Products September 28, 2007

XShares Announces Real Estate ETF Offering

September 28, 2007 (PLANSPONSOR.com) - XShares Advisors LLC has announced its newest family of funds, Adelante Shares Real Estate Exchange-Traded Funds (ETFs), began trading Friday on the New York Stock Exchange.
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The family of funds was developed in conjunction with Adelante Shares LLC and provides investors with a new approach to investing in real estate investment trusts (REITs), according to the announcement. The Adelante Shares Real Estate family of funds separates the market into six REIT-specific characteristics based on Adelante Shares’ proprietary classification of the real-estate sector.

The Adelante Shares Real Estate family of funds is comprised of seven ETFs that focus on funds from operations (FFO), growth rates (growth vs.value), square footage under management, number of units under management, dividend CAGR (compound annual growth rate) vs. CPI (consumer price index) CAGR, and dividend payout ratio along with a composite.

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The ETFs include:

  • Adelante Shares RE Classics ETF (ACK): Seeks to capture the greatest amount of U.S. non-residential, non-lodging property.
  • Adelante Shares RE Kings ETF (AKB): Seeks to capture REITs with conservative dividends.
  • Adelante Shares RE Shelter ETF (AQS): Seeks to capture the residential real estate sector.
  • Adelante Shares RE Yield Plus ETF (ATY): Seeks to capture inflation-protected real estate exposure (Dividend CAGR vs CPI CAGR).
  • Adelante Shares RE Growth ETF (AGV): Seeks to capture the fastest growing REIT companies based on FFO.
  • Adelante Shares RE Value ETF (AVU): Seeks to capture undervalued REITs.
  • Adelante Shares RE Composite ETF (ACB): Holds the largest 40 securities by market cap from each of the six indexes currently in the family.

Each ETF, excluding the Adelante Shares RE Composite ETF, holds 25 stocks, including REITs and REOCs (real estate operating companies). Each Index composition calculation is administered independently by Standard & Poor’s (S&P).

For more information, visit  http://www.xsharesadvisors.com .

Compliance September 27, 2007

Discount Rate Used in Cash Balance Conversion not up to Plan Sponsor

September 27, 2007 (PLANSPONSOR.com) - The U.S. District Court for the Eastern District of Missouri has found that a company's use of an 8% discount rate instead of the 30-year treasury rate to calculate opening balances at the time it converted its defined benefit plan to a cash balance plan violated the Employee Retirement Income Security Act (ERISA).
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According to the opinion by U.S. District Judge E. Richard Webber, when converting participants’ accrued benefit in the DB plan to an opening balance in the cash balance plan, U.S. Bank used a whipsaw calculation where it projected the accrued benefit forward using the current interest crediting rate and discounted back to present dollars using the 417(e)(3) regulations.

Citing a previous 2 nd U.S. Circuit Court of Appeals opinion, Webber said, “[T]he regulations do not leave a plan free to choose its own methodology for determining the actuarial equivalent of the accrued benefit expressed as an annuity payable at normal retirement age.”

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Webber concluded the statutory requirement that a plan use the 30-year treasury rate in calculating lump-sum distributions is equally applicable to a determination of participants’ opening balances.

U.S. Bank projected participants’ lifetime annuity to age 65 using an interest credit rate of 6.07%, the 30-year treasury rate at the time of conversion, but then discounted back to present value using an 8% discount rate. The court said that by using a high discount rate U.S. Bank did not protect participants’ accrued benefits in violation of ERISA.

The case is Sunder v. U.S. Bank Pension Plan. 

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