ADRs Outperform their Foreign Counterparts

June 17, 2002 (PLANSPONSOR.com) - Over the past six years, American Depositary Receipts (ADRs) have outperformed their home equity markets by 83%, partly due to investor perceptions of good corporate governance and lower risk, research from Citibank shows.

These vehicles are typically viewed by investors as US securities and are moved by US market conditions, while their local country listing also exposes them to the influences of their home markets.

Between 1997 and May 2002, in US dollar terms, the average annual return of:

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  • the 42 ADRs in the Bloomberg ADR Index was 12.8%
  • compared to an average of 5.1% for the respective home country indices
  • 6.7% for the US market.

Volume and Value

The ADRs in the Bloomberg index, which represent 22 countries, accounted for 55% of 2001 ADR trading value and 52% of trading volume. The ADRs outperformed their home market in every year during the period except 1998, the year of the global liquidity crisis, Citibank reported.

Citibank expects ADR trading volume during the first half of 2002 to be 15.5 billion shares, a decline of 4.9% from the first half of 2001.

ADR trading value for the first six months of the year is projected to be $294 billion, down 27% from last year’s mid-year level of $405 billion.

These declines are consistent with projected drops in mid-year US market volumes (net of ADRs) of 4.4% in shares traded, from 392 billion to 375 billion, and 26% in US dollar trading value from $12.4 trillion to $9.2 trillion, the Citibank report says.

An ADR is a certificate issued in the US in lieu of a foreign security. ADRs are traded in the US to all intents and purposes as if they were a domestic stock. Dividends are paid in US dollars, providing a way for US investors to purchase foreign stock without having to switch in and out of foreign currencies.

Jefferson Pilot Offers Critical Care Coverage

June 14, 2002 (PLANSPONSOR.com) - Benefit Partners is offering a new critical illness benefit, which generates a payout when an employee contracts a critical illness such as a heart attack or stroke and meets a survival period.

Benefit Partners, the employee benefits division of Jefferson Pilot Financial, is making its Critical Assistance Recovery Enhancement (CARE) product available as an optional benefit when purchased with Jefferson Pilot’s true group or voluntary long-term disability plans.

According to a company announcement, covered critical illnesses or ailments include a:

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  • heart attack
  • life-threatening cancer
  • major organ transplant
  • kidney failure
  • stroke

The company announcement said the payout goes to the insured employee without restrictions as to how it can be spent. The money can be used to help fill insurance coverage gaps, provide protection for incidental expenses incurred because of the illness, or to protect retirement savings, the company said.

Employers choose the CARE benefit amount for their employee population – the choices are a lump sum equal to three, six or 12 times the employee’s gross monthly long-term disability benefit up to a maximum benefit of $25,000.

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