Index Methodology and Guidelines

Transcription

1 Fxed Income Research Index Methodology and Gudelnes Contrbutors Baldwn Smth baldwn.smth@credt-susse.com Deepak Agnan deepak.agnan@credt-susse.com Bran Coco bran.coco@credt-susse.com Erc Isenberg erc.senberg@credt-susse.com Introducton As part of our commtment to provdng our clents wth the most nnovatve, effectve research products avalable, Credt Susse has developed the followng sute of fxed ncome bond ndces: Lqud U. S. Corporate Index ( LUCI ); Lqud Crossover Index( XOVR ) Lqud Eurobond Index ( LEI ) Lqud Japanese Corporate Index ( LJCI ) Euro Crossover Index ( Euro XOVR ) Credt Default Swap Indces(U.S., Euro, EMG)( CINDI ) EETC Structured Index ( DESI ) Lqud Swss Index ( LSI ) Soveregn Bond Index( SBI ) Latn Amercan Corporate Index ( LACI ) Mexco Local Bond Index( LOBOS ) U.S. Treasury Index ( USTI ) Lqud U.S. Agency Index ( LUAI ) U.S. Treasury Index ( USTI ) Treasury Bll Index ( TBI ) Inflaton Protected Treasury Index ( TIPS ) European Government Index ( EURGI ) European Government Inflaton Lnked Index( EGI ) UK Treasury Index ( UKTI ) Covered Bond Index ( CBI ) Bank Captal Index ( BCI ) Credt Susse TBA Mortgage Index ( MTGI ) The prce, yeld and spread of each ndvdual bond composng each Credt Susse ndex are reported daly by a Credt Susse trader who makes a market n the gven securty. Ths prcng approach, as opposed to alternatves such as matrx prcng, ensures tmely and relable prcng nformaton, enablng our clents to conduct accurate relatve value and portfolo performance analyss and to correctly gauge market trends and condtons wth much fner precson. Another advantage of our ndces s that they comprse only the most lqud, tradable bonds n the marketplace. Credt Susse traders, research analysts, debt captal markets professonals, and our customer base are actvely nvolved n the ncluson process for our ndces. Collectvely, these groups select newly ssued bonds for whch Credt Susse wll make a market or consders lqud accordng to the nvestment communty. Many competng ndex provders nclude both lqud and llqud securtes, renderng such ndces dffcult to replcate. FOR IMPORTANT DISCLOSURE INFORMATION relatng to analyst certfcaton, the Frm s ratng system, and potental conflcts of nterest regardng ssuers that are the subject of ths report, please refer to the Dsclosure Appendx.

2 Detaled current and hstorcal data on all ssues wthn the ndces are avalable onlne va Credt Susse s user-frendly Workbench platform, whch allows for customzed reportng and sophstcated analyss. Clents can access aggregate as well as sub-ndex level nformaton across any combnaton of ratngs, maturtes and ndustry sectors, and generate reports talored to ther specfc benchmark needs. Furthermore, all reports can be saved and updated automatcally or downloaded to an Excel spreadsheet. The Workbench also generates Graphc Analyss, whch enables users to graph one or many Indces/ ssuers/ ssues accompaned by the underlyng downloadable data. Our platform allows for flexble comparson analyss on all possble data that compose our ndces. Index Methodology The Credt Susse Bond Index Group calculates the actual change n all measured characterstcs of the respectve ndces on a daly bass. All of the ndex measures are calculated for all levels of the aggregate ndces ncludng the ndvdual bonds that make up the ndces. Market captalzaton weghtng s used for all ndex characterstcs, excludng average prce and average coupon, where prncpal outstandng s used. The weghtngs are fxed as of the last busness day of each month. All of our formulas gnore transacton costs and tax consequences. Indcatve bd sde prces are used for all ndex calculatons, and are provded by Credt Susse traders on a daly bass. Updates to the bond-level composton are made on the frst busness day of each month. For further nformaton on the ncluson crtera and other ndex detals, please refer to our ntroductory documents on the ndces, whch can be found on research and analytcs webste ( The followng secton provdes further detals on Credt Susse s methodology for calculatng: Total Return, Prce Return, Interest Return Excess Returns Underlyng Benchmarks and LIBOR Macaulay Duraton, Modfed Duraton Convexty Spread to Swap, Cross Currency Swap Index statstcs There are three basc equatons for calculatng returns on ndvdual bonds, and on the ndces themselves: Total Return, Prce Return and Interest Return. Total return s the sum of the two other returns. If daly returns are known, users can calculate returns for any gven perod. All accrued values are accumulated up to the settlement date (T+3) for corporate bonds and (T+) for government bonds. The followng assumptons are used: Index Methodology and Gudelnes 2

3 All returns wthout further qualfcaton refer to daly returns. 0: s the last busness date of the prevous month, also called date0 t : s the current date,.e., today t- : s one busness date before today, also called yesterday Pct : today s clean prce Pc0 : date0 s clean prce Pct- : yesterday s clean prce Pdt- : yesterday s drty prce Pdt : today s drty prce Pd0 : date0 s drty prce PRt: today s prce return AIt : Accrued nterest for today AIt-: Accrued nterest for yesterday CF0,t: coupon cash flow between date0 and today CF0,t-: coupon cash flow between date0 and yesterday IC0,t: cash receved between date0 and today ncludng coupon renvestment IC0,t-: cash receved between date0 and yesterday ncludng coupon renvestment DCT0,t-: days between coupon date and yesterday where coupon date s between date 0 and yesterday DCT0,t: days between coupon date and today where coupon date s between date0 and today Rt0: LIBOR M at date 0. Total Return The total return from the last busness date, for example, 0 to date t s defned as TR0,t = Pc t Pc 0 + AI t - AI 0 + IC 0,t Pd 0 The total return from the last busness date 0 to the date before t; t- s TR0,t- = Pc t- Pc0 + AIt- - AI0 + IC0,t- Pd 0 Now, the one day total return n percentage between dates t- and t s TRt-,t = TR 0,t + ( ) * 00 TR + 0,t- Prce Return The prce return s based on the clean prce apprecaton over yesterday s drty prce. PRt = Pc t Pc t Pd t The nterest return takes factors other than prce nto account. There are two components to the nterest return calculaton: accrued nterest apprecaton and the renvestment of the coupon durng the perod. The tme between coupon payments on a bond s referred to as the coupon perod. At any tme durng a gven coupon perod, the seller of the bond s enttled to that porton of the next coupon payment, known as accrued nterest, that s proportonate to the tme elapsed snce the pror payment. The quoted prce of a bond does not normally take accrued nterest nto account. A quote prce wthout accrued nterest s called a clean prce ; wth accrued nterest the prce s called a drty prce. The renvestment rate s based on the USD M LIBOR rate as of the last busness date of the prevous month. The cash receved durng date0 and any gven date durng the month assumes that there are coupon payments durng the perod and the renvestment rate s appled to the actual number of days between the coupon payment date and the gven date. If there s no coupon payment durng the perod, the IC component s set to 0. Index Methodology and Gudelnes 3

4 Interest Return Where IC0,t- = CF 0,t- * (+ DCT0,t- * Rt0 / 360) IC0,t = CF0,t * ( + DCT0,t * Rt0 / 360) Excess Return Calculatons Two types of excess returns are calculated for each fxed bond: excess return over benchmark and excess return over the asset swap asset. We refer to them as ExBench Returns and ExSwap Returns, respectvely. The asset swap asset s the floatng bond assocated wth a gven fxed bond, whch has the same leg as the fxed bond. The drty prce of the asset swap asset uses a zero curve to dscount all future cash flows to present values. The curve s defned by a swap curve as of the respectve market close from Credt Susse prcng sources. As soon as the prce for the asset swap asset s known, the total return of the asset can be calculated accordngly. We measure return performance versus the treasures for whch they are benchmarked and the asset swapped bond for each corporate securty. These returns are also avalable by the hghest-level aggregate level and the ndvdual ndustry, maturty and ratngs sectors of our LUCI. These measures are called excess return over benchmarks and excess return over swaps. Lke all of our other measures, they are market cap weghted. We offer Day (D), Month to Date (MTD) Quarter to Date (QTD), and Year to Date (YTD) Excess Returns over benchmarks and swaps. We refer to them as ExBench Total Ret and EXSwapTotal Ret under our measure category n the LUCI Workbench applcaton. We have calculated daly prce and total returns for our excess returns over benchmarks, and total returns for our excess returns over swaps. The formulas are below: ExBench Prce D return = fxed bond prce D return - benchmark prce D return ExBench Total D return = fxed bond total D return - benchmark total D return ExSwap Total D return = fxed bond total D return - asset swap bond total D return We then aggregate the daly returns to derve MTD, QTD, and YTD returns. Wth -day returns, we derve horzontal returns wth the followng formula. For example, assume Ts and Te are start date and end date of a perod. The Day return for date T s R T, where Ts <= T <= Te. The perod return R can be represented as Perod Excess Returns T R = = Te T = Ts R T Duraton Adjusted Excess Return Excess Return = Corp Total Return ((Bench Total Return/Bench Duraton) x Corp Modfed Duraton) The calculaton for the un-hedged return s smply the return n local currency multpled by the FX change of the un-hedged currency. Index Methodology and Gudelnes 4

5 Calculatng Duratons Duraton can be descrbed as the weghted average tme to recept of the future cash flows (or coupon payments), wth weghtng determned by the porton of the bond s overall present value that s represented by the present value of those future cash flows. Duraton shows that for small changes n the bond s yeld, the percentage change n the bond s prce approxmates the negatve of ts duraton tmes the change n yeld. In other words, for small parallel shfts n the yeld curve, the rato of two bonds prce changes wll be the same as the rato of ther duratons. Duraton s also a concept commonly used to descrbe the effectve lfe of bonds. It s a method of assessng the rsk profle of dfferent bonds regardless of dfferences n term to expry, coupon rates and yeld to maturty. It s an mportant concept n the use of nterest rate futures for hedgng. The duraton of a bond s a measure of how long, on average, the holder of the bond has to wat before recevng cash payments. Duraton calculaton usng the conventonal yeld s often called Macaulay duraton; ts formula s gven by: Macaulay duraton MacDur = n t tcf ( + yd / freq) Pd 0 freq Where Pd s equal to the present value of the expected cash flows, yeld (yd ) and coupon frequences (freq), equaton wth expected cash flows (CF ) Macaulay duraton dvded by one plus the conventonal yeld s often referred to as modfed duraton. Modfed duraton can be used lke contnuously compounded duraton to calculate the percentage change n bond prce for small changes n yeld. Modfed Duraton ModDur = MacDur ( + y / freq) d = Pd P d y d Mathematcally, modfed duraton represents the slope of the tangent lne, at a partcular yeld level, to the prce-yeld curve of the bond. At dfferent yeld levels the slope of ths tangent lne wll vary. Modfed duraton can then be used to measure the prce senstvty of a bond. Hence, les ts great usefulness snce modfed duraton always assumes () nstantaneous yeld changes, (2) changes n yeld whch are small, and (3) parallel shfts n the yeld curve. When moderate or large changes n nterest rates are consdered, a measure known as convexty s sometmes mportant. Parallel shfts s a very serous lmtaton. In practce, short-term rates are usually more volatle than, and are not closely correlated wth, long-term rates. From the above ModDur formula, we can easly make the followng statement: Approxmate dollar prce change Pd = - (ModDur * P d ) * Dollar duraton s defned as, DolDur = ModDur * For example, AIG 5.% 0/7/2007 on May 2, 2002 has ModDur = 4.065, drty prce = The DolDur = * $0.279 = $4.699 P d Approxmate dollar prce change = * = The sgn of dollar prce change s not mportant, as the prce/yeld relatonshp s well known. Only magntude of the dollar prce change matters. As we mentoned n the duraton assumptons, the estmaton wll be good only f the yeld change s small. yd Index Methodology and Gudelnes 5

6 Convexty Asset Swap Spread Asset Swap and Rsk Convexty s a measure of speed that a bond s duraton changes as ts yeld changes. Therefore, the duraton of a bond wth hgh convexty wll get longer as yelds fall faster than t gets short as yelds rse. Ths means that for parallel yeld shfts of equal sze, the prce gan on a downward move n yeld s larger than the prce loss on an upward move. Mathematcally, t s the second dervatve of prce wth respect to yeld. An Asset Swap s an Interest Rate Swap or Cross Currency Swap used to convert the cash flows from an underlyng securty (a Bond n our case), from Fxed coupon to Floatng coupon, Floatng coupon to Fxed Coupon, or from one currency to another. The terms and condtons of the Asset Swap are the same for an Interest Rate Swap or Cross Currency Swap. The underlyng securty and swap may be transacted together (as a package) wth the same counter-party or separately wth dfferent counterparts. The Asset Swap may be transacted at the tme of the securty purchase or added to a bond or FRN already owned by the nvestor. A Fxed Rate Bond plus an Asset Swap convertng the bond to floatng rate s known as a Synthetc Floatng Rate Note. The securty plus Asset Swap can be sold as a package separately. Dependng on the yeld of the bond and the swap curve, the asset yelds a certan premum n excess of LIBOR, commonly referred to as the asset swap spread. Credt Rsk If an asset swap nvestor wants to keep the asset on the balance sheet untl maturty, the only rsk consderaton s whether the ssuer s gong to default before the bond matures. If the nvestor wants to mark to market hs poston or sell the asset swap before maturty, he runs a credt spread rsk. The relevant credt spread s the spread to the swap curve, as the swap or smlar maturty. If swap spreads rse, the loss on the bond s offset by the gan on the swap. However, f swap rates do not move and the credt spread rses, the nvestor ncurs a loss. Interest rate rsk The nvestor has a long poston n a bond, whch s hedged by a short poston n a swap of smlar maturty, creatng a synthetc floatng rate note. A normal floatng rate note has a duraton of zero on each payment date, mplyng zero nterest rate rsk. Snce the coupon and prce of the bond and the offsettng swap are not dentcal, the duraton and convexty of the two parts wll not be dentcal ether. Spread to Swap Spread to Swap Calculaton The swap-spread calculaton s based on the followng formula: SwapSpread = PrceFromZero MktPrce dfc DCF Where the PrceFromZero s the prce of the bond calculated usng the swap-zero curve, MktPrce s the market prce of the bond. The prces can be ether both clean or drty prces. dfc s the day count fracton for the th coupon payment, as computed from the approprate floatng leg conventons (.e., Act360 on the USD market). DCF s the dscount factor for the floatng payments for the th coupon payment. Index Methodology and Gudelnes 6

7 Cross Currency Swap A cross-currency swap s equvalent to shortng a vanlla LIBOR swap n the one currency, long a vanlla LIBOR swap n the other currency, and long/short the currency bass swap. PVj : Present value of one set of cash-flows n CCYj (j =, 2) CFj : The -th cash-flow per unt notonal n currency j (j =, 2) dfj : The dscount factor to PV date appled to the -th cash flow n currency j FX : the spot FX rate on the PV date NPj : the notonal of the CCYj (j =, 2) The PV = NP * CF *df j =, 2 j j j j Snce PV = PV2 / FX NP * CF *df = 2 2 (NP 2 * CF * df ) / FX By conventon, NP2 = NP * FX, we have CF * df = CF 2 *df 2 In asset swap, CF0 s the drty prce of the bond, and CF wth > 0, are the coupons and the fnal redempton. CF20 s the ntal prncpal of the floatng leg of the swap, and CF2 wth > 0, are the (floatng coupons + asset swap spread) and the fnal redempton. Index Statstcs All ndex level (or portfolo level) statstcs aggregate the bond level measures by the consttuted bond s market weghts. For return related statstcs, bond s weghts are fxed on the last busness date of the prevous month. (Snce our ndces rebalance on the last busness date of each month.) For all other statstcs, a bond s weght s defned as daly market weght wth monthly fxed par amounts. w : market weght for the th-bond n the ndex prce + accruedinterest paramount For bond, the market weght w = ( ) n: total number of bonds n the ndex W: total weght for an ndex Index s total weght W s calculated as n W = w = Each bond has weght of ω = W w from the gven ndex. By gven bond s modfed duraton m, an ndex s modfed duraton, whch can be represented as n D = ω * m = Notes: There are some bond measures, whch are fxed for an entre month to smplfy data nterpretaton. For example, any ratng change wll not take effect untl next month. Otherwse, some ratng buckets may become empty n the month. Index Methodology and Gudelnes 7

8 FIXED INCOME INDEX PRODUCTS Bunt Ghosh, Managng Drector Global Head of Fxed Income Research Baldwn Smth, Drector Global Group Head NORTH AMERICA Baldwn Smth, Drector Deepak Agnan, Vce Presdent Bran Coco, Assocate Erc Isenberg, Assocate (Global Group Head) baldwn.smth@credtsusse.com deepak.agnan@credt-susse.com bran.coco@credt-susse.com erc.senberg@credt-susse.com..

9 Dsclosure Appendx Analyst Certfcaton The analysts dentfed n ths report each certfy, wth respect to the companes or securtes that the ndvdual analyzes, that () the vews expressed n ths report accurately reflect hs or her personal vews about all of the subject companes and securtes and (2) no part of hs or her compensaton was, s or wll be drectly or ndrectly related to the specfc recommendatons or vews expressed n ths report. Important Dsclosures Credt Susse's polcy s only to publsh nvestment research that s mpartal, ndependent, clear, far and not msleadng. For more detal, please refer to Credt Susse's Polces for Managng Conflcts of Interest n connecton wth Investment Research: Credt Susse s polcy s to publsh research reports as t deems approprate, based on developments wth the subject ssuer, the sector or the market that may have a materal mpact on the research vews or opnons stated heren. The analyst(s) nvolved n the preparaton of ths research report receved compensaton that s based upon varous factors, ncludng Credt Susse's total revenues, a porton of whch are generated by Credt Susse's Investment Bankng and Fxed Income Dvsons. Credt Susse may trade as prncpal n the securtes or dervatves of the ssuers that are the subject of ths report. At any pont n tme, Credt Susse s lkely to have sgnfcant holdngs n the securtes mentoned n ths report. As at the date of ths report, Credt Susse acts as a market maker or lqudty provder n the debt securtes of the subject ssuer(s) mentoned n ths report. For mportant dsclosure nformaton on securtes recommended n ths report, please call For the hstory of any relatve value trade deas suggested by the Fxed Income research department over the prevous 2 months, please vew the document at Credt Susse clents wth access to the Locus webste may refer to For the hstory of recommendatons provded by Techncal Analyss, please vst the webste at Credt Susse does not provde any tax advce. Any statement heren regardng any US federal tax s not ntended or wrtten to be used, and cannot be used, by any taxpayer for the purposes of avodng any penaltes. Emergng Markets Bond Recommendaton Defntons Buy: Indcates a recommended buy on our expectaton that the ssue wll delver a return hgher than the rsk-free rate. Sell: Indcates a recommended sell on our expectaton that the ssue wll delver a return lower than the rsk-free rate. Corporate Bond Fundamental Recommendaton Defntons Buy: Indcates a recommended buy on our expectaton that the ssue wll be a top performer n ts sector. Outperform: Indcates an above-average total return performer wthn ts sector. Bonds n ths category have stable or mprovng credt profles and are undervalued, or they may be weaker credts that, we beleve, are cheap relatve to the sector and are expected to outperform on a total-return bass. These bonds may possess prce rsk n a volatle envronment. Market Perform: Indcates a bond that s expected to return average performance n ts sector. Underperform: Indcates a below-average total-return performer wthn ts sector. Bonds n ths category have weak or worsenng credt trends, or they may be stable credts that, we beleve, are overvalued or rch relatve to the sector. Sell: Indcates a recommended sell on the expectaton that the ssue wll be among the poor performers n ts sector. Restrcted: In certan crcumstances, Credt Susse polcy and/or applcable law and regulatons preclude certan types of communcatons, ncludng an nvestment recommendaton, durng the course of Credt Susse's engagement n an nvestment bankng transacton and n certan other crcumstances. Corporate Bond Rsk Category Defntons In addton to the recommendaton, each ssue may have a rsk category ndcatng that t s an approprate holdng for an "average" hgh yeld nvestor, desgnated as Market, or that t has a hgher or lower rsk profle, desgnated as Speculatve and Conservatve, respectvely...

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The prce, value of and ncome from any of the securtes or fnancal nstruments mentoned n ths report can fall as well as rse. The value of securtes and fnancal nstruments s subject to exchange rate fluctuaton that may have a postve or adverse effect on the prce or ncome of such securtes or fnancal nstruments. Investors n securtes such as ADR s, the values of whch are nfluenced by currency volatlty, effectvely assume ths rsk. Structured securtes are complex nstruments, typcally nvolve a hgh degree of rsk and are ntended for sale only to sophstcated nvestors who are capable of understandng and assumng the rsks nvolved. The market value of any structured securty may be affected by changes n economc, fnancal and poltcal factors (ncludng, but not lmted to, spot and forward nterest and exchange rates), tme to maturty, market condtons and volatlty, and the credt qualty of any ssuer or reference ssuer. Any nvestor nterested n purchasng a structured product should conduct ther own nvestgaton and analyss of the product and consult wth ther own professonal advsers as to the rsks nvolved n makng such a purchase. Some nvestments dscussed n ths report may have a hgh level of volatlty. Hgh volatlty nvestments may experence sudden and large falls n ther value causng losses when that nvestment s realsed. Those losses may equal your orgnal nvestment. Indeed, n the case of some nvestments the potental losses may exceed the amount of ntal nvestment and, n such crcumstances, you may be requred to pay more money to support those losses. Income yelds from nvestments may fluctuate and, n consequence, ntal captal pad to make the nvestment may be used as part of that ncome yeld. Some nvestments may not be readly realsable and t may be dffcult to sell or realse those nvestments, smlarly t may prove dffcult for you to obtan relable nformaton about the value, or rsks, to whch such an nvestment s exposed. Ths report may provde the addresses of, or contan hyperlnks to, webstes. Except to the extent to whch the report refers to webste materal of CS, CS has not revewed any such ste and takes no responsblty for the content contaned theren. Such address or hyperlnk (ncludng addresses or hyperlnks to CS s own webste materal) s provded solely for your convenence and nformaton and the content of any such webste does not n any way form part of ths document. Accessng such webste or followng such lnk through ths report or CS s webste shall be at your own rsk. Ths report s ssued and dstrbuted n Europe (except Swtzerland) by Credt Susse Securtes (Europe) Lmted, One Cabot Square, London E4 4QJ, England, whch s regulated n the Unted Kngdom by The Fnancal Servces Authorty ( FSA ). Ths report s beng dstrbuted n Germany by Credt Susse Securtes (Europe) Lmted Nederlassung Frankfurt am Man regulated by the Bundesanstalt fuer Fnanzdenstlestungsaufscht ("BaFn"). Ths report s beng dstrbuted n the Unted States and Canada by Credt Susse Securtes (USA) LLC; n Swtzerland by Credt Susse; n Brazl by Banco de Investmentos Credt Susse (Brasl) S.A; n Japan by Credt Susse Securtes (Japan) Lmted; elsewhere n Asa/ Pacfc by whchever of the followng s the approprately authorsed entty n the relevant jursdcton: Credt Susse (Hong Kong) Lmted, Credt Susse Equtes (Australa) Lmted, Credt Susse Securtes (Thaland) Lmted, Credt Susse Securtes (Malaysa) Sdn Bhd, Credt Susse Sngapore Branch, and elsewhere n the world by the relevant authorsed afflate of the above. Research on Tawanese securtes produced by Credt Susse, Tape Branch has been prepared by a regstered Senor Busness Person. Research provded to resdents of Malaysa s authorsed by the Head of Research for Credt Susse Securtes (Malaysa) Sdn Bhd, to whom they should drect any queres on Ths research may not conform to Canadan dsclosure requrements. In jursdctons where CS s not already regstered or lcensed to trade n securtes, transactons wll only be effected n accordance wth applcable securtes legslaton, whch wll vary from jursdcton to jursdcton and may requre that the trade be made n accordance wth applcable exemptons from regstraton or lcensng requrements. Non-U.S. customers wshng to effect a transacton should contact a CS entty n ther local jursdcton unless governng law permts otherwse. U.S. customers wshng to effect a transacton should do so only by contactng a representatve at Credt Susse Securtes (USA) LLC n the U.S. Please note that ths research was orgnally prepared and ssued by CS for dstrbuton to ther market professonal and nsttutonal nvestor customers. Recpents who are not market professonal or nsttutonal nvestor customers of CS should seek the advce of ther ndependent fnancal advsor pror to takng any nvestment decson based on ths report or for any necessary explanaton of ts contents. Ths research may relate to nvestments or servces of a person outsde of the UK or to other matters whch are not regulated by the FSA or n respect of whch the protectons of the FSA for prvate customers and/or the UK compensaton scheme may not be avalable, and further detals as to where ths may be the case are avalable upon request n respect of ths report. Copyrght 2006 CREDIT SUISSE GROUP and/or ts afflates. All rghts reserved.