The Dow Jones Industrial Average (DJIA), also referred to as the

Industrial Average, the Dow Jones, theDow 30, or simply the Dow, is a

stock market index, and one of several indices created by Wall Street

Journaleditor and Dow Jones & Company co-founder Charles Dow. It is now

owned by the CME Group, who is the majority owner of Dow Jones Indexes.

The average is named after Dow and one of his business associates,

statistician HYPERLINK

"http://en.wikipedia.org/wiki/Edward_Jones_(statistician)" Edward Jones. It is

an index that shows how 30 large, publicly owned companies based in the

United States have traded during a standard trading session in the stock

market. [1] It is the second oldest U.S. market index after the Dow Jones

Transportation Average, which was also created by Dow.

The Industrial portion of the name is largely historical, as many of the modern

30 components have little or nothing to do with traditional heavy industry. The

average is price-weighted, and to compensate for the effects of stock splits

and other adjustments, it is currently a scaled average. The value of the Dow

is not the actual average of the prices of its component stocks, but rather the

sum of the component prices divided by a divisor, which changes whenever

one of the component stocks has a stock split or stock dividend, so as to

generate a consistent value for the index.

Along with the NASDAQ Composite, the S&P 500 Index, and the Russell

2000 Index, the Dow is among the most closely watched benchmark indices

tracking targeted stock market activity. Although Dow compiled the index to

gauge the performance of the industrial sector within the American

economy, the index's performance continues to be influenced by not only

corporate and economic reports, but also by domestic and foreign political

events such as war and terrorism, as well as by natural disasters that could

potentially lead to economic harm. Components of the Dow trade on both the

NASDAQ OMX and the NYSE Euronext, two of the largest stock market

companies. Derivatives of the Dow trade on the Chicago Board Options

Exchange and through CME Group, the world's largest futures exchange

company, which owns 90% of the indexing business founded by Dow Jones,

including the Industrial Average. [2][3 ]

The Dow Jones Industrial Average was founded by Charles Dow on May 26,

1896, and represented the dollar average of 12 stocks from leading American

industries. Previously in 1884, Mr. Dow had composed an initial stock average

called the Dow Jones Averages, which contained nine railroads and two

industrial companies that appeared in the Customer's Afternoon Letter, a daily

two-page financial news bulletin which was the precursor to The Wall Street

Journal. Of the original 12 stocks forming the Dow Jones Industrial Average

compiled later in 1896, no longer railroad stocks, but purely

industrial stocks, only General Electric is currently part of that index.

Financial crisis

On September 15, 2008, a wider financial crisis became evident when

Lehman Brothers filed for Chapter 11 bankruptcy along with the economic

effect of record high oil prices which reached almost $150 per barrel two

months earlier. The DJIA lost more than 500 points for only the sixth time in

history, returning to its mid-July lows below the 11,000 level. A series of

"bailout" packages, including the Emergency Economic Stabilization Act of

2008, proposed and implemented by the Federal Reserve and U.S .

Treasury, as well as FDIC-sponsored bank mergers, did not prevent further

losses. After two months of extreme volatility during which the Dow

experienced its largest one day point loss, largest daily point gain, and largest

intra-day range (more than 1,000 points), the index closed at a new twelve-

year low of 6,547.05 on March 9, 2009 (after an intra -day low of 6,469.95 [17]

during the March 6 session), its lowest close since April 1997, and had lost

20% of its value in only six weeks. Towards the latter half of 2009, the

average rallied towards the 10,000 level amid optimism that

the Late-2000s Recession, the United States Housing Bubble and the

Global Financial Crisis of 2008–2009 , were easing and possibly coming to

an end. For the decade, the Dow saw a rather substantial pullback for a

negative return from the 11,497 level to 10,428, a loss of a little over 9%.

During the early part of the 2010s, the Dow made a fairly notable rally

attempt in the face of growing global concerns such as the 2010 European

sovereign debt crisis and the Dubai debt crisis. Although for the most part

just a political event, the Dow closed at the 10,785.89 level on March 22,

2010 following the passage of the landmark Patient Protection and

Affordable Care Act in Washington. On May 6, 2010, just after 2:30 pm EDT,

the Dow Jones Industrial Average plunged by 998.50 points, an intra-day loss

of 9.2%. The event later became known as the 2010 Flash Crash or the

"Flash Crash". [18] Although there was an immediate recovery, it was the

biggest intra-day fall ever. This would have put the trading day as the fifth-

worst market sell-off on a percentage basis as well. The Dow bottomed out at

9,869, and then recovered quickly, eventually ending at 10,520.32, a loss of

347.80 points or 3.2%. [18] On November 5, 2010, the Dow would settle at the

11,444.08 level, its highest close since September 2008.

Calculation

To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a Divisor, the

Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural

changes, to ensure that such events do not in themselves alter the numerical value of

the DJIA. Early on, the initial divisor was composed of the original number of

component companies; which made the DJIA at first, a simple arithmetic average. The

present divisor, after many adjustments, is less than one (meaning the index is larger

than the sum of the prices of the components). That is:

where p are the prices of the component stocks and d is the Dow Divisor.

Events like stock splits or changes in the list of the companies composing the

index alter the sum of the component prices. In these cases, in order to avoid

discontinuity in the index, the Dow Divisor is updated so that the quotations right

before and after the event coincides:

The Dow Divisor is currently 0.132319125. [21][22] Presently, every $1 change in price in

a particular stock within the average, equates to a 7.56 (1/0.132319125) point

movement.

Assessment

With the current inclusion of just 30 stocks, critics like Ric Edelman argue that the

DJIA is not a very accurate representation of overall market performance. Still, it is the

most cited and most widely recognized of the stock market indices. [23][24] Additionally,

the DJIA is criticized for being a price-weighted average, which gives higher-priced

stocks more influence over the average than their lower-priced counterparts, but takes

no account of the relative industry size or market capitalization of the components. For

example, a $1 increase in a lower-priced stock can be negated by a $1 decrease in a

much higher-priced stock, even though the lower-priced stock experienced a larger

percentage change. In addition, a $1 move in the smallest component of the DJIA has

the same effect as a $1 move in the largest component of the average. The Dow would

see the negative effects of this price weighted average during September–October

2008 with a former component AIG. Before its reverse-split adjusted stock price

change, the stock collapsed from $22.76 on September 8 to $1.35 on October 27;

contributing to sending the Dow down roughly 3,000 points.

As of November 2010, IBM and 3M are among the highest priced stocks in the

average and therefore have the greatest influence on it. Alternatively, Bank of America

and Alcoa are among the lowest priced stocks in the average and have the least

amount of sway in the price movement. Many critics of the DJIA recommend the float-

adjusted market-value weighted S&P 500 or the Wilshire 5000, the latter of which

includes all U.S. equity securities, as better indicators of the U.S. stock market.

What is the Dow Jones?

Before I go over the Dow Jones history, it’s important to know what the Dow Jones is.

The Dow Jones is a stock market index. Currently it is calculated from the stock prices

of 30 large US companies. It is actually a complex equation because of repeated stock

splits. It is not the sum of the prices of each of those 30 companies.

What is the history of the Dow Jones?

The Dow Jones history goes way back into the 1800's. The Dow Jones Industrial

Average was founded on May 26, 1896. At the time it only represented 12 stocks. Of

those original 12 only one, General Electric, is still around. By 1928 the number of

stocks increased to 20. By 1928 the number of stocks hit 30.

During the Great Depression the Dow was reduced to 90% of its 1929 peak on July 8,

1932. Not coincidentally, the largest one-day percentage gain of 15% happened soon

after the 90% big drop on March 15, 1933. However, the 1930s was a terrible decade

as the Dow Jones industrial average was cut in half from the beginning to the end of

the decade.

As can be expected after great declines in the Dow Jones history, soon came the

great increases in the 1940s and 1950s. The Dow went from about 40 in 1932 to

616 in the 1950s. The Dow continued to increase into the 1960s and ended the

1960s at about 800. The enthusiasm took the Dow in the early 1970s above the

1000 mark. That’s a growth of about 25 times your money over 40 years or 8.4%

compounded annual growth rate. That doesn't include dividends - which were

about 4-5%.

But the cycle continued with the stagnant market of the 1970s. There was a big crash

in 1973 and 1974 where the Dow lost about half its value. For the whole decade the

Dow only rose from 800 to 838.

The 80s saw large gains in the Dow -- despite Black Monday on October 19, 1987,

where the Dow fell 22.61% in one day. The overall increase from the beginning to end

of the 90's was 838 to 2,753.

The 90s were even better for the Dow as it reached the 11,000s -- more than tripling

the Dow for the decade. But, as we all know, that just set the Dow up for large losses.

By the end of the week after the September 11 attacks the Dow had fallen 14%. The

Dow eventually bottomed out in 2002 at about 7200 -- its lowest since 1997. By

2006 the Dow was roaring again above 11,000 and by 2007 it was above 14,000.

But, the Dow Jones dropped to 6500 in 2009 -- its lowest since 1997.

What does the Dow Jones history teach us?

There will be ups and downs that will last for years. Do not panic when there is a

protracted downfall. It will rise again even if it takes 10 to 15 years. As long as you

put your money into the stock market for the long run you will be okay. Do not get too

excited when the Dow rises significantly. If you buy more than what you planned

when the stock market peaks, you will regret it.

Regardless of what the Dow is doing continue on your investing plan. Do not increase

or decrease your holdings or investment rate based upon the recent movements of

the market.

Don't think you can predict what the market will do based upon current world

conditions or history. No one knows what the market will do in the short-term and

anyone who tells you they do is either lying or ignorant. If the best investor in the world,

Warren Buffett, doesn't think he or anyone can predict the short-term stock market

movements, then what are the chances you can too? Don't try to time the market

because you will lose more often than not. It's exciting to think that you might actually

pick what will happen. And you might even be right from time to time. But, if you're

investing for you and your

family's future, then the boring investing decisions will be the right ones.

History of the Dow Jones Industrial Average

From a niche news agency in an obscure Wall Street basement to a global news and

business-information leader, the vision at Dow Jones & Company has been consistent

and defining for more than a century. Excellence, integrity and innovation are the

qualities which started the company in 1882, which sustained its growth in the 20th

Century and which guide its progress as it pioneers new approaches to business and

journalism in the digital age.

1882-1902 – Founders and Foundation

The foundation for success is laid by Charles Dow, Edward Jones and Charles

Bergstresser who over two decades conceive and commence three products which

define Dow Jones and financial journalism: The Wall Street Journal, Dow Jones

Newswires and the Dow Jones Industrial Average. The founders state their

commitment to excellence in the Journal’s first issue: “We appreciate the confidence

reposed in our work. We mean to make it better.”

1882

Dow, Jones & Company’s first product is brief news bulletins hand -delivered

throughout the day to traders at the stock exchange. Those “flimsies” as they are

called later are aggregated in a printed daily summary called the “Customer’s

Afternoon Letter.”

1889

The first edition of The Wall Street Journal is published July 8. An afternoon

newspaper, it covers four pages and sells for two cents.

1896

The Dow Jones Industrial Average is officially

launched. 1897

The Ticker, the real-time newswire and the fundamental source for news in the

investment community, is announced.

1898

The Journal, now six pages, adds a morning

edition.

1899

The Journal’s “Review & Outlook” column, which still runs in the Journal today,

appears for the first time. It initially was written by Charles Dow.

1902 – 1941 – Professionals and Progress

Dow Jones is acquired in 1902 by the leading financial journalist of the day, Clarence

Barron. Over the next 30 years, Barron recruits and develops a generation of

journalists who further Dow Jones’s reputation for excellence. Those journalists would

lead the company successfully through the Great Depression and into a new era of

prosperity and progress.

1921

Barron’s, America’s premier financial weekly, is founded; its first editor is

Clarence Barron. 1926

A motor-driven version of the “Ticker” – a key innovation in the delivery of real-time

news – was developed by the Dow Jones engineering department.

1929

The first issue of the Pacific Coast Edition of the Journal rolls off the presses on Oct.

21, eight days before the great stock-market crash.

1930

Dow Jones is incorporated in New York. It is now known as Dow Jones & Company

after the comma is dropped from the former Dow, Jones & Company.

1934

Afternoon edition of the Journal ceases.

Chief Executive Officer Casey Hogate begins a series of changes during the next

decade that ultimately result in the metamorphosis of the Journal into a new kind of

daily newspaper. One of these changes is advent of the “What’s News” column.

Created by Bernard “Barney” Kilgore, that column was the first major summary of the

news, a precursor to omnipresent summaries and digests on the Internet today.

1941-1967 – The Journal’s Genius

Barney Kilgore takes over as managing editor of the Journal in 1941 and as CEO of

Dow Jones in 1945, setting the company on a new and revolutionary course. In print,

Dow Jones isn’t satisfied reporting “what happened”; our publications redefine

journalism to include “what it means.” In business, the Journal would harness new

technologies such as microwaves to open new markets to readers in distant cities.

1947

The Journal wins its first Pulitzer Prize for editorials by William Henry

Grimes. 1948

The Journal launches a Southwest

edition 1950

The Journal launches a Midwest

edition 1953

When the New York Stock Exchange cancels its Saturday trading session, the

Journal ceases publication of a Saturday edition

1962

Making innovative use of microwave technology, Dow Jones is able to reproduce

newspaper pages by facsimile over long distances – a vital step toward a truly

national newspaper

1966

Now with regional editions spanning the U.S., the Journal counts more than one million

subscribers for the first time.

1967–2007 – Innovation and Globalization

Innovation would define Dow Jones in the 40 years after Kilgore’s death in 1967 as the

news moved into space and online. Dow Jones pioneered the use of satellites to

transmit newspaper pages and make possible a daily newspaper on truly national

scale. A decade before the Internet, Dow Jones was storing and coding its news

digitally so that it could be accessed online. Factiva’s content and technology tools set

the standard for innovation and quality in the news and information industry. The

Journal, Newswires and Dow Jones Indexes built successful franchises in Europe and

Asia. 1967

Dow Jones Newswires begins a major expansion outside the U.S. that ultimately puts

journalists in every major financial center in Europe, Asia, Latin America, Australia and

Africa.

1970

Dow Jones buys the Ottaway newspaper chain, which at the time comprised nine

dailies and three Sunday newspapers.

1971

A joint venture with Bunker Ramo is the advent of electronic delivery of news from

Dow Jones Newswires in an age before personal computers. It would also mark the

company’s pioneering efforts to store news and information electronically, a

business that would evolve into Factiva. 1976

The Asian Wall Street Journal is

launched. 1983

The Wall Street Journal Europe is

launched. 1995

The initial version of the WSJ.com appears online. Content won’t be all that

distinguishes the Journal on the Web. Dow Jones insists that its differentiated content

is worth paying for and thus built the Internet’s most successful paid news Web site.

1997

The Dow Jones Industrial Average is licensed for the first time, setting in motion a

successful new business called Dow Jones Indexes.

2005

MarketWatch is acquired, adding a key component to what will become the Wall

Street Journal Digital Network

The Journal resumes publication on Saturday with the debut of

Weekend Edition. 2006

Factiva is acquired, extending the suite of business-to-business products in what later

will become the Dow Jones Enterprise Media Group.

2007

Dow Jones is acquired by News Corp., the world’s most global media company.

Les Hinton takes over as chief executive. Robert Thomson becomes editor-in-

chief and later managing editor of the Journal.

2007 and beyond – Something Bigger

News Corp. acquires Dow Jones in December 2007, and the horizons expand again.

Now part of a global media company which includes Fox, SKY, HarperCollins and

newspapers from London to Sydney, Dow Jones reinvents the Journal for a new era of

news. Now the Journal covers more political and general news along with its leading

business coverage. Fresh investment delivers new game-changing business

intelligence tools as well as new markets in Europe and Asia. At a time when other

media companies are retrenching, Dow Jones is moving aggressively to build on the

success of the past and to capture the opportunity of the future.

2008

The Journal is reconceived as a more complete source of news with expanded

coverage of national and international events as well as more opinion, culture and

sports.

Audiences expand. In addition to growth in paid circulation at the Journal, there are

new local language products from Newswires in Spanish, Dutch and Arabic.

Newswires also expands significantly in India.

Dow Jones Indexes launches the Global Dow, a global version of the Dow Jones

Industrial Average aggregating 150 blue-chip stocks from around the world.

WSJ., the Journal’s glossy lifestyle magazine debuts

world-wide. 2009

Ottaway Newspapers Inc. is renamed the Dow Jones Local Media Group.

The company moves its headquarters to midtown Manhattan where at 1211 Avenue of

the Americas it joins its sister companies at News Corp. under one roof.

Dow Jones Sustainability Index

The Dow Jones Sustainability Indexes (DJSI) launched in 1999, are a family of

indexes evaluating the sustainability performance of the largest 2,500 companies

listed on the Dow Jones. They are the longest-running global sustainability

benchmarks worldwide and have become the key reference point in sustainability

investing for investors and companies alike. The DJSI is managed cooperatively by

Dow Jones Indexes and Sustainable Asset Management.

The DJSI is based on an analysis of corporate economic, environmental and social

performance, assessing issues such as corporate governance, risk management,

branding, climate change mitigation, supply chain standards and labor practices. The

trend is to reject companies that do not operate in a sustainable and ethical manner. It

includes general as well as industry specific sustainability criteria for each of the 57

sectors defined according to the Industry Classification Benchmark (ICB).

The DJSI family contains one main global index, the DJSI World, and various indexes

based on geographic regions such as: Europe, Nordic, North America and Asia Pacific.

The DJSI also contains industry specific indexes called “blue chip indexes.” In addition,

the DJSI methodology facilitates the design, development and delivery of customized

sustainability indexes; e.g. indexes covering different regions, indexes covering

different segments of the leading sustainability companies, indexes covering additional

exclusion criteria and indexes denominated in different currencies.

To be incorporated in the Dow Jones Sustainability Index, companies are assessed

and selected based on their long term economic, social and environmental asset

management plans. Selection criteria evolve each year and companies must continue

to make improvements to their long term sustainability plans in order to remain on the

Index. Indexes are updated yearly and companies are monitored throughout the year.

History

o 1999: The Dow Jones Sustainability Indexes are launched in September. It is

o collaboration with SAM and the Dow Jones Indexes. SAM is a global investment

company focused exclusively on Sustainability Investing. The Indexes are

created to track financial success of leading sustainability companies. The top 10

percent of the largest 2500 companies listed on Dow Jones are included.

o 2001: The DJSI is expanded to include STOXX Ltd., another indexing company. The

o Dow Jones STOXX Sustainability Index is introduced and marketed towards

Europe‟s sustainability leaders. 2005: Dow Jones Sustainability North America

Index is created.

o 2006: Dow Jones Indexes and SAM Launch Dow Jones Islamic Market

Sustainability

o Index that combines Islamic investing principles and sustainability criteria from

the DJSI.

o 2010: SAM and Dow Jones Indexes terminate collaboration with STOXX. “Dow

Jones

o Indexes will be responsible for calculation, marketing and distribution of the indexes

including the European Indexes, while SAM [will] remain responsible for the

component

o selections. As a result, SAM‟s collaboration with STOXX Ltd., which had

previously calculated the European STOXX Sustainability Indexes, has been

terminated.”

o 2010: SAM and Dow Jones Indexes Launch DJSI Nordic Index

Indexes

Indexes are denominated in both US dollars and Euros and are calculated using the

Laspeyres formula. All Indexes that are not subsets exclude companies that generate

revenue from alcohol, tobacco, gambling, armaments and firearms, and adult

entertainment. Index components are based on free float market capitalization and

most main indexes are reviewed quarterly, excluding the world index. Customized

indexes are continuously being developed and delivered to encompass different

regions or individualized sections of companies to add additional exclusions when

needed and to change the currencies they are denoted in.

The Dow Jones Sustainability Indexes have been divided into various benchmarks

including the World, Europe, North America, Asia Pacific, Nordic, and Korean indexes.

DJSI World Index

The World Index, or DJSI World, was first published on September 1999. It is based on

the largest 2500 companies in the Dow Jones Global Total Stock Market Index

(DJGTSMI). It covers the top 10% of these companies in terms of economic,

environmental, and social criteria which equals about 300 companies. The DJSI World

has two subset indexes, which are the Dow Jones Sustainability Index World 80 (DJSI

World 80) and the Dow Jones Sustainability Index World ex US 80 (DJSI World ex US

80). Both subsets were initially published in August 2008 and track the performance of

the largest 80 companies globally in terms of sustainability, with the DJSI World ex US

80 excluding the US from the top 80. The DJSI World and its subset are all reviewed

on an annual basis.

DJSI Europe and Eurozone Index

The Dow Jones Sustainability Europe Index covers the leading 20% of the largest 600

European companies in terms of sustainability from the DJGTSMI. It is subset by three

different more specific indexes for the region, the main subset being the Dow Jones

Sustainability Eurozone Index (DJSI Eurozone). This index tracks the financial

performance of sustainability leaders in the smaller eurozone region. Both indexes

were launched in August 2010 and have their own further subset. The two subsets are

the Dow Jones Sustainability Europe 40 Index (DJSI Europe 40) and the Dow Jones

Sustainability Eurozone 40 Index (DJSI Eurozone 40), both of which were also

launched in August 2010. These track the top 40 sustainability leaders in Europe and

the smaller Eurozone region. DJSI Europe and Eurozone are reviewed annually as

well as quarterly to maintain accuracy of the index composition while the DJSI Europe

40 and DJSI Eurozone 40 are reviewed only annually.

DJSI North America and United States Index

The Dow Jones Sustainability North American Index has a similar design as the DJSI

Europe and also reviews the top 20% of the 600 largest companies, but in this case in

North America. It was originally launched, along with its subset Dow Jones

Sustainability United States Index (DJSI United States), in September 2005. Both

Indexes are further broken down by the Dow Jones Sustainability North America 40

Index (DJSI North America 40) and the Dow Jones Sustainability United States 40

Index (DJSI United States 40), which cover the leading 40 sustainability driven

companies in North America and The United States, respectively. Both subsets,

however, were not launched until August 2008, three years after the DJSI North

America.

DJSI Asia Pacific Index

The Dow Jones Sustainability Asian Pacific Index (DJSI Asia Pacific) was launched at

the same time as its single subset, the Dow Jones Sustainability Asia Pacific 40 Index

(DJSI Asia Pacific 40), in January 2009. As of 2009, the DJSI Asia Pacific included 122

companies and captures the leading 20% of the top 600 companies in developed Asia

Pacific Markets in terms of sustainability as derived from the DJGTSMI. DJSI Asia

Pacific 40, the subset, tracks the largest 40 companies who are sustainability leaders

in the Asia Pacific region.

DJSI Korea Index

The Dow Jones Sustainability Korea Index is derived from the smallest pool of

companies, tracking the most sustainable 30% of the largest 200 Korean companies.

The Dow Jones Sustainability Korea Index (DJSI Korea) was launched in October

2009, along with its subset the Dow Jones Sustainability Korea 20 Index (DJSI Korea

20). As of this date, 41 companies were included in the DJSI Korea. DJSI Korea 20

encompasses the largest 20 sustainable leading companies in the region. The index

encompasses a smaller region than the other indexes resulting in a higher percentage

of companies analyzed and a lower number of companies that are reviewed in the

subset. The DJSI Korea is also reviewed on an annual and quarterly basis whereas the

DJSI Korea 20 is reviewed annually.

Assessment

A defined set of criteria is used to assess the economic, social, and environmental

opportunities of the companies that the DJSI has listed, which are chosen based on the

Corporate Sustainability Assessment by SAM Research. Information comes from the

annual SAM questionnaire, company transparency documentation, Media and

Stakeholder Reports, and personal contact with the companies. Industry leaders from

SAM Research‟s Corporate Sustainability Assessment are chosen to be listed on the

DJSI.

Once a company is listed on the DJSI, it is monitored daily for any critical arising

issues, which can lead to the exclusion of the company if deemed critical enough.

Examples of events that would lead to exclusion include: commercial practices,

human rights abuses, layoffs or worker

disputes, or catastrophic disasters. These companies are monitored through publicly

accessible information including media and company contact. If one of these critical

events happens, the situation is analyzed for the scope in which it reaches. If large

enough, the event will be analyzed further based on severity, media coverage, and

crisis management. SAM analysts decide from here whether the company will be

excluded from the DJSI. An assurance report is completed by

Deloitte to ensure the validity of the company‟s information.

In early 2009, an independent expert study commissioned by UNEP FI and presented

at the

World Economic Forum in Davos, highlighted the SAM assessment as “the most

rigorous in terms of the number of questions and depth of information requested".

In 2009, SAM carried out its 11th consecutive [Corporate Sustainability Assessment],

assessing more than 1,200 companies, an increase of 8% from 2008. At the onset of

DJSI‟s assessment criteria, SAM mainly focused on government compliance and

regulations. It has evolved to embrace Corporate Sustainability as a key competitive

advantage, taking into account nine specific criteria in addition to industry specific

criteria. Below are the criteria and weightings SAM uses to assess a company‟s

overall score

Criteria WeightingsEconomic Dimension: 33% Industry Criteria: 57%Environmental Dimension: 33%

General Criteria: 43%

Social Dimension: 33%

Note that these weightings are approximations, and actual weightings may differ

between industries. A Breakdown of these Dimensions is seen below

Economic dimension Weightings in

percentageCorporate

Governance

6.0

Risk and Crisis Management 6.0

Codes of Conduct/Compliance/Anti-Corruption & Bribery 6.0

Industry Specific

Criteria

Depends on Industry

Environmental dimension Weightings in

PercentagesEnvironmental

Reporting

3.0

Industry Specific

Criteria

Depends on Industry

Social dimension Weightings in

PercentagesHuman Capital

Development

5.5

Talent Attraction &

Retention

5.5

Labor Practice Indicators 5.0

Corporate Citizenship / Philanthropy 3.0

Social Reporting 3.0

Industry Specific Criteria Depends on Industry

Number of invited companies in 2010: [13 ]

Total Number Invited Companies = 2,617

DJSI World Universe = 2,500

DJSI Europe Universe = 600

DJSI North America Universe = 600

DJSI Asia Pacific = 600

DJSI Korea = 200

Companies analyzed globally = 1,393

Companies completing questionnaire = 698

Companies analyzed based exclusively on public information = 695

Some of the assessment criteria have varied slightly from year to year to reflect

growing information about particular issues such as water related risks, brand

management, corporate citizenship, risk and crisis management. Continuous

improvement allows for SAM to provide both relevant and current information.

Since 1999, SAM‟s Corporate Sustainability Assessment has increased in number of

assessed companies, number of sectors, number of questions to companies, average

totally sustainability score, and weight of sector-specific criteria in percentage total

weight. [14 ]

1999

2009Number of assessed Companies 4

6

8

1,2

37

Number of Sectors 6

8

58

Number of questions to companies 5

0

10

0Average Total sustainability score (out of 2 48

100) 7

Weight of sector-specific criteria (in % of total

weight) 30

57

Included in the most recent SAM questionnaire are more difficult to measure intangible

business attributes such as innovation and customer relationship management.

Questions are both directed at short-term risks and opportunities and sustainable long-

term value creation. [15] The intensity of the industry-specific criteria has continuously

increased. In 1999, industry-specific information accounted for only 30% of the overall

score, while now it accounts for nearly 60%.

From these questionnaires, each company can be awarded one or a combination of

the following status:. [16 ]

Sector Leader: In each sector, the SAM Sector Leader is identified as the company

best prepared to seize the opportunities and manage the risks deriving from

economic, environmental and social developments. The SAM Sector Leader is the

company with the best score of all companies assessed in this sector.

Sector Mover: Sector Mover is awarded to the company that achieved the

biggest proportional improvement in its Sustainability performance compared

with last year.

SAM Gold Class: To qualify for the SAM Gold Class, the SAM Sector Leader must

achieve a minimum total score of 75%. Peer group companies whose total score is

within 5% of the SAM Sector Leader are also awarded. SAM Gold Class. A score up

to 10% lower than the leader results in SAM Silver Class, a score up to 15% lower

than the leader results in SAM Bronze Class.

SAM Silver Class: To qualify for the SAM Silver Class, the SAM Sector Leader

must achieve a total score in the range of 70-75%. Peer group companies whose

total score is within 5%-10% of the SAM Sector Leader are also awarded SAM

Silver Class, while a score of 10% lower than the leader results in SAM Bronze

Class.

Sam Bronze Class: To qualify for the SAM Bronze Class, the SAM Sector Leader

must achieve a total score in the range of 65-70%. Peer group companies whose

total score is within 10%-15% of the SAM Sector Leader are also awarded SAM

Bronze Class.

Companies listed

The following lists are just a few of the more recognizable companies listed on the

Dow Jones Sustainability Indexes. It is not a complete list, however, this list is for the

2010-2011 year and updated as of October 2010.

DJSI World Index [17 ] DJSI Europe Index [18 ] DJSI Eurozone Index [19]

1

.

Adidas - Germany 1

.

Adidas AG - Germany 1

.

Abertis

2

.

BMW AG - Germany 2

.

Air France - KLM - Infraestructuras

S.A. –3

.

Coca-Cola Co –

United

France Spain

States 3

.

Astrazeneca PLC – 2

.

Adidas AG -

Germany4

.

Christian Dior S.A. - United Kingdom 3

.

ArcelorMittal -

FranceFrance 4

.

BMW AG- Germany 4

.

BMW AG –

Germany5

.

Halliburton Co. – 5

.

Coca-Cola Hellenic 5

.

Christian Dior S.A.

–United States Bottling Co. S.A. – France

6

.

Hewlett Packard Co.

–

Greece 6

.

Enel S.p.A. – Italy

United States 6

.

Deutsche Bank AG - 7

.

Finmeccanica

S.p.A. –7

.

Hyundai Engineering

&

Germany Italy

Construction Co. Ltd.

–

7

.

European Aeronautic 8

.

Fortum Oyj –

FinlandSouth Korea Defence & Space Co. 9

.

Indra Sistemas

S.A. –8

.

Intel Corp. – United EADS - France Spain

States 8

.

L„Oréal S.A. – France 1

0

.

Infineon

Technologies

9

.

Mitsubishi Corp. –

9

.

LVMH Moet

Hennessy

AG – Germany

Japan Louis Vuitton –

France

1

1

.

LeGrand S.A. –

France

1

0

.

McDonald ‟ s Corp. – 1

0

.

Nestle S.A. –

Switzerland

1

2

.

Puma AG Rudolf

United States 1

1

.

Siemens - Germany Dassler Sport –

1

1

.

Nokia Corp. -

Finland

1

2

.

ThyssenKrupp AG - Germany

1

2

.

Panasonic Corp. – Germany 1

3

.

Siemens AG –

Japan 13. Volkswagen AG Non- Germany1

3

.

Rolls-Royce Group Vtg Pfd. – Germany 1

4

.

Suez

Environement

PLC – United

Kingdom

14. AB Volvo –

Sweden1

4

.

Samsung Electronics 15. Wolters Kluwer

N.V. –

Co. Ltd – South

Korea

Netherlands

15. Siemens AG -

Germany

16. Xstrata PLC –

United1

6

.

Starbucks Corp. – Kingdom

United States17. Toshiba Corp. – Japan

18. Unilever -

United

Kingdom

19. AB Volvo - Sweden

20. Woodside

Petroleum Ltd -

Australia

S.A. – France

15. ThyssenKrupp AG

– Germany

DJSI

Nort

h

Ame

rican

I

n

d

e

x [2

0]

1. 3

M

C

o.

–

U

ni

te

d

S

ta

te

s

2. A

l

l

s

t

a

t

e

C

o

r

p

.

–

U

n

i

t

e

d

S

t

a

t

e

s

3. B

a

n

k

o

f

M

o

n

t

r

e

a

l

–

C

a

n

a

d

a

4. Campbell

Soup Co.

– United

States

5. Cater

pillar

Inc. –

Unite

d

State

s

6. Cono

coPhil

lips –

Unite

d

State

s

7. Dell

Inc. –

United

States

8. Ford

Motor

Co. –

United

States

9. Gap

Inc. –

United

States

10. H & R

Block

Inc. –

United

States

11. Kinross

Gold

Corp. –

Canada

12. Macy‟s

Inc. –

United

States

13. Micros

oft

Corp.

–

United

States

14. Nation

al

Bank

of

Cana

da –

Cana

da

15. Procter &

Gamble

Co.

– United

States

DJSI

Asia

Pacif

ic

Inde

x [21 ]

1. A

G

L

E

n

e

r

g

y

L

t

d

.

–

A

u

s

t

r

a

l

i

a

2. B

r

i

d

g

e

s

t

o

n

e

C

o

r

p

.

–

J

a

p

a

n

3. C

L

P

H

o

l

d

i

n

g

s

L

t

d

.

–

H

o

n

g

K

o

n

g

4. Daewoo

Securitie

s Co.

Ltd. –

South

Korea

5. Fujifilm

Holding

s Co.

Ltd –

Japan

6. Hitachi

Ltd. –

Japan

7. Hyundai

Engineeri

ng &

Constructi

on Co.

Ltd. –

South

Korea

8. Insuranc

e

Australia

Group

Ltd. –

Australia

9. Keppe

l Land

Ltd. –

Singa

pore

10. LG

Electron

ics Inc.

– South

Korea

11. Mitsubi

shi

Materia

ls Corp.

–

Japan

12. Nissan

Motor Co.

Ltd. –

Japan

13. Panasonic

Corp. –

Japan

14. Samsu

ng

Electro-

Mechan

ics Co.

Ltd. –

South

Korea

15. United

Microelect

ronics

Corp. –

Taiwan

DJS

I

Kor

ean

Inde

x [22 ]

1. A

s

i

a

C

e

m

e

n

t

C

o

.

L

t

d

.

–

S

o

u

t

h

K

o

r

e

a

2. A

si

a

n

a

A

irl

in

e

s

In

c.

–

S

o

ut

h

K

o

r

e

a

3. D

a

e

w

o

o

S

h

i

p

b

u

il

d

i

n

g

&

M

a

ri

n

e

E

n

g

i

n

e

e

ri

ng Co.

– South

Korea

4. Hyunda

i Steel

Co. –

South

Korea

5. KB

Financial

Group –

South

Korea

6. Kia

Motors

Corp. –

South

Korea

7. Korea

Electric

Power

Corp. –

South

Korea

8. Mirae

Asset

Securities

Co. Ltd. –

South

Korea

9. Nongshi

m Co.

Ltd. –

South

Korea

10. OCI Co.

Ltd. –

South

Korea

11. Samsung

Electronics

Co. Ltd. –

South

Korea

12. SK

Energy

Co. Ltd.

– South

Korea

13. S-Oil

Corp. –

South

Korea

14. Taihan

Electric

Wire Co.

Ltd. –

South

Korea

15. Woongjin

Chemical

Co.

Ltd. – South Korea

Reviews

The November 2010 DJSI Review includes a review of: key facts (showcasing recent

news and growth in asset management), 2010 assessment, Dow Jones Sustainability

World Index, Dow Jones Sustainability Europe Index, Dow Jones Sustainability Asia

Pacific Index, Dow Jones Sustainability North America Index, Dow Jones Sustainability

Korea Index, and Adjustments to Sustainability Index 2010. Each index on the review

includes an Index Range, Dow Jones Global Stock Market Index, Selection of

companies (percent of companies per sector, percent of market cap coverage), the

number of companies added and deleted from the DJSI, and component

selection (based on industry). All changes will take effect at the close of trading on

December

Criticism

In April of 2010, an explosion on BP‟s Deepwater Horizon oil drilling rig in the Gulf of

Mexico exploded, killing 11 crew members and injuring dozens more. Forty days later,

SAM removed BP from the DJSI thereby starting a global debate regarding the value

of rating agencies in assessing a company’s corporate sustainability.

It has been noted that because the DJSI mainly relies on data provided by the companies themselves, the credibility of the information may be questioned, given the self-interest of the companies to disclose favourable data. SAM uses four sources of information to assess corporate sustainability: company questionnaire, company documentation, media and stakeholder analysis, and contact with companies.

Using self-reported data as proxies for the social or environmental effects DJSI intends

to reflect leaves the index exposed to corporate biases and additional credibility risks. it

rewards companies with greatest capacity to respond to SAM's questionnaires and

information requests rather than those with the best socially responsible practices.

Secondly, relying on self-reported data carries substantial risks since information from

companies may not be completely credible. An index based on biased information often

underestimates real risk factors in the listed companies' operation, even in those

instances when submitted information if verified by an auditing firm such as

Pricewaterhouse Coopers. Ultimately, companies with challenging corporate

environmental and social issues are more likely to devote public relations resources to

minimize the perception of risk within their operations.

It has been also found that in the DJSI the three dimensions of sustainability are not

considered in a balanced way, being biased towards economic criteria to the

disadvantage of social and environmental ones. A further bias of the DJSI is that it only

includes large companies, whereas other indices include smaller companies as well.

As a consequence of these limitations, a survey conducted among sustainability

experts found that only 48% considered the DJSI as "highly trusted".