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05 June 2002
On April 16 2002 exchange traded funds (also known as trackers or 'tracs') were incorporated into the Mexican capital market through a placement carried out by Nacional Financiera, SNC under the name 'NAFTRAC 02'.
Trackers are investment instruments issued by a trust that tracks the performance and dividend yield of a specific index. Each tracker represents shares in the respective trust, which holds portfolios of common stock. The trust keeps common stock in the index that intends to track.
'Naftracs' were issued through trust certificates that will track the performance and dividend yield of the Consumer Price Index of the Mexican Stock Exchange. Each certificate represents shares in a trust that holds common stock in the 35 listed companies on the Mexican Stock Exchange.
The first issue was carried out for 187 million certificates, divided into 1,870 units. The placement price of each certificate was Ps7.3967, leading to a total of Ps1.4 billion.
Trackers were originally implemented during the 1980s, when the American Stock Exchange created a financial instrument that reproduced the performance of indexes based on certain stocks. Later in the 1990s trackers were placed in Toronto's and Luxemburg's Stock Markets; allowing the globalization of those instruments.
The diversification of trackers gives investors access to a broader base of companies, which provides protection in case the price of one company in the index falls. In addition, investors find that flexibility plays a key role because although trackers are designed to be long-term instruments, they can be bought and sold at any time.
For further information on this topic please contact Oliver Armas or Boris Otto at Thacher Proffitt & Wood by telephone (+52 55 5257 2940) or by fax (+52 55 5257 2950) or by email (firstname.lastname@example.org or email@example.com). The Thacher Proffitt & Wood website can be accessed at www.tpwlaw.com.
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