Methodology Changes to MSCI Index Announced

October 10, 2001 ( - Morgan Stanley Capital International (MSCI) has posted the changes to the MSCI Standard Index series resulting from the first phase of the implementation of the free float methodology changes.

The full list of pro forma constituents of the MSCI Standard Index Series is now available to offer firms that track the indexes time to adjust. The changes are scheduled to go into effect on November 30.

Enhanced Methodology

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The Enhanced Methodology adjusts the market capitalization of index constituents for free float and targets for index inclusion 85% of free float-adjusted market capitalization in each industry group in each country (see MSCI Changes Index Methodologies ).

The object of the first phase of the implementation, effective a t the end of November, is to reflect approximately half of the changes in the index. To achieve this, an Interim Foreign Inclusion Factor will be used to adjust the market capitalization of each constituent.

The second and final phase of the implementation of the Enhanced Methodology will take place at the end of May next year.

Weighing In

Major changes within the All Country World Index Free include:

  • the weight of the developed markets will change to 96.2% from 95.3%,
  • the MSCI USA will increased to 53.4%, from 50.7% of this index,
  • while the MSCI United Kingdom Index will increase to 10.3% from 9.9% of the index

Within the MSCI EAFE Index, which represents 21 developed equity markets outside of North America:

  • the MSCI United Kingdom Index will increase to 25.4% if the EAFE Index, up from 23.3%,
  • While the country weights of France, Germany and Italy will decrease by 0.85%, 0.5%, and 0.4% respectively

Within the Emerging Markets Free Index (EMF), which represents 26 of the world?s emerging markets:

  • Korea?s weight will increase to 13.8%, up from 12.3%, and
  • South Africa?s country weighting will rise to 12.6% from 11.4%, while
  • India, Malyasia and Chile will fall by 0.9%, 0.9% and 0.7% respectively

Read more at The EAFE Effect

The constituents can be viewed at the MSCI Web site at