As a result, Standard & Poor's will make the following changes in the S&P 500, and resultant changes to the S&P 100, S&P MidCap 400 and S&P SmallCap 600 Indices:
- United Parcel Service (NYSE:UPS), Goldman Sachs (NYSE:GS), Prudential Financial (NYSE:PRU), eBay Inc. (NASD:EBAY), Principal Financial Group (NYSE:PFG), and S&P MidCap 400 component's Electronic Arts (NASD:ERTS) and SunGard Data Systems (NYSE:SDS) will replace Royal Dutch Petroleum (NYSE:RD), Unilever NV (NYSE:UN), Nortel Networks (NYSE:NT), Alcan Inc. (NYSE:AL), Barrick Gold Corp (NYSE:ABX), Placer Dome Inc. (NYSE:PDG), and Inco Ltd. (NYSE:N), in the S&P 500 Index.
- Pier 1 Imports (NYSE:PIR), an S&P Small Cap 600 component, and PETsMART Inc. (NASD:PETM) will replace Electronic Arts and SunGard Data Systems in the S&P MidCap 400 Index.
- Watson Wyatt (NYSE:WW) will replace Pier 1 Imports in the S&P SmallCap 600 Index.
- Goldman Sachs will replace Nortel Networks in the S&P 100 Index.
"This change makes the S&P 500 a better reflection of the large cap segment of the U.S. equities market and enhances the role of the S&P 500 as the key U.S. component of our global S&P index family," said David M. Blitzer, Chairman of the S&P Index Committee.
"Increasingly, users of the S&P 500 have told us that the inclusion of non-U.S. companies in the index makes the index more difficult to use for investment and risk control purposes. The change will mean that index funds and exchange-traded funds can expect lower operating and transaction expenses and less tracking error. We also believe that removing the non-U.S. companies will make the S&P 500 a more useful benchmark for tracking large-cap U.S. equity market performance," said Blitzer.
The seven non-U.S. companies will be replaced by five newly eligible companies, all recent IPOs, and two companies to be promoted from the S&P MidCap 400. "We've been looking for the right opportunity to make this adjustment and this was the ideal time", said Blitzer. "The number of large replacement candidates means that the capitalization of the additions will nearly offset the deletions. Plus, this is a year of unusually low S&P 500 index turnover due to the low number of mergers and acquisitions in the large cap sector, so we are making the change at a time when the impact on index investors will be minimized."
Research conducted by Standard & Poor's and other parties finds that membership in the S&P 500 does not have a lasting price impact. While there may be short-term reaction to the addition or deletion of a stock, studies show that these effects are temporary. Copies of Standard & Poor's White Paper entitled "Focusing the S&P 500 on U.S. Large Cap Stocks and the Removal of Non-U.S. Companies in the S&P 500," and Standard & Poor's studies "Price Changes Associated with S&P 500 Deletions: Time Variation and Effect of Size and Share Prices" and "Deletion of Canadian Stocks in the S&P 500" can be found at www.spglobal.com and www.standardandpoors.com.
Information about the companies to be added to the S&P 500, S&P MidCap 400, S&P SmallCap 600 and S&P 100 Indices is as follows:
United Parcel Service is a global transportation company, offering the most extensive range of e-commerce and supply chain solutions for the movement of goods, information and funds. The company, headquartered in Atlanta, Georgia, will be added to the S&P 500 GICS (Global Industry Classification Standard) Air Freight & Logistics sub-industry index.
Goldman Sachs is a global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals. The company, headquartered in New York, will be added to the S&P 500 GICS Diversified Financial Services sub-industry index.
Prudential Financial provides a wide range of insurance, investment management, securities and other financial products and services to both retail and institutional customers throughout the United States and in many other countries. The company, headquartered in Newark, New Jersey, will be added to the S&P 500 GICS Life & Health Insurance sub-industry index.
eBay Inc. is a Web-based community in which buyers and sellers are brought together in an efficient and entertaining format to browse, buy and sell items such as collectibles, automobiles, high-end or premium art items, jewelry, consumer electronics and a host of practical and miscellaneous items. The company, headquartered in San Jose, California, will be added to the S&P 500 GICS Internet Retail sub-industry index.
Principal Financial Group provides businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance and mortgage banking through its diverse family of financial services companies. The company, headquartered in Des Moines, Iowa, will be added to the S&P 500 GICS Diversified Financial Services sub-industry index.
Electronic Arts develops, publishes and distributes software worldwide for the Internet, personal computers and video game systems. The company, headquartered in Redwood City, California, will be added to the S&P 500 GICS Application Software sub-industry index. SunGard Data Systems provides integrated, Web-enabled enterprise solutions for the trading, processing, management and accounting of financial assets and availability services, outsourcing and hosting services for online and other business-critical operations. The company, headquartered in Wayne, Pennsylvania, will be added to the S&P 500 GICS IT Consulting & Services sub-industry index.
Pier 1 Imports is a specialty retailer of imported decorative home furnishings and gifts, with stores in 48 states, Puerto Rico, Canada, the United Kingdom, and Mexico. The company, headquartered in Fort Worth, Texas, will be added to the S&P MidCap 400 GICS Specialty Stores sub-industry index.
PETsMART is a provider of services and solutions for the lifetime needs of pets. The company, headquartered in Phoenix, Arizona, will be added to the S&P MidCap 400 GICS Specialty Stores sub-industry index.
Watson Wyatt is an international human capital consulting firm that provides services in the areas of employee benefits, human resources technologies and human capital strategies. The company, headquartered in Washington, DC, will be added to the S&P SmallCap 600 GICS Diversified Commercial Services sub-industry index.
Following is a summary of the announced changes:
|
S&P 500 INDEX - July 19, 2002 |
|||
|
COMPANY |
GICS ECONOMIC SECTOR |
GICS SUB-INDUSTRY |
|
|
ADDED |
United Parcel Service |
Industrials |
Air Freight & Logistics |
|
Goldman Sachs Group |
Financials |
Diversified Financial Services |
|
|
Prudential Financial |
Financials |
Life & Health Insurance |
|
|
eBay Inc. |
Consumer Discretionary |
Internet Retail |
|
|
Principal Financial Group |
Financials |
Diversified Financial Services |
|
|
Electronic Arts |
Information Technology |
Application Software |
|
|
SunGard Data Systems |
Information Technology |
IT Consulting & Services |
|
|
DELETED |
Royal Dutch Petroleum |
Energy |
Integrated Oil & Gas |
|
Unilever N.V. |
Consumer Staples |
Packaged Foods & Meats |
|
|
Nortel Networks |
Information Technology |
Telecommunications Equipment |
|
|
Alcan Inc. |
Materials |
Aluminum |
|
|
Barrick Gold Corp. |
Materials |
Gold |
|
|
Placer Dome Inc. |
Materials |
Diversified Metals & Mining |
|
|
Inco, Ltd. |
Materials |
Gold |
|
|
S&P 100 INDEX - July 19, 2002 |
|||
|
COMPANY |
GICS ECONOMIC SECTOR |
GICS SUB-INDUSTRY |
|
|
ADDED |
Goldman Sachs Group |
Financials |
Diversified Financial Services |
|
DELETED |
Nortel Networks |
Information Technology |
Telecommunications Equipment |
|
S&P MIDCAP 400 INDEX - July 19, 2002 |
|||
|
COMPANY |
GICS ECONOMIC SECTOR |
GICS SUB-INDUSTRY |
|
|
ADDED |
Pier 1 Imports, Inc. |
Consumer Discretionary |
Specialty Stores |
|
PETsMART, Inc. |
Consumer Discretionary |
Specialty Stores |
|
|
DELETED |
Electronic Arts |
Information Technology |
Application Software |
|
SunGard Data Systems |
Information Technology |
IT Consulting & Services |
|
|
S&P SMALLCAP 600 INDEX - July 19, 2002 |
|||
|
COMPANY |
GICS ECONOMIC SECTOR |
GICS SUB-INDUSTRY |
|
|
ADDED |
Watson Wyatt |
Industrials |
Diversified Commercial Services |
|
DELETED |
Pier 1 Imports, Inc. |
Consumer Discretionary |
Specialty Stores |
Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Standard & Poor's is a leader in providing highly valued financial data, analytical research and investment and credit opinions to the global capital markets. Among the company's many products are the S&P Global 1200, the first real-time, global equity index, the S&P 500, the premier U.S. portfolio index, and credit ratings on more than 220,000 securities and funds With more than 5,000 employees located in 18 countries, Standard & Poor's is an integral part of the world's financial architecture. Additional information is available at www.spglobal.com.
Founded in 1888, The McGraw-Hill Companies is a global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor's, Business Week and McGraw-Hill Education. The corporation has more than 300 offices in 33 countries. Sales in 2000 were $4.3 billion. Additional information is available at www.mcgraw-hill.com.
