Correspondence 0001432353-24-000488 from Global X Funds (CIK 0001432353)
Global X Funds (CIK 0001432353)
Date: Nov. 26, 2024 · CIK: 0001432353 · Accession: 0001432353-24-000488
AI Filing Summary & Sentiment
File numbers found in text: 333-151713, 811-22209
Letter
VIA EDGAR Division of Investment Management Washington, D.C. 20549-9303 Attention: Ms. Alison White, Esq. Re: Global X Funds File No. 333-151713, 811-22209
Dear Ms. White:
On behalf of Global X Funds (the “Registrant” or the “Trust”) and its series, the Global X U.S. Electrification ETF (the “Fund”) included in Post-Effective Amendment No. 804, (the “Amendment”) to the Registrant’s registration statement on Form N-1A (the “Registration Statement”), below you will find the Registrant’s responses to the comments that you had conveyed to the undersigned on October 24, 2024 with regard to the Amendment. The Amendment was filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 19, 2024, pursuant to the Investment Company Act of 1940, as amended (the "1940 Act"), and Rule 485(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).
Below we have summarized your comments, in italics, and presented the Registrant’s response to each comment. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Registration Statement.
SUMMARY PROSPECTUS
1.Comment: Please provide the Staff with a copy of the white paper discussing the methodology for the Underlying Index and a list of the Underlying Index’s current or anticipated top ten holdings. In addition, please identify each holding’s geographic exposure and basis for inclusion in the Underlying Index.
Response: The requested white paper and list of top ten holdings has been provided under separate cover. Regarding each holding’s geographic exposure, the Registrant notes that the Underlying Index requires a company to be listed in the United States and generate a portion of its revenue within the United States. Additional bases for inclusion in the Underlying Index are described further in the revised “PRINCIPAL INVESTMENT STRATEGIES” disclosed in the response to Comment #6.
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 2
2.Comment: Please provide the Staff with a completed copy of the fee table and expense example prior to the effectiveness of the post-effective amendment to the Fund’s Registration Statement.
Response: The Registrant has completed the Fund’s fee table and expense example, which are included below.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees:
0.50%
Distribution and Service (12b-1) Fees:
None
Other Expenses:1
0.00%
Total Annual Fund Operating Expenses:
0.50%
1 Other Expenses are based on estimated amounts for the current fiscal year.
Example: The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account customary brokerage commissions that you pay when purchasing or selling Shares of the Fund in the secondary market. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
One Year
Three Years
$51
$160
3.Comment: In the section of the Fund’s Prospectus titled, “PRINCIPAL INVESTMENT STRATEGIES,” please include a brief statement regarding the Underlying Index’s overall investment thesis, including disclosure explaining Electrification, why Electrification is an important theme, and how the Underlying Index is designed to benefit from the theme. Please also ensure that the risk disclosure in the section titled, “SUMMARY OF PRINCIPAL RISKS,” addresses various risks associated with the theme, including natural disasters, orphaned assets, demographic or economic growth-related changes, and other areas that may impact usage.
Response: The Registrant has revised the section of the Fund’s Prospectus titled, “PRINCIPAL INVESTMENT STRATEGIES,” to state: “‘Electrification’ refers to the increase and expansion of
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 3
electric power generation and delivery.” Moreover, the Fund’s principal investment strategy provides examples of business activities involved in electrification in the Conventional Electricity, Alternative Electricity, and Grid Infrastructure and Smart Grid Technologies bullet points.
The Registrant respectfully declines to include disclosure regarding the importance of Electrification as a theme and how the Underlying Index is designed to benefit from Electrification, as such disclosure is not required by Form N-1A. Disclosure regarding the Fund’s principal investment strategies is governed by Item 9 of Form N-1A, which requires the disclosure of the principal investment strategies that the Fund will use and the types of securities that the Fund will invest in; Item 4 of Form N-1A requires a summary of how the Fund intends to achieve its investment objectives by identifying the Fund’s principal investment strategies, including the types of securities in which the Fund invests or will invest principally and any policy to concentrate in securities of issuers in a particular industry or group of industries. The Registrant believes that the proposed disclosure satisfies these requirements. For these reasons, the Registrant respectfully declines to make the requested disclosure changes.
With respect to specific risk disclosure in the “SUMMARY OF PRINCIPAL RISKS” section of the Fund’s Prospectus, the Registrant notes that the risk disclosure titled, “Associated Risks Related to Investing in Electrification Companies,” addresses the risk of natural disasters as well as economic-growth and changes in government policies.
Further, the Registrant has revised “Associated Risks Related to Investing in Electrification Companies” under the “A FURTHER DISCUSSION OF PRINCIPAL RISKS” section of the Prospectus as follows:
Conventional Electricity companies are also affected by the levels and volatility of global commodity prices, capital expenditures on exploration and production, energy conservation efforts, the prices of alternative fuels, exchange rates and technological advances. Conventional Electricity companies may also operate in countries with less developed regulatory regimes or a history of expropriation, nationalization or other adverse policies. These companies also face a risk of significant civil liability from accidents resulting in injury or loss of life or property, pollution or other environmental mishaps (e.g., from orphaned wells), equipment malfunctions or mishandling of materials, and a risk of loss from terrorism or other natural disasters. Any such event could have serious consequences for the general population of the area affected and result in a material adverse impact on the Fund’s portfolio securities and the performance of the Fund. Companies in the oil, gas and consumable fuels industry can be significantly affected by the supply of and demand for specific products and services, weather conditions, exploration and production spending, government regulation, world events and general economic conditions.
…
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 4
The volatility of energy commodity prices can indirectly affect certain Electrification Companies due to the impact of prices on the volume of commodities transported, processed, stored or distributed. Further, changes in demographics or economic growth can affect the demand for, and success of, conventional or alternative electricity, as well as the technology created to support the development of the smart grid.
4.Comment: Please confirm that the Fund has adopted written policies and procedures reasonably designed to ensure that the Underlying Index holdings are in line with its name.
Response: The SEC promulgated new guidance to index funds (including index-based exchange traded funds) as part of its amendments to Rule 35d-1 under the 1940 Act. Pursuant to this new guidance, the Commission stated that, “consistent with rule 38a-1, index funds should generally adopt and implement written policies and procedures reasonably designed to ensure that indexes selected by a fund do not have materially misleading or deceptive names themselves.” The compliance date for the amendments to Rule 35d-1 and this related guidance is December 10, 2025 for larger entities such as the Registrant.
The Registrant acknowledges this guidance and notes supplementally that it intends to adopt such written policies and procedures in advance of the December 10, 2025 compliance date.
5.Comment: Please consider explaining what some of the more obscure energy sources are, such as biomass-fired power, gravity-based, flywheel, etc.
Response: In the “Associated Risks Related to Investing in Electrification Companies” disclosure in the section of the Fund’s Prospectus titled, “A FURTHER DISCUSSION OF PRINCIPAL RISKS,” the Registrant has added the below explanations of the various energy sources:
Alternative Electricity includes, among other things, cleaner energy sources such as wind, solar, low-carbon hydrogen, and biomass-fired power (an energy production method that involves burning organic material “Biomass” as the fuel source for electricity production), as well as other technology solutions, such as small modular nuclear reactors (a more compact type of nuclear reactor that is designed to be scalable, lower in cost, and offer more flexible energy solutions).
Grid Infrastructure and Smart Grid Technologies includes, among other things, the expansion and modernization of power grid infrastructure (e.g. high-voltage direct current (HVDC) transmission infrastructure) and the development, manufacturing, and implementation of the infrastructure, technologies, and systems that transport electricity and enhance the electrical grid, such as electrical components, energy storage
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 5
technologies, electric vehicle charging equipment, and smart meters. Energy storage is the process of capturing energy and storing it for later dissemination to the grid, which can play a crucial role in managing supply and demand in energy systems, ensuring grid resilience and improving the efficiency of non-traditional, cleaner energy sources. Examples include compressed air (where electricity is used to compress and store air, which can later be released to power a generator and produce electricity), flywheel (where electricity is used to spin a heavy object or disk up to high speeds, which can later be slowed by a generator to produce electricity), and gravity-based (where electricity can be used to raise a heavy object, which can later be lowered to power a generator and produce electricity).
ADDITIONAL INFORMATION ABOUT THE FUNDS
6.Comment: In Item 9 of the Fund’s Prospectus, please consider providing examples of Electrification. Please also note that much of the information regarding the Underlying Index is missing.
Response: The section of the Fund’s Prospectus titled, “PRINCIPAL INVESTMENT STRATEGIES” and the risk factor “Associated Risks Related to Investing in Electrification Companies” under “A FURTHER DISCUSSION OF PRINCIPAL RISKS” as revised in the response to Comment #5 above, explains “electrification” and provides examples of business activities involved in electrification in the Conventional Electricity, Alternative Electricity, and Grid Infrastructure and Smart Grid Technologies bullet points.
With respect to the Underlying Index, the Registrant has updated the section, as well as other associated sections, as follows:
The Underlying Index is, as presently constituted, designed to provide exposure to equity securities listed in track the performance of U.S. listed, that provide exposure to companies domiciled in developed markets and that are involved in electrification. conventional and alternative electricity generation, transmission, and distribution and technological solutions, as well as the development of grid infrastructure and smart grid technologies (collectively, "Electrification Companies"). “Electrification Companies” are those companies that derive at least 50% of their revenues from one or more of the following business activities, in aggregate, within the U.S., as determined by the Index Administrator: “Electrification” refers to the increase and expansion of electric power generation and delivery. In constructing the Underlying Index, the Index Administrator first identifies FactSet industries and business segments related to electrification. FactSet is a leading financial data provider that maintains a comprehensive structured taxonomy designed to offer precise classification of global companies and their
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 6
individual business units. Companies within these industry and business segments, as of the selection date, are further reviewed by the Index Administrator on the basis of revenue.
•Conventional Electricity: Companies primarily engaged in the generation, transmission, and distribution of electricity using traditional energy sources such as fossil fuels (e.g., coal, natural gas, and oil) and nuclear power, that deliver electricity to residential, commercial, and industrial customers.
•Alternative Electricity: Companies that primarily engaged in generating electricity from non-traditional, cleaner energy sources (e.g., wind, solar, low-carbon hydrogen, and biomass-fired power, etc.), energy storage (e.g., batteries, compressed air, flywheel, gravity-based, and other energy storage technologies), as well as other technology solutions (e.g., small modular nuclear reactors).
•Grid Infrastructure and Smart Grid Technologies: Companies primarily engaged in the expansion and modernization of power grid infrastructure (e.g., high-voltage direct current (HVDC) transmission infrastructure, etc.), as well as the development, manufacturing, and implementation of the infrastructure, technologies, and systems that transport electricity and enhance the electrical grid, such as electrical components, energy storage devices (e.g., batteries, compressed air, flywheel, gravity-based, and other energy storage technologies), electric vehicle charging equipment, smart meters, etc.
In constructing the Underlying Index, the Index Administrator first identifies FactSet Industries related to these business activities. FactSet is a leading financial data provider that maintains a comprehensive structured taxonomy designed to offer precise classification of global companies and their individual business units. Companies within these FactSet Industries, as of the selection date, are further reviewed by the Index Administrator on the basis of revenue related to electrification. Electrification converts a device or process that relies on non-electric energy into one powered by electricity ("Electrification").
To be considered for inclusion in the Underlying Index, companies must generate at least 50% of their revenue from the U.S., as determined by the Index Administrator. If a company derives revenue from multiple sub-themes, the company’s sub-theme classification will generally be determined by the sub-theme representing the highest portion of revenue for the company relative to the other sub-themes. For the Conventional Electricity sub-theme, companies must derive at least 75%
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Global X Funds
605 Third Avenue, 43rd Floor
New York, NY 10158
November 26, 2024
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, D.C. 20549-9303
Attention: Ms. Alison White, Esq.
Re: Global X Funds
File No. 333-151713, 811-22209
Dear Ms. White:
On behalf of Global X Funds (the “Registrant” or the “Trust”) and its series, the Global X U.S. Electrification ETF (the “Fund”) included in Post-Effective Amendment No. 804, (the “Amendment”) to the Registrant’s registration statement on Form N-1A (the “Registration Statement”), below you will find the Registrant’s responses to the comments that you had conveyed to the undersigned on October 24, 2024 with regard to the Amendment. The Amendment was filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 19, 2024, pursuant to the Investment Company Act of 1940, as amended (the "1940 Act"), and Rule 485(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).
Below we have summarized your comments, in italics, and presented the Registrant’s response to each comment. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Registration Statement.
SUMMARY PROSPECTUS
1.Comment: Please provide the Staff with a copy of the white paper discussing the methodology for the Underlying Index and a list of the Underlying Index’s current or anticipated top ten holdings. In addition, please identify each holding’s geographic exposure and basis for inclusion in the Underlying Index.
Response: The requested white paper and list of top ten holdings has been provided under separate cover. Regarding each holding’s geographic exposure, the Registrant notes that the Underlying Index requires a company to be listed in the United States and generate a portion of its revenue within the United States. Additional bases for inclusion in the Underlying Index are described further in the revised “PRINCIPAL INVESTMENT STRATEGIES” disclosed in the response to Comment #6.
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 2
2.Comment: Please provide the Staff with a completed copy of the fee table and expense example prior to the effectiveness of the post-effective amendment to the Fund’s Registration Statement.
Response: The Registrant has completed the Fund’s fee table and expense example, which are included below.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees:
0.50%
Distribution and Service (12b-1) Fees:
None
Other Expenses:1
0.00%
Total Annual Fund Operating Expenses:
0.50%
1 Other Expenses are based on estimated amounts for the current fiscal year.
Example: The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account customary brokerage commissions that you pay when purchasing or selling Shares of the Fund in the secondary market. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
One Year
Three Years
$51
$160
3.Comment: In the section of the Fund’s Prospectus titled, “PRINCIPAL INVESTMENT STRATEGIES,” please include a brief statement regarding the Underlying Index’s overall investment thesis, including disclosure explaining Electrification, why Electrification is an important theme, and how the Underlying Index is designed to benefit from the theme. Please also ensure that the risk disclosure in the section titled, “SUMMARY OF PRINCIPAL RISKS,” addresses various risks associated with the theme, including natural disasters, orphaned assets, demographic or economic growth-related changes, and other areas that may impact usage.
Response: The Registrant has revised the section of the Fund’s Prospectus titled, “PRINCIPAL INVESTMENT STRATEGIES,” to state: “‘Electrification’ refers to the increase and expansion of
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 3
electric power generation and delivery.” Moreover, the Fund’s principal investment strategy provides examples of business activities involved in electrification in the Conventional Electricity, Alternative Electricity, and Grid Infrastructure and Smart Grid Technologies bullet points.
The Registrant respectfully declines to include disclosure regarding the importance of Electrification as a theme and how the Underlying Index is designed to benefit from Electrification, as such disclosure is not required by Form N-1A. Disclosure regarding the Fund’s principal investment strategies is governed by Item 9 of Form N-1A, which requires the disclosure of the principal investment strategies that the Fund will use and the types of securities that the Fund will invest in; Item 4 of Form N-1A requires a summary of how the Fund intends to achieve its investment objectives by identifying the Fund’s principal investment strategies, including the types of securities in which the Fund invests or will invest principally and any policy to concentrate in securities of issuers in a particular industry or group of industries. The Registrant believes that the proposed disclosure satisfies these requirements. For these reasons, the Registrant respectfully declines to make the requested disclosure changes.
With respect to specific risk disclosure in the “SUMMARY OF PRINCIPAL RISKS” section of the Fund’s Prospectus, the Registrant notes that the risk disclosure titled, “Associated Risks Related to Investing in Electrification Companies,” addresses the risk of natural disasters as well as economic-growth and changes in government policies.
Further, the Registrant has revised “Associated Risks Related to Investing in Electrification Companies” under the “A FURTHER DISCUSSION OF PRINCIPAL RISKS” section of the Prospectus as follows:
Conventional Electricity companies are also affected by the levels and volatility of global commodity prices, capital expenditures on exploration and production, energy conservation efforts, the prices of alternative fuels, exchange rates and technological advances. Conventional Electricity companies may also operate in countries with less developed regulatory regimes or a history of expropriation, nationalization or other adverse policies. These companies also face a risk of significant civil liability from accidents resulting in injury or loss of life or property, pollution or other environmental mishaps (e.g., from orphaned wells), equipment malfunctions or mishandling of materials, and a risk of loss from terrorism or other natural disasters. Any such event could have serious consequences for the general population of the area affected and result in a material adverse impact on the Fund’s portfolio securities and the performance of the Fund. Companies in the oil, gas and consumable fuels industry can be significantly affected by the supply of and demand for specific products and services, weather conditions, exploration and production spending, government regulation, world events and general economic conditions.
…
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 4
The volatility of energy commodity prices can indirectly affect certain Electrification Companies due to the impact of prices on the volume of commodities transported, processed, stored or distributed. Further, changes in demographics or economic growth can affect the demand for, and success of, conventional or alternative electricity, as well as the technology created to support the development of the smart grid.
4.Comment: Please confirm that the Fund has adopted written policies and procedures reasonably designed to ensure that the Underlying Index holdings are in line with its name.
Response: The SEC promulgated new guidance to index funds (including index-based exchange traded funds) as part of its amendments to Rule 35d-1 under the 1940 Act. Pursuant to this new guidance, the Commission stated that, “consistent with rule 38a-1, index funds should generally adopt and implement written policies and procedures reasonably designed to ensure that indexes selected by a fund do not have materially misleading or deceptive names themselves.” The compliance date for the amendments to Rule 35d-1 and this related guidance is December 10, 2025 for larger entities such as the Registrant.
The Registrant acknowledges this guidance and notes supplementally that it intends to adopt such written policies and procedures in advance of the December 10, 2025 compliance date.
5.Comment: Please consider explaining what some of the more obscure energy sources are, such as biomass-fired power, gravity-based, flywheel, etc.
Response: In the “Associated Risks Related to Investing in Electrification Companies” disclosure in the section of the Fund’s Prospectus titled, “A FURTHER DISCUSSION OF PRINCIPAL RISKS,” the Registrant has added the below explanations of the various energy sources:
Alternative Electricity includes, among other things, cleaner energy sources such as wind, solar, low-carbon hydrogen, and biomass-fired power (an energy production method that involves burning organic material “Biomass” as the fuel source for electricity production), as well as other technology solutions, such as small modular nuclear reactors (a more compact type of nuclear reactor that is designed to be scalable, lower in cost, and offer more flexible energy solutions).
Grid Infrastructure and Smart Grid Technologies includes, among other things, the expansion and modernization of power grid infrastructure (e.g. high-voltage direct current (HVDC) transmission infrastructure) and the development, manufacturing, and implementation of the infrastructure, technologies, and systems that transport electricity and enhance the electrical grid, such as electrical components, energy storage
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 5
technologies, electric vehicle charging equipment, and smart meters. Energy storage is the process of capturing energy and storing it for later dissemination to the grid, which can play a crucial role in managing supply and demand in energy systems, ensuring grid resilience and improving the efficiency of non-traditional, cleaner energy sources. Examples include compressed air (where electricity is used to compress and store air, which can later be released to power a generator and produce electricity), flywheel (where electricity is used to spin a heavy object or disk up to high speeds, which can later be slowed by a generator to produce electricity), and gravity-based (where electricity can be used to raise a heavy object, which can later be lowered to power a generator and produce electricity).
ADDITIONAL INFORMATION ABOUT THE FUNDS
6.Comment: In Item 9 of the Fund’s Prospectus, please consider providing examples of Electrification. Please also note that much of the information regarding the Underlying Index is missing.
Response: The section of the Fund’s Prospectus titled, “PRINCIPAL INVESTMENT STRATEGIES” and the risk factor “Associated Risks Related to Investing in Electrification Companies” under “A FURTHER DISCUSSION OF PRINCIPAL RISKS” as revised in the response to Comment #5 above, explains “electrification” and provides examples of business activities involved in electrification in the Conventional Electricity, Alternative Electricity, and Grid Infrastructure and Smart Grid Technologies bullet points.
With respect to the Underlying Index, the Registrant has updated the section, as well as other associated sections, as follows:
The Underlying Index is, as presently constituted, designed to provide exposure to equity securities listed in track the performance of U.S. listed, that provide exposure to companies domiciled in developed markets and that are involved in electrification. conventional and alternative electricity generation, transmission, and distribution and technological solutions, as well as the development of grid infrastructure and smart grid technologies (collectively, "Electrification Companies"). “Electrification Companies” are those companies that derive at least 50% of their revenues from one or more of the following business activities, in aggregate, within the U.S., as determined by the Index Administrator: “Electrification” refers to the increase and expansion of electric power generation and delivery. In constructing the Underlying Index, the Index Administrator first identifies FactSet industries and business segments related to electrification. FactSet is a leading financial data provider that maintains a comprehensive structured taxonomy designed to offer precise classification of global companies and their
U.S. Securities and Exchange Commission
Attention: Ms. Alison White, Esq.
November 26, 2024
Page 6
individual business units. Companies within these industry and business segments, as of the selection date, are further reviewed by the Index Administrator on the basis of revenue.
•Conventional Electricity: Companies primarily engaged in the generation, transmission, and distribution of electricity using traditional energy sources such as fossil fuels (e.g., coal, natural gas, and oil) and nuclear power, that deliver electricity to residential, commercial, and industrial customers.
•Alternative Electricity: Companies that primarily engaged in generating electricity from non-traditional, cleaner energy sources (e.g., wind, solar, low-carbon hydrogen, and biomass-fired power, etc.), energy storage (e.g., batteries, compressed air, flywheel, gravity-based, and other energy storage technologies), as well as other technology solutions (e.g., small modular nuclear reactors).
•Grid Infrastructure and Smart Grid Technologies: Companies primarily engaged in the expansion and modernization of power grid infrastructure (e.g., high-voltage direct current (HVDC) transmission infrastructure, etc.), as well as the development, manufacturing, and implementation of the infrastructure, technologies, and systems that transport electricity and enhance the electrical grid, such as electrical components, energy storage devices (e.g., batteries, compressed air, flywheel, gravity-based, and other energy storage technologies), electric vehicle charging equipment, smart meters, etc.
In constructing the Underlying Index, the Index Administrator first identifies FactSet Industries related to these business activities. FactSet is a leading financial data provider that maintains a comprehensive structured taxonomy designed to offer precise classification of global companies and their individual business units. Companies within these FactSet Industries, as of the selection date, are further reviewed by the Index Administrator on the basis of revenue related to electrification. Electrification converts a device or process that relies on non-electric energy into one powered by electricity ("Electrification").
To be considered for inclusion in the Underlying Index, companies must generate at least 50% of their revenue from the U.S., as determined by the Index Administrator. If a company derives revenue from multiple sub-themes, the company’s sub-theme classification will generally be determined by the sub-theme representing the highest portion of revenue for the company relative to the other sub-themes. For the Conventional Electricity sub-theme, companies must derive at least 75%