Methodology change | SOLACTIVE EMERGING MARKETS CONSUMER TECHNOLOGY INDEX | Effective Date 13 October 2020

Today, Solactive announces the following changes to the methodology of the following indices (the ‘Affected Indices’):

Rationale for methodology change

The Index aims to provide access to emerging market internet companies that provide similar services as Google, Facebook, PayPal, Amazon, etc. The Index aims to offer exposure to companies that stand to benefit from increasing domestic consumption by emerging markets’ growing middle class and exposure to emerging market companies facilitating mobile E-commerce sales.

In order to ensure that the scope of the Index is correctly reflected and captures the latest developments around the investment theme, Solactive makes the following four adjustments to the Index Guideline:

• In order to capture new industries and sub-industries that have been arisen recently, the following sub-industries with respect to Factset RBICS will be added: Food Delivery Services, Internet Pharmacies and Drug Retail as well as Media Download and Streaming Digital Content Sites. Further, the following industry with respect to Factset RBICS will be added: Catalog/Speciality Distribution. Apart from adding Factset RBICS, the sub-industry: Mixed International Telecommunications will be removed
• To ensure a consistent framework for the classification of emerging markets, the country classification is linked to the Solactive Country Classification Framework (https://www.solactive.com/wp-content/uploads/2019/11/Solactive-Country-Classification-Framework-v1.1_2019.pdf), which is regularly reviewed and updated.
• The Index aims to offer exposure to companies that stand to benefit from increasing domestic consumption by emerging markets growing middle class. Hence, in order to better reflect the actual consumption of the emerging markets population, the selection criteria is adjusted in order to include companies based on the “Country of Top Geographic Revenue” as oppose to “Country of Domicile”.
• In addition, current IPO Review Days will be replaced with Ordinary Adjustment Days so that the index is adjusted quarterly instead of annually with quarterly IPO review days. Increasing the adjustment frequency is proposed to provide better control for large weight fluctuations that may occur due to market drifts.

Changes to the Index Guideline

The following Methodology changes are implemented in the following point of the Index Guideline.

Section 1.5 Weighting

Old Text:

On each Adjustment Day and IPO Adjustment Day, each Index Component of the Solactive Emerging Markets Consumer Technology Index (GTR) is ranked according to their Market Cap as of Selection Day or IPO Review Day. The companies are then divided into three groups and receive the following weights based on their ranks:

If in any Adjustment Day or IPO Review Day, the number of components is below 50, weights are rescaled proportionally such that the sum of weights is 1.

A maximum weight of 40% per Country of Domicile is applicable. If after the procedure above, the 40% cap is breached, the following steps will be taken: Stocks from the respective Country of Domicile which have the smallest Market Capitalization values are removed until country weight is below or equal to 40%. To reach 50 companies in the index once again, companies from the eligible universe (excluding respective Country of Domicile) are selected based on highest Market Capitalization.

New Text:

On each Adjustment Day, each Index Component of the Solactive Emerging Markets Consumer Technology Index (GTR) is ranked according to their Market Cap as of Selection Day. The companies are then divided into three groups and receive the following weights based on their ranks:

If on any Adjustment Day, the number of components is below 50, weights are rescaled proportionally such that the sum of weights is 1.

A maximum weight of 40% per Country of Top Geographic Revenue is applicable. If after the procedure above, the 40% cap is breached, the following steps will be taken: Stocks from the respective Country of Top Geographic Revenue which have the smallest Market Capitalization values are removed until country weight is below or equal to 40%. To reach 50 companies in the index once again, companies from the eligible universe (excluding respective Country of Top Geographic Revenue) are selected based on highest Market Capitalization.

Section 2.2 Ordinary Adjustment

Old Text:

The composition of the Index is adjusted annually. The composition of the Index is reviewed on the Selection Day and necessary changes are announced. In addition, the composition may also be adjusted for IPOs on a quarterly basis. In order to be eligible for the index, the IPO must fulfil the same criteria outlined in section 2.1, except for the minimum Market Cap threshold, which should be 5 billion USD.

In IPO Reviews, all spinoffs which have been added to the index since the last index adjustment will be removed. Furthermore, if the addition of new companies due to the IPO criteria leads to more than 50 Index Components, the lowest ranked companies based on Market Cap will be removed from the index until the total number of Index Components is 50.

The first quarterly adjustment will be made in September 2017, based on the Trading Prices of the Index Components on the IPO Review Day.

Solactive AG shall publish any changes made to the Index composition on the Selection Day and consequently with sufficient notice before the Adjustment Day.

New Text:

[…]

The composition of the Index is adjusted quarterly. The composition of the Index is reviewed on the Selection Day and necessary changes are announced.

The first quarterly adjustment will be made in September 2017

Solactive AG shall publish any changes made to the Index composition on the Selection Day and consequently with sufficient notice before the Adjustment Day.

Section 4. Definitions

Old Text:

“Index Universe” in respect of a Selection Day are companies that fulfill the following criteria:

Headquarters in one of the following countries: Argentina, Brazil, Chile, Colombia, Mexico, Peru, Puerto Rico, Cyprus, Czech Republic, Egypt, Greece, Hungary, Poland, Qatar, Russia, South Africa, Turkey, United Arab Emirates, China, India, Indonesia, South Korea, Malaysia, The Philippines, Taiwan, Thailand.

Only the primary listing of a stock is eligible. If the stock is primarily listed in one of the following exchanges, it is not eligible: Shanghai, Shenzhen, OTC exchanges.

Stocks are only eligible if classified according to one or more of the following RBICS categories:

1. Stocks are also eligible if classified under FactSet “Industries”:

[…]

New Text:

“Index Universe” in respect of a Selection Day are companies that fulfill the following criteria:

1. Country of Top Geographic Revenue must be in any of the emerging markets countries, classified according to the Solactive Country Classification Framework. The complete classification framework can be found under the following link (https://www.solactive.com/wp-content/uploads/2019/11/Solactive-Country-Classification-Framework-v1.1_2019.pdf).
2. Only the primary listing of a stock is eligible. If the stock is primarily listed in one of the following exchanges, it is not eligible: Shanghai, Shenzhen, OTC exchanges.
3. Stocks are only eligible if classified according to one or more of the following RBICS categories:

4. Stocks are also eligible if classified under FactSet “Industries”: