Aug. 25, 2004 — The combined assets of the nation’s exchange-traded funds (ETFs) dropped to $172.1 billion at the end of July, from $178.5 billion at the end of June, according to the Investment Company Institute (ICI).

The number of ETFs in operation remained unchanged at 143 at the end of July. ETF assets totaled $151.0 billion at the end of December 2003.

Of the total number of ETFs in operation at the end of July, 96 tracked domestic stock indexes and held assets of $142.9 billion; 41 tracked international/global equity indexes and held assets of $22.2 billion; and six bond index ETFs held assets of $7.0 billion.

The ICI also noted that assets of domestic equity ETFs decreased by $6.7 billion, while international equity ETF assets decreased by $33 million.

The value of all ETF shares issued exceeded that of shares redeemed by $783 million. Equity index ETFs experienced a positive net issuance of $534 million, while bond ETFs experienced a positive net issuance of $249 million. Gross issuance of all ETFs decreased in July to $9.6 billion from $20.0 billion in June, and redemptions decreased to $8.8 billion from $11.7 billion in June.

Net issuance, which is gross issuance minus redemptions, is roughly equivalent to the unit of net new cash flow that is used for conventional mutual funds.

Below is a list of the five largest ETFs.

ETF

Assets (In billions)

One-Year Returns Through 7/31/04

S&P Dep Receipts (SPY)

$46.19

+13.3%

Nasdaq -100 Trust Ser 1 (QQQ)

$23.03

+9.8%

iShares S&P 500 Index Trust (IVV)

$8.49

+13.4%

DIAMONDS Trust, Series1 (DIA)

$7.55

+12.1%

S&P MidCap Dep Receipts (MDY)

$6.88

+17.7%

Source: Nuveen.

Contact Bob Keane with questions or comments at: bkeane@investmentadvisor.com.