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Tuesday, December 04, 2007|
PowerShares to List Three Buy-Write ETFs
PowerShares plans to list three buy-write portfolios covering the Dow Jones Industrial Average (DJIA(R)), S&P 500(R) and NASDAQ-100(R) market indexes. The PowerShares DJIA BuyWrite Portfolio and the PowerShares S&P 500 BuyWrite Portfolio will be listed on the NYSE Arca. The PowerShares NASDAQ-100 BuyWrite Portfolio will be listed on the NASDAQ.
PowerShares Capital Management LLC, a leading provider of exchange-traded funds (ETFs), today announced the anticipated listing of three buy-write portfolios covering the Dow Jones Industrial Average (DJIA(R)), S&P 500(R) and NASDAQ-100(R) market indexes. The industry's first buy-write ETFs focusing on U.S. indexes are expected to begin trading Dec. 20, 2007, on the NYSE Arca and NASDAQ Stock Market.
The anticipated ticker symbols, portfolio names and stock markets are:
-- PGB - PowerShares DJIA BuyWrite Portfolio - NYSE Arca
-- PBP - PowerShares S&P 500 BuyWrite Portfolio - NYSE Arca
-- PQBW - PowerShares NASDAQ-100 BuyWrite Portfolio - NASDAQ
PowerShares' BuyWrite ETF portfolios will provide investors continuous access to a buy-write, or covered call, investment strategy on three of the most widely recognized U.S. market indexes. The portfolios are based on Chicago Board of Options Exchange (CBOE) BuyWrite indexes which, over the past decade have had at least 25 percent less volatility than related stock indexes.
"The buy-write investment strategy is one in which the portfolio holds a basket of stocks, and sells a succession of at-the-money call options with one-month left to expiration," said Bruce Bond, president and CEO of PowerShares. "This strategy is popular with asset managers, as it can provide additional income to a portfolio through call option premiums. These are the first ETFs that allow investors to capture the moving parts of a buy-write strategy, and they do it in one simple transaction."
Product information on PowerShares BuyWrite ETF portfolios follows:
The PowerShares DJIA BuyWrite Portfolio (PGB) is based on the CBOE DJIA BuyWrite Index. This Index measures the total rate of return of DJIA(R) covered call strategy, which consists of holding a portfolio indexed to the Dow Jones Industrial Average, and selling a succession of one-month at-the- money DJIA call options. The CBOE DJIA BuyWrite Index assumes dividends paid on DJIA components are reinvested, call options are written on the third Friday of each month, held until expiration, and exercised options are settled in cash.
The PowerShares S&P 500 BuyWrite Portfolio (PBP) is based on the CBOE S&P 500 BuyWrite Index. The CBOE S&P 500 BuyWrite Index measures the total rate of return of an S&P 500 covered call strategy, which consists of holding a portfolio indexed to the S&P 500, and selling a succession of one-month at- the-money S&P 500 call options. The CBOE S&P 500 BuyWrite Index assumes that call options are written on the third Friday of each month, held until expiration, and exercised options are settled in cash.
The PowerShares NASDAQ-100 BuyWrite Portfolio (PQBW) is based on the CBOE NASDAQ-100 BuyWrite Index(TM). This Index measures the total rate of return of an NASDAQ-100(R) covered call strategy, which consists of holding a portfolio indexed to the NASDAQ-100, and selling a succession of one-month at-the-money NASDAQ-100(R) call options. The CBOE NASDAQ-100 Buy Write Index assumes that call options are written on the third Friday of each month, held until their expiration, and exercised options are settled in cash.
PowerShares Capital Management LLC is leading the intelligent ETF revolution through its family of more than 100 domestic and international exchange-traded funds, which seek to outperform traditional benchmark indexes while providing advisors and investors access to an innovative array of focused investment opportunities. With franchise assets of over $35 billion, PowerShares ETFs trade on all three U.S. stock exchanges and the PowerShares QQQ(TM), which tracks 100 of the NASDAQ's fastest-growing companies, is the most actively traded equity security in the world. For more information, please visit us at http://www.powershares.com/.
PowerShares is a part of Invesco, a leading independent global investment management company, dedicated to helping people worldwide build their financial security. By delivering the combined power of our distinctive worldwide investment management capabilities, including AIM, Atlantic Trust, Invesco, Perpetual, PowerShares, Trimark, and WL Ross, Invesco provides a comprehensive array of enduring investment solutions for retail, institutional and high net worth clients around the world. Operating in 20 countries, the company is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at http://www.invesco.com/.
Risks of Owning Exchange-Traded Funds
Options are not suitable for all investors. Exchange-traded funds are made up of publicly traded securities that can and will move higher and lower with market movements. You should anticipate that the value of the shares of each fund will advance or decline more or less in correlation with the advance or decline in value of the applicable index. The Funds are not actively managed, and shares of the Funds may trade at or below the Funds' NAV. Exchange-traded funds are subject to risks similar to those of stocks, including risks associated with short-selling and margin account maintenance. Ordinary brokerage commissions apply.
A I M Distributors, Inc. is the distributor of the PowerShares Exchange- Traded Fund Trust II.
An investor should consider the Fund's investment objectives, risks, charges and expenses carefully before investing. For this and more complete information about the Fund, call 800.983.0903. Please read the prospectus carefully before investing.
The information in this prospectus is not complete and may be changed. The portfolio may not sell its shares until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell the portfolio shares, nor is the portfolio soliciting an offer to buy its shares in any jurisdiction where the offer or sale is not permitted.
Dividends, Distributions & Taxes
The tax information in this document is provided as general information. You should consult your own tax professional about the tax consequences of an investment in Shares. Please see the prospectus for more complete tax information.
Dividends: Ordinarily, dividends from net investment income, if any, are declared and paid quarterly. Each Fund distributes its net realized capital gains, if any, to shareholders annually. Distributions: Distributions in cash may be reinvested automatically in additional whole Shares only if the broker through whom you purchased Shares makes such option available.
Taxes: Currently, any capital gain or loss realized upon a sale of Shares is generally treated as long-term capital gain or loss if the Shares have been held for more than one year and as short-term capital gain or loss if the Shares have been held for one year or less. The ability to deduct capital losses may be limited. As with any investment, you should consider how your investment in Shares will be taxed. Unless your investment in Shares is made through a tax-exempt entity or tax-deferred retirement account, such as an IRA plan, it is important to understand the possible tax consequences when: 1. Your Fund makes distributions, 2. You sell your Shares listed on the exchange, and 3. You purchase or redeem Creation Units. Ordinarily, dividends from net investment income, if any, are declared and paid quarterly. Each Fund may also pay a special distribution at the end of the calendar year to comply with federal tax requirements. In general, your distributions are subject to federal income tax when they are paid, whether you take them in cash or reinvest them in a Fund. Dividends paid out of a Fund's income and net short- term gains, if any, are taxable 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.
Long-term capital gains of non-corporate taxpayers are generally taxed at a maximum rate of 15% for taxable years beginning before January 1, 2011. Without future congressional action, the maximum rate of long-term capital gains will return to 20% in 2011. The Funds expect that the ownership of stocks and sale of call options will generally constitute "straddles" (offsetting positions with respect to personal property) under section 1092 of the Internal Revenue Code. In general, the Funds do not anticipate that the call options will be structured to be treated as "qualified covered call options" under section 1092 of the Internal Revenue Code. The straddle rules would usually terminate the Funds' holding periods for the stocks that become part of a straddle before the long-term capital gains holding period has been reached, which may restrict the Fund's ability to recognize long-term capital gains from a sale or disposition of the stocks. The straddle rules may also defer recognition of realized losses and require the capitalization of certain interest expense and carrying charges. In addition, dividends, if any, on stocks would not qualify for the reduced tax rates applicable to long-term capital gains. In this regard, the Funds intend to make certain elections consistent with their investment policies that may minimize certain of these adverse consequences. Although the Funds will be managed in an effort to minimize the extent to which the straddle rules apply, there can be no assurance that the Funds will be successful in this regard.
Distributions in excess of a Fund's current and accumulated earnings and profits are treated as a tax-free return of capital to the extent of your basis in the Shares, and as capital gain thereafter. A distribution will reduce a Fund's NAV per Share and may be taxable to you as ordinary income or capital gain even though, from an investment standpoint, the distribution may constitute a return of capital. By law, each Fund must withhold a percentage of your distributions and proceeds if you have not provided a taxpayer identification number or Social Security number.
There are risks involved with investing in ETFs including possible loss of money. Shares are not actively managed and are subject to risk similar to stocks and covered call options, as well as those risks related to short selling and margin maintenance. Shares are not FDIC insured may lose value and have no bank guarantee.
There are additional risks involved in writing (selling) covered call options on the stocks of the S&P 500, the Dow Jones Industrial Average and the NASDAQ-100 (Indexes). The Fund, by writing covered call options on these Indexes, will give up the opportunity to benefit from potential increases in the value of the indexes stocks above the exercise prices of the options, but will continue to bear the risk of declines in the value of the Indexes. The premiums received from the options may not be sufficient to offset any losses sustained from the volatility of the Indexes over time. In addition, exchanges may suspend trading of options in volatile markets. If trading is suspended, the Fund may be unable to write (sell) options at times that may be desirable or advantageous for the Fund to do so. Trading suspensions may limit the Fund's ability to achieve its investment objectives. The Fund may be required to sell investments from its portfolio to make cash settlement on (or transfer ownership of an Index stock to physically settle) any options that are exercised. Such sales (or transfers) may occur at inopportune times, and the Fund may incur transaction costs that increase its expenses.
"Dow Jones(R)," "DJIA(R)" and "Dow Jones CBOE BuyWrite Index," are trademarks of Dow Jones & Company, Inc. and have been licensed for use for certain purposes by Powershares Capital Management LLC. The Powershares DJIA BuyWrite Portfolio based on the Dow Jones CBOE BuyWrite Index is not sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of trading in such product.
"CBOE(R)" and "Chicago Board Options Exchange(R)" are registered trademarks and BuyWrite(sm) CBOE BuyWrite Index(sm) are service marks of Chicago Board Options Exchange, Incorporated ("CBOE") and have been licensed for use for certain purposes by Adviser. NASDAQ(R), NASDAQ-100(R), and NASDAQ- 100 Index(R), are registered trademarks of The NASDAQ stock Market, Inc. ("NASDAQ"). NASDAQ has granted Powershares Capital Management LLC ("Licensee") a license to use the CBOE NASDAQ-100 BuyWrite Index for purposes of Licensee's Powershares NASDAQ-100 BuyWrite Portfolio. PowerShares NASDAQ-100 BuyWrite Portfolio is not sponsored, endorsed, sold or promoted by NASDAQ or CBOE, and neither NASDAQ nor CBOE makes any representation regarding the advisability of investing in PowerShares NASDAQ-100 BuyWrite Portfolio.
"Standard & Poor's(R)", "S&P(R)" and "S&P 500(R)" are registered trademarks of Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). These marks have been licensed for use by Powershares Capital Management LLC. The Powershares S&P 500 BuyWrite Portfolio is not sponsored, endorsed, sold or promoted by S&P or CBOE, and S&P and CBOE make no representations regarding the advisability of investing in the Powershares S&P 500 BuyWrite Portfolio.
PowerShares(R) and Leading the Intelligent ETF Revolution(R) are registered marks of PowerShares Capital Management LLC. A I M Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust and the PowerShares Global Exchange-Traded Fund Trust. ALPS Distributors, Inc. is the distributor of PowerShares QQQ. PowerShares QQQ is a unit investment trust. PowerShares Capital Management LLC and A I M Distributors, Inc. are not affiliated with ALPS Distributors, Inc.
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