October 2019 S-Network REIT Dividend Dogs Index (RDOGX) Index Rules and Methodology
October 2019 TABLE OF CONTENTS I. GENERAL DESCRIPTION .......................................................................................................... 3 II. THE INDEX COMMITTEE ........................................................................................................... 3 III. INDEX VALUE AT INCEPTION ................................................................................................. 4 IV. ELIGIBILITY CRITERIA and WEIGHTING ............................................................................... 4 V. RULES FOR RECONSTITUTIONS, REBALANCINGS, AND INDEX CHANGES .................... 4 VI. ROLES OF PARTIES IN THE QUARTERLY REBALANCE .................................................... 5 VII. ROLES OF PARTIES IN THE ANNUAL RECONSTITUTION ................................................. 6 VIII. CALCULATION OF INDEX VALUES ..................................................................................... 6 IX. DISSEMINATION ....................................................................................................................... 7 X. ONGOING MAINTENANCE ....................................................................................................... 7 XI. CALCULATION AND ADJUSTMENTS .................................................................................... 9 XII. DATA CORRECTION POLICY ............................................................................................... 12 XIII. APPENDIX REVIEW SCHEDULE ......................................................................................... 13 S-Network REIT Dividend Dogs (RDOGX) | 2
October 2019 The S-Network REIT Dividend Dogs Index (RDOGX) Official Rule Book I. General Description RDOGX is a portfolio of stocks derived from the S-Network US Composite REIT Index (SNREIT). The RDOGX methodology selects the five stocks in each of the nine segments that make up SNREIT which offer the highest dividend yields as of the last trading day of November. The forty-five stocks that are selected for inclusion in the portfolio are equally weighted. The S-Network US Composite REIT Index is a benchmark index for the Real Estate Investment Trust component of the US stock market. SNREIT provides the universe of stocks for RDOGX. RDOGX, like SNREIT, divides into nine segments, eight of which are based on GICS Sub- Industries (excluding REITs involved in certain technologies) and one based on S- Network’s research : • • Diversified REITs Office REITs • • Health Care REITs Hotel & Resort REITs • • Industrial REITs Residential REITs • • Retail REITs Specialized REITs • Technology REITs The selection criteria for SNREIT include requirements for sector inclusion, primary exchange listing, minimum market capitalization, minimum average daily trading volume, and other factors. All constituents of RDOGX must be constituents of SNREIT. RDOGX excludes all operating companies within the Real Estate sector (Sector 60) as well as Mortgage REITs. The Technology REITs segment comprises REITs that are principally engaged in communication towers and/or data centers. Individual securities to be included in RDOGX are selected based on a ranking system within each sector that selects the top five stocks in the sector by indicated dividend yield as of the last trading day of November that have funds from operations per share greater than their trailing-12-month dividends per share. Indicated dividend yield is computed based on the last regular cash dividend paid by the company multiplied by the payment frequency, divided by the share price. (Special dividends are not included). All stocks selected for inclusion in RDOGX are then equally weighted. S-Network REIT Dividend Dogs (RDOGX) | 3
October 2019 II. The Index Committee The S-Network RDOGX Index Committee (“The Committee”) will be composed of not less than three members. The Committee Chairman will have extensive experience with and expertise in US equity markets. The other members will have experience in financial markets, indexes and/or financial products. The Committee will be responsible for overseeing the activities of the calculation agent and approving all changes to the index related to its annual reconstitution and quarterly rebalancings. The Committee meets quarterly, either in person or via teleconference, to discuss index issues and organize the annual reconstitution and quarterly rebalancings. The composition of the Committee may from time to time be changed to reflect changes in market conditions. All members of the index committee and their advisors shall comply with the S-Network Global Indexes code of conduct and ethics with respect to the disclosure and use of material non-public information. III. Index Value at Inception The S-Network REIT Dividend Dogs Index (Ticker: RDOGX) had a value at inception of 1000, on its inception date of June 30, 2006. RDOGX is calculated on both a Price Only and on a Total Return basis. IV. Eligibility Criteria and Weighting. Only stocks that are current constituents of SNREIT as of the last trading day of the second month of each calendar quarter (“the snapshot date ”) and have paid at least one dividend during the previous 12 months are eligible for inclusion in the index. The five stocks in each of the nine segments with the highest indicated dividend yields as of the last trading day of November and with funds from operations per share greater than their trailing-12- month dividends per share are selected for inclusion. If a company eligible for inclusion in the index has announced that it will cut its dividend within six months of the December reconstitution, the adjusted indicated dividend yield will be used as a substitute for the indicated yield in the December reconstitution. GICS Sector and Sub-Industry classifications are updated annually as of the last trading day of November. All stocks selected for inclusion in RDOGX must have a 90-day average daily trading value (ADTV) of greater than or equal to the minimum 90-day ADTV out of those of all the constituents of SNREIT whose company market capitalizations comprise the top 95% of the total. S-Network REIT Dividend Dogs (RDOGX) | 4
October 2019 All stocks selected for inclusion in RDOGX are equally weighted. Share weights will be based on prices as of the close of trading on the second Friday of the rebalancing month (“ The Record D ate”). If there are fewer than 5 eligible securities represented in any segment as of the snapshot date the index will include only those securities that qualify. All constituents are equally weighted as of the record date. V. Rules for Reconstitutions, Rebalances, and Index Changes The RDOGX is calculated by S-Network Global Indexes. ( “ The Calculation Agent ” ). The Calculation Agent is also responsible for index maintenance and price dissemination. The calculation, maintenance and dissemination rules are as follows: Index Changes. The RDOGX Index is rebalanced quarterly on the third Friday of the last month of each calendar quarter. Index changes take place at each rebalancing date (the third Friday of the last month of each calendar quarter), except in the event of certain corporate actions, such as mergers, acquisitions, and delistings. In such cases, the change is applied on the effective date of the action, unless otherwise determined by the Index Committee. Share increases and decreases are reflected on the rebalancing date. Whenever possible, changes will be announced at least two business days prior to their implementation. Index Reconstitutions. The RDOGX Index is reconstituted annually on the third Friday of December. Additions and Deletions. Additions and Deletions to the Indexes are made 1) at the close of trading on the annual reconstitution date (third Friday of the December) and 2) in the event of the deletion of a constituent stock due to a corporate action. When a stock is deleted, a replacement will be added on the next rebalancing date. Deletions are made at any time, in the event a stock is liquidated, de-listed, files for bankruptcy, is acquired, or merges with another stock. Upon deletion, the weight of the removed stock is reallocated proportionately to the remaining constituents. Additions are made only upon the effective date of the quarterly rebalancing. If a stock is deleted from SNREIT, the stock will be deleted from RDOGX on the date of the next rebalancing. If a stock is deleted from SNREIT after the snapshot date for additions and deletions pursuant to quarterly rebalancings but before the rebalancing date, the stock will be deleted from the index and a replacement stock will be chosen. VI. Roles of Parties in the Quarterly Rebalance. i) The Calculation Agent will screen the constituents of the RDOGX to validate each constituent is a member of SNREIT Index. S-Network REIT Dividend Dogs (RDOGX) | 5
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