The standalone MSCI China A Index Series was created by MSCI Barra specifically for the China A share market. The index series is constructed with the objective to provide performance benchmarks for a broad section of investors currently investing in the A share market, including those with a value or growth style focus. The index design takes into consideration the unique characteristics of the A market and endeavors to reflect the investment process and constraints of domestic A share investors.

While the MSCI China A index is created primarily for domestic A share investors, it is also intended to serve as a tool for international investors to understand and approach the China A share market.

In designing the MSCI China A Index, MSCI has engaged in an extensive consultation with industry practitioners in China with the aim of creating a benchmark index that could fulfill the benchmark and investment needs of China equity investors.

The free-float market capitalization weighted MSCI China A index includes A share securities listed on both Shanghai and Shenzhen Stock Exchanges. The index is constructed based on a bottom up sampling approach targeting 65% of industry group representation with the objectives of capturing the diversity of business activities, achieving a broad and fair market representation and providing flexibility to reflect the evolution of the A share market. The index design also includes a large securities rule to systematically capture the specific risk of large companies and the use of a minimum size guideline and liquidity screen to ensure investability of the index.

Following consultations with investment professionals in China, MSCI Barra has introduced two value and growth index families for the China A share market based on MSCI’s standard global value and growth methodology. The MSCI China A Value and Growth Indices and the MSCI China A Absolute Value and Absolute Growth Indices provide representations of the opportunity sets available to style managers, and reflect two distinct methods of defining and segmenting the China A market.

These two style index families use the same set of criteria to determine the value and growth characteristics of securities, but they differ in style allocation. While the China A Value and Growth indices are consistent with MSCI’s widely followed Global Value and Growth Indices, the China A Absolute Value and Absolute Growth Indices have index inclusion criteria that highlight the strong style effects of the China A market.

In the China A market there is a weaker linkage between value and growth securities than in other markets, meaning that securities may demonstrate strong value and strong growth characteristics simultaneously, or not at all. The MSCI China A Absolute Value and Absolute Growth Indices reflect these style characteristics by allowing securities to be fully allocated to both value and growth indices if they demonstrate both value and growth characteristics. This reflects the practices of investment professionals in the China A market.

The index methodologies for the value and growth, as well as the absolute value and absolute growth, indices have a number of state-of-the-art features, including:

• A two-dimensional framework for style segmentation in which value and growth securities are specified using different attributes
• The use of seven different variables (three for value and four for growth), including forward-looking data, to more accurately reflect value and growth styles
• Buffer zones that reduce index turnover caused by the temporary migration of securities from one style index to the other