Methodology Change  | Solactive United States Benchmark Series | Effective Date 05/05/2023

Today, on 03/05/2023, Solactive announces the following change to the methodology of the following indices (the ‘Affected Indices’). The change to the methodology will become effective on 05/05/2023.

Rationale for Methodology Change

Abnormally high-priced securities are difficult to be traded by ETF managers and institutional investors due to round lot and liquidity concerns. In recent years, fractional shares trading has inflated the liquidity of a high-priced security, making such a security eligible for inclusion in the indices based on the current liquidity criteria of the Indices. While accessible to retail investors, the liquidity from fractional shares trading may be inaccessible to institutional investors who must track the index turnover of such a high-priced security in whole share units. The proposed changes aim to make these indices more investable by excluding very high-priced securities as outliers to the universe of the Indices. If successful, the changes will take effect for the June-2023 rebalance of the Indices.

Changes to the Index Guideline

In this regard, Solcactive proposed a closing price filter of a maximum of USD 20,000 for a new index component and USD 25,000 for a current index component to be considered in Selection of index constituents. Solactive conducted a Market Consultation during 31/03/2023 – 14/04/2023 with relevant stakeholders to receive their feedback on the proposed changes. Upon considering the feedbacks received in Market Consultation, Solactive reduced the closing price thresholds to USD 10,000 for new components and USD 15,000 for current components.

Consequently, The following changes will be implemented in the following points of the Index Guideline (ordered in accordance with the numbering of the affected sections):

To exclude very high-priced securities, the following change will apply to the corresponding section:

2.2. Selection of the Index Components

An additional criterion is added in filtering eligible securities:

“3. New (Current) INDEX COMPONENTS must have a closing price of less than USD 10,000 (15,000).”

Defined terms used in this announcement, but not defined herein, have the meaning assigned to them in the respective index guideline of the Affected Indices. The amended version of the index guideline will be available on the effective date.