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Exchange-Traded Fund (ETF) Profiles -- INTERNET
HOLDR (HHH)
 The
Internet HOLDR (HHH) is an exchange-traded fund that invests in twelve
firms that derive the majority of their revenue directly from business
transacted on the Internet. The fund's three largest holdings -- eBay
(EBAY), Yahoo (YHOO) and Amazon.com (AMZN) -- account for more than 85%
of its value, with each of these three accounting for at least 24% of
HHH's total value. In fact, eBay alone accounts for more than 30% of the
fund!
HHH has been one of the top-performing funds since the market bottomed
last year. It has already delivered returns in excess of +100% in 2003,
and is now ahead more than +80% compared to its level a year ago.
However, since its inception in September 1999, the fund has posted a
dismal annualized return of -17.46%. After trading as high as $192 per
share at its peak in 2000, HHH fell below $18 last year, a loss of more
than -90%.
HHH has a fairly high correlation with the Nasdaq overall, as well as
with the Technology Sector SPDR (XLK). However, these 77-79%
correlations are well below what you'll find if you compare, for
example, the tech sector itself with the entire Nasdaq Composite. The
fund is fairly volatile, with an average daily trading range of about
2.5% (this figure stood at nearly 4.0% back in 2002).
Important Reminder: HHH is a HOLDR
managed by brokerage giant Merrill Lynch. These types of funds are a bit
different from traditional ETFs in the way they trade and in their
expense ratios. (There are some other technical issues that you might
want to discuss with your tax advisor as well, after you've read the
prospectus.) For example, you cannot buy or sell less than 100 shares of
a HOLDR in any transaction. However, they are still exempt from the
uptick rule (the uptick rule says that you cannot short a stock unless
the last price change in the stock was to a higher price).
Unlike most other types of funds, which track
broad-based indices that contain hundreds (or some cases even thousands)
of stocks, HOLDRS consist of just a handful of stocks and are designed
to track particular industry groups. Because they only track a few
companies, HOLDRS are very inexpensive to manage. However, because they
aren't highly diversified, HOLDRS tend to be much more volatile than the
average ETF.
| Internet
HOLDR (HHH) |
|
|
|
| Type: |
Sector
(Narrow) |
Reminder:
HOLDRs only trade in 100-share round lots. |
| Similar
funds: |
Broadband
HOLDR (BDH) |
|
|
|
Semiconductor
HOLDR (SMH) |
|
|
|
Technology
SPDR (XLK) |
|
|
| Options?: |
Yes, illiquid |
|
|
|
|
|
|
|
|
|
|
| Performance
Data |
|
|
|
|
| YTD
High: |
$49.45 |
10/9/2003 |
|
Annualized
return since: |
| YTD
Low: |
$24.05 |
2/13/2003 |
|
One-year |
87.00% |
| YTD
Return: |
92.31% |
As
of close 11/07/03 |
Three-year |
-16.13% |
|
|
|
|
Five-year |
N/A |
| Dividends: |
$0.10 |
past 12-mos |
Life of fund* |
-17.42% |
| Expense
Ratio: |
$0.08
per share per year |
|
*
- Started trading 9/23/1999 |
|
|
|
|
|
|
| Correlation
Data* |
(1/02/02-10/31/03) |
Holdings* |
(as of 11/6/2003) |
| Dow
Jones Industrials |
65.1% |
|
E-Bay (EBAY) |
33.44% |
| S&P
500 |
|
70.8% |
|
Yahoo! (YHOO) |
27.90% |
| Nasdaq
Composite |
79.2% |
|
Amazon.com (AMZN) |
24.74% |
| Nasdaq-100 |
|
79.4% |
|
E-Trade (ET) |
3.14% |
|
|
|
|
Ameritrade (AMTD) |
2.78% |
| BDH |
|
69.5% |
|
Network Assoc.
(NET) |
2.53% |
| SMH |
|
68.7% |
|
Earthlink (ELNK) |
1.44% |
| XLK |
|
76.9% |
|
Real Networks
(RNWK) |
1.27% |
|
|
|
|
DoubleClick (DCLK) |
0.83% |
|
|
|
|
CNET (CNET) |
0.82% |
|
|
|
|
* Percent top ten
are of total |
98.89% |
|
|
|
|
|
|
| Average
Daily Volume |
|
Average
Daily Price Range |
| Oct-03 |
321,961 |
|
|
Oct-03 |
2.5% |
| 2003
YTD |
206,950 |
|
|
2003 YTD |
2.5% |
| 2002 |
177,908 |
|
|
2002 |
3.8% |
| *
- Correlation measures how closely the two items track each
other |
|
*
Includes prior day's close (true range) |
|
|
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