ETFs Based on Mergent's Dividend Achievers(TM) Meet Multiple Investment Objectives, a New White Paper Finds

Dividend-focused ETFs offer total return, high current yield, capital appreciation, and international investment strategies 


NEW YORK, Oct. 6  /PRNewswire/ -- A family of four exchange-traded funds (ETFs) based on Mergent, Inc.'s Dividend Achievers index methodology, which are now on the market, offers a wide range of dividend-focused investment opportunities, with each ETF appropriate for investors with specific investment objectives, a new white paper concludes. These investment objectives include total return, high current yield, capital appreciation and international investing.

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Three of these four funds began trading on the American Stock Exchange (Amex) on September 15, 2005: Broad Dividend Achievers(TM) Portfolio (ticker "PFM"), High Growth Rate Dividend Achievers(TM) Portfolio ("PHJ"), and the International Dividend Achievers(TM) Portfolio ("PID"). The fourth ETF, the PowerShares High Yield Equity Dividend Achievers(TM) Portfolio ("PEY"), was launched on December 9, 2004, and has grown to approximately $500 million in assets. All four funds are run by PowerShares Capital Management, LLC, a firm that has become well known for its developing enhanced ETF strategies over the past several years.

The research report, titled "PowerShares Dividend Achievers(TM) Funds: Four Flavors for Four Investment Objectives," prepared by New York-based AltaVista Independent Research, demonstrates that the four different dividend- focused investment strategies represented by these ETFs have all significantly outperformed their benchmarks over the past 10 years, with lower risk/volatility, making them excellent core investment products, depending on the investor's particular objective.

Each fund satisfies a different objective

The paper then uses the strong long-term relationship between yield and earnings growth (described later) to distinguish among the four ETFs, demonstrating how each fund can meet the needs of investors with different investment objectives:

   - Broad Dividend Achievers (PFM) for total return. This fund represents
     the "growth and income" middle ground between the High Yield (PEY) and
     High Growth (PHJ) funds.
   - High Yield (PEY) for yield and stability. With the highest yield among
     the four ETFs, PEY is appropriate for more conservative, income-
     oriented investors.
   - High (Dividend) Growth Rate (PHJ) for capital gains. Going forward,
     anticipated faster earnings growth should support faster share price
     appreciation, and given the fund's relatively lower yields, a bigger
     portion of returns are expected to come from capital gains.
   - International Dividend Achievers (PID) for valuation. The case for this
     fund goes beyond the diversification motivation for foreign exposure.
     Valuations of these foreign securities trading on U.S. markets are
     modestly cheaper than their domestic counterparts, even though their
     profitability is on a par with the U.S. stocks, making this portfolio
     inviting from both diversification and value standpoints.

  The Dividend Achievers indexes underlying the ETFs


Mergent, Inc., a Xinhua Finance (TSE Mothers: 9399) company, which owns and maintains the indexes underlying the ETFs, developed the proprietary methodology that identifies Dividend Achievers - companies that have consistently increased their regular annual dividends to shareholders for at least the past ten or more consecutive years (five years or longer for foreign companies). Companies that meet this stringent requirement tend to be high quality firms, with strong cash flows and solid balance sheets, and with the potential for long-term outperformance.

Each of the indexes underlying these funds is calculated and published by the AMEX every 15 seconds. The Broad Dividend Achievers Index (AMEX ticker "DAA"), which underlies the PFM fund, tracks the aggregate total return of all U.S. Dividend Achievers stocks.

The Dividend Achievers 50 Index (ticker "DAY"), which underlies the PEY fund, tracks the aggregate total return of the 50 highest yielding Dividend Achievers stocks, resulting in the highest-yielding of the Dividend Achievers family of indexes. The High Growth Rate Dividend Achievers Index (ticker "DAH"), which underlies the PHJ fund, tracks the total return of the 100 Dividend Achievers with the greatest 10-year dividend growth rate. And the International Dividend Achievers Index (ticker "DAT"), which underlies the PID fund, tracks the total return of approximately 50 stocks and American Depositary Receipts (ADRs) from Canada, Europe and Asia that both meet the Dividend Achievers requirements and trade on the U.S. equities market.

Performance of the indexes

The white paper analyzes the performance of each of these underlying Dividend Achievers indexes, demonstrating in each case that the index has outperformed its appropriate benchmark index for the 5- and 10-year periods ended June 30, 2005, with less risk/volatility. This results in higher risk- adjusted returns (a higher Sharpe ratio) than the benchmark in each case.

While the historical record demonstrates that all four indexes have outperformed over the past ten years, the report takes the analysis further, scrutinizing the performance variations among the four indexes for investment guidelines.

Because the portfolio constituents of an ETF, and the number of shares of each stock in the portfolio, are fully transparent, the white paper's author notes that it is possible to apply fundamental analysis to ETFs, similar to the analysis of a single stock. By contrast, the report notes, such fundamental analysis is not possible with mutual funds, because the constituents of the portfolio are not fully transparent.

The strong relationship between yield and dividend/earnings growth enables the author to distinguish among these funds, and conclude that each fund is more appropriate for investors with specific investment objectives. Based on the differing yield/growth characteristics for each fund, the report concludes by showing how each fund is more appropriate for specific investment objectives: total return, high current yield, capital appreciation and international investing.

About Mergent

Mergent, Inc., a Xinhua Finance company (TSE Mothers: 9399), is the preferred leading provider of business and financial data on global publicly listed companies. The company is headquartered in New York, NY, and Charlotte, NC, with sales offices in key North American cities as well as London, Shanghai, Tokyo, Toronto, and Sydney. Mergent's databases include information on more than 15,000 U.S. public companies and 20,000 non-U.S. public companies in more than 100 countries. Mergent is the publisher of the Dividend Achievers(TM) family of indexes including Broad, International, High Growth and Canadian. Mergent products and services include Ford Equity Research, independent equity research with buy, sell and hold recommendations; Mergent Online; Mergent Manuals, Handbooks and Investment Guides; EventsData, web- based reporting of corporate actions and events; BondSource, access to municipal and corporate fixed income data and end-of-day evaluation pricing. For more information, visit our websites, http://www.dividendachievers.com/ and http://www.mergent.com/.

About Xinhua Finance Limited

Xinhua Finance Limited is China's premier financial services and media company and is listed on the Mothers board of the Tokyo Stock Exchange (symbol: 9399) (OTC ADRs: XHFNY).  Rooted in China with a global presence, Xinhua Finance services financial institutions, corporations and re- distributors through four focused and complementary service lines:  Indices, Ratings, Financial News and Investor Relations. Founded in 1999 and based in Hong Kong, the Company has 17 offices and 22 news bureaus across Asia, Australia, North America and Europe and covers key Chinese and international markets.  For more information, please visit http://www.xinhuafinance.com/. 

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DATASOURCE: Mergent, Inc.



CONTACT:  Lew Koflowitz, Strategic Design Group of NY, Inc.,

[phone], or cell, [phone]; or Shirley Petersen, Vice

President, Index Licensing of Mergent, Inc., [phone], or





Web site:  http://www.mergent.com/

http://www.dividendachievers.com/

http://www.xinhuafinance.com/ 

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