Strategic Capability Index - 15 September 2009

How we composed the Index

We created a notional investment fund comprising a basket of 12 equally weighted shares in 2004. We invested a notional amount of £1,000 in each of them. Taking the closing price on 7 March 2004 we have monitored the average return based on the closing price of each share on the first business day of each month over the last sixty-five months to 15 September 2009, without any adjustment for dividends or capital returns. Both the FTSE100 and the Strategic Capability Index had a starting point of 1.00 on 7 March 2004. The composition of the fund has remained unchanged over the sixty-five months since then.

Beyond the Index

After five plus years with the same components our notional index has probably gone as far as it can. Share price performance is a limited indicator but it has indicated the basic validity of the concept. FutureValue is now looking to conduct a more sophisticated review based on total shareholder return. This, we believe, will provide a more robust illustration of the link between quality of narrative disclosure and long term value creation. First, we need to access a historical total shareholder return database. With this we will be able to test the concept more appropriately.