The Innovation Index 2008 Performance

The Innovation Index 2008 Performance
Top 20 Innovators	Ticker	31-Dec-07	31-Dec-08	% Change
3M Company	MMM	84.32	57.54	-31.76%
Amazon.com	AMZN	92.64	51.28	-44.65%
America Movil	AMX	61.39	30.99	-49.52%
Apple	AAPL	198.08	85.35	-56.91%
AT&T	T	41.16	28.50	-30.76%
Best Buy	BBY	52.51	28.11	-46.47%
Cisco Systems	CSCO	27.07	16.30	-39.79%
Costco Wholesale	COST	69.60	52.50	-24.57%
eBay	EBAY	33.19	13.96	-57.94%
General Electric	GE	36.74	16.20	-55.91%
Google	GOOG	691.48	307.65	-55.51%
Hewlett-Packard	HPQ	50.48	36.29	-28.11%
Intel	INTC	26.50	14.66	-44.68%
IBM	IBM	107.69	84.16	-21.85%
Merck	MRK	57.61	30.40	-47.23%
McDonald's	MCD	58.51	62.19	6.29%
Microsoft	MSFT	35.46	19.44	-45.18%
NIKE	NKE	64.00	51.00	-20.31%
Research In Motion	RIMM	113.40	40.58	-64.22%
Proctor & Gamble	PG	73.05	61.82	-15.37%
The Innovation Index		108.27	66.35	-38.72%
S&P 500	^GSPC	1,468.36	903.25	-38.49%
Dow Jones	^DJI	13,264.82	8,776.39	-33.84%
NASDAQ	^IXIC	2,652.28	1,577.03	-40.54%
McDonald's Corporation is the only innovator out of the top 20 innovators that had a positive stock performance in an otherwise tough 2008. McDonald's has achieved an amazing feat that will be cherished for a long time. 8 out of the Top 20 Innovators finished averaging better performance than the S&P 500. Assumptions and Disclosures: *Assumes equal investment in each Innovator of the Innovation Index
*Innovation Index Fund is closed and ended much lower than the Innovation Index
*2009 Innovation Index will be announced the week of Jan 12, 2009
*Innovation Index Group will relaunch in 2009, without management of any fund, as an investment research and analysis company.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

The Innovation Index slides 9% in Q1, 2008, manages to stay in front of S & P 500

The Innovation Index Performance Since Dec 2006

The Innovation Index slides 9% in the first quarter of 2008 along with the broader market. The Innovation Index beats S & P 500 by 1%, beats NASDAQ by 5%, and lags Dow Jones by 1%. S & P 500 is down 10%, NASDAQ is down 14% and Dow Jones is down 8% in the first quarter of 2008.

Only 4 Innovators out of the Top 20 Innovators are in the green in 2008 and are showing modestly positive returns ranging from 1% to 7% gain. 16 out of the Top 20 Innovators are in the red in 2008, with wide-ranging negative returns with a maximum of 36% loss.

The Innovation Index had a banner 2007, and gained 66% in 2007.* The Innovation Index closed at 108.27 on December 31, 2007, up 66% from the closing price of 65.05 on December 29, 2006.*

Invest in The Innovation Index - Invest in the Innovation Index Fund

The Innovation Index closed at 98.51 on March 31, 2008, down 9% from the closing price of 108.27 on December 31, 2007, and up 51% from the closing price of 65.05 on December 29, 2006. S & P 500 is down 7%, NASDAQ is down 6% and Dow Jones is down 2% since December 29, 2006.

The Innovation Index - 2008

The Innovation Index - 2007

Q1 2008 Leaders

Only 4 Innovators show a positive gain in first quarter of 2008. The early leader of 2008 is IBM (NYSE: IBM) with a gain of 7%. Why is IBM ahead? Great quarterly earnings performance, and an upbeat future earnings guidance aka outlook. IBM is poised to have a solid 2008, and if the broader market improves, watch out! IBM could easily gain 20% to 30% in 2008. Nike Inc. (NYSE: NKE) also leads with 6% gain for the year. Nike also had an amazing quarter, beat the revenue and earnings on the high estimates, and gave an upbeat outlook as well. If Nike continues to deliver on the announced innovations, Nike will have another breakout year on the heels of 2007. Who else is in the positive in 2008? How about America Movil (NYSE: AMX) and General Electric (NYSE: GE)? America Movil is on a three-peat: After a solid 2007 with 36% gain, and an impressive 2006 with 56% gain, America Movil is up 4% in 2008. It's core business is wireless which shows no signs of letdown in 2008. 2008 could be the year of GE. GE was even in 2007 (paid good dividend though). Investors are betting that GE can grow globally and show consistent growth in 2008. GE is a safer bet. GE is up 1% in 2008.

Q1 2008 Laggards

There is a sea of red. Everywhere you see, you see Innovators with negative performance in 2008. As a matter of fact, there are 16 of the 20 Innovators who are down in the first quarter of 2008. Who leads the pack in losses? Surprisingly, it is Google Inc. (NASDAQ: GOOG). Google is down 36% in 2008, after gaining 50% in 2007. So it is kind of bittersweet. Can Google rebound in 2008 with the earnings gains from recently completed Double Click acquisition? Google also announced new innovations with Team Apps. Google has plenty of distractions though - the biggest one being Microsoft's pending acquisition of Yahoo. Google must stay focused on increasing Search marketshare and increasing the higher performing clicks. A percent improvement in the effectiveness of clicks generates a factor of ten improvement in topline revenue. One of the newest Innovator for 2008 is down 34% after gaining 35% in 2007. Merck Inc. (NYSE: MRK) is down 34% in Q1, 2008. There are plenty of news around Merck's Vytorin and Zetia. "The drugmakers sold $5.2 billion of Vytorin and Zetia last year. The study showing the drugs work no better than a generic medicine at one-fifth the price may cost the two companies $1.3 billion in sales this year and $1 billion next year, said Jim Kelly, an analyst with Goldman Sachs & Co., in a research report today." - Bloomberg Merck has some rebounding to do from such a deep drop in 2008.
Why are shares of Apple Inc. (NASDAQ: AAPL) down 28% after gaining 133% in 2007? Apple was one of the star performers in 2007 Innovation Index. Apple kicked off 2008 with bold new innovations, introduced the new iPhone and new iPod touch, and created new technology with Nike for the gym. It has do with future earnings guidance, or rather a weak one by Apple. If Apple delivers on the earnings and shows growth in Mac, iPod and iPhone business, Apple will do just fine. Can Apple hit $250 in 2008? We will need to fast forward to December 2008.

There are 4 Innovators who have lost 20% or more in 2008. These include Amazon.com Inc. (NASDAQ: AMZN) down 23% after gaining a whopping 135% in 2007; Best Buy Inc. (NYSE: BBY) down 21% after gaining 6% in 2007; Intel (NASDAQ: INTC) down 20% after gaining 32% in 2007; and Microsoft Corporation (NASDAQ: MSFT) down 20% after gaining 20% in 2007. Can these Innovators rebound in 2008?

Which Innovators are safe bets for investors in 2008? 3M and PG are smart long-term buys in turbulent markets. We have three more quarters in 2008. And as we witnessed in 2007, one quarter can make a huge difference.

2007 Leaders

Research In Motion Limited - (NASDAQ: RIMM) was the 2007 leader in stock performance, with 166% gain for the year. Amazon.com, Inc. (NASDAQ: AMZN) was equally impressive with 135% gain for the year. Apple Inc. (NASDAQ: AAPL) had a great year with 133% appreciation for the year. There were eight other innovators with double-digit gains for the year. Among these innovators, Google Inc. (NASDAQ: GOOG) led with 50% gain. America Movil (NYSE: AMX) was next up with 36% gain in 2007, and Intel Corporation (NASDAQ: INTC) closed out 2007 with 32% gain. Overall, 13 innovators finished 2007 with positive gains.

2007 Laggards

Six innovators finished the year in the negative, led by Starbucks Corporation (NASDAQ: SBUX) declining 42% for the year. Southwest Airlines Co. (NYSE: LUV) was next, declining 20% for the year. Target Corp. (NYSE: TGT) rounded out the top three, declining 12% for the year. Yahoo Inc. (NASDAQ: YHOO) was down 9% in 2007.

2008 Top 20 Innovators

The Top 20 Innovators for 2008 were announced on December 31, 2007. Here is the alphabetical list of the Top 20 Innovators for 2008:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

2008 Predictions (originally published January 17, 2008)

How will The Innovation Index perform in 2008? So far, the Innovators have been off to a rough start in 2008. The sub-prime mortgage crisis, rising oil prices, and early indications of slowing economy have contributed to negativity on the Wall Street. We believe this sentiment is short-lived, and will only last through the second quarter of 2008. The potential availability of an economic stimulus package will certainly help. The resilient Innovators of The Innovation Index will reward the patient, long-term investor. The key is to stay with these Innovators through the downturn, and wait until later in the year to realize the positive gains.* Innovation Index Group, Inc. announced the following BUY recommendations for the Top 20 Innovators of The Innovation Index.

Invest in the Innovation Index Fund

We launched the new Innovation Index Fund in December, 2007 that invests in the Innovation Index. Innovation Index would have returned 66% in 2007 based on our performance model, and 174% in the previous five years based on historical model. If you want to learn more about the Innovation Index Fund, fill out your contact information at the bottom of this form: http://www.innovationindexgroup.com/invest.html

The Innovation Index Reports:

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund
Introducing The Innovation Index Fund - Invest into The Innovation Index
Top 50 Innovative Companies in the world - 2007 Report on Top 50 Companies
Annual Report - Chapter One - Total Innovation Activity - 2006 Annual Report One
Annual Report - Chapter Two - The Top Innovator - 2006 Annual Report Two
Annual Report - Chapter Three - The Innovation Insights - 2006 Annual Report Insights
Innovation and Stock Performance Correlation - The Innovation Index and Stock Performance
The Innovation Index gallops to 56% - Quarterly Report - Q3, 2007

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index returned 66% in 2007 according to performance model, and would have returned 174% over the previous five years (2002-2006) according to historical model. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.

* Past Performance Does Not Guarantee Future Results

The Innovation Index closes 2007 with 66% gain, beats major U.S. indices

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund


(click to maximize Innovation Index performance chart)

The Innovation Index had a banner year, and gained 66% in 2007. The Innovation Index beats the major U.S. indices including the S & P 500, NASDAQ and Dow Jones. S & P 500 was up 4% for the year, NASDAQ was up 10% for the year and the Dow Jones Index was up 6% for the year.

The Innovation Index closed at 108.27 on December 31, 2007, up 66% from the closing price of 65.05 on December 29, 2006.

(click to maximize)

2007 Leaders

Research In Motion Limited - (NASDAQ: RIMM) was the 2007 leader in stock performance, with 166% gain for the year. Amazon.com, Inc. (NASDAQ: AMZN) was equally impressive with 135% gain for the year. Apple Inc. (NASDAQ: AAPL) had a great year with 133% appreciation for the year. There were eight other innovators with double-digit gains for the year. Among these innovators, Google Inc. (NASDAQ: GOOG) led with 50% gain. America Movil (NYSE: AMX) was next up with 36% gain in 2007, and Intel Corporation (NYSE: INTC) closed out 2007 with 32% gain. Overall, 13 innovators finished 2007 with positive gains.

2007 Laggards

Six innovators finished the year in the negative, led by Starbucks Corporation (NASDAQ: SBUX) declining 42% for the year. Southwest Airlines Co. (NYSE: LUV) was next, declining 20% for the year. Target Corp. (NYSE: TGT) rounded out the top three, declining 12% for the year. Yahoo Inc. (NASDAQ: YHOO) was down 9% in 2007.

2008 Top 20 Innovators

The Top 20 Innovators for 2008 were announced on December 31, 2007. Here is the alphabetical list of the Top 20 Innovators for 2008:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

2008 Predictions

How will The Innovation Index perform in 2008? So far, the Innovators have been off to a rough start in 2008. The sub-prime mortgage crisis, rising oil prices, and early indications of slowing economy have contributed to negativity on the Wall Street. We believe this sentiment is short-lived, and will only last through the second quarter of 2008. The potential availability of an economic stimulus package will certainly help. The resilient Innovators of The Innovation Index may reward the patient, long-term investor. The key may be to stay with these Innovators through the downturn.

Invest in the Innovation Index Fund

We launched the new Innovation Index Fund in December, 2007 that invests in the Innovation Index. Innovation Index would have returned 66% in 2007 according to our performance model, and would have returned 174% in the previous five years according to our historical model.* If you want to learn more about the Innovation Index Fund, fill out your contact information at the bottom of this form: http://www.innovationindexgroup.com/invest.html

The Innovation Index Reports:

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund
Introducing The Innovation Index Fund - Invest into The Innovation Index
Top 50 Innovative Companies in the world - 2007 Report on Top 50 Companies
Annual Report - Chapter One - Total Innovation Activity - 2006 Annual Report One
Annual Report - Chapter Two - The Top Innovator - 2006 Annual Report Two
Annual Report - Chapter Three - The Innovation Insights - 2006 Annual Report Insights
Innovation and Stock Performance Correlation - The Innovation Index and Stock Performance
The Innovation Index gallops to 56% - Quarterly Report - Q3, 2007

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index returned 66% in 2007, and would have returned 174% over the previous five years (2002-2006) based on historical model.* This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.

*Past Performance Does Not Guarantee Future Results. Please refer to Innovation Index Fund Prospectus for details on our offering.

The Innovation Index Top 20 Innovators for 2008

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund

Top 20 Innovators of The Innovation Index for 2008

Six new Innovators have been added to The Innovation Index for 2008:

AT&T Inc. - (NYSE: T) (52 week change: UP 18.71%)
Best Buy Co., Inc. - (NYSE: BBY) (52 week change: UP 6.30%)
Costco Wholesale Corporation - (NASDAQ: COST) (52 week change: UP 32.82%)
Merck & Co., Inc. - (NYSE: MRK) (52 week change: UP 34.66%)
McDonald's Corporation (NYSE: MCD) (52 week change: UP 34.22%)
NIKE, Inc. - (NYSE: NKE) (52 week change: UP 29.88%)

Fourteen existing Innovators have been retained to The Innovation Index for 2008:

3M Company - (NYSE: MMM) (52 week change: UP 9.19%)
Amazon.com, Inc. - (NASDAQ: AMZN) (52 week change: UP 139.36%)
America Movil - (NYSE: AMX) (52 week change: UP 34.30%)
Apple Inc. - (NASDAQ: AAPL) (52 week change: UP 135.54%)
Cisco Systems, Inc. - (NASDAQ: CSCO) (52 week change: UP 0.84%)
eBay Inc. - (NASDAQ: EBAY) (52 week change: UP 12.34%)
General Electric Co. - (NYSE: GE) (52 week change: UP 0.35%)
Google Inc. - (NASDAQ: GOOG) (52 week change: UP 52.56%)
Hewlett-Packard Co. - (NYSE: HPQ) (52 week change: UP 24.69%)
Intel Corporation - (NYSE: INTC) (52 week change: UP 32.15%)
International Business Machines Corp. - (NYSE: IBM) (52 week change: UP 13.32%)
Microsoft Corporation - (NASDAQ: MSFT) (52 week change: UP 20.96%)
Research In Motion Limited - (NASDAQ: RIMM) (52 week change: UP 174.55%)
The Proctor & Gamble Company - (NYSE: PG) (52 week change: UP 15.53%)

Six old Innovators were dropped from 2007 and will not make the 2008 list:

Dell Inc. - (NASDAQ: DELL) (52 week change: DOWN 0.56%)
Southwest Airlines Co. - (NYSE: LUV) (52 week change: DOWN 20.17%)
Starbucks Corporation - (NASDAQ: SBUX) (52 week change: DOWN 43.17%)
Target Corp. - (NYSE: TGT) (52 week change: DOWN 11.06%)
Wal-Mart Stores, Inc. - (NYSE: WMT) (52 week change: UP 4.11%)
Yahoo! Inc. - (NASDAQ: YHOO) (52 week change: DOWN 8.18%)

The Innovation Index Top 20 Innovators for 2008 are the following:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

Further commentary on the addition of six new Innovators, the top Innovator of 2007, and the changes will be provided in the second week of January, 2008. As of December 17, 2007, The Innovation Index has returned 56%. The Innovation Index closed at 101.28 on December 17, 2007, effectively even from the closing price of 101.39 on Sep 28, 2007, and up 56% from the closing price of 65.05 on December 29, 2006.

Invest in the Innovation Index Fund

We launched the new Innovation Index Fund in December, 2007 that invests in the Innovation Index and returned 66% in 2007, and 174% in the previous five years. If you want to learn more about the Innovation Index Fund, fill out your contact information at the bottom of this form: http://www.innovationindexgroup.com/invest.html

The Innovation Index Reports:

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund
Introducing The Innovation Index Fund - Invest into The Innovation Index
Top 50 Innovative Companies in the world - 2007 Report on Top 50 Companies
Annual Report - Chapter One - Total Innovation Activity - 2006 Annual Report One
Annual Report - Chapter Two - The Top Innovator - 2006 Annual Report Two
Annual Report - Chapter Three - The Innovation Insights - 2006 Annual Report Insights
Innovation and Stock Performance Correlation - The Innovation Index and Stock Performance
The Innovation Index gallops to 56% - Quarterly Report - Q3, 2007

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index has returned 119% over the last five years. This assumes an investment in each stock of The Innovation Index (buying each stock). An average of $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.

The Normalized Innovation Index has returned an impressive 174% over the last five years. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001.

2008 - Alphabetical list of the Top 20 Innovators of The Innovation Index and their stock ticker symbols for 2008:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

2007 - Alphabetical list of the Top 20 Innovators of The Innovation Index and their stock ticker symbols for 2007:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.

The Innovation Index

Introducing The Innovation Index

The Innovation Index is a compilation of the Top 20 Innovators in North America. Most of these Innovators are prestigious companies including GE, 3M, HP, IBM, and Proctor & Gamble who have created numerous innovations and shaped our lives over the past fifty plus years; some leaders are better known by their innovative product brands - Blackberry by Research In Motion, iPod and iMac by Apple, online shopping by Amazon.com, Windows and Office by Microsoft, Microprocessor powered by Intel; the list also includes leaders whose creativity and brands have become synonymous to markets: networks by Cisco, computers by Dell, marketplace of traders by eBay, hot coffee and cappuccino by Starbucks, fashionable clothing by Target, lowest price shopping by Wal-Mart, low airline fares by Southwest Airlines, and search nirvana by Google.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

The alphabetical list of the Top 20 Innovators of The Innovation Index (for 2007) along with their stock ticker symbols are presented below:

3M Company - MMM
Amazon.com, Inc. - AMZN
America Movil - AMX (added end of December 2006)
Apple Computer, Inc. - AAPL
Cisco Systems, Inc. - CSCO
Dell Inc. - DELL
eBay Inc. - EBAY
General Electric Co. - GE
Google Inc. - GOOG
Hewlett-Packard Co. - HPQ
Intel Corporation - INTC
International Business Machines Corp. - IBM
Microsoft Corporation - MSFT
Research In Motion Limited - RIMM
Southwest Airlines Co. - LUV
Starbucks Corporation - SBUX
Target Corp. - TGT
The Proctor & Gamble Company - PG
Wal-Mart Stores, Inc. - WMT
Yahoo! Inc. - YHOO (added end of December 2006)

For 2008, six Top Innovators were changed. The alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols are presented below:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

For 2009, there were no changes.

The Innovation Index Report will incorporate the following objectives and will be released quarterly:

1. Report, analyze and project the stock performance of the Top 20 Innovators in North America every week, and compare their performance to S&P, NASDAQ and Dow Jones.

2. Compare and contrast best practices, initiatives, new products, successes, strategies, stories, leadership and insights on Creativity and Innovation at the Top 20 Innovators.

3. Showcase Disruptors challenging these Top Innovators, their disruptive innovation strategy, and their current and potential impact on the Innovators' customer base and market share.

A potential "The Disruption Index" could also arise once the market of Disruptors grows, and they become identified and accounted for. For example, The Disruption Index could include Juniper Networks and highlights about how it is disrupting Cisco Systems, Advanced Micro Devices' and its challenge versus Intel, and Yahoo!, the once crowned Internet Innovation King now in a Disruptor's role vis-à-vis Google.

How are the Top Innovators performing (2006)?

In one word: Surprising. (click on the image to obtain a larger view of The Innovation Index) The number one Innovator by stock performance this year is not Google, nor Apple - the top two innovators in the world. Rather it is an Innovator that knows a thing or two about causing disruption in the business segment of mobile devices by its ubiquitous wireless email service: Research In Motion - RIMM. The Blackberry, called "crackberry" by its cult-like business users who are so hooked on the e-mail that they can't even go to sleep without it being on, has fundamentally changed how the business world communicates via wireless email with total ease and security. What is also surprising is eBay (EBAY), the darling of the Internet boom, is showing the highest negative return so far this year out of the top 18 Innovators. eBay is sure to answer back next year with a host of new planned innovations. Cisco Systems (CSCO) is on the rebound this year notching gains over 50% for the year; bell-weather, Hewlett Packard, is also showing impressive gains of about 40% for the year. Are they innovating and executing better this year? Dell (DELL), Intel (INTC) and Amazon.com (AMZN) are all showing double-digit negative returns for the year. Are Disruptors challenging their leadership positions? Would they be around as Innovators next year in the index?

Overall, The Innovation Index shows a solid return of 14% for the year, beating the S & P 500 and NASDAQ, and in a virtual tie with the Dow Jones Industrial Index average. The Innovation Index is currently at 75.61 points, up 9.03 points for the year. Only 5 out of 18 companies in The Innovation Index are showing negative returns. Seven Innovators are showing double-digit returns; while the venerable companies including GE, Wal-Mart and 3M are showing less than 5% return – I will be exploring under the hood as to why this is the case. I believe though that in the longer term, in as much as the index continues to include the most innovative companies in the world founded on creativity and ingenuity driving business innovation, The Innovation Index will outperform the respective market indices. On the other hand, The Disruption Index could be even more spectacular in annual returns owing to smaller yet high growth companies carving out significant market share.

2006 Innovation Index performance:

The Innovation Index closed 2006 with 18.01% return, beating the major U.S. indices.

2007 Innovation Index performance:

The Innovation Index had a banner year, and gained 66% in 2007. The Innovation Index easily crushes the major U.S. indices including the S & P 500, NASDAQ and Dow Jones. S & P 500 was up 4% for the year, NASDAQ was up 10% for the year and the Dow Jones Index was up 6% for the year.

For now, watch this blog for updates on The Innovation Index, the Top 20 Innovators in action, and their Disruptors in hot pursuit. Check Innovation Index reports below for detailed analysis, highlights, correlations, stock performance, and more.

2007 Top Innovators Update

America Movile, S.A. de C.V. (America Movil) (NYSE: AMX) and Yahoo! Inc. (NASDAQ: YHOO) were added to The Innovation Index (for 2007). With this addition, The Innovation Index now represents the Top 20 Innovators in North America. The Innovation Index will begin 2007 at 69.38 points with the addition of AMX and YHOO.

2008 Top Innovators Update

Six new Innovators have been added to The Innovation Index for 2008 and 2009:

AT&T Inc. - (NYSE: T) (52 week change: UP 18.71%)
Best Buy Co., Inc. - (NYSE: BBY) (52 week change: UP 6.30%)
Costco Wholesale Corporation - (NASDAQ: COST) (52 week change: UP 32.82%)
Merck & Co., Inc. - (NYSE: MRK) (52 week change: UP 34.66%)
McDonald's Corporation (NYSE: MCD) (52 week change: UP 34.22%)
NIKE, Inc. - (NYSE: NKE) (52 week change: UP 29.88%)

2008 Innovation Index Performance

Top 20 Innovators	Ticker	31-Dec-07	31-Dec-08	% Change
3M Company	MMM	84.32	57.54	-31.76%
Amazon.com	AMZN	92.64	51.28	-44.65%
America Movil	AMX	61.39	30.99	-49.52%
Apple	AAPL	198.08	85.35	-56.91%
AT&T	T	41.16	28.50	-30.76%
Best Buy	BBY	52.51	28.11	-46.47%
Cisco Systems	CSCO	27.07	16.30	-39.79%
Costco Wholesale	COST	69.60	52.50	-24.57%
eBay	EBAY	33.19	13.96	-57.94%
General Electric	GE	36.74	16.20	-55.91%
Google	GOOG	691.48	307.65	-55.51%
Hewlett-Packard	HPQ	50.48	36.29	-28.11%
Intel	INTC	26.50	14.66	-44.68%
IBM	IBM	107.69	84.16	-21.85%
Merck	MRK	57.61	30.40	-47.23%
McDonald's	MCD	58.51	62.19	6.29%
Microsoft	MSFT	35.46	19.44	-45.18%
NIKE	NKE	64.00	51.00	-20.31%
Research In Motion	RIMM	113.40	40.58	-64.22%
Proctor & Gamble	PG	73.05	61.82	-15.37%
The Innovation Index		108.27	66.35	-38.72%
S&P 500	^GSPC	1,468.36	903.25	-38.49%
Dow Jones	^DJI	13,264.82	8,776.39	-33.84%
NASDAQ	^IXIC	2,652.28	1,577.03	-40.54%

2009 Innovation Index Performance

Innovation Index Reports

• Annual Report 2009 - Innovation Index
• Innovation Index strikes back with 48.65% in 2009.
  
• Annual Report 2008 - Innovation Index
• Innovation Index dropped over 38% in 2008.
  
• Annual Report 2007 - The Innovation Index gains 66%
• Innovation Index delivered huge in 2007. Find out why.
  
• Measuring Business Innovation Success
• How successful is your new innovation? Pertinent report and industry study.
  
• Innovation Index Group BUY Recommendations
• What would be the 12 month target for the top 20 innovators?
  
• Q1 2008 Report - Innovation Index ahead of S&P 500
• Innovation Index report for the first quarter of 2008.
  
• Q2 2008 Report - Top Innovators Deliver
• Top 20 Innovators performed remarkably in trying economic conditions.
  
• Top 50 Innovative Companies in the world
• The most innovative companies in the world. What sets them apart?
  
• Annual Report - Chapter One - Total Innovation Activity
• How many innovations were carved out by the top innovators?
  
• Annual Report - Chapter Two - The Top Innovator
• Which innovators excelled, and why?
  
• Annual Report - Chapter Three - The Innovation Insights
• Key observations from the Top 20 Innovators.
  
• Innovation and Stock Performance Correlation
• Innovation drives business growth; business growth drives market performance.
  
• Future earnings guidance, A leading indicator
• Better earnings outlook and its impact on current stock performance
  
• Smart Investing In Tough Economic Times
• Where would you invest in current economy? Business of Investing.
  
• To Sell Or Not To Sell - You Decide
• Now may not be the time to sell. Find out why.
  
• Creativity and Innovation Best Practices
• All the best practices at the Top innovative companies in the world.
  
• Creativity and Innovation Case Studies
• Key Case Studies of the Top innovative companies in the world.
  
  Leading Creativity and Innovation eBook. Business Innovation Resource Kit - 212 pages Definitive Guide, 439-slide insights Innovation Bootcamp, Annual Innovation Report. 212-page collection of over 55 best practices, case studies, and insights on the current state of Creativity and Innovation in Business at Top Innovators including Apple, Google, Netflix, 3M, Frito Lay, Johnson & Johnson, Procter & Gamble, Toyota, GE, BMW, Deloitte, Southwest, Nike, IBM, Dell and more. "Your report from the eBook and definitive guide was the primary reference that we used." Used by over 550 leading organizations including HP, Pepsi, EDS, Nokia, J&J more... Download Now...
  
  
  Selected references:
  Leading eBook on Creativity and Innovation in Business
  Creativity and Innovation Best Practices
  Creativity and Innovation Case Studies
  The Innovation Index
  Top 50 innovative companies in the world

References:

BusinessWeek: The World’s Top 25 Most Innovative Companies

BusinessWeek along with the Boston Consulting Group surveyed and ranked the top 25 Innovative companies in the world for 2006 and 2005. I have compiled the list of the Top Innovators in North America for the past three years. This list only includes the North American companies that are publicly traded.

Updated: February 19, 2008