Calculation of Stock Market Indices

Istanbul Stock Exchange

General Information

ISE Stock Market Indices

ISE indices are composed in order to calculate price and return performances of all shares as well as on the basis of relative markets and sectors. Until the end of 1996, the ISE used to compute only the ISE-100, Financials and Industrials price indices. As from 1997, the ISE began to calculate sector and sub-sector indices on the basis of prices and total return.

ISE price indices are computed and published throughout the trading session while the return indices are calculated and published at the close of the session only. The ISE National-100 Index is used as a main indicator of the National Market.

ISE National-All Shares Index is composed of all National Market companies except investment trusts.

ISE National-30 is composed of National Market companies except investment trusts and will also be used for trading in the Derivatives Market. The constituent 30 companies are selected on the basis of pre-determined criteria directed for the companies to be included in the indices.

ISE National-50 is composed of National Market companies except investment trusts. The constituent 50 companies are selected on the basis of pre-determined criteria directed for the companies to be included in the indices. ISE National-50 Index contains the ISE National-30 Index companies.

ISE National-100, which has been calculated since the inception of the ISE, is composed of National Market companies except investment trusts. The constituents of the ISE National-100 Index are selected on the basis of pre-determined criteria directed for the companies to be included in the indices. ISE National-100 Index contains the ISE National-50 and ISE National-30 Index companies.

Sector and sub-sector indices are composed of National Market companies excluding investment trusts.

ISE Second National Market Index is composed of companies traded in the Second National Market. Regional Markets’s name was changed to Second National Market as of March 03, 2003.

ISE New Economy Market Index is composed of companies traded in the New Economy Market.

ISE Investment Trusts Index is composed of investment trust stocks traded in the National Market.

The Istanbul Stock Exchange decided to drop two zeros from the current market indices (i.e. ISE-100, Financials and Industrials) for simplification purposes. With the new implementation, ISE-100 index values prior to and including December 27, 1996 were divided by 100 to have a January 1986 base value of 1 (one) instead of the previous 100. Former values of the ISE Financials and Industrials Indices were also divided by 100 to have base values of December 31, 1990 = 32,56 instead of 3,255.75.

As from 1997, the Istanbul Stock Exchange calculated the values of all indices as an integer while two decimal numbers were added to the integer as from 1998.

The existing and the newly introduced stock market indices of the Istanbul Stock Exchange are shown below:

CODE	INDICES	BASE DATE AND VALUE
XU100	ISE NATIONAL-100	Jan. 1986 = 1
XU050	ISE NATIONAL-50	Dec.28, 1999=15,208.78
XU030	ISE NATIONAL-30	Dec.27, 1996=976
XUTUM	ISE NATIONAL - ALL SHARES	Dec.27, 1996=976
XUSIN	ISE NATIONAL - INDUSTRIALS	Dec.31, 1990 = 32.56
XGIDA	FOOD, BEVERAGE	Dec.27,1996=1,046
XTEKS	TEXTILE, LEATHER	Dec.27,1996=1,046
XKAGT	WOOD, PAPER, PRINTING	Dec.27,1996=1,046
XKMYA	CHEMICAL,PETROLEUM,PLASTIC	Dec.27,1996=1,046
XTAST	NON-METAL MINERAL PRODUCTS	Dec.27,1996=1,046
XMANA	BASIC METAL	Dec.27,1996=1,046
XMESY	METAL PRODUCTS, MACHINERY	Dec.27,1996=1,046
XUHIZ	ISE NATIONAL - SERVICES	Dec.27,1996=1,046
XELKT	ELECTRICITY	Dec.27,1996=1,046
XULAS	TRANSPORTATION	Dec.27,1996=1,046
XTRZM	TOURISM	Dec.27,1996=1,046
XTCRT	WHOLESALE AND RETAIL TRADE	Dec.27,1996=1,046
XILTM	TELECOMMUNICATIONS	July 24, 2000 = 13,719.88
XSPOR	SPORT	March 31, 2004 = 20,190.83
XUMAL	ISE NATIONAL - FINANCIALS	Dec.31,1990 =32.56
XBANK	BANKS	Dec.27, 1996 = 914
XSGRT	INSURANCE	Dec.27, 1996 = 914
XFINK	LEASING, FACTORING	Dec.27, 1996 = 914
XHOLD	HOLDING AND INVESTMENT	Dec.27, 1996 = 914
XGMYO	REAL ESTATE INVESTMENT TRUSTS	Dec.28, 1999 = 21,180.77
XUTEK	ISE NATIONAL-TECHNOLOGY	June 30, 2000 = 14,466.12
XBLSM	INFORMATION TECHNOLOGY	June 30, 2000 = 14,466.12
XSVNM	DEFENCE	June 30, 2000 = 14,466.12
XYORT	ISE INVESTMENT TRUSTS	Dec.27, 1996 = 976
XIKIU	ISE SECOND NATIONAL	Dec.27, 1996 = 976
XYEKO	ISE NEW ECONOMY	Sept.02, 2004 = 20.525,92

ISE also computes and maintains all indices in U.S. dollar terms and ISE National-100 Index in Euro terms.

Calculation of ISE Stock Market Indices

The ISE indices are weighted by the market capitalization of the publicly held portion (the stocks kept in custody at Takasbank, except those kept in non-fungible accounts) of each constituent.

The basic formula for calculating ISE’s float capitalization-weighted indices is as follows:

å Pit x Nit x FWit

ISE Indext = i=1

P_it = The closing price of the stock ‘i’ at period ‘t’
N_it= The total number of shares outstanding of the stock ‘i’ at period ‘t’ (Paid-in capital / 1,000)
FW_it= The flotation weight (publicly-held portion, i.e. the ratio of stocks kept in custody at Takasbank, except those kept in non-fungible accounts) of the stock ‘i’ at period ‘t’
D_t = The value of divisor at period ‘t’ (Adjusted base market value)
n = Total number of stocks included in the index.

Prices of old and new stock certificates are taken into account separately.
Only registered prices are taken into account in the calculation of indices.

Maintenance and the continuity of the indices

All of the indices have varying base values and the continuity of the indices is maintained by adjusting these base values (the divisor of the index formula).

Corporate actions that necessitate an adjustment to the base values of the indices and the adjustment times are shown below:

Price Indices
Corporate Action	Adjustment Time
a) Capital increase through rights issues i. Exercising pre-emptive rights ii. Not-exercising the pre-emptive rights b) Addition of a new stock to the Index c) Exclusion of a constituent stock d) Change in the ratio of stocks kept in custody at Takasbank e) Mergers and acquisitions f) Company splits	Beginning date of subscription period Ending date of sales Date of entry Date of exclusion Quarterly Stock distribution date Stock distribution date

Return Indices
Corporate Action	Adjustment Time
a) Capital increase through rights issues i. Exercising pre-emptive rights ii. Not- exercising the pre-emptive rights b) Addition of a new stock to the Index c) Exclusion of a constituent stock d) Change in the ratio of stocks kept in custody at Takasbank e) Dividend payment f) Mergers and acquisitions g) Company splits	Beginning date of subscription period Ending date of sales Date of entry Date of exclusion Quarterly Ex-dividend date Stock distribution date Stock distribution date

The formula for adjusting the base market value is as follows:

New Base Value = Former Base Value x New Market Value
Former Market Value

Selection Criteria for the Companies to be included in the ISE National-30, ISE National-50 and ISE National-100 Indices

ISE Executive Council shall determine the stocks to be included in the ISE indices following the evaluation of market data on a quarterly basis.

The constituent companies of the ISE National-30, ISE National-50 and ISE National-100 indices must fulfill the following pre-requisites:

a) The stocks of the company traded in the National Market should have been traded on the Exchange for at least 60 days in order to be included in the ISE National-30, ISE National-50 and ISE National-100 Indices. A company which starts to be traded in the National Market within the Evaluation Period and the market value of its stocks offered to the public is equal or greater than the 2% of the total market value of National Market stocks those kept in custody at Takasbank (Except those kept in non-fungible accounts) as of the date of public offering, is not subject to this rule.

b) For companies having more than one group of stocks (e.g. group A, group B, group C etc.) only one group is included.

The stocks are ranked according to the highest market value (3-month average number of stocks kept in custody at Takasbank are used in calculation of market value) and daily average traded values (The traded values of the first 20 trading days of the stocks those started to be traded within the Evaluation Period are excluded) and those stocks which have the highest market values and daily average trading values are included in the ISE National-30, ISE National-50 and ISE National-100 indices.

Periodic Review and Adjustments

The composition of the ISE National-30, ISE National-50 and ISE National-100 indices are reviewed and adjusted 4 times on a quarterly basis for the periods January-March, April-June, July-September and October-December.

Evaluation periods are last 12 months for daily traded values and last 3 months for the ratio of the stocks kept in custody at Takasbank. Evaluation periods end a month before each quarter.

Periodic adjustments are announced 15 days before each quarter.

The periodic adjustments to the constituent stocks of ISE National-30, ISE National-50 and ISE National-100 Indices are fulfilled according to the following pre-requisites:

a) At the end of the evaluation period, eligible stocks are ranked according to highest market capitalization of stocks kept in custody at Takasbank (except those kept in non-fungible accounts) and daily average traded values. A non-constituent stock will be included at the periodic review if it rises above the position stated below for the relevant index.

- ISE National-30 : Risen to 25^th or above
- ISE National-50 : Risen to 45^th or above
- ISE National-100 : Risen to 90^th or above

b) At the end of the evaluation period, eligible stocks are ranked according to highest market capitalization of stocks kept in custody at Takasbank (except those kept in non-fungible accounts) and daily average traded values. A constituent stock will be excluded at the periodic review if it falls below the position stated below for the relevant index.

- ISE National-30 : Fallen to 36^th or below
- ISE National-50 : Fallen to 56^th or below
- ISE National-100 : Fallen to 111^th or below

c) If, in case the number of stocks included in the indices exceed or fall below the number of stocks excluded from the indices, necessary adjustments will be made.

Reserve List: 2 stocks for the ISE National-30, 3 stocks for the ISE National-50 and 5 stocks for the ISE National-100 are selected as reserve stocks to use for any non-periodic changes stated below.

Non-Periodic Changes

Stocks whose trading will be halted permanently will be excluded from all indices. In this case, reserve stocks will be included in the ISE National-30, ISE National-50 and the ISE National-100 Indices.
Stocks whose market will be closed for more than 5 consecutive trading days, will be excluded from the relevant indices. Stocks excluded from the ISE National-30, ISE National-50 or ISE National-100 indices will be replaced by reserve stocks.
Stocks which have been excluded from the indices due to closure of their markets for more than 5 consecutive trading days will not be re-included in the ISE National-30, ISE National-50 and the ISE National-100 indices until the end of the quarter. Whereas, these stocks will be re-included in the relevant market, sector and sub-sector indices on the same day they begin trading.
Stocks, started to be traded in another market, will be included in the indices related to its new market and excluded from the old ones. Stocks excluded from the ISE National-30, ISE National-50 and ISE National-100 indices will be replaced by reserve stocks. If, excluded stocks re-start trading in the National Market, these will not be re-included in the ISE National-30, ISE National-50 and ISE National-100 indices until the end of the quarter. Whereas, these stocks will be re-included in the relevant market, sector and sub-sector indices on the same day they re-start trading in the National Market.
Stocks, started to be traded within the quarter, are included in the relevant market, sector and sub-sector indices on the 11th trading day.
Upon a merger activity of two constituent companies or an acquisition of a constituent company, the stocks of resulting company will remain within the relevant indices and the stocks of the acquired (discontinued) company will be replaced by the reserve stocks.
If a constituent company of the ISE National-30, ISE National-50 or ISE National-100 Index is split into two or more companies, only one of the resulting companies with the highest market capitalization will continue to be a constituent of the relevant indices until the end of the quarter while the other companies are excluded.

ISE Stock Market Indices Expressed in U.S. Dollars

Since stock trading operations in stock exchanges worldwide are carried out in local currencies in which the securities are issued, comparative studies of indices among countries is possible on the basis of a common currency unit. In general, the US dollar is used as a common currency unit for comparing stock exchange performances or alternative investment instruments.

For the convenience of foreign investors, the Turkish lira based indices are also expressed and published in U.S. dollar terms. Turkish Central Bank’s buying rates are being used in conversion to US$ values.

The ISE-100 Index can be expressed in US dollar terms as shown below:

Current index value * TL/ US$ exchange rate at Base date * 100
Current TL/US$ exchange rate

The TL/US$ exchange rate at base period (January 1986) is 581.91.