Classifications as determined on December 1, 2009.

The definition of a narrow-based index has changed and, as a result, the overwhelming majority of indices with exchange-traded options now count as "broad-based." This is good news for most index investors because options on broad-based indices receive more generous tax treatment than options on narrow-based indices.   While there is still some debate, we believe options on exchange-traded funds (whether or not they are based on broad-based indices) do not receive the favorable tax treatment.

In general, under the new definition, an index is narrow-based only if it contains nine or fewer component securities, if a single component security comprises more than 30% of its weighting, or if the aggregate of the five highest-weighted component securities comprise more than 60% of its weighting. For a more detailed discussion of the new law, go to  Good News For Index Investors.

The classification of a given index may fluctuate between broad-based and narrow-based. Investors are cautioned to confirm the classification shown below if time has elapsed from the above date.

More information on the tax treatment of exchange-traded index options.

Options involve risk and are not suitable for all investors.  Before engaging in an options transaction, investors must review the booklet "Characteristics and Risks of Standardized Options".