Both ETF’s are designed to invest in high relative strength stocks. We have segmented our investment universe into two main regions: Developed (including investable markets in Germany, Canada, Spain, Austria, France, etc.) and Emerging Markets (including investable markets in China, Korea, Malaysia, Peru, Turkey, etc.). Each region will have its own dedicated ETF, and there will not be any overlap between the two investment universes. The investment strategy is designed to outperform an appropriate broad market benchmark over a long-term time horizon.

What are the similarities/differences between the new ETF’s and PDP?

The new International ETF’s use the same investment process as PDP (our domestic Technical Leaders ETF). We simply run the same tools on a different investment universe. Because relative strength is such a robust tool we can use it in many different types of markets without having to make modifications to the strategy. By using the exact same methodology we believe it will make it easier to understand the overall philosophy, and give you confidence in the underlying process. (The fact that we use the same investment strategy as PDP is also why this FAQ is so similar to the one for PDP!).

Is there any marketing material available?

PowerShares publishes all of the marketing brochures for the ETF. You can get information at www.powershares.com, or by contacting your PowerShares wholesaler. The material will provide you with expense information, portfolio statistics (Performance, Beta, etc…), current holdings in the fund, and information on the historical testing of the strategy. For starters, these links will take you to the fact sheet for each new fund.
• FactSheet for PowerShares DWA Developed Markets Technical Leaders Portfolio (PIZ)

• FactSheet for PowerShares DWA Emerging Markets Technical Leaders Portfolio (PIE)

Will the ETF be available for purchase at my firm?

Because all ETFs trade on the stock exchanges they are available for purchase through every broker/dealer. You buy and sell the PowerShares DWA Technical Leaders ETF’s just like you would any other U.S. equity.

How are the investments selected?

We use Relative Strength as the only factor in the investment process. From our extensive research we know RS is a very robust and adaptable stock selection method. Stocks exhibiting superior Relative Strength characteristics are eligible for inclusion in the index. The process of selecting the stocks for the index is 100% systematic. We do not discuss what we think should be included or excluded from the index. The systematic process determines the securities and weights, and we follow it without question.

How many securities will each index hold?

There will be 100 securities in each index. From time to time, corporate actions may necessitate an index hold slightly more, or less, than 100 securities, but the number should always be close to 100.

Are the holdings published?

The holdings of all ETFs are published and part of the public domain. We will also make the complete index list available in pdf format on the Dorsey Wright homepage www.dorseywright.com.

How are the securities weighted in the indexes?

We use a modified equal-weighting methodology. We assign more weight to securities with better short-term relative strength characteristics. Essentially, stocks that have performed better in the recent past get a higher weighting within the index.

Are there any regional constraints?

We don’t constrain any region or country in either index. We build each index from the bottom up, based entirely on relative strength. The resulting overweights and underweights are simply a result of the stock-by-stock relative strength process, not a macro decision to over, or under, weight a specific area. A country can have a very large weight at any one time, but as relative strength changes the allocation to that area will also change.

How often is the index changed?

We rebalance the index quarterly. Every three months we revisit our relative strength rankings for the entire universe to determine what needs to be sold and what needs to be added to the index. We also re-weight all of the securities at this time.

Why do you rebalance quarterly?

It is always difficult to determine how much turnover a process can reasonably bear. We know from our research that simply increasing the trading frequency does not necessarily lead to better returns. (This, by the way, is one of the most common misperceptions we hear from people calling our office.) Rebalancing quarterly is a nice compromise between overtrading (say, rebalancing monthly) and undertrading (rebalancing annually). After the launch, we will no doubt receive spreadsheets from people detailing how we would be able to increase our performance by changing the trading frequency. We know quarterly rebalancing will not be optimal in every period. However, we do know from our testing that quarterly rebalancing works extremely well for this methodology, and that over time is the best solution for what we are trying to accomplish. This product is designed to perform well over the long-term and is not designed to react to every market “wiggle” that comes along.

What will the turnover of the index be?

These are relatively high turnover strategies. In our historical testing the Emerging Markets index had higher turnover than the Developed index. This was primarily due to the higher volatility in Emerging Markets, and we would expect this to continue to hold true in the future. From an investor’s standpoint, however, this will not make any difference. When there are changes to the index the changes are made automatically and the investor is unaffected. There are also tax advantages to using a high turnover strategy in an ETF format as opposed to a mutual fund format, which should help mitigate some of the effects of the turnover.

What are the performance characteristics of the new ETF?

Relative Strength is a trend following methodology. As a result, when there are definable trends in place this index should perform well. All trend following methodologies struggle when trends change. You can expect the DWA Technical Leaders Indexes to lag the broad market when there are major leadership changes. From the historical testing we know the index is capable of performing well in both broad market advances and more narrow moves, where the funds will struggle are periods where the market leadership is rotating out of one area and into another. While underperformance is always unsettling, the index is designed to be extremely adaptive. When trends change we will not be the first to change, but will adapt in a timely fashion and exploit the new leadership as it emerges.

How can I use this ETF in my business?

The DWA International Technical Leaders Indexes provide a turnkey solution for exposure to a high relative strength international stock index. Small accounts that can’t buy individual securities can get immediate exposure to the strategy by utilizing these ETF’s. Many people will also use the ETF’s as part of an overall asset allocation plan. Mixing the ETF with other investments can enhance returns while reducing overall index risk. We have intentionally split our universe into two markets with differing characteristics so you can allocate between the two as you see fit.

What about risk management?

It is important to remember these are international equity products, and there will be volatility that is generally higher than more diversified products (such as DWAFX). Always keep in mind that each DWA International Technical Leaders ETF holds a very specialized basket of stocks. When the defensive team moves on to the field that does not mean every stock in your index is going to start taking on water. Know exactly why you are purchasing these products and remember that you will need to monitor what the leadership is doing along the way and act accordingly.