The ETF Industry! THE ETFs ECOSYSTEM:! KEY TRENDS TO WATCH!

The ETF Industry THE ETFs ECOSYSTEM: KEY TRENDS TO WATCH May, 2017

TABLE OF CONTENTS 1. ETF INDUSTRY GROWTH 2. ETF INDUSTRY INDEX DESCRIPTION 3. EMBRACING THE HEADWINDS OF GROWTH 2

ACCELERATED INDUSTRY GROWTH $0-500 billion Over 14 years $500-1,000 billion 3 years, 4 months $1-1.5 trillion 2 years 7 months $1.5 2 trillion 1 year 5 months $2-2.5 trillion 2 years Source: Morningstar Direct 3

AN INDUSTRY GROWING RAPIDLY The ETF industry has been growing at a rapid pace with a 19.4% Annual Growth Rate over 10 years and over 1,500 ETF/ETP products have been launched in US alone the last 10 years 3,000 2,500 US ETFs & ETPs over $2.7 trillion in Assets as of February 2017 10 Year ETF/ETP CAGR: 19.4% YTD 2017: 8.2% 2,500 2,000 Billions 2,000 1,500 1,000 1,500 1,000 # ETFs/ETPs 500 500-2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ETP Assets 6 9 6 17 35 41 84 116 122 135 86 84 70 84 89 ETF Assets 151 228 305 416 586 498 706 893 938 1,212 1,612 1,918 2,060 2,465 2,669 # ETFs/ETPs 134 169 221 381 673 845 925 1,099 1,369 1,447 1,536 1,662 1,845 1,969 1,995 Feb-1 7 - Source: ETFGI 4

US AUM AND ISSUER GROWTH

ISSUER MARKET SHARE 3/14/12 3/14/13 3/14/14 3/14/15 3/14/16 3/14/17 BlackRock BlackRock BlackRock BlackRock BlackRock BlackRock 41.37% 40.70% 38.58% 37.97% 38.83% 38.11% SSgA SSgA SSgA Vanguard Vanguard Vanguard 24.33% 23.81% 22.09% 21.98% 23.16% 24.41% Vanguard Vanguard Vanguard SSgA SSgA SSgA 17.38% 18.91% 20.02% 20.72% 19.84% 19.50% Invesco PowerShares Invesco PowerShares Invesco PowerShares Invesco PowerShares Invesco PowerShares Invesco PowerShares 5.67% 5.24% 5.87% 4.79% 4.31% 4.30% Van Eck Van Eck WisdomTree WisdomTree WisdomTree Charles Schwab 2.05% 1.81% 1.93% 2.58% 2.14% 2.44% ProShares WisdomTree ProShares First Trust Charles Schwab First Trust 1.98% 1.67% 1.59% 1.82% 1.94% 1.61% WisdomTree ProShares Van Eck Guggenheim First Trust WisdomTree 1.30% 1.58% 1.44% 1.45% 1.66% 1.52% Guggenheim Guggenheim Guggenheim Charles Schwab Guggenheim Guggenheim 0.78% 1.00% 1.40% 1.44% 1.25% 1.23% First Trust PIMCO First Trust ProShares ProShares VanEck 0.66% 0.75% 1.37% 1.24% 1.18% 1.22% Barclays Charles Schwab Charles Schwab Van Eck Deutsche Bank ProShares 0.62% 0.74% 1.08% 1.07% 0.90% 0.98%

IS VANGUARD TOO BIG TO FAIL? 7

VANGUARD CORE OFFERING PERCENTAGE OVERLAP POSISTION OVERLAP MGC MGV MGK VV VUG VTV VO VOE VOT VB VBR MGV 54 MGK 48 3 VV 84 46 41 VUG 48 3 80 50 VTV 56 84 5 55 5 VO 1 1 1 17 19 14 VOE 0.1 0.1 0.1 9 4 14 54 VOT 0.1 0 0.1 8 17 0.1 47 3 VB 0.1 0.1 0 0.1 0.1 0.1 2 2 1 VBR 0.1 0.1 0 0.1 0.1 0.1 2 2 1 56 VBK 0 0 0 0.1 0.1 0 0.1 0.1 1 45 4 MGC MGV MGK VV VUG VTV VO VOE VOT VB VBR MGV 145 MGK 140 11 VV 140 145 140 VUG 135 10 134 314 VTV 155 145 21 316 37 VO 12 6 7 331 184 169 VOE 10 6 5 195 47 169 195 VOT 3 0 3 147 148 6 148 11 VB 1 1 0 22 7 15 22 17 5 VBR 1 1 0 18 3 15 18 16 2 792 VBK 0 0 0 4 4 0 4 1 3 611 66

VALUE FACTOR BIAS CORE CORE CORE CORE MGC VV VO VB VALUE MGV 54 MGK 48 GROWTH VALUE VTV 48 55 GROWTH VUG 56 50 VALUE VOE 0.1 9 54 GROWTH VOT 0.1 8 47 VALUE VBR 0.1 0.1 2 56 GROWTH VBK 0 0.1 0.1 45

UNDERSTANDING THE ECOSYSTEM Will Vanguard fund investments be in jeopardy if the fund s custodian bank fails? U.S. banking laws generally provide that segregated mutual fund assets held by a bank custodian aren t subject to the liens or claims of the custodian s creditors or of the Federal Deposit Insurance Corporation (FDIC). To further mitigate risk, Vanguard takes the precaution of using several different independent custodian banks. These banks include The Bank of New York Mellon, Brown Brothers Harriman & Co., JPMorgan Chase Bank, and State Street Bank and Trust Company. The Fund employs an indexing investment approach designed to track the performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market and includes large-, mid-, small-, and micro-cap stocks regularly traded on the New York Stock Exchange and Nasdaq. Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000 Index) through April 22, 2005; MSCI US Broad Market Index through June 2, 2013; and CRSP US Total Market Index thereafter. GSCM Goldman Sachs Capital Management. GSI Goldman Sachs International. At December 31, 2016, the counterparty had deposited in segregated accounts securities with a value of $615,000 in connection with amounts due to the fund for open swap contracts. All comparative mutual fund data are from Lipper, a Thomson Reuters Company, or Morningstar, Inc., unless otherwise noted. Vanguard S&P 500 ETF seeks to track the performance of a benchmark index that measures the investment return of large-capitalization stock The Chicago Board Options Exchange Volatility Index, or VIX, also known as the "fear gauge," has fallen to levels commonly associated with a tranquil equity market.1 Vanguard research, using data from FactSet 10

TABLE OF CONTENTS 1. ETF INDUSTRY GROWTH 2. ETF INDUSTRY INDEX DESCRIPTION 3. EMBRACING THE HEADWINDS OF GROWTH 11

THE TOROSO ETF INDUSTRY INDEX Exposure to the Entire ETF Ecosystem Companies that derive revenue from the Exchange Traded Funds industry The rise of passive investing - exchangetraded funds, index funds and the like has revolutionized the investment world New York Times, 3/28/17 ETFs could see $1 trillion in inflows over the coming year Market Watch, Jan 2017 1

INDEX COMMITTEE TEAM The function of the index committee is to interpret the revenue, public statements and other financial data on the companies within the investable universe. Although the primary factor governing the tier selection is ETF industry revenue data, the index committee may adjust for intangible assets and other non-financial, public information. The index committee includes five members: two from Toroso and three independent ETF industry veterans. The committee seeks consensus on all tier selections Internal Members Independent Members GUILLERMO TRIAS PARTNER & CEO TOROSO INVESTMENTS KEVIN CARTER FOUNDER BIG TREE CAPITAL MICHAEL VENUTO CO-FOUNDER & CIO TOROSO INVESTMENTS LINDA ZHANG, Ph.D FOUNDER PURVIEW INVESTMENTS Research DAVID DZIEKANSKI PORTFOLIO MANAGER TOROSO INVESTMENTS KRIS MONACO CO-FUNDER & MANAGING PARTNER LEVEL ETF VENTURES 1 9

THE TOROSO ETF INDUSTRY INDEX The Toroso ETF Industry Index ( ETF Industry Index ) measures and monitors the performance of an investable universe of publicly-traded companies deriving revenues from the ETF industry. The Index was created and is owned by Toroso Investments, LLC and is maintained by Solactive AG (the Index Administrator ). An experienced Index Committee of ETF industry experts first evaluates the universe of public companies to identify impactful ETF players. INITIAL UNIVERSE We first examine any public or private company above $200 million in Market Cap that participate in the industry Financial Analysis on Revenue Generated from the ETF Industry SELECTED COMPANIES Currently, there are 37 companies generating significant revenue from the ETF Industry 14

ACTIVE RESEARCH IN A PASSIVE VEHICLE Two times a year, the Index Committee evaluates selected companies to determine their weighting within the Index based on a defined criteria described below Tiered Weighting Tier 1 50% Substantial participation / direct financial benefit Tier 2 25% Substantial participation / indirect financial benefit Tier 3 15% Moderate participation / indirect financial benefit Tier 4 10% New or minor participation All participants are equal weighted with in the tiers and are subject to a 9% maximum weight for any one security with in a tier. (1) Registered with the SEC as a Registered Investment Advisor (RIA) 15

THE TOROSO ETF INDUSTRY INDEX Tier A 50% Substantial participation in the ETF industry with direct financial benefit to shareholders Equally-weighted tier designed to capture companies with the purest connection to the growth of the ETF industry. Tier A will focus on issuers but can include companies form other categories that have substantial revenue from the ETF industry or are an integral part of the ETF ecosystem. Companies include Dominant companies like BlackRock, which oversees close to 40% of all US ETF assets Pure ETF players such as WisdomTree Investments Exchanges such as Chicago Board Options Exchange, Inc. With the acquisition of BATS and ETF.COM, as well as their dominance in the trading and indexation of volatility, they are a clear leader in the ETF Ecosystem Weight Can include Name companies from other Ticker categories that have Index Subsector substantial Market revenue Cap (mil) from the P/E ETF industry P/B P/S or are P/C (%) an integral part of the ETF ecosystem. BlackRock Inc BLK 6.25 Sponsor 62,600.79 20.35 2.18 5.79 29.96 Examples of non-issuer companies: Chicago Board Options Exchange, Incorporated (CBOE) Charles Schwab Corp SCHW 6.25 Sponsor 54,233.65 30.85 3.96 7.21 347.79 Invesco Ltd IVZ 6.25 Sponsor 12,443.41 15.63 1.73 2.74 100.30 State Street Corp STT 6.25 Sponsor 30,104.50 16.04 1.69 3.09 13.79 WisdomTree Investments Inc WETF 6.25 Sponsor 1,218.67 0.00 0.00 0.00 0.00 MSCI Inc MSCI 6.25 Index/Data 8,752.00 35.03 26.97 7.94 21.01 S&P Global Inc SPGI 6.25 Index/Data 33,445.07 16.31 51.53 6.07 23.45 CBOE Holdings Inc CBOE 6.25 Exchange 9,024.71 34.38 27.46 9.67 27.69 Source: Morningstar Direct & Bloomberg for EST (1) Registered with the SEC as a Registered Investment Advisor (RIA) 16

THE TOROSO ETF INDUSTRY INDEX Tier B 25% Substantial participation in the ETF industry with indirect financial benefit to shareholders Equally-weighted tier dedicated to companies that have had a meaningful impact on the industry Revenue and relevance to shareholders: indirect or muted by other business activities Companies include KCG holdings is an integral part of the ETF ecosystem as a key lead market maker and liquidity provider. Their primary business is execution and transaction oriented for all securities JP Morgan is an example of the muted but meaningful tier B selection. JPM is an ETF issuer with substantial ETF assets but other business activities that overshadow their ETF revenue. They are also involved in ETF trading, custody & trust services and have a minority investment in a private ETF issuer. Name Ticker Weight (%) Index Subsector Market Cap (mil) P/E P/B P/S P/C DST Systems Inc DST 3.57 Sponsor 3,830.66 22.27 3.38 2.56 21.06 JPMorgan Chase & Co JPM 3.57 Sponsor 312,618.22 14.64 1.42 3.46 16.38 SEI Investments Co SEIC 3.57 Service 7,934.93 24.80 6.15 5.91 19.47 KCG Holdings Inc A KCG 3.57 Liquidity 1,107.04 4.66 0.68 0.87 9.98 Virtu Financial Inc A VIRT 3.57 Liquidity 2,355.17 19.72 17.20 1.06 3.21 Intercontinental Exchange Inc ICE 3.57 Exchange 35,203.68 24.11 2.16 5.74 15.92 Nasdaq Inc NDAQ 3.57 Exchange 11,448.96 0.00 0.00 0.00 0.00 Source: Morningstar Direct & Bloomberg for EST (1) Registered with the SEC as a Registered Investment Advisor (RIA) 17

THE TOROSO ETF INDUSTRY INDEX Tier C 15% Moderate participation in the ETF industry with indirect financial benefit to shareholders Equally-weighted tier designed to capture exposure to companies that support or have moderate participation in the ETF industry ETF revenue and relevance to shareholders of these companies is indirect Companies include US Bancorp & Bank of New York: these companies support the industry as custodians and fund service companies Virtus, Northern Trust & Ameriprise: companies that issue/sponsor ETFs but their current impact and market share is moderate Name Ticker Weight (%) Index Subsector Market Cap (mil) P/E P/B P/S P/C Ameriprise Financial Inc AMP 2.14 Sponsor 19,936.12 16.84 3.22 1.88 11.22 Northern Trust Corp NTRS 2.14 Sponsor 19,786.19 20.22 2.26 4.03 13.26 Virtus Investment Partners Inc VRTS 2.14 Sponsor 718.38 0.00 0.00 0.00 0.00 Bank of New York Mellon Corp BK 2.14 Service 48,809.49 0.00 0.00 0.00 0.00 US Bancorp USB 2.14 Service 87,285.67 16.98 2.23 4.49 17.77 FactSet Research Systems Inc FDS 2.14 Index/Data 6,497.58 21.13 14.17 6.35 23.37 CME Group Inc Class A CME 2.14 Exchange 39,909.00 26.81 2.03 11.45 23.99 Source: Morningstar Direct & Bloomberg for EST (1) Registered with the SEC as a Registered Investment Advisor (RIA) 18

THE TOROSO ETF INDUSTRY INDEX Tier D 10% New or minor participation in the ETF industry with indirect financial benefit to shareholders Equally-weighted tier to gain exposure to ETF industry new-comers and minor participants. This tier can also capture service, data, exchange, and trading companies that have ETF oriented revenue but have yet to make ETFs a business priority. Companies include Eaton Vance Corporation (new-comer that is also an innovator with their NextShares structure) Name Ticker Weight (%) Index Subsector Market Cap (mil) P/E P/B P/S P/C Citigroup Inc C 0.71 Service 165,007.16 12.62 0.80 2.47 3.20 E*TRADE Financial Corp ETFC 0.71 Service 9,548.60 17.43 1.61 4.96 5.93 Envestnet Inc ENV 0.71 Service 1,411.59 0.00 3.84 3.02 32.34 Eaton Vance Corp EV 0.67 Sponsor 5,113.18 0.00 0.00 0.00 0.00 Franklin Resources Inc BEN 0.67 Sponsor 23,602.16 14.49 2.03 3.86 13.19 Goldman Sachs Group Inc GS 0.67 Sponsor 91,084.28 15.23 1.30 3.53 19.38 Hancock Holding Co HBHC 0.67 Service 3,902.08 25.37 1.47 4.06 10.85 Janus Capital Group Inc JNS 0.67 Sponsor 2,454.85 16.23 1.43 2.27 8.75 Legg Mason Inc LM 0.67 Sponsor 3,481.78 37.35 0.92 1.40 7.85 Principal Financial Group Inc PFG 0.67 Sponsor 18,136.91 13.90 1.76 1.48 4.75 Morgan Stanley MS 0.67 Service 79,703.90 15.64 1.24 2.49 35.22 TD Ameritrade Holding Corp AMTD 0.67 Service 20,389.52 0.00 0.00 0.00 0.00 UMB Financial Corp UMBF 0.67 Service 3,706.62 0.00 0.00 0.00 0.00 MarketAxess Holdings Inc MKTX 0.67 Liquidity 7,034.28 58.45 15.68 19.92 91.76 Morningstar Inc MORN 0.67 Index/Data 3,311.24 0.00 0.00 0.00 0.00 Source: Morningstar Direct & Bloomberg for EST (1) Registered with the SEC as a Registered Investment Advisor (RIA) 19

THE RESULT PORTFOLIO CHARACTERISTICS MARKET CAP BREAKDOWN TETF Index Overlap Holdings Active Overlap overlap Share S&P 500 20 5.3% 94.7% DJ Financial Services Index 29 22.7% 77.3% LARGE CAP > $10 B 19 companies 57% of portfolio MID CAP $2-10 B 14 companies 31% of portfolio SMALL CAP < $2 B 4 companies 12% of portfolio TETF Index Overlap Holding Comparison Holdings in TETF also in BM Holdings in BM also in TETF S&P 500 61.5% 5.4% DJ Financial Services Index 77.5% 43.5% Overlap, Active Share and holdings are the comparisons against the ETF Industry ETF Index Sector Breakdown Sponsors 50% Exchanges Index/Data Providers 16% 15% Service Providers 12% Liquidity Providers 8% 0% 10% 20% 30% 40% 50% 60% Source: Morningstar Direct (1) Registered with the SEC as a Registered Investment Advisor (RIA) 20

TABLE OF CONTENTS 1. ETF INDUSTRY GROWTH 2. ETF INDUSTRY INDEX DESCRIPTION 3. EMBRACING THE HEADWINDS OF GROWTH 2 1

ETF BUBBLE? 22

OPENED AND CLOSED ETFS 300 250 200 150 Opened Closed Net 100 50 0 3/14/13 3/14/14 3/14/15 3/14/16 2017

THE PASSIVE OWNERSHIP FACTS

MORE GROWTH TO COME US ETF vs MUTUAL FUND FLOWS $12,700 $10,700 $8,700 $6,700 $4,700 $2,700 $700 -$1,300 -$3,300 ETF and Mutual Fund - AUM & Flows (in Billions) $12,531 $2,555 $50 $- $(50) $(100) 1998-12 1999-12 2000-12 2001-12 2002-12 2003-12 2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 2014-12 2015-12 2016-12 $400 $350 $300 $250 $200 $150 $100 ETF Flows MF Flows ETF Assets MF Assets Annual ETF Flows - MF Flows $257 $379 $300 $100 $(100) $(300) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AUM ETFS AND MUTUAL FUNDS In the last two years, ETF flows have exceeded Mutual Fund flows by $635 billion dollars At this time Mutual Funds still enjoy some what of an artificial distribution benefit that may soon end (401k s etc) Source: Morningstar Direct 25

VANGUARD AGAIN 26

DO YOU GET WHAT YOU PAY FOR? 27

EXPENSE RATIO vs. TRACKING DIFFERENCE 28

ETF INDUSTRY 15 C REPORTING 29

UNDERSTANDING LIQUIDITY

THE VALUE OF EXPOSURE & EXECUTION 31

BRIEF HISTORY OF THE ETF INNOVATION First US ETF Launch Jan 1993 First sector ETF Dec 1998 First Bond ETF July 2002 First Gold ETF Nov 2004 First ETN Jun 2006 First active ETF May 2009 US ETF Assets Surpass $2 trillion Dec 2014 First International ETF Mar 1996 MSCI EAFE in ETF Aug 2001 First Smart Beta ETF Dec 2005 First VIX ETF Jan 2009 MSCI EM in ETF April 2003 US ETF Assets Surpass $1 trillion Dec 2010 Source: Morningstar Direct 32

TOROSO CONTACT INFORMATION NEW YORK 115 West 29th Street Suite 811 New York, NY 10001 Dan Carlson 610-517-6901 dcarlson@torosoinv.com David Dziekanski 917-684-7792 ddziekanski@torosoinv.com John Lowrey 401-651-5007 jlowrey@torosoinv.com Kathy Smith 610-755-7581 ksmith@torosoinv.com Mike Venuto 646-773-6834 mvenuto@torosoinv.com CHICAGO 5100 N Ravenswood Ave. Suite 228 Chicago, IL 60640 Guillermo Trias 305-951-1474 gtrias@torosoinv.com 3