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Construction Rules for Morningstar
Global Markets ex-US Index Family
Morningstar Methodology Paper
Version 1.5 – June 2015
©2015 Morningstar, Inc. All rights reserved. The information in this document is the property of Morningstar, Inc.
Reproduction or transcription by any means, in whole or in part, without the prior written consent of Morningstar, Inc., is prohibited.
For Professional Use Only.
Contents
Introduction
Morningstar Index Characteristics
Structure of Morningstar Global Markets ex-US Indexes
Inception Date and Base Market Values
Calculation and Dissemination of Index Values
Index Value Currencies
Real-Time Schedule
4
5
5
5
5
5
Country Selection
Country Inclusion Framework
Index of Economic Freedom
World Bank Country Classification
Country Market Capitalization and Country Market Capitalization / GDP Ratio
Additional Country Inclusion Criteria
Developed and Emerging Market Classification
Developed and Emerging Market Country List
6
6
7
7
7
7
8
Assigning Stocks to the Morningstar Global Markets ex-US Indexes
Overview
Equity Universe
Investable Universe
Companies with Multiple Share Classes
9
10
12
13
Assigning Companies to Capitalization Bands
Overview
Calculating the Economic Segment-Level Capitalization Breakpoints
Calculating the Country-Level Capitalization Breakpoints
Assigning Companies to Capitalization Bands
Small Cap-Micro Cap Buffering
Determining Global Markets ex-US Indexes
14
14
14
15
15
15
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
2
Index Weighting and Rebalancing
Free Float
Foreign Ownership Limits
Foreign Room
Constituent Weight Calculation
Scheduled Reconstitution Dates
Scheduled Rebalancing Dates
Unscheduled Index Rebalancing
16
16
17
17
17
17
Index Calculations
Basic Formula
Divisor Adjustments
Intraday Index Data Corrections
Index-Related Data and Divisor Corrections
Computational and Reporting Precision
Undocumented Events
18
19
19
19
19
19
Adjustments for Corporate Actions
Morningstar Index Committee
20
26
Appendix A: List of Eligible Exchanges
Appendix B: Tax Havens
Appendix C: Country Classification Case Studies
Appendix D: List of Eligible Security Types
25
27
28
29
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
3
Introduction
The Morningstar Global Markets ex-US Index Family is designed to provide investors with accurate
benchmarks for performance measurement as well as a basis for asset allocation and investment
vehicles. The index series captures performance and fundamental characteristics of global equity markets
(excluding the United States) through a comprehensive portfolio of accessible and liquid stocks. The
index is designed with the following key objectives in mind:
1)
2)
3)
4)
5)
Transparent and objective rules. Construction of indexes should be governed by a clear and
transparent set of well-documented rules for security selection and exclusion, reconstitution, and
adjustments for corporate actions.
The right balance between comprehensive market coverage and full investability. Indexes should
reflect the actual investment opportunities available to active and passive managers. At the same
time, they should reflect the overall economic importance of the company—the larger and more
liquid the security, the more consideration it deserves for index inclusion. The goal is to find the right
balance between completeness and investability.
Non-overlapping and hierarchical. Indexes should include all qualified stocks in the broad market
index. There should be no “sampling” or other process whereby some stocks are ignored or their
influence reduced. Each stock in the broad market index is included in one and only one of the
subcomponents at each level.
Facilitate asset allocation across geographic regions and countries. The Morningstar Global Markets
ex-US Index Family should provide discrete building blocks that serve as asset class proxies based
on economic segment (developed and emerging), geographical regions, and country.
Minimize index turnover. Indexes incur turnover as they are rebalanced in line with their stated
methodology. Unnecessary turnover results in higher management costs for investable products
linked to the index.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
4
Morningstar Index Characteristics
Structure of Morningstar Global Markets ex-US Indexes
The Morningstar Global Markets ex-US Index covers the top 97% market capitalization in each of two
economic segments, developed ex-US and emerging markets. Together, these two economic segment
indexes make up the Global Markets ex-US index. As of June 2015, the index contains securities from 44
countries; 23 developed and 23 emerging.
Inception Date, Commencement Date and Base Market Values
Index inception date is the date on which the first back-tested index value is calculated. The back-test
calculations are based on the same methodology that was in effect when the index was officially
launched. The inception date of the Morningstar Global Markets ex-US Indexes is June 19, 1998. Daily
price, gross and net return series are available from this date forward. The base market value of the
indexes at inception is generally set to 1,000.
Index commencement date is the date on which the index is launched with live end-of-day or real-time
calculations. The commencement date of the Morningstar Global Markets ex-US Index is September 12,
2012.
Calculation and Dissemination of Index Values
Price return index values are calculated and disseminated electronically at 15-second or 60-second
intervals depending on country/region, and daily index highs and lows are based on continuous
calculations. Daily and monthly price, gross, and net return index values are distributed via various data
distribution channels.
Index Value Currencies
The real-time values of Morningstar indexes are calculated in local currencies.
The closing values of Morningstar indexes are calculated in U.S. dollars, yen, pounds sterling, and euro
using an average of WM/Reuters bid and ask price at 16:00 GMT. They are also available in a U.S. dollar
un-hedged variant, which is a representation of returns from buying non-dollar securities without
employing any hedges. When a particular local market is closed and the index is calculated, the
exchange rate used is that of the previous business day.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
5
Country Selection
Country Inclusion Framework
The country inclusion framework provides a structured review process around admitting or removing
countries from the index. The review period will occur once a year in August. A country will have to
maintain its passable status for two consecutive years before it will be deemed eligible for inclusion in
the index. The Morningstar Index Committee will review all potential changes to determine any final
action. If a country is added or removed, notice of the pending action is provided a minimum of three
months in advance. This framework considers three main criteria:
× Degree of Economic Freedom
o
A score of 50 or above from the Index of Economic Freedom
× Country Income
o
A high- or middle-income country classification from the World Bank
× Depth of Equity Markets
o
o
More than $5.0 billion in market capitalization
Ratio of market capitalization/GDP must be among the top 80%
Index of Economic Freedom
The Index of Economic Freedom is a joint study by the Heritage Foundation and The Wall Street Journal
covering 179 countries across 10 specific factors of economic freedom. Five of these countries have very
high freedom scores of 80% or more, putting them into the “free” economies category (the highest). The
next 23 countries are in the 70% range, placing them in the “mostly free” category. This means that only
28 countries, or less than one fifth of all countries surveyed, have economic freedom scores higher than
70%. The bulk of countries have freedom scores of 50%-70%. Of those, about half are “moderately free”
(scores of 60%-70%), and half are “mostly un-free” (scores of 50%-60%). 29 countries have “repressed
economies” with scores below 50%, and are considered for exclusion from the index.
The 10 factors are:
×
×
×
×
×
Business Freedom
Fiscal Freedom
Monetary Freedom
Financial Freedom
Freedom From Corruption
×
×
×
×
×
Trade Freedom
Government Size
Investment Freedom
Property Rights
Labor Freedom
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
© 2015 Morningstar, Inc. All rights reserved. The information in this document is the property of Morningstar, Inc. Reproduction or transcription by any
means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
6
World Bank Country Classification
For operational and analytical purposes, the World Bank’s main criterion for classifying economies is
gross national income (GNI) per capita. The bank's analytical income categories (low, middle, high
income) are based on the bank's operational lending categories (civil works preferences, IDA eligibility,
etc.). These operational guidelines were established three decades ago, based on the view that since
poorer countries deserve better conditions from the bank, comparative estimates of economic capacity
needed to be established. GNI, a broad measure, was considered to be the best single indicator of
economic capacity and progress; at the same time it was recognized that GNI does not, by itself,
constitute or measure welfare or success in development. GNI per capita is therefore the bank's main
criterion of classifying countries.
Source: World Bank
Country Market Capitalization and Country Market Capitalization/GDP Ratio
The size of a country’s equity markets should be material, or above $5.0 billion. The market should exhibit
financial depth; that is, the ratio of the size of the country’s equity markets to its gross domestic product
should be high. Countries that fall in the bottom 20% are removed from eligibility.
Additional Country Inclusion Criteria
The following criteria are taken into account when determining country eligibility:
× The country’s allowance of foreign investors to easily enter and exit the market, as well as to
repatriate capital and dividends.
× Timely and accurate availability of real-time and historical market data.
× The level of interest attracted by the market from international investors.
Developed and Emerging Market Classification
Countries are classified as developed if they meet all of the following criteria:
× Annual per capita GNI falls in the high-income category, as defined by the World Bank, for the most
recent three consecutive years. As of July 2011 (the last year for which data are available), the
World Bank defines countries with per capita GNI in excess of $12,476 as high income.
× The country must not have in place any broad-based discriminatory controls against non-domiciled
investors for the most recent three years.
× The country’s stock markets must exhibit these characteristics:
o Transparency
o Market regulation
o Operational efficiency
o Absence of broad-based investment restrictions
Countries that do not meet all of the above criteria fall into the emerging markets economic segment. For
example, a country may be classified as high-income by the World Bank, but due to lack of transparency
within local markets, it falls into the emerging markets economic segment.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
© 2015 Morningstar, Inc. All rights reserved. The information in this document is the property of Morningstar, Inc. Reproduction or transcription by any
means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
7
Developed and Emerging Market Country List
As of June 2015, countries are classified into developed and emerging market economic segments as
follows:
Country
Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Greece
Hong Kong
Ireland
Israel
Italy
Japan
Netherlands
New Zealand
Norway
Portugal
Singapore
Spain
Sweden
Switzerland
United Kingdom
Classification
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Developed
Country
Brazil
Chile
China
Colombia
Czech Republic
Egypt
Hungary
India
Indonesia
Malaysia
Mexico
Morocco
Peru
Philippines
Poland
Qatar
Russia
South Africa
South Korea
Taiwan
Thailand
Turkey
United Arab Emirates
Classification
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Emerging
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
8
Assigning Stocks to the
Morningstar Global Markets ex-US Indexes
Overview
Index construction follows a four-step process, which begins with the universe of Global non-US equities.
At each step, various criteria are applied to the survivors of the previous step, to result in the Global
Markets ex-US Index constituents. At each reconstitution date, the rules are applied in the sequence in
which they appear below.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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9
Equity Universe
To qualify for inclusion in the equity universe, a security must meet the following criteria:
1)
Security Type
All listed securities, including income trusts in Canada, real estate investment trusts, and preferred
shares that exhibit characteristics of equity securities are generally eligible for inclusion. Please see
Appendix D for a full list of eligible security types by country. The following security types do not
qualify:
×
×
×
×
×
×
Mutual funds
ETFs
Derivatives
Convertible notes, warrants, and rights
Limited partnerships
Depository receipts, except Swedish Depository Receipts and Philippine Depository Receipts
2)
Exchange
The security must trade on one of the major global exchanges. A complete list of such eligible
exchanges is provided in Appendix A.
3)
Country Classification
Each security in the Morningstar Global Equity Universe shall be assigned to a single country using a
rules-based approach. The country classification for any security is defined primarily by the country
of incorporation of the issuing company and the country of primary listing of the security. In addition,
if a company is incorporated in a Developed Market country in Europe and has its security’s primary
listing in another Developed Market European country, the security will be assigned to its country of
primary listing. Nearly 98% of the securities in the Morningstar Global Equity Universe are classified
using this approach.
For the remaining cases where the company is incorporated in one country but the primary listing of
its securities is in a different country, additional factors are considered to determine the country
classification:
Primary Business and Listing Country
If a security has a listing in the country where its primary business activities are conducted, as
measured by maximum single revenue segment, the security will be assigned to its country of
listing and primary business location.
Tax Havens
To benefit from legal, tax, and/or regulatory advantage, companies may opt to incorporate in a
country with limited or no public domestic equity market such as Bahamas, Bermuda, etc.
For such cases, the security is classified in the country of its primary listing. A complete list of
countries that have been determined to provide these benefits can be found in Appendix B.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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10
China Classification
Securities will be classified to China if the company is incorporated in the People’s Republic of
China (PRC) and listed on the Shanghai and Shenzhen stock exchanges as B shares or listed on the
Hong Kong stock exchange as H shares. To provide investors with exhaustive China coverage and
remain true to the underlying risks associated with the business, the following exception is made to
the country of incorporation and country of primary listing agreement rule.
Securities will be classified to China if the company is incorporated outside the PRC but has a listing
in the U.S., Singapore, or Hong Kong, provided they meet the following criteria:
× If a company is listed in the U.S. or Singapore but has the majority of its business as measured
by single revenue segment contributing 50% or more from China and is headquartered in China.
× If the company is listed in Hong Kong and meets the following definitions:
 Red chip: Company is (directly or indirectly) controlled by organizations or
enterprises that are owned by the state, provinces, or municipalities of the PRC.
 P chip: The company satisfies at least two of the following conditions:
 The company is controlled by PRC individuals.
 The company derives more than 80% of its revenue from the PRC.
 The company allocates more than 60% of its assets in the PRC.
Manual Review
For remaining cases, secondary listing, geographical distribution of assets and shareholders is
reviewed to arrive at a country assignment. Companies that remain unclassified at the end of the
exercise are rendered ineligible from the Equity Universe.
Please see Appendix C for country classification case studies.
Investable Universe
To qualify for initial inclusion in the Morningstar Global Markets ex-US Index, a security must meet the
following criteria, which are applied in sequence to the survivors of the prior requirement.
1)
Trading Frequency
New securities are added to the index if they have less than 20 non-trading days in the six calendar
months immediately prior to reconstitution. For corporate entities younger than six months, the
criterion is applied on a prorated basis.
Current constituents are provided a one-time buffer and will remain in the investable universe if they
have less than 30 non-trading days in the prior six months. The buffer is designed to help reduce the
turnover in the investable universe caused by marginal and temporary decline in the number of
trading days. Current constituents retained due to buffer in the previous reconstitution would remain
in the investable universe if they have less than 20 non-trading days in the prior six months.
2)
Dollar Trading Volume and Turnover
A security’s traded value score (TVS) is the average of its ranks on three measures:
a)
The average of monthly dollar traded value (AMDTV) for the six calendar months immediately
prior to reconstitution. Monthly dollar traded value (MDTV) is the product of average of number
of shares traded in the month and closing price of the security as of the last trading day of the
month. For corporate entities younger than six months, MDTV is computed on a prorated basis.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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11
b)
The two lowest MDTV in the six calendar months immediately prior to reconstitution (the
months need not be sequential).
c)
The average monthly turnover ratio (AMTR) during the six calendar months immediately prior to
reconstitution. AMTR is AMDTV divided by float market value (in U.S. dollars) as of the end of
the last trading day prior to reconstitution.
New securities are added to the investable universe if they are among the top 75% of the securities
in the Global Markets ex-US universe based on their TVS. Current constituents are provided a onetime buffer and will remain in the index if they are among the top 80% of the securities based on
their TVS. The buffer is designed to help reduce the turnover in the index caused by marginal and
temporary decline in TVS of current constituents. Current constituents retained due to the buffer in
the previous reconstitution remain in the investable universe if they are among the top 75% of the
securities based on their TVS.
Liquidity criterion is waived in cases of certain corporate events, such as corporate takeovers or
spin-offs, where the successor entity issues one or more securities that meet the following criteria:
× The new entity qualifies for index membership in either the mid cap or the large cap band.
× The new entity’s free float market capitalization value is greater than or equal to the smallest
free float market capitalization in the mid cap band.
3)
Free Float Market Capitalization Requirements
For each security, minimum free float market capitalization requirements are pegged to the previous
period. Components are eliminated if current free float market cap is less than the product of:
(Minimum free float market cap)t-1 * (1 + Return on Global Market ex-US Index6-month)
Companies with Multiple Share Classes
For companies with multiple share classes of equity securities, the following general rules apply:
× All trading classes that meet the general eligibility criteria are considered for inclusion.
× The market capitalization of a company is determined by aggregating all listed share classes. This
aggregate market capitalization is used to assign companies to market capitalization bands, which is
described in detail in the following section.
× The weight contribution of a given share class in a given index is based on the free float market
capitalization of that particular share class. Thus, a share class may have zero weight in the index if
it does not have available free float shares.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
12
Assigning Companies to Capitalization Bands
Overview
Each security that meets the general criteria documented immediately above is considered for inclusion
in one of two economic segment indexes: developed or emerging. The country classification process
previously described determines membership in the appropriate index.
Calculating the Economic Segment-Level Capitalization Breakpoints
First, for each economic segment (developed and emerging), the companies are ordered by market
capitalization in descending order. Next, the cumulative market capitalization percentage is calculated for
each stock within its economic segment. The market capitalization of the largest stock whose cumulative
market capitalization percentage is greater than the following percentages is taken as the capitalization
breakpoint for that capitalization band.
Large Cap:
Mid Cap:
Small Cap:
70%
90%
97%
Finally, an upper and lower bound is taken around each of the capitalization breakpoints (large, mid and
small). The upper bound is 1.15 times the breakpoint, and the lower bound is 0.5 times the breakpoint.
For example, if the developed market large capitalization breakpoint is $10B, then the upper bound is
$10B * 1.15 = $11.5B and the lower bound is $10B * 0.5 = $5B.
Calculating the Country-Level Capitalization Breakpoints
The capitalization breakpoints calculated in the previous section are applied within each country to arrive
at the country-specific capitalization breakpoints. For each country, the companies are ordered by market
capitalization in descending order and the cumulative market capitalization percentages for the
companies are calculated. The market capitalization of the largest stock whose cumulative cap
percentage is greater than the following values is taken as the initial capitalization breakpoint for that cap
band:
Large Cap:
Mid Cap:
Small Cap:
70%
90%
97%
This initial country-specific capitalization breakpoint is then adjusted based on the economic segmentlevel capitalization bounds calculated in the previous section. If the initial country-specific breakpoint is
larger than the economic segment-level capitalization upper bound, then the country-specific breakpoint
is set to the economic segment-level capitalization upper bound. If the initial country-specific breakpoint
is smaller than the economic segment-level capitalization lower bound, then the country-specific
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
13
breakpoint is set to the economic segment-level capitalization lower bound. If the initial country-specific
breakpoint is between the upper economic segment-level capitalization and lower economic segmentlevel capitalization bounds, then no adjustment is made.
Assigning Companies to Capitalization Bands
The adjusted country-level capitalization breakpoints calculated in the previous section are applied within
each country to assign companies to one of three capitalization bands: large, mid and small. All
companies that have a market capitalization greater than the large cap adjusted capitalization breakpoint
are assigned to that large cap band. The same goes for the mid cap and small cap bands.
Small Cap-Micro Cap Buffering
A buffer is enforced around the small cap-micro cap threshold. This buffer is designed to help reduce
turnover in the index caused by small changes in market capitalization. New constituents of the index
must have a cumulative capitalization percentage less than the upper buffer in order to be assigned to
small cap. Existing constituents of the index must have a cumulative capitalization percentage less than
the lower buffer in order to be assigned to small cap.
Small Cap-Micro Cap Upper Buffer:
Small Cap-Micro Cap Lower Buffer:
X –1.5%
X+2.5%
X is the country-level adjusted capitalization breakpoint for the small cap band.
Determining Global Markets ex-US Indexes
The Developed Market and Emerging Market indexes together form the Global Markets ex-US Index.
Once index constituents are selected, each security is weighted by its float-adjusted market
capitalization for index calculation purposes. Multiple share classes are included and also weighted by
the available float of each share class (please see section on multiple share class treatment above).
Subsequently, individual regional and country indexes are derived from the constituents of the
Morningstar Global ex-US Index.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
14
Index Weighting and Rebalancing
Free Float
Morningstar defines free float as the number of shares (or percentage of shares) that are, theoretically,
available for purchase by the public. In general, the shareholdings can be classified in two broad
categories of holders: institutional holders and declarable stakeholders. The stakeholders hold shares for
various tactical or speculative reasons (other than those that might typify why an institutional investor
would own the shares). As a result, the shares held by these stake investors are, theoretically,
unavailable to the public and therefore excluded from free float.
The formula for calculating free float is:
Free float = (total shares outstanding) – (total declarable stakeholder shares)
Stakeholders may be typically classified among the following:
× Officer/director
× Joint venture
× Private company
× Private equity fund/alternative investment
× Public company stake
× Employee stock ownership fund
× Holding company
× Government
× Sovereign wealth fund
× Subsidiary
× Trust/trustee
× Venture capital fund
Securities with a free float of 5% or lower are not considered for index inclusion.
Foreign Ownership Limits
Besides the stakeholders’ shares, certain investment restrictions may apply for non-domestic investors,
limiting their opportunity to invest. Such restrictions, known as foreign share ownership limits, can be set
by government regulation, company bylaws, or local laws.
Morningstar adjusts free float with foreign ownership limits during the June and December
reconstitutions for the following countries that are known to have restrictions on foreign ownership:
Australia, India, Japan, Philippines, Qatar, South Korea, Taiwan, Thailand and United Arab Emirates.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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15
Foreign Room
Foreign room is the proportion of shares available to foreign investors given the foreign ownership limit.
Securities with a foreign room of 10% or below are not considered for index inclusion, and existing index
constituents are removed if the foreign room falls below 5%.
Morningstar adjusts foreign room at the June and December reconstitutions for the following countries
that are known to have restrictions on foreign ownership: Australia, India, Japan, Philippines, Qatar,
South Korea, Taiwan and United Arab Emirates.
For India, securities listed under the Reserve Bank of India’s (RBI) caution list and ban list are not eligible
for index inclusion. An existing index constituent that moves to the RBI ban or caution list is deleted from
the index with a suitable advance notification.
Constituent Weight Calculation
Each index constituent is weighted according to its free float market capitalization, which is the product
of free float shares and the most recent traded price of the security. While free float market capitalization
is calculated continually for each index constituent, the free float market capitalization of each potential
index constituent is calculated only at each rebalancing.
Scheduled Reconstitution Dates
Morningstar Indexes are reconstituted—i.e., the index membership is reset—twice annually.
Adjustments are performed after the close of business on the third Friday of June, and December and
effective on the following Monday. If the Monday is a holiday, reconstitution occurs on the Tuesday
immediately following.
Scheduled Rebalancing Dates
Morningstar indexes are rebalanced—i.e., the number of free float shares of each constituent security is
adjusted—four times annually. Adjustments are made after the close of business on third Friday of
March, June, September, and December and effective on the following Monday. If the Monday is a
holiday, rebalancing occurs on the Tuesday immediately following. Market data used for rebalancing are
from the last trading day of the first month of each quarter. Index constituent float factors and shares
outstanding updates are announced at least two business days prior to rebalancing.
Unscheduled Index Rebalancing
In addition to scheduled rebalancing, Morningstar indexes are rebalanced whenever a constituent’s total
outstanding shares or free float changes by 10% point or more. Rebalancing is carried out at the close of
trading on the day of the event. The Morningstar indexes are not reconstituted when unscheduled
rebalancing occurs.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
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means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
16
Index Calculations
Basic Formula
Price returns, total and net returns of each index are calculated using Laspeyres’ formula. The only
difference is that the divisor Dt is different for the different index variants:
n
Index (t ) 
( p
i (t )
i 1
n
 qi (t ) )
C (t ) ( pi ( 0)  qi ( 0 ) )
 BaseIndexV alue  ( M (t ) / B(t ))  BaseIndexV alue
i 1
The above formulas can be simplified as:
Where:
D(t)
n
closing price of stock i at the base date pi(0)
qi(0)
pi(t)
qi(t)
C(t)
t
M(t)
B(t)
=
=
=
=
=
=
=
=
=
=
Index(t) 
M(t)
D(t)
divisor at time (t)=B(t)/Base Index Value
number of stocks in the index
constructed shares of company i at the base
price of stock i at time (t)
constructed shares of company i at time (t)
adjustment factor for the base date market capitalization
time the index is calculated
market capitalization of the index at time (t)
adjusted base date market capitalization of the index at time (t)
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17
Divisor Adjustments
To avoid distortions caused by corporate actions that affect the share capital of index constituents, the
divisor of the index is adjusted accordingly. The following formula will be used for divisor adjustments due
to corporate action. Note: No divisor adjustments are necessary for stock splits, because market
capitalization does not change and the share number and share price are adjusted prior to the opening of
trading on the split’s ex-date.
n
Dt 1  Dt 
( p
i 1
i (t )
 qi (t ) )  MC (t  1)
n
( p
i 1
Where:
D(t)
D(t+1)
Pi(t)
qi(t)
DMC(t+1)
i (t )
 qi (t ) )
=
=
=
=
divisor at time (t)
divisor at time (t+1)
stock price of company i at time (t)
number of shares of company i at time (t)
=
add difference in components’ new market capitalization and adjusted market
capitalization (calculated with adjusted closing prices and shares effective at time
t+1) and/or minus market capitalization of companies to be deleted (calculated with
closing prices and shares at time t)
Note: If the current trading price of an issue is unavailable, the previous trading session’s closing price is
used. However, if the issue is affected by any corporate action that requires an adjustment, then the
adjusted price is used.
Intraday Index Data Corrections
Commercially reasonable efforts are made to ensure the correctness of data used in real-time index
calculations. If incorrect price or corporate action data affect index daily high or lows, it is corrected
retroactively as soon as feasible.
Index-Related Data and Divisor Corrections
Incorrect pricing and corporate action data for individual issues in the database will be corrected upon
detection. In addition, an incorrect divisor of an index, if discovered within five days of its occurrence, will
always be fixed retroactively on the day it is discovered to prevent an error from being carried forward.
Commercially reasonable efforts are made to correct an older error subject to its significance and
feasibility.
Computational and Reporting Precision
All calculated and adjusted data are stored in real numbers. For reporting purposes, index values are
rounded to two decimal places and divisors are rounded to appropriate decimal places. The number of
shares outstanding in determining the free float or capitalization of a company is the actual number of
shares.
Undocumented Events
Any matter arising from undocumented events will be resolved at the discretion of the Morningstar Index
Committee.
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18
Adjustments for Corporate Actions
Special Dividend
A special dividend is a non-recurring distribution of company’s assets, usually in the form of cash to
shareholders. Special dividends are typically larger compared to normal dividends. To avoid distortion in
the price return index a price adjustment is performed where:
Adjusted Price = previous day closing price - special dividend payment
A divisor adjustment is performed to reflect the adjusted price. No share adjustment is required.
Capital Repayment
A capital repayment (return of capital) refers to a cash distribution to the existing shareholders from the
company’s share capital or additional paid-in capital (capital contribution reserve). A price adjustment is
performed where:
Adjusted Price = previous day closing price - capital repayment payment
A divisor adjustment is performed to reflect the adjusted price. No share adjustment is required.
Stock Dividend
A stock dividend is a dividend payment made in the form of additional shares, rather than a cash payout.
This action requires both share and price adjustment where:
Current shares = previous shares*(1+stock div ratio) and
Adjusted price = previous day closing price/ (1+stock div ratio)
In theory there should be no divisor change but, due to rounding of the shares and price, there are times
a small divisor change is necessary to have the start of day (SOD) index level tie out.
Stock dividend with other type of Asset attached
A stock dividend with another type of asset attached is a dividend payment made in the form of
additional shares, rather than a cash payout, plus some other asset (e.g. bonds, warrants, preferred
shares).
This action requires both share and price adjustment where:
Current shares = previous shares*(1+stock div ratio) and
1) If the price of the other asset is not available: Adjusted price = previous day closing price/ (1+stock
div ratio) or
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2) If the price of the other asset is available: previous day closing price + price of the other Asset/
(1+stock div ratio)
Stock Split
A stock split is a corporate action in which a company's existing shares are divided into multiple shares.
Although the number of shares outstanding increases by a specific multiple, the total dollar value of the
shares remains the same compared to pre-split values because no real value has been added as a result
of the split.
This action requires both share and price adjustment where:
Current shares = previous shares*split ratio and
Adjusted price = previous day closing price/split ratio
In theory there should be no divisor change but, due to rounding of the shares and price, there are times
a small divisor change is necessary to have the SOD index level tie out.
Reverse Stock split
A reverse stock split is a reduction in the number of a corporation's shares outstanding that increases the
par value of its stock or the earnings per share. The market value of the total number of shares (market
cap) remains the same.
This action requires both share and price adjustment where:
Current shares = previous shares*split ratio and
Adjusted price = previous day closing price/split ratio
In theory there should be no divisor change but, due to rounding of the shares and price, there are times
a small divisor change is necessary to have the SOD index level tie out.
Spin Off (when-issued trading available before the ex-date)
A spin off is the creation of an independent company through the sale or distribution of new shares of an
existing business/division of a parent company. A spinoff is a type of divestiture. A price adjustment is
performed where:
when-issued trading available before the ex-date
Adjusted Price (parent company) = parent company previous day closing price - spun-off company
previous day when-issued closing price * spin-off ratio
spun-off entity begins trading on the ex-date
Adjusted Price (parent company) = parent company previous day closing price - spun-off company open
price on ex-date * spun-off ratio
spun-off entity begins trading after the ex-date)
Adjusted Price (parent company) = parent company open price on ex-date
A divisor adjustment is performed to reflect the adjusted price. No share adjustment is required.
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Acquisition
An acquisition is a corporate action in which a company buys most, if not all, of the target company's
ownership stake in order to assume control of the target firm. Acquisitions are often paid in cash, the
acquiring company's stake, or a combination of both. Acquisitions are handled as follows:
Acquisition funded by cash (both acquiring company and target company are in the same index)
The target company is deleted from the index. The target company is not replaced. A divisor adjustment
is performed to reflect the change in index market value. No price adjustment is required.
Acquisition funded by cash (only target company is in the index)
The target company is deleted from the index. The target company is not replaced. A divisor adjustment
is performed to reflect the change in index market value. No price adjustment is required.
Acquisition funded by cash (only acquiring company is in the index)
No action is required.
Acquisition funded by stock or stock and cash (both acquiring company and target company are in the
same index)
The target company is deleted from the index. The target company is not replaced. The acquiring
company will have its shares increased based on the M&A terms. A divisor adjustment is performed to
reflect the change in index market value reflecting the target company’s deletion and new shares for the
acquiring company. No divisor change is required if the acquisition is funded by stock only. No price
adjustment is required.
Acquisition funded by stock or stock and cash (only target company is in the index)
The target company is deleted from the index. The target company is not replaced. A divisor adjustment
is performed to reflect the change in the index market value. No price adjustment is required.
Acquisition funded by stock or stock and cash (only acquiring company is in the index)
The shares of the acquiring company will be increased based on the terms of M&A. A divisor adjustment
is performed to reflect the new shares for the acquiring company. No price adjustment is required.
Acquisition with delisting prior to effective data (index constituent acquires another index constituent)
No action is taken on the delisting date. If the acquisition is funded by stock or stock and cash, the target
company is deleted and the shares of the acquiring company are increased on the effective date. In the
interim target company is carried in the index at a synthetic price. The synthetic price is determined by:
1) for an all cash merger: cash proceeds, 2) for an all stock merger: acquiring company EOD price * stock
terms, 3) for a cash & stock merger: acquiring company EOD price * stock terms + cash terms.
Acquisition with delisting prior to effective data (non-index constituent acquires index constituent)
The acquired company is deleted at the delisting date and the new company is not added to the index.
Merger
A merger occurs when two companies merge into a new company. For example: Company A and B
merge into a new company, C. A and B will be removed while C will be added. When a constituent
company merges with another constituent company, the merged company is assigned the attributes of
the security of the constituent company to which it is historically linked. Company attributes include
sector, capitalization band, style assignments and weighting factors associated with any of the above
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mentioned characteristics. Company attributes will be formally reviewed at the next semi-annual
reconstitution.
Rights Offering
Rights offerings are issuing rights to a company's existing shareholders to buy a proportional number of
additional securities at a given price (usually at a discount) within a fixed period. This action requires both
share and price adjustment.
The shares shall be adjusted if 1) the rights are in-the-money and 2) the corporate action results in the
issuance of new shares in the same security. If the rights are in-the-money the adjusted price = previous
day closing price - price adjustment amount.
Special case (new shares not entitled to the forthcoming dividend): 1) subscription price >= (market
price – dividend), the subscription is at a premium, therefore no price adjustment is required, 2)
subscription price < (market price – dividend), the subscription price is at a discount, therefore a price
adjustment is required. A divisor adjustment is required because the price reduction and share increase
don't offset each other.
Rights Offering (rights to acquire any other asset)
Rights offerings are given to the company's existing shareholders to purchase the company's underlying
shares and some other assets other than the underlying shares (e.g. bonds, warrants, preferred shares or
other company's equity shares) within a fixed period.
Adjusted price = previous day closing price - price adjustment amount.
The price of the underlying shares is adjusted ONLY if the other asset value or the value of the right is
available on the ex-date. No share adjustment is required. A divisor adjustment is required because of
the adjustment to price.
Rights Offering (rights to acquire new underlying shares with other Asset attached)
Rights offerings are given to the company's existing shareholders to purchase the company's underlying
shares and some other assets other than the underlying shares (e.g. bonds, warrants, preferred shares or
other company's equity shares) within a fixed period. The shares shall be adjusted if the rights are in-themoney.
Adjusted price = previous day closing price - price adjustment amount.
If the other asset value is available on the ex-date and if the subscription price < (market price - value of
other asset), the subscription is at a discount. A divisor adjustment is required because the price
reduction in the rights is in the money. A divisor adjustment is required because of the adjustment to
price and shares.
Rights Offering (Australian cases)
It is a common practice for Australian companies to first get suspended and then release the terms of
rights issue and date of trading resumption. If the rights are in the money on the first day that the
securities of the company resume trading, then the shares shall be adjusted on that day.
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Adjusted price = previous day closing price – price adjustment amount, as long as the market price on
the first day of resumed trading is less than the subscription price. A divisor adjustment is required
because the price reduction and share increase do not offset each other.
Stock Distribution (both securities are in the index)
One security (A) distributes shares of another existing security (B). Shares of security B will be
increased. The price of security A will be adjusted:
Adjusted price (A) = previous day closing price (A) – price adjustment amount. A divisor adjustment is
not required because the market value (MV) increase of B should offset the MV decrease of A.
Stock Distribution (only A is in the index)
One security (A) distributes shares of another existing security (B). No share adjustment is required. The
price of security A will be adjusted:
Adjusted price (A) = previous day closing price (A) – price adjustment amount. A divisor adjustment is
required because, after calculating the adjusted price, the share count remains the same.
Stock Distribution (only B is in the index)
One security (A) distributes shares of another existing security (B). No share adjustment is required. No
price adjustment is required. No divisor adjustment is required because the MV increase of B should
offset the MV decrease of A.
Distribution of other type of Asset
A distribution to the company's existing shareholders of types of assets other than equity shares (e.g.
bonds, warrants, preferred shares, etc.). No share adjustment is required. A price adjustment would
take place ONLY if the other asset value or the value of the right is available on the ex-date. If relevant,
this price adjustment would be implemented as:
Adjusted price = previous day closing price – price adjustment amount.
Mandatory Redemption (buy-back)
A mandatory redemption (or buy-back) is a mandatory pro rata buy back of shares held by existing
shareholders. Shares would be adjusted if the redemption reduces shares outstanding by 5% or more.
No price adjustment is necessary. A divisor adjustment is necessary because the mandatory redemption
results in a decrease in share capital.
Primary Offering
Primary offering refers to issuance of new shares and can be framed as: 1) Public offering/placement where new shares placed by underwriters to institutional or other non-strategic investors. 2) Private
placement - where new shares as offered by the company itself to another company, an individual
investor, or a group of investors.
A share adjustment is required if the primary offering increases the shares outstanding by 5% or more.
No price adjustment is necessary. A divisor adjustment is necessary because the secondary offering
results in an increase in share capital.
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Secondary Offering
Secondary offerings are cases where existing shareholders would sell a portion of their holdings and
reduce stake in the company. This does not involve issuance of new shares but may lead to change in
float if the change is 10% or more is confirmed. No share or price adjustment is necessary.
Debt to Equity Conversion
It involves conversion of debt instrument, originally not convertible or contingent to be converted at the
time of issue, to equity. Share adjustment is made if the increase in shares outstanding is 10% or
more. No price adjustment is necessary. A divisor adjustment is made as the conversion results in an
increase in share capital.
Tender Offers
In case of tender offers, the target company is generally removed at the end of initial offer period when
the offer is likely to be successful or the offer is declared unconditional in all respects or if there is an
official announcement for the suspension or delisting.
The following factors are considered to assess the outcome of a tender offer:
× Nature of the offer to be friendly or hostile
× Status of regulatory approvals
× Required level of acceptance for the offer to be successful
× Target company’s Board of Director’s recommendation
× Stated intentions of major shareholders
Bankruptcy, Extreme Financial Distress, and Delisting
If the constituent is delisted by its principal exchange because it fails to meet financial or regulatory
standards, if it enters bankruptcy proceedings, or if it is under extreme financial distress, the security is
removed from the index. Exceptions are made on a case by case basis.
When a stock is suspended from trading due to financial distress and subsequently delisted by its
primary market prior to resumption of trading, the last traded price is not appropriate for determining the
value of the stock when it is removed from the index. To determine the appropriate price, the bestavailable alternate pricing source is utilized. If no pricing source is available, then the average of the last
bid and ask is used. In extreme cases of financial distress, and if it is clear that equity shareholders
shares are worthless, a security may be removed at a price of zero.
Suspension
Constituent securities for which trading is either halted or suspended due to legal investigations, failure
to meet listing or other statutory requirements, pending corporate actions, or other circumstances, will
be retained in the index unless the suspension leads to delisting, or if the suspension is on account of a
tender offer. During the suspension period, the security is carried forward at the market price
immediately prior to the suspension.
Late Announcements
Corporate actions that are announced before 1:30 EST effective on the same date are applied on that
day. Corporate actions that are announced after1:30 EST effective on the same date are applied on the
next index day by carrying forward last traded price as applicable.
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Morningstar Index Committee
The Morningstar Indexes Committee responsibilities include deciding on extraordinary issues pertaining
to index construction and maintenance such as security eligibility and classification, country eligibility and
classification, corporate actions. The Morningstar Indexes Committee decisions are deemed final.
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Appendix A
The following is a list of eligible exchanges for Developed Market Indexes:
Country
Australia
Austria
Eligible Exchange
Australian Securities Exchange
Vienna Stock Exchange
Belgium
Euronext Brussels
Canada
Denmark
France
Toronto Stock Exchange
Copenhagen Stock Exchange
First North
Helsinki Stock Exchange
First North
Euronext Paris
Germany
Deutsche Borse Xetra
Greece
Athens Stock Exchange
Hong Kong
Hong Kong Stock Exchange
Ireland
Irish Stock Exchange
Israel
Italy
Tel Aviv Stock Exchange
Borsa Italiana
Japan
Tokyo Stock Exchange
Nagoya Stock Exchange
Finland
Eligible Market Segment
Official List
Prime Market
Standard Market
Mid Market-Regulated
Euronext
Alternext
Official List
Main Market
Ineligible Market Segment
Mid Market-MTF
Free Market Segment
Main Market
Euronext
Alternext
Prime Standard
General Standard
Main Market
Alternative Market
Free Market Segment
Entry Standard
Low Dispersion
Surveillance
Under Suspension
Under Deletion
Main Board
Growth Enterprise Market(GEM)
Main Securities Market
Enterprise Securities Market
MTA
First Section
Second Section
Mothers
JASDAQ
First Section
Second Section
Centrex
MIV
AIM Italia-MAC
Other
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Continued:
Country
Netherlands
Eligible Exchange
Euronext Amsterdam
New Zealand
New Zealand Stock Exchange
Norway
Oslo Stock Exchange
Portugal
Euronext Lisbon
Singapore
Singapore Stock Exchange
Spain
Sweden
Madrid Stock Exchange
Stockholm Stock Exchange
First North
AktieTorget
Nordic Growth Market
SIX Swiss Exchange
London Stock Exchange
Switzerland
United Kingdom
Eligible Market Segment
Euronext
Alternext
Main Board
Alternative Market
Oslo Bors
Oslo Axess
Euronext
Alternext
Main Board
CATALIST
Ineligible Market Segment
Fonterra Shareholders’
Market
Main Market
Main Market
AIM Market
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The following is a list of eligible exchanges for the index for Emerging Markets:
Country
Eligible Exchange
Brazil
BM&F Bovespa SA
Chile
China
Colombia
Czech Republic
Santiago Stock Exchange
Shenzhen Stock Exchange
Shanghai Stock Exchange
Colombian Securities Exchange
Prague Stock Exchange
Egypt
Hungary
The Egyptian Exchange
Budapest Stock Exchange
India
Indonesia
Bombay Stock Exchange
National Stock Exchange
Jakarta Stock Exchange
Malaysia
Kuala Lumpur Stock Exchange
Mexico
Morocco
Mexican Stock Exchange
Casablanca Stock Exchange
Peru
Philippines
Poland
Lima Stock Exchange
Philippine Stock Exchange
Warsaw Stock Exchange
Qatar
Russian Fed.
South Africa
Qatar Stock Exchange
MICEX
Johannesburg Stock Exchange
South Korea
Korea Exchange
Taiwan
Thailand
GreTai Securities Market
Taiwan Stock Exchange
The Stock Exchange of Thailand
Turkey
Istanbul Stock Exchange
Eligible Market Segment
Ineligible Market
Segment
Traditional
Level 1
Level 2
Novo Mercado
Prime Market
Standard Market
Start Market
Primary Market
Standard Market
T Market
Main Board
Development Board
Main Market
Ace Market
Capitals Market
Main Market
PN-17
GN-3
Development Market
Growth Market
Main Board
Basic Market
Parallel Market
Main Board
AltX
KOSPI
KOSDAQ
Main Board
Main Board
Local Stock
Market for Alternative Investment
National Market
Second National Market
New Economy Market (ECM
Companies)
KONEX
Emerging Market Board
Alternate Trading Method
Companies to be Delisted
Foreign Common Stock
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Country
United Arab Emirates
Eligible Exchange
Eligible Market Segment
Ineligible Market
Segment
Abu Dhabi Securities Exchange
Dubai Financial Market
NASDAQ Dubai
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Appendix B
The following is a list of countries that have been determined to provide some benefits to incorporate in
their domicile and are considered as a tax haven:
Andorra
Jamaica
Anguilla
Jersey
Antigua and Barbuda
Liberia
Aruba
Liechtenstein
Bahamas
Luxembourg
Barbados
Marshall Islands
Belize
Monaco
Bermuda
Montserrat
Bonaire St. Eust. Saba
Netherlands Antilles
British Virgin Islands
Panama
Cayman Islands
Puerto Rico
Channel Islands
Saint Barthelemy
Cook Islands
Saint Kitts and Nevis
Curacao
Saint Martin
Dominica
San Marino
Dominican Republic
Seychelles
Falkland Islands
Sint Maarten
Faroe Islands
Solomon Islands
Gibraltar
St Vincent & Grenadines
Grenada
St. Lucia
Guam
Trinidad and Tobago
Guernsey
Turks and Caicos Islands
Haiti
Isle of Man
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Appendix C
Country Classification Case Studies
Case Study #1: Transocean




1999: Changed country of incorporation from U.S. to Cayman Island, primary and only listing on New
York Stock Exchange. Morningstar retained the country classification to U.S.
2008: Changed country of incorporation from Cayman Island to Switzerland, primary and only
listing on New York Stock Exchange
2010: An additional listing established on SIX Swiss Exchange
Result: Morningstar changed Transocean country classification to Switzerland, given country of
incorporation and local listing on Swiss exchange
Case Study #2: Prada



Incorporated in Italy and only listing on the Hong Kong Stock Exchange
Revenues cannot be attributed to any specific country
Result: Given that no link can be established between country of incorporation, country of listing and
country of revenue, Morningstar keep Prada as unclassified
Case Study #3: Southern Copper Corp.




Incorporated in the U.S., files a 10-K and have its primary listing on New York Stock Exchange
Majority of revenue is from Mexico (23%) followed by the U.S. (17%) (as of 31st December 2013)
Majority of assets located in Peru and Mexico
Result: Morningstar classify Southern Copper Corp. in the U.S. as it country of incorporation and
primary listing is in the U.S.
Appendix D
Eligible Securities (Developed Markets):
Country Name
Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Security Class
Ordinary Shares
Preferred Shares
Stapled Securities
Ordinary Shares
Preferred Shares
Units/Certificates
Ordinary Shares
Preferred Shares
Ordinary Shares
Units of Income Trusts
Stapled Securities
Ordinary Shares
Ordinary Shares
Ordinary Shares
Preferred Shares
Certificats d'Investissement
Certificats Coopératif d'Investissement
Ordinary Shares
Preferred Shares
Greece
Ordinary Shares
Preferred Shares
Hong Kong
Ordinary Shares
Business Trusts
Stapled Securities
Ordinary Shares
Units
Ireland
Israel
Common Shares
Preferred Shares
Italy
Ordinary Shares
Preferred Shares
Savings Shares
Ordinary Shares
Ordinary Shares
Japan
Netherlands
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New Zealand
Norway
Portugal
Singapore
Spain
Sweden
Switzerland
United Kingdom
Preferred Shares
Certificates
Ordinary Shares
Preferred Shares
Certificates
Ordinary Shares Certificates
Ordinary Shares
Ordinary Shares
Business Trust
Ordinary Shares
Preferred Shares
Ordinary Shares
Swedish Depositary Receipts
Ordinary Shares
Preferred Shares
Certificates
Ordinary Shares
Units
Eligible Securities (Emerging Markets):
Country Name
Brazil
Chile
China
Colombia
Czech Republic
Egypt
Hungary
India
Indonesia
Malaysia
Mexico
Morocco
Peru
Security Class
Ordinary Shares
Preferred Shares
Units
Ordinary Shares
Preferred Shares
B shares
H shares*
P chip*
Red chip*
Ordinary Shares
Preferred Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Ordinary Shares
Units
Certificate of Participation
Ordinary Shares
Ordinary Shares
Preferred Shares
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
© 2015 Morningstar, Inc. All rights reserved. The information in this document is the property of Morningstar, Inc. Reproduction or transcription by any
means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
33
Investment Shares
Philippines
Poland
Qatar
Russia
South Africa
South Korea
Taiwan
Ordinary Shares
Philippine Depository Receipts
Ordinary Shares
Ordinary Shares
Ordinary Shares
Preferred Shares
Ordinary Shares
Preferred Shares
Units
Ordinary Shares
Preferred Shares
Ordinary Shares
Preferred Shares
Thailand
Ordinary Shares
Preferred Shares
Turkey
United Arab Emirates
Ordinary Shares
Ordinary Shares
*The H shares, P Chip, and the Red Chip securities are listed at the Hong Kong stock exchange.
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
© 2015 Morningstar, Inc. All rights reserved. The information in this document is the property of Morningstar, Inc. Reproduction or transcription by any
means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
34
The following sections were modified:
Between Version 1.3 and 1.4

Foreign Room
× India is now added to the list of countries where Morningstar Indexes monitors foreign room
× Change in policy of handling Indian securities in the RBI caution list (Reserve Bank of India)

Appendix B
× The following countries are now added to the list of tax havens - Guam, Puerto Rico, Sint
Maarten, St Vincent & Grenadines, St. Lucia
Between Version 1.4 and 1.5

Developed and Emerging Market Country List
× Qatar and United Arab Emirates added to the list of Emerging Markets

Foreign Ownership Limits & Foreign room
× Qatar and United Arab Emirates are added to the list of countries where Morningstar Indexes
monitors foreign ownership limit and foreign room

Appendix A and Appendix D
× Added eligible exchanges and security types for Qatar and United Arab Emirates
Construction Rules for Morningstar Global Market ex-US Index Family |June 2015
© 2015 Morningstar, Inc. All rights reserved. The information in this document is the property of Morningstar, Inc. Reproduction or transcription by any
means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited. For Professional Use Only.
35