Exchange-Traded Funds

Exchange-Traded Funds NORTH AMERICA MICHAEL JABARA Morgan Stanley Wealth Management Michael.Jabara@morganstanley.com +1 212 296-2626 JOHN DUGGAN Morgan Stanley Wealth Management John.Duggan@morganstanley.com +1 212 296-2573 CHRISTOPHER K. BAXTER Morgan Stanley Wealth Management Christopher.Baxter@morganstanley.com +1 212 296-2562 US ETF Weekly Update - Weekly Flows: $27.6 Billion Net Inflows - Largest Weekly Net Inflows of 2015 - High-conviction ETF Recommendations Slide: No Changes - ETF Assets Stand at $2.0 Trillion, up 2% YTD - Seven ETF Launches Last Week - Emerging Global Advisors to Close Two ETFs - Global X Announces ETF Closures - OppenheimerFunds to Acquire VTL Associates As with any investment, ETFs have risks. These include the general risks associated with investing in the underlying assets, potential tracking error, and the possibility that particular indices may lag other market segments or active managers. In addition, ETFs investing in international markets may include currency and geopolitical risks, while fixed income ETF risks also include credit and interest rate risk. Leveraged, Inverse, and Leveraged Inverse ETFs have unique risks, which are reviewed on slide 11. We define exchange-traded funds as encompassing passively and actively managed exchange-traded funds. This report is focused on U.S.-listed exchange-traded funds. These funds are registered with the SEC and trade as a single stock under SEC exemptions. U.S. listed, open-end fund ETFs must be offered under and sold only pursuant to a Prospectus. U.S.-listed ETFs may not be marketed or sold in a number of jurisdictions and may not be suitable for all investors. Morgan Stanley Wealth Management Sales Personnel should check with the Legal Department to clarify whether they may market the ETFs in a particular jurisdiction. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. Morgan Stanley Wealth Management does and seeks to do business with companies covered in Morgan Stanley Wealth Management Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Wealth Management Research. Investors should consider Morgan Stanley Wealth Management Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report

US-Listed ETFs: High-conviction ETF Recommendations Below are our highest-conviction ETF recommendations, drawing on published strategy from Morgan Stanley Wealth Management s Global Investment Committee and Morgan Stanley & Co. s Institutional Research group Ticker Name Fund Focus Investment Rationale IJR ishares Core S&P Small-Cap ETF US Equity-Small-Cap May benefit from a strong USD, low energy costs, a better labor market, pick-up in consumer spending, and increased M&A. XLY Consumer Discretionary Select Sector SPDR US Equity-Sector Lower energy costs, better consumer confidence, and easier comps may drive sector higher. XLF Financials Select Sector SPDR US Equity-Sector Strong USD, rising interest rates, growth in shareholder return, and better relative estimate achievability may drive sector higher. KRE SPDR S&P Regional Banking ETF US Equity-Sector May benefit from wage growth, housing improvement, increased consumer confidence, and rising rates. VGK Vanguard FTSE Europe ETF International Equity-Europe Expectation for improving economic outlook and attractive valuations in Europe. DBEU Deutsche X-Tracker MSCI Europe Hedged Equity Fund International Equity-Europe Expectation for improving economic outlook and attractive valuations in Europe; we anticipate European currencies to weaken. EZU ishares MSCI EMU ETF International Equity-Europe Expectation for improving economic outlook and attractive valuations in Europe. EWQ ishares MSCI France ETF International Equity-France Expectation for improving economic outlook and attractive valuations in Europe. EWG ishares MSCI Germany ETF International Equity-Germany Expectation for improving economic outlook and attractive valuations in Europe. EWJ ishares MSCI Japan ETF International Equity-Japan Positive bias amid political and structural changes as recovery appears sustainable; Yen weakness behind us. GXC SPDR S&P China ETF International Equity-China Anticipate growth to stabilize, new policy measures should help, and government has additional tools. EPI WisdomTree India Earnings Fund International Equity-India Anticipate monetary stimulus, lower inflation, positive longer view based on demographics, globalization, and political reforms. HYG ishares iboxx $ High Yield Corporate Bond ETF Fixed Income-High Yield Risk/reward looks appealing amid recent spread widening. BKLN PowerShares Senior Loan Portfolio Fixed Income-Senior Loan Appealing asset class given floating rate exposure, long-term risk adjusted return history, and slow US recovery. SRLN SPDR Blackstone/GSO Senior Loan ETF Fixed Income-Senior Loan Appealing asset class given floating rate exposure, long-term risk adjusted return history, and slow US recovery. UUP PowerShares DB US Dollar Index Bullish Fund Currency Basket-USD Strong US economy compared to other regions and potential for rising rates should continue to support USD. Source: Morgan Stanley Wealth Management ETF Research. 2

US-Listed ETFs: Estimated Flows by Market Segment ETFs posted net inflows of $27.6 bln last week; largest weekly net inflows of 2015 - Last week s net inflows were led by US Large-Cap ETFs at $17.1 bln; conversely, US Dividend Income ETFs posted modest net outflows of $105 mln, the most of any category we measured - Thirteen of the 15 categories we measured posted net inflows last week and six segments had net inflows of $1+ bln - ETFs have generated net inflows 27 of 38 weeks YTD - ETF assets stand at $2.0 tln, up 2% YTD 13-week flows remain positive among most asset classes; combined $45.0 bln in net inflows - Fixed Income ETFs generated net inflows of $19.0 bln over the last 13 weeks, the most of any category we measured and meaningfully higher than the next largest category, US Large-Cap ETFs, which had $15.4 bln in net inflows - International - Emerging ETFs is one of six categories to have exhibited net outflows over the last 13 weeks, at $10.3 bln; it has been a challenging 13 weeks for the space; however, International - Emerging ETFs actually generated net inflows of $1.2 bln last week Net Cash Flow ($ Mil) Mkt Cap Market Investment Objective Funds 1-Week 4-Week 13-Week ($ Mil) Share (%) US Broad-Market 21 397 462 1,698 73,527 4 US Large-Cap 63 17,132 12,296 15,400 497,983 25 US Mid-Cap 34 1,598 1,605 (88) 109,598 5 US Small- & Micro-Cap 42 2,612 4,445 (50) 96,440 5 US Sector & Industry 158 941 (4,415) 966 234,133 12 US Custom 100 348 100 2,540 40,399 2 US Dividend Income 31 (105) (615) (1,768) 68,474 3 Leveraged/Inverse 193 476 2,314 4,123 33,204 2 International - Developed 237 1,194 (460) 12,552 302,077 15 International - Emerging 151 1,151 (3,945) (10,289) 110,632 5 Global 150 52 (536) 357 49,475 2 Fixed Income 217 1,793 14,480 19,034 332,413 16 Commodity 37 (83) (380) (581) 46,985 2 Currency 18 12 (334) (737) 2,784 0 Active 126 82 744 1,883 21,114 1 Total 1,578 27,600 25,760 45,041 2,019,238 100 Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Flow data estimated as of 9/18/15 based on daily change in share counts and daily NAVs. 3

US-Listed ETFs: Estimated Largest Flows by Individual ETF SPDR S&P 500 ETF (SPY) posted net inflows of $14.6 bln last week, leading all ETFs - SPY s net inflows last week were its largest weekly flows of 2015 - The PowerShares QQQ (QQQ) had net inflows of $1.3 bln last week, trailing only SPY; QQQ, which is overweight the information technology sector, historically has been a trading vehicle for institutional investors - Notably, the ishares MSCI Emerging Markets ETF (EEM) also had a positive week, generating net inflows of $1.0 bln; EEM flows have stabilized the last three weeks following a stretch when the fund had net outflows of $5.6 bln over a 14-week period - Conversely, the Consumer Staples Select Sector SPDR (XLP) exhibited net outflows of $291 mln last week, the most of any ETF Net Inflows Net Outflows Net Cash Flow ($ Mil) Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Flow data estimated as of 9/18/15 based on daily change in share counts and daily NAVs. Mkt Cap ETF Name Symbol 1-Week 4-Week 13-Week ($ Mil) SPDR S&P 500 ETF SPY 14,640 9,599 6,691 173,927 PowerShares QQQ QQQ 1,258 1,137 996 37,994 ishares MSCI Emerging Markets ETF EEM 1,003 54 (3,512) 22,089 Vanguard Small-Cap ETF VB 914 838 92 12,069 Vanguard Mid-Cap ETF VO 905 1,142 (240) 13,190 ishares Russell 2000 ETF IWM 782 2,827 (1,674) 27,501 ishares MSCI EMU ETF EZU 465 330 1,199 10,424 ishares Russell 1000 Growth ETF IWF 439 220 404 29,101 Consumer Discretionary Select Sector SPDR XLY 430 21 399 10,497 Energy Select Sector SPDR XLE 383 541 383 11,243 Consumer Staples Select Sector SPDR XLP (291) (326) 22 7,143 ishares Core S&P 500 ETF IVV (288) (988) 795 64,984 SPDR Dow Jones Industrial Average ETF DIA (274) 126 (33) 10,604 ishares U.S. Real Estate ETF IYR (142) (150) (169) 4,051 Guggenheim S&P Equal Weight Health Care ETF RYH (131) (168) (95) 668 Utilities Select Sector SPDR XLU (111) (517) (35) 5,991 SPDR S&P Regional Banking ETF KRE (94) (303) (10) 2,214 WisdomTree Japan Hedged Equity Fund DXJ (89) (384) 408 15,904 SPDR S&P Emerging Asia Pacific ETF GMF (81) (241) (325) 438 SPDR Barclays Short Term High Yield Bond ETF SJNK (77) (149) (589) 3,526 4

US-Listed ETFs: ETF Dollar Volume ETF monthly $ volume as a % of listed trading surged in August to 30% relative to July s 25% reading; over the last five years, ETF monthly $ volume as a % of listed trading volume averaged 27% Over the last five years, ETF monthly $ volume as a % of listed trading volume peaked in August 2011 at 36% ETF $ volume was up $110 bln last week compared to the prior week and is essentially in-line with its 13-week average; recent market volatility has driven ETF volume higher US Large-Cap ETFs accounted for 48% of ETF $ volume last week compared to their 13-week average of 46% and their 25% market cap share Monthly ETF Dollar Volume as a % of Listed Trading Weekly Dollar Volume by ETF Market Segment $9,000 Non-ETF Dollars Traded ($ Bil) 45% Dollar Volume ($ Bil) $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 ETF Volume ($ Bil) ETF Percentage (right axis) 40% 35% 30% 25% 20% 15% 10% 5% ETF as % of Market 1-Week ETF 1-Week ETF 13-Week ETF 13-Week ETF Market Cap Investment Objective Funds Vol ($ Mil) Vol Shr (%) Avg Vol ($ Mil) Avg Vol Shr (%) Shr (%) US Broad-Market 21 2,369 0.6 2,561 0.6 3.6 US Large-Cap 63 201,612 48.3 187,159 45.5 24.7 US Mid-Cap 34 4,126 1.0 5,126 1.2 5.4 US Small- & Micro-Cap 42 22,706 5.4 24,460 5.9 4.8 US Sector & Industry 158 54,594 13.1 53,215 12.9 11.6 US Custom 100 2,013 0.5 2,177 0.5 2.0 US Dividend Income 31 1,475 0.4 1,614 0.4 3.4 Leveraged/Inverse 193 31,576 7.6 30,196 7.3 1.6 International - Developed 237 23,632 5.7 27,429 6.7 15.0 International - Emerging 151 32,633 7.8 32,867 8.0 5.5 Global 150 9,303 2.2 11,044 2.7 2.5 Fixed Income 217 24,411 5.8 24,633 6.0 16.5 Commodity 37 5,926 1.4 7,047 1.7 2.3 Currency 18 726 0.2 837 0.2 0.1 Active 126 669 0.2 928 0.2 1.0 Total 1,578 417,772 100.0 411,293 100.0 100.0 $0 0% Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Source: Bloomberg, Morgan Stanley Wealth Management ETF Research, NYSE Arcavision. Monthly data as of 8/31/15; weekly data as of 9/18/15. Non-ETF Dollars Traded + ETF Volume=Total Listed Volume. 5

US-Listed ETFs: Short Interest Data Unchanged: Based on data as of 8/31/15 SPDR S&P 500 ETF (SPY) had the largest increase in USD short interest at $11.9 bln - SPY s shares short at 373 mln are at their highest level since 12/15/11 - The PowerShares QQQ (QQQ) also had a big increase in short interest last period, up $2.3 bln; QQQ s shares short are at their highest level since 10/31/14-820 ETFs exhibited short interest increases while 608 experienced short interest declines over the last period - Aggregate ETF USD short interest increased by $24.3 bln over the period ended 8/31/15 The average shares short/shares outstanding for ETFs is currently 3.8%, up from last period s 3.6% - For the sixth consecutive period the Market Vectors Semiconductor ETF (SMH) occupied the top spot as the most heavily shorted ETF as a % of shares outstanding at 237% - Five of the 10 most heavily shorted ETFs as a % of shares outstanding are sector/industry based (SMH, XRT, XBI, IYR, XME) - Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only five ETFs exhibited shares short as a % of shares outstanding greater than or equal to 100%) Change in Short Interest Shares Short as % of Shares Outstanding ETF Name Symbol Last Change in USD Amount Held Short ETF Name Symbol Shares Short / Shrs Out (%) SPDR S&P 500 ETF SPY 11,909,583,501 Market Vectors Semiconductor ETF SMH 236.6 PowerShares QQQ QQQ 2,321,834,099 CurrencyShares Euro Trust FXE 181.7 SPDR Biotech ETF XBI 2,254,404,275 SPDR Retail ETF XRT 153.5 ishares Russell 2000 ETF IWM 1,320,663,168 ProShares Ultra VIX Short-Term Futures ETF UVXY 128.5 ishares MSCI Emerging Markets ETF EEM 1,021,621,445 SPDR Biotech ETF XBI 125.0 ishares U.S. Real Estate ETF IYR (408,391,144) ishares U.S. Real Estate ETF IYR 94.2 Utilities Select Sector SPDR XLU (279,046,143) Deutsche X-Tracker Harvest CSI 300 China A-Shares Fund ASHR 80.4 Alerian MLP ETF AMLP (162,557,997) CurrencyShares Japanese Yen Trust FXY 78.2 ishares 20+ Year Treasury Bond ETF TLT (139,804,324) SPDR S&P Metals & Mining ETF XME 73.4 SPDR Oil & Gas Exploration & Production ETF XOP (132,495,669) ishares MSCI Brazil Capped ETF EWZ 73.4 Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Short Interest data are only reported bi-monthly with a lag. Data compares short interest from 8/31/15 vs. 8/14/15. 6

US-Listed ETFs: Most Successful Recent Launches by Assets $9.0 bln in total market cap of ETFs less than 1-year old - Over the last 13 weeks, recently launched Active ETFs generated net inflows of $565 mln, more than any other category; Active ETFs account for 26% of recently launched market share, trailing only Global ETFs - Notably, 63 International - Developed ETFs were launched over the last year as ETF sponsors have issued products in an area that has exhibited strong net inflows recently - 191 new ETF listings and 64 closures YTD The top 10 most successful launches make up 54% of the market cap of ETFs launched over the past year - Seven ETF sponsors and three asset classes (equity, fixed income, and commodity) were represented in top 10 most successful launches - The Deep Value ETF (DVP) had net inflows of $86 mln last week, the most of any recently launched ETF; DVP is composed of undervalued dividend paying US stocks with solid balance sheets, positive earnings, and strong free cash flows Estimated Flows for ETF Launches Over Past Year Net Cash Flow ($ Mil) Mkt Cap Top 10 Successful Launches Over Past Year Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Data estimated as of 9/18/15 based on daily change in share counts and daily NAVs. Market Investment Objective Funds 1-Week 4-Week 13-Week ($ Mil) Share (%) US Broad-Market 0 0 0 0 0 0 US Large-Cap 3 0 2 14 169 2 US Mid-Cap 0 0 0 0 0 0 US Small- & Micro-Cap 1 0 0 (1) 1 0 US Sector & Industry 5 (4) (19) 100 269 3 US Custom 26 87 112 527 933 10 US Dividend Income 7 1 4 35 79 1 Leveraged/Inverse 31 44 (1) 515 597 7 International - Developed 63 28 233 529 1,098 12 International - Emerging 20 1 4 (32) 332 4 Global 32 4 (71) 387 2,417 27 Fixed Income 23 5 26 10 775 9 Commodity 1 0 0 0 1 0 Currency 0 0 0 0 0 0 Active 33 40 83 565 2,325 26 Total 245 207 373 2,649 8,997 100 Symbol Fund Name Mkt Cap ($ Mil) 1-Week Flows ($ Mil) 4-Week Flows ($ Mil) HACK PureFunds ISE Cyber Security ETF 1,159 0 (79) TOTL SPDR DoubleLine Total Return Tactical ETF 1,136 39 89 XT ishares Exponential Technologies ETF 647 0 (2) VBND Vident Core US Bond Strategy ETF 423 0 (5) CHAD Direxion Daily CSI 300 China A Share Bear 1x Shares 300 39 (46) DVP Deep Value ETF 290 86 82 COMT ishares Commodity Select Strategy ETF 255 (3) (6) PTLC Pacer Trendpilot 750 ETF 247 1 21 EUSC WisdomTree Europe Hedged SmallCap Equity Fund 222 12 12 HEEM ishares Currency Hedged MSCI Emerging Markets ETF 217 0 4 Total 4,897 174 70 7

US-Listed ETFs: New Listings For the Week Symbol Fund Name KSA ishares MSCI Saudi Arabia Capped ETF 9/17/2015 0.74 Tracks an index of Saudi Arabian equities. HAKK Direxion Daily Cyber Security Bull 2x Shares 9/16/2015 0.80 Objective: Tracks 2x daily performance of the ISE Cyber Security Index. HAKD Direxion Daily Cyber Security Bear 2x Shares 9/16/2015 0.80 Objective: Tracks -2x daily performance of the ISE Cyber Security Index. PILL Direxion Daily Pharmaceutical & Medical Bull 2x Shares 9/16/2015 0.80 Objective: Tracks 2x daily performance of the Dynamic Pharmaceutical Intellidex. PILS Direxion Daily Pharmaceutical & Medical Bear 2x Shares 9/16/2015 0.80 Objective: Tracks -2x daily performance of the Dynamic Pharmaceutical Intellidex. HDWX SPDR S&P International Dividend Currency Hedged ETF 9/15/2015 0.48 HREX SPDR MSCI International Real Estate Currency Hedged ETF 9/15/2015 0.48 Launch Date Tracks an index of international developed and emerging market dividend yielding companies while simultaneously hedging currency risk vs. the USD. Tracks an index of international developed market real estate companies while simultaneously hedging currency risk vs. the USD. Expense Ratio (%) Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. 8

US-Listed ETFs: News Highlights Emerging Global Advisors to Close Two ETFs - In a 9/18/15 press release, Emerging Global Advisors announced plans to liquidate two equity ETFs (see list below). - The ETFs will cease trading after the market closes on 10/30/15. Ticker BCHP BRXX Global X Announces ETF Closures - In a 9/15/15 press release, Global X Funds announced plans to liquidate four equity ETFs (see list below). - The ETFs will cease trading after the market closes on 10/8/15. Ticker BRAF AZIA GURX JUNR Fund Name EGShares Blue Chip ETF EGShares Brazil Infrastructure ETF Fund Name Global X Brazil Financials ETF Global X Central Asia & Mongolia Index ETF Global X Guru Small Cap Index ETF Global X Junior Miners ETF OppenheimerFunds to Acquire VTL Associates - In a recent press release, OppenheimerFunds announced an agreement to acquire VTL Associates, LLC, an independent investment firm best known for its RevenueShares ETFs. - The transaction is subject to closing conditions and consents. Source: Morgan Stanley Wealth Management ETF Research, Emerging Global Advisors, Global X, OppenheimerFunds. 9

Recent Reports ETF Mechanics & Liquidity Update - September 14, 2015 PIMCO Receives Wells Notice on BOND - August 4, 2015 2Q15 ETF Fund Flows-$44.8 Billion Net Inflows - July 30, 2015 An Introduction to Smart Beta ETFs - July 21, 2015 ETF Investment Primer - July 8, 2015 ETF Semi-Annual Review: $2.1 Trillion in 1,499 ETFs - May 29, 2015 ETF Tracking Error: A Decline in 2014 - March 16, 2015 Morgan Stanley Wealth Management and its affiliates do not provide fundamental research ratings on exchange-traded funds (ETFs). 10

Leveraged, Inverse & Leveraged Inverse Conclusions and Risks 1) Leveraged, Inverse, and Leveraged Inverse (L&LI) ETFs generally capture a high percentage of their expected daily returns, particularly on a net asset value basis. L&LI ETFs are not appropriate for all investors. However, we believe they can be appropriate tools for some investors looking to make short-term tactical trades if they perceive a high likelihood of a strong market move occurring in a relatively short time period. In strong trending markets, being on the right side of the trade with L or LI ETFs can lead to very strong returns. Investors should not expect these ETFs to deliver total returns linked to their benchmarks over any period other than daily. The effects of compounding and the daily re-leveraging or de-leveraging that occurs with L&LI ETFs can lead to unexpected results over the long term. As a result, we believe longer-term investors should consider regularly rebalancing positions. 4) Trendless markets, particularly those with a high level of volatility, can lead to substantial relative underperformance of L&LI ETFs. 2) Leveraged and Leveraged Inverse (L&LI) ETFs typically utilize futures and equity swap agreements. The use of these derivative instruments increases risk and enhances the possibility of tracking error. Relative to traditional ETFs, leveraged, inverse and leveraged inverse ETFs typically have higher costs and lower tax efficiency. 3) The effects of compounding can lead to significant deviations from traditional benchmarks over longer time periods. For example, if $100,000 is invested in an index that increases in value by 10% on day one and then decreases in value by 10% on day two, the investment will be worth $110,000 at the end of day one and $99,000 after day two. However, the value of a security that doubles the daily performance of the index would be worth $120,000 on day one and $96,000 after day two. Thus, the index is down 1% after two days, a doubling of which would be down 2%. However, the security attempting to double the return of the index is down 4%. Investors should consider carefully the potential impact over longer periods. MLP and MLP ETF Risks Individual MLPs are publicly traded partnerships that have unique risks related to their structure. These include, but are not limited to, their reliance on the capital markets to fund growth, adverse ruling on the current tax treatment of distributions (typically mostly tax deferred), and commodity volume risk. For tax purposes, MLP ETFs are taxed as C corporations and will be obligated to pay federal and state corporate income taxes on their taxable income, unlike traditional ETFs, which are structured as registered investment companies. These ETFs are likely to exhibit tracking error relative to their index as a result of accounting for deferred tax assets or liabilities (see funds prospectuses). The potential tax benefits from investing in MLPs depend on their being treated as partnerships for federal income tax purposes and, if the MLP is deemed to be a corporation, then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund s value. MLPs carry interest rate risk and may underperform in a rising interest rate environment. MLP funds accrue deferred income taxes for future tax liabilities associated with the portion of MLP distributions considered to be a tax-deferred return of capital and for any net operating gains as well as capital appreciation of its investments; this deferred tax liability is reflected in the daily NAV; and, as a result, the MLP fund s after-tax performance could differ significantly from the underlying assets even if the pre-tax performance is closely tracked. Commodity ETF Risks Commodity ETFs may be subject to greater volatility than traditional ETFs and can be affected by increased volatility of commodities prices or indexes as well as changes in supply-anddemand relationships, interest rates, monetary and other governmental policies, or factors affecting a particular sector or commodity. Currency ETF Risks Investing in foreign markets entails greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. Investing in currency involves additional special risks such as credit, interest rate fluctuations, derivative investment risk, and domestic and foreign inflation rates, which can be volatile and may be less liquid than other securities and more sensitive to the effect of varied economic conditions. In addition, international investing entails greater risk, as well as greater potential rewards compared to U.S. investing. These risks include political and economic uncertainties of foreign countries as well as the risk of currency fluctuations. These risks are magnified in countries with emerging markets, since these countries may have relatively unstable governments and less established markets and economies. 11

Important Disclosures The information and opinions in Morgan Stanley Wealth Management Research were prepared by Morgan Stanley Smith Barney LLC under its trade name Morgan Stanley Wealth Management. For important disclosures (including copies of historical disclosures) regarding the securities and/or companies that are the subject of this Morgan Stanley Wealth Management Research product, please contact Morgan Stanley Wealth Management Research, 522 Fifth Ave., New York, N.Y. 10036, Attention: Research Management. In addition, the same important disclosures, with the exception of the historical disclosures, are contained on the Firm's disclosure website at https://www.morganstanley.com/online/researchdisclosures. Historical disclosures will be provided upon request back to June 1, 2009. Morgan Stanley Wealth Management Analyst Certification The Morgan Stanley Wealth Management research analysts principally responsible for the preparation and content of all or any identified portion of this research report, hereby certify that their views about the securities and/or companies discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report. Unless otherwise stated, the individuals listed on the cover page of this report are Morgan Stanley Wealth Management research analysts. Global Research Conflict Management Policy Morgan Stanley Wealth Management has a Conflict Management policy available at: https://www.morganstanley.com/online/researchconflictpolicies Important US Regulatory Disclosures on Subject Issuers The following analyst or strategist (or a household member) owns securities (or related derivatives), ETFs, or Closed-End funds that he or she covers or recommends in Morgan Stanley Wealth Management Research: John Duggan - CurrencyShares Japanese Yen Trust, First Trust ISE-Revere Natural Gas Index, ishares Gold Trust, ishares MSCI Brazil Capped ETF, ishares MSCI South Korea Capped ETF, ishares MSCI Switzerland Capped ETF, ishares National AMT-Free Muni Bond ETF, ishares Russell 3000 ETF, ishares Silver Trust, PowerShares DB Agriculture Fund, PowerShares DB US Dollar Index Bearish Fund, SPDR Dow Jones Industrial Average ETF, SPDR Gold Trust, Vanguard FTSE All-World ex-us ETF. Morgan Stanley Wealth Management or an affiliate beneficially owned 1% or more of a class of common equity securities of: ishares 1-3 Year Credit Bond ETF, ishares 1-3 Year Treasury Bond ETF, ishares 20+ Year Treasury Bond ETF, ishares 3-7 Year Treasury Bond ETF, ishares 7-10 Year Treasury Bond ETF, ishares China Large-Cap ETF, ishares Cohen & Steers REIT ETF, ishares Core High Dividend ETF, ishares Core S&P 500 ETF, ishares Core S&P Mid-Cap ETF, ishares Core S&P Small-Cap ETF, ishares Core Total US Bond Market ETF, ishares Core US Value ETF, ishares Dow Jones U.S. ETF, ishares Europe ETF, ishares Floating Rate Bond ETF, ishares Global 100 ETF, ishares Global Consumer Discretionary ETF, ishares Global Consumer Staples ETF, ishares Global Energy ETF, ishares Global Financials ETF, ishares Global Healthcare ETF, ishares Global Industrials ETF, ishares Global Infrastructure ETF, ishares Global Materials ETF, ishares Global Tech ETF, ishares Global Telecom ETF, ishares Global Utilities ETF, ishares Gold Trust, ishares iboxx $ High Yield Corp Bond ETF, ishares iboxx $ Invt Grade Corp Bond ETF, ishares Intermediate Credit Bond ETF, ishares International Treasury Bond ETF, ishares Intl Select Dividend ETF, ishares J.P. Morgan USD Emerging Mkts, ishares Latin America 40 ETF, ishares MBS ETF, ishares Morningstar Large-Cap Growth ETF, ishares Morningstar Large-Cap Value ETF, ishares Morningstar Mid-Cap Growth ETF, ishares Morningstar Mid-Cap Value ETF, ishares MSCI ACWI ETF, ishares MSCI ACWI ex U.S. ETF, ishares MSCI All Country Asia ex Japan ETF, ishares MSCI All Country World Minimum Volatility ETF, ishares MSCI All Peru Capped ETF, ishares MSCI China ETF, ishares MSCI EAFE ETF, ishares MSCI EAFE Growth ETF, ishares MSCI EAFE Small-Cap ETF, ishares MSCI EAFE Value ETF, ishares MSCI Emerging Mkts Min Vol, ishares MSCI Indonesia ETF, ishares MSCI Philippines ETF, ishares MSCI Poland Capped ETF, ishares MSCI Russia Capped ETF, ishares MSCI USA Minimum Volatility ETF, ishares Nasdaq Biotechnology ETF, ishares National AMT-Free Muni Bond ETF, ishares North American Natural Resources, ishares North American Tech ETF, ishares North American Tech-Software ETF, ishares PHLX Semiconductor ETF, ishares Russell 1000 ETF, ishares Russell 1000 Growth ETF, ishares Russell 1000 Value ETF, ishares Russell 2000 ETF, ishares Russell 2000 Value ETF, ishares Russell 3000 ETF, ishares Russell Mid-Cap ETF, ishares Russell Mid-Cap Growth ETF, ishares Russell Mid-Cap Value ETF, ishares S&P 100 ETF, ishares S&P 500 Growth ETF, ishares S&P 500 Value ETF, ishares S&P GSCI Commodity-Indexed Trust, ishares Select Dividend ETF, ishares Short Treasury Bond ETF, ishares Short-Term Natl AMT-Free Muni, ishares Silver Trust, ishares TIPS Bond ETF, ishares Transportation Average ETF, ishares U.S. Aerospace & Defense ETF, ishares U.S. Basic Materials ETF, ishares U.S. Broker-Dealers ETF, ishares U.S. Consumer Goods ETF, ishares U.S. Consumer Services ETF, ishares U.S. Financial Services ETF, ishares U.S. Financials ETF, ishares U.S. Healthcare ETF, ishares U.S. Home Construction ETF, ishares U.S. Industrials ETF, ishares U.S. Medical Devices ETF, ishares U.S. Oil & Gas Exp & Prod ETF, ishares U.S. Oil Equip & Services ETF, ishares U.S. Preferred Stock ETF, ishares U.S. Real Estate ETF, ishares U.S. Technology ETF, ishares U.S. Telecommunications ETF, ishares U.S. Utilities ETF, PIMCO 0-5 Year High Yield Corporate Bond Index Fund, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat Fund, PIMCO Intermediate Muni Bond Strat Fund, PIMCO Short Term Municipal Bond Strategy, PIMCO Total Return Active ETF.. 12

Within the last 12 months, Morgan Stanley Wealth Management or an affiliate received compensation for investment banking services from the following issuers (if the security is an ETF or Closed- End Fund, the compensation is from the fund's investment manager or advisor): ishares 1-3 Year Credit Bond ETF, ishares 1-3 Year Treasury Bond ETF, ishares 20+ Year Treasury Bond ETF, ishares 3-7 Year Treasury Bond ETF, ishares 7-10 Year Treasury Bond ETF, ishares China Large-Cap ETF, ishares Cohen & Steers REIT ETF, ishares Core High Dividend ETF, ishares Core S&P 500 ETF, ishares Core S&P Mid-Cap ETF, ishares Core S&P Small-Cap ETF, ishares Core Total US Bond Market ETF, ishares Core US Value ETF, ishares Dow Jones U.S. ETF, ishares Europe ETF, ishares Floating Rate Bond ETF, ishares Global 100 ETF, ishares Global Consumer Discretionary ETF, ishares Global Consumer Staples ETF, ishares Global Energy ETF, ishares Global Financials ETF, ishares Global Healthcare ETF, ishares Global Industrials ETF, ishares Global Infrastructure ETF, ishares Global Materials ETF, ishares Global Tech ETF, ishares Global Telecom ETF, ishares Global Utilities ETF, ishares Gold Trust, ishares iboxx $ High Yield Corp Bond ETF, ishares iboxx $ Invt Grade Corp Bond ETF, ishares Intermediate Credit Bond ETF, ishares International Treasury Bond ETF, ishares Intl Select Dividend ETF, ishares J.P. Morgan USD Emerging Mkts, ishares Latin America 40 ETF, ishares MBS ETF, ishares Morningstar Large-Cap Growth ETF, ishares Morningstar Large-Cap Value ETF, ishares Morningstar Mid-Cap Growth ETF, ishares Morningstar Mid-Cap Value ETF, ishares MSCI ACWI ETF, ishares MSCI ACWI ex U.S. ETF, ishares MSCI All Country Asia ex Japan ETF, ishares MSCI All Country World Minimum Volatility ETF, ishares MSCI All Peru Capped ETF, ishares MSCI China ETF, ishares MSCI EAFE ETF, ishares MSCI EAFE Growth ETF, ishares MSCI EAFE Small-Cap ETF, ishares MSCI EAFE Value ETF, ishares MSCI Emerging Mkts Min Vol, ishares MSCI Indonesia ETF, ishares MSCI Philippines ETF, ishares MSCI Poland Capped ETF, ishares MSCI Russia Capped ETF, ishares MSCI USA Minimum Volatility ETF, ishares Nasdaq Biotechnology ETF, ishares National AMT-Free Muni Bond ETF, ishares North American Natural Resources, ishares North American Tech ETF, ishares North American Tech-Software ETF, ishares PHLX Semiconductor ETF, ishares Russell 1000 ETF, ishares Russell 1000 Growth ETF, ishares Russell 1000 Value ETF, ishares Russell 2000 ETF, ishares Russell 2000 Value ETF, ishares Russell 3000 ETF, ishares Russell Mid-Cap ETF, ishares Russell Mid-Cap Growth ETF, ishares Russell Mid-Cap Value ETF, ishares S&P 100 ETF, ishares S&P 500 Growth ETF, ishares S&P 500 Value ETF, ishares S&P GSCI Commodity- Indexed Trust, ishares Select Dividend ETF, ishares Short Treasury Bond ETF, ishares Short-Term Natl AMT-Free Muni, ishares Silver Trust, ishares TIPS Bond ETF, ishares Transportation Average ETF, ishares U.S. Aerospace & Defense ETF, ishares U.S. Basic Materials ETF, ishares U.S. Broker-Dealers ETF, ishares U.S. Consumer Goods ETF, ishares U.S. Consumer Services ETF, ishares U.S. Financial Services ETF, ishares U.S. Financials ETF, ishares U.S. Healthcare ETF, ishares U.S. Home Construction ETF, ishares U.S. Industrials ETF, ishares U.S. Medical Devices ETF, ishares U.S. Oil & Gas Exp & Prod ETF, ishares U.S. Oil Equip & Services ETF, ishares U.S. Preferred Stock ETF, ishares U.S. Real Estate ETF, ishares U.S. Technology ETF, ishares U.S. Telecommunications ETF, ishares U.S. Utilities ETF. In the next 3 months, Morgan Stanley Wealth Management or an affiliate will seek compensation for investment banking services from the following issuers (if the security is an ETF or Closed-End Fund, the compensation is from the fund's investment manager or advisor): First Trust Dow Jones Internet Indx Fund, First Trust Global Tactical Commodity Strategy Fund, First Trust ISE-Revere Natural Gas Index, First Trust Large Cap Core AlphaDEX Fund, First Trust Mid Cap Core AlphaDEX Fund, First Trust Morningstar Dividend Leaders Index Fund, First Trust North American Energy Infrastructure Fund, FlexShares Morningstar Global Upstream Natural Resources, ishares PHLX Semiconductor ETF, Market Vectors Agribusiness ETF, Market Vectors Brazil Small-Cap ETF, Market Vectors Coal ETF, Market Vectors Egypt Index ETF, Market Vectors Emerging Mkts Local CCY, Market Vectors Global Alternative Energy, Market Vectors Gold Miners ETF, Market Vectors Hard Assets Producers ETF, Market Vectors High Yield Muni Index ETF, Market Vectors Indonesia Index ETF, Market Vectors Intermediate Muni Index, Market Vectors Junior Gold Miners ETF, Market Vectors Morningstar Wide Moat Research ETF, Market Vectors Oil Services ETF, Market Vectors Pharmaceutical ETF, Market Vectors Pre-Refunded Municipal Index ETF, Market Vectors Russia ETF, Market Vectors Semiconductor ETF, Market Vectors Vietnam ETF, PIMCO 0-5 Year High Yield Corporate Bond Index Fund, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat Fund, PIMCO Intermediate Muni Bond Strat Fund, PIMCO Short Term Municipal Bond Strategy, PIMCO Total Return Active ETF, SPDR S&P MidCap 400 ETF, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All World ex-us Small-Cap, Vanguard FTSE All-World ex-us ETF, Vanguard FTSE Developed Markets ETF, Vanguard FTSE Emerging Markets ETF, Vanguard FTSE Europe ETF, Vanguard FTSE Pacific ETF, Vanguard Growth ETF, Vanguard Health Care ETF, Vanguard High Dividend Yield ETF, Vanguard Industrials ETF, Vanguard Information Technology ETF, Vanguard Intermediate-Term Bond ETF, Vanguard Intermediate-Term Corporate Bond ETF, Vanguard Large-Cap ETF, Vanguard Materials ETF, Vanguard Mid-Cap ETF, Vanguard Mid-Cap Growth ETF, Vanguard Mid-Cap Value ETF, Vanguard REIT ETF, Vanguard S&P 500 ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond ETF, Vanguard Small-Cap ETF, Vanguard Small-Cap Growth ETF, Vanguard Small-Cap Value ETF, Vanguard Telecom Services ETF, Vanguard Total Bond Market ETF, Vanguard Total International Bond ETF, Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF, WisdomTree Asia Local Debt Fund, WisdomTree Dreyfus Brazilian Real Fund, WisdomTree Dreyfus China Yuan Fund, WisdomTree Dreyfus Emerging CCY Fund, WisdomTree Managed Futures Strategy Fund. Within the last 12 months, Morgan Stanley Wealth Management or an affiliate has provided or is providing investment banking services to, or has an investment banking client relationship with, the following issuers (if the security is an ETF or Closed-End Fund, the services were or are being provided to, or the relationship is with, the fund's investment manager or advisor): First Trust Dow Jones Internet Indx Fund, First Trust Global Tactical Commodity Strategy Fund, First Trust ISE-Revere Natural Gas Index, First Trust Large Cap Core AlphaDEX Fund, First Trust Mid Cap Core AlphaDEX Fund, First Trust Morningstar Dividend Leaders Index Fund, First Trust North American Energy Infrastructure Fund, FlexShares Morningstar Global Upstream Natural Resources, ishares 1-3 Year Credit Bond ETF, ishares 1-3 Year Treasury Bond ETF, ishares 20+ Year Treasury Bond ETF, ishares 3-7 Year Treasury Bond ETF, ishares 7-10 Year Treasury Bond ETF, ishares China 13

Large-Cap ETF, ishares Cohen & Steers REIT ETF, ishares Core High Dividend ETF, ishares Core S&P 500 ETF, ishares Core S&P Mid-Cap ETF, ishares Core S&P Small-Cap ETF, ishares Core Total US Bond Market ETF, ishares Core US Value ETF, ishares Dow Jones U.S. ETF, ishares Europe ETF, ishares Floating Rate Bond ETF, ishares Global 100 ETF, ishares Global Consumer Discretionary ETF, ishares Global Consumer Staples ETF, ishares Global Energy ETF, ishares Global Financials ETF, ishares Global Healthcare ETF, ishares Global Industrials ETF, ishares Global Infrastructure ETF, ishares Global Materials ETF, ishares Global Tech ETF, ishares Global Telecom ETF, ishares Global Utilities ETF, ishares Gold Trust, ishares iboxx $ High Yield Corp Bond ETF, ishares iboxx $ Invt Grade Corp Bond ETF, ishares Intermediate Credit Bond ETF, ishares International Treasury Bond ETF, ishares Intl Select Dividend ETF, ishares J.P. Morgan USD Emerging Mkts, ishares Latin America 40 ETF, ishares MBS ETF, ishares Morningstar Large-Cap Growth ETF, ishares Morningstar Large-Cap Value ETF, ishares Morningstar Mid-Cap Growth ETF, ishares Morningstar Mid-Cap Value ETF, ishares MSCI ACWI ETF, ishares MSCI ACWI ex U.S. ETF, ishares MSCI All Country Asia ex Japan ETF, ishares MSCI All Country World Minimum Volatility ETF, ishares MSCI All Peru Capped ETF, ishares MSCI China ETF, ishares MSCI EAFE ETF, ishares MSCI EAFE Growth ETF, ishares MSCI EAFE Small-Cap ETF, ishares MSCI EAFE Value ETF, ishares MSCI Emerging Mkts Min Vol, ishares MSCI Indonesia ETF, ishares MSCI Philippines ETF, ishares MSCI Poland Capped ETF, ishares MSCI Russia Capped ETF, ishares MSCI USA Minimum Volatility ETF, ishares Nasdaq Biotechnology ETF, ishares National AMT-Free Muni Bond ETF, ishares North American Natural Resources, ishares North American Tech ETF, ishares North American Tech-Software ETF, ishares PHLX Semiconductor ETF, ishares Russell 1000 ETF, ishares Russell 1000 Growth ETF, ishares Russell 1000 Value ETF, ishares Russell 2000 ETF, ishares Russell 2000 Value ETF, ishares Russell 3000 ETF, ishares Russell Mid-Cap ETF, ishares Russell Mid-Cap Growth ETF, ishares Russell Mid-Cap Value ETF, ishares S&P 100 ETF, ishares S&P 500 Growth ETF, ishares S&P 500 Value ETF, ishares S&P GSCI Commodity-Indexed Trust, ishares Select Dividend ETF, ishares Short Treasury Bond ETF, ishares Short-Term Natl AMT-Free Muni, ishares Silver Trust, ishares TIPS Bond ETF, ishares Transportation Average ETF, ishares U.S. Aerospace & Defense ETF, ishares U.S. Basic Materials ETF, ishares U.S. Broker- Dealers ETF, ishares U.S. Consumer Goods ETF, ishares U.S. Consumer Services ETF, ishares U.S. Financial Services ETF, ishares U.S. Financials ETF, ishares U.S. Healthcare ETF, ishares U.S. Home Construction ETF, ishares U.S. Industrials ETF, ishares U.S. Medical Devices ETF, ishares U.S. Oil & Gas Exp & Prod ETF, ishares U.S. Oil Equip & Services ETF, ishares U.S. Preferred Stock ETF, ishares U.S. Real Estate ETF, ishares U.S. Technology ETF, ishares U.S. Telecommunications ETF, ishares U.S. Utilities ETF, Market Vectors Agribusiness ETF, Market Vectors Brazil Small-Cap ETF, Market Vectors Coal ETF, Market Vectors Egypt Index ETF, Market Vectors Emerging Mkts Local CCY, Market Vectors Global Alternative Energy, Market Vectors Gold Miners ETF, Market Vectors Hard Assets Producers ETF, Market Vectors High Yield Muni Index ETF, Market Vectors Indonesia Index ETF, Market Vectors Intermediate Muni Index, Market Vectors Junior Gold Miners ETF, Market Vectors Morningstar Wide Moat Research ETF, Market Vectors Oil Services ETF, Market Vectors Pharmaceutical ETF, Market Vectors Pre-Refunded Municipal Index ETF, Market Vectors Russia ETF, Market Vectors Semiconductor ETF, Market Vectors Vietnam ETF, PIMCO 0-5 Year High Yield Corporate Bond Index Fund, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat Fund, PIMCO Intermediate Muni Bond Strat Fund, PIMCO Short Term Municipal Bond Strategy, PIMCO Total Return Active ETF, SPDR S&P MidCap 400 ETF, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All World ex-us Small-Cap, Vanguard FTSE All-World ex-us ETF, Vanguard FTSE Developed Markets ETF, Vanguard FTSE Emerging Markets ETF, Vanguard FTSE Europe ETF, Vanguard FTSE Pacific ETF, Vanguard Growth ETF, Vanguard Health Care ETF, Vanguard High Dividend Yield ETF, Vanguard Industrials ETF, Vanguard Information Technology ETF, Vanguard Intermediate-Term Bond ETF, Vanguard Intermediate-Term Corporate Bond ETF, Vanguard Large-Cap ETF, Vanguard Materials ETF, Vanguard Mid-Cap ETF, Vanguard Mid-Cap Growth ETF, Vanguard Mid-Cap Value ETF, Vanguard REIT ETF, Vanguard S&P 500 ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond ETF, Vanguard Small-Cap ETF, Vanguard Small-Cap Growth ETF, Vanguard Small-Cap Value ETF, Vanguard Telecom Services ETF, Vanguard Total Bond Market ETF, Vanguard Total International Bond ETF, Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF, WisdomTree Asia Local Debt Fund, WisdomTree Dreyfus Brazilian Real Fund, WisdomTree Dreyfus China Yuan Fund, WisdomTree Dreyfus Emerging CCY Fund, WisdomTree Managed Futures Strategy Fund. Within the last 12 months, Morgan Stanley Wealth Management has received compensation for products or services other than investment banking services from the following issuers (if the security is an ETF or Closed-End Fund, the compensation is from the fund's investment manager or advisor): ALPS Sector Dividend Dogs ETF, Consumer Discretionary Select Sector, Consumer Staples Select Sector SPDR, Direxion Daily Financial Bear 3x Shares, Direxion Daily Financial Bull 3x Shares, EGShares Beyond BRICs ETF, Energy Select Sector SPDR, Financials Select Sector SPDR, FlexShares Morningstar Global Upstream Natural Resources, Guggenheim BRIC ETF, Guggenheim BulletShares 2018 Corporate Bond ETF, Guggenheim China Small Cap ETF, Guggenheim Multi- Asset Income ETF, Guggenheim Russell Top 50 Mega Cap ETF, Guggenheim S&P 500 Pure Growth ETF, Guggenheim S&P 500 Pure Value ETF, Guggenheim S&P Equal Weight ETF, Guggenheim S&P Global Water Index ETF, Guggenheim Solar ETF, Health Care Select Sector SPDR, Industrials Select Sector SPDR, IQ Global Resources ETF, IQ Hedge Multi-Strategy Tracker ETF, ishares 1-3 Year Credit Bond ETF, ishares 1-3 Year Treasury Bond ETF, ishares 20+ Year Treasury Bond ETF, ishares 3-7 Year Treasury Bond ETF, ishares 7-10 Year Treasury Bond ETF, ishares Agency Bond ETF, ishares China Large-Cap ETF, ishares Cohen & Steers REIT ETF, ishares Core High Dividend ETF, ishares Core MSCI EAFE ETF, ishares Core MSCI Emerging Markets ETF, ishares Core S&P 500 ETF, ishares Core S&P Mid-Cap ETF, ishares Core S&P Small-Cap ETF, ishares Core Total US Bond Market ETF, ishares Core US Growth ETF, ishares Core US Value ETF, ishares Dow Jones U.S. ETF, ishares Europe ETF, ishares Floating Rate Bond ETF, ishares Global 100 ETF, ishares Global Consumer Discretionary ETF, ishares Global Consumer Staples ETF, ishares Global Energy ETF, ishares Global ex USD High Yield Corporate Bond ETF, ishares Global Financials ETF, ishares Global Healthcare ETF, ishares Global Industrials ETF, ishares Global Infrastructure ETF, ishares Global Materials ETF, ishares Global Tech ETF, ishares Global Telecom ETF, ishares Global Utilities ETF, ishares Gold Trust, ishares iboxx $ High Yield Corp Bond ETF, 14

ishares iboxx $ Invt Grade Corp Bond ETF, ISHARES INC-ISHARES MSCI UNITED KINGDOM ETF, ishares Intermediate Credit Bond ETF, ishares International Treasury Bond ETF, ishares Intl Select Dividend ETF, ishares J.P. Morgan USD Emerging Mkts, ishares Latin America 40 ETF, ishares MBS ETF, ishares Micro-Cap ETF, ishares Morningstar Large-Cap Growth ETF, ishares Morningstar Large-Cap Value ETF, ishares Morningstar Mid-Cap Growth ETF, ishares Morningstar Mid-Cap Value ETF, ishares MSCI ACWI ETF, ishares MSCI ACWI ex U.S. ETF, ishares MSCI All Country Asia ex Japan ETF, ishares MSCI All Country World Minimum Volatility ETF, ishares MSCI All Peru Capped ETF, ishares MSCI Australia ETF, ishares MSCI Brazil Capped ETF, ishares MSCI BRIC ETF, ishares MSCI Canada ETF, ishares MSCI Chile Capped ETF, ishares MSCI China ETF, ishares MSCI EAFE ETF, ishares MSCI EAFE Growth ETF, ishares MSCI EAFE Small- Cap ETF, ishares MSCI EAFE Value ETF, ishares MSCI Emerging Markets ETF, ishares MSCI Emerging Mkts Min Vol, ishares MSCI EMU ETF, ishares MSCI France ETF, ishares MSCI Frontier 100 ETF, ishares MSCI Germany ETF, ishares MSCI Hong Kong ETF, ishares MSCI Indonesia ETF, ishares MSCI Israel Capped ETF, ishares MSCI Italy Capped ETF, ishares MSCI Japan ETF, ishares MSCI Malaysia ETF, ishares MSCI Mexico Capped ETF, ishares MSCI Pacific ex Japan ETF, ishares MSCI Philippines ETF, ishares MSCI Poland Capped ETF, ishares MSCI Russia Capped ETF, ishares MSCI Singapore ETF, ishares MSCI South Africa ETF, ishares MSCI South Korea Capped ETF, ishares MSCI Spain Capped ETF, ishares MSCI Sweden ETF, ishares MSCI Switzerland Capped ETF, ishares MSCI Taiwan ETF, ishares MSCI Thailand Capped ETF, ishares MSCI Turkey ETF, ishares MSCI USA Minimum Volatility ETF, ishares Nasdaq Biotechnology ETF, ishares National AMT-Free Muni Bond ETF, ishares North American Natural Resources, ishares North American Tech ETF, ishares North American Tech-Software ETF, ishares PHLX Semiconductor ETF, ishares Russell 1000 ETF, ishares Russell 1000 Growth ETF, ishares Russell 1000 Value ETF, ishares Russell 2000 ETF, ishares Russell 2000 Growth ETF, ishares Russell 2000 Value ETF, ishares Russell 3000 ETF, ishares Russell Mid-Cap ETF, ishares Russell Mid-Cap Growth ETF, ishares Russell Mid-Cap Value ETF, ishares S&P 100 ETF, ishares S&P 500 Growth ETF, ishares S&P 500 Value ETF, ishares S&P GSCI Commodity-Indexed Trust, ishares S&P Mid-Cap 400 Growth ETF, ishares S&P Mid-Cap 400 Value ETF, ishares S&P Small-Cap 600 Growth ETF, ishares S&P Small-Cap 600 Value ETF, ishares Select Dividend ETF, ishares Short Maturity Bond ETF, ishares Short Treasury Bond ETF, ishares Short-Term Natl AMT-Free Muni, ishares Silver Trust, ishares TIPS Bond ETF, ishares Transportation Average ETF, ishares U.S. Aerospace & Defense ETF, ishares U.S. Basic Materials ETF, ishares U.S. Broker-Dealers ETF, ishares U.S. Consumer Goods ETF, ishares U.S. Consumer Services ETF, ishares U.S. Energy ETF, ishares U.S. Financial Services ETF, ishares U.S. Financials ETF, ishares U.S. Healthcare ETF, ishares U.S. Home Construction ETF, ishares U.S. Industrials ETF, ishares U.S. Medical Devices ETF, ishares U.S. Oil & Gas Exp & Prod ETF, ishares U.S. Oil Equip & Services ETF, ishares U.S. Preferred Stock ETF, ishares U.S. Real Estate ETF, ishares U.S. Technology ETF, ishares U.S. Telecommunications ETF, ishares U.S. Utilities ETF, Market Vectors Agribusiness ETF, Market Vectors Brazil Small-Cap ETF, Market Vectors Coal ETF, Market Vectors Egypt Index ETF, Market Vectors Emerging Mkts Local CCY, Market Vectors Global Alternative Energy, Market Vectors Gold Miners ETF, Market Vectors Hard Assets Producers ETF, Market Vectors High Yield Muni Index ETF, Market Vectors Indonesia Index ETF, Market Vectors Intermediate Muni Index, Market Vectors Junior Gold Miners ETF, Market Vectors Morningstar Wide Moat Research ETF, Market Vectors Oil Services ETF, Market Vectors Pharmaceutical ETF, Market Vectors Pre-Refunded Municipal Index ETF, Market Vectors Russia ETF, Market Vectors Semiconductor ETF, Market Vectors Vietnam ETF, Materials Select Sector SPDR, Peritus High Yield ETF, PIMCO 0-5 Year High Yield Corporate Bond Index Fund, PIMCO 1-5 Year U.S. TIPS Index Fund, PIMCO Enhanced Short Maturity Strat Fund, PIMCO Intermediate Muni Bond Strat Fund, PIMCO Short Term Municipal Bond Strategy, PIMCO Total Return Active ETF, PowerShares Build America Bond Portfolio, PowerShares Buyback Achievers, PowerShares DB Agriculture Fund, PowerShares DB Base Metals Fund, PowerShares DB Oil Fund, PowerShares DWA Emerging Markets Technical Leaders Portfolio, PowerShares Dynamic Large Cap Value, PowerShares Dynamic Large-Cap Growth, PowerShares Dynamic Market Portfolio, PowerShares Emerging Markets Sovereign Debt Portfolio, PowerShares Financial Pref Portfolio, PowerShares FTSE RAFI US 1000 Portfolio, PowerShares FTSE RAFI US 1500 Small-Mid Portfolio, PowerShares Gbl Clean Energy Portfolio, PowerShares Global Listed Private Equity Portfolio, PowerShares Global Water Portfolio, PowerShares Intl Div Achievers Portfolio, PowerShares Multi-Strategy Alternative Portfolio, PowerShares Preferred Portfolio, PowerShares QQQ, PowerShares S&P 500 BuyWrite Portfolio, PowerShares S&P 500 Low Volatility Portf, PowerShares Senior Loan Portfolio, PowerShares VRDO Tax-Free Wkly Portfolio, PowerShares Water Resources Portfolio, PowerShares WilderHill Clean Energy, SPDR Barclays 1-3 Month T-Bill ETF, SPDR Barclays Intl Treasury Bond ETF, SPDR DB Intl Gov't Inflation-Protected, SPDR Dow Jones Global Real Estate ETF, SPDR Dow Jones Intl Real Estate ETF, SPDR EURO STOXX 50 ETF, SPDR S&P China ETF, SPDR S&P Emerging Asia Pacific ETF, SPDR S&P Emerging Markets Small Cap ETF, SPDR S&P International Dividend ETF, SPDR S&P International Small Cap ETF, Technology Select Sector SPDR, Utilities Select Sector SPDR, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All World ex-us Small-Cap, Vanguard FTSE All-World ex-us ETF, Vanguard FTSE Developed Markets ETF, Vanguard FTSE Emerging Markets ETF, Vanguard FTSE Europe ETF, Vanguard FTSE Pacific ETF, Vanguard Growth ETF, Vanguard Health Care ETF, Vanguard High Dividend Yield ETF, Vanguard Industrials ETF, Vanguard Information Technology ETF, Vanguard Intermediate-Term Bond ETF, Vanguard Intermediate-Term Corporate Bond ETF, Vanguard Large-Cap ETF, Vanguard Materials ETF, Vanguard Mid-Cap ETF, Vanguard Mid-Cap Growth ETF, Vanguard Mid-Cap Value ETF, Vanguard REIT ETF, Vanguard S&P 500 ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond ETF, Vanguard Small-Cap ETF, Vanguard Small-Cap Growth ETF, Vanguard Small-Cap Value ETF, Vanguard Telecom Services ETF, Vanguard Total Bond Market ETF, Vanguard Total International Bond ETF, Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF. Within the last 12 months, Morgan Stanley Wealth Management has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following issuers (if the security is an ETF or Closed-End Fund, the services were or are being provided to, or the agreement is with, the fund's investment manager or advisor): ALPS Sector Dividend Dogs ETF, Consumer Discretionary Select Sector, Consumer Staples Select Sector SPDR, Direxion Daily Financial Bear 3x Shares, 15