Standard & Poor's Announces Chrysler to Leave S&P 500 Index
1 October 1998
Standard & Poor's Announces Chrysler to Leave S&P 500 Index
NEW YORK--Oct. 1, 1998--Standard & Poor's Financial Information Services will replace Chrysler Corporation (C) in the S&P 500 Index with a company to be announced at a later date. Chrysler will be removed from the S&P 500 at the close of trading on the last day it trades on the New York Stock Exchange. Daimler-Benz, a German corporation, is acquiring Chrysler. Upon completion of the merger the new company DaimlerChrysler AG will be incorporated in Germany. The merger is still subject to certain regulatory approvals. The merged company will not be added to the S&P 500.
In considering the Chrysler/Daimler-Benz transaction, the Standard & Poor's Index Committee re-affirmed its longstanding policy that non-US companies will not be added to the S&P 500. The S&P 500 is the US component of the global Standard & Poor's indexes. S&P will shortly announce a new Euro Index.
David M. Blitzer, Chairman of the S&P 500 Index Committee, commented, "The S&P 500 covers leading companies in leading industries and reflects the performance of the US markets and economy. Investors see the index as the key benchmark for the US markets. Moreover, investors recognize that companies and markets in one country perform differently from companies or markets in other countries. Our action today affirming that the S&P 500 represents the US market and companies is a reflection of how investors manage their investments."
To help ensure that investors have complete and accurate information, Standard & Poor's policy regarding non-U.S. companies is stated below.
Policy Statement
Several factors are considered when making the decision to add a particular company to an S&P index. Of foremost importance is the home country. S&P's policy is to maintain indices with non-overlapping constituents. Avoiding overlap makes S&P indices more reflective of the particular market and more efficient for index users.
The patterns of investment returns, and the way stocks trade, depend on a variety of factors. Experience and formal research show that a stock's home country is an important determinant of how it trades. In determining the home country of a company, Standard & Poor's considers where a company is incorporated, where it is registered for purposes of taxation and where the company is headquartered. These factors often determine its legal organization and corporate governance. New additions to the Standard & Poor's domestic US indexes are limited to US companies.
Ten non-U.S. companies are currently members of the S&P 500 Index. Royal Dutch Shell and Unilever joined the index in 1957 and 1961, respectively. The remaining eight are Canada-based firms. All are considered to be "grandfathered."
Other major factors considered when adding stocks include:
- the market capitalization of the company
- industry group classification
- ownership and liquidity of its shares
Standard & Poor's Financial Information Services, a division of The McGraw-Hill Companies, provides financial, economic, and investment information, as well as analytical services, to the global financial community and commodity trading markets.
Standard & Poor's calculates and maintains the S&P 100, S&P 500, S&P MidCap 400, S&P SmallCap 600, and the S&P Super Composite 1500 stock price Indexes, which are widely considered key barometers of stock market activity and performance benchmarks for professional money managers. Approximately $653 billion is currently indexed to the S&P Equity Indexes, including $626 billion indexed to the S&P 500, $20 billion indexed to the S&P MidCap 400, and $7 billion linked to the S&P SmallCap 600. Company additions to and deletions from the S&P equity indexes do not in any way reflect an opinion on the investment merits of the company.