segment of Indonesia’s stock market.
IDXJ is the second ETF introduced by Market Vectors that focuses exclusively on Indonesia, joining Market Vectors Indonesia Index ETF (NYSE Arca:IDX), which focuses on the large-cap segment of the fast-growing Indonesia economy. IDX has earned a 5-star Morningstar rating on both a 3-year and overall basis (as of 2/29/12).+
Indonesia, home to roughly 240 million people, has Southeast Asia’s largest economy: $834 billion in 2011. Beginning in 1999, the country embarked on a path of sounder fiscal and monetary policies that allowed it to improve its financial condition dramatically.1 As a result, the country has attracted substantial foreign direct investments and its sovereign debt rating has been upgraded to investment grade by both Fitch Ratings (as of December 15, 2011) and Moody’s Investors Services (as of January 18, 2012).
“Indonesia has grown rapidly over the past several years and we believe that it is well positioned to continue to prosper, with an economy supported by rising domestic consumption and higher levels of disposable income,” said Ed Lopez, Marketing Director at Market Vectors ETFs. “In our view, smaller cap companies that generate the majority of their revenues in the local market provide the best way for investors to gain exposure to the domestic growth story. In that regard, IDXJ provides a complement to our broader-based Indonesian ETF, IDX.”
IDXJ seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of Market Vectors Indonesia Small-Cap Index (MVIDXJTR), a rules-based, modified market capitalization-weighted, float-adjusted index comprised of publicly traded small capitalization companies that are domiciled and primarily listed in Indonesia, or that generate the majority of their revenues in Indonesia. MVIDXJTR was created by Market Vectors Index Solutions GmbH which develops tailor-made, investable indices that seek to provide comprehensive exposure to a given country or region.
As of February 29, 2012, the leading sectors in the Index were Financials (39 percent), Industrials (18 percent), Energy (17 percent), and Consumer Staples (15 percent). To be included in the Index, companies must have a market capitalization in excess of $150 million, three-month average daily trading volume of at least $1 million, and a minimum trading volume of 250,000 shares each month over the last six months. The average market capitalization of the Index at launch was $688 million.
Market Vectors notes that investing in the securities of Indonesian issuers involves risks not typically associated with investments in the securities of issuers in more developed countries, including expropriation, foreign ownership restrictions and government intervention in international trade, confiscatory taxation, and political instability, among others.
IDXJ joins the Market Vectors family of ETFs that, in addition to IDX, includes small- and all-cap emerging markets exchange traded funds such as India Small-Cap Index (NYSEArca:SCIF); Germany Small-Cap ETF (NYSEArca:GERJ); Russia ETF (NYSEArca:RSX); Poland ETF (NYSEArca:PLND); Russia Small-Cap ETF (NYSEArca:RSXJ); Vietnam ETF (NYSEArca:VNM); and Brazil Small-Cap ETF (NYSEArca:BRF), among others.
IDXJ, Market Vectors 45th ETF, has a gross expense ratio of 0.70 percent and a net expense ratio of 0.61 percent, which is capped until at least May 1, 2013. During such time, the expense limitation is expected to continue until the Fund’s Board of Trustees acts to discontinue all or a portion of such expense limitation.
About Market Vectors ETFs
Market Vectors exchange-traded products have been offered since 2006 and span many asset classes, including equities, fixed income (municipal and international bonds) and currency markets. The Market Vectors family currently totals $23.7 billion in assets under management, making it the fifth largest ETP family in the U.S. and eighth largest worldwide as of December 31, 2011.
Market Vectors ETFs are distributed by Van Eck Global. Founded in 1955, Van Eck Global was among the first U.S. money managers helping investors achieve greater diversification through global investing. Today, the firm continues this tradition by offering innovative, actively managed investment choices in hard assets, emerging markets, precious metals including gold, and other alternative asset classes. Van Eck Global has offices around the world and manages approximately $33.1 billion in investor assets as of December 31, 2011.
1 Source: Asian Development Outlook 2011, Asian Development Bank, adb.org
+©2012 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star.
The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. As of 2/29/12, of U.S. Exchange Traded Funds and U.S. Open-End Mutual Funds (as defined by Morningstar), IDX had an overall and three-year rating of 5 stars out of 65 funds, and five-year rating of 1 star out of 41 funds in the Pacific/Asia ex-Japan Stock category. Past performance is no guarantee of future results.
The Fund is subject to elevated risks, including those associated with investments in foreign securities, in particular Indonesian issuers, which include, among others, expropriation, confiscatory taxation, political instability, armed conflict and social instability. In addition, companies with small capitalizations are subject to elevated risks, which include, among others, greater volatility, lower trading volume and less liquidity than larger companies that tend to have narrower product lines, fewer financial resources, less management depth and experience and less competitive strength. Investors should be willing to accept a high degree of volatility and the potential of significant loss. The Fund may loan its securities, which may subject it to additional credit and counterparty risk. Please refer to the prospectus for complete risk information.
The Fund’s assets may be concentrated in a particular sector or sectors or industry or group of industries to the extent the Index concentrates in a particular sector or sectors or industry or group of industries. In addition, the Fund’s assets will be concentrated in Indonesia. To the extent that the Fund’s investments are concentrated in a particular sector, industry or country, the Fund will be susceptible to loss due to adverse occurrences effecting that sector, industry or country.
Market Vectors Indonesia Small-Cap Index (the “Index”) is the exclusive property of Market Vectors Index Solutions GmbH (a wholly owned subsidiary of the Adviser), which has contracted with Structured Solutions AG to maintain and calculate the Index. Structured Solutions AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards Market Vectors Index Solutions GmbH, Structured Solutions AG has no obligation to point out errors in the Index to third parties.
Market Vectors Index Solutions GmbH does not sponsor, endorse or promote Market Vectors Indonesia Small-Cap ETF and makes no representation regarding the advisability of investing in the Fund.
Index returns are not Fund returns and do not reflect any management fees or brokerage expenses. Investors can not invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses. Index returns assume that dividends have been reinvested.
The “Net Asset Value” (NAV) of a Market Vectors exchange-traded fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF’s intraday trading value. Market Vectors ETF investors should not expect to buy or sell shares at NAV.
Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called “creation units” and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 888.MKT.VCTR or visit marketvectorsetfs.com. Please read the prospectus and summary prospectus carefully before investing.
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