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Rogers International Commodity Index® |
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Additional information is
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OBJECTIVE CRITERIA The following is a description of the RICI®, including a summary of the procedures used to determine and calculate the RICI®. The information contained in this section has been provided by Beeland Interests. The Rogers International Commodity Index® (“RICI”) is a composite, U.S. dollar-based, total return index designed by James B. Rogers, Jr. (“Rogers”) in the late 1990s. The index was designed to meet the need for consistent investing in a broad based international vehicle; it represents the value of a basket of commodities consumed in the global economy, ranging from agricultural to energy and metals products. The value of this basket is tracked via futures contracts on 35 different exchange-traded physical commodities, quoted in four different currencies, listed on eleven exchanges in five countries. The index aims to be an effective measure of the price action of raw materials not just in the United States but also around the world. Indeed, the index's weights attempt to balance consumption patterns worldwide (in developed and developing economies) and specific contract liquidity. Below is a current list of the futures contracts comprising the index, together with their respective symbols, exchanges, currencies and initial weights:
1ICE Futures through its affiliate ICE Data LLP provides the pricing data for the ICE components of the RICI® and such data is used subject to license by ICE Futures and ICE Data LLP; but for such license Beeland Interests would not have the right to use such pricing data in providing the Index Values through its Official Global Calculation Agent, CQG, Inc. The ICE pricing data is provided "as is" and without representation or warranty. 2The London Metal Exchange Limited provides the pricing data for the LME components of the RICI®. All references to the LME pricing data are used with the permission of the LME and LME has no involvement with and accepts no responsibility for any RICI® product or any part of the Rogers International Commodity Index®, Rogers International Commodity Index® - Metals, Rogers International Commodity Index® - Industrial Metals, their suitability as the basis for an investment, or their future performance.
The index is designed to offer stability, partly because it is broadly based and consistent in composition, and to meet a need
in the financial spectrum currently not effectively covered.
The RICI® Committee RICI® Composition The Process The contracts chosen for the basket of commodities that constitute the RICI® are required to fulfill various conditions described below. Generally, the selection and weights of the items in the RICI® are reviewed annually by the RICI® Committee, and weights for the next year are assigned every December. As a stable and investable index, the RICI®'s composition is modified only on rare occasions. Indeed, the composition of the RICI® will not be changed unless exceptional circumstances in fact occur. Such “exceptional circumstances” may include (but are not restricted to): Exchanges and Non-Traded Items All commodities included in the RICI® must be publicly traded on recognized exchanges to ensure ease of tracking and verification. Additionally, the RICI® does not and will not include non-traded items such as hides or tallow, which are included in other popular commodity indexes. The 11 international exchanges recognized by the RICI® Committee are:
General Contract Eligibility A commodity will be considered fit to be included in the RICI® if it plays a significant role in worldwide (developed and developing economies) consumption. “Worldwide consumption” is measured by tracking international import/export patterns, and domestic consumption environments of the world’s prime commodity consumers. Only raw materials that reflect the current state of international trade and commerce are eligible to become RICI® commodities. Commodities that are merely linked to national consumption patterns will not be considered. The RICI® is not related to commodities production data of any sort. Commodity Screening Process Data of private and governmental providers concerning the world’s top consumed commodities is actively monitored and thoroughly analyzed by the members of the RICI® Committee throughout the year. To obtain the most accurate picture of international commodities consumption, a wide range of sources on commodities demand and supply is consulted. The findings of this complex research undertaking are then condensed into the different commodities contracts weights of the RICI®. Sources on world’s commodity consumption data include:
Contract Characteristics In order to decide whether a specific commodity contract is actually investable, the RICI® Committee screens the extensive volume and liquidity data of international exchanges, published on a regular basis by the Futures Industry Association (Washington DC, United States). Additionally individual exchange data on contracts can be included in the process. If a commodity contract trades on more than one exchange, the most liquid contract globally, in terms of volume and open interest combined, is then aimed to be selected for inclusion in the RICI®, taking legal considerations into account. Beyond liquidity, the RICI® Committee is dedicated to including the contract representing the highest quality grade of a specific commodity. RICI® commodity contracts epitomize international liquidity and quality choice. For example, Silver is traded on COMEX, on NYSE Liffe, and on the Tokyo Commodity Exchange. The largest average volume and open interest is consistently transacted on COMEX, consequently this contract was selected to represent Silver in the Index. RICI® Weights Initial Weights As of September 1, 2009, the RICI® components have the initial weights listed in the chart above (the “Initial Weights”). Changes in Weights and/or RICI® Composition As noted, the RICI® Committee reviews the selection and weights of the futures contracts in the RICI® annually. Thus, weights are potentially reassigned during each month of December for the following year - if necessary. Monthly Rolling of Contracts The index rolls usually over 3 days, from the last RICI® Business Day of the month to the first RICI® Business Day of the following month. In the event that at least one of the last 3 weekdays (excluding weekend) of the month is simultaneously a holiday in the US and a business day in Japan, the roll period will be shifted forward by the number of days meeting the preceding condition (i.e. holiday in the US and business day in Japan). Generally, if the next calendar month of a futures contract includes a first notice day, a delivery day or historical evidence that liquidity migrates to a next contract month during this period, then the next contract month is intended to be applied to calculate the index, taking legal constraints into account. For example, during the November roll period, the January Crude Oil contract is replaced by the February Crude Oil contract. Rebalancing of the RICI® Components The RICI® is rebalanced monthly during each roll period using Index Weights Data Source. The index calculation is based on the official commodity exchanges' prices of the futures contracts used. Exceptional Committee Meeting If, for any reason, one of the RICI® components ceases to exist or liquidity collapses to abnormal levels, or any other similar event with similar consequences as determined in the discretion of the Committee occurs, the RICI® Committee will call an exceptional meeting to assess the situation and come out with a replacement for this component or for a change in the weights. For example, following the fall of the Malaysian ringgit in 1998, the liquidity of the Palm Oil futures contract on the Kuala Lumpur Commodity Exchange collapsed to a point where it became impossible to trade it. In this case, the RICI® Committee, calling an exceptional meeting, decided to replace the Palm Oil futures contract by the Soybean Oil contract that trades on the Chicago Board of Trade, United States. Available Reference Rates The Available Reference Rate ARR used for the calculation of the RICI® Total Return index is defined below: ARR is the 91-Day U.S. Treasury Bill (3 Months) auction rate, designated as "High Rate" as published in the "Treasury Security Auction Results" report, published by the Bureau of Public Debt and available on Bloomberg USB3MTA Index <GO> or Reuters USAUCTION9. The rate is generally published once per week on Monday and effective on the RICI® Business Day immediately following. |
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This www.rogersrawmaterials.com website is published and maintained by Beeland Management Company, LLC. Neither Beeland Interests, Inc. nor James Beeland Rogers, Jr. owns, is involved in the management of, or is responsible in any way for Beeland Management Company, LLC or Uhlmann Price Securities, LLC. Neither Beeland Interests, Inc. nor James Beeland Rogers, Jr. is responsible in any way for this website, including without limitation the accuracy or completeness of information provided on this website or on other websites accessible via this website’s links. For more information, you may contact Uhlmann Price Securities, LLC, a full service brokerage firm located in Chicago (http://www.upsecurities.com).
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