MarketGrader China A-Shares Materials 30 Index


Base Date:

December 31, 2007

No. of Components:

30

Minimum Market Cap:

USD $200 million

Minimum Daily Avg. Liquidity:

USD $2,000,000

Sector Limit:


Geographic Exposure:

Mainland China

Rebalance Frequency:

Semi-annual

Underlying Universe:

Companies covered by MarketGrader.com that are domiciled in Mainland China, listed on the Shanghai and Shenzhen Stock Exchanges, that belong to the Industrials sector as classified by MarketGrader.


Methodology


Selection
All index components are selected based on their overall MarketGrader grade. Built on a scale between zero and 100, our overall grade is based on 24 fundamental indicators, or factors, which are divided into four categories, with six indicators each: Growth, Value, Profitability and Cash Flow. All of our indicators and our overall company 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 index between rebalance periods.


Liquidity
All index constituents must have a minimum total market cap of USD $200 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.


Diversification
At least 20% of index constituents (six companies) must be designated as large caps by MarketGrader based on our annual classification by size of all Chinese equities under coverage.


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

Strategy

The MarketGrader China Materials Index seeks to follow the most fundamentally sound companies with the best growth prospects in the Materials sector that are domiciled and listed in Mainland China. Along with the rest of MarketGrader’s China Sector indexes, it seeks to give local and global investors the opportunity to gain exposure to the best companies in China, with the best growth at a reasonable price (GARP) attributes, while acting on their views on a sector-specific basis. Since the index is equally weighted, it gives each company an equal opportunity to contribute to its overall performance regardless of size or affiliation with the state.




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