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Global Sanctions MethodologyCuba ScreenOctober 2014msci.com

Global Sanctions MethodologyCuba ScreenOctober 2014CONTENTSCONTENTS ............................................................................. 2CUBA SCREEN ...................................................................... 3DEFINITIONS .......................................................................... 3TYPES OF INVOLVEMENT ............................................................................... 3OWNERSHIP ........................................................................................................... 4RESEARCH PROCESS OVERVIEW ............................... 4MONTHLY UPDATES .......................................................................................... 4ANNUAL UPDATES .............................................................................................. 4SOURCES ................................................................................................................ 4QUALITY ASSURANCE ...................................................................................... 5GLOBAL SANCTIONS RESEARCH FACTORS: CUBA .......................... 5Contact Us ........................................................................ 8Notice and Disclaimer ............................................................................................ 8About MSCI ESG Research ................................................................................ 8About MSCI ............................................................................................................... 8MSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document2 of 8msci.com

CUBA SCREENGlobal Sanctions MethodologyCuba ScreenOctober 2014MSCI ESG Research’s Global Sanctions Cuba Screen is designed to serve investors interested in screeningtheir investments for companies that are or have been involved with Cuba. The Cuba Screen enablesMSCI ESG Research clients to meet U.S. State legislated mandates specifically targeting publicly tradedcompanies that are involved or have had involvement with Cuba, as well as those mandates focused oninvolvement with countries designated as “State Sponsors of Terrorism” by the U.S. Department ofState. Cuba is on the U.S. Department of State’s “State Sponsors of Terrorism” list. The Cuba Screen canalso be used to meet general MSCI ESG Research client interests in screening their investments forinvolvement with Cuba.DEFINITIONSCoverage universe: All global equity issuers plus selected bond-issuing subsidiaries, selectedcorporate bond issuers, and selected government-owned entities that operate as corporations.Sample of U.S. states with anti-terror mandates that include Cuba: Arizona, Florida, Maryland,Massachusetts, Michigan, New Jersey, Tennessee, and VirginiaTYPES OF INVOLVEMENTMSCI ESG Research classifies a company’s involvement with Cuba as one of the following types:Equity InvolvementDirect involvement with Cuba, including:Operations with Cuba, including sales officesInvestment in joint venture concerning key sectors of the Cuban economyOwnership of/by a company that meets the equity involvement criteriaNon-Equity InvolvementIndirect involvement with Cuba, including:Imports good and services from CubaSale of products to Cuba directly or through agency, distribution, franchise, or licensingagreements with 3 rd partiesOwnership of/by a company that meets the non-equity involvement criteriaOther Involvement A company that meets the equity or non-equity involvement criteria, but has suspended therelated operationsNot IncludedCompanies whose involvement is strictly humanitarian or limited only to the provision ofgoods/services related to health, education, journalism, or religionNon-revenue generating activitiesIndirect revenue generating activitiesMSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document3 of 8msci.com

Global Sanctions MethodologyCuba ScreenOctober 2014OWNERSHIPOwnership OF an Involved Company MSCI ESG Research notes if a company owns 20% or more of an involved companyOwnership BY an Involved Company MSCI ESG Research notes if an involved company owns 50% or more of another publicly tradedcompanyRESEARCH PROCESS OVERVIEWMONTHLY UPDATESResearch is conducted monthly to track previously uninvolved companies that have become involvedwith Cuba. Initial public offerings, name changes, de-listings, and mergers & acquisitions are included inthis research process.MSCI ESG Research will remove a company from a restricted list if MSCI ESG Research determinesconclusively that the company is no longer involved with Cuba.Updates to screens are available in ESG Manager five business days before the end of the month duringwhich new information is processed, and on the first of the following month in data feeds.ANNUAL UPDATESResearch on companies found to be involved with Cuba is updated once every calendar year. The annualupdate process involves confirming involvement and updating all companies with the most recent fiscalyear information. As necessary, MSCI ESG Research communicates directly with companies in order toconfirm involvement or discontinued operations.A new company search is conducted annually using proprietary web-crawling technology to identify anynew companies with involvement with Cuba.MSCI ESG Research will remove a company from a restricted list if MSCI ESG Research determinesconclusively that the company is no longer involved with Cuba.In addition, MSCI ESG Research will remove a company from a restricted list if after three years MSCIESG Research cannot confirm ongoing evidence of a company’s involvement with Cuba.SOURCESMSCI ESG Research uses a wide range of information tools and sources to perform both annual andmonthly updates, including:Proprietary web-crawling technologyCompany websitesCompany Annual Reports and regulatory filing documentsMedia search servicesBusiness directoriesNGO reports and websitesGovernment agencies and disclosureMSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document4 of 8msci.com

Global Sanctions MethodologyCuba ScreenOctober 2014Financial data providersDirect communication with companyQUALITY ASSURANCEMSCI ESG Research maintains robust quality assurance programs, including full reviews of research bysenior analysts, and a methodology committee that approves all changes to the research methodologyand enforces a consistent implementation.GLOBAL SANCTIONS RESEARCH FACTORS: CUBAIn addition to classifying the general type of a company’s involvement with Cuba, MSCI ESG Researchidentifies a number of factors detailing the nature of the company’s involvement. These factors arediscrete data fields in MSCI ESG Research’s Global Sanctions database and, therefore, can be used tocreate customized lists of companies involved with Cuba. These factors include both common criteriaacross all or most target countries covered by MSCI ESG Research’s Global Sanctions product, andfactors unique to Cuba.Clients that subscribe to ESG Manager and/or ESG Data Feeds will have access to these research factors.The following provides the research factor name, the column header under which that factor will beidentified, and the description of that research factor.CREATING A RESTRICTED LIST: CUBAStep 1Step 2The first step in creating a restricted list consists of determining the involvement type. All companies onMSCI ESG Research’s Cuba list meet one of the three involvement types, Equity, Non-Equity, or Other.Factor Name Column Header DescriptionCuba - InvolvementTypeCUBA_TIEType of involvement - Equity, Non-Equity, or OtherThe second step, if necessary, is to identify further levels of the company’s involvement with Cuba. Thefollowing list of research factors are available to build a restricted list concerning companies involvedwith Cuba, and are designed to be able to meet the criteria of various mandates. The factors are listedalphabetically by Column Header.Factor Name Column Header DescriptionCuba - GovernmentTieCUBA_BUS_GOVTCompany with a business tie to the Cubangovernment.Cuba - Military Tie CUBA_BUS_MILITARY Company with a business tie to the Cuban military.Cuba - Issue CreditLoanCUBA_CREDIT_LOANCompany issues credit or loans to Cuba.Cuba - Domiciled CUBA_DOMICILED Company's headquarters are located in Cuba(regardless of nation of incorporation).MSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document5 of 8msci.com

Global Sanctions MethodologyCuba ScreenOctober 2014Cuba - Totalinvestment in Cubagreater than USD20million in one yearCuba - Involvement inMineral ExtractionCuba - Involvement inNatural Gas /Petroleum SectorCuba - Involvement inPower ProductionActivitiesCuba – Provision ofMilitary EquipmentCUBA_INV_GREATER_20CUBA_INV_MIN_EXTCUBA_INV_NAT_GASCUBA_INV_POW_PRODCUBA_MILITARY_EQUIPThe company's total investment in Cuba is greaterthan USD $20 million in one year.Company is involved in mineral extraction activities,including, but not limited to: exploring, extracting,processing, and transporting.Company is involved in the natural gas or petroleumsector, including, but not limited to: exporting,extracting, producing, refining, processing, exploringfor, transporting, selling, or trading oil.Company is involved in power production activitieswhose purpose is to facilitate power generation anddelivery, including, but not limited to: establishingpower-generating plants or hydroelectric dams, andselling or installing components for such projects.Company has sold or distributed military equipmentto any party based in Cuba.Cuba - Pay for Mineral/ Energy rightsCuba - PropertyOwnershipCUBA_PAY_GOVT_MIN_ENERGYCUBA_PROPERTYCompany pays the Cuban government for accessrights to mineral or energy resources.Company owns/controls property in Cuba.Cuba - State Owned CUBA_STATE_ OWNED Cuban government, or any government-ownedentity, owns a 5% or greater stake in the company.Step 3The third step, if necessary, is to exclude companies from restricted lists if they have certain positive oroff-setting involvement with Cuba. MSCI ESG Research tracks the following positive or off-settingfactors:Factor Name Column Header DescriptionCuba - PromoteHealth, Education,Journalism, Religion(Positive Indicator)Cuba - Humanitarianefforts (PositiveIndicator)CUBA_HLTH_ED_JL_RELCUBA_ HUMANITARIANCompany whose operations in Cuba relate to thetransfer of information (including, but not limited to:books, newspapers and the Internet), the provisionof medicine/healthcare, or the propagation of anyreligious or philosophical belief system.Company whose primary operations in Cuba arerelated to food/medicine/human services, all ofwhich are provided to the population with minimalor no cost.MSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document6 of 8msci.com

Global Sanctions MethodologyCuba ScreenOctober 2014Cuba - InactiveOperationsCUBA_INACTCompany that maintains property, or renewal rightsto a property, that had previously operated for thepurpose of generating revenue but is currently notbeing used for that purpose.Step 4Finally, MSCI ESG Research provides a narrative summary of a company’s operations with Cuba, whichclients can choose to include in their lists for reference:Factor Name Column Header DescriptionCuba - CompanyProfileCUBA_PROFILEProfile of company's operations in Cuba.MSCI ESG Research© 2014 MSCI Inc. All rights reserved.Please refer to the disclaimer at the end of this document7 of 8msci.com

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