Methodology Change | Solactive MLP Infrastructure Index | Effective Date 02/08/2023

Today, on the 02/08/2023, Solactive announces the following changes to the methodology of the following indices (the ‘Affected Indices’):

Rationale for Methodology Change

Due to the current market environment and ongoing consolidation within the MLP market as well as the expected continuation of this development, Solactive decided to adjust the weighting mechanism described in Section 2.3. The current weighting scheme will result in a significant overweighting of MLPs taxed as corporations the more constituents the Affected Indices loose. This  is not in line with the index objective.

Therefore, Solactive decided to remove Section 2.3.3) as well as changing the cap of 4.75% for companies ranked below top 6 by a cap as of the weight of the index component ranked at number 6.

Due to the observation of increased market activity for the month end periods within the MLP space, significantly affecting market prices and volatility and in turn also affecting the tradability of the underlying constituents of the Affected Indices, Solactive proposes to adjust the rebalance cycle for the Affected Indices.

Changes to the Index Guideline

Section 2.3 WEIGHTING OF THE INDEX COMPONENTS

From:

“[….]

On each Selection Day each Index Component of the Solactive MLP Infrastructure Index is weighted proportionally according to its Free Float Market Capitalization. The following caps and weight restrictions are then applied:

• The percentage weight of an Index Component, taxed as partnership, with the highest Free Float Market Capitalization is capped at 10%, the Index Component with the second highest Free Float Market Capitalization is capped at 9%. This mechanism proceeds until the Index Component with rank number 6 is capped at 5% and all Index Components with a rank number above 6 are capped at 4,75%. The excess weight is allocated proportionally to all Index Component whose percentage weight is not capped.
• If there are fewer than 20 Index Components, the cap on each of the six highest-ranked Index Components is increased by 0.5% multiplied by the difference between 20 and the current number of Index Components. For example, if only 18 Index Components are included in the Solactive MLP Infrastructure Index, the Index Component with the highest Free Float Market Capitalization would be capped at 11%.
• The percentage weight of each Index Component, taxed as a corporation, is capped at 2%, provided, however, that if such cap would cause the total maximum weight of all Index Components to be capped at less than 100%, the percentage weight of each Index Component taxed as a corporation will be capped at 100% minus the sum of MLP companies taxed as partnerships (assuming their maximum weight will be reached) divided by the number of Index Components taxed as corporations. The excess weight is allocated proportionally to all Index Components whose percentage weight is not capped.
• The calculated Number of Shares as of the Selection Day are used and will be implemented as of the close on the Adjustment Day. To match the correct Index level on the Adjustment Day, this is carried out by implementing the shares as determined based on the weights calculated on the Selection Day.

The capping methodology may be amended by the Oversight Committee from time to time to ensure appropriate Index representation and Index compliance with financial product regulations in the United States.

[…]”

To:

“[…]

On each Selection Day each Index Component of the Solactive MLP Infrastructure Index is weighted proportionally according to its Free Float Market Capitalization. The following caps and weight restrictions are then applied:

• The percentage weight of an Index Component, , with the highest Free Float Market Capitalization is capped at 10%, the Index Component with the second highest Free Float Market Capitalization is capped at 9%. This mechanism proceeds until the Index Component with rank number 6 is capped at 5% and all Index Components with a rank number above 6 are capped at the weight of the Index Component with rank number 6. The excess weight is allocated proportionally to all Index Components whose percentage weight is not capped.
• If there are fewer than 20 Index Components, the cap on each of the six highest-ranked Index Components is increased by 0.5% multiplied by the difference between 20 and the current number of Index Components. For example, if only 18 Index Components are included in the Solactive MLP Infrastructure Index, the Index Component with the highest Free Float Market Capitalization would be capped at 11%.
• In case the above-mentioned weighting requirements can no longer be met, the Oversight Committee may decide to revise on the weighting methodology and determine appropriate actions.
• The calculated Number of Shares as of the Selection Day are used and will be implemented as of the close on the Adjustment Day. To match the correct Index level on the Adjustment Day, this is carried out by implementing the shares as determined based on the weights calculated on the Selection Day.

The capping methodology may be amended by the Oversight Committee from time to time to ensure appropriate Index representation and Index compliance with financial product regulations in the United States.

[…]”

Section 6. DEFINITIONS

From:

“[…]

“Adjustment Day” is the last Business Day in February, May, August and November.

[…]”

To:

“[…]

“Adjustment Day” is the 6^th Business Day of February, May, August and November.

[…]”

Defined terms used in this Announcement, but not defined herein, have the meaning assigned to them in the respective index guideline of the Index.