CONSULTATION ON POTENTIAL
ENHANCEMENTS TO THE MSCI DIVIDENDMASTERS INDEXES METHODOLOGY
August 2018

Note that this consultation may or may not lead to the implementation of any or allof the proposed changes in the highlighted or any other MSCI indexes. Consultation
feedback will remain confidential. MSCI may publicly disclose feedback if specificallyrequested by specific market participants. In that case, the relevant feedback would
be published together with the final results of the consultation.

© 2018 MSCI Inc. All rights reserved.
Please refer to the disclaimer at the end of this document.

SUMMARY MSCI is proposing potential enhancements to the MSCI Dividend Masters
Indexes methodology in order to avoid issuer concentration (multiple securitiesper issuer) in the MSCI Dividend Masters Indexes Proposal 1: Select only one security per issuer, in order of existing index
membership and dividend yield Proposal 2: No change to the selection process, but equal weighting at issuer
level MSCI proposes to implement this change starting from the November 2018
Annual Index Review

MSCI welcomes feedback from market participants until September 14, 2018 andwill announce the results of the consultation on or before September 28, 20182OVERVIEW OF THE CURRENT INDEX METHODOLOGYParameters

Methodology

Selection

At each annual index review, target a specified minimum
number of securities that have consistently increased dividends
every year for a specific number of consecutive years

Capping

Sector and country weights are capped at the defined
thresholds

Weighting

Securities are equal weighted at each index review

Index Reviews

Annual Index Review in November and Quarterly Index reviews
in February, May and August3

PROPOSED ENHANCEMENTS
Current

Proposal 1

Pick all securities that haveconsistently increased dividends
over the specified period

Pick all securities that haveconsistently increased dividends
over the specified period.
In case of multiple eligible
securities of the same issuer, select
only one security based on current
membership, and then on dividend
yieldCountry/Sector capping thresholds Country/Sector capping thresholds
met using an iterative algorithm,
met using an iterative algorithm,
based on number of securitiesbased on number of securities

All selected securities are equal
weighted

All selected securities are equal
weighted

Proposal 2

Pick all securities that haveconsistently increased dividends
over the specified period

Country/Sector capping thresholds
met using an iterative algorithm,
based on number of issuers.
Multiple securities of the same
issuer do not increase the countused in the capping process
All selected issuers1 are equal
weighted

1 Securities within each issuer would be weighted by their free float-adjusted market capitalization.

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SIMULATED RESULTS – MSCI EAFE DIVIDEND MASTERS INDEXCurrent

Proposal 1

Proposal 2

Pro forma #sec55

54

55

Pro forma #issuers

54

54

54

Turnover

14.2%

15.3%

15.1%

Highlights

Two securities ofsame issuer Lindt &Sprungli included, fora total issuer weightof 3.6%, while allother issuers have aweight of 1.8% each

Only one security
with higher yield
selected, for an issuer
weight of 1.9% same as all the otherissuers

Bothsecurities
selected, but equal
weighting at issuer
level, for an issuer
weight of 1.9% same as all the otherissuers

As of November 2017 Index Review5

SIMULATED RESULTS – MSCI EUROPE DIVIDEND MASTERS INDEXCurrent

Proposal 1

Proposal 2

Pro forma #sec42

41

42

Pro forma #issuers

41

41

41

Turnover

12.6%

14.1%

13.9%

Highlights

Two securities ofsame issuer Lindt &Sprungli included, fora total issuer weightof 4.8% while allother issuers have aweight of 2.4% each.

Only one security
with higher yield
selected, for an issuer
weight of 2.4% same as all the otherissuers.

Bothsecurities
selected, but equalweighting at issuer
level, for an issuer
weight of 2.4% same as all the otherissuers.

As of November 2017 Index Review

6SIMULATED RESULTS – MSCI EM DIVIDEND MASTERS INDEXCurrent

Proposal 1

Proposal 2

Pro forma #sec

71

68

69

Pro forma #issuers

70

68

68

33.6%

32.9%

34.7%

Two securities ofthe same issuer
Bancolombia
included, for a total
issuer weight of
2.8%, while allother issuers have aweight of 1.4%
each.

Only one security withhigher yield selected,
for an issuer weight of1.5% - same as all theother issuers .

Both securities selected,
but equal weighting atissuer level, for an issuer
weight of 1.5% - sameas all the other issuers.

When only one security
is selected, sector andcountry
caps
aresatisfied earlier, leading
to the two othersecurities not being
selected.

Due to issuer weighting,sector and country caps
are satisfied earlier,leading to two othersecurities not being
selected.

TurnoverHighlights

As of November 2017 Index Review7

DISCUSSION POINTS
Do you prefer Proposal 1 or Proposal 2?

 Additional questions for Proposal 1:
 Do you agree with giving preference to existing
constituents in order to avoid turnover?
 Would you prefer any other metrics such as market cap orliquidity?

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APPENDIX

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MSCI EAFE DIVIDEND MASTERS INDEX – DETAILED RESULTS

Security Name

Dividend
Yield

Dividend
Increase
periodWeights
Current

Proposal 1

Proposal 2# securities

55

54

55

# issuers

5454

54

Other Constituents –Total weight

--

96.4%

98.1%

98.1%

Other constituents –each issuer weight-

101.8%

1.9%

1.9%

Lindt & Sprungli Part1.52

10

1.8%

1.9%

0.9%

Lindt & Sprungli Namen

1.27

101.8%

0.0%

1.0%

14.2%

15.3%

15.1%

TurnoverAs of November 2017 Index Review

10MSCI EUROPE DIVIDEND MASTERS INDEX – DETAILED RESULTS

Security Name

Dividend
Yield

Dividend
Increase
periodWeights
Current

Proposal 1

Proposal 2# securities

4241

42

# issuers

41

41

41

Other Constituents –Total weight

--

95.2%

97.6%

97.6%

Other constituents –each issuer weight-

102.38%

2.44%

2.44%

Lindt & Sprungli Part

1.52

102.38%

2.44%

1.12%

Lindt & Sprungli Namen

1.27

102.38%

0.0%

1.32%

12.6%

14.1%

13.9%

TurnoverAs of November 2017 Index Review

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MSCI EM DIVIDEND MASTERS INDEX – DETAILED RESULTS
Security Name

Dividend
Yield

Dividend
Increase
periodWeights
Current

Proposal 1

Proposal 2# securities

71

68

69

# issuers

70

68

68

Other Constituents – Total
weight--

93%

97.1%

97.1%

Other constituents – eachissuer weight-7

1.4%

1.5%

1.5%

Bancolombia

3.37

71.4%

1.5%

0.5%

Bancolombia Pref

3.28

71.4%0%

1.0%

Aldar Properties

4.62

61.4%

1.5%

1.5%

Hon Hai Precision Ind

4.02

61.4%

0%

0%

Phison Electronics Corp

3.91

61.4%

0%

0%

33.6%

32.9%

34.7%

TurnoverAs of November 2017 Index Review

12MULTIPLE ISSUERS AT HISTORICAL INDEX REVIEWSMSCI EAFE Dividend Masters Index and MSCI Europe Dividend Masters Index

Index Review

Issuer with multiple securities

Nov 2016

Lindt & Sprungli – 2 securities

Nov 2015

Lindt & Sprungli – 2 securities

Nov 2014

Lindt & Sprungli – 2 securities

MSCI EM Dividend Masters Index

Index Review

Issuer with multiple securities

Nov 2016

Hyundai Motor Co – 3 securities

Nov 2015

Hyundai Motor Co – 2 securities

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