PowerShares to List First Buy-Write ETF Portfolios Covering Major U.S. Market Indexes
December 04 2007 - 12:21PM
PR Newswire (US)
CHICAGO, Dec. 4 /PRNewswire/ -- 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. Risk Information 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.
QQQ000287 Media Contact: Kristin Sadlon Porter Novelli 212-601-8192
DATASOURCE: PowerShares Capital Management LLC CONTACT: Kristin
Sadlon of Porter Novelli, +1-212-601-8192, Web site:
http://www.powershares.com/
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