Index Rules and Mehodology 7/12/2012
TABLE OF CONTENTS I. GENERAL DESCRIPTION... 3 II. REGIONAL SUB-INDEXES... 4 III. SECTOR SUB-INDEXES... 4 IV. INDEX COMMITTEE... 4 V. DESIGN SPECIFICATIONS... 5 VI. CONSTITUENT WEIGHTINGS... 6 VII. DIVISION INTO REGIONAL SUB-INDEXES... 7 VIII. EXTRA LIQUID (XL) SERIES... 8 IX. SECTOR SUB-INDEX... 9 X. RULES FOR CALCULATION AND DISSEMINATION... 9 XI. ROLES OF PARTIES IN THE QUARTERLY RECONSTITUTIONS... 10 XII. CALCULATION OF INDEX VALUES... 11 XIII. DISSEMINATION... 11 XIV. ONGOING MAINTENANCE... 12 XV. CORPORATE ACTION REPLACEMENT TREATMENT... 14 XVI. FLOAT ADJUSTMENT... 14 XVII. TOTAL RETURN INDEX VALUE... 15 XVIII. CALCULATION AND ADJUSTMENTS... 15 XIX. DATA CORRECTION POLICY... 18 XX. APPENDIX REVIEW SCHEDULE... 19 Ardour Global Alernaive Energy Indexes 2
Ardour Global Alernaive Energy Indexes (AGI) Rule Book (Secion I) This documen provides he rules for calculaing and mainaining he Ardour Global Alernaive Energy Indexes, hereafer referred o as he AGI Family. Included in hese rules are he following: 1) a descripion of he AGI Family, 2) he design specificaions for he AGI Family, and 3) he index calculaion and daa elemens. I. General Descripion The Ardour Global Index SM (Composie) ( The Composie ) is a capializaion weighed, floa adjused equiy index designed o serve as an equiy benchmark for globally raded socks which are principally engaged in he field of Alernaive Energy Technologies, including renewable energy, alernaive fuels and relaed enabling echnologies. The Composie comprises five main business segmens: Alernaive Energy Resources. Companies whose echnologies are involved wih: Solar Power- including phoo-volaic (PV) and hermal BioEnergy- including power and fuel Wind Power Hydro Power, Tidal Power and Wave Power Geohermal Power Disribued Generaion. Companies whose echnologies produce power a or near he end user. These echnologies include: Micro Turbines Diesel Engines Fuel Cells Hydrogen Generaion and Sorage Energy Efficiency. Companies whose echnologies are involved wih: Lighing Whie Tags Cogeneraion Energy Recycling Advanced Meering Demand Response Enabling Technologies. Companies whose echnologies are involved wih: Power Elecronics Advanced Baery Chemisries Flywheels Superconducors Ulracapaciors Advanced Maerials Environmenal Technologies. Companies whose echnologies are involved wih: Waer and Wasewaer Treamen Air Qualiy and Emission Miigaion Clean Coal Ardour Global Alernaive Energy Indexes 3
The Composie is a capializaion weighed, floa adjused equiy index conaining socks seleced from a universe of equiy securiies raded on recognized sock exchanges in a) Norh America, b) Souh and Cenral America, c) Europe, Middle Eas & Africa (EMEA) and c) Asia/Pacific, based on a se of objecive screening crieria. The selecion crieria include requiremens for indusry paricipaion, primary exchange lising, minimum capializaion (adjused for free floa), minimum price and average daily rading volume. Socks ha mee he screening crieria a incepion or on a rebalancing dae will be included in he Composie, unless oherwise deermined by he Index Commiee. Each sock s relaive weighing in he Composie will be based on is marke capializaion, adjused for free floa, relaive o he overall marke capializaion, adjused for free floa, of he Composie, subjec o cerain resricions, limiaions and modificaions. The weigh of any sock conained in he Composie will be capped a 20% of he oal marke capializaion of he Composie and he aggregae weigh of all socks wih individual weighs of 5% or more will be capped a 45% of he oal marke capializaion of he Composie. II. Regional Sub-Indexes The companies conained in he Global Index will be divided ino four regional groupings o form he regional sub-indexes. The regional sub-indexes are: Norh America. Companies whose principle place of doing business is Norh America and whose securiies have heir primary lisings on Norh American Sock Exchanges. Europe, Middle Eas, & Africa (EMEA). Companies whose principle place of doing business is Europe, Africa or he Middle Eas and whose securiies have heir primary lising on sock exchanges in hose regions. Asia/Pacific. Companies whose principle place of doing business is Asia, including, Japan, Korea, Souheas Asia, Indonesia, Taiwan, he Philippines, Ausralia and New Zealand and whose securiies have heir primary lising on sock exchanges in his region. (No Presenly compiled or calculaed.) Souh and Cenral America. No presenly compiled or calculaed. Companies whose securiies rade in ADR or GDR form, or whose securiies are lised on a foreign exchange, are assigned o he region in which heir principal place of doing business is locaed. III. Secor Sub-Index The companies conained in he Global Index ha are engaged in he producion of Solar Energy and relaed producs or services form he Ardour Solar Energy Index (SOLRX). The SOLRX includes companies in hree primary secors: 1) Phoovolaic, Concenraed Solar Power, and Solar Thermal Power; 2) Solar Inegraors; and 3) Relaed Technologies. IV. The Index Commiee The AGI Index Commiee ( The Commiee ) will be composed of no less han four members. The Commiee Chairman will have exensive experience in he overall field of alernaive and renewable energy. Two of he members will have some experise in a leas one of he above-named segmens. The fourh member will have exensive experience and experise in financial markes and sock marke characerisics. Ardour Global Alernaive Energy Indexes 4
The Commiee will be responsible for mainaining a comprehensive lis of companies ha are principally engaged in one of he business segmens and he lis will form he Composie universe of socks. Imparial selecion crieria will hen be applied o hese socks o deermine wheher or no hey should be included in he index. The Commiee will hen review he socks o be included in he Composie and may rejec any sock ha i believes does no mee is overall sandards for risk and sound business pracice. The Commiee will mee quarerly, eiher in person or via eleconference, o discuss index issues and organize he semi-annual or special rebalancings. The composiion of he Commiee may from ime o ime be changed o reflec changes in marke condiions. V. Design Specificaions The Composie will conain socks ha mee he following crieria: i) The company has been classified by he Commiee as being principally engaged (>50% of gross revenues derived from business of alernaive energy) in one of he five business segmens described above. The company s sock mus rade on a recognized Norh American, European or Asian sock exchange. (Naional Sock Exchange, formerly NASDAQ, socks mus be repored securiies under 11Aa3-1 of he Securiies and Exchange Ac, i.e., Naional Marke Sysem socks, and similar crieria apply o socks wih foreign lisings.) Only acual common shares ousanding are eligible for inclusion. For companies wih muliple share classes, he eligibiliy of each share class will be considered based upon overall liquidiy (average daily rading volume) as if each represened a separae company. See Appendix A for a lis of approved exchanges. i The sock mus have an average daily closing price greaer han $1, or he equivalen amoun in is lising currency, for he preceding hree monhs or he enire period of is sock exchange lising, if less han hree monhs. iv) (06/09/2009 Rule Change: A sock whose average share price is beween $1 and $.90 shall no be deleed from he index on he firs rebalancing dae on which his price is refleced, bu shall be deleed from he index on he hird consecuive rebalancing dae on which his price is refleced.) v) The minimum capializaion value for each sock will be deermined a index incepion and will be revised wih each quarerly rebalancing o reflec curren marke levels. To qualify for inclusion, he minimum capializaion value for any sock will be greaer han USD 100 million, or he equivalen amoun in is lising currency. vi) To qualify for inclusion, he minimum free floa for any sock will be greaer han USD 50 million, or he equivalen amoun in is lising currency. Ardour Global Alernaive Energy Indexes 5
v vi ix) A consiuen whose capializaion falls below 50% of he minimum on he dae of he quarerly rebalancing shall be deleed from he AGI afer he close on he effecive dae of he rebalancing. A consiuen whose free floa falls below USD 50 million on he dae of he quarerly rebalancing shall be deleed from he AGI before he open of rade on he effecive dae. A liquidiy raio, R-Score, is defined as he average 3-monh daily rading volume (in housands, USD) divided by he average 3-monh marke capializaion (in million). A non-componen wih R-Score less han 25% as of he snapsho dae will be removed from he Composie selecion pool. x) Curren consiuens wih R-Score less han 15% shall be deleed from he Composie before he open of rade on he quarerly rebalancing effecive dae. xi) x For AGIXL and SOLRX, companies represening a leas 90% of he oal weigh of he respecive indexes mus have urnover (shares raded X average share price) of a leas USD 1 million per day for he hree monhs preceding he las rading dae of he second monh of each calendar quarer. For AGIXL and SOLRX, pre-exising index consiuens wih share urnover of less han 600,000 USD average daily rading volume shall be deleed from he index. xi xiv) For a recen IPO (less han hree monhs of rading hisory) o be included in he Composie selecion pool, he sock will require a leas 15 rading days as of he snapsho dae. R-Score will be based on he enire rading hisory if he company s rading hisory is less han hree calendar monhs. Such companies may be added o he Composie on any rebalancing dae a he discreion of he Commiee. Recen IPOs in non-us jurisdicions will be added only afer meeing relevan US regulaions wih respec qualificaions for US ownership. Cerain companies ha are no principally engaged in one or more of he five segmens, bu ha derive significan revenues from businesses in one or more of he five segmens may be included in he Composie a he discreion of he Index Commiee on a capializaion-adjused basis, provided 1) such revenues represen more han 20% of he company s oal revenues and such revenues are independenly repored in he company s financial repors, 2) applicable revenues are likely o have a maerial impac on he company s overall share price performance, and 3) he company s applicable business is likely o have a significan impac on he alernaive energy secor as a whole. VI. Consiuen Weighings i) Each index consiuen s sock is capializaion weighed, using each sock s acual shares ousanding muliplied by he closing price on he primary lising exchange on he incepion or rebalancing dae. Each consiuen s capializaion is hen adjused o reflec he acual free floa of he company s shares. Free floa is he marke capializaion afer eliminaing governmen Ardour Global Alernaive Energy Indexes 6
holdings, indusrial cross-holdings, resricions of foreign invesmen and similar facors. Index consiuens shall be subjec o limiaion on heir floa-adjused capializaion weighing in he Composie. a) No sock s weigh shall exceed 20%. b) The aggregae weigh of socks exceeding 5% shall no exceed 45%. i The following procedure shall be used o ensure ha no Composie consiuen weighing exceeds a pre-deermined maximum weigh on he rebalancing dae: Sep 1: Sor he Composie consiuens by floa marke capializaion in descending order. Saring wih he second larges company in he index, calculae a floa marke capializaion raio for each company o he nex larges company in he index. Sep 2: Adjus his raio by he following formula: 1 OriginalRaio NewRaio 1 Facor where: Original Raio = he floa marke capializaion raio of each company o he nex larges company calculaed in Sep 1. Facor = a divisor, ha sars wih 1, ha increases he raio calculaed in Sep1 Sep 3: Calculae new floa marke capializaion using he New Raio for each company. Sep 4: Calculae he new weighs for each company based on he new floa marke capializaion and check o see if he weigh limis described in V( are saisfied. Sep 5: If he weigh limis are no saisfied, repea Seps 2 o 4, increasing he Facor by.01 for each round unil he weigh limis are saisfied. Sep 6: Once he weigh limis are saisfied, calculae he final cap facors for each company using he floa marke capializaion calculaed in Sep 3 such ha he smalles company in he index has a cap facor of 1.0. iv) The foregoing mehodology shall be applied o all indexes included in he AGI Family, excep he Exra Liquid indexes for Norh America and EMEA, which shall follow a differen weighing/capping procedure. For hese indexes he aggregae weigh of he op five consiuens shall be capped a 60% and he weighs of each of he op five consiuens shall be reduced by he excess weigh in proporion o heir respecive relaive weighs in he op five index consiuens. The excess weigh will hen be added o he boom en consiuens in proporion o heir respecive relaive weighs among he boom en consiuens. Ardour Global Alernaive Energy Indexes 7
VII. Division ino Regional Sub-Indexes i) Upon compleion, he Composie will hen be divided ino hree regional subindexes based on he regional descripion conained in Secion II. i The weighing of each of he socks conained in he sub-index shall be adjused upward on a proporional basis so ha he combined weighs of hese socks equals 100%. The procedures applied o secion V(i) hrough V(i herein shall hen be applied o each regional sub-index. VIII. Exra Liquid (XL) Series i) Upon compleion, he Composie and he Norh American and EMEA subindexes will each be reduced o a subse of he mos liquid socks conained in he Composie or relevan sub-index. i iv) The Ardour Global Index (Exra Liquid) ( AGI Exra Liquid ) will conain a oal of 30 socks and each of he regional (N.A. and EMEA) sub-indexes will conain a oal of 15 socks. All socks conained in he Exra Liquid Series shall mee he inclusion crieria defined herein for he Composie. Cerain sock exchange lisings, which qualify a sock for inclusion in he Composie or Regional Indexes, are no considered qualified exchanges for inclusion in he Exra Liquid Series. See Appendix A for a lis of qualified exchanges for he Exra Liquid Series. v) The socks conained in he Exra Liquid Series shall in he case of he AGI Exra Liquid be he 30 socks wih he highes average rank of floa marke capializaion and average daily dollar urnover for he previous hree monhs and shall in he case of he Norh American and EMEA indexes be he 15 socks wih he highes average rank. vi) v vi The Commiee will screen he consiuens o make sure ha no consiuen s average daily urnover as a percenage of is marke capializaion (floa adjused) is inconsisen wih sound marke rading paerns. If in he opinion of he Commiee a consiuen presens such inconsisen rading paerns, i will no be included in he index and he nex mos acively raded sock will be seleced in is place. The weighing of each of he socks conained in he AGI Exra Liquid shall be deermined on a capializaion-weighed, floa-adjused basis, using mehodology conained in Secion VI herein. The weighing of each of he socks conained in he Norh America and EMEA Exra Liquid Indexes shall be capializaion-weighed, floa-adjused, bu weighings of hose socks whose weighs exceed he limis defined in Secion VI(i)-V(i will no be adjused as described in hose secions. Insead, a differen formulaion will be used o insure ha he aggregae Ardour Global Alernaive Energy Indexes 8
weigh of he five larges consiuens does no exceed 60% of he weigh of he index. ix) A each reconsiuion he consiuen urnover of he various Exra Liquid indexes will be smoohed using he following mehodology. For he AGI Exra Liquid, no sock will be added o he index unless i saisically ranks among he op 25 candidae socks and no sock will be deleed from he index unless i ranks lower han he 35 h mos liquid candidae. For he AGI regional Exra Liquid indexes, a sock mus rank among he op 12 candidae socks o be added and will no be deleed from he index unless i ranks lower han he 18 h mos liquid candidae. IX. Secor Sub-Index i) Upon compleion hose companies conained in he Composie ha have been idenified as Solar Energy Companies by he Index Commiee will be used o form he SOLRX. i iv) In addiion o he eligibiliy crieria applied o he Composie, companies mus have average daily rading volume of more han USD 1 million for he niney days prior o he rebalancing dae, or in he case of recen IPOs, companies mus have average daily rading volume of more han USD 1 million for heir enire rading hisory, provided he companies have raded more han 22 days and less han 90 days. A consiuen whose hree-monh average daily rading volume falls below USD 600,000 on he dae of he quarerly rebalancing shall be deleed from he SOLRX before he open of rading on he effecive dae. The weighing of each of he socks conained in he SOLRX shall be deermined on a modified capializaion weighed, floa adjused basis. The four larges consiuens are equal-weighed a 10% each and he nex four consiuens are equal-weighed a 4.5% each. The remainder of he socks in he index are capializaion weighed, adjused for free floa and he larges of he remaining socks are capped a 4.4%. X. Rules for Calculaion and Disseminaion The Ardour Global Index (Exra Liquid) and he Ardour Solar Energy Index (SOLRX) are calculaed exernally on behalf of Ardour Global Alernaive Energy Indexes, LLC ( The Company ) by Reuers PLC. (Calculaion Agen). The Calculaion Agen is also responsible for index mainenance and price disseminaion. The remaining Ardour Indexes are calculaed by S-Nework Global Indexes, LLC on an end of day basis. The calculaion, mainenance and disseminaion rules are as follows: Index Rebalancing. The Indexes are reconsiued and rebalanced on a quarerly basis, during which he Index Commiee submis o Compilaion Agen (S-Nework Global Indexes, LLC) a candidae lis of all idenifiable companies worldwide ha are principally engaged in Ardour Global Alernaive Energy Indexes 9
he business (as described above) including curren Index consiuens and recen IPOs. All candidaes and curren consiuens are screened agains he Composie selecion crieria, and addiions o and deleions from he Composie and relaed sub-indexes are deermined. Once he Commiee has approved addiions and deleions, he Indexes are rebalanced o reflec all changes. The index rebalancing snapsho dae is he firs Monday following he hird Friday of he monh prior o a rebalancing monh. Shares ousanding oals for componen socks are updaed during he quarerly review. However, if he number of floa-adjused shares ousanding for an index componen changes by more han 10% due o a corporae acion, he shares oal will be adjused immediaely afer he close of rading on he dae of he even. Whenever possible, changes will be announced a leas wo business days prior o is implemenaion. Changes in shares ousanding due o sock dividends, splis and oher corporae acions also are adjused immediaely afer he close of rading on he day hey become effecive. Addiions and Deleions. Addiions o he Indexes are made a he close of rading on he hird Friday of he las monh of each calendar quarer. Addiions are made o he Exra Liquid Series when an index vacancy is creaed by an index deleion a he close of rade on he dae he deleion becomes effecive. Addiions may be made o he Composie a he close of rading on he quarerly rebalancing daes (hird Friday of las monh of he calendar quarer) in he case of cerain recen Iniial Public Offerings ha occurred more han 22 rading days prior o he rebalancing dae. Deleions o he Indexes are made 1) a he close of rading on quarerly rebalancing daes for companies ha fail o mee he eligibiliy crieria and 2) a any ime, in he even a company is de-lised, files for bankrupcy, is acquired or merges wih anoher company. XI. Roles of Paries in he Quarerly Reconsiuions. i) The Commiee, or is designee, will submi o he Compilaion Agen (S-Nework Global Indexes, LLC) a lis of index consiuens for possible inclusion in AGI a he close of US markes on he Monday following he hird Friday of he monh prior o he rebalancing monh. i iv) The Compilaion Agen will use he remaining crieria in V o saisically screen he lis of index consiuens o confirm heir eligibiliy for he index based on closing prices and values as of las rading dae of he second monh of each calendar quarer. On he firs Friday of he rebalancing monh, he Compilaion Agen shall provide he Commiee, or is designee, wih a lis of consiuens for he AGI. The Commiee shall approve or rejec he changes and noify he calculaion agen of is decisions no laer han he Wednesday following he firs Friday of he rebalancing monh. v) No laer han he Wednesday following he firs Friday of he rebalancing monh, he Index Commiee or is designee will issue a press release announcing addiions and deleions o AGI. The press release will be posed on he AGI web sie. (Announcemen dae.) vi) The Compilaion Agen will provide final share weighs o he Commiee or is designee on he second Friday of he rebalancing monh. Weighs will be based on prices as of he close of rading on he preceding Thursday, or he Thursday prior o he second Friday of he rebalancing monh. Ardour Global Alernaive Energy Indexes 10
v vi ix) The AGI Index Commiee or is designee will approve he final share weighs prior o he close of US markes on he second Friday. Share weighs will be disseminaed o all licensees immediaely following he Index Commiee or is designee s approval. The Compilaion Agen will disribue final share weighs o all approved paries via email and FTP afer he close of US markes on he second Friday. The effecive dae of he rebalancing will be he hird Friday of he rebalancing monh. The Compilaion Agen will pos all final rebalancing daa and informaion on is FTP server on he second Friday of he rebalancing monh barring he Index Commiee Approval. x) AGI will pos all rebalancing daa on is websie prior o he open on he nex business day following he rebalancing dae. XII. Calculaion of Index Values i) The Calculaion Agen will calculae index values using price daa on each repored rade i receives on each componen securiy. i iv) The Calculaion Agen will disribue index values o vendors a se 15-second inervals, provided he index value has changed from he previously disribued value. The index calculaions will sar a 18:00 (EST - US) for he nex rading day (opening price). A ha ime, he index will begin changing as new prices or exchange raes are processed. Index calculaion will cease each rading day a 17:00 (EST-US) and official summaries will be disseminaed a approximaely 17:40 (closing price). v) Each week, he indexes will be calculaed saring Sunday nigh a 18:00 hrough Friday nigh a 17:00. vi) If, during periods when he index is calculaed, one or more markes are closed, he index calculaion will coninue using he las closing price for hose socks ha rade on he closed exchange(s). v) Socks denominaed in foreign currencies will be convered o USD wih each repored price using exchange raes derived from Reuers. Official closing prices for he indexes will be calculaed using he Reuers Raes (4PM GMT). vi) v The indexes will also be calculaed and disseminaed in EUR. The indexes will also be calculaed and disseminaed in USD and EUR using Luxembourg Dividend Tax Raes o calculae ne oal reurn. XIII. Disseminaion Ardour Global Alernaive Energy Indexes 11
Index values will be disseminaed in US dollars via he NYSE Global Index Feed using he following ickers: Index Ardour Global Index (Composie) Ardour Global Index (Exra Liquid) AGI Norh America AGI Norh America Exra Liquid AGI EMEA AGI EMEA Ardour Solar Energy Index Ticker AGIGL AGIXL AGINA AGINAXL AGIEM AGIEMXL SOLRX Index values will be disseminaed in EUR via he NYSE Global Index Feed using he following ickers: Index Ardour Global Index (Composie) Ardour Global Index (Exra Liquid) AGI Norh America AGI Norh America Exra Liquid AGI EMEA AGI EMEA Ardour Solar Energy Index Ticker AGIGLE AGIXLE AGINAE AGINAXLE AGIEME AGIEMXLE SOLERX Values for he price only indexes are disribued in real-ime, ha is, in 15-second snapshos, saring a approximaely 18:30PM (EST) on Sunday hrough approximaely 16:30 PM (EST) he nex day. The following day s price calculaion resumes a approximaely 18:30PM (EST). Index values are no calculaed from 16:30PM on each Friday hrough 18:30PM (EST) on each Sunday. XIV. Ongoing Mainenance In addiion o he scheduled quarerly reviews, he AGI Family is reviewed on an ongoing basis. Changes in index composiion and relaed weigh adjusmens are necessary whenever here are exraordinary evens such as delising, bankrupcy, mergers or akeovers involving index componens. In hese cases, each even will be aken ino accoun as soon as i is effecive. Whenever possible, he changes in he index s componens will be announced a leas wo business days prior o heir implemenaion dae. i) Changes of Eligible Securiies. In he even ha a componen no longer mees he eligibiliy requiremens described in Secion IV herein, i will be removed from he index. i Changes of Primary-Marke Lising. When a company's primary marke lising changes from one region o anoher, i will be removed from is curren regional index when i is de-lised and will be considered for addiion o is new regional index. Changes of Indusry Classificaion. Companies are eligible for inclusion in he Composie based on he revenues received from one or more applicable business segmens. Mergers, akeovers, and spin-offs, as well as organic growh Ardour Global Alernaive Energy Indexes 12
in a company's business segmens, may cause a company o lose is eligibiliy. In such a circumsance, he company will be deleed from he index. A company's classificaion may also require an immediae change as he resul of a special even such as a merger, akeover or spin-off. iv) Splis and Spin-offs. If an index consiuen splis or spins off a porion of is business o form one or more new companies, all of he companies involved in he spin-off will be immediaely included in AGI Family, if hey would oherwise qualify for membership. Inclusion of a spin-off or deleion due o a spin-off in an Exra Liquid Index will be deermined by he Commiee. v) Mergers. If wo index consiuens merge, heir componen posiions will be replaced by he surviving company immediaely. The Calculaion Agen will adjus he floa-adjused shares ousanding for he surviving company o reflec he changes in boh is oal shares and any floa blocks, regardless of he percenage changes in he survivor. If an index consiuen merges wih a noncomponen company, is componen posiion will be replaced by he new company, if he new company mees all eligibiliy crieria described in Secion IV herein. In he even of mergers of equals, he combined rading hisory of he predecessor companies shall be used for evaluaion. vi) v vi Takeovers. If an index componen is aken over by anoher componen company, he former will be removed from he index immediaely upon compleion of he akeover. If an index componen is aken over by a noncomponen company, i will be replaced by he acquiring company immediaely, if he acquiring company mees all he eligibiliy crieria described in Secion IV herein. The Commiee will provide he Calculaion Agen a wach lis of eligible replacemen companies, in he even a consiuen of one of he Exra Liquid indexes is aken over. Share Offerings, Tenders and Purchases. All share offerings, enders and purchases ha resul in an increase of shares will be held consan and will be implemened a he quarerly review. Removal of Companies Due o Delising, Bankrupcy or Exreme Financial Disress. If an index consiuen is de-lised by is primary marke, or is in bankrupcy proceedings, i will be removed from he index. * If an index componen is de-lised by is primary marke due o failure o mee financial or regulaory requiremens, i will be removed from he index. * If an index componen eners bankrupcy proceedings, i will be removed from he index and will remain ineligible for re-inclusion unil i has emerged from bankrupcy. However, he Commiee may, following a review of he bankrup company and he issues involved in he filing, decide o keep he company in he index. * The Commiee may, a is discreion, remove a company i has deermined o be in exreme financial disress from any AGI Family index o which i belongs, if he Commiee deems he removal necessary o proec he inegriy of he index and he ineress of invesors in producs linked o ha index. ix) Pricing of Socks in Exreme Financial Disress for Index Mainenance. Ardour Global Alernaive Energy Indexes 13
* When a sock is suspended from rading due o financial disress and subsequenly de-lised by is primary marke prior o resumpion of rading, he Calculaion Agen will use he bes-available alernae pricing source o deermine he value a which he company should be removed from he index. * If he sock's primary marke price is no longer available due o is suspension or de-lising, a curren price from anoher exchange, such as a regional or elecronic markeplace, may be used. In he absence of hose prices in he case of U.S. securiies, OTC Bullein Board, OTC Equiy (non-otcbb socks), and Pink Shee raded prices could be applied in ha order. * If neiher a raded price nor a bid/asked range is available, he Commiee will evaluae he saus of he suspended sock. The Commiee may consul wih managers of porfolios linked o indexes in which he sock is a consiuen in deermining he value of he sock. If he Commiee concludes ha he securiy has become worhless or is likely o remain oo illiquid o be raded, i will be removed from he index a.01 local currency of he sock. XV. Corporae Acion Replacemen Treamen In he even of a delising he following procedure applies Take he floa adjused marke cap for he acquired and replacemen companies 3 days prior o he corporae acion If weigh of acquired company is less han 3% of he oal weigh of he index he replacemen will be reaed weigh in/weigh ou If he marke cap of he replacemen company is greaer han or equal o 2/3 of he acquired company he replacemen will be reaed weigh in/weigh ou If he marke cap of he replacemen company is less han 2/3 of he acquired company and more han 3% of he oal weigh of he index o o The replacemen company will be added a he raio above*he acquired company s price weighed marke cap Redisribue original weigh less replacemen weigh o he remaining consiuens on a proporional basis based on he closing prices of T-3. XVI. Floa Adjusmen The AGI Family indexes are consruced and weighed using free-floa marke capializaion. Floa-adjused raher han full marke capializaion is used o reflec he number of shares acually available o invesors. Floa facors will be deermined a he quarerly rebalancing and will be held consan unil he following rebalancing. i) Qualificaions. A company s ousanding shares are adjused by block ownership o reflec only ruly radable and invesable shares. The following four ypes of block ownership are considered during floa adjusmen: * Cross ownership shares ha are owned by oher companies (including banks and life insurance companies) Ardour Global Alernaive Energy Indexes 14
* Governmen ownership shares ha are owned by governmens (cenral or municipal) or heir agencies * Privae ownership shares ha are owned by individuals, families or chariable russ and foundaions * Resriced shares shares ha are no allowed o be raded during a cerain ime period However, a company s ousanding shares are no adjused by insiuional invesors' holdings, which include, bu are no limied o, he following caegories: * Cusodian nominees * Trusee companies * Muual funds (open-end and closed-end funds) * Invesmen companies i Threshold. A company s ousanding shares are adjused if, and only if, an eniy in any of he four qualified caegories lised above owns 5% or more of he company. Is shares will no be adjused if he block ownership is less han 5%. Foreign Resricion. The floa adjusmen rules also apply o foreign companies ha have cross ownership of 5% or more. If a governmen has a foreign ownership resricion of 5% or more, he lesser of free-floa shares or he porion ha is available for foreign invesmen will be used for index calculaion. XVII. Toal Reurn Index Value Toal Reurn values reflec dividends ne of wihholding axes. See appendix B for schedule. XVIII. Calculaion and Adjusmens i) Inpu Daa Sources * Real-ime sock prices are provided by Reuers. The laes rading price is used for index calculaion. * The number of shares is deermined separaely for each class of sock. This informaion is obained from regulaory filings and a variey of daa vendors. The daa also may be sourced from he companies hemselves. * Corporae acions are sourced from public news services, regulaory filings and daa vendors. The companies hemselves may be used as an addiional source. * Floa daa are obained from a variey of sources including daa vendors, exchanges, regulaors and he companies hemselves. Index Formula. The index is calculaed using a Laspeyres formula. This formula is used for he calculaion of he reurn index and he price index. The only difference is ha he divisor D is differen for he wo indexes (reurn index and price index). Ardour Global Alernaive Energy Indexes 15
The index is compued as follows: Index C n i 1 p n i 1 i x p i0 q i q i0 ri rio f i f io Base Index Value M B Base Index Value The above menioned formula can be simplified as: Index M D Where: D = B base index value = divisor a ime () n = he number of socks in he index p i0 = he closing price of sock i a he base dae q i0 = he number of shares of company i a he base dae r io = he exchange rae from local currency o USD a he base dae f io = he floa facor of company i a he base dae p i = he price of sock i a ime () q i = he number of shares of company i a ime () r i = he exchange rae from local currency o USD a ime () f i = he floa facor of company i a ime () C = he adjusmen facor for he base dae marke capializaion = he ime he index is compued M = marke capializaion of he index a ime () B = adjused base dae marke capializaion of he index a ime () Dividend paymens are no aken ino accoun in he price indexes, whereas dividend paymens are reinvesed in he index samples of he oal reurn indexes. i iv) Divisor Adjusmens. Corporae acions affec he share capial of componen socks and herefore rigger increases or decreases in he index. To avoid disorion, he divisor of he index is adjused accordingly. Changes in he index s marke capializaion due o changes in he composiion (addiions, deleions or replacemens), weighing (following quarerly reviews or changes of more han 10% in a single componen s share number) or corporae acions (mergers, spin-offs, righs offerings, repurchase of shares, public offerings, reurn of capial, or special cash or sock disribuions of oher socks) resul in a divisor change o mainain he index s coninuiy. By adjusing he divisor, he index value reains is coninuiy before and afer he even. For righs offerings, he Calculaion Agen will price he righs during he subscripion period, no before or afer. Alernaively, he Calculaion Agen may sar pricing he righs afer he ex dae and before he subscripion period, under he condiion ha he righs are priced daily. Ardour Global Alernaive Energy Indexes 16
* Formulae for Divisor Adjusmen. The following formulae will be used for divisor adjusmens. (Noe: No divisor adjusmens are necessary for sock splis, since marke capializaion does no change and he share number and share price are adjused prior o he opening of rading on he spli's ex-dae.) D +1 Where: D pi x qi r i f i pi x qi D = divisor a ime () D = divisor a ime (+1) p i 1 r i f i MC +1 = sock price of company i a ime () q i = number of shares of company i a ime () r i = he exchange rae from local currency o USD a ime () f i = he floa facor of company i a ime () MC +1 = add new componens marke capializaion and adjused marke capializaion (calculaed wih adjused closing prices and shares effecive a ime +1 and/or minus marke capializaion of companies o be deleed (calculaed wih closing prices and shares a ime ) Noe: If he curren rading price of an issue is unavailable, he previous rading session s closing price is used. However, if he issue is affeced by any corporae acion ha requires an adjusmen, hen he adjused price is used. * Adjusmens for Corporae Acions. An index divisor may decrease ( ) or increase ( ) or keep consan ( ) when corporae acions occur for a componen sock. Assuming shareholders receive B new shares for every A share held for he following corporae acions: A) CASH DIVIDEND (applied for reurn index only) adjused price = closing price - dividend announced by he company B) SPECIAL CASH DIVIDEND (applied for price and reurn index) adjused price = closing price - dividend announced by he company C) SPLIT AND REVERSE SPLIT Adjused price = closing price * A / B New number of shares = old number of shares * B / A D) RIGHTS OFFERING Adjused price = (closing price * A + subscripion price * B) / (A + B) New number of shares = old number of shares * (A + B) / A E) STOCK DIVIDEND Adjused price = closing price * A / (A + B) New number of shares = old number of shares * (A + B) / A F) STOCK DIVIDEND OF A DIFFERENT COMPANY SECURITY adjused price = (closing price * A - price of he differen company securiy * B) / A G) RETURN OF CAPITAL AND SHARE CONSOLIDATION adjused price = (closing price - dividend announced by company) * A / B Ardour Global Alernaive Energy Indexes 17
new number of shares = old number of shares * B / A H) REPURCHASE SHARES-SELF TENDER adjused price = [(price before ender * old number of shares) - (ender price * number of endered shares)] / (old number of shares - number of endered shares) new number of shares = old number of shares - number of endered shares I) SPIN-OFF adjused price = ( closing price * A - price of spun-off shares * B ) / A J) COMBINATION STOCK DISTRIBUTION (DIVIDEND OR SPLIT) AND RIGHTS OFFERING Shareholders receive B new shares from he disribuion and C new shares from he righs offering for every A shares held: * If righs are applicable afer sock disribuion (one acion applicable o oher). Adjused price = [closing price * A + subscripion price * C * (1 + B / A)] / [(A + B) * (1 + C / A)] New number of shares = old number of shares * [(A + B) * (1 + C / A)] / A * If sock disribuion is applicable afer righs (one acion applicable o oher). adjused price = [closing price * A + subscripion price * C] / [(A + C) * (1 + B / A)] new number of shares = old number of shares * [ ( A + C ) * ( 1 + B / A) ] K) STOCK DISTRIBUTION AND RIGHTS (NEITHER ACTION IS APPLICABLE TO THE OTHER) Adjused price = [closing price * A + subscripion price * C] / [A + B + C] New number of shares = old number of shares * [A + B + C] v) Compuaional Precision. Index values are rounded o wo decimal places and divisors are rounded o inegers. Any values derived by he index calculaion engine from a corporae acion used for he divisor adjusmens and index compuaions are rounded o seven decimal places. XIX. Daa Correcion Policy To mainain a high sandard of daa inegriy, a series of procedures have been implemened o ensure accuracy, imeliness and consisency. Inpu prices are moniored using a variey of compuerized range-check warning sysems for boh icker-plan and real-ime index sysems. Faul oleran mehods are employed in he collecion of marke and corporae acion daa. Various verificaion and audi asks are performed o ensure he qualiy of he real-ime daa feeds and relaed marke daa. While every effor is aken o ensure he accuracy of he informaion used for he index calculaion, an index error may occur due o incorrec or missing daa, including rading prices, exchange raes, shares ousanding and corporae acions, due o operaional errors or oher reasons. i) Inraday Correcions. Reasonable effors are employed o preven erroneous daa from affecing he indexes. Correcions will be made for bad prices and incorrec or missing corporae acions as soon as possible afer deecion. Ardour Global Alernaive Energy Indexes 18
vi) v Since he indexes are calculaed on a real-ime basis, an incorrec index value ick will no be fixed reroacively. Incorrec daily high/low index values will be correced as soon as pracicable. Index-Relaed Daa and Divisor Correcions. Incorrec pricing and corporae acion daa for individual issues in he daabase will be correced upon deecion. In addiion, an incorrec divisor of an index, if discovered wihin five days of is occurrence, will always be fixed on he day i is discovered o pre-ven an error from being carried forward. If a divisor error is discovered more han five days afer occurrence, he adjusmen will depend upon how significan he error is, how far back he error occurred and he feasibiliy of performing he adjusmen. XX. APPENDIX REVIEW SCHEDULE Shares Updaes Frequency: Quarerly Effecive dae: The Monday afer he 3rd Friday of ha monh Advance noice: A leas wo business days Quarerly Review Frequency: Quarerly Effecive dae: The Monday afer he 3rd Friday of ha monh Advance noice: A leas wo business days News Noificaion Frequency: As needed Effecive dae: As announced Advance noice: A leas wo business days whenever possible * Includes evens such as de-lisings, mergers, bankrupcies and oher exraordinary evens. * Based on available news. Ardour Global Alernaive Energy Indexes 19