.jpg)
The proposed full country index review would be moved from the current frequency of 12 to 18 months to an annual periodicity at fixed dates. The full index review for countries included in the MSCI Developed Markets Series is proposed to be carried out at the end of May, while the full index review for countries included in the MSCI Emerging Markets Series would take place at the end of November. The annual full country index review would involve a systematic re-assessment of the various dimensions of the equity universe for the countries being reviewed. This will include a re-appraisal of the free float-adjusted industry group representation within a country, a detailed review of the shareholder information used to estimate free float for constituent and non-constituent securities, and updating of minimum size guidelines for new and existing constituents.
Although most event-related changes, such as mergers and acquisitions, are and will continue to be implemented on their effective dates, there is a role for quarterly index reviews to reflect certain other market events on a timely way. Under the proposal, quarterly index reviews would be carried out at end of February, May, August, and November to reflect important market driven changes that were not captured in the index at the time of their actual occurrence and should not wait until the full country index review due to their importance. These quarterly index reviews may result in additions or deletions, due to one or more industry groups having become significantly over- or under-represented, as a result of important mergers, acquisitions, reorganizations and other major market events, and additions of large companies that did not meet the minimum size threshold for early inclusion at the time of their IPO or secondary offering. The quarterly index review also may include changes in Foreign Inclusion Factor (FIF) due to large market transactions involving strategic shareholders or changes in Foreign Ownership Limits, or the deletion of very small or illiquid securities.
These proposals and some alternatives are presented in a consultation paper, which is available on MSCI's website (www.msci.com/consultation).
MSCI has opened a formal period of consultation with investors worldwide on these proposals. This review may or may not lead to any changes in MSCI policy with respect to index rebalancing frequency and timing. If any change is warranted, MSCI will make a public announcement on or before May 31, 2002. All MSCI Equity Indices and related products, including the MSCI Value and Growth Index Series, the MSCI Standard Pan-Euro and Euro Indices and the MSCI GDP-weighted Indices may be impacted.
