The Next Big Emerging Markets?

By Frank Holmes
CEO and Chief Investment Officer

When countries get grouped together for economic or political purposes, an acronym or other shorthand device is soon to follow. OPEC, EU and G7 are a few of the old standards, while G20, PIIGS (European nations with dangerously large sovereign debt burdens), and of course BRICs are newer examples.
Now The Economist is getting into the game with “CIVETS.”

This venerable magazine is not reinventing itself as a British version of National Geographic we’re not talking about the civets that prowl the treetops in the tropical forests of Africa and Asia.

CIVETS in this case refers to Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa six countries that could be the next wave of emerging markets stardom.

The Economist’s basic case: these six have large and young populations, diversified economies, relative political stability and decent financial systems. In addition, they are for the most part unhampered by high inflation, trade imbalances or sovereign debt bombs.

We didn’t think up the acronym, but we have liked the long-term prospects for most of these countries for quite a while. Here are some of our thoughts and observations.

Start with Colombia, which has had a hard time getting people to forget about its narcoterrorism past and look at its pro-business government policies.
I met with former President Alvaro Uribe and it was fascinating to observe his policies for social stability and job creation. Five years ago, he changed the rules and began to encourage companies to come in and help develop their oil resources. He has taken those petrodollars created and reinvested them back in the country’s infrastructure and created jobs.

That is in complete contrast to what Hugo Chavez is doing in Venezuela, or even Mexico and its energy policy. Both of those countries are watching their reserves deplete, but there’s no policy to bring in intellectual capital like you’re seeing in Colombia.

2010 Performance Indicators
Population (m) GDP per head
(US$, PPP) Consumer
price inflation (%, av) Budget balance
(% of GDP) Source: Economist Intelligence Unit, Country Data

Colombia 46.9 8,920 2.6 -3.9 Indonesia 243.0 4,230 5.1 -2.2 Vietnam 87.8 3,150 9.3 -7.7 Egypt 84.7 5,910 11.8 -8.7 Turkey 73.3 12,740 8.7 -4.5 South Africa 49.1 10,730 5.8 -6.3 Turkey’s economy is dynamic and currently supported by strong underlying trends that point to long-term growth ahead. Its economy is the sixth largest in Europe and in the top 20 worldwide with a 2009 GDP of $615 billion.

According to a 2009 International Monetary Fund (IMF) report, Turkey’s per capita GDP of just over $8,700 is greater than any of the BRICs. Industrial output leaped by 21 percent in the 12 months ending March 2010, inflation fell to 6.1 percent last year from double-digit levels a year before, and public debt is less than 40 percent of GDP.

And while Europe still makes up more than half of Turkey’s exports, the current government has taken steps to increase exports to Middle East trading partners Saudi Arabia, Iraq and Egypt, for instance as a hedge against any economic volatility in Europe.

Indonesia’s demographics, natural resources and relatively stable political environment have set up the country for what could be a very strong decade of growth. Its economy doubled in the past five years and in greater Jakarta—the world’s second-largest urban area with roughly 23 million people—GDP per capita grew by 11 percent each year from 2006 through 2009.

More importantly, this growth was driven by the private sector, not by government spending the private sector accounts for roughly 90 percent of the country’s GDP. Over the past five years, the average income has doubled to $2,350 a year and Deutsche Bank thinks that figure can rise another 50 percent by the end of next year.

Despite this income growth, Indonesia still has the lowest unit labor costs in the Asia-Pacific region, according to JP Morgan. This has attracted manufacturing activities from China. Employment growth is key because half of Indonesia’s population is 25 years old or younger, so the workforce as a portion of total population will rise over the next 20 years. This should increase the country’s consumption levels and fuel further economic growth.

Vietnam has seen rapid economic growth in recent years. It too has picked up some manufacturing base that was formerly in China. The country’s per-capita income of $1,050 last year was nearly fivefold higher than it was in the mid 1990s, and in Hanoi, the income level is closing in on $2,000 per person, according to government figures.

That new wealth is showing up in gold purchases. Net retail gold investment in Vietnam exceeded 500,000 ounces during the first quarter of 2010, up 36 percent year-over-year, the World Gold Council says. Add to that a 20 percent increase in gold jewelry demand.

Beyond the CIVETS, we see some potential in other places. Malaysia’s economy, for instance, grew more than 10 percent in the first quarter of 2010, and the country has plans to slash its budget deficit and at the same time invest more heavily in infrastructure. And in Chile, despite February’s earthquake, public debt is just 7 percent of GDP and the economy is expected to 5.5 percent growth this year and 6.5 percent in 2011 as resource exports to emerging markets in Asia accelerate.

We see the global growth story led by key emerging market countries like the BRICs, the CIVETS and others as the most powerful long-term investment opportunity.

For more on this theme, I invite you to visit our website to read through the “Frank Talk” blog for a look at our interactive “What’s Driving Emerging Markets” presentation.

Index Summary

The major market indices were mixed this week. The Dow Jones Industrial Index rose 0.40 percent. The S&P 500 Stock Index lost 0.10 percent, while the Nasdaq Composite finished 0.65 percent lower.
Barra Growth underperformed Barra Value as Barra Value finished 0.36 percent higher while Barra Growth declined 0.56 percent. The Russell 2000 closed the week with a gain of 0.04 percent.
The Hang Seng Composite finished higher by 1.00 percent; Taiwan was down 0.01 percent and the Kospi advanced 0.07 percent.
The 10-year Treasury bond yield closed at 2.91 percent, down 9 basis points for the week.
All American Equity Fund – GBTFX • Holmes Growth Fund – ACBGX • Global MegaTrends Fund – MEGAX

Domestic Equity Market

The chart shows the performance of each sector in the S&P 500 index for the week. Five sectors gained and five declined. The best-performing sector was telecom services, up 1.7 percent. Other better-performing sectors included financials and industrials. The three worst-performing sectors were technology, consumer staples, and consumer utilities.

Within the telecom services sector the best-performing stock was Verizon Communications Inc, up 4 percent. The other top-three performers were Frontier Communications Corp and AT&T Inc.

Strengths

The real estate services group was the best-performing group for the week, up 12 percent, led by its single member, CB Richard Ellis Group Inc. The firm’s second quarter earnings easily beat the consensus estimate, driven by year-over-year increases in investment sales revenue and leasing revenue.
The office electronics group was the second-best performer, increasing 5 percent. The group’s single member, Xerox Corp, reported earnings in the prior week above the consensus estimate, and it guided 2010 earnings up. The strength in the stock this week appeared to be a carryover from that report.
The diversified chemicals group outperformed, rising 4 percent, led by E.I DuPont & Co which reported earnings above the analysts’ consensus estimate and raised its full year outlook above the analysts’ forecast.
Weaknesses

The photo products group was the worst performer, down 18 percent, led by its single member, Eastman Kodak Co, which reported earnings below the consensus forecast.
The tires & rubber group underperformed, down 13 percent. The group’s single member, Goodyear Tire & Rubber Co, reported earnings above the consensus, but the stock sold off on concerns about the outlook for the second half.
The building products group underperformed, losing 10 percent, led by its single member, Masco Corp, which reported earnings above the consensus but warned that the second half would be challenging as home building activity was slowing and big-ticket items would continue to be deferred.
Opportunities

There may be an opportunity for gain in M&A (merger & acquisition) transactions in 2010. Corporate liquidity is high, thereby providing the means to pursue acquisitions.
Threats

Should investors’ expectations for an improving economy not come to fruition on a reasonable time frame, it could be a threat to stock prices.
As governments around the world begin to wind-down the monetary and fiscal stimulus programs put in place during the economic crisis, it will likely present a headwind for stocks.

U.S. Government Securities Savings Fund – UGSXX • U.S. Treasury Securities Cash Fund – USTXX
Near-Term Tax Free Fund – NEARX • Tax Free Fund – USUTX

The Economy and Bond Market

Treasury bonds rallied this week on mixed economic news. Bonds appeared to be reacting to stocks, trading inversely this week driven largely by global macro concerns.

Economic data was mixed this week as second quarter GDP disappointed a little while housing data was a little better than expected. An interesting data point out of Europe this week was the European Commission Economic Sentiment Indicator for the Eurozone which reached the highest level in more than two years. This is counter intuitive given the ongoing European financial crisis but the weaker Euro has boosted exports and German unemployment has now fallen for 13 consecutive months, so maybe things aren’t as bad as they seem.

Strengths

European confidence remains surprisingly strong and is an interesting counter point to all the recent bad news.
The S&P/CaseShiller Composite 20 Home Price Index rose a better than expected 4.6 percent. At the same time Freddie Mac reported that mortgage rates hit another record low of 4.54 percent.
The Chicago Purchasing Managers Index unexpectedly rose, indicating that manufacturing activity remains strong.
Weaknesses

Second quarter GDP was somewhat disappointing, expanding at a modest 2.4 percent.
Durable Goods orders for June declined one percent, well below expectations of a one percent gain.
The Fed’s Beige Book report highlighted the slowing pace of economic activity in several areas of the country.
Opportunities

Inflation is unlikely to be a problem for some time and this gives central bankers and other policy makers around the world room for expansive policies.
Threats

The risk of austerity measures going too far and significantly diminishing economic growth is a real risk.
July 29, 2010

Another ETF Eye-opener

July 28, 2010

One of the Best Gold Watchers

July 27, 2010

Seeing the Good and Bad in Latin America

World Precious Minerals Fund – UNWPX • Gold and Precious Metals Fund – USERX

Gold Market

For the week, spot gold closed at $1,181.05 per ounce, down $8.15, or 0.69 percent for the week. Gold equities, as measured by the Philadelphia Gold & Silver Index, fell 2.13 percent. The U.S. Trade-Weighted Dollar Index decreased 1.03 percent.

Strengths

The U.S. unit of ETF Securities, a global ETF issuer specializing in commodities, filed papers with the SEC to market a gold exchange-traded fund that would be the first to store its bullion in a Singapore vault.
A poll of 55 analysts and traders showed expectations for gold prices in 2011 have risen by nearly 7 percent to a median of $1,228 per ounce, and 2010 gold expectations have risen 4 percent to a median of $1,197 per ounce.
Jamie Sokalsky, the CFO of the world’s largest gold producer, recently noted the concerns that pushed the gold price to record highs above $1,200 per ounce have not been addressed despite the weakened gold price within the past weeks.
Weaknesses

A congressional subcommittee has been asked to investigate the growing backlog in foreign procurement of U.S. bullion and collectors’ precious metals coin blanks manufactured by the U.S. Mint.
The gold price fell to a three month low on Tuesday to around $1,160 per ounce due to fear abatement, central bank tightening, and ETF liquidation.
Seasonally, the next natural catalyst for gold will be the return of jewelry manufactures as we close out the summer. In the mean time, the gold market may be relatively flat.
Opportunities

UBS recently stated “We believe that ongoing pressure on sovereign debt markets, combined with persistent concerns over private sector credit contraction will raise the spectre of debt monetization repeatedly over the next few years. We expect that this background will remain very supportive for gold prices over the period.”
Earnings reporting season for gold companies is in full swing. What is interesting is the number of companies that have established a dividend or raised their dividend payout, which should give these companies greater appeal to mainstream investors.
The attraction of dividend payments along with gold companies starting to be compared on other fundamental valuation metrics such as PE ratios is not a sign that there is “bubble in gold company valuations”.
Threats

The debate around the nationalism of South African mines has created “great uncertainty” with investors, and could even see the development of some projects essentially be put on hold, until after the ruling the African National Congress’s policy review conference in 2012.
Deutsche Bank believes the “gold price weakness has been driven more by a liquidation in a net length among the investor community than a structural change in market fundamentals, and history suggests investor de-leveraging can persist for another month.”
St. Louis Federal Reserve Bank President James Bullard commented that the economic outlook was unusually uncertain. He further noted, “The U.S. is closer to a Japanese-style outcome today than at any other time in recent history…”

Global Resources Fund – PSPFX • Global MegaTrends Fund – MEGAX

Energy and Natural Resources Market

Strengths

Indonesia, the largest coal exporter in the world, exported 24.49 million tonnes of coal in June, rising 32.23 percent from 18.52 million tonnes in May.
In June, Japan’s crude oil imports were up 0.5 percent year-over-year to 3.16 million barrels per day, liquefied natural gas imports were up 9 percent year-over-year and coal imports up 14 percent year-over-year, according to data published by the Finance Ministry.
According to the National Development and Reform Commission, China domestic coal production reached 1.57 billion tons in the first half up by 20.1 percent year-over-year.
Mitsui O.S.K. Lines Ltd., the operator of the world’s largest merchant fleet, raised its full-year profit forecast as demand for transporting goods between Asia and the U.S. and Europe rebounded.
Weaknesses

Iraq’s oil ministry has said the country’s oil exports had dropped to 1.8 million barrels per day in June from 1.9 million barrels per day the month before, due to bad weather and bomb attacks.
Japan’s refined copper exports fell 22 percent year-over-year in June while refined zinc exports fell 37 percent from a year earlier, Ministry of Finance data showed.
Opportunities

The Hellenic Shipping News reported that Russia plans to give licenses for development of 41 iron-ore and 31 coking coal deposits during 2011-2015. The iron-ore deposits are estimated to have a reserve base of 16.6 billion tonnes, while the coking coal reserves are estimated to be about 80.5 billion tones.
Arabian Oil Co., the world’s biggest oil company, said Wednesday it signed contracts with several local and international contractors to help it build its estimated $10 billion export refinery at Yanbu on the Red Sea. Announced first in 2005, the refinery was originally set to cost $6 billion to build. However, the project’s price tag doubled to as much as $12 billion in 2008 when raw material and commodity prices peaked. Construction of the facility is now estimated to cost about $10 billion.
State-run explorer Oil India has set aside $2 billion for overseas acquisitions, chairman NM Borah told reporters this week. Bigger rival Oil & Natural Gas Corporation has spearheaded India’s hunt for foreign petroleum assets, often competing with Chinese companies, but smaller players such as Oil India and refiners like Indian Oil Corporation are also scouting for assets, Reuters reported..
Threats

Oil reserves in Nigeria have dropped by 4.79 percent to 31.81 billion barrels over the past year because companies refuse to undertake exploration, a senior industry official said this week.
China’s natural gas supplies may face pressure in some regions this winter because of insufficient storage capacity and slowness by some companies to import supplies, said the National Development and Reform Commission.

China Region Opportunity Fund – USCOX • Eastern European Fund – EUROX
Global Emerging Markets Fund – GEMFX

Emerging Markets

Strengths

South Korea’s GDP expanded by a faster than expected 1.5 percent quarter-over- quarter, or 7.2 percent year-over-year, in the second quarter, driven by strong exports of automobiles, semiconductors, and machinery. Consumer confidence held at a five month high of 112 in July.
Profits at China’s large industrial companies in 24 regions climbed 71.8 percent year over year to RMB 1.61 trillion in the first half of this year.
China’s land supply for residential real estate construction increased 113 percent in the first half compared with a year ago, while the average price of residential land declined 10.6 percent sequentially in the second quarter.
The Indonesian rupiah appreciated to a three-year high on Thursday against the U.S. dollar, as the local stock market rose to a record high and government forecasted 6 percent GDP growth in the second half of this year.
Lojas Renner, one of the largest Brazilian retailers, reported strong 2Q results that were boosted by better procurement practices that resulted in an improvement in the earnings before interest, taxes, depreciation and amortization (EBITDA) margin to 24.8 percent from 17.8 percent a year earlier.
OHL toll road group in Brazil reported a 29 percent traffic growth in 2Q brought about by an economic recovery in the country.
Chilean banks, Banco de Chile and Santander Chile, also reported strong 2Q results with net income growing 57 percent year-over-year.
Hungary sold more debt than planned at an auction of three month Treasury bills on Wednesday as traders said yields were attractive given the interest rate outlook, according to Bloomberg.
Weaknesses

China’s new loans to property developers fell 62 percent sequentially in the second quarter to RMB 122 billion, representing a 32 percent decrease year-over- year, as banks intentionally reduced balance sheet exposure to the property sector as a result of credit control and risk management.
Vietnam’s long term foreign and local currency debt ratings were reduced by Fitch Ratings to B+ from BB-, due to concerns over declining foreign reserves and weak banking system.
The capital output ratio defined as the investment portion of GDP divided by real GDP growth measures how much investment is needed to produce GDP growth, the higher the ratio, the more inefficient the investment. As the chart shows, the efficiency of Russia’s investment into economy was particularly wasteful under socialism. It has now reached a stable state at around 4 times (equal to that of China), which is below the world average at 3 times.

Opportunities

Although China’s domestic A share market staged a close to 10 percent rebound in July, the best performer in Asia for the month, Chinese mutual funds by and large did not participate in the rally. These mutual funds, together with domestic insurance companies who are expected to be approved to raise allocation to equities in August, may provide liquidity support for a continued recovery in Chinese domestically listed stocks.
A recent M&A activity in the Brazilian telecom sector has created three major fully integrated players America Movil, Telefonica and Oi, that should offer bundled products (fixed line, wireless and pay TV) at a reduced cost for customers.
We have noted an inflow into the Chilean equity market by the local pension funds that scaled down their international exposure and boosted valuations of the Santiago bourse.
The IMF’s new loan agreement for $15 billion requires fiscal policy changes from Ukraine aimed at lowering the deficit to 5.5 percent of GDP in 2010 and 3.5 percent in 2011. The IMF’s renewed engagement with Ukraine opens up the possibility of loans from the European Commission and the World Bank, according to RGE Monitor.
Threats

In addition to ongoing property tightening, Chinese government’s goal to reduce energy consumption per unit of real GDP by over 5 percent this year from 2009, as mandated by its 11th Five Year Plan, may result in more plant closures, as a matter of expediency, especially in heavy industries, and a slowdown in economic activity in the second half of this year.
Macquarie Airports indicated that they will be selling its 14 percent stake in ASUR. At this point it remains uncertain who the buyer might be but the transaction may well improve liquidity in the ASUR shares.
On Thursday, the Russian government finalized its list of companies to be privatized in 2011-2013, and the amount it is planning to raise through these privatizations is close to $35 billion US dollars. The slope of the regression line of Russian Trading System market returns vs. total IPO issuance is negative, suggesting that a large supply of state’s shares could have a negative impact on the market.

Leaders and Laggards

The tables show the performance of major equity and commodity market benchmarks of our family of funds.
Weekly Performance Index Close Weekly
Change($) Weekly
Change(%) DJIA 10,465.94 +41.32 +0.40% S&P 500 1,101.60 -1.06 -0.10% S&P BARRA Value 525.54 +1.89 +0.36% S&P BARRA Growth 567.85 -3.19 -0.56% S&P Energy 403.14 +0.84 +0.21% S&P Basic Materials 193.56 -0.28 -0.14% Nasdaq 2,254.70 -14.77 -0.65% Russell 2000 650.89 +0.24 +0.04% Hang Seng Composite Index 2,954.24 +29.28 +1.00% Korean KOSPI Index 1,759.33 +1.27 +0.07% S&P/TSX Canadian Gold Index 346.45 -8.74 -2.46% XAU 169.72 -3.70 -2.13% Gold Futures 1,183.50 -8.10 -0.68% Oil Futures 78.95 -0.03 -0.04% Natural Gas Futures 4.92 +0.34 +7.40% 10-Yr Treasury Bond 2.91 -0.09 -2.90%
Monthly Performance Index Close Monthly
Change($) Monthly
Change(%) DJIA 10,465.94 +691.92 +7.08% S&P 500 1,101.60 +70.89 +6.88% S&P BARRA Value 525.54 +34.02 +6.92% S&P BARRA Growth 567.85 +36.31 +6.83% S&P Energy 403.14 +29.78 +7.98% S&P Basic Materials 193.56 +21.10 +12.23% Nasdaq 2,254.70 +145.46 +6.90% Russell 2000 650.89 +41.40 +6.79% Hang Seng Composite Index 2,954.24 -332.01 -14.83% Korean KOSPI Index 1,759.33 +61.04 +3.59% S&P/TSX Canadian Gold Index 346.45 -36.35 -9.50% XAU 169.72 -7.91 -4.45% Gold Futures 1,183.50 -66.40 -5.31% Oil Futures 78.95 +3.32 +4.39% Natural Gas Futures 4.92 +0.30 +6.56% 10-Yr Treasury Bond 2.91 -0.02 -0.82%
Quarterly Performance Index Close Quarterly
Change($) Quarterly
Change(%) DJIA 10,465.94 -701.38 -6.28% S&P 500 1,101.60 -105.18 -8.72% S&P BARRA Value 525.54 -52.80 -9.13% S&P BARRA Growth 567.85 -51.37 -8.30% S&P Energy 403.14 -51.25 -11.28% S&P Basic Materials 193.56 -15.17 -7.27% Nasdaq 2,254.70 -257.22 -10.24% Russell 2000 650.89 -86.85 -11.77% Hang Seng Composite Index 2,954.24 +13.16 +0.45% Korean KOSPI Index 1,759.33 +30.91 +1.79% S&P/TSX Canadian Gold Index 346.45 -4.27 -1.22% XAU 169.72 -8.87 -4.97% Gold Futures 1,183.50 +10.80 +0.92% Oil Futures 78.95 -6.22 -7.30% Natural Gas Futures 4.92 +0.94 +23.59% 10-Yr Treasury Bond 2.91 -0.82 -21.93%
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting Home – U.S. Global Investors or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.
An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.
Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio.
The Eastern European Fund invests more than 25 percent of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.
Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.
Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5 percent to 10 percent of your portfolio in these sectors. Investing in real estate securities involves risks including the potential loss of principal resulting from changes in property value, interest rates, taxes and changes in regulatory requirements.
Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. Each tax free fund may invest up to 20 percent of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The tax free funds may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer.
Past performance does not guarantee future results.
These market comments were compiled using Bloomberg and Reuters financial news.
Holdings as a percentage of net assets as of 6/30/10:
Verizon Communications Inc.: All American Equity Fund 1.01%
Frontier Communications Corp.: All American Equity Fund 0.93%
AT&T Inc.: All American Equity Fund 1.03%
CB Richard Ellis Group Inc.: 0.00%
Xerox Corp.: 0.00%
E.I. du Pont de Nemours & Co.: 0.00%
Eastman Kodak Co.: 0.00%
Goodyear Tire & Rubber Co.: 0.00%
Masco Corp.: 0.00%
Mitsui O.S.K. Lines Ltd.: 0.00%
Arabian Oil Co.: 0.00%
Oil & Natural Gas Corporation: 0.00%
Indian Oil Corporation: 0.00%
Lojas Renner S.A.: Global Emerging Markets Fund 3.18%
Obrascon Huarte Lain S.A.: 0.00%
Banco de Chile: 0.00%
Banco Santander Chile: 0.00%
America Movil: Global MegaTrends Fund 2.18%, Global Emerging Markets Fund 1.62%
Telefonica: 0.00%
Oi: 0.00%
Grupo Aeroportuario de Sureste SAB de CV: Global MegaTrends Fund 4.65%
*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.
The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.
The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.
The S&P BARRA Growth Index is a capitalization-weighted index of all stocks in the S&P 500 that have high price-to-book ratios.
The S&P BARRA Value Index is a capitalization-weighted index of all stocks in the S&P 500 that have low price-to-book ratios.
The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.
The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.
The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange.
The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.
The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver.
The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar.
The MSCI Russia Index is a free-float weighted equity index developed in 1994 to track major equities traded in the Russian market.
The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks.
The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500.
The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500.
The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period.
The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500.
The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500.
The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500.
The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500.
The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500.
The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500.
The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.
The S&P/Case-Shiller Index tracks changes in home prices throughout the United States by following price movements in the value of homes in 20 major metropolitan areas.
The European Commission Economic Sentiment Indicator is a monthly economic sentiment indicator reflects general economic activity of the EU. This indicator combines assessments and expectations stemming from business and consumer surveys. Such surveys include different components of the economy: industry, consumers, construction and retail trade. In order to comply with new Eurostat data series, the base year of the ESI has been changed in August 2003 from 1995 to 2000.
The Russian Trading System Index is and indicator of the 50 most liquid Russian stocks listed on the exchange.
The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
Advanced G-20 economies references members of the G-20 whose economies are considered by the IMF to be developed. This includes Canada, United States, Austria, Belgium, France, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, Australia, Japan and Korea. Emerging G-20 economies references members of the G-20 whose economies are considered by the IMF to be emerging. This includes Brazil, India, Indonesia, Hungary, Russia and Saudi Arabia. BRIC refers to the emerging market countries Brazil, Russia, India and China.

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