MarketGrader China A-Shares 100 Index


Base Date:

December 31, 2007

No. of Components:

100

Minimum Market Cap:

USD $100 million

Minimum Daily Avg. Liquidity:

USD $2,000,000

Sector Limit:

20% (20 companies)

Geographic Exposure:

Mainland China

Rebalance Frequency:

Semi-annual

Underlying Universe:

Companies domiciled in Mainland China, listed in the Shanghai or Shenzhen Exchanges, covered by MarketGrader.com


Methodology


Selection
All index components are selected based on their overall MarketGrader Grade. Built on a scale between 0 and 100, our Overall Grade is based on our 24 fundamental indicators, which are broken down into four analytical categories: Growth, Value, Profitability and Cash Flow. All of our indicators and our overall grades are calculated daily for all companies under coverage.


Equal Weighting
All index constituents are equally weighted every time the index is rebalanced. No weight modifications or adjustments are made to the portfolio between rebalance periods.


Liquidity
All index constituents must have a minimum total market cap of USD $100 million, a minimum 3-month daily traded value of USD $2 million and at least USD $50 million in aggregate trading volume in the trailing 12 months immediately before the index selection date. At least 20% of all index components (20/40 companies) must have a market cap of at least USD $2 billion.


Diversification
No more than 20% of the index (20 companies) may belong to the same economic sector.


Rebalance Discipline
The index is rebalanced twice a year, on the third Friday of March and September.

Strategy

The MarketGrader China A-Share 100 Index seeks to follow the most fundamentally sound companies with the best growth prospects in Mainland China. It seeks to give local and global investors access to a market that has been gradually opening to foreign investments, and that houses some of the most promising companies in China. As the Shanghai and Shenzhen stock markets continue to develop into world-class investor destinations, our A-Share indexes seek to expose investors to the best opportunities within them. Since their constituents are equally weighted, the index gives each company an equal opportunity to contribute to the performance of the portfolio regardless of market size, sector, business model or affiliation with the state.




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