Quarterly Review and Rebalancing
The Publisher quarterly reviews the Index Constituents to ensure all companies meeting the eligibility requirements are included and continue to represent the A.I. growth asset class. This quarterly rebalancing can thus be expected to add and subtract Index Constituents from the Index. The reference date for all company-specific transaction and valuation data and other information utilized in the rebalancing process will be taken from the three months preceding the rebalancing date.
Addition of New Companies to the Index
Immediately prior to each rebalancing date, the Publisher reviews information regarding market environment changes, price developments, stock market changes, private technology company primary financings, secondary transactions, technology leadership, disruptive potential or publicly reported investors’ valuation marks. This review may reveal companies that now meet the Index’s eligibility requirements but that were not previously included in the Index. Companies qualifying in this manner could then be added to the Index. The inclusion of a new Index Constituent will be announced with the release of the subsequent Index publication.
Removal of Companies From the Index
During the quarterly rebalancing, the Publisher also reviews Index Data to determine whether any Index companies no longer meet the eligibility requirements, either due to corporate action or for other reasons. Such companies will then be removed from the Index. Removal of a company from the Index does require that the Publisher replace the deleted company by adding a new company to the Index. The number of Index companies stays at 42.
The Index will be updated as a result of corporate actions (e.g., acquisition, bankruptcy, divestiture, or initial public offering) that change the composition of the Index companies. If an Index company is removed during the quarterly rebalancing as a result of a corporate action, it will be replaced with the next ranked company. Each publication of the Index will include a “distribution” line item to ensure that addition or deletion of a company from the Index due to a corporate action does not disproportionately affect the existing weightings of the Index. Any new company will be incorporated in to the Index at the quarterly rebalancing with its capitalization value. When a company is removed from the Index, we will add the difference between its contribution to the Index and the value of the Index prior to the company’s removal to the distribution line. The sum total values of all Index companies will be added to the distribution line to determine the gross sum of the Index (numerator).
The Publisher intends to publish the Index in realtime and will incorporate changes of the market environment, announcements, news, private growth company transactions or valuation marks that become known to the Publisher.
Index Announcements and Dissemination
The AI-42X INDEX and AI-42 INDEX are published on the 42.CX website and through various data providers. There, visitors can view the most recent Index development and request, information describing the Index’s construction and maintenance, and find important legal notices and disclaimers. Also available on the website is the most recent calculation of the Index. Information pertaining to the Index will also be disseminated from time to time via email to registered 42.CX members and through content partnerships and licensing arrangements with third parties.