Index Investing

What is an Index?
Technically, an index is a mathematical measure of the performance of a group of investments. Simply stated, an index tracks the growth of a basket of stocks or bonds. For example, the S&P 500 index tracks the performance of the 500 largest publicly traded firms in the United States. Though the companies in the index sometimes change, what is important to most investors is the change in value of the actual index over a period of time.

What is an ETF (Exchange-Traded Fund)?
ETFs are mutual funds traded publicly on a stock exchange. These funds can own hundreds of stock or bond positions. By purchasing shares of an ETF, you are indirectly investing in hundreds of positions without the cost or hassle of buying these positions yourself.

What is an Index-Linked ETF?
Index-linked ETF’s are created to perform exactly like a stock or bond specific index. The S&P 500 Index ETF is a basket of the actual stocks of the 500 largest companies in the United States as picked by Standard and Poor's. This ETF allows an investor to gain exposure to the S&P 500 without having to try to buy all 500 stocks individually. An index-linked ETF is a tremendously powerful investment vehicle that enables investors to quickly and efficiently invest in many companies and industries.

Which Index-Linked ETFs does CitrinGroup use?
CitrinGroup offers five optimized portfolios that each consist of a subset of the 16 Index-Linked ETFs (plus a money market fund) listed in the table below. These specific ETFs were selected as a result of our Portfolio Optimization process.

Fund	Symbol	Number of Holdings	Expense Ratio (%)	Category	Description
Vanguard Short-Term Bond Fund	BSV	869	0.11	Fixed-Income Index	0-3 Year U.S. Treasury and Agency Bonds
iShares MSCI Mexico Fund	EWW	41	0.51	Sector-Specific International Stock Index	Companies of Mexico
CurrencyShares Mexican Peso Trust	FXM	-	0.40	Currency Index	National Currency of Mexico
streetTRACKS Gold Trust	GLD	-	0.40	Sector-Specific Commodities Index	Gold Bullion
iShares S&P GSCI Commodity-Indexed Trust	GSG	-	0.75	Broad Commodities Index	Diversified Commodities
SPDR S&P Emerging Europe Fund	GUR	70	0.60	Broad International Stock Index	Companies of Emerging European Countries
iShares Dow Jones U.S. Healthcare Providers Fund	IHF	52	0.48	Sector-Specific Domestic Stock Index	Healthcare Provider Companies of the U.S.
iShares Dow Jones U.S. Medical Devices Fund	IHI	41	0.48	Sector-Specific Domestic Stock Index	Medical Equipment Companies of the U.S.
SPDR Lehman Intermediate-Term Treasury Fund	ITE	108	0.14	Fixed-Income Index	0-10 Year U.S. Treasury Bonds
iPath Dow Jones-AIG Copper Total Return Sub-Index Trust	JJC	-	0.75	Sector-Specific Commodities Index	Copper
iPath Dow Jones-AIG Energy Total Return Sub-Index Trust	JJE	-	0.75	Sector-Specific Commodities Index	Energy
PowerShares High Yield Corporate Bond Fund	PHB	50	0.50	Fixed-Income Index	High-Yield U.S. Corporate Bonds
Vanguard Europe Pacific Fund	VEA	1,176	0.12	Broad International Stock Index	Companies of Emerging International Countries
Vanguard REIT Fund	VNQ	98	0.10	Sector-Specific Domestic Stock Index	U.S. Real Estate
Vanguard Total Stock Market Fund	VTI	3,544	0.07	Broad Domestic Stock Index	Companies of the U.S.
Vanguard Emerging Markets Fund	VWO	962	0.25	Broad International Stock Index	Companies of Europe, Australia, Asia & the Far East
Money Market Fund (not an ETF)	-	-	-	Cash Equivalents	Money Market

Sources: currencyshares.com, invescopowershares.com, ipathetn.com, ishares.com, ssgafunds.com, vanguard.com (as of 2008-03-31)

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