Funds Management

Investment adviser

XShares Advisors LLC serves as investment adviser to the Funds with overall responsibility for the general management and administration of the Funds, subject to the supervision of the Funds' Board of Directors. Under the Investment Advisory Agreement with the Fund, each Fund is responsible for the payment of its own expenses, including the investment advisory fee, distribution fees pursuant to each Fund's Distribution and Service Plan, if any, transfer agency, custody, fund administration, brokerage, taxes, interest, fees and expenses of the Independent Directors, fees and expenses of counsel to the Fund and counsel to the Disinterested Directors, fees and expenses of the Chief Compliance Officer and expenses associated with the Funds' compliance program, litigation expenses and other extraordinary expenses. Pursuant to the Investment Advisory Agreement, the Advisor is authorized to engage one or more sub-advisers to perform any of the services contemplated to be performed by the Advisor under the Investment Advisory Investment Agreement. The Advisor is responsible for payment of the Sub-Advisory fee, as discussed below.

The Advisor is a newly organized investment adviser located at 420 Lexington Avenue, New York, New York 10170. The Advisor's parent company is XShares Group LLC, the creator of the Underlying Indexes.


BNY Investment Advisors ("Sub-Adviser"), a separate identifiable division of The Bank of New York, a New York State banking corporation, having its principal office and place of business at 1633 Broadway, 13th Floor, New York 10019, acts as investment sub-adviser to the Funds. Pursuant to a Sub-Advisory Agreement between the Adviser and the Sub-Adviser, the Sub-Adviser will be responsible for the day-to-day management of the Funds, subject to the supervision of the Adviser and the Funds' Board of Directors. In this regard, the Sub-Adviser will be responsible for implementing the replication strategy for each Fund with regard to its Underlying Index and for general administration, compliance and management services as may be agreed between the Adviser and the Sub-Adviser from time to time. [It is not contemplated that Sub-Adviser will be responsible for employing any sampling strategy for the Funds, as any such strategy will be employed by the Sub-Adviser.]

The Sub-Adviser is located at 101 Barclay Street, New York, New York 10286. In accordance with the terms of the Sub-Advisory Agreement, the Adviser pays the Sub-Adviser, out if its own resources, a fee based on a percentage of the average daily net assets of each Fund as set forth below:

A discussion regarding the basis for the Board of Directors approval of the Investment Advisory and Sub-Advisory contracts will be available in the Funds annual or semi-annual report.

Portfolio managers

Each Fund is managed by the Sub-Advisor's ETF Management Division. The five most senior members are Kurt Zyla, Lloyd Buchanan, Denise Krisko, Robert McCormack and Todd Rose. Mr. Zyla, a Managing Director of the Sub-Advisor, has supervised the ETF Management Division since 1996. He joined the Sub-Advisor in 1989. Prior to his current position, he was employed by the Sub-Advisor in a number of capacities. Mr. Buchanan has been a Portfolio Manager in the ETF Management Division since January 2002. Prior to joining the Sub-Advisor, Mr. Buchanan was a Vice President and Chief Operating Officer of Axe Houghton Associates, Inc., an investment management subsidiary of Hoenig Group. He joined Axe Houghton in May 1988. Ms. Krisko is a Senior Portfolio Manager in the ETF Management Division. Prior to joining the Sub-Advisor in 2005, she held various senior investment positions, including director and senior quantitative equity portfolio manager, trader and member of global index investment and business subcommittees for Deutsche Asset Management and Northern Trust; as senior quantitative equity portfolio manager and trader for The Vanguard Group; and brokerage specialist for Federated Investors. Mr. McCormack is a Senior Portfolio Manager in the ETF Management Division. He is responsible for domestic indexed portfolio management. Prior to joining the Index Management division in 1999, Mr. McCormack was a relationship manager in the Sub-Advisor's Master Trust/Master Custody division, specializing in working with foundations and endowments and other not-for-profit organizations. Mr. McCormack joined the Sub-Advisor in 1987. Mr. Rose has been a Portfolio Manager in the ETF Management Division since 2000. Prior to joining the Division, Mr. Rose worked in the Mutual Funds Accounting Division in various functions. Before joining the Sub-Advisor in 1997, Mr. Rose was a Financial Consultant at Merrill Lynch. He began his career trading futures with Linnco Futures Group in Chicago.

Each Portfolio Manager is responsible for various functions related to portfolio management, including, but not limited to, investing cash inflows, implementing investment strategy, researching and reviewing investment strategy, and overseeing members of his or her portfolio management team with more limited responsibilities. Each Portfolio Manager has appropriate limitations on his or her authority for risk management and compliance purposes.

The Statement of Additional Information has more detailed information about the portfolio managers' compensation, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities of the Funds.