# Index Methodology

***

### The reference index: DFMREI

The DFMREI measures the price performance of DFM-listed companies classified under the Real Estate sector according to the **Global Industry Classification Standard (GICS)**.

|                   |                                                                         |
| ----------------- | ----------------------------------------------------------------------- |
| Index Owner       | Dubai Financial Market (DFM)                                            |
| Calculation Agent | S\&P Dow Jones Indices (S\&P DJI)                                       |
| Calculation basis | Price Return — capital gains and losses from share price movements only |
| Publication       | Real-time during DFM trading hours                                      |
| Base currency     | UAE Dirham (AED)                                                        |

The DFM acts as Index Owner. S\&P DJI serves as the independent calculation agent, computing constituent weights on an end-of-day (EOD) basis in accordance with the official DFM Index Procedures (Version 22-01, November 2022).

***

### Weighting method

The DFMREI is **free-float-adjusted, market-capitalisation weighted**.

Each constituent's weight reflects its total market capitalisation adjusted by a Free Float Factor (FFF). The FFF excludes shares held by major shareholders, strategic investors, and other non-freely-tradeable blocks — ensuring the index reflects genuinely investable market activity.

The FFF is assigned on a tiered basis:

| Free Float Range | Free Float Factor Applied     |
| ---------------- | ----------------------------- |
| 5% – 25%         | 25% of market capitalisation  |
| 25% – 50%        | 50% of market capitalisation  |
| 50% – 75%        | 75% of market capitalisation  |
| Above 75%        | 100% of market capitalisation |

Companies with a Free Float Factor below 5% are not eligible for index inclusion.

***

### Single-constituent weight cap

No single constituent may exceed a **10% weight** at rebalancing.

Any constituent whose free-float-adjusted market cap weight exceeds 10% at the Rebalancing Reference Date is capped at 10%, with the excess redistributed proportionally across the remaining constituents.

***

### Rebalancing schedule

The index is reviewed and rebalanced **quarterly**.

| Date                       | Definition                                                                            |
| -------------------------- | ------------------------------------------------------------------------------------- |
| Rebalancing Reference Date | Close of trading on the Wednesday prior to the second Friday of the rebalancing month |
| Rebalancing Effect Date    | Monday market open following the close of the third Friday of the rebalancing month   |

Constituent weights are updated at the open of the Rebalancing Effect Date. Eligibility is assessed using market data from the preceding three months.

***

### Corporate actions

Splits, dividends, rights issues, spin-offs, mergers, and delistings are handled by S\&P DJI in accordance with the S\&P Corporate Actions Table (Appendix 2 of the DFM Index Procedures). Changes are announced at least one business day before implementation. Fractit's SPV operations team follows the same corporate action policy to maintain 1:1 replication fidelity.

***

### Index governance principles

The DFM Index Procedures are governed by five principles:

1. Constituents are freely tradable and have adequate liquidity relative to their size.
2. The index has operational continuity and only includes frequently traded securities.
3. Constituent weightings are representative of the market being measured.
4. All decisions are governed by an independent Index Policy Committee.
5. The methodology is transparent, with public consultation before any changes are introduced.


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