he Newgate Global Resources Equity Index was created to help investors define a new asset class: equity securities of companies in the business of extracting and processing natural resources.

There are three goals for the Newgate Global Resources Equity Index:

1. Defining this asset class. Given the diverse nature of companies in this sector, Newgate has attempted to deepen the scope of what is considered a natural resource investment.
2. Broadening the investment universe to include natural resources that do not have liquid futures contracts, such as coal and iron ore.
3. Creating reasonable risk, return and correlation figures for this asset class to be used by investors while making asset allocation decisions.

Sectors
Three sectors are included in the Newgate Global Resources Equity Index (Agriculture, Energy and Materials) with thirteen sub-sectors listed below. Most sectors have four representatives in the Index. Two sectors (Forest Products and Agricultural Chemicals) only have two representatives, as these industries are smaller and have a limited number of companies with adequate size and liquidity characteristics.

Country
Companies from all countries in the MSCI World Index were eligible for inclusion in the Newgate Global Resources Equity Index. As of January 1, 2007, companies from eighteen countries are represented in the Newgate Global Resources Equity Index.

Selection
Four stocks were selected from eleven of the sub-sectors, two from two others. Individual stocks were selected as follows:

The three largest companies (by market capitalization) were selected, provided that no more than two stocks could be from any one country. In the event the largest three stocks were from the same country, the next largest stock not from that country was selected. When practical, one stock from an emerging markets country was selected for inclusion. In the industries where no suitable emerging market stock exists, the fourth stock was included from the developed world. In no case is any one sector represented by three stocks from the same country.

Weighting Methodology
Stocks in the Newgate Global Resources Equity Index are equally weighted.

Back-testing
The index was back-tested from January 1996. Stocks were selected based on size, liquidity and business characteristics from the end of the preceding year. For example, inclusion in the Index for 1999 was based on data from the end of 1998.

Rebalancing
The Newgate Global Resources Equity Index is rebalanced annually on January 1 of each year. In the event of mergers or other major corporate actions, the affected equity is replaced upon the completion of the corporate activity. New companies coming into the Index mid-year are given the same weight in the Index as the company it is replacing.

Allocations
Allocations in the Newgate Global Resources Equity Index are as follows:

The sector allocation will only change if:

1. a sector is added/deleted
2. there is insufficient liquidity to continue to include four stocks per sector, or
3. in those sectors where there are currently only two stocks, additional stocks get added in the sector.

Newgate Capital Management LLC anticipates these situations occurring rarely.

Historical Performance
Performance for the Newgate Global Resources Equity Index is as follows: