Emerging Markets. Emerging Core? Live Webinar July 9, p.m. EDT

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1 Emerging Markets. Emerging Core? Live Webinar July 9, p.m. EDT

2 Emerging Markets. Emerging Core? Defini7on & Structure Benefits & Risks Evalua7ng Choices Ma2 Hougan Editor in Chief IndexUniverse.com ETFR

3 Our Panelists Luciano Siracusano Chief Investment Strategist WisdomTree Asset Management Tom Lydon President Global Trends Investments

4 What Are Emerging Markets? Developed Emerging Fron7er

5 What Are Emerging Markets?

6 The Eye Chart MSCI DJ TSM S&P BMI ArgenAna ArgenAna ArgenAna Bahrain Bermuda Brazil Brazil Brazil Bulgaria Chile Chile Chile China China China Colombia Colombia Czech Republic Czech Republic Czech Republic Egypt Egypt Egypt Hong Kong Estonia Hungary Hungary Hungary India India India Indonesia Indonesia Indonesia Israel Italy Jordan Jordan Kuwait Luxembourg Latvia Lithuania Malaysia Malaysia Malaysia Malta Mexico Mexico Mexico Morocco Morocco Morocco Pakistan Peru Peru Peru Philippines Philippines Philippines Poland Poland Poland Romania Russia Russia Russia Slovakia Slovenia South Africa South Africa South Africa South Korea Sri Lanka Taiwan Taiwan Thailand Thailand Thailand Turkey Turkey Turkey

7 Why Care About Emerging Markets? % % S&P 500 MSCI EM EAFE % % 50.00% 0.00% 50.00% J 04 J 05 J 06 J 07 J 08 J 09 J 10 J 11 J 12 J 13

8 Why? PorMolio Diversifica7on 110% 100% 90% 80% No EM 10% EM 20% EM 15.94% 27.67% 40.23% 70% 60% 50% 40% 30% 20% 10% 0% 10% 20% 30% 6/03 6/04 6/05 6/06 6/07 6/08 6/09 6/10 6/11 6/12 6/13

9 Why? Emerging Weights

10 Why? Correla7ons MSCI Emerging Market: Monthly Correlations, MSCI World 0.82 S&P 500 Total Return 0.58 Russell S&P GSCI Total Return 0.82 REITs 0.80 US Treasury 7 10 year 0.65

11 Why? GDP Growth! 14% 12% US World India China 10% 8% 6% 4% 2% 0% Source: USDA Economic Research Service

12 Why? Growth! 40% % 20% 10% 0% U.S. China Russia Brazil India Source: Goldman Sachs, IMF, New York Times

13 Why? Growth 25% Emerging Market % of World GDP 20% 15% 10% 5% 0% Source: World Bank

14 Why? Fundamentals Country Index PE RaAo Price/Book Russia MSCI Italy FTSE MIB France CAC Brazil MSCI ArgenAna MSCI USA MSCI South Africa JSE Top Thailand Thai SET India Sensex Germany DAX Index China CSI UK FTSE Taiwan Taiwan

15 Does Diversifica7on S7ll Work?

16 Does Diversifica7on S7ll Work? Health Care Consumer Disc. Consumer Staples UAliAes Industrials Telecom IT Materials Energy Financials S&P 500 EAFE MSCI EM

17 How Much Exposure Do Most Investors Have? 95% 98% 82% InternaAonal DomesAc U.S. Japanese U.K.

18 How Much Exposure Do Most Investors Have? MSCI ACWI U.S. Japan U.K. All Others France Switzerland Canada Germany Australia China Spain

19 How Much Exposure Should You Have? % Global Markets % Global GDP

20 How Much Exposure Should You Have? % Global Market Cap % GDP China Brazil Russia India Mexico South Korea Turkey

21 Have Emerging Markets Changed? Country Mexico Turmoil 1996 Peso devaluaaon Russia 1998 Ruble crisis South Korea 1998 IMF crisis Thailand 1997 Baht collapse ArgenAna Economic crisis

22 Have Emerging Markets Changed? Debt/GDP Japan U.S. Developed Markets China Brazil Emerging Markets 0% 100% 200% 300% 400%

23 Have Emerging Markets Changed? Foreign Currency Reserves ($ Bln) China 1,953,000 Japan 1,056,718 Eurozone 685,406 Russia 383,969 Taiwan 312,642 India 251,952 South Korea 226,927 Brazil 208,738 Germany 201,224 Hong Kong 193,441 Singapore 170,101

24 Emerging Markets Are Not All Equal It's kind of like the early days of Reagan in emerging markets. You see flat tax policies, deregulaoon, privaozaoon and producovity improving at a very rapid pace. JusAn Leverenz, Oppenheimer Developing Markets Fund Although we re soll very posiove on the prospects for emerging markets in the long term, their economies remain very precarious. Peter Elston, Aberdeen Asset Management

25 Currency Impact

26 Currency Strength Is Shi[ing

27 The Current Crisis 50% S&P 500 MSCI EM EAFE 25% 0% 25% Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13

28 Which is Riskier? Weak economic acovity will hamper growth for the rest of 2009 and only a gradual recovery will emerge by mid 2010 European Central Bank Unemployment surged across Europe and the United States, data showed on Thursday, with no sign of a peak Reuters Meanwhile... "India should be back on the new trend growth path of 8.5 to 9 percent per annum" India Finance Ministry Industrial producoon in Brazil rose more than expected in May, marking the fi]h straight month on month increase IBGE (Brazil government staasacs agency)

29 Drawdowns MSCI Emerging Markets Drawdowns >20% Peak Trough Decline Decline Dura7on July 1990 November Months September 1994 February Months July 1997 August Months October 2007 October Months

30 Ge\ng Exposure: Ac7ve vs. Index

31 Ge\ng Exposure: Ac7ve vs. Index % of Active Emerging Markets Funds that Fail to Beat the Benchmark (S&P/IFCI Comp.) One Year Three Year Five Year 65.06% 83.93% 89.83% Average Performance (Equal-Weighted) One Year Three Year Five Year S&P/IFCI Composite 53.73% 4.29% 8.1% Emerging Markets Funds 57.2% 7.96% 5.47% Source: Standard & Poor s, period ending 12/31/08

32 The Case for ETFs Low Cost Tax Efficient Liquid

33 Choosing Between ETFs: The Lineup 51 emerging market equiaes ETFs 7 emerging market currencies ETFs 2 emerging market bond ETFs

34 Broad Based ETFs Compared AUM 12 Month 3 Yr 5 Yr ishares MSCI Emerging Markets 30, Vanguard Emerging Markets 8, N/A BLDRs Emerging Markets PowerShares FTSE RAFI Emerging Markets N/A N/A WisdomTree EM SmallCap Dividend N/A N/A SPDR S&P Emerging Mkts N/A N/A PowerShares DWA Emerging Mkts Tech Leaders N/A N/A SPDR S&P Emerging Mkts SmCap N/A N/A

35 Broad Based ETFs Compared 12 Month Return P/E P/B Exp. RaAo WisdomTree EM SmallCap Dividend SPDR S&P Emerging Mkts SmCap PowerShares FTSE RAFI Emerging Markets SPDR S&P Emerging Mkts N/A ishares MSCI Emerging Markets Vanguard Emerging Markets BLDRs Emerging Markets Yield PowerShares DWA Emerg Mkts Tech Leaders

36 Broad Based ETFs Compared AUM 12 Month 3 Yr 5 Yr P/E P/B Yield Exp. RaAo ishares MSCI Emerging Markets 30, Vanguard Emerging Markets 8, N/A

37 Regional ETFs Compared: Asia Ticker AUM 12 Month 3 Yr 5 Yr P/E P/B ishares MSCI All Country Asia ex Japan AAXJ N/A N/A N/A ishares S&P Asia 50 AIA N/A N/A 12.3 N/A 0.50 PowerShares FTSE Asia Pacific ex Japan PAF N/A N/A SPDR S&P Emerging Asia Pacific GMF N/A N/A WisdomTree Pacific ex Japan Total Dividend Exp. RaAo DND N/A N/A WisdomTree Pacific ex Japan Equity DNH N/A N/A

38 Regional ETFs Compared: BRICs Claymore/BNY BRIC ETF First Trust ISE Chindia Hong Kong Hong Kong China Brazil India India China Russia ishares MSCI BRIC SPDR S&P BRIC 40 Hong Kong Brazil Hong Kong Brazil China Russia China Russia India India

39 Country ETFs Compared: China SPDR S&P China ishares FTSE/Xinhua China Materials Other Materials Other IT Industrials Financials Industrials Telecomm Financials Telecomm Energy Energy PowerShares Halter USX Claymore/Alpha China Small Cap Consumer Other Energy Consumer Financials Materials Telecomm Other Industrials Materials IT Industrials IT

40 Country ETFs Compared: India ipath MSCI India Index Industrials PowerShares India UAliAes Energy Materials Telecomm Other Other Consumer Financials Energy IT IT Consumer WisdomTree India Earnings Fund Telecomm Industrials Financials Energy Materials Other Financials IT

41 Other Op7ons: Currency Funds Emerging Market Barclays GEMS Index ETN JEM Barclays GEMS Asia-8 ETN AYT Barclays Asian & Gulf Currency Revaluation ETN PGD WisdomTree Dreyfus Emerging Currency CEW Yuan Market Vectors Renminbi ETN CNY WisdomTree Dreyfus Chinese Yuan CYB Rupee Market Vectors Rupee ETN INR WisdomTree Dreyfus Indian Rupee ICN Other Single Currency WisdomTree South African Rand SZR WisdomTree Dreyfus Brazilian Real BZF CurrencyShares Mexican Peso FXM CurrencyShares Russian Ruble XRU

42 Conclusion 110% 100% 90% No EM 10% EM 20% EM 80% 70% 60% 50% 40% 30% 20% 10% 0% 10% 20% 30% 6/03 6/04 6/05 6/06 6/07 6/08 6/09 6/10 6/11 6/12 6/13

43 Our Panelists Luciano Siracusano Chief Investment Strategist WisdomTree Asset Management Tom Lydon President Global Trends Investments

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