UPDATES nual expense ratio of 0.70 percent. The biggest country holding in the ETF at launch was Japan, at almost a third of the portfolio, followed <strong>by</strong> Germany, at just over 20 percent <strong>and</strong> the U.S., at almost 18 percent. South Korean companies make up about 10 percent of the ETF. The <strong>to</strong>p three companies in the fund are Germany’s Daimler AG, at 8.28 percent; General Mo<strong>to</strong>rs at 7.64 percent; <strong>and</strong> Honda at 5.67 percent. Direxion Changes Tickers On Natgas Funds Direxion changed the ticker symbols on a pair of its natural gas funds in May. The Direxion Daily Natural Gas Related Bull 2x Shares will now trade under the ticker GASL <strong>and</strong> the Direxion Daily Natural Gas Related Bear 2x Shares under the ticker GASX. The funds’ previous tickers were FCGL <strong>and</strong> FCGS, respectively. Both <strong>ETFs</strong> trade on the NYSE Arca exchange. The new tickers are motivated simply <strong>by</strong> the company’s desire <strong>to</strong> make its monikers more easily recognizable <strong>to</strong> inves<strong>to</strong>rs seeking <strong>to</strong> take advantage of short-term market movement, a company spokesperson said. The pair of funds is designed <strong>to</strong> provide twice the daily or inverse performance of the ISE-Revere Natural Gas Index, <strong>and</strong> has been around since August 2010. The previous tickers bore clear resemblance <strong>to</strong> the trading symbol of the popular First Trust ISE-Revere Natural Gas ETF (NYSE Arca: FCG). Global X Debuts Fertilizer, Farming <strong>ETFs</strong> In May, Global X Funds launched two <strong>ETFs</strong>, focusing on global fertilizer producers <strong>and</strong> farming equities. The Global X Fertilizers/Potash ETF (NYSE Arca: SOIL), <strong>by</strong> tracking the Solactive Global Fertilizers/Potash Index, owns the largest <strong>and</strong> most liquid global names involved in various aspects of the fertilizer industry. SOIL comes with a 0.69 percent price tag. The Global X Farming ETF (NYSE Arca: BARN), on the other h<strong>and</strong>, is likely <strong>to</strong> face stiff competition from the likes of the $5.25 billion Market Vec<strong>to</strong>rs Agribusiness ETF (NYSE Arca: MOO). Still, BARN claims <strong>to</strong> be more narrowly focused than its competi<strong>to</strong>rs, as it only includes companies in the agricultural products, lives<strong>to</strong>ck operations <strong>and</strong> farming equipment manufacturing segments. BARN tracks the Solactive Global Farming Index from Germany-based Structured Solutions AG. The benchmark comprises 50 securities screens for liquidity, <strong>and</strong> weights securities based on freefloat market capitalization. Retail Inves<strong>to</strong>rs Power Schwab ETF Gains Charles Schwab managed $121 billion in ETF assets at the end of the first quarter, 32 percent more than a year ago, according <strong>to</strong> the company’s latest ETF inves<strong>to</strong>r data. The increase is due largely <strong>to</strong> retail inves<strong>to</strong>rs <strong>and</strong> a generally growing appetite for <strong>ETFs</strong>. Retail inves<strong>to</strong>r assets in the various <strong>ETFs</strong> offered through Schwab’s platform soared 58 percent between March 2010 <strong>and</strong> March 2011, <strong>and</strong> now represent 37 percent of Schwab’s <strong>to</strong>tal ETF pie, up from 31 percent a year earlier. Similarly, dem<strong>and</strong> from clients using registered investment advisors grew 18 percent, though an exodus from international equity <strong>ETFs</strong> slowed the RIA-related growth, the company said. For Schwab, about 85 percent of advisors already include <strong>ETFs</strong> in their portfolios, while only a small portion of retail inves<strong>to</strong>rs do, Beth Flynn, Schwab’s vice president of ETF platform development, said in a telephone interview in May. But usage <strong>by</strong> these retail inves<strong>to</strong>rs is growing faster, she noted. While a retail inves<strong>to</strong>r who uses <strong>ETFs</strong> had, on average, a 16 percent allocation <strong>to</strong> cash, a non-ETF retail inves<strong>to</strong>r tied nearly 40 percent of invested assets <strong>to</strong> cash, Schwab data showed. IndexIQ Rolls Out Japan MidCap ETF In June, IndexIQ rolled out a first-of-itskind ETF focused on midcap Japanese companies that the firm says have growth characteristics of small-cap enterprises with the size <strong>and</strong> stability of larger ones. The IQ Japan Mid Cap ETF (NYSE Arca: RSUN) is designed <strong>to</strong> give inves<strong>to</strong>rs pureplay exposure <strong>to</strong> the midcap universe either as a st<strong>and</strong>-alone fund or in conjunction with small- <strong>and</strong> large-cap Japanese offerings <strong>to</strong> create broader-based exposure, the company said in a press release. As of May 16, the industrial sec<strong>to</strong>r made up 23.2 percent of the ETF’s underlying index, while the financial <strong>and</strong> technology sec<strong>to</strong>rs made up 17.7 percent <strong>and</strong> about 9 percent, respectively, IndexIQ said. The new ETF has an annual expense ratio 0.69 percent. UBS Launches 2X Business Development ETN In late May, Swiss bank UBS launched a double-exposure exchange-traded note focused on business development companies. The UBS 2X Leveraged Long Wells Fargo Business Development Company ETN (NYSE Arca: BDCL) is essentially a double-exposure play on an ETN it launched on April 28 with the ticker (NYSE Arca: BDCS). Both ETNs are based on the market-capitalization-weighted Wells Fargo Business Development Company Index, <strong>and</strong> have annual expense ratios of 0.85 percent. The new ETNs reflect a growing interest in financing for smaller companies that some say goes h<strong>and</strong> in h<strong>and</strong> with an economy that’s starting <strong>to</strong> grow on its own, aside from government aid. While credit markets have normalized <strong>to</strong> a large extent, small companies are still having problems obtaining loans since the economic crisis of 2008. Deutsche Debuts Leveraged Dollar Index ETNs Deutsche Bank <strong>and</strong> Invesco PowerShares rolled out in late May the first-ever U.S. dollar index leveraged ETNs that provide triple-long <strong>and</strong> triple-short exposure <strong>to</strong> futures contracts on the currency benchmark that measures the value of the greenback compared with six of the world’s most-traded currencies. The Powershares DB 3x Long <strong>US</strong> Dollar Index Futures ETN (NYSE Arca: UUPT) <strong>and</strong> PowerShares DB 3x Short <strong>US</strong> Dollar Index Futures ETN each charge an annual expense ratio of 0.95 percent. They are designed <strong>to</strong> replicate the performance of the dollar relative <strong>to</strong> a basket of six currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona <strong>and</strong> Swiss franc. The ETNs are rebalanced monthly. 4 ETFR • July 2011
DBA T H E P O W E R S H A R E S D B AGRICULTURE FUND To download a copy of a prospectus, visit PowerShares.com/DBApro The fund is not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940 <strong>and</strong> is not subject <strong>to</strong> its regulation. DB Commodity Services LLC, a wholly owned subsidiary of Deutsche Bank AG, is the managing owner of the fund. Certain marketing services may be provided <strong>to</strong> the fund <strong>by</strong> Invesco Distribu<strong>to</strong>rs, Inc. or its affiliate, Invesco PowerShares Capital Management LLC (<strong>to</strong>gether, “Invesco”). Invesco will be compensated <strong>by</strong> Deutsche Bank or its affiliates. ALPS Distribu<strong>to</strong>rs, Inc. is the distribu<strong>to</strong>r of the fund. Invesco, Deutsche Bank <strong>and</strong> ALPS Distribu<strong>to</strong>rs, Inc. are not affiliated. Commodity futures contracts generally are volatile <strong>and</strong> are not suitable for all inves<strong>to</strong>rs. An inves<strong>to</strong>r may lose all or substantially all of an investment in the fund.
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