CONSULTATION ON POTENTIAL CHANGES TO THE
GLOBAL INDUSTRY CLASSIFICATION STANDARD(GICS®) STRUCTURE IN 2013
June 12, 2013

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TABLE OF CONTENTS
1.
2.
3.
4.

5.
6.
7.

Introduction
The Evolution of the GICS Structure
Summary of proposals
Proposals in detail Renewable Energy
 Silver Agriculture and Farm Machinery REITS Industry
 Information Technology Sector
 Photographic Products Sub-Industry
Changes to Sub-Industry Definitions
Other discussion topics
Scope of further granularity in the GICS Structure

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INTRODUCTION
 MSCI and S&P Dow Jones Indices have decided to consult with members of the investment community on potential changes to the
GICS structure in 2013. This consultation paper is designed to allow market participants to understand and give feedback on t hepotential changes to the GICS structure, which in turn will help MSCI and S&P Dow Jones Indices to make any final decisions.

 The consultation begins on June 12, 2013 and will end on August 23, 2013. Any changes to the GICS structure are expected to b eannounced on November 5, 2013. This consultation may or may not result in any changes to the GICS structure.
Mode of consultation:
If you would like to participate in this consultation, there are 3 options:Contact MSCI or S&P Dow Jones Indices by telephone- MSCI - Americas Client Service: 1.888.588.4567 (toll free) / +1.212.804.3901; EMEA Client Service:+44.20.7618.2222; Asia Pacific Client Service: +852.2844.9333- S&P Dow Jones Indices - U.S.: 1.877.325.5415 (toll free) / +1.212.438.2046; EMEA: +44.20.7176.8888;
China: +86.10.6569.2905; Japan: +813.4550.8564; Australia: +61.2.9255.9802; Canada: +1.416.507.3200; Dubai:+971.4.3727131; India: +91.22.22728971



Click on the below link to participate in the online survey-www.surveymonkey.com/s/SPDJI-GICS-2013

Contact one of the following email addresses with your feedback-MSCI: clientservice@msci.com-S&P Dow Jones Indices: spgics@standardandpoors.com-Contact your MSCI or S&P Dow Jones Account Manager or Representative
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3THE EVOLUTION OF THE GICS STRUCTURE
 In August 1999, MSCI and S&P Dow Jones Indices announced their agreement to co-develop GICS.
 When first introduced, GICS was a four tier structure with an eight-digit taxonomy – 10 Sectors, 23 Industry Groups, 59
Industries, and 123 Sub-Industries. Through the practice of periodic client consultations, the structure has evolved to 10
Sectors, 24 Industry Groups, 68 Industries, and 154 Sub-Industries. Direct input from global equity market participants has
been the key driver for these changes.

 Some of the more significant changes over the past 14 years include: Industrial Sector - the addition of an Industry for Professional Services and Sub-Industries for Diversified Support Services,
Human Resource and Employment Services, Research and Consulting Services, and Security and Alarm Services.

 Consumer Discretionary Sector - the addition of an Industry for Diversified Consumer Services and Sub-Industries for
Automotive Retail, Cable and Satellite, Education Services, Home Furnishing Retail, and Specialized Consumer Services.
 Financials Sector - the creation of an Industry for Real Estate Investment Trust (REIT) and seven Sub-Industries related to
REITs. Sub-Industry Real Estate Management and Development was made more granular by breaking it into Sub -Industries
Real Estate Operating Companies, Real Estate Development, Real Estate Services, and Diversified Real Estate Activities.

 Health Care Sector - the addition of Sub-Industries for Life Sciences Tools and Services, Health Care Services, and HealthCare Technology.
 Information Technology Sector - the promotion of the Semiconductors and Semiconductor Equipment Industry to Industry
Group status.

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SUMMARY OF PROPOSALSThe main proposals set out in this consultation paper are:
 Analysis of the Renewable Energy Industry
 Review of the Metals and Mining Industry
 Review of the Machinery Industry

 Review of the REITs Industry
 Review of the Technology Hardware and Equipment Industry Group Review of the Photographic Products Sub-Industry
 Potential changes to the definitions of certain Sub-Industries within the Banks Industry Group, and the Consumer Electronics
and Internet Software and Services Sub-Industries

 Discussion topic relating to the Health Care Sector
 Scope for further granularity in the GICS Structure

For a detailed description of the classification standard, please refer to the MSCI’s Web site www.msci.com or the S&P Dow Jones
Indices’ Web site www.spdji.com

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ANALYSIS OF THE RENEWABLE ENERGY INDUSTRY
Rationale for the analysis: Renewable fuels potentially present a comparative advantage over the traditional fossil fuels due to: Presence in wider geographies
 Reduced cost of related technologies
 Related economic benefits
 Energy security and energy efficiency
 With the conflicting interests of increased global demand for energy, and the need for a cleaner, greener environment, renewa ble
sources of energy continue to enjoy a strong surge in demand. This has lead to growth in both the market capitalization and t henumber of companies in the renewable energy space.

Does the current and potential future growth in the renewable energy sphere present a need to create new Industries and Sub Industries within the GICS structure?

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ANALYSIS OF THE RENEWABLE ENERGY INDUSTRY
Proposed structure:
SectorIndustry Group

Industry
101010 - Energy Equipment & Services

10 - Energy

1010 - Energy

101020 - Oil,Gas & Consumable Fuels

101030 - Renewable Energy (New)55 - Utilities

5510 - Utilities

551010 - Electric Utilities
551020 - Gas Utilities
551030 - Multi Utilities
551040 - Water Utilities
551050 - Independent Power Producers &Energy Traders (Discontinued)

Sub-Industry
10101010 - Oil & Gas Drilling
10101020 - Oil & Gas Equipment & Services
10102010 - Integrated Oil & Gas
10102020 - Oil & Gas Exploration & Production
10102030 - Oil & Gas Refining & Marketing
10102040 - Oil & Gas Storage & Transportation
10102050 - Coal & Consumable Fuels
10103010 - Renewable Energy (New)55101010 - Electric Utilities
55102010 - Gas Utilities
55103010 - Multi Utilities
55104010 - Water Utilities
55105010 - Independent Power Producers &Energy Traders551050 - Power Producers & Energy Traders 55105020 - Renewable Electricity (New)(Name change)

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ANALYSIS OF THE RENEWABLE ENERGY INDUSTRY
Proposed new definitions:
Renewable Energy:

Companies that engage in the generation and distribution of energy, other than electricity, using renewable sources, includin g, but
not limited to, companies that generate energy other than electricity using ethanol, biomass and biofuel, geothermal energy,hydrogen, and solar energy. Includes companies manufacturing capital equipment which are used to generate energy other thanelectricity, using renewable sources. Also includes companies that develop technology mainly for this market.
Renewable Electricity:

Companies that engage in generation and distribution of electricity using renewable sources, including, but not limited to,companies that produce electricity using biomass, geothermal energy, solar energy, hydropower, and wind power. Includes
companies manufacturing capital equipment used to generate electricity using renewable sources, such as manufacturers of sola r
power systems and installers of photovoltaic cells. Also includes companies involved in the provision of technology, componen ts,
and services mainly to this market.

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ANALYSIS OF THE RENEWABLE ENERGY INDUSTRY
Discussion topics:
 Are companies that produce renewable energy other than electricity and those that produce renewable electricity consideredseparate? Are these companies subject to different or similar valuation metrics?

 With the evolution of markets, do diversified energy companies tend to gradually move towards being pure -play companies
specializing in renewable energy or vice versa?
 Should companies involved solely in renewable energy equipment and services be classified based on their nature(‘Industrials’) or based on their end-use (‘Energy’ / ‘Utilities’)?

 Should renewable energy in ‘Sector 10: Energy’ also include companies manufacturing capital equipment, which in turn isused to generate renewable energy other than electricity, or does this warrant a separate Sub-Industry altogether?
 Should renewable electricity in ‘Sector 55: Utilities’ also include companies manufacturing capital equipment, which in turn isused to generate electricity using renewable sources, such as solar power systems and installers, and photovoltaic cells, ordoes this warrant a separate Sub-Industry altogether?

 Does the level of regulation play a role in governing the operations of renewable energy companies?

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REVIEW OF THE METALS AND MINING INDUSTRY
Rationale for the review:

 Silver’s industrial demand has greatly expanded the role of the global silver market in recent years. Silver’s unique technic alproficiency makes it suitable for a wide range of applications while also limiting the ability of industrial users to shift i n favorof less-costly alternatives. Whether it is health and medicine, electronics, communications, solar power, batteries, super
conductors, computers, jewelry or silverware, silver has numerous applications. Most of the other precious metals do nothave as many uses from an industrial standpoint as silver. Further, uncertainty over whether the gold price surge in recent
times is a bubble or backed by strong fundamentals and recent volatility in gold prices due to various global factors has led
investors to take shelter in potential safe havens like silver.
Does the current and potential future growth of the industrial demand for Silver warrant the creation of a new Sub -Industry
within the GICS structure?
 Companies engaged in mining of metallurgical (coking) coal used for steel production are better classified based on end use,
namely, steel.

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REVIEW OF THE METALS AND MINING INDUSTRY
Proposed structure:
SectorIndustry Group

15 - Materials 1510 - Materials

Industry

151040 - Metals & Mining

Sub-Industry
15104010 - Aluminum
15104020 - Diversified Metals & Mining
15104030 - Gold
15104040 - Precious Metals & Minerals
15104045 - Silver (New)15104050 - Steel

Proposed definitions:
Diversified Metals & Mining:

Companies engaged in the diversified production or extraction of metals and minerals not classified elsewhere, including, but notlimited to, nonferrous metal mining, salt and borate mining, phosphate rock mining, and diversified mining operations. Exclud esiron ore mining, classified in the Steel Sub-Industry and bauxite mining classified in the Aluminum Sub-Industry. Excludes coalmining companies classified either in the Coal & Consumable Fuels Sub-Industry or the Steel Sub-Industry.
Silver:Companies primarily mining silver. Does not include companies classified in the Gold or Precious Metals and Minerals Sub Industry.
Steel:
Producers of iron and steel and related products, including, but not limited to, metallurgical (coking) coal mining used for steel
production.

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REVIEW OF THE METALS AND MINING INDUSTRY
Discussion topics: What is the source of the demand for Silver?
 How does the market perceive the growth of companies mining Silver in the future?
 How does the market for Silver compare to that for Gold and how is this trend likely to change in the future? Are Silver
producers, Gold producers and Precious Metal producers subject to same or different valuation metrics?
 In terms of quantity, what proportion of the total precious metals and minerals should silver be, in order to be significant
enough to warrant an independent Sub-Industry for Silver?

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REVIEW OF THE MACHINERY INDUSTRY
Rationale for the review: There is a higher correlation of prices of agriculture and farm machinery to agricultural products than with those of capital
goods. This is primarily on account of the fact that the business cycles of agriculture and farm machinery follow the troughs
and crests of agriculture products rather than capital goods. Also, the key drivers affecting the demand for and supply ofagriculture and farm machinery are different as compared to heavy-duty and commercial trucks and other construction
equipments.
Proposed structure:

Sector20 - Industrials

Industry Group2010 - Capital
Goods

Industry

Sub-Industry
20106010 - Construction & Heavy Trucks(Name Change)
20106015 - Agriculture & Farm Machinery(New )

201060 - Machinery20106020 - Industrial Machinery

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REVIEW OF THE MACHINERY INDUSTRY
Proposed new definition:
Agriculture and Farm Machinery:
Companies manufacturing agricultural machinery, farm machinery and their related parts.

Including, but not limited to, manufacturers of: Farm field and farmstead machinery used for the production of crops and agricultural livestock Agricultural tractors
 Planting and fertilizing machinery, fertilizer and chemical application equipment
 Sprayers and irrigation equipment
 Tillage equipment
 Harvesting machinery, haying and mowing machinery Milking machines and other farm dairy equipment
 Poultry equipment
 Grain dryers and blowers
Discussion topics:

 Should manufacturers of ‘Agriculture and Farm Machinery’ be classified based on their nature (‘Industrials’) or based on
their end-use (‘Consumer Staples’)?
 Are the valuation metrics that manufacturers of ‘Agriculture and Farm Machinery’ are subjected to similar to those of
Machinery or Food Products?

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REVIEW OF THE REITS INDUSTRY
Rationale for the review: The global specialization of companies that are defined as some form of property trust (REIT) and the need for real estate as set
owners to conduct performance attribution and analysis has created the opportunity to create a more granular REITs GICS
structure that groups companies with more focused business activities in new Sub-Industries.

Have the hotel and resort REIT industry and the health care REIT industry, in particular, gained enough critical mass to warrant
their own Sub-Industries?
Proposed structure:
SectorIndustry Group

Industry

Sub-Industry

40402010 - Diversified REITs
40402020 - Industrial REITs
40402030 - Mortgage REITs
40402035 - Hotel & Resort REITs (New)40 - Financials 4040 - Real Estate 404020 - Real Estate Investment Trusts (REITs) 40402040 - Office REITs
40402045 - Health Care REITs (New)40402050 - Residential REITs
40402060 - Retail REITs
40402070 - Specialized REITs

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REVIEW OF THE REITS INDUSTRY
Proposed new definitions:
Hotel and Resort REITs:
Companies or Trusts engaged in the acquisition, development, ownership, leasing, management and operation of hotel and resort
properties.

Health Care REITs:
Companies or Trusts engaged in the acquisition, development, ownership, leasing, management and operation of properties
serving the health care industry, including hospitals, nursing homes, and assisted living properties.

Discussion Topics: Given the similarity of the Office and Industrial REITs, does it make sense to combine them into one Sub -Industry? Where dodata centers belong?
 Are there any other types of REITs that should be broken out into its own Sub-Industry?

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REVIEW OF THE TECHNOLOGY HARDWARE AND EQUIPMENT INDUSTRY GROUP
Rationale for the review:
 In recent years, technology companies have been more difficult to classify according to our existing Sub -Industry definitions in
the Information Technology Sector. Tablets, computers, and smartphones have similar drivers, and are viewed as very similar
products. Rather than being viewed strictly as communications tools, smartphones and tablets are viewed as mini computers.
We believe that the similar nature of these products makes it possible to combine two Sub-Industries into one.
 With only 16 companies, the Office Electronics Sub-Industry has been shrinking and is outdated. There are very few
manufacturers of copiers and fax machines anymore, and most have diversified into other operations. Companies
manufacturing copiers and fax machines would move into the Electronic Equipment and Instruments Sub -Industry.

Proposed structure:
SectorIndustry Group

Industry
452010 - Communications Equipment

45 Information
Technology

4520 Technology
Hardware &Equipment

45201020 - Communications Equipment
45202010 - Computer Hardware (Discontinued)

452020 - Technology Hardware, Storage & 45202020 - Computer Storage & Peripherals
Peripherals (Name Change)(Discontinued)
45202030 - Technology Hardware, Storage &Peripherals (New)452040 - Office Electronics (Discontinued)

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Sub-Industry© 2013. All rights reserved.

45204010 - Office Electronics(Discontinued)
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REVIEW OF THE TECHNOLOGY HARDWARE AND EQUIPMENT INDUSTRY GROUP
Proposed definitions:Technology Hardware, Storage and Peripherals:
Manufacturers of smartphones, personal computers, servers, electronic computer components and peripherals. Includes data
storage components, motherboards, audio and video cards, monitors, keyboards, printers, and other peripherals. Excludes
semiconductors classified in the Semiconductors Sub-Industry.
Communications Equipment:
Manufacturers of communication equipment and products, including LANs, WANs, routers, telephones, switchboards andexchanges.

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REVIEW OF THE PHOTOGRAPHIC PRODUCTS SUB-INDUSTRY
Rationale for the review: The Photographic Products Sub-Industry is outdated and shrinking. Most companies in this category manufacture opticallenses, not necessarily for consumer-focused cameras. Companies can be split between 2 Sub-Industries: digital cameras andrelated equipment will be classified into Consumer Electronics, and other types of photographic products will be classified i n
Leisure Products.

Proposed Structure:
SectorIndustry Group

2520 - Consumer
25 - Consumer
Durables &Discretionary
Apparelmsci.com

Industry

Sub-Industry
25202010- Leisure Products

252020 - Leisure Equipment & Products© 2013. All rights reserved.

25202020 - Photographic Products(Discontinued)

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CHANGES TO SUB-INDUSTRY DEFINITIONS
Commercial Banks Industry (401010)
 The 401010 Industry level name will change from Commercial Banks to Banks. We are also changing the definitions ofDiversified Banks (40101010), Regional Banks (40101015), and Other Diversified Financial Services (40201020) in order to moreaccurately classify large, diversified and regional retail banks.

New definition for 40101010 - Diversified Banks will be:
Large, geographically diverse banks with a national footprint whose revenues are derived from conventional banking services
and have significant business activity in retail banking and small and medium corporate lending. Excludes banks classified in the
Regional Banks and Thrifts and Mortgage Finance Sub-Industries. Also excludes investment banks classified in the Investment
Banking and Brokerage Sub-Industry.
New definition for 40101015 – Regional Banks will be:
Commercial banks whose businesses are derived primarily from conventional banking services and have significant businessactivity in retail banking and small and medium corporate lending. Regional banks tend to operate in limited geographic
regions. Excludes companies classified in the Diversified Banks and Thrifts & Mortgage Banks sub -industries. Also excludes
investment banks classified in the Investment Banking & Brokerage Sub-Industry.
New definition for 40201020 - Other Diversified Financial Services will be:
Providers of a diverse range of financial services and/or with some interest in a wide range of financial services includingbanking, insurance and capital markets, but with no dominant business line. Excludes companies classified in the Banks
Industry.

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CHANGES TO SUB-INDUSTRY DEFINITIONSInternet Software and Services Sub-Industry (45101010)
 We will update the definition for the Internet Software and Services Sub-Industry to highlight the fact that companies who
generate a majority of revenues from online advertising are classified here.
New definition for 45101010- Internet Software and Services will be:
Companies developing and marketing internet software and/or providing internet services including online databases andinteractive services, as well as companies deriving a majority of their revenues from online advertising.
Thrifts and Mortgage Finance (40102010)

 The definition will be updated to remove reference to mortgage GSEs (government sponsored enterprises).
New definition for Thrifts and Mortgage Finance will be:
Financial institutions providing mortgage and mortgage related services. These include financial institutions whose assets areprimarily mortgage related, savings and loans, mortgage lending institutions, building societies and companies providing
insurance to mortgage banks.
Consumer Electronics (25201010)

 The definition of Consumer Electronics is outdated.
New definition for Consumer Electronics will be:
Manufacturers of consumer electronics products including TVs, home audio equipment, game consoles and related products.
Excludes electric household appliances classified in the Household Appliances Sub -Industry.

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OTHER DISCUSSION TOPICS
 There is a lot of overlap between the Biotechnology and Pharmaceuticals Sub-Industries, which sometimes makes it difficult todetermine the correct classification. How should we distinguish between pharmaceuticals and biotechnology companies?
Should companies classified as Biotechnology ideally not engage in manufacturing pharmaceuticals? Should we create another
Sub-Industry or combine pharmaceuticals and biotechnology?
 How does the market view companies manufacturing products using biotechnology but without a health care application? For
example, industrial enzymes have been designed to catalyze reactions for products in many industries, including brewing, food ,biofuel, rubber, photographic, and molecular biology. How are these types of companies best classified?

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SCOPE OF FURTHER GRANULARITY IN THE STRUCTURE – DISCUSSION TOPIC

What should we focus on over the next three-to-five years?
 Large Sub-Industries that can be broken down, such as “Diversified Metals and Mining”, “Packaged Foods and Meats”,
and “Commodity Chemicals”.

 Split Sub-Industries with dissimilar business models grouped together such as “Aerospace and Defense”.
 Are there any other areas where you would like to see more granularity or consolidation?

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NOTICE AND DISCLAIMER•

This document has been prepared by MSCI and S&P Dow Jones Indices LLC and its affiliates (“S&P Dow Jones Indices”) solely for informational purposes. All of the information contained
herein, including without limitation all text, data, graphs, charts (collectively, the “Information”) is the property of MSCI , S&P Dow Jones Indices, or their respective affiliates. The
Information may not be reproduced or redisseminated in whole or in part without prior written permission from MSCI and S&P Dow Jones Indices.

•

None of the proposals or alternatives set forth herein has been adopted by MSCI, S&P Dow Jones Indices or Standard & Poor’s F inancial Services LLC (“S&P”), an affiliate of S&P Dow
Jones Indices, and there is no assurance that they may be considered or adopted, in whole or in part, by any such party.

•

The Information may not be used to create derivative works or to verify or correct other data or information. For example ( but without limitation), the Information may not be used tocreate indices, databases, risk models, analytics, software, or in connection with the issuing, offering, sponsoring, managing or marketing of any securities, portfolios, financial products
or other investment vehicles utilizing or based on, linked to, tracking or otherwise derived from the Information.

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and none of the Information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on
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•The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and S&P. “Global I ndustry Classification Standard (GICS)” is a service mark of
MSCI and S&P.

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