 
S&P Dow Jones Indices:  Equity Indices Policies & Practices       1 
Table of Contents 
 
Introduction  4 
Overview  4 
Corporate Action Treatment by Index Categorization  4 
Additions and Deletions  5 
Mandatory Events  6 
Mergers & Acquisitions  6 
Reverse Mergers/Takeovers  7 
Tendered Shares  8 
Spin-Offs  8 
Treatment of Spin-Offs in Market Capitalization Indices  8 
Treatment of Spin-Offs in Certain Non-Market Capitalization Indices  9 
Rights Offerings (or “Rights Issues”)  10 
S&P DJI’s Calculation of Rights Offerings  10 
Non-Market Capitalization Weighted Indices  12 
Warrants, Options, Partly Paid Shares, Convertible Bonds, Contingent Value 
Rights, and Other Ineligible Securities & Share Types  12 
Non-Mandatory Share and IWF Updates  14 
Material Share/IWF Changes - Accelerated Implementation Rule  14 
Market Specific Accelerated Implementation Rules  15 
Announcement Policy  15 
Non-Material Share/IWF Changes – Quarterly Implementation  15 
Rebalancing Guidelines – Share/IWF Reference Date & Freeze Period  16 
Certain Share Types and Designations  17 
Multiple Share Classes  17 
Designated Listings  17 
Depositary Receipt Shares  18 
Brazil Units  18 
Dividends, Stock Splits, and Consolidations  19 
Dividends  19 
Regional Variations in the Treatment of Cash Dividends  20 
Post Ex-date Dividend Adjustment  22 
Foreign Exchange Conversions for Dividends  23 
Multiple Dividend Distributions on a Single Day  23 

 
S&P Dow Jones Indices:  Equity Indices Policies & Practices       2 
Dividend Not Quoted Ex by the Exchange  23 
Bonus Issues of Shares Not Entitled To Cash Dividend  23 
Total Return and Net Return Indices  23 
Stock Split and Consolidation  24 
Certain Eligibility Criteria for Dividend Focused Indices  24 
Monthly Review for Ongoing Eligibility in Dividend Focused Indices  25 
Summary of Corporate Action Treatment by Index Weighting Type  27 
Market Capitalization Indices  27 
Non-Market Capitalization Indices (Excluding Price & Equal Weighted Indices)  28 
Price Weighted Indices  29 
Equal Weighted Indices  30 
Regulatory Capping Requirements  31 
Treatment of Corporate Actions on Exchange Holidays  33 
Price Adjusting Corporate Actions  33 
Non-Price Adjusting Corporate Actions  33 
Bankruptcies & Stock Suspensions  34 
Bankruptcies  34 
Long-Term Stock Suspensions  34 
Short-Term Stock Suspensions  35 
Sanctions  35 
Domiciles  37 
Policy  37 
Controls on the Repatriation of Foreign Capital  39 
Unexpected Exchange Closures  40 
U.S. Securities  40 
International Securities  40 
Treatment of Corporate Actions  41 
Rebalancing  42 
Index Recalculation Policy  44 
End-of-Month Global Fundamental Data – Recalculation Policy  45 
Index Governance  47 
Index Committee  47 
Quality Assurance  47 
Internal Reviews of Methodology  47 
Index Policy  49 
Announcements  49 
Pro-forma Files  49 

 
S&P Dow Jones Indices:  Equity Indices Policies & Practices       3 
Holiday Schedule  49 
Exchange Rate  49 
Corporate Actions Applicable to Domestic Investors Only  49 
Special Index Variations  49 
Child Indices  50 
Index Cessations  50 
Calculations and Pricing Disruptions  50 
Other Adjustments  52 
Expert Judgment  52 
Discretion  52 
Data Hierarchy and Data Sources  52 
Contact Information  52 
Appendix A – Definitions and Terms  53 
Rights Offering Terms and Definitions  53 
Appendix B – Methodology Changes  60 
Disclaimer  71 
Performance Disclosure/Back-Tested Data  71 
Intellectual Property Notices/Disclaimer  72 
ESG Indices Disclaimer  74 

S&P Dow Jones Indices: Equity Indices Policies & Practices 4

Introduction

Overview

S&P Dow Jones Indices’ (S&P DJI) equity indices adhere to the general policies and practices covering

corporate action treatment, index applications, pricing guidelines, market disruptions, recalculations, and

other policies outlined below.

However, please note that local market practices may take precedence over general S&P DJI policies &

practices in some instances, so there are exceptions and/or special rules pertaining to those markets. If

an index methodology specifies a different approach than the general approach stated within this policy

document, the rules stated in the index methodology take precedence. To the extent possible, the

implementation and timing is the same across all S&P DJI’s branded equity indices. For specific

information on the policies and practices governing an index, please refer to the respective index

methodology.

Corporate Action Treatment by Index Categorization

S&P DJI’s index calculation and corporate action treatments vary according to the categorization of the

indices. At a broad level, indices are defined into two categorizations: Market Capitalization Weighted and

Non-Market Capitalization Weighted Indices.

A majority of S&P DJI’s equity indices are market capitalization weighted and float-adjusted, where each

stock’s weight in the index is proportional to its float-adjusted market value. S&P DJI also offers capped

versions of market capitalization weighted indices, where single index constituents or defined groups of

index constituents, such as sector or geographical groups, are confined to a maximum weight. The default

treatment in this document assumes a market capitalization weighted index.

Non-market capitalization weighted indices include those that are not weighted by float-adjusted market

capitalization and generally are not affected by notional market capitalization changes resulting from

corporate actions. Examples include indices that apply equal weighting, factor weighting such as dividend

yield or volatility, strategic tilts, thematic weighting, price weighting, or other alternative weighting

schemes.

S&P Dow Jones Indices: Equity Indices Policies & Practices 5

Additions and Deletions

Additions and deletions of securities to indices can occur for a number of reasons. For indices that do not

have a fixed number of constituents, additions and deletions are not linked to one another. For certain

indices with a fixed number of constituents, whenever there is a deletion from an index, a replacement is

added to the index, preferably on the same day. In other instances, indices can have a fixed number of

constituents at each rebalancing with the constituent count fluctuating between rebalancings. In these

situations, if an index has a targeted constituent count of 30 or less and more than 10% of the constituent

count between rebalancing dates is removed from the index due to mergers, acquisitions, takeovers,

delistings, bankruptcies, or other reasons that warrant ineligibility, the index will be reviewed by the Index

Committee to determine when replacement securities will be added to the index.

Initial Public Offerings (IPOs) and Direct Listings. IPO and direct listing additions to indices typically

take place on the rebalancing dates. In general, IPOs and direct listings must meet the index eligibility

criteria, and in certain cases, large offerings may qualify for fast track entry.

Data Availability. IPOs and direct listings for which S&P Dow Jones Indices is unable to confirm the

number of shares and/or calculate an accurate Investable Weight Factors (“IWFs”) based on available

information are not considered for fast track entry, and in instances where this information is not available

before a rebalancing cut-off reference date, may not be eligible for inclusion during the rebalancing.

Delistings. A security is generally dropped from all the indices it is a constituent of on or around its

expected delisting date. Securities removed from an index due to voluntary delisting or failure to meet the

exchange listing requirements, are removed at the primary exchange price, if available, or at a zero price

if no primary exchange price is available. In some cases, where a stock’s listing changes to an exchange

not maintained by S&P DJI, the stock is removed using the last traded price on the prior exchange. For

U.S. listed securities, non-bankrupt securities are removed at the OTC or pink sheet price if no primary

exchange price is available. If no OTC or pink sheet price is available, the security can be removed at a

zero price at the discretion of the Index Committee.

Please refer to Mergers & Acquisitions for information on delistings due to M&A events.

Note: Every index methodology has its own guidelines and thresholds for determining additions and

deletions, and the timing of these actions. Please refer to the respective individual index methodology for

further clarity on the timing of changes to the given index.

S&P Dow Jones Indices: Equity Indices Policies & Practices 6

Mandatory Events

Mergers & Acquisitions

Merger & Acquisition (M&A) corporate action events often result in changes to index membership, shares

outstanding, and IWFs for index constituents. S&P DJI attempts, on a best-efforts basis, to mimic index

clients’ real-world experiences when processing M&A events. S&P DJI’s index analysts track and review

all M&A events on an individual, case-by-case basis.

Event Finalization. S&P DJI’s branded indices generally implement (“finalize”) M&A driven changes

according to the below, with any action taken based on the publicly available information related to the

event:

• at least one (1) business days’ notice for all non-Depository Receipts (DR) U.S. listed stocks

• at least two (2) business days’ notice for all non-U.S. listed stocks, U.S. listed DRs, and inter-

listed stocks.

For mergers involving shareholder elections, S&P DJI generally recognizes the event based on the

default election terms. In certain cases, and with the defined advance notice to clients, S&P DJI may

decide to recognize an event using alternative election terms.

Any share issuance for the acquirer is implemented to coincide with the drop event for the target. To

minimize turnover, there is no minimum threshold requirement for implementation of an M&A driven

share/IWF change.

S&P DJI may, in certain cases, exercise discretion to accumulate and implement de minimis M&A share

changes with the quarterly share rebalancing. M&A share/IWF changes for an index company acquiring a

privately held company, or a company not part of any S&P DJI-maintained indices, are implemented at

the next quarterly rebalancing.

Target Deletion. S&P DJI generally removes an M&A target company from all indices on or around the

expected delisting, or last trading, date. In certain scenarios a target company may be removed before its

delisting date, according to the below:

• The M&A event is deemed unconditional, i.e., all required approvals are received and all

conditions for the acquisition to complete are met.

• For Tender offers:

o All conditions are met, and there is an announced settlement date.

o The remaining free float is less than 15% (except where pre-event free float is less than

15%) as based on publicly available information, even if the tender offer is still open.

Where these conditions are met, the deletion is generally effective prior to the open of the business day

following the last day of the tender period, subject to the notice periods specified above.

Any stock removed from an index due to the above rule is ineligible for re-inclusion in any S&P DJI

branded index for at least 12 months following the stock’s removal date, even if the stock continues to

trade on an eligible exchange.

Deletion Price. Generally, S&P DJI implements deletions using the security’s closing price on the

deletion date. If the primary exchange suspends or halts an M&A target security prior to S&P DJI’s

announced effective deletion date, the removal is implemented as follows:

S&P Dow Jones Indices: Equity Indices Policies & Practices 7

• Cash Consideration Events: S&P DJI removes the security at the market close price or the deal

price, whichever is lower.

• Stock Consideration Events: S&P DJI synthetically derives a price for the suspended security

using the deal ratio terms, provided the acquirer is issuing stock as part of the merger. The

synthetically derived price is used in index calculations until S&P DJI’s deletion date.

If any other pricing mechanism is used, the final decision regarding the pricing method is at the discretion

of S&P DJI and is announced to clients with sufficient notice.

Target Security Float Change. For events where conditions for the removal of a security are not met, or

where the intention is a partial acquisition, S&P DJI may decide to update the IWF of the target security

with at least two (2) business days’ notice. Such a decision is based on publicly available information in

the following circumstances:

1. The Offer Period is over, and the Acquiring company does not announce an extension or re-

opening. The following conditions must be met:

a. All required approvals have been received and conditions for the offer are met.

b. Public information is available to calculate the new IWF.

c. Settlement date of the tendered shares is known.

d. Size of the change is at least 5% and US$ 150 million or US$ 1 billion.

2. The Offer Period is extended, or an additional offer period is opened/announced, and the

following conditions are met:

a. All required approvals have been received and conditions for the offer are met.

b. Public information is available to calculate the new IWF.

c. Settlement date of the tendered shares is known.

d. Size of the change is at least US$ 1 billion or IWF changes by at least 15%.

If an IWF change does not meet any of the above conditions, the IWF updates at the subsequent

quarterly rebalancing, subject to all required information being publicly available. If the stock is

suspended, the event is recognized once trading resumes and follows the above process.

For more information on the timing of share changes, please refer to the Non-Mandatory Share and

Investable Weight Factor (IWF) Updates chapter.

S&P DJI believes turnover in index membership should be avoided when possible. An otherwise eligible

addition is generally not added to indices at a rebalancing if the company is the target of a confirmed

M&A event. Current index constituents are generally not deleted at a rebalancing solely for the reason of

being the target of a pending acquisition.

At the discretion of S&P DJI, constituents with shareholder ownership restrictions defined in company

bylaws may be deemed ineligible for inclusion in an index. Ownership restrictions preventing entities from

replicating the index weight of a stock may be excluded from the eligible universe or removed from the

index.

Reverse Mergers/Takeovers

Acquisitions for shares of a public company by a private company or by a subsidiary of a public company

that will then list, also known as reverse takeovers, will generally be implemented via a change of the

company/stock name, and all other identifiers of the target of the acquisition and current index

constituent. These events are generally triggered by a reorganization of the acquiring company’s

capitalization. In order to align all attributes of the newly listed company to the former entity, S&P DJI

S&P Dow Jones Indices: Equity Indices Policies & Practices 8

might apply a split event to the number of shares and share price of the parent according to the terms of

the takeover.

In instances where a price adjusting corporate action with a cash component becomes non-replicable for

clients due to late information, SP DJI may decide to use a temporary placeholder security to ensure

clients have at least one day’s notice.

Tendered Shares

Generally, index changes due to tender offers are only implemented after the final results of the tender

offer are publicly announced and verified by S&P DJI.

In certain markets, tendered shares may be replaced with a tradable tendered share class on the same

stock exchange. S&P DJI will consider replacing the common share line with the tendered share class in

indices once a minimum acceptance ratio of 75% has been reached and subject to the announcement of

a further acceptance period.

If S&P DJI decides to replace the common share line with the tendered line, an announcement will be

issued with one to five business days’ notice with a replacement effective date timed to occur during the

subsequent acceptance period. No changes will be made to the tendered shares outstanding, IWF,

divisor, or index weighting. Identifiers are updated if necessary.

Spin-Offs

Treatment of Spin-Offs in Market Capitalization Indices

As a general policy, a spin-off security is added to all indices where the parent security is a constituent, at

a zero price at the market close of the day before the ex-date (with no divisor adjustment). The spin-off

security will remain in the parent’s indices if it meets the eligibility criteria.

If a spin-off security is determined to be ineligible to remain in the index, it will be removed after at

least one day of regular way trading (with a divisor adjustment). In certain instances, S&P DJI may

decide to add the spin-off security to indices using a non-zero price and applying a price adjustment to

the parent.

S&P DJI may determine not to add an ineligible spin-off security to the parent’s indices due to de minimis

value, lack of information on value of the spin-off security, or tradability issues. Generally, if a spin-off

security is anticipated to trade on an exchange, it is at least temporarily added to indices to discover value

and then removed if it is determined to be ineligible for continued index inclusion. If S&P DJI is unable to

determine whether the spin-off security will trade on an exchange, or is unable to obtain information to

value the spin-off security, S&P DJI may choose not to recognize the event.

If there is a gap between the ex-date and distribution date (or payable date), or if the spin-off security

does not trade regular way on the ex-date, the spin-off security is kept in all indices in which the parent

is a constituent until the spin-off security begins trading regular way. An indicative or estimated price

may be used for the spin-off entity in place of a zero price until the spin-off security begins trading to

represent the value of the spin-off received. The indicative or estimated price for the spin-off security is

usually calculated using the difference between the parent’s close price the night before the ex-date and

the opening price of the parent on the ex-date. Any difference in calculation due to subsequent corporate

actions on the parent or spin-off security will be communicated to clients through the usual channels. If

the spin-off entity does not trade for 20 consecutive trading days after the ex-date and there is no

guidance issued for when trading may begin, S&P DJI may decide to remove the spin-off security at a

zero price with advance notice given to clients.

Index composition changes involving the parent or spin-off company, including attribute changes, such

as a change in its Global Industry Classification Standard (GICS

) classification, are implemented after the

spin-off entity has traded regular way for at least one day.

S&P Dow Jones Indices: Equity Indices Policies & Practices 9

1. Spin-off Security is a New Entity. The spin-off security will be added to all parent indices on the

ex-date.

2. Spin-off Security is an Existing Publicly Traded Entity (In Specie Distribution). S&P DJI will

add the in specie distribution to all indices in which the parent is a constituent on the ex-date at

a zero price and will mimic the price of the existing publicly traded entity on the close of the ex-

date. The distribution will be represented by a temporary non-tradeable placeholder constituent

created by S&P DJI to hold the place (weight) of the assets distributed, but not yet received by

index clients. A placeholder may be used by S&P DJI to enhance an index client’s ability to

replicate an index. The placeholder will be added to indices in which the parent is a constituent

using the parent’s IWF and using shares equal to the distribution ratio times the parent’s total

shares outstanding. The placeholder will be priced to match the price of the existing publicly

traded security. The placeholder will generally remain in indices until the distribution date. The

existing publicly traded security will be added and/or upweighted to reflect the distribution on the

same date that the placeholder is removed from indices, if applicable. In certain instances, S&P

DJI may decide to apply a price adjustment to the parent and not add a placeholder.

3. South Korea. In South Korea holding companies often have a reverse split accompany a spin-

off of its operating entity. As a general index implementation policy for spin-offs accompanied by

reverse splits in South Korea, a spin-off is effective on the day the spun-off company starts to

trade. The valuation of the spun-off company is calculated as the market capitalization of the

parent company before the spin-off event multiplied by the spin-off ratio.

4. India. Indian spin-offs often list several weeks, and in some cases months, after the ex-date. In

such cases, S&P DJI will apply an indicative or estimated price for the spin-off entity based on the

difference between the parent’s closing price the night before the ex-date and the opening price

of the parent on the ex-date until the spin-off security lists and begins trading. If the spin-off entity

does not trade for 20 consecutive trading days after listing, S&P DJI may decide to remove the

spin-off security at a zero price.

Treatment of Spin-Offs in Certain Non-Market Capitalization Indices

For most non-market capitalization weighted indices, both the parent and spin-off company generally

remain in the index until the next index rebalancing. The spin-off company is added to the index at a zero

price at the close of the day before the ex-date. No price adjustment is applied to the parent and there is

no divisor change. All indices undergo a full review with the next rebalancing.

However, if

(i) the next index rebalancing is more than three months away, and

(ii) either the parent company or the spin-off company is clearly not eligible for the particular index

then, the spin-off company is reviewed on a case-by-case basis and the appropriate treatment will be

announced to clients in advance. In such cases, and when achievable, clients are provided with one to

five business days advance notice to drop either the parent or child company (as applicable in the

situation) in a market situation where regular-way trading is available for both the parent and child.

• If a decision is made to keep the spun-off company and drop the parent, because of a

determination that the spun-off company is within the objective of the index while the parent no

longer meets such requirements, the weight of the parent stock is (1) distributed proportionately

across the rest of the index for a non-market capitalization weighted index or (2) the spun-off

stock inherits the weight of the parent in an non-market capitalization equal weighted index.

• Alternately, if a decision is made to drop the spun-off company and keep the parent, because it

has been determined that the parent company is within the objective of the index while the spun-

off does not meet such requirements, the weight of the spun-off company is added back to the

parent stock’s weight in a non-market capitalization equal weighted index.

S&P Dow Jones Indices: Equity Indices Policies & Practices 10

Non-market capitalization weighted indices based on another fixed count index whose adds and drops

follow the parent index exactly (for example, the S&P 500 Equal Weighted Index) will continue to follow

the add/drop policy of the parent as outlined in the following section.

Non-Market Capitalization Weighted Indices Based on a Fixed Count Parent Index. The spun-off

company is added to the index at a zero price at the market close of the day before the ex-date with no

divisor adjustment. If the spun-off company is replacing a dropped company in the parent index, on the

effective date of the deletion, first the weight of the spun-off company is redistributed to the parent

company, and then the weight of the deleted company is redistributed to the spun-off company. If the

spun-off company is replacing the parent company, the weight of the parent is redistributed to the spun-

off company on the effective date of the deletion. If the spun-off company will be dropped from the parent

index, the weight of the spun-off company is redistributed back to the parent company.

Refer to the respective individual index methodology documents for more information on the specific

treatment for a particular index.

Return Calculation for a Spun-off Stock on the Close of the Ex-Date. Where a stock is included at a

zero price and then trades, its return on the day is mathematically infinite. S&P DJI adjusts the % returns

field in the constituent (.SDC) files to make it zero for the day. Similarly, since the closing price of the

parent is not being adjusted downward as of the next day’s market open to account for the spin-off, the

return on the parent for that day could be understated. S&P DJI calculates the return on the parent stock

on that day by dividing the sum of the total closing index market cap of the parent stock and the spin-off

stock(s) by the closing index market cap of the parent stock on the day prior to spin-off. Using this method

to calculate the return of the parent stock yields a return on the combined position of the parent and spin-

off stock, and, since the return on the spin-off stock is treated as zero for the day, ensures that the single

stock returns presented can be aggregated into the total index return.

Rights Offerings (or “Rights Issues”)

A rights issue is an event in which existing shareholders are given the right to buy a specified number of

additional shares from a company, at a specified price (‘rights’ or ‘subscription’ price), within a specified

time (‘subscription period’). Only rights available to all shareholders are recognized.

For all markets (Developed, Emerging, and Frontier), irrespective of whether the rights are renounceable

and/or fully underwritten, S&P DJI implements the following treatment:

• Price adjustments are applied at the opening of the rights ex-date as per the calculations shown

below.

• Share changes are also applied at the full rights ratio at the opening of the rights ex-date.

• If the rights are undersubscribed or oversubscribed, the corresponding share adjustments are

made at the next quarterly share rebalancing.

• If the new shares are not entitled to a future dividend, which has been announced and where the

amount is known, the price adjustment calculation will reflect the dividend (the dividend amount

will be added to the subscription price). This applies to both ordinary and special dividends.

Please see the example calculations below.

S&P DJI’s Calculation of Rights Offerings

Step 1: In/Out-of-the-Money Determination:

If the subscription price < the stock closing price on the day before the ex-date, then the rights offering is

in-the-money.

If the subscription price ≥ the stock closing price on the day before the ex-date, then the rights offering is

out-of-the-money.

S&P Dow Jones Indices: Equity Indices Policies & Practices 11

Note: In several cases with rights offerings, the new shares are not entitled to a future dividend. If a future

dividend is announced by the day before the ex-date of the rights, the dividend amount has been

confirmed and S&P DJI is certain that the newly created shares as a result of the rights offering are not

entitled to the dividend, the following rule is used to determine whether a rights offering is or is not in-the-

money:

If the subscription price + dividend < the stock closing price on the day before the ex-date, then the rights

offering is in-the-money.

If the subscription price + dividend ≥ the stock closing price on the day before the ex-date, then the rights

offering is out-of-the-money.

Step 2: Application of Price & Share Adjustment on the Ex-Date for in-the-money Rights

Offerings:

S&P DJI’s practice is to only recognize rights that are in-the-money. The assumption is that main clients

are long-only indexers and, as rational investors, they will exercise any rights that are in-the-money to

mimic the index and keep tracking error minimized. Indexers will not exercise issues that are out-of-the-

money, as they are trading at a premium to the current market price.

For rights offering in-the-money, the share adjustment is made irrespective of whether it is greater or

less than 5% (since it is a corporate action driven event). The price adjustment is always applied on the

ex-date using the following calculation:

Price adjustment calculation:

Value of the Rights = {Market Value of the Stock – (Subscription Price + Dividend

)}/ (Number of Rights

required to purchase 1 share + 1)

Price Adjustment Factor = (Market Value of the Stock - Value of the Rights)/ Market Value of the Stock

Adjusted Price or Theoretical Ex-Rights Price (TERP) = Market Value of the Stock * Price Adjustment

Factor = Market Value of the Stock – Value of the Rights

Note > that the Market Value of the Stock is the previous day’s closing price (previous day to the rights

ex-date). This is also referred to as Cum Rights Price in some markets.

Examples:

Example 1: SP AUSNET (SPN.AX). For SPN.AX’s (May 2009) rights offer, the full AU$ 0.05927

distribution (AU$0.04603 cash dividend + AU$ 0.01324 capital return) was used in the TERP calculation

of SPN.AX. This amount was added to the SPN.AX rights subscription price of AU$ 0.78. The cash

dividend and capital return on the dividend ex-distribution date was not diluted.

Example 2: A 7:5 rights offering (i.e., the right to buy seven new shares for every five shares owned) at a

subscription price GBP 1.50 and the market value of the stock on previous day’s close is GBP 3.34; no

future dividend has been announced.

Value of Rights = {3.34 – (1.5 + 0)}/ {(5/7) + 1} = GBP 1.07333333

Price Adjustment Factor = (3.34 – 1.07333)/ 3.34 = 0.67864271

Adjusted Price or TERP = 3.34 * 0.67864271 = GBP 2.26666667

If there is no upcoming dividend or newly added shares are entitled to a future dividend, the “Dividend” amount in the formula is

zero. If the new shares are not entitled to the dividend, the dividend amount is added to the subscription price. This applies to

regular and special dividends.

S&P Dow Jones Indices: Equity Indices Policies & Practices 12

Adjusted Price or TERP = 3.34 – 1.07333333 = GBP 2.26666667

Example 3: A 7:5 rights offering at a subscription price of GBP 1.50 and the market value of the stock on

previous day’s close is GBP 3.34; a future dividend for the amount GBP 0.50 is declared, but the new

shares are not entitled to this dividend.

Value of Rights = {3.34 – (1.5 + 0.5)}/ {(5/7) + 1} = GBP 0.78166667

Price Adjustment Factor = (3.34 – 0.78166667)/ 3.34 = 0.76596806

Adjusted Price or TERP = 3.34 * 0.76596806= GBP 2.5583333

Adjusted Price or TERP = 3.34 – 0.78166667 = GBP 2.5583333

If the rights offering is out-of-the-money, then no action is undertaken to match the corporate action

for index purposes, as a rational investor would not subscribe to the rights issue. This is valid even if the

issue is underwritten or guaranteed rights offering. Any subsequent shares issued are made at the

quarterly rebalancing.

Non-Market Capitalization Weighted Indices

When a stock in an equal weighted non-market capitalization weighted index has a rights or open

offering, there are no market cap changes between the close and adjusted close files (i.e., the weight of

the company stays the same, per the index methodology). The AWF will be adjusted to offset any

potential market cap changes, bringing the security back to its weight before the rights offering. Certain

Strategy indices also follow the non-market capitalization weighted methodology. For such indices, in the

event of a rights offering, the treatment is exactly the same as the one for equal weighted non-market

capitalization weighted indices. The price adjustment is accompanied by an index share change so that

the company’s weight remains the same as its weight before the rights offering. No divisor adjustment is

made.

Refer to the respective individual index methodology for more information on the specific treatment for a

particular index.

Warrants, Options, Partly Paid Shares, Convertible Bonds, Contingent Value Rights, and Other

Ineligible Securities & Share Types

Securities such as warrants, options, partly paid shares, convertible bonds, or contingent value rights are

ineligible for equity indices. In certain instances, if a derivative security is anticipated to trade on a local

exchange, it may, temporarily, be added to indices to discover value and then later removed. S&P DJI

may choose to implement a price adjustment to the parent on the ex-date if all the information to calculate

the price adjustment for the derivative security is available. If S&P DJI is unable to determine whether a

derivative security will trade on a local exchange or is unable to obtain information to value an ineligible

security, S&P DJI may choose not to recognize the event. Any share increase associated with the

derivative security, where applicable, is implemented when the information is available, following a review

by S&P DJI.

If S&P DJI decides to temporarily add the ineligible security to indices and the ineligible security does not

trade for 20 consecutive trading days after the ex-date, S&P DJI may decide to remove the security at a

zero price with advance notice given to clients.

In instances where the terms specify that the type of shares or financial instruments being offered are of a

different nature than the current shares outstanding for a particular company’s stock, a price adjustment

S&P Dow Jones Indices: Equity Indices Policies & Practices 13

may be implemented on the rights ex-date with a share increase at a later time, in line with the treatment

detailed above. Clients will be notified of such treatment in advance.

Exceptions:

Subscription Price is unknown until after the Ex-Date. In certain markets, the subscription price is not

known on the ex-date and is sometimes provided well after the ex-date. In Singapore, in some instances,

a subscription price range is provided instead of a fixed subscription price, and there is no definite

subscription price at the market close of the day before the rights ex-date. Similar cases have come up in

Chile and other emerging markets. In the U.S., there have been instances where the subscription price

and ratio were not known until the ex-date had passed. In all such cases, these are treated as a book

build/placement issue and a share change is applied to the full extent of the rights ratio at the opening of

the first business day following the expiration date. The share change is applied only if the rights are in

the money when the terms are disclosed. No price adjustment is made.

Other. In instances where high profile banks or companies are involved, or the Government is

underwriting shares, S&P DJI reserves the right to alter the general treatment with sufficient notice to

clients.

Accelerated Rights Offering: Accelerated Rights may come in two parts “institutional” (accelerated) and

“retail” (traditional). For all purposes, the index is adjusted on the ex-date at the full rights ratio. If the

stock is suspended during the accelerated stage of the offer, the ex-date is taken as the date that trading

resumes. If there is an over allocation in the index, a share adjustment is made to bring shares back into

line at the next quarterly share rebalancing. Current treatment is as follows:

• Known Price: If the subscription price is known in advance, price and shares are adjusted on the

ex-date.

• Unknown Price: If the price is determined in a bookbuild or some other facility and released after

the ex-date, this is treated as a placement (secondary offering). Shares increase at the full ratio,

with one to five business days’ notice, with no price adjustment.

UK Open Offers. Open Offers are a type of UK equity placing where existing shareholders are offered

the opportunity to buy shares at a discounted rate to the market price. These rights are non-

renounceable. Open offers are often accompanied by an equity placing available to all investors at the

same discounted price preferentially available to existing shareholders. Both events are normally

announced on the ex-date of the open offer.

S&P DJI recognizes that there is no additional value to being a shareholder prior to the offer, as there is

equal value available to other market participants.

The treatment of UK Open Offers is to not apply a price adjustment for such transactions. The share

change is considered a non-mandatory event and is applied after the end of the subscription period

where the event meets the requirements for accelerated implementation. Share changes that do not meet

the criteria for accelerated implementation are implemented at the quarterly rebalancing.

For more information, please refer to the Non-Mandatory Share & Investable Weight Factor (IWF)

Updates section.

S&P Dow Jones Indices: Equity Indices Policies & Practices 14

Non-Mandatory Share and IWF Updates

Certain mandatory actions, such as M&A driven share/IWF changes, stock splits, and mandatory

distributions, are not subject to a minimum threshold for implementation. Material share/IWF changes

resulting from certain non-mandatory corporate actions follow the accelerated implementation rule

defined below with sufficient advance notification. Non-material share/IWF changes are implemented

quarterly. The accelerated implementation rule is intended to reduce turnover intra-quarter while also

enhancing opportunities for index trackers to take advantage of non-mandatory material liquidity events.

In certain instances, local market practices may relax these rules, so please refer to the respective

individual index methodology for any deviations from this policy.

Material Share/IWF Changes - Accelerated Implementation Rule

1. Public offerings. Public offerings of new company-issued shares and/or existing shares offered

by selling shareholders, including block sales and spot secondaries, will be eligible for

accelerated implementation treatment if the size of the event meets the materiality threshold

criteria:

a. At least US $150 million

, and

b. At least 5%

of the pre-event total shares.

In addition to the materiality threshold, public offerings must satisfy the following conditions:

• Be underwritten.

• Have a publicly available prospectus, offering document, or prospectus summary filed with

the relevant authorities.

• Have a publicly available confirmation from an official source that the offering has been

completed.

For public offerings that involve a concurrent combination of new company shares and existing

shares offered by selling shareholders, both events are implemented if either of the public

offerings or the total underwritten public offering represents at least 5% of total shares and US

$150 million. Any concurrent share repurchase by the affected company will also be included

in the implementation.

2. Dutch Auctions, Self-tender offer buybacks, and Split-off exchange offers. These non-

mandatory corporate action types will be eligible for accelerated implementation treatment

regardless of size once the final results are publicly announced and verified by S&P DJI.

For companies with multiple share class lines, the criteria specified above applies to each individual

multiple share class line rather than total company shares.

Accelerated implementation for events less than US $1 billion includes an adjustment to the company’s

IWF only to the extent that such an IWF change helps the new float share total mimic the shares available

in the offering. To minimize unnecessary turnover, these IWF changes do not need to meet any minimum

Calculated using the offering (subscription) price per share and the number of shares offered (excluding any overallotment).

When the offering price is announced in a non-US currency, it is converted into USD using the WMR 4PM spot rate on the

day prior to the pricing date. If the offering price, total shares offered, and total offering value cannot reasonably be determined to

meet the minimum threshold criteria based on the public information available, S&P DJI may decide not to use accelerated

implementation treatment, or may wait until more information becomes available before determining if accelerated implementation

treatment will be used.

Measured as the pre-event total share outstanding for that share class.

S&P Dow Jones Indices: Equity Indices Policies & Practices 15

threshold requirement for implementation. Any IWF change resulting in an IWF of 0.96 or greater is

rounded up to 1.00 at the subsequent annual IWF review.

For accelerated implementation of at least US $1 billion

, S&P DJI applies the share change, and any

resulting IWF change, using the latest share and ownership information publicly available at the time

of the announcement, even if the offering size is below the 5% threshold. This exception ensures that

very large events are recognized in a timely manner using the latest available information. Any IWF

change resulting in an IWF of 0.96 or greater is rounded up to 1.00.

Market Specific Accelerated Implementation Rules

U.S. and Canada. Non-fully paid or non-fully settled offerings, such as subscription receipts in Canada

and forward sales agreements in the U.S., are ineligible for accelerated implementation. Share updates

resulting from completion of subscription receipts terms, or the settlement of forward sale agreements,

are updated at a future quarterly rebalancing.

India. Non-mandatory events that otherwise qualify for accelerated implementation are not

implemented until the updated shareholder information is available, due to the tendency for such

events to be made known to strategic holders ahead of time.

Announcement Policy

For accelerated implementation, S&P DJI provides two (2) business days’ notice for all non-U.S. listed

stocks, U.S. listed Depositary Receipts (DRs), and interlisted stocks

, and one (1) business days’

notice for all non-DR U.S. listed stocks.

For non-DR U.S. listed stocks, to provide additional notification, S&P DJI announces accelerated

implementation events with a size of at least US$ 1 billion intraday, once S&P DJI confirms the event

details.

Non-Material Share/IWF Changes – Quarterly Implementation

All non-mandatory events not covered or implemented via the accelerated implementation rule

(including but not limited to private placements, acquisition of private companies, and conversion of

non-index share lines) are reviewed quarterly, effective after the close of the third Friday of the third

month in each calendar quarter and as per below.

Share Updates. At each quarterly review, shares outstanding are updated to the latest available

information as of the rebalancing reference date.

For more information, please refer to ‘Rebalancing Guidelines – Share/IWF Reference Date & Freeze

Period’.

IWF Updates. At the quarterly review, IWF changes are only made if there is a share change of at least

5% of total current shares outstanding and if the adjusted IWF absolute change is at least 5, with IWF

adjustments limited to the extent necessary to help reflect the corresponding share change.

Calculated using the offering (subscription) price per share and the number of shares offered (excluding any overallotment).

When the offering price is announced in a non-US currency, it will be converted into USD using the WMR 4PM spot rate on

the day prior to the pricing date. If the offering price, total shares offered, and total offering value cannot reasonably be

determined to meet the minimum threshold criteria based on the public information available, S&P DJI may decide not to use

accelerated implementation treatment, or may wait until more information becomes available before determining if accelerated

implementation treatment will be used.

Includes interlisted stocks where the designated listing trades on a non-U.S. exchange. For interlisted stocks where the designated

listing trades on a U.S. exchange, S&P DJI provides one business days’ notice.

For Australian stocks S&P DJI provides two (2) business days’ notice from the day the Appendix 2A (formerly Appendix 3B) is

filed. If the Appendix 2A is filed at or after the end of the day, accelerated changes are implemented at the earliest on the next

trading day.

S&P Dow Jones Indices: Equity Indices Policies & Practices 16

For quarterly share change events, unless there is explicit information stating that the new shares are not

available to the market, shares are generally considered to be available to all investors and reflected in

the IWF. Events such as conversion of derivative securities, acquisitions of private companies, or

acquisitions of non-index companies that do not trade on a major exchange are generally implemented as

described above.

In certain markets such as India and Thailand, foreign ownership limit adjustments that result in IWF

changes are implemented with the quarterly rebalancing even if there is no change in shares outstanding.

Other than the situations described above, please note that IWF changes are only made at the annual

IWF review.

For more information on IWF updates, please refer to S&P Dow Jones Indices’ Float Adjustment

Methodology.

Note: For indices using equal weighted, price weighted, or non-market capitalization weighted corporate

action treatments, shares and/or IWF updates are only effective for the underlying shares or IWF. The

stocks’ Additional Weight Factor (AWF) is generally modified to counteract the underlying shares/IWF

change, so that index shares remain unchanged until the index is fully updated at the next scheduled

rebalancing.

Please refer to the respective individual index methodologies to confirm if an index follows this rule.

Rebalancing Guidelines – Share/IWF Reference Date & Freeze Period

A reference date, after the market close five weeks prior to the third Friday in March, June, September,

and December, is the cutoff for publicly available information used for quarterly shares outstanding and

IWF changes. All shares outstanding and ownership information contained in public filings and/or official

sources dated on or before the reference date are included in that quarter’s update. In addition, there is a

freeze period on a quarterly basis for any changes that result from the accelerated implementation rules.

The freeze period begins after the market close on the Tuesday prior to the second Friday of each

rebalancing month (i.e., March, June, September, and December) and ends after the market close on the

third Friday of the rebalancing month.

Pro-forma files for float-adjusted market capitalization indices are generally released after the market

close on the first Friday, two weeks prior to the rebalancing effective date. Pro-forma files for capped and

alternatively weighted indices are generally released after the market close on the second Friday, one

week prior to the rebalancing effective date. For illustration purposes, if rebalancing pro-forma files are

scheduled to be released on Friday, March 5, the share/IWF freeze period will begin after the close of

trading on Tuesday, March 9, and will end after the close of trading the following Friday, March 19 (i.e.,

the third Friday of the rebalancing month).

During the share/IWF freeze period shares and IWFs are not changed, and the accelerated

implementation rule is suspended, except for mandatory corporate action events (such as merger activity,

stock splits, and rights offerings). The suspension includes all changes that qualify for accelerated

implementation and would typically be announced or effective during the share/IWF freeze period. At the

end of the freeze period all suspended changes will be announced on the third Friday of the rebalancing

month and implemented five business days after the quarterly rebalancing effective date. For these non-

mandatory events, S&P DJI uses shares and IWF data as of the upcoming rebalancing effective date to

calculate the size of the event and in turn assess if the event qualifies the Accelerated Implementation

rule.

Companies that are the target of cash M&A events, and publicly available guidance indicates the event is

expected to close by quarter end, may have their share count frozen at their current level for rebalancing

purposes.

S&P Dow Jones Indices: Equity Indices Policies & Practices 17

Certain Share Types and Designations

Multiple Share Classes

Companies issue multiple share classes in some instances. The treatment of multiple share classes of

stock varies across S&P DJI’s indices depending on local market custom and conditions. S&P DJI

includes all publicly listed multiple share class lines separately in its float-adjusted market capitalization

(FMC) weighted indices, subject to liquidity and float criteria currently in place for each index. Index

membership eligibility for a company with multiple share class lines is based on the total market

capitalization of the company. The decision to include each publicly listed line is evaluated line by line; the

weight of each line will only reflect its own float, not the combined float of all company lines. It is possible

that one listed share class line may be included in an index while a second listed share class line of the

same company is excluded. Unlisted share class lines are not combined with any other listed share class

lines, but these unlisted share class lines are included in the calculation of the company’s total market

capitalization. A company’s total market capitalization is used to determine its assignment to either large-

cap, mid-cap, or small-cap indices.

Once a listed share class line is added to an index, it may be retained in the index even though it may

appear to violate certain addition criteria. Listed share class line deletions are at the discretion of the

governing Index Committee.

For companies that issue a second publicly traded share class to index share class holders, the newly

issued share class line will be considered for inclusion if the event is mandatory, and the market

capitalization of the distributed class is not considered to be de minimis.

Exception:

Berkshire Hathaway Inc. Due to turnover and liquidity concerns, Berkshire Hathaway Inc.

(NYSE:BRK.B) is an exception to the Multiple Share Classes rule. S&P DJI will continue to consolidate

the share count for this company under the B share class line.

Designated Listings

For companies with multiple share classes of common stock, S&P DJI determines the share class with

both the highest one-year trading liquidity (as defined by Median Daily Value Traded) and largest float-

adjusted market capitalization as the Designated Listing. All other share classes are referred to as

Secondary Listings. When the liquidity and market capitalization indicators are in conflict, S&P DJI

analyzes the relative differences between the two values placing a greater importance on liquidity.

Once established, the Designated Listing is only changed if both the liquidity and market capitalization of

a Secondary Listing exceed the liquidity and market capitalization of the Designated Listing by more than

20 percent. If only one measure exceeds 20 percent, S&P DJI analyzes the data as described above to

determine if the Designated Listing should be changed. Otherwise, the Designated Listing remains

unchanged.

For those companies having depository receipts or shares listed on an exchange outside of the country of

domicile (including inter-listed stocks), the Designated Listing is generally the one listed on the exchange

in the country of domicile. Non-voting depositary receipts (NVDR) are generally designated as Secondary

Listings.

S&P DJI reviews Designated Listings on an annual basis and any changes are implemented after the

close of the third Friday of September. The last trading day in July is used as the reference date for the

S&P Dow Jones Indices: Equity Indices Policies & Practices 18

liquidity and market capitalization data. If less than one year of trading data is available as of the

reference date, then all available data is used. S&P DJI reserves the right to review and update the

Designated Listing more frequently based on market conditions.

For purposes of index selection, S&P DJI utilizes one of the following approaches when more than one

listing of equity stock outstanding is available. Changes to a Designated Listing within a given index are

only made at a regularly scheduled rebalancing as defined in the applicable Index Methodology. Any

deviations from the rules below are described in individual Index Methodology documents.

A. All publicly listed multiple share class lines are eligible for index inclusion, subject to meeting the

eligibility criteria detailed in the respective Index Methodology.

B. Each company is represented once by the Designated Listing.

C. Each company is represented once by the listing with the highest dividend yield, subject to

meeting the eligibility criteria detailed in the respective index methodology. In the event multiple

lines meet the eligibility criteria and have similar dividend yields, the Designated Listing is

selected.

Exception:

The class A shares of Chinese companies as well as the class A shares of Filipino companies will not be

selected as the Designated Listing due to foreign ownership restrictions. In these cases, an alternative

listing will be considered the Designated Listing.

Note: Non-market capitalization indices that follow the composition of an S&P Dow Jones FMC index

utilize the same composition as the parent index.

For information on the treatment of multiple share classes for non-market capitalization weighted indices,

please refer to the respective index’s methodology document available at www.spglobal.com/spdji/.

Depositary Receipt Shares

Depositary Receipt (DR) shares outstanding, including American Depositary Receipts (ADRs) and Global

Depositary Receipts (GDRs), are derived by multiplying the DR ratio by the underlying shares

represented by the DR.

Brazil Units

Brazil units are securities issued and traded on the São Paulo Stock Exchange representing a

combination of Ordinary and Preferred shares issued by companies in Brazil. For index purposes, shares

outstanding for Units are derived by dividing the total number of outstanding ordinary and preferred

shares by the Units ratio, which is the total number of securities that the Unit contains. The IWF for Units

is calculated using float figures at the company level, based on the total holdings of ordinary and

preferred shares per shareholder. For companies in Brazil that have listed Units, the Units are normally

used for index inclusion rather than its Ordinary or Preferred listed stocks.

S&P Dow Jones Indices: Equity Indices Policies & Practices 19

Dividends, Stock Splits, and Consolidations

Dividends

Ordinary Dividend. An ordinary dividend is a distribution of a portion of a company's earnings to its

shareholders. Ordinary dividends typically follow a quarterly, semi-annual, or annual cycle and are most

often quoted in terms of the payment amount each share receives (dividends per share). For index

calculation purposes, an ordinary dividend will only have an effect on the Total Return (TR) and Net Total

Return (NTR) indices and not on Price Return indices.

Variable Dividends. To be considered a variable dividend, a company must pay a base dividend and

pay an additional variable dividend amount that fluctuates based on company earnings or another metric

explicitly stated in the dividend policy. Variable dividends differ from special dividends in that variable

dividends are part of the normal dividend policy of the company. For index purposes, variable dividends

are treated as ordinary dividends for companies with a variable dividend policy and only effect the Total

Return (TR) and Net Total Return (NTR) indices, excluding Price Return indices.

Special Dividends. Special dividends are defined as those dividends that are outside of the normal

payment pattern established historically by the corporation. Whether a dividend is funded from operating

earnings or from other sources of cash does not affect the determination of whether it is a special

dividend. Special dividends are typically larger than ordinary dividends and are quoted in terms of the

payment amount each share receives (dividends per share). Generally, there are no patterns for these

events, and they may be one-time payments. Special dividends are treated as corporate actions with

price and divisor adjustments. For index calculation purposes, a special dividend results in a stock’s price

being adjusted (reduced) by the payment amount at the opening of the effective date.

S&P DJI generally considers the third consecutive instance of a non-ordinary dividend (in terms of timing

[i.e., ex-date], not amount) to be ordinary for index purposes as the third consecutive payment is

generally be considered to be part of the normal payment pattern established by the company.

Special dividends usually have the following characteristics: The company describes it as a “special,”

“extra,” “irregular,” “return of capital” “distribution from reserves”, or some other similar term in the

dividend announcement. Dividend payments not subject to a withholding tax are usually an indication that

the dividend should be treated as special; however, large and out-of- pattern payments are still

considered as “special” even if they are subject to a withholding tax.

When an ordinary dividend is increased or decreased, it is still ordinary, not special.

When a return of capital is declared in lieu of an ordinary cash dividend and fits the historical pattern of an

ordinary dividend in amount and frequency, it is treated as an ordinary cash dividend. For example, many

Swiss companies distribute a return of capital in lieu of ordinary dividends.

When a dividend is paid the first time, it is ordinary unless the company’s release specifically states

otherwise.

Return of Capital. A return of capital is a cash distribution of a portion of a company’s share capital or

capital surplus. As it is not paid out of net income or retained earnings, it is generally not subject to

withholding tax. For index calculation purposes, a return of capital is considered a special dividend.

However, when a return of capital is declared in lieu of an ordinary cash dividend and fits the historical

pattern of an ordinary dividend in amount and frequency, it is treated as an ordinary cash dividend.

S&P Dow Jones Indices: Equity Indices Policies & Practices 20

Hybrid Dividends. Hybrid dividends, payable in cash & stock, can be considered as regular or special

dividends by S&P DJI. Treatment is as follows:

• Hybrid Dividends Considered Ordinary Dividends. S&P DJI applies the full amount of the

dividend on the ex-date (using the cash equivalent amount), and then increases the shares either

on the payable date (if the final distribution ratio is announced by the company at least one

business day prior to the payable date) or at the next quarterly share rebalancing, regardless of

whether the share increase is at least 5%.

• Hybrid Dividends Considered Special Dividends. A price adjustment is applied for the full

amount of the dividend after the close of trading on the day before the ex-date, and a share

increase is made either on the payable date (if the final distribution ratio is announced by the

company at least one business day prior to the payable date) or at the next quarterly share

rebalancing, regardless of whether the share increase is at least 5%.

In certain instances, S&P DJI may decide to add a temporary placeholder security to represent the stock

portion of the hybrid dividend when deemed necessary to enhance the replicability of the index and to

reduce unnecessary turnover. In such cases, S&P DJI will announce the treatment details with one to five

business days’ notice.

Scrip Dividend. A scrip dividend is a dividend paid by the issue of new shares in lieu of cash. A

company may offer its shareholders the choice of receiving a dividend in shares (scrip dividend) rather

than cash. The share option is typically listed as the default option for the shareholders who do not make

an election. Only the distribution received under the cash option is subject to dividend withholding tax.

S&P DJI treats scrip dividends as cash dividends on the ex-date. Any share changes made due to a

shareholder’s election to receive shares are accumulated for quarterly implementation.

Dividend Treatments for ADRs and GDRs. For most American Depository Receipts (ADRs) and Global

Depository Receipts (GDRs), cash dividends are declared in the local currency. While the dividend ex-

date for an ADR/GDR is known ahead of time, the depositary bank usually provides only an estimated

dividend amount in the trading currency of the ADR/GDR based on the foreign exchange rates at that

time. The final dividend amount calculated using the latest forex rates is not available until closer to the

payable date. S&P DJI’s branded indices use the dividend treatment outlined below:

(i) If the dividend is quoted ex by the exchange, this amount is used on the dividend ex-date.

(ii) If the dividend is not quoted ex by the exchange, the dividend is not generally recognized for

index purposes. An exception is Japanese and Korean ADR dividends which are generally not

quoted ex by the exchange but are recognized on a future date if the depository bank issues a

final dividend notice.

For more information, please refer to the Post Ex-date Dividend Adjustment section.

(iii) For certain Russian GDRs, the information regarding the dividend amount and ex-date is

available only after the ex-date has passed. In these instances, S&P DJI may choose to

recognize the dividend on the date S&P DJI becomes aware of the amount. S&P DJI does not

wait for the payable date, which could be months away in some instances.

Regional Variations in the Treatment of Cash Dividends

UK. Cash dividends reported in the UK are net dividends, which is the amount used for index calculation

purposes. UK dividends are taxed at the source – from company profits after corporation tax has already

been paid.

Property Income Distributions (PIDs): PIDs are a special kind of dividend related to Real Estate

Investment Trusts (REITs) and are taxed at a rate of 20%. REITs might declare dividends that are solely

PIDs, solely ordinary dividends or a combination of the two.

Example:

S&P Dow Jones Indices: Equity Indices Policies & Practices 21

Company A declares a dividend consisting of two components: an ordinary dividend of GBP 0.031 and a

PID component of GBP 0.015 taxed at a rate of 20%. So, for index calculation purposes, the dividend

amount for Company A is GBP 0.043.

Dividend = GBP 0.031 + GBP {0.015 * (1-0.2)} = GBP 0.043

Taiwan. When there is a suspension in trading that S&P DJI is aware of, the event is recognized on the

date trading resumes.

Examples:

(1) The reverse split for 2887.TW was recognized on February 3, 2010, the pay date after the stock

came out of its trading suspension instead of January 19, 2010, which was the ex-date.

(2) The return of capital with the reverse split for 2412.TW was recognized on February 8, 2010, the

pay date, after the stock resumed trading instead of its ex-date January 21, 2010.

Japan. The majority of dividends in Japan are provided in estimated amounts on their ex-date. If an

estimated dividend is provided, the estimated dividend is reinvested into the index on the ex-date. For

companies that do not provide estimates but have a historical pattern of paying dividends, the estimate is

calculated as the previous year’s dividend amount adjusted for any split/bonus issues. If no dividend was

paid in the same period the prior year and an estimated dividend is not available, no dividend amount is

reinvested on the ex-date. Once the company announces the actual dividend amount, S&P DJI reinvests

the difference between the estimated and confirmed dividend amount using the Post Ex-Date Dividend

calculation methodology (see below).

Irregular distributions declared by Japanese companies, including memorial dividends, returns of capital

and special dividends are generally treated as ordinary dividends.

Korea. The majority of dividends in Korea are not announced prior to their ex-date. If an estimated

dividend is provided, the estimated dividend is reinvested into the index on the ex-date. For companies

that do not provide estimates but have a historical pattern of paying interim dividends or dividends with a

record date at fiscal year-end, the estimate is calculated as the previous year’s dividend amount in the

same period adjusted for any split/bonus issues. If no dividend was paid in the same period of the prior

year and an estimated dividend is not available, no dividend amount is reinvested on the ex-date. Once

the company announces and pays the actual dividend amount, S&P DJI reinvests the difference between

the estimated and confirmed dividend amount using the Post Ex-Date Dividend calculation methodology

(see below). A negative dividend adjustment will be applied if the estimated dividend has not been

confirmed by the company six months after the ex-date.

Brazil. Interest on Capital is generally recognized as an ordinary dividend subject to a different

withholding tax rate.

Turkey. Distributions from REIT companies are treated as ordinary dividends but are not subject to

withholding tax.

Australia.

• Franking. Australia has a tax structure where profits are only taxed once at either the company

level or shareholder level (i.e., Australian companies pay out profits as dividends either before or

after tax). The “franking rate” is what tracks whether or not the tax was already paid on the cash

dividend. If the tax was already paid at the company level, then the dividend amount is fully

franked (100% franked). If taxes were not paid on the cash distribution, then the dividend is 0%

franked. Note that the franking rate can also be in between 0% and 100%.

Note S&P DJI does not backfill franking rates announced after a dividend ex date.

S&P Dow Jones Indices: Equity Indices Policies & Practices 22

• Conduit Foreign Income (CFI). CFI is foreign income received by a foreign resident via an

Australian corporate tax entity. The tax relief for CFI ensures that those amounts are not taxed in

Australia when distributed by the Australian corporate tax entity to its foreign owners. The Conduit

Foreign Income removes any withholding tax liability for non-resident shareholders in relation to

the CFI component of dividends received.

China.

• Offshore A-Shares. These are shares issued by companies in mainland China and are listed on

the Shanghai - Hong Kong Stock Connect or Shenzhen - Hong Kong Stock Connect exchanges,

and available to foreign investors. S&P DJI uses the offshore CNH exchange rate for the

calculation and maintenance of China A-Shares using the Stock Connect listings.

Franking Credit Adjusted Total Return Indices. Additional total return indices are available for a

number of S&P/ASX Indices that adjust for the tax effect of franking credits attached to cash dividends.

The indices utilize tax rates relevant to two segments of investors: one version incorporates a 0% tax rate

relevant for tax-exempt investors and a second version uses a 15% tax rate relevant for superannuation

funds. The franking credits attached to both regular and special cash dividends are included in the

respective calculations.

Post Ex-date Dividend Adjustment

S&P DJI may apply an adjustment to a dividend post ex-date due to a revision of the original amount or

due to certain market conventions.

Companies in Japan and South Korea do not typically confirm cash dividend amounts prior to the ex-

dates. Estimated dividends are usually available for Japanese companies ahead of the dividend ex-date,

and it is generally accepted to recognize the estimated amount on the ex-date. Korean companies do not

usually provide an estimate for dividends. For both countries, actual dividend amounts are confirmed by

the companies several weeks after the ex-date.

For South Korea, S&P DJI applies the adjustment after the pay date. This dividend adjustment is

applicable to Japanese and South Korean companies listed in their home markets and overseas as

depositary receipts (ADR/GDR). For Japanese and Korean depositary receipts (ADR/GDR), S&P DJI

uses the final confirmed dividend amount announced by the depositary bank.

S&P DJI determines the difference between the dividend amount recognized on the original ex-date and

the confirmed dividend amount announced by the company. An adjustment in terms of dividend points is

applied to the affected indices weekly at the close of the following Friday without restatement to past

index levels. Any dividend adjustment applied on Friday is announced one day in advance. If the following

Friday is not a trading day, the dividend adjustment is applied on the next trading day. The dividend point

adjustment for a particular index is calculated using the following formula:

Index Dividend Point Adjustment = (D

* S

) / Divisor

where:

= Difference between the original and the confirmed dividend amount; foreign exchange

conversion, if applicable, is based on the exchange rate on the ex-date.

= Index shares on the ex-date.

Divisor

= Index divisor on the ex-date.

The gross total return (TR) and net total return (NTR) versions of the dividend point adjustment are

calculated. The TR index dividend point adjustment, which may be positive or negative, is added to the

price index level on Friday for the calculation of the total return index that day. Similarly, the NTR index

dividend point adjustment is used for the calculation of net total return. If there are multiple dividend

adjustments to implement in an index, a separate index dividend point is calculated for each dividend

adjustment. The index dividend points are then aggregated for the calculation of return index levels. In the

S&P Dow Jones Indices: Equity Indices Policies & Practices 23

event that a negative dividend adjustment results in an overall negative index dividend for the day, the

gross and net total return series underperform the price return on the effective date that the dividend

adjustment is applied.

Exception: If a stock is not part of an index on the original dividend ex-date or the dividend adjustment

implementation date, there is no dividend adjustment for that stock in that index. For indices formed by

attributes applied to the headline composition, if a stock has an attribute change between the original ex-

date and the dividend adjustment effective date but remains in the headline index throughout the period,

any dividend adjustment attributable to that stock would be applied to the headline index but not to the

attribute indices.

Foreign Exchange Conversions for Dividends

When companies declare dividends in currencies other than their stock trading currency, the following

rules are used for the dividend currency conversion:

• The dividend is converted using the forex rate on the ex-date for regular cash dividends. Special

dividends are converted using the forex rate on the day prior to the ex-date (or two days prior for

Asia Pacific). Please refer to individual index methodology documents to check which foreign

exchange rates are used for index calculation purposes.

• For ADRs and GDRs, the dividend amount and currency provided by the depositary banks are

generally used for index calculation.

S&P DJI reserve the right to make exceptions to this policy and apply a dividend amount in an alternative

currency announced by the company.

Multiple Dividend Distributions on a Single Day

When there are multiple regular cash dividends on a single day, S&P DJI will combine them into a single

amount for implementation. If the different dividends or multiple components of a single dividend are

subject to different dividend withholding taxes, the standard withholding tax rate for the country will be

used and the gross dividend amount may be adjusted accordingly.

Dividend Not Quoted Ex by the Exchange

At times, when companies declare a conditional dividend (contingent upon some event taking place (e.g.,

a merger, Board approval, etc.), S&P DJI might still decide to recognize it. In such cases, clients will be

notified in advance.

Bonus Issues of Shares Not Entitled To Cash Dividend

In certain global markets there have been cases where bonus issues of shares are not entitled to a

dividend effective at a later date.

Treatment is as follows:

• Apply the bonus issue on the ex-date

• Adjust the dividend effective at a later date accordingly (i.e., decrease the dividend amount in order

to adjust it over the new number of shares including those resulting from the bonus issue).

Total Return and Net Return Indices

Gross and net total return indices are calculated for most S&P DJI branded indices. Cash dividends are

generally applied on the ex-date of the dividend (market exceptions are noted in this document).

Net return indices reflect the return to an investor where dividends are reinvested after the deduction of a

withholding tax.

S&P Dow Jones Indices: Equity Indices Policies & Practices 24

Withholding Tax. This is the amount withheld by the company making a dividend payment, to be paid to

the taxation authorities. In the context of S&P DJI’s branded indices, this refers to the tax that non-

residents are subject to, when the country in which the company paying the dividends is incorporated is

not where the shareholder resides. In most countries, domestic shareholders are not required to pay this

tax. Tax treaties between countries may reduce the amount of withholding tax required. The withholding

tax rates used by S&P DJI do not reflect any such reduction from tax treaties. Tax rate data is reviewed

annually by S&P DJI. Tax rates are sourced and verified with independent data sources, including but not

limited to the Worldwide Corporate Tax Guide published annually by Ernst & Young. With sufficient notice

to clients, SP DJI updates WHT rates outside of the annual review when it becomes aware of a change in

a rate.

S&P DJI applies withholding tax to regular cash dividends. Generally, withholding tax is not applied to

special cash dividends or proceeds from M&A events.

Stock Split and Consolidation

Stock Split. A stock split is a corporate action that increases the number of a company’s shares, while

simultaneously reducing its per share price, such that the market capitalization of the company remains

the same before and after the event.

Stock splits are quoted in terms of shares received to shares held.

The shares of a company are increased (multiplied) by the stock split adjustment factor (greater than

one), while the price is decreased (divided) by this same factor.

In a 5-for-1 stock split the adjustment factor is 5, so the shares outstanding is multiplied by 5 while the

price is divided by 5.

Stock Dividend. Stock dividends work exactly like stock splits, except these are quoted in terms of the

percentage of shares received to those held.

A 5% stock dividend is the same as a 1.05-for-1 stock split with an adjustment factor of 1.05.

Bonus Issue. A bonus issue is quoted in terms of shares received to shares held, like stock splits, or

quoted in percentages like stock dividends.

Stock splits, stock dividends and bonus issues are similar terms. The terms imply the same action; the

only difference is in the way the terms are quoted.

For example, a 1-for-20 bonus issue is the same as a 21:20 stock split, which is the same as a 5% stock

dividend.

Consolidation. A consolidation is the opposite of a stock split. In a consolidation, the shares of a

company are decreased while its per-share-price is increased by the adjustment factor (less than one).

Also like a stock split, the overall market capitalization of the company remains unchanged by this event.

Also referred to as a “Reverse Stock Split”.

Reverse splits are quoted in terms of shares received to shares held.

The shares of a company are decreased (multiplied) by the adjustment factor, while the price is increased

(divided) by this same amount. The adjustment factor for a reverse split is determined just like in a stock

split (shares received/shares held).

Certain Eligibility Criteria for Dividend Focused Indices

Dividend Payment Types. For index eligibility, selection, and weighting purposes of some indices, S&P

DJI only considers cash dividend payments declared regular by the paying company. Cash dividend

S&P Dow Jones Indices: Equity Indices Policies & Practices 25

payments declared as special by the paying company, including recurring special cash dividends, are not

considered. Please refer to the relevant index methodology for additional details.

Indicated Annual Dividend (IAD). Forward-looking annualized dividend per share calculated by

multiplying the latest announced dividend per share by the number of annual dividend payments, with

considerations for company and/or market-specific dividend payment details that may require use of

historical dividend per share paid amounts.

Unique Payment Types. Dividends paid in non-traditional payment types (such as cryptocurrencies or

digital securities) will generally not be recognized in S&P DJI Indices.

Monthly Review for Ongoing Eligibility in Dividend Focused Indices

S&P Dow Jones Dividend Indices’ constituents are reviewed on a monthly basis for ongoing eligibility.

Unless stated otherwise in the relevant index methodology, S&P DJI will use one of the following

approaches when conducting the monthly review to determine whether an index constituent will remain in

a dividend index following an announcement concerning the company’s dividend program.

Approach A: Generally applied to dividend-themed indices whose main objective is to measure the

performance of companies that have maintained or increased dividends every year for a specified

number of years.

Approach B: Generally applied to dividend-themed indices whose main objective is to measure the

performance of dividend-paying companies and whose selection rules and weighting is often yield-

focused.

Approach C: Generally applied to indices with multiple objectives, one of which is to measure the

performance of dividend-paying companies.

At the discretion of S&P DJI, an index constituent may be removed effective prior to the open of the first

business day of the following month, if:

Approach A:

• A scheduled dividend payment is omitted, or

• A company announces that it will cease paying dividends for an undetermined period, or

• A company announces a reduced dividend amount and S&P DJI determines that it will no longer

qualify for the index at the subsequent reconstitution as a result.

Approach B:

• A company announces that it will cease paying dividends for an undetermined period, or

• A company announces a reduced dividend amount and S&P DJI determines that it will no longer

qualify for the index at the subsequent reconstitution as a result.

Approach C:

• A scheduled dividend payment is omitted, or

• A company announces that it will cease paying dividends for an undetermined period.

The determination of ongoing eligibility and qualifying for the index at the subsequent reconstitution is at

the discretion of the Index Committee.

Where a company postpones or defers a scheduled dividend payment, but does not cancel it, S&P DJI

will generally take no action until the company makes a further announcement, or the index undergoes a

rebalancing, whichever occurs sooner.

S&P Dow Jones Indices: Equity Indices Policies & Practices 26

For Approach B, companies that omit a single scheduled dividend payment will have their revised

(reduced) total annual dividend amount reviewed for continuing eligibility. In the case of companies that

typically pay a single dividend annually, omission may result in a zero dividend being recorded in the

reference period for the subsequent rebalancing.

The review of ongoing eligibility is conducted based on information publicly announced by the company

up to and including the 21st of the month (in February, this date will be the 18th). Any index changes are

effective prior to the open of the first business day of the following month and will be announced with five

business days' notice.

S&P Dow Jones Indices: Equity Indices Policies & Practices 27

Summary of Corporate Action Treatment by

Index Weighting Type

The tables in the following pages detail the general corporate action treatment by index weighting type.

For more information on the specific treatment within an index family, please refer to that index

methodology. For complete details on index math calculations please refer to S&P Dow Jones Indices’

Index Mathematics Methodology, available at www.spglobal.com/spdji/.

Market Capitalization Indices

• Market capitalization indices – where constituent weights are determined by float-adjusted market

capitalization.

• Capped market capitalization indices − where single index constituents or defined groups of index

constituents, such as sector or geographical groups, are confined to a maximum index weight. All

corporate actions for capped market capitalization indices affect the index in the same manner as

in market cap weighted indices.

Corporate Action

Treatment

Company

Addition/Deletion

Addition

Companies are added at the float (capped float) market capitalization weight. For capped indices,

refer to the index methodology for details on the capping factor applied to intra-rebalancing

additions. The net change to the index market capitalization causes a divisor adjustment.

Deletion

The weights of all stocks in the index will proportionally change. Relative weights will stay the same.

The index divisor will change due to the net change in the index market capitalization.

Change in shares

outstanding

Increasing (decreasing) the shares outstanding increases (decreases) the market capitalization of the

index. The change to the index market capitalization causes a divisor adjustment.

Split/Reverse Split

Shares outstanding are adjusted by split ratio. Stock price is adjusted by split ratio. There is no change

to the index market capitalization and no divisor adjustment.

Spin-off

The spin-off is added to the index on the ex-date at a price of zero. The spin-off index shares are

based on the spin-off ratio. On the ex-date the spin-off will have the same attributes and capping

adjustment factor (AWF) as its parent company, and will remain in the index for at least one trading

day. As a result, there will be no change to the index divisor on the ex-date.

If the spin-off is ineligible for continued inclusion, it will be removed after the ex-date. The weight of

the spin-off being deleted is reinvested across all the index components proportionally such that the

relative weights of all index components are unchanged. The net change in index market

capitalization will cause a divisor change.

Refer to the individual index methodology for specific eligibility rules and treatment of spin-offs.

Change in IWF

Increasing (decreasing) the IWF increases (decreases) the market capitalization of the index. A net

change to the index market capitalization causes a divisor adjustment.

Ordinary dividend

When a company pays an ordinary cash dividend, also referred to as a regular cash dividend, the

index does not make any adjustments to the price or shares of the stock. As a result, there are no

divisor adjustments to the index. Ordinary dividends are reinvested across the index and accounted

for in the Total Return index calculations. Additional details on the Total Return calculation can be

found in S&P Dow Jones Indices Index Mathematics Methodology.

Special dividend

The stock price is adjusted by the amount of the dividend. The net change to the index market

capitalization causes a divisor adjustment.

Rights offering

All rights offerings that are in the money on the ex-date are applied under the assumption the rights

are fully subscribed. The stock price is adjusted by the value of the rights and the shares outstanding

are increased by the rights ratio. The net change in market capitalization causes a divisor

adjustment.

S&P Dow Jones Indices: Equity Indices Policies & Practices 28

Non-Market Capitalization Indices (Excluding Price & Equal Weighted Indices)

A non-market capitalization weighted (also called a non-market cap or modified market cap) index is an

index in which constituents’ weights are defined by a factor other than market capitalization. Between index

rebalancings, corporate actions generally have no effect on index weights. Examples include indices

weighting constituents by factor score, dividend yield, inverse volatility, strategic tilt, thematic weighting,

and other alternative weighting schemes.

Corporate Action

Treatment

Company

Addition/Deletion

Addition

Most non-market capitalization weighted indices do not add companies between rebalancings.

Refer to the index methodology for further details on intra-rebalancing additions.

Deletion

The weights of all stocks in the index will proportionately change but relative weights will stay the

same. The index divisor will change due to the net change in the index market capitalization.

Change in shares

outstanding

Shares outstanding changes are offset by an adjustment factor (AWF). There is no change to the

index market capitalization and no divisor adjustment.

Split/Reverse Split

Shares outstanding are adjusted by split ratio. Stock price is adjusted by split ratio. There is no change

to the index market capitalization and no divisor adjustment.

Spin-off

The spin-off is added to the index on the ex-date at a price of zero. The spin-off index shares are

based on the spin-off ratio. On the ex-date the spin-off will have the same attributes and capping

adjustment factor (AWF) as its parent company, and will remain in the index for at least one trading

day. As a result, there will be no change to the index divisor on the ex-date.

If the spin-off is ineligible for continued inclusion, it will be removed after the ex-date. The weight of

the spin-off being deleted is reinvested across all the index components proportionately such that

the relative weights of all index components are unchanged. The net change in index market

capitalization will cause a divisor change.

Please refer to the individual index methodology for specific eligibility rules and treatment of spin-

offs.

Change in IWF

IWF changes are offset by an adjustment factor (AWF). There is no change to the index market

capitalization and no divisor adjustment.

Ordinary dividend

When a company pays an ordinary cash dividend, also referred to as a regular cash dividend, the

index does not make any adjustments to the price or shares of the stock. As a result, there are no

divisor adjustments to the index. Ordinary dividends are reinvested across the index and accounted

for in the Total Return index calculations. Additional details on the Total Return calculation can be

found in S&P Dow Jones Indices Index Mathematics Methodology.

Special dividend

The stock price is adjusted by the amount of the dividend. The net change to the index market

capitalization causes a divisor adjustment.

Rights offering

All rights offerings that are in the money on the ex-date are applied under the assumption the rights

are fully subscribed. The stock price is adjusted by the value of the rights and the shares outstanding

are increased by the rights ratio. The change in price and shares is offset by an adjustment factor

(AWF) to keep the index market capitalization (stock weight) unchanged. There is no change to the

index market capitalization and no divisor adjustment.

S&P Dow Jones Indices: Equity Indices Policies & Practices 29

Price Weighted Indices

In a price-weighted index, such as the Dow Jones Industrial Average, constituent weights are determined

solely by the prices of the constituent stocks. Shares outstanding are set to a uniform number throughout

the index. Indices using this methodology will adjust the index divisor for any price impacting corporate

action on one of its member stocks; this includes price adjustments, special dividends, stock splits, and

rights offerings. The index divisor will also adjust in the event of an addition to or deletion from the index.

Corporate Action

Treatment

Company

Addition/Deletion

Fixed Component Count Index Treatment (Stock Replacements)

A company is added to the index at a weight determined by the price of the added stock relative to

all other index constituents. The net difference between the prices of the added and deleted stocks

will cause a divisor adjustment.

Addition Only

A stock is added to the index at a weight determined by the price of the added stock relative to all

other index constituents. The net change to the index market capitalization (sum of the index

constituent prices) resulting from the addition causes a divisor adjustment.

Deletion Only

The weights of all stocks in the index will proportionally change but relative weights will stay the

same. The index divisor will change due to the net change in the index market capitalization.

Change in shares

outstanding

All shares outstanding are assigned a constant value (shares = 1). Shares outstanding changes due to

corporate actions or other events are not applicable.

Split/Reverse Split

Stock price is adjusted by split ratio. Shares outstanding are not adjusted by the split ratio. There is a

change to the index market capitalization due to the price adjustment causing a divisor adjustment.

Spin-off

The price of the parent company is adjusted to the Price of the Parent Company minus (the Price of

the Spun-off Company/Share Exchange Ratio). The index divisor adjusts simultaneously.

Please refer to the individual index methodology for specific eligibility rules and treatment of spin-

offs.

Change in IWF

All IWFs are assigned a constant value (IWF = 1). IWF changes due to corporate actions or other

events are not applicable.

Ordinary dividend

When a company pays an ordinary cash dividend, also referred to as a regular cash dividend, the

index does not make any adjustments to the price or shares of the stock. As a result, there are no

divisor adjustments to the index. Ordinary dividends are reinvested across the index and accounted

for in the Total Return index calculations. Additional details on the Total Return calculation can be

found in S&P Dow Jones Indices Index Mathematics Methodology.

Special dividend

The stock price is adjusted by the amount of the dividend. The net change to the index market

capitalization causes a divisor adjustment.

Rights offering

All rights offerings that are in the money on the ex-date are applied under the assumption the rights

are fully subscribed. The stock price is adjusted by the value of the rights. The index market

capitalization changes due to the price adjustment causing a divisor adjustment.

S&P Dow Jones Indices: Equity Indices Policies & Practices 30

Equal Weighted Indices

An equal weighted index is one where every stock, or company, has the same weight in the index at the

relevant rebalancing date, and a portfolio that tracks the index will invest an equal dollar amount in each

applicable instrument. Therefore, when stocks are added or deleted, either the new stock must assume

the actual weight of the old stock, or the entire index must be rebalanced. However, this is not always the

case and may vary by index family.

Corporate Action

Treatment

Company

Addition/Deletion

Fixed Component Count Index Treatment (Stock Replacements)

The company entering the index goes in at the weight of the company coming out. If a company is

being removed at a price of 0.00, the replacement goes in at the weight of the deleted company at

the close on the day before the effective date. If more than one company is being replaced in the

index on a single date, the replacements are added in the order specified in the client

announcement. There will be no change in index market capitalization and no divisor change for

stock replacements except where a company is removed at a price of zero as noted above.

Addition Only

Most non-fixed count equal weight indices do not add companies between rebalances. Please refer

to the index methodology for further details.

Deletion Only

The weights of all stocks in the index will proportionately change, due to the absolute change in the

number of index constituents. Relative weights will stay the same. The index divisor will change

due to the net change in the index market capitalization.

Change in shares

outstanding

Shares outstanding changes are offset by an adjustment factor (AWF). There is no change to the

index market capitalization and no divisor adjustment.

Split/Reverse Split

Shares outstanding are adjusted by split ratio. Stock price is adjusted by split ratio. There is no change

to the index market capitalization and no divisor adjustment.

Spin-off

The spin-off is added to the index on the ex-date at a price of zero. The spin-off index shares are

based on the spin-off ratio. On the ex-date the spin-off will have the same attributes and capping

adjustment factor (AWF) as its parent company and will remain in the index for at least one trading

day. As a result, there will be no change to the index divisor on the ex-date.

If the spin-off is ineligible for continued inclusion, it will be removed after the ex-date. In most equal

weight indices, the weight of the spin-off is re-invested back into the parent stock on the deletion

date. There will be no divisor adjustment in this case.

Please refer to the individual index methodology for specific eligibility rules and treatment of spin-

offs.

Change in IWF

IWF changes are offset by an adjustment factor (AWF). There is no change to the index market

capitalization and no divisor adjustment.

Ordinary dividend

When a company pays an ordinary cash dividend, also referred to as a regular cash dividend, the

index does not make any adjustments to the price or shares of the stock. As a result, there are no

divisor adjustments to the index. Ordinary dividends are reinvested across the index and accounted

for in the Total Return index calculations. Additional details on the Total Return calculation can be

found in S&P Dow Jones Indices Index Mathematics Methodology.

Special dividend

The stock price is adjusted by the amount of the dividend. The net change to the index market

capitalization causes a divisor adjustment.

Rights offering

All rights offerings that are in the money on the ex-date are applied under the assumption the rights

are fully subscribed. The stock price is adjusted by the value of the rights and the shares outstanding

are increased by the rights ratio. The change in price and shares is offset by an adjustment factor

(AWF) to keep the index market capitalization (stock weight) unchanged. There is no change to the

index market capitalization and no divisor adjustment.

S&P Dow Jones Indices: Equity Indices Policies & Practices 31

Regulatory Capping Requirements

Regulatory capping is not an Index Weighting Type. However, certain indices have capping thresholds

designed to support financial products subject to regulatory diversification requirements. Capping

thresholds defined in the weighting section of some index methodologies are intended to reflect certain

diversification requirements imposed on investment companies under the United States Internal Revenue

Code (the “Code”) and the Investment Company Act of 1940 (the “40 Act”) as of the publication date, or

under the Directive 2009/65/EC.

Under the United States Internal Revenue Code (the “Code”) and the Investment Company Act of

1940 (the “40 Act”) as of the publication date:

• Regulated Investment Company” (“RIC”). To qualify as a RIC under the Code, a company

must, among other things, ensure that at the end of each quarter of its taxable year:

i. no more than 25% of the total value of the company’s assets are invested in securities of

a single issuer (other than government securities or the securities of another RIC), and

ii. no more than 50% of the total value of the company’s assets are represented by

securities (other than government securities or the securities of another RIC) of issuers in

which the company’s investment exceeds 5% of the total value of the company’s assets.

• Diversified Company. To qualify as a “Diversified Company” under the 40 Act, an investment

company must, among other things, ensure that at the end of each fiscal quarter, no more than

25% of the company’s total asset value are represented by securities (other than government

securities or the securities of other investment companies) of issuers in which the company’s

investment exceeds 5% of the company’s total asset value.

Although the capping procedures are designed to reflect the specific diversification requirements noted

above, these procedures cannot guarantee that an asset portfolio constructed based on the index

complies with all diversification rules under either the Code or the 40 Act. For instance, the Code and the

40 Act also impose limitations on the percentage of outstanding voting securities of an issuer held by a

RIC or a Diversified Fund, and compliance with that requirement depends on the overall size of a fund’s

portfolio in addition to the portfolio’s weighting of particular securities. Also, the capping procedures are

designed to result in diversification at the end of each calendar quarter, but a fund may have a tax or

fiscal year that does not end at the end of a calendar quarter.

S&P DJI makes no representation or warranty with respect to its indices’ compliance with, and S&P DJI

will not be responsible or have any liability for, a fund’s failures to satisfy the diversification requirements

of the Code or the 40 Act.

Under the Directive 2009/65/EC:

The capping procedures are intended to reflect the diversification requirements imposed by the Directive

2009/65/EC relating to undertakings for collective investment in transferable securities, as amended (the

“UCITS Directive”), as of the publication date. The market capitalization weighting is designed to limit

concentration and ensure adequate diversification which an undertaking for collective investment in

transferable securities (“UCITS”) must comply with at all times.

The UCITS Directive provides that a UCITS must not invest no more than 5% of its assets in “eligible

securities”. This limit can be raised to a maximum of 10%, provided that the total value of the eligible

securities held by the UCITS in the issuing bodies in which the UCITS invests more than 5 % of its assets

must not exceed 40 % of the value of its assets.

By way of derogation from the above diversification requirement, where the UCITS aims to replicate the

composition of a certain stock index which is recognized within the European Union, then, provided that

the composition of the index is sufficiently diversified, represents an adequate benchmark for the market

to which it refers and is published in an appropriate manner, a UCITS must not invest no more than 20%

S&P Dow Jones Indices: Equity Indices Policies & Practices 32

of its assets in one single issuer. The UCITS Directive allows the 20% limit to be further raised to 35% for

one single issuer where justified by exceptional market conditions as further described in its issuing

document. A UCITS should not invest in a financial index which has a single component that has an

impact on the overall index return which exceeds the relevant diversification requirement (i.e. 20%/35%).

Although the capping procedures referred to in the weighting methodology are designed to reflect the

particular UCITS diversification requirements noted above, these procedures cannot guarantee that the

portfolio of a UCITS, as constructed based on the index, will comply with all diversification requirements

provided under the UCITS Directive. Member States of the European Union may have implemented

additional requirements which further substantiate the capping requirements mentioned above (the

“National Initiatives”).

In addition, the UCITS Directive also imposes limitations on the percentage of voting securities of a single

issuer which a UCITS can hold, and compliance with that requirement depends on the overall size of the

UCITS’s portfolio.

It should also be noted that although the capping procedures are designed to result in diversification at

the end of each calendar quarter, a UCITS must comply with the diversification requirements as set out in

the UCITS Directive at all times. As a result, it cannot be excluded that time that has elapsed pending the

rebalancing of the Index as defined below may lead to an investment breach which will have to be

remediated by the UCITS in application of the UCITS Directive and any relevant National Initiatives.

S&P DJI makes no representation or warranty with respect to its indices’ compliance with, and S&P will

not be responsible or have any liability for a UCITS’s failure to satisfy, the diversification or other

requirements under the UCITS Directive or any National Initiatives. Any UCITS should obtain their own

legal advice on the application of such requirements.

S&P Dow Jones Indices: Equity Indices Policies & Practices 33

Treatment of Corporate Actions on Exchange

Holidays

Price Adjusting Corporate Actions

Price-adjusting corporate actions such as splits, bonuses, rights, spin-offs, and special dividends with

effective dates that fall on an exchange holiday are generally implemented on the next trading day. If an

exchange declares a trading holiday with little advance notice, S&P DJI may implement the corporate

actions on that date. In such a scenario, the adjusted closing prices are used for index calculation rather

than the previous trading day’s closing prices. In scenarios when forex rates are relevant to the index

calculation, if the forex rate is available but the exchange is closed, the current day forex rate is utilized. If

no forex rate is available, the previous day forex rate is utilized.

Non-Price Adjusting Corporate Actions

Share and IWF changes, adds to, and drops from the index, changes of attributes such as country of

domicile and GICS classification, etc. are allowed on an exchange holiday. These events take effect

before the open of the effective date. Therefore, any trading required would have been completed by the

close of the trading day before the effective date.

S&P Dow Jones Indices: Equity Indices Policies & Practices 34

Bankruptcies & Stock Suspensions

Bankruptcies

Bankrupt securities are considered ineligible. The removal of a bankrupt security is done at the same time

with the same closing price in all S&P DJI’ branded indices.

• Same day removals for bankruptcies are not done. Announcements are made such that a

minimum of one day’s notice is given to clients. For example, if the bankruptcy filing is on

Monday, S&P DJI’ announcement is published on Monday evening, with the removal on Tuesday

after the market close.

• If the security is trading on its primary exchange at the close of the day it is removed, that price is

used. If the security is halted on or delisted from its primary exchange, a price of zero is used.

o Exception for U.S. listed securities. If a U.S. listed stock moves from its primary

exchange to the OTC market prior to it index deletion date, OTC prices (including Special

Opening Quotations if applicable) are used to price the stock for index purposes from the

time of the exchange move until its index delisting date regardless of the reason for the

exchange move (including bankruptcies, voluntary delistings and non-compliance

issues). If a stock moves to OTC but does not trade on OTC prior to its index deletion

date, the stock is removed at a zero price.

• FDIC Receivership. This refers to the process by which the Federal Deposit Insurance

Corporation (in the U.S.) takes over the operations of a failed banking institution and arranges for

the liquidation of its assets. Companies that have been placed in FDIC receivership are dropped

from all indices at the earliest reasonable date using the rules stated above.

Long-Term Stock Suspensions

For suspended stocks, for the duration of the suspension period, S&P DJI carries forward the last

available official closing price. Suspended stocks that exceed a threshold of 60 consecutive business

days, based on the designated listing exchange trading days, are reviewed for possible index deletion.

The suspension review evaluation date to determine a potential index deletion is the last business day of

February, May, August, and November. Stocks that reach a suspension period of 60 days or more, as of

the evaluation date, are subject to index deletion. S&P DJI will provide advance notice that a stock will be

removed at a zero price at the next rebalancing following the quarterly suspension evaluation date.

As part of the suspension review, stocks with pending corporate actions or that have announced

information regarding the date when the stock will resume trading will generally not be deleted from

indices. S&P DJI does not consider restructuring as a corporate action unless further information is

disclosed, except for Chinese domestic companies. Restructuring events for Chinese domestic

companies (including A, B & H shares) are recognized as corporate actions and will not be deleted from

indices until the stock trades again. S&P DJI freezes the index shares for suspended stocks across any

index rebalancings during the suspension period.

Stocks suspended for less than 60 business days, as of the quarterly suspension evaluation date, are

reviewed for deletion at the following quarterly suspension evaluation date. If a stock resumes trading

after S&P DJI’s announcement that the stock will be deleted, the S&P DJI Index Committee may revise

the deletion decision provided the stock resumes trading at least two business days prior to

implementation of the stock’s deletion. Any change in status that occurs less than two days before the

rebalancing effective date will be reviewed by the index committee.

S&P Dow Jones Indices: Equity Indices Policies & Practices 35

In order to minimize turnover, any stock deleted from an index due to the 60 day suspension rule will not

be eligible for re-inclusion in any index for six months following its deletion even if the stock begins trading

again. Stocks under long-term suspension that exceed the threshold of 60 business days will be deleted

at the March, June, September, and December rebalancings. Suspended stocks that are removed from

indices will then become eligible again for index inclusion beginning with the subsequent September,

December, March, and June rebalancings, respectively. For example, a stock that is deleted from an

index at the September rebalancing would be eligible for index inclusion beginning with the subsequent

March rebalancing.

Any exceptions to these rules will be announced in advance of the implementation.

Short-Term Stock Suspensions

Corporate Actions. If SP DJI has advance knowledge of a stock’s trading suspension, even if quoted ex

by the exchange, corporate actions occurring during the suspension are not recognized until trading

resumes. However, if prior information is not available for a stock’s trading suspension, and if a corporate

action has been recognized for that day, the market driven actions are implemented on the ex-date and

the adjusted prices carried until trading resumes. Index committee discretion can be used when

determining whether or when to implement a corporate action for a suspended stock.

Rebalancing Share/IWF Changes. For stocks suspended for less than 60 consecutive business days

as of the suspension review evaluation date with no information regarding the date when the stock will

resume trading, or information that the stock will resume trading after the rebalancing effective date, no

share or IWF changes are applied at the rebalancing.

If a stock suspends after the suspension review evaluation date prior to the rebalancing and with no

information regarding the date when the stock will resume trading or information that the stock will

resume after the rebalancing effective date, any previously announced share or IWF changes are

generally cancelled.

Any rebalancing share or IWF changes cancelled as a result of stock suspension will not be reinstated

even if the stock resumes trading prior to the rebalancing.

All such changes are reviewed for implementation at the subsequent rebalancing, subject to eligibility.

Suspended stocks are generally not added to indices at a rebalancing, even if otherwise eligible. Current

index constituents are generally not deleted at a rebalancing solely for the reason of being suspended

(unless meeting the criteria for removal under long-term suspension).

For more information, please refer to the Non-Mandatory Share and Investable Weight Factor (IWF)

Updates chapter.

Sanctions

Some sanctions programs are comprehensive in nature and include broad-based trade restrictions, while

others selectively target specific individuals and entities. As sanctions can be either comprehensive or

selective, S&P DJI reviews sanctions on a case-by-case basis. Depending on the circumstance, entire

countries, or specific securities, may be impacted by sanctions.

Generally, S&P DJI will consider sanctions using the perspective of a U.S., U.K., and/or European Union

(EU) based investor for standard, global indices. Subject to Index Committee determination, specific

securities impacted by sanctions may:

• Have their current shares/IWF/GICS frozen for the duration of the sanctions

• Be deleted from indices; and/or

• Become ineligible for addition to indices.

S&P Dow Jones Indices: Equity Indices Policies & Practices 36

In all cases, S&P DJI’s specific treatment is announced to clients when new sanctions are imposed or

removed with index implications.

Subject to S&P DJI’s compliance with applicable law, S&P DJI may also elect to publish indices whose

objective is to measure the performance of securities from the perspective of certain non U.S./U.K./EU

investor groups that may not be impacted by the sanctions described above. Such indices may contain

securities subject to sanctions from a U.S./U.K./EU perspective and are therefore ineligible for S&P DJI’s

global indices. In any such case, the relevant index methodology will explicitly define the treatment.

Please note the use and licensing of such indices may be restricted to ensure S&P DJI’s compliance with

applicable law.

Please note that users of S&P DJI’s indices are solely responsible for ensuring such users’ compliance

with all applicable law (including, without limitation, sanctions laws and any other rules, regulations, or

prohibitions) in connection with such use (including, without limitation, trading, investment, or other use).

S&P Dow Jones Indices: Equity Indices Policies & Practices 37

Domiciles

Investors often allocate their portfolios on a country-by-country basis. Company domicile assignments are

important to companies and investors because they determine how companies are perceived by investors

and what companies are considered their peers. Also, certain countries may place restrictions on foreign

investors’ holdings.

Traditionally index providers (including S&P DJI), analysts and investors had relied on incorporation or

registration as the primary determinant of a company’s domicile. Incorporation determines a company’s

tax status, the legal structure it follows, and its corporate structure and governance. Difficulties arise when

a company uses its domicile for purposes other than simple legal registration, such as minimizing its

taxes or adjusting shareholder rights. This often leads to incorporation/registrations in domiciles of

convenience such as Bermuda, the Cayman Islands, Channel Islands, etc. See below for a list of

domiciles of convenience.

Domicile determination becomes more complex when companies in emerging or frontier markets which

seek developed market legal and tax systems (e.g., Chinese companies incorporated in Hong Kong or

Bermuda). When a domicile of convenience is chosen, additional information for domicile determination is

considered.

Policy

The incorporation and/or registration, operational headquarters location, and primary stock exchange

listing are the principal factors determining country of domicile. Other factors considered include the

geographic breakdown of revenue and assets, ownership information, location of officers, directors and

employees, investor perception, and other factors deemed to be relevant by the Index Committee.

All final domicile determinations are subject to review by the relevant Committee, if needed. Please note,

that while a company is assigned a country of domicile based on this policy, individual index

methodologies may have other criteria that would exclude it from a headline country index. Please refer to

the respective index methodology document for such additional criteria.

This review includes exceptions for China, Russia, and Israel. A large number of companies based in

China are incorporated and/or listed and traded in other places such as Hong Kong, Singapore, Bermuda

(incorporation) or the U.S. (listings) because the Chinese equity markets are not completely open to

global investors. These companies have been, and will continue to be, considered Chinese. Numerous

Russian companies are similarly incorporated and traded in London, though headquartered in Russia.

Israeli companies are sometimes listed on NASDAQ and incorporated in domiciles of convenience.

Domiciles of Convenience:

• Bermuda

• Channel Islands (as in British Channel)

• Gibraltar

• Islands in the Caribbean (Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, British

Virgin Islands, Cayman Islands, Dominica, the Dominican Republic, Grenada, Haiti, Jamaica,

Montserrat, Navassa Island, Netherlands Antilles, Puerto Rico, St. Barthelemy, St. Kitts and

Nevis, St. Lucia, St. Martin, St. Vincent and Grenadines, Trinidad and Tobago, Turks and Caicos,

the Virgin Islands)

• Isle of Man

S&P Dow Jones Indices: Equity Indices Policies & Practices 38

• Luxembourg

• Liberia

• Panama

S&P DJI has seen companies reincorporated in certain European countries such as Cyprus, Ireland, the

Netherlands, and Switzerland for tax purposes. These European countries are not included in the

“domiciles of convenience” list; however other mentioned factors are considered before determining a

country of domicile in such cases.

Note that some of the domiciles of convenience have domestic stock exchanges, and a company can

therefore be placed in one of these countries if it is incorporated/ registered there.

Domicile determination is generally applied to new index additions or when a company announces a

change in incorporation or registration. However, S&P DJI’s Index Committee does reserve the right to

review companies on a case-by-case basis. Domicile is reviewed on an as-needed basis.

S&P Dow Jones Indices: Equity Indices Policies & Practices 39

Controls on the Repatriation of Foreign Capital

A government, central bank, or monetary authority can impose controls or restrictions on the repatriation

of foreign capital that make it difficult or even impossible to trade securities listed in that market.

Moreover, a market can temporarily exhibit other trading constraints, such as insufficient foreign

exchange liquidity. If a market institutes capital controls, or experiences other structural trading

constraints, S&P Dow Jones Indices will assess the impact and duration of the situation, and may take

one or more of the following actions:

1. Continue to maintain the stocks listed in the affected market in accordance with standard ongoing

maintenance procedures.

2. Retain the stocks listed in the affected market, but freeze all potential changes until further notice

(e.g., shares, float, index shares, adds/drops).

3. Drop the stocks listed in the affected market.

4. Utilize only depository receipts and/or cross-listings for representation of the affected market, if

possible, which in some cases may require a switch of the listing included in an index.

S&P DJI will provide advance notice if it elects to drop stocks or switch the listing due to capital controls

or other trading constraints. Stocks may be removed at a zero or minimal price at the Committee’s

discretion, in recognition of the constraints faced by investors.

Once the capital controls or trading constraints are lifted and/or remedied, S&P DJI may reevaluate the

status of the affected country using S&P Dow Jones Indices’ Country Classification Methodology. Any

decisions will be communicated to clients as soon as possible through the normal channels.

For more information, please refer to S&P Dow Jones Indices’ Country Classification Methodology.

S&P Dow Jones Indices: Equity Indices Policies & Practices 40

Unexpected Exchange Closures

An unexpected market/exchange closure is when a market/exchange fully or partially fails to open, or

trading is temporarily halted. This can apply to a single exchange or to a market as a whole when all of

the primary exchanges are closed and/or not trading. Unexpected market/exchange closures are usually

due to unforeseen circumstances, such as natural disasters, inclement weather, outages, or other events.

U.S. Securities

To a large degree, S&P DJI is dependent on the exchanges to provide guidance in the event of an

unexpected exchange closure. S&P DJI’s decisions are dependent on exchange guidance regarding

pricing and mandatory corporate actions.

SEC Rule 123C-Equities provides closing contingency procedures for determining an official closing price

for listed securities if the exchange is unable to conduct a closing transaction in one or more securities

due to a system or technical issue.

3:00 PM ET is the deadline for an exchange to determine its plan of action regarding an outage scenario.

As such, S&P DJI also uses 3:00 PM ET as the cutoff.

Full Market Disruptions. If all major exchanges fail to open or unexpectedly halt trading intraday due to

unforeseen circumstances, such as natural disasters, inclement weather, outages, or other events, S&P

DJI will take the following actions:

• Market Disruption Prior to Open of Trading:

(i) If all exchanges indicate that trading will not open for a given day, S&P DJI will treat the

day as an unscheduled market holiday. The decision will be communicated to clients as

soon as possible through the normal channels. Indices containing multiple markets will be

calculated as normal, provided that at least one market is open that day. Indices which

only contain closed markets will not be calculated.

(ii) If exchanges indicate that trading, although delayed, will open for a given day, S&P DJI

will begin index calculation when the exchanges open.

• Market Disruption Intraday:

(i) If exchanges indicate that trading will not resume for a given day, index levels will be

calculated using prices determined by the exchanges based on SEC Rule 123C. Intraday

index values will continue to use the last traded composite price until the primary

exchange publishes Official Closing Prices.

International Securities

International exchanges do not have the same secondary exchange default capabilities as U.S.

exchanges. In the event of an unexpected exchange closure, S&P DJI uses the following guidelines:

(i) If an unexpected exchange closure occurs prior to the open of trading and it is indicated that

trading will not open for a given day, S&P DJI will treat the day as an unscheduled market

holiday.

(ii) If a market disruption occurs intraday, S&P DJI will wait for the impacted exchange to publish a

list of closing prices, which will then be used to calculate the closing index values. If no list is

published, the last trade for each security before the interruption is used to calculate the index

S&P Dow Jones Indices: Equity Indices Policies & Practices 41

closing value. If no trades were reported for a security, the previous closing price, adjusted for

corporate actions, is used for index calculation.

Please refer to the Index Policy chapter for more details.

Treatment of Corporate Actions

S&P DJI will take the following steps regarding corporate actions in an effort to provide a replicable index:

In the event of an unexpected full market closure:

(i) Full-day closure occurring on the corporate action effective date: All market driven actions (splits,

bonuses, rights, cash dividends, spin-offs, etc.) are moved to the next trading date. This involves

the reposting of all affected files of each index that contains the impacted stocks. However, the

exchange’s lead is followed in such situations. If the exchange moves the corporate action ex-

date, S&P DJI does the same. Adds and drops to the index and share/IWF updates remain

unchanged, since trading was completed at the close on the day before the effective date.

(ii) Unexpected early market closure occurring on the corporate action effective date: When all

exchanges in a market are forced to close early, all market driven actions (splits, bonuses, rights,

cash dividends, spin-offs, etc.) take place at the open on the ex-date. Adds and drops to the

index and share/IWF updates remain unchanged, since trading was completed at the close on

the day before the effective date.

(iii) Full-day or unexpected early market closure occurring on the day before the corporate action

effective date: Adds and drops to the index and share/IWF updates are moved to the close of the

next trading date and use the closing prices of that day. All market driven actions scheduled for

the open of the next day are unaffected by an exchange closure on the day before the ex-date.

Full Market Unexpected Closure

↓

Full Day

↔

After Market Opens

↓

Corporate Action

Effective Date

↔

Day Before

Corporate Action

Effective Date

Corporate Action

Effective Date

↔

Day Before

Corporate Action

Effective Date

↓

All market driven

actions (splits,

bonuses, rights,

cash dividends,

spin-offs, etc.) are

moved to the next

trading date.

All market driven

actions scheduled

for the open of the

next day are

unaffected by an

exchange closure.

All market driven

actions (splits,

bonuses, rights,

cash dividends,

spin-offs, etc.) take

place at the open

on the ex-date.

All market driven

actions scheduled

for the open of the

next day are

unaffected by an

exchange closure.

Adds and drops to

the index and

share/IWF updates

remain unchanged

Adds and drops to

the index and

share/IWF updates

are moved to the

close of the next

trading date and

use the closing

prices of that day.

Adds and drops to

the index and

share/IWF updates

remain unchanged

Adds and drops to

the index and

share/IWF updates

are moved to the

close of the next

trading date and

use the closing

prices of that day.

U.S. Markets. In the event of an unexpected exchange closure where at least one other exchange is

operating normally:

(i) If the impacted exchange has an unexpected closure prior to 3:00 PM ET and is not expected to

reopen before 3:00 PM ET, events will not be moved. Corporate actions, including adds and

drops to the index and share/IWF events remain unchanged. All index changes will be

implemented using prices determined by the exchanges based on SEC Rule 123C.

S&P Dow Jones Indices: Equity Indices Policies & Practices 42

(ii) In the event at least one exchange has an unexpected closure after 3:00 PM ET, all adds and

drops to an index, and share/IWF changes scheduled to be implemented at the close on that day

will be moved to the close of the next trading date. This includes actions involving stocks whose

primary exchange is unaffected by the outage. Closing prices are determined by the exchanges

based on SEC Rule 123C.

U.S. Exchange Unexpected Closure (at least one, but not all)

↓

Prior to 3:00 PM ET

↔

After 3:00 PM ET

↓

Corporate Action

Effective Date

↔

Day Before

Corporate Action

Effective Date

Corporate Action

Effective Date

↔

Day Before

Corporate Action

Effective Date

↓

All market driven

actions (splits,

bonuses, rights,

cash dividends,

spin-offs, etc.) take

place at the open

on the ex-date.

All market driven

actions scheduled

for the open of the

next day are

unaffected by an

exchange closure.

All market driven

actions (splits,

bonuses, rights,

cash dividends,

spin-offs, etc.) take

place at the open

on the ex-date.

All market driven

actions scheduled

for the open of the

next day are

unaffected by an

exchange closure.

Adds and drops to

the index and

share/IWF updates

remain unchanged

Adds and drops to

the index and

share/IWF updates

events remain

unchanged.

Adds and drops to

the index and

share/IWF updates

remain unchanged

Adds and drops to

an index, and

share/IWF changes

scheduled to be

implemented at the

close on that day

events will be

moved to the close

of the next trading

date. This includes

actions involving

U.S. stocks whose

primary exchange is

unaffected by the

outage.

For global indices, the effective date of corporate actions, including adds, drops, and share/IWF updates,

remain unchanged for the markets not impacted by unexpected closure.

Rebalancing

If an exchange is fully closed or has an unexpected early market closure on the effective date and an

index rebalancing is scheduled for the opening of the effective date, all the rebalancing related adds,

drops, and share/IWF changes take place as scheduled since trading will have been completed at the

close on the day before the effective date.

If an exchange is fully closed or has an unexpected early market closure and closing prices are not

available on the day prior to an index rebalancing effective date, S&P DJI will generally shift corporate

actions, including adds, drops, and share/IWF changes.

Rebalancing

↓

Rebalancing Effective Date

↔

Day Before Rebalancing Effective Date

↓

All rebalancing related adds, drops, and

share/IWF changes take place as scheduled

Corporate actions, including adds, drops, and

share/IWF changes will be moved to the close of

the next trading date.

S&P Dow Jones Indices: Equity Indices Policies & Practices 43

U.S. Markets. If at least one exchange has an unexpected closure after 3:00 PM ET, all adds and drops

to an index, and share/IWF changes scheduled to be implemented at the close on that day, will be moved

to the close of the next trading date. This includes actions involving stocks whose primary exchange is

unaffected by the outage. Closing prices are determined by the exchanges based on SEC Rule 123C.

The rebalancing treatment listed above is the general policy. The Index Committee will review each

situation on a case-by-case basis and the appropriate treatment will be announced in advance to clients.

S&P Dow Jones Indices: Equity Indices Policies & Practices 44

Index Recalculation Policy

S&P DJI reserves the right to recalculate an index at its discretion in the event one of the following

occurs:

1. Incorrect or revised closing price of one or more constituent securities

2. Missed or misapplied corporate action

3. Late announcement of a corporate action

4. Incorrect calculation or data entry error

5. Incorrect application of an index methodology, as described below in Index Methodology Event

A general description of how these events are handled is provided in the table below.

The decision to recalculate an index is made at the discretion of the applicable Index Manager and/or

Index Committee, as set forth herein. The potential market impact or disruption resulting from a

recalculation is considered when making any such decision.

In the event one of the following recalculation events is discovered within two trading days of its

occurrence, generally the index is recalculated. In the event any such recalculation event is discovered

beyond the two-trading day period, the applicable Index Committee shall decide whether the index should

be recalculated.

Recalculation Events

Treatment In S&P DJI’s Branded Indices

Closing Price

Incorrect constituent closing prices are generally corrected and reposted.

Missed or Misapplied

Corporate Action

Missed or misapplied corporate actions are corrected & reposted.

Late Announcement of a

Corporate Action

Divisor Impact: Divisor-impacting information is corrected and reposted.

No Divisor Impact: Late information, including regular cash dividends, that

does not impact the index divisor are applied at the earliest opportunity when

S&P DJI becomes aware of the event.

For late announced or canceled dividends, S&P DJI generally uses a Post Ex-

date Dividend Adjustment, unless otherwise notified. See the Post Ex-date

Dividend Adjustment section for further information.

Stock splits, bonus issues or stock dividends and reverse stock splits are

applied on the correct ex-date. If these are announced on the same day (either

that this is taking place or that a previously announced event is being

postponed or cancelled), they are applied on the correct ex-date and files are

not reposted. Same day corporate actions are included in the current day files,

so previous day files are not reposted. If these are announced after the ex-

date, then it is applied on the correct ex-date and files are regenerated and

reposted.

Incorrect Calculation or

Data Entry Error

Incorrect calculations or data entry mistakes caused by S&P DJI are corrected

and impacted indices are recalculated.

S&P Dow Jones Indices: Equity Indices Policies & Practices 45

Incorrect Application of an Index Methodology. The Index Committee shall determine whether or not

to recalculate an index in the event an error is discovered by S&P DJI that was caused by the incorrect

application of an index methodology and results in the incorrect composition and/or weighting of index

constituents. The committee has final discretion but generally considers the following guidelines:

• In the event the Index Committee discovers, based on index eligibility and selection criteria for a

given index as documented in the index’s methodology, a company was incorrectly added to,

dropped from, or retained in an index, or the constituent weightings in the index were incorrectly

assigned, the Index Committee may decide to amend the constituents or weighting of the index in

line with the index methodology on a future date (as opposed to retroactively) providing

reasonable advance notice from the announcement date to the effective date. The Index

Committee will generally not alter the index composition and/or weightings of constituents

retroactively except in accordance with the following guidelines:

o The addition of a constituent that does not meet the index objective as defined in the

index methodology (e.g., adding a stock that is not Shariah-compliant to a Shariah index).

o The changes made differ from those that were announced by S&P DJI in advance of the

effective date (e.g., pro-forma files).

o The change would result in greater than de minimis performance impact and is consistent

with index usage.

• If an incorrect application of the methodology for determining index composition or weighting is

discovered after the action has been announced by S&P DJI, but prior to the effective date of the

action, S&P DJI reserves the right to rescind the action and restate it using corrected data.

In the event S&P DJI chooses to recalculate an index, it shall do so within a reasonable timeframe

following the detection and review of the issue. If it is determined that an index will be recalculated, the

following steps will be taken upon completion of the recalculation:

• All impacted files are regenerated and reposted.

• All clients (i.e., S&P DJI-licensed entities) are notified of the recalculation and alerted when files

have been successfully reposted.

S&P DJI calculates real-time (intraday) values for some of its indices. In the event there is an error with a

real-time calculation or a restatement of end-of-day values for one of these indices, S&P DJI will not re-

compute intraday values for the impacted time period.

S&P DJI applies the recalculation rules set forth herein to its branded indices and markets (developed,

emerging and frontier). Any decisions that differ from the stated rules will be reviewed by the Index

Committee and announced accordingly.

Common Identifiers. Incorrect identifiers are generally corrected on the same day such an error is

detected and will be included in the next regularly scheduled file delivery.

End-of-Month Global Fundamental Data – Recalculation Policy

S&P DJI calculates and distributes End-of-Month (“EOM”) Global Fundamental Data for various indices,

and reserves the right to recalculate and repost the EOM files at its discretion should either of the

following events occur:

1. Incorrect underlying data point used in the calculation

2. Incorrect application of index methodology or missed methodology event

In the event one of the recalculation events is discovered within one month of its occurrence and impacts

only the latest files produced, the Index Manager may, at their discretion, recalculate and repost the EOM

files without involving the Index Committee. In the event any such recalculation event is discovered

S&P Dow Jones Indices: Equity Indices Policies & Practices 46

beyond the one month period and/or impacts files beyond the latest files produced, the applicable Index

Committee shall decide whether the data will be recalculated, and files reposted.

In the event S&P DJI chooses to recalculate Global Fundamental Data, it shall do so within a reasonable

timeframe following the detection and review of the issue. If it is determined that the data will be

recalculated, the following steps will be taken upon completion of the recalculation:

• All impacted files are regenerated and reposted.

• All clients (i.e., S&P DJI-licensed entities) are notified of the recalculation and alerted when files

have been successfully reposted.

S&P Dow Jones Indices: Equity Indices Policies & Practices 47

Index Governance

Index Committee

An Index Committee governs all indices. Except for some co-branded indices which may include

members from external companies or exchanges, most committees are comprised of full-time

professional members of S&P DJI staff. Please refer to individual index methodology documents for

information on index committees with external index committee members. At each meeting, the Index

Committee may review pending actions that may affect index constituents, statistics comparing the

composition of the indices to the market, securities being considered as candidates for addition to an

index, and any significant market events. In addition, the Index Committee may revise index policies.

Questions of interpretation or possible exceptions to rules are considered by the Index Committee

responsible for the indices in question.

S&P DJI considers information about changes to its indices and related matters to be potentially market

moving and material. Therefore, all Index Committee discussions are confidential.

S&P DJI’s Index Committees reserve the right to make exceptions in the treatment if the need arises. In

any scenario where the treatment differs from the general rules stated in this document, clients will

receive sufficient notice, whenever possible.

Quality Assurance

S&P DJI maintains quality assurance processes and procedures for the calculation and maintenance of

its indices that include a regularly scheduled meeting to review incidents or errors, if any, that occurred

during the previous week and identify causes, determine repetitive issues, and evaluate whether any

long-term changes are necessary (e.g., a change in process). Incidents and errors are tracked through

S&P DJI’s internal system and significant matters are escalated, requiring, at times, an ad hoc meeting of

the same group.

Internal Reviews of Methodology

Annual Review Process. In addition to its daily governance of indices and maintenance of index

methodologies, at least once within any 12-month period, the Index Committee reviews each index

methodology to ensure the indices continue to achieve the stated objectives, and that the data and

methodology remain effective. In the case that an index methodology is reviewed off cycle from the

annual review, the Index Committee reserves the right to cancel the annual review if the requested review

covers all the relevant issues.

Communication with Stakeholders and Consultations. S&P DJI communicates and consults with

stakeholders through various channels using press releases, index announcements, emails, and the

distribution of data files. In addition, S&P DJI has a designated client experience team available to

respond to inquiries.

When a material change to an index methodology is considered, S&P DJI publishes a consultation

inviting comments from external parties. A material change alters the index objective or changes the

methodology in a way that affects the likelihood that the index will achieve its objective. Examples of

methodology changes that could impact the index objective include altering rules determining the index

universe, the selection of its constituents, or the weighting of its constituents. Consultations are posted on

the Web site at www.spglobal.com/spdji, and feedback is accepted only during the posted timeframe.

Under normal circumstances, the consultation period is open for a minimum of 30 days from publication.

S&P Dow Jones Indices: Equity Indices Policies & Practices 48

In instances where a material change is deemed to be time sensitive, S&P DJI may determine that a

shorter consultation period is required. Time sensitive changes are those that may require consideration

or implementation within a shorter timeframe, and where the full consultation time period is not possible.

Prior to the Index Committee’s final review, S&P DJI will consider the issues and may request

clarifications from respondents as part of that review. All feedback from consultations is reviewed and

considered before a final decision is made by the Index Committee. Any changes to an index

methodology resulting from a consultation are announced on our web site.

Substantive changes to methodology documents not resulting from consultations will also be announced.

S&P DJI will generally not issue an announcement for minor edits to methodology documents that it

deems not substantive, such as clarifications and format edits that are not related to any kind of

methodological change.

Occasionally, S&P DJI may hold client meetings, conference calls, or Advisory Panels.

Complaints Procedure. For any inquiry, comment, or complaint regarding the indices governed by this

methodology, a Client Services Form can be found at http://us.spindices.com/feedback/client-services.

S&P Dow Jones Indices: Equity Indices Policies & Practices 49

Index Policy

Announcements

All index constituents are evaluated daily for data needed to calculate index levels and returns. All events

affecting the daily index calculation are typically announced in advance via the Index Corporate Events

report (.SDE), delivered daily to all clients. Announcements of additions and deletions for headline equity

indices are generally made shortly after market close. Press releases are posted on the Web site,

www.spglobal.com/spdji/, and are released to major news services.

For reposting guidelines due to late announcements or analyst errors, please refer to the Recalculation

Policy for S&P Dow Jones Indices’ Branded Indices chapter.

Pro-forma Files

In addition to the corporate events file (.SDE), S&P DJI provides constituent pro-forma files for many

indices at the time of rebalancing. The pro-forma file is typically provided daily in advance of the

rebalancing date and contains all constituents as well as their corresponding weights and index shares

effective for the upcoming rebalancing. Since index shares are assigned based on prices prior to the

rebalancing, the actual weight of each stock at the rebalancing will differ from these weights due to

market movements.

Please visit www.spglobal.com/spdji/ for a complete schedule of rebalancing timelines and pro-forma

delivery times.

Holiday Schedule

The indices are calculated daily, throughout the calendar year. The only days an index is not calculated

are on days when all exchanges where an index’s constituents are listed are officially closed. Any

exceptions to this are noted in the respective index’s methodology.

A complete index holiday schedule for the year is available at www.spglobal.com/spdji/.

Exchange Rate

WMR foreign exchange rates are taken daily at 4:00 PM London Time and used in the calculation of the

indices. These mid-market fixings are calculated by WMR based on LSEG data and appear on LSEG

pages. Indices not using the WMR exchange rate indicate the exchange rate, if any, used in their

respective methodology document.

Corporate Actions Applicable to Domestic Investors Only

In general, if a corporate action is restricted to domestic investors only, it is not recognized in the global

indices.

Special Index Variations

S&P DJI may calculate separate versions of S&P- or Dow Jones-branded indices which may be tailored

in a variety of ways such as the exclusion of certain constituents or sectors, different rebalancing

schedules, weighting schemes, currencies of calculation, or tax rates. In such cases, the index follows the

methodology of the parent index except where otherwise noted.

S&P Dow Jones Indices: Equity Indices Policies & Practices 50

Child Indices

S&P DJI calculates and maintains a number of sub-indices (“Child Index” or “Child Indices”) derived from

a larger or broader index (“Parent Index” or “Parent Indices”). A Child Index provides a further breakdown

of individual constituents within a Parent Index based on a specific attribute, such as a specific sector,

country, or geographic region. The actual composition of each Child Index is a subset of the respective

Parent Index, with the weights of the Child Index constituents relative to their weights in the Parent Index.

Therefore, a change to a Parent Index’s composition causes a simultaneous change to the composition of

the relevant Child Index.

A Child Index can be viewed as a building block of the Parent Index, which helps users better understand

the overall performance of the Parent Index. In certain cases, Child Indices range from broad, well

diversified benchmarks to very narrow, concentrated baskets. S&P DJI may choose to publish these Child

Indices for a variety of purposes including performance attribution.

Child Indices are eligible to be calculated and published each trading day in end-of-day files provided the

current composition of the Parent Index includes the specific attribute. For example, if a particular GICS

sector is not represented in the Parent Index on trading day (t), then no Child Index for that sector is

calculated and published by S&P DJI on trading day (t). However, if that sector is represented within the

Parent Index following a future rebalancing or reconstitution, S&P DJI will calculate and publish the

applicable Child Index in end-of-day files.

As the constituents of a Parent Index change over time, there may be periods where an eligible Child

Index is active or inactive, and is thereby added to or removed from end-of-day files. If a Child Index is

added on trading day (t), the Child Index level is set to a predefined value (e.g., 100.00 or 1000.00) on

trading day (t-1), and subsequently appears in end-of-day files on trading day (t). If a Child Index is

removed, the relevant Child Index no longer appears in the end-of-day files, but remains eligible for

inclusion in the future. The calculation and publication of Child Indices is an automated process,

dependent on whether the applicable attribute appears in the Parent Index; accordingly, S&P DJI does

not provide advance notice on the addition to or removal of Child Indices from end-of-day files.

Measuring the performance of an index requires a continuous and uninterrupted time series. Each

reactivation instance of a Child Index signifies a new time series, and any historical data prior to that

reactivation date should be treated as a separate time series.

Index Cessations

For information on index cessations, please refer to the S&P Dow Jones Indices Cessations Policy.

Calculations and Pricing Disruptions

Special Open Quotation (SOQ)

The special opening quotation (“SOQ”) is calculated using the same methodology as the underlying index

except that the price used for each index constituent is the open price at which the security first trades

upon the opening of the exchange on a given trading day.

For more information on SOQ calculation, please refer to S&P Dow Jones Indices’ Index Mathematics

Methodology.

Real-time Index Calculation

For certain indices, S&P DJI calculates intraday index calculations using real-time exchange traded

prices. S&P DJI does not calculate with each traded price, but rather, calculates on a pre-determined

fixed interval (e.g., every five seconds). At each fixed interval, the index calculates with the latest real-time

pricing for each underlying security included in the index. If a new price is not available since the last real-

time calculation, the calculation leverages the last available traded price provided by the exchange. In the

S&P Dow Jones Indices: Equity Indices Policies & Practices 51

absence of a real-time traded price for a given security, the calculation will leverage the prior days’

closing price adjusted for corporate actions.

S&P DJI also maintains price thresholds for real-time securities and indices to prevent unusually large

price movements or incorrect price adjustments to adversely impact index calculations.

• Security Level: If a security price breaches a threshold, the system generates an internal alert

and temporarily holds the last price prior to the breach. For index calculations, a held security is

included in the calculation, but the calculation uses the security’s last accepted price prior to the

breach. Once the held price is confirmed or falls back within the acceptable tolerance, the latest

real-time price for the security is used for index calculations.

• Index Level: If an index calculation breaches a threshold the system generates an internal alert

but continues calculating and disseminating the index level as an S&P analyst investigates and

responds to the alert accordingly.

S&P DJI seeks to minimize any disruptions to its index calculations. In the event there is a disruption in

intraday calculations, S&P DJI will not recalculate the impacted period.

End-of Day-Calculations (EOD)

S&P DJI leverages exchange provided prices for official end-of-day index calculations. For each

exchange, S&P DJI will use the relevant price (e.g. last trade, auction, VWAP, official close) as defined in

the S&P Dow Jones Indices' Global Equity Close Prices guide available on www.spindices.com. These

prices are validated by index analysts prior to distribution of official index levels and files. S&P DJI

performs secondary checks to determine if an exchange modifies the official price used by S&P DJI. In

situations when there is an amended price, S&P DJI generally recalculates and reposts all affected files.

Please refer to the Recalculation Policy section of this document for further information.

U.S. Securities. Official EOD calculations are based on each stock’s primary market closing price.

Prices used for the calculation of real-time index values are based on the “Consolidated Tape”. The

“Consolidated Tape” is an aggregation of trades for each security over all regional exchanges and trading

venues and includes the primary exchange. If there is a failure or interruption on one or more exchanges,

real-time calculations will continue as long as the “Consolidated Tape” is operational.

If an interruption is not resolved prior to the market close, official closing prices will be determined based

on SEC Rule 123C as outlined in the Unexpected Exchange Closures chapter.

A notice is published on S&P DJI’s Web site at www.spglobal.com/spdji/ indicating any changes to the

prices used in index calculations.

In extreme circumstances, S&P DJI may decide to delay index adjustments or not publish an index.

Indian Securities. Real-time calculations of the S&P BSE Indices are calculated by the BSE and use

prices obtained directly from the BSE. If the BSE suffers a failure or interruption, real-time calculations are

halted until the BSE confirms that trading and price dissemination has resumed. If the interruption is not

resolved before the market close and the BSE publishes a list of closing prices, those prices are used to

calculate the closing value of the indices. If no list is published, the last trade for each security before the

interruption is used to calculate the closing value of the index. If no trades were reported for a security,

the previous close adjusted for corporate actions is used for index calculation.

In extreme circumstances, S&P DJI may decide to delay index adjustments or not publish an index.

All Other Securities. Real-time calculations of equity indices incorporating securities other than Indian

securities use prices obtained from ICE or Refinitv. If the primary vendor used by S&P DJI experiences a

disruption or failure, S&P DJI will switch to the alternate vendor. Real-time calculated and published

values will be disrupted until the vendor switch is implemented. If an exchange suffers a failure or

interruption, real-time calculations for indices including relevant securities will be impacted until the issue

S&P Dow Jones Indices: Equity Indices Policies & Practices 52

is resolved. During such disruption events, S&P DJI will continue to calculate and publish index values

with the latest available prices. This may result in indices flat-lining (e.g., no change in value) in a

complete outage or partially updating in the event some constituent securities are not impacted by the

disruption. In extreme circumstances, S&P DJI may decide to delay index adjustments or not publish an

index.

Other Adjustments

In cases where there is no achievable market price for a stock being deleted, it can be removed at a zero

or minimal price at the Index Committee’s discretion, in recognition of the constraints faced by investors in

trading bankrupt or suspended stocks.

Expert Judgment

S&P DJI’s Index Committees may exercise Expert Judgment when the situation calls for the interpretation

of data in calculating and maintaining an S&P DJI Index. S&P DJI maintains internal records of the use of

Expert Judgment and the rationale for any such use. To the extent applicable to equity indices, Expert

Judgment refers to S&P DJI’s exercise of discretion with respect to its use of data in determining an index

in the following context: Expert Judgment includes extrapolating data from prior or related transactions,

adjusting data for factors that might influence the quality of data such as market events or impairment of a

buyer or seller’s credit quality, or weighing firm bids or offers greater than a particular concluded

transaction. Other areas of discretion, such as methodology changes, are not, for the purposes of this

document, considered Expert Judgment.

Discretion

S&P DJI’s Index Committees may apply discretion to make decisions that differ from the index

methodology in certain circumstances, including, to avoid unnecessary turnover, excessive index

changes or adjustments, possible market disruption, to enhance/allow for index replicability, or when strict

application of the index rules results in inconsistency with the intention of the index objective.

Data Hierarchy and Data Sources

Data Hierarchy. Data used for the indices governed by this methodology may include:

a) Completed transaction data are used in these indices in the vast majority of cases; and/or

b) For certain corporate actions, theoretical prices may be derived using the existing security price

and the specifics of the corporate action.

Data Sources. The primary source for pricing data is generally the exchange upon which the underlying

security is traded (either directly from the applicable exchange or via a third party data vendor).

Contact Information

For questions regarding an index, please contact: index[email protected].

S&P Dow Jones Indices: Equity Indices Policies & Practices 53

Appendix A – Definitions and Terms

Rights Offering Terms and Definitions

Rights Offering. An event in which existing shareholders are given the right to buy a specified number of

additional shares from a company, at a specified price (‘rights’ or ‘subscription’ price), within a specified

time (‘subscription period’). A rights issue is offered to all existing shareholders individually and may be

accepted in full, accepted in part or rejected. A right to a share is generally issued as a ratio to shares

held (e.g., 1:3 rights issue, meaning a right to buy one new share for every three shares owned).

Rights issues may be underwritten. The role of the underwriter is to guarantee that the company will raise

a minimum amount of capital. Typical terms of an underwriting require the underwriter to subscribe to any

shares offered to, but not taken up by, shareholders. Underwriters and sub-underwriters may be

governments, financial institutions, stockbrokers, major shareholders of the company, or any other party.

Open Offering. Open offers have been most commonly recognized in the UK. These are a type of UK

equity placing where existing shareholders are offered the opportunity to buy shares at a discounted rate

to the market price. This is almost always accompanied by an equity placing available to all investors.

Open offers are ‘non-renounceable’. Shareholders must either take up the offer or let them lapse. Once

the offer has expired, it no longer exists. The shareholders have an entitlement, rather than a tradable

right, to subscribe to new shares. For this reason, an open offer is sometimes referred to as an

entitlement issue. Any entitlement that is not taken up simply expires. Open offers are not transferable

(tradable) on the open market. As in the case of rights, open offer issues may or may not be underwritten.

Renounceable Rights Offering. The rights issued to an existing shareholder are transferable on the

open market, and are able to be sold separately from the share to other investors during the life of the

right. Renounceable rights are referred to as “transferable” in the U.S. or “tradable” in other markets. All

three of these terms – renounceable, transferable, and tradable – are used interchangeably throughout

this document.

Non-Renounceable Rights Offering. The rights issued as part of the offering cannot be traded.

Shareholders must either take up the rights or let them lapse upon expiration. Once the rights have

expired, they no longer exist. Also referred to as “non-transferable” or “non-tradable”.

Accelerated Rights/Entitlement Offering. This is most commonly used in Australia, but is also gaining

popularity in Singapore and the UK. This type of rights offering grants the issuer quick access to capital

markets without disadvantaging smaller investors. The institutional component of the offer is conducted

during a trading halt and the company generally resumes trading on an ex-rights/entitlement basis within

three to five trading days. Retail investors generally have two to three weeks to decide to take up the

offer. Also known as Jumbo’s, RAPIDS, and AREO’s.

Features (some or all of the following features may be present):

• The stock is suspended when the rights offering is announced.

• The offer made to institutional holders typically occurs before retail holders – institutional

investors are asked to subscribe on the same day vs. retail investors, who are given more time to

consider the issues (usually within two weeks of the original offering).

• The offer can be conducted on a renounceable or non-renounceable basis.

• A capital raising announcement may be combined with the offering.

S&P Dow Jones Indices: Equity Indices Policies & Practices 54

Pro-rata Accelerated Institutional, Tradable Retail Entitlement Offering. This type of entitlement

offering grants the issuer quick access to capital markets. It comprises an accelerated institutional

entitlement offer as well as a tradable retail entitlement offer. The institutional component of the offer is

conducted as an AREO (see above); retail investors have the option to sell their entitlement on the open

market, take up the offer or let their entitlement lapse. This is also known as a PAITREO.

Features (some or all of the following features may be present):

• The stock is suspended when the entitlement offering is announced.

• The offer made to institutional holders is conducted as an Accelerated Rights/Entitlement Offering

during the trading halt period. Any renounced right/entitlements are sold through a book building

process.

• The offer made to retail holders is conducted as a Renounceable Rights/Entitlement Offering

whereby the right/entitlements are tradable.

Poison Pill Rights. These are commonly seen in U.S. markets. This is a defensive strategy used by

companies faced with a hostile takeover. The target company issues rights to existing shareholders to

acquire a large number of common shares. These rights can be exercised if anyone acquires more than a

set amount of the target company's stock. This dilutes the percentage of the target owned by the bidder,

and makes it more expensive to acquire control of the target.

S&P DJI does not recognize poison pill rights.

In-the-Money. If the rights or open offer price represents a discount to the price of the stock following the

close of trading on the day before the ex-date, then the offer is said to be "in-the-money".

Out-of-the-Money. If the rights or open offer price is greater than or equal to the stock price on the day

before the ex-date, then the offer is said to be "out-of-the-money."

Terms

Ex-Date. The starting date where a security is traded without the previously declared dividend. After the

ex-date, a stock is said to trade ex-dividend.

Ex-Rights. The shares no longer have the rights offering attached to them.

Expiration Date. The end of the subscription period; the last day that the rights can be exercised. This is

also known as the “renunciation date” in some markets.

Record Date. The date that is used to determine the holders who are entitled to the offering.

Subscription Period. The period during which it is possible to exercise the right by paying the

subscription price. Also, renounceable rights are available for trading during the subscription period.

When the subscription period ends (on the “expiration date”), those rights not yet subscribed will expire at

zero value.

Subscription Price. Also known as the “offer price” or “rights price”. This is the price at which existing

shareholders can purchase the new shares.

Theoretical Ex-Rights Price (TERP). This is the theoretical price of a stock after a new rights issue.

This is also referred to as the “Adjusted Price” throughout this document.

S&P Dow Jones Indices: Equity Indices Policies & Practices 55

Terms Used Interchangeably across S&P DJI

S&P DJI strives to use standardized terms in all documents. However, due to local market terminologies,

analysts might come across different regions or groups using different terms to describe the same item.

Here is a list of commonly used terms and their synonyms:

COMMONLY USED TERM

INTERCHANGEABLE TERMS USED/MEANING OF THE TERM

Adjusted Price

TERP (Theoretical Ex-Rights Price); Ex-Rights Price, Theoretical

Open Price, Next Day Open Price

Dividend Disadvantage, Dividend

Difference

Future dividend amount that new shares are not entitled to

Expiration Date

Renunciation Date

Market Value of the Stock

Cum Price or Cum Rights Price. This is the closing price on the

day before the rights ex-date

Non-Renounceable

Non-Tradable, Non-Transferable, Open Offer (in the UK)

Price Adjustment Factor (PAF)

Dilution Factor

Renounceable

Tradable, Transferable

Rights Offering – broad term

used to describe all kinds of

rights (renounceable and non-

renounceable)

Entitlement Offer (used in Australia for non-renounceable rights);

Open Offer (used in UK for non-renounceable rights)

Subscription Price

Offer Price, Rights Price (please note that in Australian indices,

the price at which the additional rights line is added to the index

for renounceable rights is referred to as the “Rights Price”),

Application Money (in Australia)

Underwritten

Guaranteed (in North America)

Value of the Rights

Price Adjustment, Price Adjustment Amount, Implied Rights Value

Life Cycle of a Rights Offering

Ex-date-1: At the close of the market, registered shareholders are

entitled to participate in the rights offering

Ex-date: At the market open, the stock is trading ‘excluding’ the right. In

most markets, the subscription period usually begins on the rights ex-

date.

Subscription period: At any time in the subscription period, it is possible

to exercise the right by paying the subscription price. Also,

renounceable rights are available for trading during the subscription

period.

Expiration date: The end of the subscription period. If subscription

payments have not been made by this time, the right lapses.

Expiration date +1: Shareholders who have subscribed to the offering

are entitled to the new shares issued.

S&P Dow Jones Indices: Equity Indices Policies & Practices 56

Spin-Off. When a corporation divests a subsidiary or division to create a new, independent company.

The spun-off company takes assets, intellectual property, technology, and/or existing products from the

parent organization and forms its own private or publicly listed company. Shares of the new organization

are distributed to the equity shareholders of the parent organization, at a ratio established by the parent,

to keep or sell at their discretion. The new company formed by this divestiture is called the “spun-off”

entity. Spin-offs may also be referred to as “demergers”.

Zero Price Spin-Off. For index implementation, a spun-off entity is added to all indices of which the

parent is a constituent, at a zero price at the market close of the day before the ex-date. There is no

divisor change. All key attributes of the spun-off company are the same as the parent’s at the time of

addition.

Carve-out. This is also referred to as a “partial spin-off”. In the case of a carve-out, the parent company

sells a minority stake in a subsidiary to the public through an IPO.

Split-Off. In a split-off, the existing shareholders of the parent company must relinquish their shares in

the parent company to receive shares in the subsidiary. The key difference between a spin-off and a split-

off is that, in the case of the latter, the shareholders need to act – either opt in for the split-off and give up

their shares in the parent company to receive shares in the subsidiary, or do nothing and keep the shares

of the parent company. In a spin-off, existing shareholders in the parent company do not need to trade or

take any action (unless they choose to). They automatically receive shares in the subsidiary.

When-Issued Trading. When-issued trading is the trading of securities that takes place before the

securities are issued. When-issued markets, a short form of “when, as, and if issued”, are active in price

discovery for new securities. The term refers to a conditional security that is authorized for issuance, but

not yet actually issued. All “when issued” transactions occur on an “if and when” basis and are settled if

and when the actual security is issued.

Regular Way Trading. Trading after a security has been issued.

In-Specie. This term is Latin for “in its actual form” and is used often in spin-off related discussions. It

implies that the distribution of an asset will be in its actual form rather than in cash or other forms. In-

Specie distribution is made when cash is not readily available and allocating the physical asset is the

better alternative. A stock dividend is an example of an in-specie distribution.

Spin-off Ratio. This is the ratio of new shares in the spun-off entity to the existing shares in the parent

company. For instance, a 2:3 (or 2 per 3) spin-off ratio implies that existing shareholders will receive two

shares in the spun-off entity for every three shares they hold of the parent company. Also referred to as

the “Distribution Ratio”.

Distribution Date. In the context of a spin-off, this is the date on which the spun-off entity shares are

distributed. This is sometimes referred to as the “payable date”.

Ex-Distribution Date. The date on which the parent security is first traded without the right to receive the

distribution. Shareholders who own the parent security prior to the ex-date will receive shares in the spun-

off entity. Investors who purchase the parent stock on or after the ex-date will not receive shares in the

spun-off entity. In most, but not all, cases the ex-distribution date will be the day after the payable date.

Record Date. The date that is used to determine the holders who are entitled to a distribution or offering.

Settlement Date. The date that the securities must be delivered and paid for to complete a transaction.

Acquisition. An acquisition is an event in which a company buys most, if not all, of the target company in

order to assume control. The acquisition could be done via a cash offer, stock swap or a combination of

both. For the purposes of S&P DJI’s branded indices, an acquisition will result in the deletion of the target

company, as well as a possible share issuance and IWF change to the acquirer, if the purchase was

funded with acquirer shares.

S&P Dow Jones Indices: Equity Indices Policies & Practices 57

At-the-market Offerings. This is a registered offering of securities by a publicly traded issuer

periodically over time at the prevailing market price. This is done through a placement agent or

designated broker-dealer. The issuer has control over when the securities are sold, the amount sold, and

the minimum price at which they may be sold. The issuer may stop the offering at any time. The broker-

dealer is paid a commission on the securities sold.

Bankruptcy. A legally declared inability or impairment of ability of an individual or organization to pay

their creditors. Bankrupt companies will typically be delisted by the exchange on which their shares are

traded.

Book building. This is a price-discovery process wherein an underwriter accepts and records investor

demand for shares and the price they are willing to pay. This information is, then, used by the underwriter

to determine an issue price when the book building is closed.

Bought Deal Equity Offering. A new share issuance by a company which is taken up in its entirety,

usually by a few underwriters, to be resold later to investors. Shares are offered to underwriters at a

discounted price and payment is made up front.

Cash Offer. Shareholders of the target company are offered cash by the acquirer for the stocks they own

in the target company.

Foreign Ownership Limit (FOL). The statutory limit restricting foreign ownership in a given company.

Delisting. This refers to the removal of a listed security from the exchange on which it trades. The

security is removed from the exchange because the company is not in compliance with the listing

requirements of the exchange. Delisting could be a voluntary action taken by the company or involuntary.

This typically occurs when a company has become private after a merger/acquisition, declares

bankruptcy, or no longer satisfies the listing rules of the stock exchange.

Dutch Auction. This is also referred to as the “descending price auction” or “clock auction”. The bidding

process starts with a high asking price which is then lowered until a participant accepts the auctioneer’s

price or a pre-determined minimum acceptable price set by the seller. In the U.S., Treasury Bills (T-Bills)

are sold through this process. The Treasury accepts higher bids first and continues to accept

progressively lower bids until an issue is completely sold. IPOs may also be sold through Dutch Auction.

Exchange offers. An exchange offer takes place when a company exchanges its securities for a

different series that it has issued or for securities of another company (as seen with split-offs). This should

not be confused with the conversion of preferred stocks or bonds to common stock.

FDIC Receivership. In the U.S., this is the process by which the Federal Deposit Insurance Corporation

takes over the operations of a failed banking institution and arranges for the liquidation of its assets.

Float-Adjusted Shares. Total number of shares held by the public and available for trading. These are

the shares outstanding adjusted for any restricted shares or strategic holdings.

Initial Public Offering (IPO). A privately held company or unit selling stock to the public for the first time.

IWF. The percentage of shares outstanding that is readily available to investors for a given company.

Investors who own shares with the intention of maintaining control are said to be investors of a “strategic”

nature and are not included in the IWF calculation.

Merger. A merger is the combination of two (or more) companies into one larger company, involving a

stock swap and/or cash payment to the shareholders of the target company. If both companies are in an

S&P Dow Jones’ index, one company, identified as the “target company”, is deleted from the index, and

the acquirer or surviving company may see a share, IWF and name change, depending on the terms of

the deal.

S&P Dow Jones Indices: Equity Indices Policies & Practices 58

Multiple Share Classes. Companies might choose to issue multiple classes of common stock, such as

Class A and Class B shares. For example, Berkshire Hathaway Inc. has two classes of common stock

designated Class A and Class B. Generally, one class of shares will have more voting rights and/or

conversion privileges compared to the other. These shares can be listed or unlisted and priced

separately.

For Chinese companies, multiple share classes may include:

• A-Shares. These are shares in companies incorporated in mainland China. A-shares are issued

in China, governed by Chinese law, trade in the local currency, and are listed on the local

Shanghai or Shenzhen Stock Exchanges. Only Chinese nationals and select Qualified Foreign

Institutional Investors (QFII) are allowed to trade A-shares.

• B-Shares. These are local shares issued by companies in mainland China, quoted in Hong Kong

dollars (on the Shenzhen exchange) and U.S. dollars (on the Shanghai exchange), and available

to foreigners and certain classes of domestic investors.

• H-Shares. These trade in Hong Kong in Hong Kong dollars. The companies are registered in

mainland China.

• N-Shares. These are shares of Chinese companies listed in the U.S. (as ADRs). These trade in

U.S. dollars and follow the GAAP accounting system. Similarly, L-Shares, J-Shares and S-hares

are Chinese companies listed on the London Stock Exchange, Tokyo Stock Exchange, and

Singapore Exchange, respectively.

Private Placement. This involves direct placement of new shares to a select group of investors. Private

placement of shares does not have to be registered with the Securities and Exchange Commission (in the

U.S.) and is done without any underwriters being involved.

Prospectus Offering. A means by which companies raise capital by selling shares to underwriters at a

pre-determined price. The underwriters act on a “best efforts” basis and assume no risk if the stock

cannot be sold. A prospectus offering will list the number of shares, selling price, commission rate,

optional overallotment (also called a “greenshoe”), and a closing date.

Recapitalization. A change in the company’s capital structure which often involves altering the asset

allocation between equity and debt.

Restricted Shares. These are shares acquired in unregistered, private sales from the issuer to the

investors. Investors generally receive these shares through private placement offerings, as consideration

in mergers, and employee incentive or compensation plans. A holding period is associated with these

shares. In the U.S., the sale of restricted shares requires a filing with the SEC (Securities and Exchange

Commission) in most cases. These shares are also referred to as “Unregistered Shares”.

Reverse Takeover. This is the acquisition of a publicly traded company by a privately held company. A

private company might choose to go public using this route over an IPO, to bypass the complex process

involved with an initial public offering.

Scrip Offer. This term is commonly used in some markets to refer to an all-stock takeover offer. The

acquirer offers its shares to the target company shareholders as the consideration instead of cash.

Public Offering. This is the issuance of shares to the public following an initial public offering. Public

offerings can take one of the following forms: (a) the company can issue new shares to the public,

thereby increasing the shares outstanding of the issuing company and diluting the ownership of existing

shareholders; or (b) existing shareholders might sell a portion of their holdings and reduce their stake in

the company. The latter does not increase the shares outstanding as no “new” shares are issued.

Underwriters are usually involved in the process of placing these existing shares to the public.

Share Placement. The issuance of new shares for sale to the public. The term is used interchangeably

with “secondary offering” in many markets.

S&P Dow Jones Indices: Equity Indices Policies & Practices 59

Share Repurchase/Buyback. Companies buy a portion of their outstanding shares to reduce the

number of shares on the market. These repurchased shares could either be retired by the company or

retained as treasury stock to be reissued at a later date. S&P DJI does not make any price adjustments

for offers at a premium.

Shares Outstanding. This is the total number of shares issued by a company that is currently held by

investors. Shares that have been repurchased by the company are not considered outstanding.

Tender Offers. These are offers made by a prospective acquirer to purchase shares of a company,

usually at a premium to the market price. Cash or other securities may be offered to the target company’s

shareholders. Tender offers might be friendly or hostile. A friendly offer occurs when the bidder informs

the company’s board of directors of its intent; and if the board approves, they recommend the

shareholders accept the offer. A hostile offer occurs when the target company’s management is either not

informed in advance or unwilling to accept the offer, yet the bidder continues to pursue it.

The term “partial tender offer” refers to an invitation for tenders for less than all of the outstanding shares

of the target company. This is done by specifying a maximum number of shares that will be accepted.

Tracking Stock. This is a type of common stock that tracks the financial performance of a specific

business or operating unit, instead of the company as a whole. Tracking stocks trade as separate

securities. A tracking stock typically has limited or no voting rights. Companies with diversified operations

might choose to issue tracking stocks in addition to their traditional common stock. Also known as

“targeted” stock.

Treasury Stock. These are shares issued by a company that have been reacquired by the issuing

company. These are held by the company and can be reissued at any point of time in the future. These

shares do not pay dividends and have no voting rights. In general, Treasury stock is not included in the

shares outstanding calculations. However, certain regions do include treasury shares.

S&P Dow Jones Indices: Equity Indices Policies & Practices 60

Appendix B – Methodology Changes

Methodology changes since January 1, 2015, are as follows:

Effective Date

Methodology

Change

(After Close)

Updated

The indices

calculate in

Canadian and U.S.

dollars.

09/20/2024

All non-mandatory events not covered by

the accelerated implementation rule

(including but not limited to private

placements, acquisition of private

companies, and conversion of non-index

share lines) will be implemented quarterly

coinciding with the third Friday of the third

month in each calendar quarter.

In addition, events that were not

implemented under the accelerated

implementation rule but were found to have

been eligible, (e.g., due to lack of publicly

available information at the time of the

event) are implemented as part of a

quarterly rebalancing.

IWF changes will only be made at the

quarterly review if the change represents at

least 5% of total current shares outstanding

and is related to a single corporate action

that did not qualify for the accelerated

implementation rule, regardless of whether

there is an associated share change.

Quarterly share change events resulting

from the conversion of derivative securities,

acquisitions of private companies, or

acquisitions of non-index companies that

do not trade on a major exchange are

considered to be available to investors

unless there is explicit information stating

that the new owner is a strategic holder.

All non-mandatory events not covered or

implemented via the accelerated

implementation rule (including but not

limited to private placements, acquisition of

private companies, and conversion of non-

index share lines) are reviewed quarterly,

effective after the close of the third Friday

of the third month in each calendar quarter

and as per below.

Share Updates. At each quarterly

review, shares outstanding are updated

to the latest available information as of

the rebalancing reference date.

IWF Updates. At the quarterly review,

IWF changes are only made if there is a

share change of at least 5% of total

current shares outstanding and if the

adjusted IWF absolute change is at least

5%, with IWF adjustments limited to the

extent necessary to help reflect the

corresponding share change.

For quarterly share change events, unless

there is explicit information stating that the

new shares are not available to the market,

shares are generally considered to be

available to all investors and reflected in

the IWF. Events such as conversion of

derivative securities, acquisitions of private

companies, or acquisitions of non-index

companies that do not trade on a major

exchange are generally implemented as

described above.

Rebalancing

Guidelines –

Share/IWF

Reference Date &

Freeze Period

09/20/2024

During the share/IWF freeze period shares

and IWFs are not changed, and the

accelerated implementation rule is

suspended, except for mandatory corporate

action events (such as merger activity,

stock splits, and rights offerings). The

suspension includes all changes that

qualify for accelerated implementation and

would typically be announced or effective

during the share/IWF freeze period. At the

end of the freeze period all suspended

changes will be announced on the third

Friday of the rebalancing month and

implemented five business days after the

quarterly rebalancing effective date.

During the share/IWF freeze period, shares

and IWFs are not changed and the

accelerated implementation rule is

suspended, except for mandatory corporate

action events (such as merger activity, stock

splits, and rights offerings). The suspension

includes all changes that qualify for

accelerated implementation and would

typically be announced or effective during the

share/IWF freeze period. At the end of the

freeze period, all suspended changes will be

announced on the third Friday of the

rebalancing month and implemented five

business days after the quarterly rebalancing

effective date. For these non-mandatory

events, S&P DJI uses shares and IWF data

as of the upcoming rebalancing effective

date to calculate the size of the event and

in turn assess if the event qualifies the

Accelerated Implementation rule.

Real-Time Index

Calculations:

Index Level Auto-

Hold

11/17/2023

Index Level: If a security price breaches a

threshold, the system generates an internal

alert, but continues calculating and

disseminating the index level as an S&P

analyst investigates and responds to the alert

accordingly. In the event an index calculation

breaches a threshold, the system will

generate alerts and temporarily hold the last

Index Level: If an index calculation

breaches a threshold the system generates

an internal alert but continues calculating and

disseminating the index level as an S&P

analyst investigates and responds to the alert

accordingly.

S&P Dow Jones Indices: Equity Indices Policies & Practices 61

Effective Date

Methodology

Change

(After Close)

Updated

index value prior to the breach. While the

index is held, the last held index value will be

distributed as defined by the set

dissemination frequency. Once the held index

value is confirmed or falls back within the

acceptable tolerance, index calculations will

resume with the latest market data.

Mergers &

Acquisitions:

Event Finalizations

& Target Deletion

05/30/2023

An M&A target company is generally dropped

from all indices on or around its expected

delisting date. In certain instances, the target

company may be dropped before its delisting

date once an offer to acquire the security has

been deemed unconditional.

Event Finalization. S&P DJI’s branded

indices generally implement (“finalize”) M&A

driven changes according to the below, with

any action taken based on the publicly

available information related to the event:

• at least one (1) business days’ notice for

all non-Depository Receipts (DR) U.S.

listed stocks.

• at least two (2) business days’ notice for

all non-U.S. listed stocks, U.S. listed DRs,

and inter-listed stocks.

For mergers involving shareholder elections,

S&P DJI generally recognizes the event

based on the default election terms. In certain

cases, and with the defined advance notice to

clients, S&P DJI may decide to recognize an

event using alternative election terms.

Any share issuance for the acquirer is

implemented to coincide with the drop event

for the target. To minimize turnover, there is

no minimum threshold requirement for

implementation of an M&A driven share/IWF

change.

S&P DJI may, in certain cases, exercise

discretion to accumulate and implement de

minimis M&A share changes with the

quarterly share rebalancing. M&A share/IWF

changes for an index company acquiring a

privately held company, or a company not

part of any S&P DJI-maintained indices, are

implemented at the next quarterly

rebalancing.

Target Deletion. S&P DJI generally

removes an M&A target company from all

indices on or around the expected delisting,

or last trading, date. In certain scenarios a

target company may be removed before its

delisting date, according to the below:

• The M&A event is deemed unconditional,

i.e., all required approvals are received

and all conditions for the acquisition to

complete are met.

• For Tender offers:

o All conditions are met, and there is an

announced settlement date.

o The remaining free float is less than

15% (except where pre-event free

float is less than 15%) as based on

publicly available information, even if

the tender offer is still open.

Where these conditions are met, the deletion

is generally effective prior to the open of the

business day following the last day of the

tender period, subject to the notice periods

specified above.

Any stock removed from an index due to the

above rule is ineligible for re-inclusion in any

S&P DJI branded index for at least 12

months following the stock’s removal date,

S&P Dow Jones Indices: Equity Indices Policies & Practices 62

Effective Date

Methodology

Change

(After Close)

Updated

even if the stock continues to trade on an

eligible exchange.

Deletion Price. Generally, S&P DJI

implements deletions using the security’s

closing price on the deletion date. If the

primary exchange suspends or halts an M&A

target security prior to S&P DJI’s announced

effective deletion date, the removal is

implemented as follows:

• Cash Consideration Events: S&P DJI

removes the security at the market close

price or the deal price, whichever is lower.

• Stock Consideration Events: S&P DJI

synthetically derives a price for the

suspended security using the deal ratio

terms, provided the acquirer is issuing

stock as part of the merger. The

synthetically derived price is used in index

calculations until S&P DJI’s deletion date.

If any other pricing mechanism is used, the

final decision regarding the pricing method is

at the discretion of S&P DJI and is

announced to clients with sufficient notice.

Mergers &

Acquisitions:

Target Security

Float Change

05/30/2023

Target Security Float Change. For events

where conditions for the removal of a security

are not met, or where the intention is a partial

acquisition, S&P DJI may decide to update

the IWF of the target security with at least two

(2) business days’ notice. Such a decision is

based on publicly available information in the

following circumstances:

1. The Offer Period is over, and the

Acquiring company does not announce

an extension or re-opening. The

following conditions must be met:

a. All required approvals have been

received and conditions for the offer

are met.

b. Public information is available to

calculate the new IWF.

c. Settlement date of the tendered

shares is known.

d. Size of the change is at least 5%

and US$ 150 million or US$ 1 billion.

2. The Offer Period is extended, or an

additional offer period is

opened/announced, and the following

conditions are met:

a. All required approvals have been

received and conditions for the offer

are met.

b. Public information is available to

calculate the new IWF.

c. Settlement date of the tendered

shares is known.

d. Size of the change is at least US$ 1

billion or IWF changes by at least

15%.

If an IWF change does not meet any of the

above conditions, the IWF updates at the

subsequent quarterly rebalancing, subject to

all required information being publicly

available. If the stock is suspended, the event

is recognized once trading resumes and

follows the above process.

S&P Dow Jones Indices: Equity Indices Policies & Practices 63

Effective Date

Methodology

Change

(After Close)

Updated

Short-Term

Suspensions

12/08/2022

If it is known in advance that the stock will be

suspended from trading, corporate actions

(even if quoted ex by the exchange) are not

recognized until trading resumes. However, if

prior information is not available for a stock

being suspended and if a corporate action

has been recognized for that day, the market

driven actions will be implemented for the ex-

date and the adjusted prices carried until

trading resumes. Index committee discretion

can be used when determining whether or

when to implement a corporate action for a

suspended stock.

Corporate Actions. If it is known in advance

that the stock will be suspended from trading,

corporate actions (even if quoted ex by the

exchange) are not recognized until trading

resumes. However, if prior information is not

available for a stock being suspended and if

a corporate action has been recognized for

that day, the market driven actions will be

implemented for the ex-date and the adjusted

prices carried until trading resumes. Index

committee discretion can be used when

determining whether or when to implement a

corporate action for a suspended stock.

Rebalancing Share/IWF Changes. For

stocks suspended for less than 60

consecutive business days as of the

suspension review evaluation date, with no

information regarding the date when the

stock will resume trading or information that

stock will resume after the rebalancing

effective date, no share or IWF changes will

be applied at the rebalancing.

If a stock suspends after the suspension

review evaluation date, but prior to the

rebalancing and with no information

regarding the date when the stock will

resume trading or information that stock will

resume after the rebalancing effective date,

any previously announced share or IWF

changes will generally be cancelled.

Any rebalancing share or IWF changes

cancelled as a result of stock suspension will

not be reinstated even if the stock resumes

trading prior to the rebalancing.

All such changes will be reviewed for

implementation at the subsequent

rebalancing, subject to eligibility. Please refer

to the Non-Mandatory Share and Investable

Weight Factor (IWF) Updates section for

further details.

Suspended stocks are generally not added to

indices at a rebalancing, even if otherwise

eligible. Current index constituents are

generally not deleted at a rebalancing solely

for the reason of being suspended (unless

meeting the criteria for removal under long-

term suspension).

Quarterly

rebalancing

announcement

schedule

09/03/2021

Pro-forma files are announced after the

market close on the second Friday of March,

June, and December. In September, all FMC

weighted indices are generally announced

after the market close on the first Friday and

capped/alternatively weighted indices are

generally announced after the market close

on the second Friday.

Pro-forma files for float-adjusted market

capitalization indices are generally released

after the market close on the first Friday, two

weeks prior to the rebalancing effective date.

Pro-forma files for capped and alternatively

weighted indices are generally released after

the market close on the second Friday, one

week prior to the rebalancing effective date.

Quarterly

Outstanding and

IWF Reference

Dates

08/13/2021

A reference date, after the market close on

the Tuesday prior to the second Friday in

March, June, September, and December.

A reference date, after the market close five

weeks prior to the third Friday in March, June,

September, and December, is the cutoff for

publicly available information used for

quarterly shares outstanding and IWF

changes.

Accelerated

Implementation of

Non-Mandatory

Share and

Investable Weight

06/30/2021

S&P DJI will provide two (2) business days’

notice for all non-U.S. listed stocks, and one

(1) business days’ notice for all U.S. listed

stocks.

S&P DJI will provide two (2) business days’

notice for all non-U.S. listed stocks, U.S.

listed DRs, and interlisted stocks

, and one

(1) business days’ notice for all non-DR U.S.

listed stocks.

Includes interlisted stocks where the designated listing trades on a non-U.S. exchange. For interlisted stocks where the designated

listing trades on a U.S. exchange, S&P DJI will provide one business days’ notice.

S&P Dow Jones Indices: Equity Indices Policies & Practices 64

Effective Date

Methodology

Change

(After Close)

Updated

Factor (IWF)

Updates

For U.S. listed stocks, accelerated

implementation events with a size of at least

US$ 1 billion are announced intraday once

the details are confirmed by S&P DJI, in

order to provide additional notification.

For non-DR U.S. listed stocks, accelerated

implementation events with a size of at least

US$ 1 billion are announced intraday once

the details are confirmed by S&P DJI, in order

to provide additional notification.

Sanctions

02/22/2021

Some sanctions programs are

comprehensive in nature, and block the

government or include broad-based trade

restrictions, while others selectively target

specific individuals and entities. Because

sanctions can be either comprehensive or

selective, S&P DJI reviews sanctions on a

case-by-case basis. Depending on the

circumstance, countries or specific securities

may be impacted by sanctions. Generally,

S&P DJI will treat sanctions using the

perspective of a U.S. and/or European Union

(EU) based investor. Specific securities

impacted by sanctions may result in deletion

from indices if the impacted security is a

current index constituent, blocking the

addition of a non-constituent security to an

index or freezing the current

shares/IWF/GICS of a security for the

duration of the sanctions. In all cases, S&P

DJI’s treatment is announced to clients when

new sanctions are imposed or removed with

index implications.

Some sanctions programs are

comprehensive in nature and include broad-

based trade restrictions, while others

selectively target specific individuals and

entities. As sanctions can be either

comprehensive or selective, S&P DJI reviews

sanctions on a case-by-case basis.

Depending on the circumstance, entire

countries, or specific securities, may be

impacted by sanctions.

Generally, S&P DJI will consider sanctions

using the perspective of a U.S., U.K., and/or

European Union (EU) based investor for

standard, global indices. Subject to Index

Committee determination, specific securities

impacted by sanctions may:

• Have their current shares/IWF/GICS

frozen for the duration of the sanctions

• Be deleted from indices; and/or

• Become ineligible for addition to indices.

In all cases, S&P DJI’s specific treatment is

announced to clients when new sanctions are

imposed or removed with index implications.

Subject to S&P DJI’s compliance with

applicable law, S&P DJI may also elect to

publish indices whose objective is to measure

the performance of securities from the

perspective of certain non U.S./U.K./EU

investor groups that may not be impacted by

the sanctions described above. Such indices

may contain securities subject to sanctions

from a U.S./U.K./EU perspective and are

therefore ineligible for S&P DJI’s global

indices. In any such case, the relevant index

methodology will explicitly define the

treatment. Please note the use and licensing

of such indices may be restricted to ensure

S&P DJI’s compliance with applicable law.

Please note that users of S&P DJI’s indices

are solely responsible for ensuring such

users’ compliance with all applicable law

(including, without limitation, sanctions laws

and any other rules, regulations, or

prohibitions) in connection with such use

(including, without limitation, trading,

investment, or other use).

Monthly Dividend

Review for

Ongoing Eligibility

in Dividend

Focused Indices

01/19/2021

S&P DJI’s constituents are reviewed on a

monthly basis for ongoing eligibility.

Unless stated otherwise in the relevant index

methodology, S&P DJI will use one of the

following approaches when conducting the

monthly review to determine whether an

index constituent will remain in a dividend

index following an announcement concerning

the company’s dividend program.

Approach A: Generally applied to dividend-

themed indices whose main objective is to

measure the performance of companies that

have maintained or increased dividends

every year for a specified number of years.

S&P Dow Jones Indices: Equity Indices Policies & Practices 65

Effective Date

Methodology

Change

(After Close)

Updated

Approach B: Generally applied to dividend-

themed indices whose main objective is to

measure the performance of dividend-paying

companies and whose selection rules and

weighting is often yield-focused.

Approach C: Generally applied to indices

with multiple objectives, one of which is to

measure the performance of dividend-paying

companies.

At the discretion of S&P DJI, an index

constituent may be removed effective prior to

the open of the first business day of the

following month, if:

Approach A:

• A scheduled dividend payment is omitted,

• A company announces that it will cease

paying dividends for an undetermined

period

• A company announces a reduced

dividend amount and S&P DJI determines

that it will no longer qualify for the index at

the subsequent reconstitution as a result.

Approach B:

• A company announces that it will cease

paying dividends for an undetermined

period

• A company announces a reduced

dividend amount and S&P DJI determines

that it will no longer qualify for the index at

the subsequent reconstitution as a result.

Approach C:

• A scheduled dividend payment is omitted

• A company announces that it will cease

paying dividends for an undetermined

period.

The determination of ongoing eligibility and

qualifying for the index at the subsequent

reconstitution is at the discretion of the Index

Committee.

Where a company postpones or defers a

scheduled dividend payment, but does not

cancel it, S&P DJI will generally take no

action until the company makes a further

announcement, or the index undergoes a

rebalancing, whichever occurs sooner.

For Approach B, companies that omit a single

scheduled dividend payment will have their

revised (reduced) total annual dividend

amount reviewed for continuing eligibility. In

the case of companies that typically pay a

single dividend annually, omission may result

in a zero dividend being recorded in the

reference period for the subsequent

rebalancing.

The review of ongoing eligibility is conducted

based on information publicly announced by

the company up to and including the 21st of

S&P Dow Jones Indices: Equity Indices Policies & Practices 66

Effective Date

Methodology

Change

(After Close)

Updated

the month (in February, this date will be the

18th). Any index changes are effective prior

to the open of the first business day of the

following month and will be announced with

five business days' notice.

Treatment of

Korean Interim

Dividends

12/04/2020

For companies that do not provide estimates

but have a historical pattern of paying

dividends with a record date at fiscal year-

end, the estimate is calculated as the

previous year’s dividend amount adjusted for

any split/bonus issues.

For companies that do not provide estimates

but have a historical pattern of paying interim

dividends or dividends with a record date at

fiscal year-end, the estimate is calculated as

the previous year’s dividend amount in the

same period adjusted for any split/bonus

issues.

Timing of Certain

Non-Mandatory

Events

03/27/20

Confirmed share changes that are at least

5% of the total shares outstanding are

implemented weekly. Total shares

outstanding (not float-adjusted shares) are

used to determine whether the share change

meets this 5% threshold. The 5% rule applies

to share changes only. IWF changes are only

considered if a share change meets the 5%

threshold.

Share changes are applied weekly and are

announced after the market close on Fridays

for implementation after the close of trading

the following Friday (i.e., one week later).

Material share/IWF changes resulting from

non-mandatory actions follow the accelerated

implementation rule with sufficient advance

notification, and share/IWF changes deemed

non-material are implemented quarterly.

During the share/IWF freeze period, shares

and IWFs are not changed except for

mandatory corporate action events (such as

merger activity, stock splits, and rights

offerings), and the accelerated

implementation rule is suspended. The

suspension includes all changes that qualify

for accelerated implementation and would

typically be announced or effective during the

share/IWF freeze period. At the end of the

freeze period all suspended changes will be

announced on the third Friday of the

rebalancing month, and implemented five

business days after the quarterly rebalancing

effective date.

Treatment of

Canadian

Dividends

03/15/2019

S&P/TSX Canadian Indices have a minimum

4% of price threshold to recognize a dividend

as special; For example, if the dividend is

over 4% of the price of the stock, it is deemed

to be a return of capital and the price of the

underlying security is reduced by the dividend

amount prior to the ex-date.

S&P DJI will generally consider the third

consecutive instance of a non-ordinary

dividend (in terms of timing, not amount) to

be ordinary for index purposes as this third

consecutive payment will generally be

considered to be part of the normal payment

pattern established by the company.

Treatment of

Korean Dividends

12/21/2018

The majority of dividends in Korea are not

announced prior to their ex-date. S&P DJI

recognizes these dividends after they have

been confirmed by the company

If an estimated dividend is provided, the

estimated dividend is reinvested into the

index on the ex-date. For companies that do

not provide estimates but have a historical

pattern of paying dividends with a record date

at fiscal year-end, the estimate is calculated

as the previous year’s dividend amount

adjusted for any split/bonus issues. If no

dividend was paid in the same period of the

prior year and an estimated dividend is not

available, no dividend amount is reinvested

on the ex-date.

Once the company announces the actual

dividend amount, S&P DJI reinvests the

difference between the estimated and

confirmed dividend amount using the Post

Ex-Date Dividend calculation methodology.

A negative dividend adjustment will be

applied if the estimated dividend has not

been confirmed by the company six months

after the ex-date.

Treatment of

Renounceable

Rights Offers for

Australian Stocks

08/24/2018

Adjust the stock price on the ex-date. Add the

rights class to the index with a share count

based on the offer ratio at the Theoretical Ex-

Rights Price (TERP) minus the Subscription

Price. When the rights class converts to fully

paid ordinary shares, drop the rights class

and increase the shares of the stock at the

last traded price.

Aligned with the standard global treatment of

a simultaneous price adjustment and share

change applying the rights ratio and terms

effective on the ex-date of the offer.

Special Dividends

for Australian

Stocks

08/24/2018

If a company announces that a dividend

being paid is a special dividend, it is treated

as a special dividend. Where a company

S&P DJI will generally consider the third

consecutive instance of a non-ordinary

dividend (in terms of timing, not amount) to

S&P Dow Jones Indices: Equity Indices Policies & Practices 67

Effective Date

Methodology

Change

(After Close)

Updated

does NOT announce it as a special dividend,

but the ASX or vendors do, the treatment will

still match that announced by the company.

be ordinary for index purposes as this third

consecutive payment will generally be

considered to be part of the normal payment

pattern established by the company.

Dividend

Elimination,

Suspension,

Reduction, or

Omission

07/31/2018

If S&P DJI determines that an index

constituent has eliminated or suspended its

dividend, omitted a payment or reduced its

calendar year dividend amount such that it

will no longer qualify for the index at the

subsequent reconstitution, it will be removed

from the index effective prior to the open of

trading on the first business day of the

following month.

Weekly share

change

announcement

04/30/2018

There is no weekly share change

announcement on the second Friday of a

rebalancing month.

There is no weekly share change

announcement on the first and second

Fridays of a rebalancing month.

Merger related IWF

change

01/19/2018

A merger related IWF change resulting in an

IWF of 0.96 or greater is rounded up to 1.00

on the merger effective date.

A merger related IWF change that results in

an IWF of 0.96 or greater is rounded up to

1.00 at the next annual IWF review.

Tendered share

lines

01/19/2018

S&P DJI did not switch to tendered share

lines in some markets when certain

conditions were met.

In certain markets, tendered shares may be

replaced with a tradable tendered share class

on the same stock exchange. S&P DJI will

consider replacing the common share line

with the tendered share class in indices once

a minimum acceptance ratio of 75% has

been reached and subject to the

announcement of a further acceptance

period.

Designated Listing

01/19/2018

For companies with multiple share classes of

equity stock, S&P DJI determines the share

class having both the highest one-year

trading liquidity (as defined by Median Daily

Value Traded) and largest float adjusted

market capitalization as the Designated

Listing. All other share classes are referred to

as Secondary Listings for index purposes.

Share Updates –

S&P/TSX Canadian

Indices

12/15/2017

Share updates are made at the first practical

date when the relative weight impact is

estimated to be at least 0.05% on the

S&P/TSX Composite. At the Quarterly

Review, there is a complete share update for

the index (in March, June, September, and

December). This update includes all

cumulative changes to shares outstanding,

during the quarter, that have affected the

capitalization of Index Securities by less than

a relative index weight of 0.05%.

Shares outstanding are updated on a weekly

basis if the changes are 5% or more of the

total share count. Share changes are

announced on Fridays for implementation

after the close of trading the following Friday.

If a change in shares outstanding of at least

5% causes a company’s IWF to change by at

least 5%, the IWF is updated at the same

time as the share change. Changes of less

than 5% of the total shares are accumulated

and made quarterly on the third Friday of

March, June, September, and December.

Bankruptcies –

Pricing for U.S.

listed securities

07/31/2017

If the security is trading on its primary

exchange at the close of the day it is

removed, that price is used. If the security is

halted on or delisted from its primary

exchange, a price of zero is used.

If a U.S. listed stock moves from its primary

exchange to the OTC market prior to it index

deletion date, OTC prices (including Special

Opening Quotations if applicable) are used to

price the stock for index purposes from the

time of the exchange move until its index

delisting date regardless of the reason for the

exchange move (including bankruptcies,

voluntary delistings and non-compliance

issues). If a stock moves to OTC, but does

not trade on OTC prior to its index deletion

date, the stock is removed at a zero price.

Market Disruption –

U.S. exchange has

an unexpected

closure

03/21/2017

In the event of an unexpected single

exchange closure (U.S. Securities):

(i) In the event a single U.S. exchange has an

unexpected closure, events will not be

moved. Corporate actions, including adds

and drops to the index and share/IWF

updates remain unchanged. The transaction

will be implemented using prices determined

by the exchanges based on SEC Rule 123C

hierarchy.

For U.S. Markets: In the event of an

unexpected exchange closure where at least

one other exchange is operating normally:

(i) If the impacted exchange has an

unexpected closure prior to 3:00 PM ET

and is not expected to reopen before

3:00 PM ET, events will not be moved.

Corporate actions, including adds and

drops to the index and share/IWF events

remain unchanged. All index changes

will be implemented using prices

determined by the exchanges based on

SEC Rule 123C.

S&P Dow Jones Indices: Equity Indices Policies & Practices 68

Effective Date

Methodology

Change

(After Close)

Updated

(ii) In the event at least one exchange has

an unexpected closure after 3:00 PM ET,

all adds and drops to an index, and

share/IWF changes scheduled to be

implemented at the close on that day will

be moved to the close of the next trading

date. This includes actions involving

stocks whose primary exchange is

unaffected by the outage. Closing prices

are determined by the exchanges based

on SEC Rule 123C.

Market Disruption –

Rebalancing: U.S.

03/21/2017

If an exchange is fully or partially closed on

the day prior to an index rebalancing effective

date, S&P DJI will generally shift corporate

actions, including adds, drops, and

share/IWF changes.

For U.S. markets: If at least one exchange

has an unexpected closure after 3:00 PM ET,

all adds and drops to an index, and

share/IWF changes scheduled to be

implemented at the close on that day will be

moved to the close of the next trading date.

This includes actions involving stocks whose

primary exchange is unaffected by the

outage. Closing prices are determined by the

exchanges based on SEC Rule 123C.

Market Disruption –

Rebalancing: Non-

U.S.

03/21/2017

If an exchange is fully or partially closed on

the day prior to an index rebalancing effective

date, S&P DJI will generally shift corporate

actions, including adds, drops, and

share/IWF changes.

If an exchange is fully closed or has an

unexpected early market closure and closing

prices are not available on the day prior to an

index rebalancing effective date, S&P DJI will

generally shift corporate actions, including

adds, drops, and share/IWF changes.

Market Disruption –

calculation of the

Special Open

Quotation (SOQ):

U.S.

03/21/2017

U.S. Securities. Prices used for the

calculation of the Special Open Quotation

(SOQ) are based on the official opening

prices of the individual constituents of the

index as set by their primary exchange. If an

opening price is not received for a security,

the previous closing price adjusted for

corporate actions is used in the calculation of

the SOQ.

If the exchange is unable to provide official

opening prices, the opening price as reported

on the “Consolidated Tape” is used. If an

opening price is not available on the

“Consolidated Tape” for a security, the

previous closing price adjusted for corporate

actions is used in the calculation of the SOQ.

For U.S. markets: If the exchange is unable

to provide official opening prices, the official

closing prices will utilize and determined

based on SEC Rule 123C as outlined in the

Unexpected Exchange Closures chapter.

Market Disruption –

calculation of the

Special Open

Quotation (SOQ):

Non-U.S.

03/21/2017

For non-U.S. markets: If the exchange is

unable to provide official opening prices, the

official closing prices are utilized. If the

exchange is unable to provide official opening

or closing prices, the previous closing price

adjusted for corporate actions is used in the

calculation of the SOQ.

Treatment of

suspended stocks

in calculation of the

Special Open

Quotation (SOQ)

03/21/2017

For stocks that are suspended from trading

on an exchange but are still in indices, S&P

DJI will synthetically derive an SOQ for the

suspended security using the deal ratio terms

and the opening price of the acquiring

company if the acquirer is issuing stock as

part of the merger. If the acquirer is paying

cash only, the lower price of the previous

official close price and the cash amount will

be used in the calculation of the SOQ.

Removal of spin-off

that doesn’t trade

03/21/2017

If there is a gap between the ex-date and

distribution date (or payable date), or if the

spin-off security does not trade regular way

on the ex-date, the spin-off security is kept in

all indices in which the parent is a constituent

until the spin-off security begins trading

regular way. At the discretion of the Index

Committee, an indicative or estimated price

may be used for the spin-off entity in place of

a zero price until the spin-off security begins

trading.

If there is a gap between the ex-date and

distribution date (or payable date), or if the

spin-off security does not trade regular way

on the ex-date, the spin-off security is kept in

all indices in which the parent is a constituent

until the spin-off security begins trading

regular way. At the discretion of the Index

Committee, an indicative or estimated price

may be used for the spin-off entity in place of

a zero price until the spin-off security begins

trading. If the spin-off entity does not trade for

20 consecutive trading days after the ex-date

and there is no guidance issued for when

S&P Dow Jones Indices: Equity Indices Policies & Practices 69

Effective Date

Methodology

Change

(After Close)

Updated

trading may begin, S&P DJI may decide to

remove the spin-off security at a zero price

with advance notice given to clients.

Intra-day

Calculation for U.S.

Securities

12/02/2016

Prices used for the calculation of real-time

index values are based on those from the

primary exchanges.

Prices used for the calculation of real-time

index values are based on those from the

“Consolidated Tape”.

Correction

Dividends for

ADRs/GDRs

09/16/2016

For Japanese and Korean ADRs/GDRs, if the

dividend is not quoted ex by the exchange,

the dividend is not generally recognized for

index purposes.

Japanese and Korean ADR dividends which

are generally not quoted ex by the exchange

will be recognized on a future date if the

depository bank issues a final dividend

notice.

Long-Term Stock

suspensions

07/29/2016

Suspended stocks are reviewed for possible

deletion after five trading days for Developed

Markets, 10 trading days for Emerging

Markets, and 20 trading days for Frontier

Markets. This review is conducted

independently of rebalancing schedules.

Stocks under long-term suspensions are

reviewed on a periodic basis. Suspended

stocks that exceed a threshold of 60 business

days, based on the designated listing

exchange trading days, are reviewed for

possible index deletion.

Share/IWF freeze

07/29/2016

A "share freeze" is implemented during each

quarterly rebalancing. The timing is between

12 business days before and three business

days after the quarterly rebalancing effective

date.

A share/IWF freeze period is implemented

during each quarterly rebalancing. The freeze

period begins after the market close on the

Tuesday prior to the second Friday of each

rebalancing month (i.e., March, June,

September, and December) and ends after

the market close on the third Friday of the

rebalancing month.

Treatment of U.S.

transferable rights

offerings

07/29/2016

For U.S. transferable rights, S&P DJI uses

the when-issued trading price for the rights

line to determine the price adjustment

amount. The value of the right is determined

by using the market value of the right, if

available. S&P DJI uses the when-issued

price of the rights trading line and subtracts

that amount times the ratio from the

underlying to get the new price of the

underlying. If there is no market value

available, the value of the rights as discussed

earlier in this document is calculated.

SP DJI will no longer use when issued pricing

for U.S. transferable rights offerings.

Spin-off Treatment

when the spin-off is

an existing publicly

traded company

07/29/2016

If the spun-off company is already trading

regular way, S&P DJI will not use a zero price

treatment. The price adjustment to the parent

is calculated as the (price of the spin-off) *

(ratio of the spin-off shares to the parent

shares).

S&P DJI will add the in-specie distribution to

all indices in which the parent is a constituent

on the ex-date. The distributed security will

remain in the parent’s indices until it has

completed at least one day of regular way

trading and will remain in indices through the

distribution date if the distribution date is later

than the ex-date. The distribution will be

represented by a temporary placeholder

security.

Clarify when S&P

DJI considers a

non-ordinary

dividend to be

ordinary for index

purposes

07/29/2016

"Special dividends" are those dividends that

are outside of the normal payment pattern

established historically by the corporation.

S&P DJI will generally consider the third

consecutive instance of a non-ordinary

dividend (in terms of timing, not amount) to

be ordinary for index purposes as this third

consecutive payment will generally be

considered to be part of the normal payment

pattern established by the company.

Enhancement to

dividend treatment

of Japanese and

Korean companies

12/31/2015

S&P DJI recognizes Korean dividends on the

payable date. For Japanese companies, S&P

DJI recognizes estimated dividend amount on

the ex- date, with no index adjustment for

dividend amount differences between the

estimated and the confirmed amounts.

The dividend treatment of Japanese and

Korean companies accounts for differences

between the dividend amount recognized on

the original ex-date and the final amount

confirmed by the company. The dividend

adjustment is applied to affected indices on a

weekly basis without restatement of historical

index levels.

Clarification of

spin-off policy and

treatment in

modified market

capitalization

weighted indices

(excluding equal

weighted indices)

09/30/2015

The closing price of when-issued trading is

used for adding an eligible spun-off company

to indices and for the calculation of the price

adjustment to the parent company.

Zero price spin-off is the standard index

treatment for spin-offs unless an eligible

spun-off company is already trading regular

way. The spun-off company is added to all

the indices of which the parent is a

constituent, at a zero price at the market

close of the day before the ex-date (with no

divisor adjustment).

For modified market capitalization weighted

indices, if the parent or the spun-off entity is

S&P Dow Jones Indices: Equity Indices Policies & Practices 70

Effective Date

Methodology

Change

(After Close)

Updated

removed from indices post spin-off, the

standard treatment is to reinvest the weight in

the indices unless stated otherwise in the

individual index methodology.

Rules regarding

multiple share

class lines

09/18/2015

In S&P DJI’s U.S. indices, companies that

have more than one class of common stock

outstanding are represented only once. The

stock price is based on one class, usually the

most liquid class, and the share count is

based on the total shares outstanding of all

classes.

There will no longer be consolidated lines in

the S&P DJI branded Float Market Cap

(FMC) indices. Instead, all multiple share

class companies that have listed share class

lines will be adjusted for shares and float

such that each share class line will only

represent that line’s shares and float. The

decision to include each publicly listed line is

evaluated individually. All multiple share class

companies that have an unlisted class line

will also be adjusted.

Clarification on

recurring returns of

capital and multiple

dividend

distributions with

different

withholding tax

requirements

03/31/2015

When a return of capital is declared in lieu of

an ordinary cash dividend and fits the

historical pattern of an ordinary dividend in

amount and frequency, it is treated as an

ordinary cash dividend.

If the different dividends or multiple

components of a single dividend are subject

to different dividend withholding taxes, the

standard withholding tax rate for the country

will be used and the gross dividend amount

may be adjusted accordingly.

S&P Dow Jones Indices: Equity Indices Policies & Practices 71

Disclaimer

Performance Disclosure/Back-Tested Data

Where applicable, S&P Dow Jones Indices and its index-related affiliates (“S&P DJI”) defines various

dates to assist our clients by providing transparency. The First Value Date is the first day for which there

is a calculated value (either live or back-tested) for a given index. The Base Date is the date at which the

index is set to a fixed value for calculation purposes. The Launch Date designates the date when the

values of an index are first considered live: index values provided for any date or time period prior to the

index’s Launch Date are considered back-tested. S&P DJI defines the Launch Date as the date by which

the values of an index are known to have been released to the public, for example via the company’s

public website or its data feed to external parties. For Dow Jones-branded indices introduced prior to May

31, 2013, the Launch Date (which prior to May 31, 2013, was termed “Date of introduction”) is set at a

date upon which no further changes were permitted to be made to the index methodology, but that may

have been prior to the Index’s public release date.

Please refer to the methodology for the Index for more details about the index, including the manner in

which it is rebalanced, the timing of such rebalancing, criteria for additions and deletions, as well as all

index calculations.

Information presented prior to an index’s launch date is hypothetical back-tested performance, not actual

performance, and is based on the index methodology in effect on the launch date. However, when

creating back-tested history for periods of market anomalies or other periods that do not reflect the

general current market environment, index methodology rules may be relaxed to capture a large enough

universe of securities to simulate the target market the index is designed to measure or strategy the index

is designed to capture. For example, market capitalization and liquidity thresholds may be reduced. In

addition, forks have not been factored into the back-test data with respect to the S&P Cryptocurrency

Indices. For the S&P Cryptocurrency Top 5 & 10 Equal Weight Indices, the custody element of the

methodology was not considered; the back-test history is based on the index constituents that meet the

custody element as of the Launch Date. Also, the treatment of corporate actions in back-tested

performance may differ from treatment for live indices due to limitations in replicating index management

decisions. Back-tested performance reflects application of an index methodology and selection of index

constituents with the benefit of hindsight and knowledge of factors that may have positively affected its

performance, cannot account for all financial risk that may affect results and may be considered to reflect

survivor/look ahead bias. Actual returns may differ significantly from, and be lower than, back-tested

returns. Past performance is not an indication or guarantee of future results.

Typically, when S&P DJI creates back-tested index data, S&P DJI uses actual historical constituent-level

data (e.g., historical price, market capitalization, and corporate action data) in its calculations. As ESG

investing is still in early stages of development, certain datapoints used to calculate certain ESG indices

may not be available for the entire desired period of back-tested history. The same data availability issue

could be true for other indices as well. In cases when actual data is not available for all relevant historical

periods, S&P DJI may employ a process of using “Backward Data Assumption” (or pulling back) of ESG

data for the calculation of back-tested historical performance. “Backward Data Assumption” is a process

that applies the earliest actual live data point available for an index constituent company to all prior

historical instances in the index performance. For example, Backward Data Assumption inherently

assumes that companies currently not involved in a specific business activity (also known as “product

involvement”) were never involved historically and similarly also assumes that companies currently

involved in a specific business activity were involved historically too. The Backward Data Assumption

allows the hypothetical back-test to be extended over more historical years than would be feasible using

only actual data. For more information on “Backward Data Assumption” please refer to the FAQ. The

methodology and factsheets of any index that employs backward assumption in the back-tested history

S&P Dow Jones Indices: Equity Indices Policies & Practices 72

will explicitly state so. The methodology will include an Appendix with a table setting forth the specific

data points and relevant time period for which backward projected data was used. Index returns shown

do not represent the results of actual trading of investable assets/securities. S&P DJI maintains the index

and calculates the index levels and performance shown or discussed but does not manage any assets.

Index returns do not reflect payment of any sales charges or fees an investor may pay to purchase the

securities underlying the Index or investment funds that are intended to track the performance of the

Index. The imposition of these fees and charges would cause actual and back-tested performance of the

securities/fund to be lower than the Index performance shown. As a simple example, if an index returned

10% on a US $100,000 investment for a 12-month period (or US $10,000) and an actual asset-based fee

of 1.5% was imposed at the end of the period on the investment plus accrued interest (or US $1,650), the

net return would be 8.35% (or US $8,350) for the year. Over a three-year period, an annual 1.5% fee

taken at year end with an assumed 10% return per year would result in a cumulative gross return of

33.10%, a total fee of US $5,375, and a cumulative net return of 27.2% (or US $27,200).

Intellectual Property Notices/Disclaimer

S&P 100, S&P COMPOSITE 1500, S&P 400, S&P MIDCAP 400, S&P 600, S&P SMALLCAP 600, S&P

GIVI, GLOBAL TITANS, DIVIDEND ARISTOCRATS, Select Sector, S&P MAESTRO, S&P PRISM, S&P

STRIDE, GICS, SPIVA, SPDR, INDEXOLOGY, iTraxx, iBoxx, ABX, ADBI, CDX, CMBX, MBX, MCDX,

PRIMEX, HHPI, and SOVX are registered trademarks of S&P Global, Inc. (“S&P Global”) or its affiliates.

DOW JONES, DJIA, THE DOW and DOW JONES INDUSTRIAL AVERAGE are trademarks of Dow

Jones Trademark Holdings LLC (“Dow Jones”). These trademarks together with others have been

licensed to S&P Dow Jones Indices LLC. Redistribution or reproduction in whole or in part are prohibited

without written permission of S&P Dow Jones Indices LLC. This document does not constitute an offer of

services in jurisdictions where S&P DJI does not have the necessary licenses. Except for certain custom

index calculation services, all information provided by S&P DJI is impersonal and not tailored to the needs

of any person, entity, or group of persons. S&P DJI receives compensation in connection with licensing its

indices to third parties and providing custom calculation services. Past performance of an index is not an

indication or guarantee of future results.

It is not possible to invest directly in an index. Exposure to an asset class represented by an index may

be available through investable instruments based on that index. S&P DJI does not sponsor, endorse,

sell, promote or manage any investment fund or other investment vehicle that is offered by third parties

and that seeks to provide an investment return based on the performance of any index. S&P DJI makes

no assurance that investment products based on the index will accurately track index performance or

provide positive investment returns. S&P DJI is not an investment advisor, commodity trading advisor,

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investing in any such investment fund or other investment vehicle. A decision to invest in any such

investment fund or other investment vehicle should not be made in reliance on any of the statements set

forth in this document. S&P DJI is not a tax advisor. Inclusion of a security, commodity, crypto currency,

or other asset within an index is not a recommendation by S&P DJI to buy, sell, or hold such security,

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These materials have been prepared solely for informational purposes based upon information generally

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S&P Dow Jones Indices: Equity Indices Policies & Practices 73

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S&P DJI does not perform an audit or undertake independent verification of any information it receives.

S&P DJI reserves the right to vary or discontinue any index at any time for regulatory or other reasons.

Various factors, including external factors beyond S&P DJI’s control might necessitate material changes

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S&P Dow Jones Indices: Equity Indices Policies & Practices 74

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ESG Indices Disclaimer

S&P DJI provides indices that seek to select, exclude, and/or weight index constituents based on, but not

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indicators (such as, inequality and investment in human capital); governance indictors (such as sound

management structures, employee relations, remuneration of staff, tax compliance, respect for human

rights, anti-corruption and anti-bribery matters), specific sustainability or values-related company

involvement indicators (for example, production/distribution of controversial weapons, tobacco products,

or thermal coal), or controversies monitoring (including research of media outlets to identify companies

involved in ESG-related incidents).

S&P DJI ESG indices use ESG metrics and scores in the selection and/or weighting of index constituents.

ESG scores or ratings seek to measure or evaluate a company’s, or an asset’s, performance with respect

to environmental, social and corporate governance issues.

The ESG scores, ratings, and other data used in S&P DJI ESG indices is supplied directly or indirectly by

third parties (note these parties can be independent affiliates of S&P Global or unaffiliated entities) so an

S&P DJI ESG index’s ability to reflect ESG factors depends on these third parties’ data accuracy and

availability.

ESG scores, ratings, and other data may be reported (meaning that the data is provided as disclosed by

companies, or an asset, or as made publicly available), modelled (meaning that the data is derived using

a proprietary modelling process with only proxies used in the creation of the data), or reported and

modelled (meaning that the data is either a mix of reported and modelled data or is derived from the

vendor using reported data /information in a proprietary scoring or determination process).

ESG scores, ratings, and other data, whether from an external and/or internal source, is based on a

qualitative and judgmental assessment, especially in the absence of well-defined market standards, and

due to the existence of multiple approaches and methodologies to assess ESG factors and

considerations. An element of subjectivity and discretion is therefore inherent in any ESG score, rating, or

other data and different ESG scoring, rating, and/or data sources may use different ESG assessment or

estimation methodologies. Different persons (including ESG data ratings, or scoring providers, index

administrators or users) may arrive at different conclusions regarding the sustainability or impact of a

particular company, asset, or index.

Where an index uses ESG scores, ratings or other data supplied directly or indirectly by third parties, S&P

DJI does not accept responsibility for the accuracy of completeness of such ESG scores, ratings, or data.

No single clear, definitive test or framework (legal, regulatory, or otherwise) exists to determine ‘ESG’,

‘sustainable’, ‘good governance’, ‘no adverse environmental, social and/or other impacts’, or other

equivalently labelled objectives. In the absence of well-defined market standards and due to the existence

of multitude approaches, the exercise of judgment is necessary. Accordingly, different persons may

classify the same investment, product and/or strategy differently regarding ‘ESG’, ‘sustainable’, ‘good

S&P Dow Jones Indices: Equity Indices Policies & Practices 75

governance’, ‘no adverse environmental, social and/or other impacts’, or other equivalently labelled

objectives. Furthermore, the legal and/or market position on what constitutes an ‘ESG’, ‘sustainable’,

‘good governance’, ‘no adverse environmental, social and/or other impacts’, or other equivalently labelled

objectives may change over time, especially as further regulatory or industry rules and guidance are

issued and the ESG sustainable finance framework becomes more sophisticated.

Prospective users of an S&P DJI ESG Index are encouraged to read the relevant index methodology and

related disclosures carefully to determine whether the index is suitable for their potential use case or

investment objective.