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December 12, 2006
Another Clean Energy Exchange Traded Fund to Launch
    by Bill Baue

First Trust Advisors is slated to introduce an ETF that tracks the NASDAQ Clean Edge US Liquid Series Index early next year.


Following in the footsteps of the three existing exchange traded funds (ETFs) that track indexes comprised of companies fueling the shift to cleaner energy, the first ETF based on the NASDAQ Clean Edge US Index series is set to launch early next year. First Trust Advisors has signed a licensing agreement with NASDAQ and Clean Edge to introduce the First Trust NASDAQ Clean Edge US Liquid Series Index Fund in January 2007.

"As the world's economy shifts away from fossil fuel dependency towards efficient, renewable energy sources, investment opportunities are being created daily in this new industry," said John Jacobs, executive vice president of NASDAQ. "This index, and the ETF based on it, will provide the tools needed to capture the investment opportunities created by this economic shift."

The 45 companies currently comprising the NASDAQ Clean Edge US Index (ticker: CLEN), which was launched in May 2006, fall into five sub-categories. These categories include renewable electricity generation (such as solar photovoltaics), renewable fuels (such as biodiesel or ethanol), energy storage and conversion (such as hydrogen fuel cells), energy intelligence (such as smart grids), and advanced materials (such as nanotech.)

The September 2006 semi-annual evaluation of the NASDAQ Clean Edge US Index resulted in one addition and one deletion. Added was AVX Corporation (AVX), a manufacturer of passive electronic components used to store and regulate electric energy that is 71 percent owned by Kyocera (KYO), one of the major solar PV panel manufacturers in the world. Ultralife Batteries (ULBI) was deleted.

The NASDAQ Clean Edge US Index constituents overlap with those of the three other clean energy oriented indexes (and hence the ETFs tracking them.) NASDAQ Clean Edge US Index component SunPower (SPWR) is the top constituents of the WilderHill Clean Energy Index (ECO), the benchmark for the PowerShares WilderHill Clean Energy Portfolio (PBW--launched in March 2005). SunPower, which manufactures semiconductor devices that directly convert sunlight into electricity, is also the third biggest constituents of the Cleantech Index (CTIUS), benchmark for the PowerShares Cleantech Portfolio (PZD--launched in October 2006).

The Cleantech Index's second biggest constituent--American Power Conversion (APCC)--is also a NASDAQ Clean Edge US Index component. American Power Conversion manufactures products that improve the performance of sensitive electronic devices such as computers and home electronics.

Showing up third in the top constituents of the WilderHill Progressive Energy Index (WHPRO), benchmark for the PowerShares WilderHill Progressive Energy Portfolio (PUW--launched October 2006), is On Semiconductor (ONNN), a NASDAQ Clean Edge US Index company. On Semiconductor produces components that provide high-performance clock management and data flow management for precision computing and communications systems.

In addition to the flagship index, there are three other indexes in the NASDAQ Clean Edge US Index series. One focuses on total return ( CLNX), one on liquidity ( CELS), and one on both liquidity and total return ( CEXX). The First Trust ETF tracks CELS.

 

 
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