) -- Bullish dollar investors have hobbled the

PowerShares DB US Dollar Index Bullish ETF

(UUP) - Get Invesco DB US Dollar Index Bullish Fund Report

, as an influx of assets has brought creation of the fund to a standstill.

As investors still try to make bullish dollar bets with UUP, the fund is now creeping to a premium.

At the heart of the ETF pricing process is the creation and redemption of new shares. The creation of new shares and the redemption of exisiting shares keeps the market price of the ETF in line with the ETF's underlying value.

Halting UUP's creation process will effectively make this ETF a closed-end fund. Investors can expect to see a disconnect between this fund market price and its underlying value. This means premiums for customers.

As of Nov. 3, PowerShares DB US Dollar Index Bullish Fund announced in a current report on Form 8-K that 6,600,000 of its Shares registered with the Securities and Exchange Commission were available for purchase by the Fund's Authorized Participants.

Today, UUP managers

filed an 8K

announcing that:

"As of November 5, 2009, the Fund issued all of the remaining Shares to its Authorized Participants. As a result of these issuances, the Fund will temporarily suspend the issuance of additional Creation Baskets until the registration statement on Form S-3 (333-162819, 333-162819-05) which was initially filed on November 2, 2009 and registers an additional 100,000,000 Shares of the Fund (the "Registration Statement") has been cleared by the SEC, the Financial Industry Regulatory Authority and the National Futures Association."

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The essence of this 8K filing is that until the SEC, FINRA and National Futures Association approve, no additional shares of UUP will be issued. The fund, however, will continue to trade. So, UUP buyers may have to pony up premiums until the share issuance problem is resolved.

ETF investors should feel a certain sense of

deja vous

this afternoon following the UUP announcement. This past July, the

United States Natural Gas fund

ran out of pre-approved shares, just as UUP did today, and was forced to suspend creation.

The SEC did not approve additional shares for UNG until August, so UUP investors may have a while to wait.

Disruption in ETF trading undermines the principal promises that ETFs make to investors. If an ETF is not allowed to function as it was designed, with the creation and redemption of underlying shares keeping the fund in line with net asset value, it ceases, in effect, to be an ETF.

Investors should avoid UUP until the share issue is resolved. Depending on the dollar, UUP could become a bubble waiting to burst.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion does not own any funds mentioned.

Don Dion is president and founder of

Dion Money Management

, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.