Nuveen to Launch 5 Treasury Index ETFs, Announces Monthly Tax-Free Dividends for Closed-End ETFs

By John Spence, Associate Editor

Chicago-based Nuveen Investments announced that it plans to launch the first exchange-traded funds (ETFs) that track U.S. Treasury Indexes. The new ETFs will be called Fixed Income Trust Receipts (FITRs) and will be based on Ryan Treasury Indexes of 1-year, 2-year, 5-year, and 10-year Treasury issues and 20-year Treasury STRIPs.

STRIPs, which stands for Separate Trading of Registered Interest and Principal Securities, are created by bond dealers by dividing individual interest-paying securities into component cash flows and selling each one separately. When a bond gets "stripped" of its interest payments, it becomes a zero-coupon bond. The owner is not paid any interest, but buys the right to repayment of principal at a discount to the face value.

The new ETFs will be traded on the American Stock Exchange (AMEX), pending final regulatory approval.

The Nuveen funds will track Ryan Treasury Indexes, the first set of bond indexes developed by Ronald J. Ryan in 1983. Ryan previously served as Director of Fixed Income Research at Lehman Brothers before he left in 1982 to found a fixed-income quantitative research firm that would later become Ryan Labs, Inc.

Below is a table that lists historical performance of Ryan Treasury Indexes that the Nuveen ETFs will be based upon, as of 11/30/2000.

Index name	10 yr.*	5 yr.*	3 yr.*	1 yr.	1 mo.
Ryan 12 mo. Bill	5.71%	5.60%	5.29%	5.99%	0.71%
Ryan 2 year TSY	6.22%	5.28%	4.98%	6.26%	1.01%
Ryan 5 year TSY	7.11%	5.46%	5.54%	9.00%	1.98%
Ryan 10 year TSY	7.71%	5.44%	5.20%	9.76%	2.82%
Ryan 20-year Strips	12.80%	8.86%	8.57%	32.31%	n/a

* annualized returns               Source: Ryan Labs, Inc.

The new Treasury Index ETFs may be attractive to many investors in 2001 should stock prices continue to sag. "These new ETFs will make buying and selling Treasury securities as convenient as buying and selling stocks," said Gary Gastineau, Managing Director of ETF Product Development at Nuveen. "They will benefit both retail and institutional investors."

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