (such as a bank), the Fund, the Advisor or the Sub-Advisor
may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by
influencing broker-dealers or other intermediaries and your salesperson to recommend the Fund over another investment. Ask your
salesperson or visit your financial intermediary’s website for more information.
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