Long Term Perspective

This series is relatively new to the S&P family. The index consists of 400 domestic stocks chosen for market size, liquidity, and industry group representation. It includes industrials, financials, utilities and transportation just like the S&P 500. The difference is that the market cap of these companies is smaller than for the 500 index.

This series of mid-cap stocks increased 11.3 percent in 2005, seemingly relatively mild compared with the gains of the two previous years. Nonetheless, it was a good showing - much better than most other market segments!

Short Term Perspective

The Mid Cap index incorporates a greater portion of its companies listed from the NASDAQ (26 percent) compared to the S&P 500 (13 percent). NASDAQ companies tend to be younger than those listed on the New York Stock Exchange (NYSE).

The Mid Cap index was up 10.3 percent in November 2006 relative to a year ago. Through the end of November, this index is 9.6 percent higher than year-end 2005. In the first part of this year, this segment of the market was stronger than the large cap sector of the economy, but that is no longer the case.

The Mid Cap index edged up 3.1 percent in November after gaining 4.1 percent in the preceding month. All segments of the market had weakened during the summer as investors worried about Federal Reserve policy. Conversely, investors were mollified after the Fed refrained from raising the federal funds rate target at its August FOMC meeting and then again in September and October.