NOTES TO FINANCIAL STATEMENTS
March 31, 2013 (Unaudited)
NOTE 1 – ORGANIZATION
.
PureFunds™ ISE Diamond/Gemstone ETF, PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF and PureFunds™ ISE Mining Service ETF (each a “Fund”, or collectively the “Funds”) are series of FactorShares Trust (the “Trust”), an open-end management investment company consisting of multiple investment series, organized as a Delaware statutory trust on July 1, 2009. The Trust is registered with the SEC under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and the offering of the Funds’ shares (“Shares”) is registered under the Securities Act of 1933, as amended (the “Securities Act”). PureFunds™ ISE Diamond/Gemstone ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Diamond/Gemstone™ Index (the “Underlying Index”). PureFunds™ ISE Mining Service ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Mining Service™Index (the “Underlying Index”). PureFunds™ Junior Silver (Small Cap Miners/Explorers) ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Junior Silver (Small Cap Miners/Explorers)™ Index (the “Underlying Index”).
The Funds commenced operations on November 29, 2012.
The Funds each currently offer one class of shares, which has no front end sales load, no deferred sales charges, and no redemption fees. The Funds may issue an unlimited number of shares of beneficial interest, with no par value. All shares of each Fund have equal rights and privileges.
Shares of the Funds are listed and traded on the NYSE Arca, Inc. Market prices for the Shares may be different from their net asset value (“NAV”). Each Fund issues and redeems Shares on a continuous basis at NAV only in blocks of 50,000 shares, called “Creation Units.” Creation Units are issued and redeemed principally in-kind for securities included in a specified universe. Once created, shares generally trade in the secondary market at market prices that change throughout the day in amounts less than a Creation Unit. Except when aggregated in Creation Units, shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain financial institutions (“Authorized Participants”). An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors do not qualify as Authorized Participants nor have the resources to buy and sell whole Creation Units. Therefore, they are unable to purchase or redeem the shares directly from a Fund. Rather, most retail investors may purchase shares in the secondary market with the assistance of a broker and are subject to customary brokerage commissions or fees.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
.
The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
NOTES TO FINANCIAL STATEMENTS
March 31, 2013 (Unaudited) (Continued)
|
A.
|
Security Valuation
.
Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange
1
or market (foreign or domestic) on which they are traded on valuation date (or at approximately 4:00 pm Eastern Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale on the valuation date, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used.
|
|
|
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees. When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board of Trustees. The use of fair value pricing by the fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. As of March 31, 2013, the Funds did not hold any fair valued securities.
As described above, the Funds utilize various methods to measure the fair value of its investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuations methods. The three levels of inputs are:
|
|
|
Level 1-
|
Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access.
|
|
|
Level 2-
|
Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
|
|
|
Level 3-
|
Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
|
|
|
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
|
__________________________________________
|
1
|
For a security that trades on multiple exchanges, the primary exchange will generally be considered to be the exchange on which the security is normally most actively traded.
|
NOTES TO FINANCIAL STATEMENTS
March 31, 2013 (Unaudited) (Continued)
|
|
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The following is a summary of the inputs used to value the Funds’ investments as of March 31, 2013:
|
|
|
PureFunds™ ISE Diamond/Gemstone ETF
|
|
Description^
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Common Stocks
|
|
$
|
1,961,232
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,961,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Securities
|
|
$
|
1,961,232
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,961,232
|
|
|
|
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF
|
|
Description^
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Common Stocks
|
|
$
|
3,372,410
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,372,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Securities
|
|
$
|
3,372,410
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,372,410
|
|
|
|
PureFunds™ ISE Mining Service ETF
|
|
Description^
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
Common Stocks
|
|
$
|
1,109,647
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,109,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Securities
|
|
$
|
1,109,647
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,109,647
|
|
|
|
^See Schedule of Investments for industry breakouts.
The Fund did not have any transfers between levels during the period ended March 31, 2013.
|
|
B.
|
Federal Income Taxes.
The Funds have each elected to be taxed as a “regulated investment company” and intend to distribute substantially all taxable income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provision for federal income taxes or excise taxes has been made.
|
NOTES TO FINANCIAL STATEMENTS
March 31, 2013 (Unaudited) (Continued)
|
|
To avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
Net capital losses incurred after October 31, within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year.
Each Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Each Fund has analyzed its tax position and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Fund’s 2013 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal and the State of Delaware; however the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
|
|
C
.
|
Security Transactions and Investment Income.
Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on a specific identification basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis.
|
|
D.
|
Distributions to Shareholders.
Distributions to shareholders from net investment
income are declared and paid on a quarterly basis and net realized gains on securities for each Fund normally are declared
and paid on an annual basis. Distributions are recorded on the ex-dividend date.
|
|
E.
|
Use of Estimates.
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
|
|
F.
|
Share Valuation.
The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the
total number of shares outstanding for the Fund, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share.
|
NOTES TO FINANCIAL STATEMENTS
March 31, 2013 (Unaudited) (Continued)
|
G.
|
Guarantees and Indemnifications
. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
|
|
H.
|
Subsequent Events.
In preparing these financial statements, management has evaluated events and transactions for potential recognition or disclosure through date the financial statements were available to be issued. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund’s financial statements.
|
|
I.
|
Recent Accounting Pronouncement
.
In January 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No 2013-01 “Clarifying the Scopy of Disclosures about Offsetting Assets and Liabilities.” ASU 2013-01 states the intended scope of disclosures required by ASU No. 2011-11 “Balance Sheet (Topic 210):Disclosures about Offsetting Assets and Liabilities apply to derivatives and hedging transactions. This pronouncement was effective for fiscal years, and interin periods within those years, beginning on or after January 1, 2013. The adoption of this guidance did not have an effect on the Funds’ finacial condition, results of operations, or cash flows.
|
NOTE 3 -COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
Factor Advisors, LLC, serves as the investment advisor to the Funds. Pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between the Trust, on behalf of the Funds, and the Advisor, the Advisor provides investment advice to the Funds and oversees the day-to-day operations of the Funds, subject to the direction and control of the Board and the officers of the Trust. Under the Advisory Agreement, the Advisor is also responsible for arranging, in consultation with Esposito Partners, LLC (the “Sub-Advisor”), transfer agency, custody, fund administration and accounting, and other non-distribution related services necessary for the Funds to operate. Under the Business Management Agreement, the Advisor has contracted with PureShares, LLC (the “Business Manager”) to manage the Funds’ business affairs and provide office facilities and equipment and certain clerical, bookkeeping and administrative services. The Business Manager bears the costs of all advisory and non-advisory services required to operate the Fund, in exchange for a single unitary fee. For services provided to the Funds, each Fund pays the Business Manager at an annual rate of 0.69% of the Fund’s average daily net assets.
The Business Manager has an agreement with, and is dependent on, a third party to pay each Fund’s expenses in excess of 0.69% of the Fund’s average daily net assets. Pursuant to this agreement, the Business Manager is subject to certain requirements that, if not met by the Business Manager or waived by the third party, would permit the third party to terminate the agreement. If the agreement is terminated, the Business Manager may not be able to perform its obligations under the Business Management Agreement.
NOTES TO FINANCIAL STATEMENTS
March 31, 2013 (Unaudited) (Continued)
NOTE 4 - PURCHASES AND SALES OF SECURITIES
.
The costs of purchases and sales of securities, excluding short-term securities and in-kind transations, for the period ended March 31,2013 are as follows:
|
|
|
Purchases
|
|
|
Sales
|
|
|
Diamond/Gemstone ETF
|
|
$
|
324,285
|
|
|
$
|
370,272
|
|
|
Junior Silver (
Small Cap Miners/Explorers) ETF
|
|
|
721,148
|
|
|
|
734,178
|
|
|
Mining Service ETF
|
|
|
336,459
|
|
|
|
232,303
|
|
For the period ended March 31, 2013 in-kind transactions associated with creations and redemptions were as follows:
|
|
|
Purchases
|
|
|
Sales
|
|
|
Diamond/Gemstone ETF
|
|
$
|
2,027,607
|
|
|
$
|
-
|
|
|
Junior Silver
(Small Cap Miners/Explorers) ETF
|
|
|
4,465,710
|
|
|
|
839,698
|
|
|
Mining Service ETF
|
|
|
1,850,795
|
|
|
|
1,162,799
|
|
There were no purchases or sales of U.S. Government obligations for the period ended March 31, 2013.
The components of distributable earnings(losses) and cost basis of investments for federal income tax purposes at March 31, 2013 were as follows (because tax adjustments are calculated annually, these amounts do not reflect tax adjustments since the Funds do not have a full fiscal year):
|
|
|
GEMS
|
|
|
SILJ
|
|
|
MSXX
|
|
|
Tax cost of investments
|
|
$
|
1,946,810
|
|
|
$
|
3,636,996
|
|
|
$
|
1,007,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross tax unrealized appreciation
|
|
|
177,768
|
|
|
|
43,323
|
|
|
|
147,751
|
|
|
Gross tax unrealized depreciation
|
|
|
(165,146
|
)
|
|
|
(307,909
|
)
|
|
|
(45,533
|
)
|
|
Net tax unrealized appreciation/(depreciation)
|
|
$
|
12,622
|
|
|
$
|
(264,586
|
)
|
|
$
|
102,218
|
|
APPROVAL OF ADVISORY AGREEMENTS & BOARD CONSIDERATIONS
March 31, 2013 (Unaudited)
Pursuant to Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), at a meeting held on October 3, 2012, the Board of Trustees (the “Board”) of FactorShares Trust (the “Trust”) considered the approval of the following agreements (collectively, the “Agreements”):
|
●
|
the Advisory Agreement between Factor Advisors, LLC (the “Adviser”) and the Trust, on behalf of PureFunds ISE Diamond/Gemstone ETF, PureFunds ISE Mining Service ETF and PureFunds ISE Junior Silver (Small Cap Miners/Explorers) ETF (each a “Fund” and collectively, the “Funds”); and
|
|
●
|
the Sub-Advisory Agreement between the Adviser and Esposito Partners, LLC (the “Sub-Adviser”) with respect to the Funds.
|
In preparation for such meeting, the Board requested and reviewed a wide variety of information from the Adviser and Sub-Adviser.
Prior to the meeting held on October 3, 2012, the Board, including the Trustees who are not parties to the Agreements or "interested persons" of any party hereto, as defined in the 1940 Act (the "Independent Trustees"), reviewed written materials from the Adviser and the Sub-Adviser regarding, among other things: (i) the nature, extent and quality of the services to be provided to Fund shareholders by the Adviser and the Sub-Adviser; (ii) the Adviser and the Sub-Adviser’s cost and profits they will realize in providing their services, including any fall-out benefits enjoyed by the Adviser and the Sub-Adviser; (iii) comparative fee and expense data for the Funds and other investment companies with similar investment objectives; (iv) the extent to which economies of scale would be realized as the Funds proposed to be managed by the Adviser and Sub-Adviser grow and whether the proposed advisory fee for the Funds reflects these economies of scale for the benefit of the Funds; and (v) other financial benefits to the Adviser and Sub-Adviser and their affiliates resulting from services rendered to the Funds.
Prior to and at the meeting held on October 3, 2012, representatives from the Adviser and the Sub-Adviser, along with other service providers of the Funds, presented additional oral and written information to help the Board evaluate the Adviser’s and the Sub-Adviser’s fees and other aspects of the Agreements. Among other things, representatives from the Adviser and the Sub-Adviser provided overviews of their advisory businesses, including investment personnel and investment processes. The Adviser and Sub-Adviser each discussed its experience with exchange-traded funds. The representatives discussed the services to be provided by the Sub-Adviser, which would be responsible for executing purchase and sale transactions in the Funds. The representatives also discussed the rationale for launching the Funds, the Funds’ fees and fee structures of comparable investment companies. The Board then discussed the written materials that it received before the meetings and the Adviser and Sub-Adviser’s oral presentations and any other information that the Board received at the meetings, and deliberated on the approval of the Agreements in light of this information. In its deliberations, the Board did not identify any single piece of information discussed below that was all-important or controlling.
PureFunds
TM
ETFs
APPROVAL OF ADVISORY AGREEMENTS & BOARD CONSIDERATIONS
March 31, 2013 (Unaudited) (Continued)
Nature, Extent and Quality of Services Provided by the Adviser and the Sub-Adviser
The Trustees considered the scope of services to be provided under the Advisory Agreement between the Trust and Factor Advisors noting that Factor Advisors, LLC will be providing investment management services to the Funds.
In considering the nature, extent and quality of the services to be provided by the Adviser, the Board reviewed the qualifications of the Adviser’s chief compliance officer and the firm’s compliance history. The Board also considered the Adviser’s experience working with exchange-traded funds. The Adviser’s registration form (“Form ADV”) was provided to the Board, as was the response of the Adviser to a detailed series of questions which included, among other things, information about the background and experience of the portfolio managers primarily responsible for the day-to-day management of the Funds.
The Board also considered other services to be provided to the Funds by the Adviser, such as monitoring adherence to the Funds’ investment restrictions and monitoring compliance with various Fund policies and procedures and with applicable securities regulations.
The Trustees then considered the scope of services to be provided under the Investment Sub-Advisory Agreement, noting that Esposito Partners, LLC will be providing investment management services to the Funds. The Board noted the responsibilities that the Sub-Adviser has as the Funds’ investment sub-adviser, including: responsibility for the general management of the day-to-day investment and reinvestment of the assets of each Fund; reviewing the daily baskets of deposit securities and cash components; executing portfolio security trades for purchases and redemptions of Fund shares conducted on a cash-in-lieu basis; daily monitoring of tracking error and quarterly reporting to the Board; and implementation of Board directives as they relate to the Funds.
Based on the factors above, as well as those discussed below, the Board concluded that it was satisfied with the nature, extent and quality of the services to be provided to the Funds by the Adviser and the Sub-Adviser.
Cost of Services Provided and Economies of Scale
The Board reviewed each Fund’s estimated expense ratio and the advisory fee to be paid by each Fund, considered the expense ratios of comparable funds, and concluded that the advisory fees were reasonable and the result of arm’s length negotiations. Additionally, the Board took into consideration that the advisory fee, along with most of the Funds’ other operating expenses, would be paid by PureShares, LLC (the “Business Manager”) in exchange for the fee received by the Business Manager under a Business Management Agreement. The Board also evaluated the compensation and benefits expected to be received by the Adviser from its relationship with the Funds.
The Board determined that the Adviser is likely to realize economies of scale in managing the Funds as assets grow in size. The Board further determined that such economies of scale are currently shared with Fund shareholders through the Adviser’s low advisory fee and because the Business Manager pays most Fund expenses, although the Board intends to monitor fees as the Funds grow in size and assess whether fee breakpoints may be warranted.
PureFunds™ ETFs
APPROVAL OF ADVISORY AGREEMENTS & BOARD CONSIDERATIONS
March 31, 2013 (Unaudited) (Continued)
The Board then reviewed the advisory fee to be paid by the Adviser to the Sub-Adviser for its services as Sub-Adviser to the Funds. The Board considered that the fees paid to the Sub-Adviser would be paid by the Adviser from the advisory fee the Adviser will receive from the Business Manager and noted that the fee reflected an arms-length negotiation between the Adviser and the Sub-Adviser. The Board concluded that the sub-advisory fees were reasonable.
Based on the Board’s deliberations and its evaluation of the information described above, the Board, including the Independent Trustees, unanimously: (a) concluded that the terms of the Agreements are fair and reasonable; (b) concluded that the Adviser’s and Sub-Adviser’s fees are reasonable in light of the services that the Adviser and Sub-Adviser will provide to the Funds; and (c) agreed to approve the Agreements for an initial term of two years.
For the Period Ended March 31, 2013 (Unaudited)
As a shareholder of PureFunds™ ISE Diamond/Gemstone ETF, PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF and PureFunds™ ISE Mining Service ETF (the “Funds”) you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares, and (2) ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 29, 2012 – March 31, 2013).
Actual Expenses
The first line of the table provides information about actual account values based on actual returns and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then, multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period'' to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table provides information about hypothetical account values based on a hypothetical return and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
|
PureFunds™ ISE Diamond/Gemstone ETF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
Account Value
November 29, 2012
|
|
|
Ending
Account Value
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Expenses Paid
During the Period^
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
$
|
1,000
|
|
|
$
|
992
|
|
|
$
|
2.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hypothetical (5% annual
|
|
$
|
1,000
|
|
|
$
|
1,015
|
|
|
$
|
2.34
|
|
|
return before expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
PureFunds
TM
ETFs
Expense Example
For the Period Ended March 31, 2013 (Unaudited) (Continued)
|
PureFunds™ ISE Junior Silver (Small Cap Miners/Explorers) ETF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
Account Value
November 29, 2012
|
|
|
Ending
Account Value
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Expenses Paid
During the Period^
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
$
|
1,000
|
|
|
$
|
862
|
|
|
$
|
2.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hypothetical (5% annual
return before expenses)
|
|
$
|
1,000
|
|
|
$
|
1,015
|
|
|
$
|
2.34
|
|
PureFunds™ ISE Mining Service ETF
|
|
|
Beginning
Account Value
November 29, 2012
|
|
|
Ending
Account Value
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses Paid
During the Period^
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
$
|
1,000
|
|
|
$
|
1,130
|
|
|
$
|
2.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hypothetical (5% annual
return before expenses)
|
|
$
|
1,000
|
|
|
$
|
1,015
|
|
|
$
|
2.34
|
|
^The Fund commenced operations on November 29, 2012. Expenses are equal to the Fund’s annualized expense ratio of 0.69% (for the period of commencement of operation to March 31, 2013), multiplied by the average account value during the period, multiplied by 123/365 (to reflect the period since inception).
INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds file their complete schedules of portfolio holdings for their first and third fiscal quarters with the Securities and Exchange Commission (“SEC”) on Form N-Q. Each Fund’s Form N-Q is available without charge, upon request, by calling toll-free at
(877) 756-7873
. Furthermore, you may obtain the Form N-Q on the SEC’s website at www.sec.gov. Each Fund’s portfolio holdings are posted on the Funds'
website at www.pureetfs.com daily.
INFORMATION ABOUT PROXY VOTING
A description of the polices and procedures each Fund uses to determine how to vote proxies relating to portfolio securities is provided in the Statement of Additional Information (“SAI”). The SAI is available without charge upon request by calling toll-free at
(877) 756-7873
, by accessing the SEC’s website at
www.sec.gov
, or by accessing the Fund’s website at www.pureetfs.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the period ending June 30 is available by calling toll-free at
(877) 756-7873
or by accessing the SEC’s website at
www.sec.gov
.
PureFunds
TM
ETFs
The Funds collect non-public information about you from the following sources:
|
●
|
Information we receive about you on applications or other forms;
|
|
●
|
Information you give us orally; and
|
|
●
|
Information about your transactions with us or others.
|
The Funds do not disclose any non-public personal information about our customers or former customers without the customer’s authorization, except as permitted by law or in response to inquiries from governmental authorities. The Funds may share information with affiliated parties and unaffiliated third parties with whom we have contracts for servicing the Fund. The Funds will provide unaffiliated third parties with only the information necessary to carry out their assigned responsibility. The Funds maintain physical, electronic and procedural safeguards to guard your non-public personal information and require third parties to treat your non-public information with the same high degree of confidentially.
In the event that you hold shares of a Fund through a financial intermediary, including, but not limited to, a broker-dealer, bank, or trust company, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared by those entities with unaffiliated third parties.
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Investments.
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Item 11. Controls and Procedures.
|
(a)
|
The Registrant’s Principal Executive Officer and Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider.
|
|
(b)
|
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.
|
Item 12. Exhibits.
|
(a)
|
(1)
Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit.
Not applicable
.
|
(2)
A separate certification for each principal executive and Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
. Filed herewith.
(3)
Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.
Not applicable to open-end investment companies.
|
(b)
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
(Registrant)
|
FactorShares Trust
|
|
|
|
|
|
|
|
|
|
|
|
|
By (Signature and Title
|
/s/Samuel Masucci III
|
|
|
|
|
|
|
Samuel Masucci III, Principal Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 30, 2013
|
|
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
By (Signature and Title)*
|
/s/Samuel Masucci III
|
|
|
|
|
|
|
Samuel Masucci III, Principal Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 30, 2013
|
|
|
|
|
|
By (Signature and Title)*
|
/s/Mary Byra,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 30, 2013
|
|
|
|
* Print the name and title of each signing officer under his or her signature.
