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What is an index?

An index is a group of stocks representing a particular segment of a market, or in some cases the entire market. For example, the Standard &
Poor's 500 index represents a specific segment of the U.S. capital markets. Foreign stock markets also may be represented by an index, such as the Nikkei index of large Japanese companies or the CAC 40 index of large French companies. The components of an index can change over time, as new stocks are added and old ones are dropped.

Broader indices, such as the MSCI EAFE�,are made up of stocks from several markets. For example, as of June 30, 1998, the MSCI EAFE� included a total of 21 developed markets in Europe, Australasia (Australia, New Zealand, Malaysia and Singapore) and the Far East (Japan and Hong Kong).

The MSCI EMF Index included 26 emerging markets: Argentina, Brazil, Chile, China, Columbia, Czech Republic, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Sri Lanka, Taiwan, Thailand, Turkey and Venezuela. Broader market indices, particularly for emerging markets, may change as countries are added or dropped from the index. In 1988, for example, the MSCI EMF Index included only 15 countries.

Source: Securities and Exchange Commission

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