Exchange-Traded Funds

Exchange-Traded Funds US ETF Weekly Update - Weekly Flows: $4.2 Billion Net Outflows - ETF Assets Stand at $1.4 Trillion, up 5% YTD - Two ETF Launches Last Week - Exchange Traded Concepts Makes Changes to ETF NORTH AMERICA MICHAEL JABARA Michael.Jabara@morganstanley.com +1 212 783 3317 STEPHEN MINAR Stephen.Minar@morganstanley.com +1 212 783 3329 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 8. 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. DAVID PERLMAN David.Perlman@morganstanley.com +1 212 783 3328 Morgan Stanley Wealth Management ( 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: Estimated Flows by Market Segment ETFs posted net outflows of $4.2 bln last week, the fifth consecutive week of net outflows - Over the past five weeks, ETFs have posted a combined $16.7 bln in net outflows - Four of the 15 categories we measured last week posted net outflows in excess of $1 bln; Fixed Income ETFs led the way exhibiting net outflows of $1.4 bln - Fixed Income ETFs have had net outflows for six consecutive weeks, totaling $9.5 bln; within the Fixed Income ETF category we have seen investors flock to short duration/floating rate ETFs - ETF assets stand at $1.4 tln, up 5% YTD with asset growth primarily from net inflows; $66.2 bln net inflows YTD 13-week flows remain mostly positive among asset classes; combined $13.9 bln in net inflows - International Developed Equity ETFs have generated net inflows of $7.9 bln over the last 13 weeks, the most of any category we measured; specifically, the two largest Japan ETFs (EWJ, DXJ) accounted for $7.6 bln of the net inflows - International Emerging Equity and Commodity ETFs have posted a combined $25.8 bln in net outflows over the last 13 weeks, the most of any categories we measured Net Cash Flow ($ Mil) Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Data estimated as of 6/21/13 based on daily change in share counts and daily NAVs. Mkt Cap Market Investment Objective Funds 1-Week 4-Week 13-Week ($ Mil) Share (%) US Broad-Market 22 123 527 1,927 44,680 3 US Large-Cap 60 (1,124) 467 7,315 335,877 24 US Mid-Cap 32 372 757 2,216 62,802 4 US Small- & Micro-Cap 39 (185) 2,164 1,542 63,455 5 US Sector & Industry 147 (1,043) (615) 4,503 148,047 11 US Custom 74 350 145 3,227 21,713 2 US Dividend Income 18 162 70 3,809 52,867 4 Leveraged/Inverse 181 109 523 2,508 30,764 2 International - Developed 152 (466) (1,960) 7,917 149,890 11 International - Emerging 140 (1,283) (9,882) (12,495) 129,883 9 Global 112 537 796 1,955 39,933 3 Fixed Income 178 (1,365) (8,378) 984 239,442 17 Commodity 38 (646) (1,324) (13,253) 71,665 5 Currency 17 112 21 (222) 3,372 0 Active 54 127 338 1,979 13,657 1 Total 1,264 (4,222) (16,351) 13,913 1,408,047 100 2

US-Listed ETFs: Estimated Largest Flows by Individual ETF The Financials Select Sector SPDR (XLF) posted net inflows of $509 mln, the most of any ETF - Interestingly, the Market Vectors Gold Miners ETF (GDX), which tracks gold mining companies, posted net inflows last week as well as over the past four- and 13-week periods, while the SPDR Gold Trust (GLD), which tracks the physical commodity, continues to exhibit net outflows - Notably, despite a surge in long-term Treasury rates last week, the ishares Barclays 20+ Year Treasury Bond Fund (TLT) generated net inflows of $396 mln; TLT has also posted net inflows of $743 mln over the last 13 weeks, defying outflow expectations - Vanguard FTSE Emerging Markets ETF (VWO) and ishares J.P. Morgan USD Emerging Markets Bond Fund (EMB) posted net outflows over the last one-, four-, and 13-week periods, which is consistent with broader trends that we have seen in both emerging market equity and debt funds given the material underperformance relative to developed markets Net Inflows Net Outflows Net Cash Flow ($ Mil) Mkt Cap ETF Name Symbol 1-Week 4-Week 13-Week ($ Mil) Financials Select Sector SPDR XLF 509 746 1,823 13,867 ishares MSCI Brazil Capped Index Fund EWZ 406 418 (790) 5,815 PowerShares QQQ QQQ 401 (297) 571 33,313 Vanguard Small-Cap ETF VB 397 435 651 6,602 ishares Barclays 20+ Year Treasury Bond Fund TLT 396 732 743 3,902 Vanguard Mid-Cap ETF VO 393 453 645 5,395 Market Vectors Gold Miners ETF GDX 383 761 570 5,527 ishares Core S&P 500 ETF IVV 316 48 734 42,055 Vanguard FTSE Developed Markets ETF VEA 287 288 904 13,243 Consumer Discretionary Select Sector SPDR XLY 267 697 1,174 5,796 SPDR S&P 500 ETF SPY (2,604) (949) 2,324 133,799 Vanguard FTSE Emerging Markets ETF VWO (1,311) (2,586) (3,898) 47,856 ishares Russell 2000 Index Fund IWM (921) 1,086 (432) 21,124 ishares Dow Jones US Real Estate Index Fund IYR (756) (1,452) (1,130) 3,891 Consumer Staples Select Sector SPDR XLP (639) (264) (252) 6,170 SPDR Gold Trust GLD (559) (1,123) (10,711) 41,166 ishares iboxx $ Investment Grade Corporate Bond Fund LQD (557) (2,244) (2,624) 19,749 ishares Barclays TIPS Bond Fund TIP (553) (1,883) (3,413) 16,135 Utilities Select Sector SPDR XLU (429) (143) (407) 5,314 ishares J.P. Morgan USD Emerging Markets Bond Fund EMB (349) (803) (813) 4,400 Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Data estimated as of 6/21/13 based on daily change in share counts and daily NAVs. 3

US-Listed ETFs: Short Interest Data Unchanged: Based on data as of 5/31/13 ishares MSCI Emerging Markets Index Fund (EEM) had the largest increases in USD short interest at $529 mln - EEM s shares short are at their highest level since 2/15/11 - Notably, the ishares MSCI EAFE Index Fund (EFA) is at its lowest level of shares short since 10/31/12 - Aggregate ETF USD short interest decreased by $1.8 bln over the period ended 5/31/13 The average shares short/shares outstanding for ETFs is currently 4.3% - The ishares Barclays 20+ Year Treasury Bond Fund (TLT) cracked the top 10 most heavily shorted ETFs as a % of shares outstanding as investors fret rising rates; for contrarian investors, TLTs increase may be a positive sign for rates and a signal that the recent sell-off is overdone - Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only three ETFs exhibited shares short as a % of shares outstanding greater than 100%) ETF Name Change in Short Interest Symbol ishares MSCI Emerging Markets Index Fund EEM 528,924,150 SPDR Retail ETF XRT 429,441,737 ishares Barclays 20+ Year Treasury Bond Fund TLT 380,031,683 Consumer Staples Select Sector SPDR XLP 378,446,067 ishares iboxx $ High Yield Corporate Bond Fund HYG 331,239,265 SPDR S&P 500 ETF SPY (2,429,956,755) ishares MSCI EAFE Index Fund EFA (760,952,944) ishares Russell 2000 Index Fund IWM (668,489,504) Financials Select Sector SPDR XLF (223,069,109) Market Vectors Russia ETF RSX (184,441,073) Shares Short as % of Shares Outstanding Last Change in USD Amount Held Short ETF Name Symbol Shares Short / Shrs Out (%) CurrencyShares Euro Trust FXE 365.7 SPDR Retail ETF XRT 284.6 SPDR Oil & Gas Exploration & Production ETF XOP 238.1 Direxion Daily Real Estate Bear 3x Shares DRV 97.3 United States Oil Fund USO 90.7 PowerShares KBW Regional Banking Portfolio KBWR 90.3 CurrencyShares Japanese Yen Trust FXY 83.9 Market Vectors Retail ETF RTH 83.4 Market Vectors Semiconductor ETF SMH 82.4 ishares Barclays 20+ Year Treasury Bond Fund TLT 72.1 Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Short Interest data are only reported bi-monthly with a lag. Data compares short interest from 5/31/13 vs. 5/15/13. 4

US-Listed ETFs: Most Successful Recent Launches by Assets $7.4 bln in total market cap of ETFs less than 1-year old - Newly launched International Emerging Equity ETFs account for 26% of recently launched market cap followed by Fixed Income ETFs at 19%; interestingly, outside of the recently launched ETFs, both categories have struggled posting combined net outflows of $18.3 bln over the past four weeks - Issuance has been light in 2013 relative to the past three years; 55 new ETF listings and 30 closures/delistings YTD The top 10 most successful launches make up 66% of the market cap of ETFs launched over the past year - Six ETF sponsors and two asset classes represented in top 10 most successful launches; seven have an income orientation - Despite last week s market volatility, newly launched ETFs continued to take in new money, posting net inflows of $347 mln Estimated Flows for ETF Launches Over Past Year Net Cash Flow ($ Mil) Mkt Cap Top 10 Successful Launches Over Past Year Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Data estimated as of 6/21/13 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 1 0 0 0 11 0 US Mid-Cap 0 0 0 0 0 0 US Small- & Micro-Cap 0 0 0 0 0 0 US Sector & Industry 1 0 2 13 15 0 US Custom 16 27 79 172 594 8 US Dividend Income 7 33 79 275 587 8 Leveraged/Inverse 9 2 7 22 59 1 International - Developed 6 2 30 318 1,014 14 International - Emerging 13 158 487 1,011 1,924 26 Global 13 43 99 377 701 9 Fixed Income 18 36 150 464 1,410 19 Commodity 0 0 0 0 0 0 Currency 1 0 0 (4) 8 0 Active 18 46 162 572 1,110 15 Total 103 347 1,095 3,220 7,432 100 1-Week Flows ($ Mil) 4-Week Flows ($ Mil) Mkt Cap Symbol Fund Name ($ Mil) IEMG ishares Core MSCI Emerging Markets ETF 1,516 166 373 IEFA ishares Core MSCI EAFE ETF 780 0 0 VTIP Vanguard Short-Term Inflation-Protected Securities ETF 687 22 77 MDIV First Trust Multi-Asset Diversified Income Index Fund 472 29 54 EMLP First Trust North American Energy Infrastructure Fund 374 11 24 SRLN SPDR Blackstone/GSO Senior Loan ETF 289 10 60 SDOG ALPS Sector Dividend Dogs ETF 271 17 36 FM ishares MSCI Frontier 100 Index Fund 221 0 107 PFXF Market Vectors Preferred Securities ex Financials ETF 162 0 2 TDIV First Trust NASDAQ Technology Dividend Index Fund 148 16 33 Total 4,921 271 765 5

US-Listed ETFs: New Listings For the Week Symbol Fund Name Launch Date Expense Ratio (%) PGHY PowerShares Global Short Term High Yield Bond Portfolio 6/20/2013 0.35 Tracks an index of US and international short-term (three years or less) sovereign and corporate non-investment grade rated USD-denominated bonds. ICOL ishares MSCI Colombia Capped ETF 6/20/2013 0.61 Tracks an index designed to capture the performance of the large-, mid-, and small-cap segments of the Colombian equity market. Source: Company Data, Morgan Stanley Wealth Management ETF Research. 6

Recent Reports Fixed Income ETF Asset Allocation Model Update - June 13, 2013 ETF Quarterly Report: $1.5 Trillion in 1,257 ETFs - May 30, 2013 ETF US Sector Allocation Model Update - May 13, 2013 1Q13 ETF Fund Flows-$51.7 Billion Net Inflows -May 7, 2013 ETF Overview and Strategies - April 22, 2013 2012 Tracking Error Report: A Modest Rise Amid Expansion - March 14, 2013 US Dividend ETFs: More Than Just Yield - December 7, 2012 Morgan Stanley & Co., Citi Research and Morgan Stanley Wealth Management do not provide fundamental research ratings on exchange-traded funds (ETFs). 7

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. 2) 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. 3) 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. 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-and-demand 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. 8

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 and/or its affiliate Morgan Stanley Private Wealth Management Ltd, and Morgan Stanley Wealth Management Australia Pty Ltd (collectively, "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: David Perlman - Vanguard Total Stock Market ETF, Vanguard Total World Stock Index Fund, WisdomTree Emerging Markets Equity Income Fund. Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, but excluding Citigroup Global Markets, Inc. and its affiliates other than Morgan Stanley Wealth Management, beneficially owned 1% or more of a class of common equity securities of: 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 ST Municipal Bond Strat. Fund, PIMCO Total Return ETF. Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets, Inc. 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): First Trust Dow Jones Internet Index, First Trust ISE-Revere Natural Gas Index, First Trust Large Cap Core AlphaDEX Fund, First Trust Morningstar Dividend Leaders Index Fund, FlexShares Morningstar Global Upstream Natural Resources, Guggenheim CurrencyShares Australian Dollar Trust, Guggenheim CurrencyShares Canadian Dollar Trust, Guggenheim CurrencyShares Swiss Franc Trust, 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 ST Municipal Bond Strat. Fund, PIMCO Total Return ETF. In the next 3 months, Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets, Inc. 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): FlexShares Morningstar Global Upstream Natural Resources, 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 ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard ETF Emerging Markets, Vanguard ETF European, Vanguard ETF REIT, Vanguard Europe Pacific ETF, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All-World ex-us ETF, Vanguard FTSE ex-us SmallCap 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 Pacific ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond, 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 Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF. Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets, Inc. or an affiliate, managed or co-managed a public offering (or 144a offering) for: FlexShares Morningstar Global Upstream Natural Resources. Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets, Inc. 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 Index, First Trust ISE-Revere Natural Gas Index, First Trust Large Cap Core AlphaDEX Fund, First Trust Morningstar Dividend Leaders Index Fund, FlexShares Morningstar Global Upstream Natural Resources, Guggenheim CurrencyShares Australian Dollar Trust, Guggenheim CurrencyShares Canadian Dollar Trust, Guggenheim CurrencyShares Swiss Franc Trust, 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 ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard ETF Emerging Markets, Vanguard ETF European, Vanguard ETF REIT, Vanguard Europe Pacific ETF, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All-World ex-us ETF, Vanguard FTSE ex-us SmallCap 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 Pacific ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond, 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 Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF. 9

Important Disclosures Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, Citigroup Global Markets, Inc. or an affiliate, 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): Alerian MLP ETF, Consumer Discretionary Select Sector, Consumer Staples Select Sector SPDR, Direxion Financial Bear 3X, Direxion Financial Bull 3X, Energy Select Sector SPDR, Financials Select Sector SPDR, FlexShares Morningstar Global Upstream Natural Resources, Guggenheim BRIC ETF, Guggenheim China Small Cap ETF, Guggenheim CurrencyShares Australian Dollar Trust, Guggenheim CurrencyShares Canadian Dollar Trust, Guggenheim CurrencyShares Swiss Franc Trust, Guggenheim Multi-Asset Income 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 Barclays 1-3 Year Credit Bond, ishares Barclays 20+ Year Treasury Bond, ishares Barclays 3-7 Year Treasury, ishares Barclays 7-10 Year Treasury Bond, ishares Barclays Agency Bond Fund, ishares Barclays Aggregate Bond Fund, ishares Barclays Intermediate Credit, ishares Barclays Lehman 1-3 Yr Treasury, ishares Barclays MBS Bond Fund, ishares Barclays Short Treasury, ishares Barclays TIPS Bond Fund, ishares Cohen & Steers Realty Majors, 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 DJ US Basic Materials Sector Index Fund, ishares DJ US Cons. Services Sector Index Fund, ishares DJ US Consumer Goods Sector, ishares DJ US Technology Sector Index, ishares Dow Jones Broker-Dealers Index, ishares Dow Jones International Select D, ishares Dow Jones Select Dividend Index, ishares Dow Jones Transportation Index, ishares Dow Jones U.S. Index Fund, ishares Dow Jones U.S. Medical Devices, ishares Dow Jones U.S. Oil & Gas Exp., ishares Dow Jones U.S. Oil Equip. & Svcs, ishares Dow Jones US Aerospace & Defense, ishares Dow Jones US Energy Sector Index Fund, ishares Dow Jones US Financial Sector, ishares Dow Jones US Financial Services, ishares Dow Jones US Healthcare Sector, ishares Dow Jones US Home Construction, ishares Dow Jones US Industrial Sector, ishares Dow Jones US Real Estate Index, ishares Dow Jones US Telecom Sector, ishares Dow Jones US Utilities Sector, ishares FTSE China 25 Index Fund, ishares Gold Trust, ishares GSCI Commodity Indexed Trust, ishares High Dividend Equity Fund, ishares iboxx $ High Yield Corp Bond, ishares iboxx $ InvesTop Inv Grade Bond, ishares JPMorgan USD Emerging Mkt Bond, ishares Morningstar Large Growth Index, ishares Morningstar Large Value Index, ishares Morningstar Mid Growth Index, ishares Morningstar Mid Value Index Fund, ishares MSCI ACWI ex US Index Fund, ishares MSCI ACWI Index Fund, ishares MSCI All Country Asia ex-japan Index Fund, ishares MSCI All Peru Capped Index Fund, ishares MSCI Australia Index Fund, ishares MSCI Brazil Index Fund, ishares MSCI BRIC Index Fund, ishares MSCI Canada Index Fund, ishares MSCI Chile Index Fund, ishares MSCI China Index Fund, ishares MSCI EAFE Growth Index Fund, ishares MSCI EAFE Index Fund, ishares MSCI EAFE Small Cap Index Fund, ishares MSCI EAFE Value Index Fund, ishares MSCI Emerging Markets Index Fund, ishares MSCI Emerging Mkts Min Volatilit, ishares MSCI EMU Index Fund, ishares MSCI France Index Fund, ishares MSCI Germany Index Fund, ishares MSCI Hong Kong Index Fund, ishares MSCI Indonesia Investable Market Index Fund, ishares MSCI Israel Capped Index Fund, ishares MSCI Italy Index Fund, ishares MSCI Japan, ishares MSCI Malaysia Index Fund, ishares MSCI Mexico Index Fund, ishares MSCI Pacific ex-japan Index Fund, ishares MSCI Philippines Investable Market Index Fund, ishares MSCI Poland Capped Investable Market Index Fund, ishares MSCI Russia Capped Index Fund, ishares MSCI Singapore Index Fund, ishares MSCI South Africa Index Fund, ishares MSCI South Korea Index Fund, ishares MSCI Spain Index Fund, ishares MSCI Sweden Index Fund, ishares MSCI Switzerland Index Fund, ishares MSCI Taiwan Index Fund, ishares MSCI Thailand Index Fund, ishares MSCI Turkey Index Fund, ishares MSCI United Kingdom Index Fund, ishares MSCI USA Minimum Volatility Index Fund, ishares Nasdaq Biotech, ishares PHLX SOX Semiconductors Sector Index Fund, ishares Russell 1000 Growth Index Fund, ishares Russell 1000 Index Fund, ishares Russell 1000 Value Index Fund, ishares Russell 2000 Growth Index Fund, ishares Russell 2000 Index Fund, ishares Russell 2000 Value Index Fund, ishares Russell 3000 Growth Index Fund, ishares Russell 3000 Index Fund, ishares Russell 3000 Value Index Fund, ishares Russell Microcap Index Fund, ishares Russell Mid Cap Growth Index, ishares Russell Midcap Index Fund, ishares Russell Midcap Value Index Fund, ishares S&P 100 Index Fund, ishares S&P 500 Growth Index Fund, ishares S&P 500 Value Index Fund, ishares S&P Europe 350 Index Fund, ishares S&P Global 100 Index Fund, ishares S&P Global Consumer Discretionary Sector Index Fund, ishares S&P Global Consumer Staples, ishares S&P Global Energy Sector Index, ishares S&P Global Financial Sector Index Fund, ishares S&P Global Healthcare Sector Index Fund, ishares S&P Global Ind. Sector Index, ishares S&P Global Infrastructure Index, ishares S&P Global Materials Sector, ishares S&P Global Tech. Sector Index, ishares S&P Global Tele. Sector Index, ishares S&P Global Utilities Sector, ishares S&P Latin America 40 Index Fund, ishares S&P MidCap 400 Growth Index Fund, ishares S&P MidCap 400 Value Index Fund, ishares S&P N. Amer. Natural Res. Sector, ishares S&P N. Amer. Software Index Fund, ishares S&P Nat'l AMT-Free Municipal, ishares S&P North American Technology, ishares S&P Short Term Nat.Municipal, ishares S&P SmallCap 600 Growth, ishares S&P SmallCap 600 Value, ishares S&P U.S. Preferred Stock Index, ishares S&P/Citigroup International Treasury Bond Fund, ishares Silver Trust, Market Vectors Agribusiness ETF, Market Vectors Brazil Small-Cap ETF, Market Vectors Coal ETF, Market Vectors Egypt Index ETF, Market Vectors Emerg. Markets Local, Market Vectors ETF Gold Miners, Market Vectors Global Alt.Energy ETF, Market Vectors Hard Assets Producers ETF, Market Vectors High Yield Municipal Inde, Market Vectors Indonesia Index ETF, Market Vectors Intermediate Municipal In, Market Vectors Junior Gold Miners ETF, Market Vectors Nuclear Energy ETF, Market Vectors Russia ETF, Market Vectors Steel Index ETF, Market Vectors Vietnam ETF, Materials Select Sector SPDR, Oil Services HOLDRS, Pharmaceutical HOLDRS, 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 ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, PowerShares Build America Bond Portfolio, PowerShares DB Agriculture Fund, PowerShares DB Base Metals Fund, PowerShares DB Energy Fund, PowerShares DB G10 Currency Harvest Fund, PowerShares DB Oil Fund, PowerShares DB USD Index Bearish Fund, PowerShares DB USD Index Bullish Fund, PowerShares Dynam. LargeCap Value, PowerShares Dynam.LargeCap Growth, PowerShares Dynamic Market Portfolio, PowerShares Emerging Markets Sovereign Debt Portfolio, PowerShares Financial Preferred Portf., PowerShares FTSE RAFI US 1000 Portfolio, PowerShares Global Clean Ergy. Portfol., PowerShares Global Water Portfolio, PowerShares Int.Div. Achievers Portfol., PowerShares Preferred Portfolio, PowerShares QQQ, PowerShares S&P 500 BuyWrite Portfolio, PowerShares S&P 500 Low Volatility Portfolio, PowerShares Senior Loan Portfolio, PowerShares VRDO Tax-Free Wkly Portfol., PowerShares Water Resources Portfolio, PowerShares WilderHill Clean Ergy., Rydex Russell Top 50 ETF, Rydex S&P 500 Pure Growth ETF, Rydex S&P Equal Weight ETF, Semiconductor HOLDRS, SPDR Barclays 1-3 Month T-Bill ETF, SPDR Barclays Capital Int. Treasury, SPDR Barclays Capital ST Muni. Bond ET, SPDR Barclays Convertible Bond ETF, SPDR Barclays High Yield Bond ETF, SPDR Barclays Municipal Bond ETF, SPDR Barclays Short Term High Yield Bond ETF, SPDR Biotech ETF, SPDR DB Int. Govt. Inflation-Protect, SPDR Dow Jones Int. Real Estate ETF, SPDR Dow Jones REIT ETF, SPDR KBW Bank ETF, SPDR KBW Regional Banking ETF, SPDR Oil & Gas Equipment & Services ETF, SPDR Oil & Gas Exploration & Prod. ETF, SPDR Retail ETF, SPDR S&P China ETF, SPDR S&P Dividend ETF, SPDR S&P Emerging Asia Pacific ETF, SPDR S&P Emerging Markets Small Cap ETF, SPDR S&P Homebuilders ETF, SPDR S&P International Dividend ETF, SPDR S&P International Small Cap ETF, SPDR S&P Metals & Mining 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 ETF Emerging Markets, Vanguard ETF European, Vanguard ETF REIT, Vanguard Europe Pacific ETF, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All-World ex-us ETF, Vanguard FTSE ex-us SmallCap 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 10

Important Disclosures ETF, Vanguard Mid-Cap Value ETF, Vanguard Pacific ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond, 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 Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF, WisdomTree Emerging Markets Equity Income Fund. Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, Citigroup Global Markets, Inc. or an affiliate, 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): Alerian MLP ETF, Consumer Discretionary Select Sector, Consumer Staples Select Sector SPDR, Direxion Financial Bear 3X, Direxion Financial Bull 3X, Energy Select Sector SPDR, Financials Select Sector SPDR, First Trust Dow Jones Internet Index, First Trust ISE-Revere Natural Gas Index, First Trust Large Cap Core AlphaDEX Fund, First Trust Morningstar Dividend Leaders Index Fund, FlexShares Morningstar Global Upstream Natural Resources, Guggenheim BRIC ETF, Guggenheim China Small Cap ETF, Guggenheim CurrencyShares Australian Dollar Trust, Guggenheim CurrencyShares Canadian Dollar Trust, Guggenheim CurrencyShares Swiss Franc Trust, Guggenheim Multi-Asset Income 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 Barclays 1-3 Year Credit Bond, ishares Barclays 20+ Year Treasury Bond, ishares Barclays 3-7 Year Treasury, ishares Barclays 7-10 Year Treasury Bond, ishares Barclays Agency Bond Fund, ishares Barclays Aggregate Bond Fund, ishares Barclays Intermediate Credit, ishares Barclays Lehman 1-3 Yr Treasury, ishares Barclays MBS Bond Fund, ishares Barclays Short Treasury, ishares Barclays TIPS Bond Fund, ishares Cohen & Steers Realty Majors, 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 DJ US Basic Materials Sector Index Fund, ishares DJ US Cons. Services Sector Index Fund, ishares DJ US Consumer Goods Sector, ishares DJ US Technology Sector Index, ishares Dow Jones Broker-Dealers Index, ishares Dow Jones International Select D, ishares Dow Jones Select Dividend Index, ishares Dow Jones Transportation Index, ishares Dow Jones U.S. Index Fund, ishares Dow Jones U.S. Medical Devices, ishares Dow Jones U.S. Oil & Gas Exp., ishares Dow Jones U.S. Oil Equip. & Svcs, ishares Dow Jones US Aerospace & Defense, ishares Dow Jones US Energy Sector Index Fund, ishares Dow Jones US Financial Sector, ishares Dow Jones US Financial Services, ishares Dow Jones US Healthcare Sector, ishares Dow Jones US Home Construction, ishares Dow Jones US Industrial Sector, ishares Dow Jones US Real Estate Index, ishares Dow Jones US Telecom Sector, ishares Dow Jones US Utilities Sector, ishares FTSE China 25 Index Fund, ishares Gold Trust, ishares GSCI Commodity Indexed Trust, ishares High Dividend Equity Fund, ishares iboxx $ High Yield Corp Bond, ishares iboxx $ InvesTop Inv Grade Bond, ishares JPMorgan USD Emerging Mkt Bond, ishares Morningstar Large Growth Index, ishares Morningstar Large Value Index, ishares Morningstar Mid Growth Index, ishares Morningstar Mid Value Index Fund, ishares MSCI ACWI ex US Index Fund, ishares MSCI ACWI Index Fund, ishares MSCI All Country Asia ex- Japan Index Fund, ishares MSCI All Peru Capped Index Fund, ishares MSCI Australia Index Fund, ishares MSCI Brazil Index Fund, ishares MSCI BRIC Index Fund, ishares MSCI Canada Index Fund, ishares MSCI Chile Index Fund, ishares MSCI China Index Fund, ishares MSCI EAFE Growth Index Fund, ishares MSCI EAFE Index Fund, ishares MSCI EAFE Small Cap Index Fund, ishares MSCI EAFE Value Index Fund, ishares MSCI Emerging Markets Index Fund, ishares MSCI Emerging Mkts Min Volatilit, ishares MSCI EMU Index Fund, ishares MSCI France Index Fund, ishares MSCI Germany Index Fund, ishares MSCI Hong Kong Index Fund, ishares MSCI Indonesia Investable Market Index Fund, ishares MSCI Israel Capped Index Fund, ishares MSCI Italy Index Fund, ishares MSCI Japan, ishares MSCI Malaysia Index Fund, ishares MSCI Mexico Index Fund, ishares MSCI Pacific ex-japan Index Fund, ishares MSCI Philippines Investable Market Index Fund, ishares MSCI Poland Capped Investable Market Index Fund, ishares MSCI Russia Capped Index Fund, ishares MSCI Singapore Index Fund, ishares MSCI South Africa Index Fund, ishares MSCI South Korea Index Fund, ishares MSCI Spain Index Fund, ishares MSCI Sweden Index Fund, ishares MSCI Switzerland Index Fund, ishares MSCI Taiwan Index Fund, ishares MSCI Thailand Index Fund, ishares MSCI Turkey Index Fund, ishares MSCI United Kingdom Index Fund, ishares MSCI USA Minimum Volatility Index Fund, ishares Nasdaq Biotech, ishares PHLX SOX Semiconductors Sector Index Fund, ishares Russell 1000 Growth Index Fund, ishares Russell 1000 Index Fund, ishares Russell 1000 Value Index Fund, ishares Russell 2000 Growth Index Fund, ishares Russell 2000 Index Fund, ishares Russell 2000 Value Index Fund, ishares Russell 3000 Growth Index Fund, ishares Russell 3000 Index Fund, ishares Russell 3000 Value Index Fund, ishares Russell Microcap Index Fund, ishares Russell Mid Cap Growth Index, ishares Russell Midcap Index Fund, ishares Russell Midcap Value Index Fund, ishares S&P 100 Index Fund, ishares S&P 500 Growth Index Fund, ishares S&P 500 Value Index Fund, ishares S&P Europe 350 Index Fund, ishares S&P Global 100 Index Fund, ishares S&P Global Consumer Discretionary Sector Index Fund, ishares S&P Global Consumer Staples, ishares S&P Global Energy Sector Index, ishares S&P Global Financial Sector Index Fund, ishares S&P Global Healthcare Sector Index Fund, ishares S&P Global Ind. Sector Index, ishares S&P Global Infrastructure Index, ishares S&P Global Materials Sector, ishares S&P Global Tech. Sector Index, ishares S&P Global Tele. Sector Index, ishares S&P Global Utilities Sector, ishares S&P Latin America 40 Index Fund, ishares S&P MidCap 400 Growth Index Fund, ishares S&P MidCap 400 Value Index Fund, ishares S&P N. Amer. Natural Res. Sector, ishares S&P N. Amer. Software Index Fund, ishares S&P Nat'l AMT-Free Municipal, ishares S&P North American Technology, ishares S&P Short Term Nat.Municipal, ishares S&P SmallCap 600 Growth, ishares S&P SmallCap 600 Value, ishares S&P U.S. Preferred Stock Index, ishares S&P/Citigroup International Treasury Bond Fund, ishares Silver Trust, Market Vectors Agribusiness ETF, Market Vectors Brazil Small-Cap ETF, Market Vectors Coal ETF, Market Vectors Egypt Index ETF, Market Vectors Emerg. Markets Local, Market Vectors ETF Gold Miners, Market Vectors Global Alt.Energy ETF, Market Vectors Hard Assets Producers ETF, Market Vectors High Yield Municipal Inde, Market Vectors Indonesia Index ETF, Market Vectors Intermediate Municipal In, Market Vectors Junior Gold Miners ETF, Market Vectors Nuclear Energy ETF, Market Vectors Russia ETF, Market Vectors Steel Index ETF, Market Vectors Vietnam ETF, Materials Select Sector SPDR, Oil Services HOLDRS, Pharmaceutical HOLDRS, 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 ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, PowerShares Build America Bond Portfolio, PowerShares DB Agriculture Fund, PowerShares DB Base Metals Fund, PowerShares DB Energy Fund, PowerShares DB G10 Currency Harvest Fund, PowerShares DB Oil Fund, PowerShares DB USD Index Bearish Fund, PowerShares DB USD Index Bullish Fund, PowerShares Dynam. LargeCap Value, PowerShares Dynam.LargeCap Growth, PowerShares Dynamic Market Portfolio, PowerShares Emerging Markets Sovereign Debt Portfolio, PowerShares Financial Preferred Portf., PowerShares FTSE RAFI US 1000 Portfolio, PowerShares Global Clean Ergy. Portfol., PowerShares Global Water Portfolio, PowerShares Int.Div. Achievers Portfol., PowerShares Preferred Portfolio, PowerShares QQQ, PowerShares S&P 500 BuyWrite Portfolio, PowerShares S&P 500 Low Volatility Portfolio, PowerShares Senior Loan Portfolio, PowerShares VRDO Tax-Free Wkly Portfol., PowerShares Water Resources Portfolio, PowerShares WilderHill Clean Ergy., Rydex Russell Top 50 ETF, Rydex S&P 500 Pure Growth ETF, Rydex S&P Equal Weight ETF, Semiconductor HOLDRS, SPDR Barclays 1-3 Month T-Bill ETF, SPDR Barclays Capital Int. Treasury, SPDR Barclays Capital ST Muni. Bond ET, SPDR Barclays Convertible Bond ETF, SPDR Barclays High Yield Bond ETF, SPDR Barclays Municipal Bond ETF, SPDR Barclays Short Term High Yield Bond ETF, SPDR Biotech ETF, SPDR DB Int. Govt. Inflation- Protect, SPDR Dow Jones Int. Real Estate ETF, SPDR Dow Jones REIT ETF, SPDR KBW Bank ETF, SPDR KBW Regional Banking ETF, SPDR Oil & Gas Equipment & Services ETF, SPDR Oil & Gas Exploration & Prod. ETF, SPDR Retail ETF, SPDR S&P China ETF, SPDR S&P Dividend ETF, SPDR S&P Emerging Asia Pacific ETF, SPDR S&P Emerging Markets Small Cap ETF, SPDR S&P Homebuilders ETF, SPDR S&P International Dividend ETF, SPDR S&P International Small Cap ETF, SPDR S&P Metals & Mining ETF, SPDR S&P MidCap 400 ETF, Technology Select Sector SPDR, 11

Important Disclosures United States Natural Gas Fund LP, Utilities Select Sector SPDR, Vanguard Consumer Discretionary ETF, Vanguard Consumer Staples ETF, Vanguard Dividend Appreciation ETF, Vanguard Energy ETF, Vanguard ETF Emerging Markets, Vanguard ETF European, Vanguard ETF REIT, Vanguard Europe Pacific ETF, Vanguard Extended Market ETF, Vanguard Financials ETF, Vanguard FTSE All- World ex-us ETF, Vanguard FTSE ex-us SmallCap 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 Pacific ETF, Vanguard Short-Term Bond ETF, Vanguard Short-Term Corporate Bond, 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 Stock Market ETF, Vanguard Total World Stock Index Fund, Vanguard Utilities ETF, Vanguard Value ETF, WisdomTree Emerging Markets Equity Income Fund. Within the last 12 months, Morgan Stanley Wealth Management or an affiliate, including, Citigroup Global Markets, Inc. or an affiliate, has either provided or is providing non-investment banking, non-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): WisdomTree Emerging Markets Equity Income Fund. An affiliate of Morgan Stanley Wealth Management, including but not limited to, Morgan Stanley & Co. LLC, and/or Citigroup Global Markets Inc., has a significant financial interest in relation to the following issuers (if the security is an ETF or Closed-End Fund, the significant financial is in relation to the fund's investment manager or advisor): ishares Barclays 1-3 Year Credit Bond, ishares Barclays 20+ Year Treasury Bond, ishares Barclays 3-7 Year Treasury, ishares Barclays 7-10 Year Treasury Bond, ishares Barclays Agency Bond Fund, ishares Barclays Aggregate Bond Fund, ishares Barclays Intermediate Credit, ishares Barclays Lehman 1-3 Yr Treasury, ishares Barclays MBS Bond Fund, ishares Barclays Short Treasury, ishares Barclays TIPS Bond Fund, ishares Cohen & Steers Realty Majors, ishares Core S&P 500 ETF, ishares Core S&P Mid-Cap ETF, ishares Core S&P Small-Cap ETF, ishares DJ US Basic Materials Sector Index Fund, ishares DJ US Cons. Services Sector Index Fund, ishares DJ US Consumer Goods Sector, ishares DJ US Technology Sector Index, ishares Dow Jones Broker-Dealers Index, ishares Dow Jones International Select D, ishares Dow Jones Select Dividend Index, ishares Dow Jones Transportation Index, ishares Dow Jones U.S. Index Fund, ishares Dow Jones U.S. Medical Devices, ishares Dow Jones U.S. Oil & Gas Exp., ishares Dow Jones U.S. Oil Equip. & Svcs, ishares Dow Jones US Aerospace & Defense, ishares Dow Jones US Energy Sector Index Fund, ishares Dow Jones US Financial Sector, ishares Dow Jones US Financial Services, ishares Dow Jones US Healthcare Sector, ishares Dow Jones US Home Construction, ishares Dow Jones US Industrial Sector, ishares Dow Jones US Real Estate Index, ishares Dow Jones US Telecom Sector, ishares Dow Jones US Utilities Sector, ishares FTSE China 25 Index Fund, ishares Gold Trust, ishares GSCI Commodity Indexed Trust, ishares High Dividend Equity Fund, ishares iboxx $ High Yield Corp Bond, ishares iboxx $ InvesTop Inv Grade Bond, ishares JPMorgan USD Emerging Mkt Bond, ishares Morningstar Large Growth Index, ishares Morningstar Large Value Index, ishares Morningstar Mid Growth Index, ishares Morningstar Mid Value Index Fund, ishares MSCI ACWI ex US Index Fund, ishares MSCI ACWI Index Fund, ishares MSCI All Country Asia ex-japan Index Fund, ishares MSCI All Peru Capped Index Fund, ishares MSCI China Index Fund, ishares MSCI EAFE Growth Index Fund, ishares MSCI EAFE Index Fund, ishares MSCI EAFE Small Cap Index Fund, ishares MSCI EAFE Value Index Fund, ishares MSCI Emerging Mkts Min Volatilit, ishares MSCI Indonesia Investable Market Index Fund, ishares MSCI Philippines Investable Market Index Fund, ishares MSCI Poland Capped Investable Market Index Fund, ishares MSCI Russia Capped Index Fund, ishares MSCI USA Minimum Volatility Index Fund, ishares Nasdaq Biotech, ishares PHLX SOX Semiconductors Sector Index Fund, ishares Russell 1000 Growth Index Fund, ishares Russell 1000 Index Fund, ishares Russell 1000 Value Index Fund, ishares Russell 2000 Index Fund, ishares Russell 2000 Value Index Fund, ishares Russell 3000 Index Fund, ishares Russell 3000 Value Index Fund, ishares Russell Microcap Index Fund, ishares Russell Mid Cap Growth Index, ishares Russell Midcap Index Fund, ishares Russell Midcap Value Index Fund, ishares S&P 100 Index Fund, ishares S&P 500 Growth Index Fund, ishares S&P 500 Value Index Fund, ishares S&P Europe 350 Index Fund, ishares S&P Global 100 Index Fund, ishares S&P Global Consumer Discretionary Sector Index Fund, ishares S&P Global Consumer Staples, ishares S&P Global Energy Sector Index, ishares S&P Global Financial Sector Index Fund, ishares S&P Global Healthcare Sector Index Fund, ishares S&P Global Ind. Sector Index, ishares S&P Global Infrastructure Index, ishares S&P Global Materials Sector, ishares S&P Global Tech. Sector Index, ishares S&P Global Tele. Sector Index, ishares S&P Global Utilities Sector, ishares S&P Latin America 40 Index Fund, ishares S&P N. Amer. Natural Res. Sector, ishares S&P N. Amer. Software Index Fund, ishares S&P Nat'l AMT-Free Municipal, ishares S&P North American Technology, ishares S&P Short Term Nat.Municipal, ishares S&P U.S. Preferred Stock Index, ishares S&P/Citigroup International Treasury Bond Fund, ishares Silver Trust, 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 ST Municipal Bond Strat. Fund, PIMCO Total Return ETF, SPDR S&P 500 ETF. For an explanation of the determination of significant financial interest, please refer to the applicable policies for managing conflicts of interest, which can be found at https://www.morganstanley.com/online/researchconflictpolicies. The research analysts or strategists principally responsible for the preparation of Morgan Stanley Wealth Management Research have received compensation based upon various factors, including quality of research, investor client feedback, competitive factors, and firm profitability or revenues (which include fixed income trading and capital markets profitability or revenues). Research analysts' or strategists' compensation is not linked to the profitability or revenues of particular capital markets transactions performed by Morgan Stanley Wealth Management or the profitability or revenues of particular fixed income trading desks. Morgan Stanley Wealth Management and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Wealth Management Research. Morgan Stanley Wealth Management and/or its affiliates sells to and buys from customers the securities/instruments of issuers covered in this Morgan Stanley Wealth Management Research report on a principal basis. Morgan Stanley Wealth Management and others associated with it may have positions in and effect transactions in securities of ETFs mentioned and may also perform or seek to perform brokerage and other services for those ETFs and may enter into transactions with them. Affiliates of Morgan Stanley Wealth Management may participate in the creation and redemption of the securities covered in this report and as an authorized participant or otherwise, and may acquire such securities from the issuers for the purpose of resale. Investors should consider the investment objectives, risks, charges and expenses of each investment company carefully before investing. The prospectuses and product descriptions contain this and other information about the investment company and should be read carefully before investing. Investors may obtain product descriptions and prospectuses for the ETFs mentioned in this report from the ETF distributor, their brokers or the exchange upon which the particular ETF is listed. Morgan Stanley & Co. LLC or its affiliates is an authorized participant for one or more ETFs of the following fund families: BlackRock Fund Advisors, 1-800-474-2737; DirexionShares, 1-866- 476-7523; ETF Securities, 1-212-918-4954; Guggenheim Funds, 1-888-949-3837; Merrill Lynch & Co., 1-212-449-1000; PIMCO ETFs, 1-888-400-4383; PowerShares Capital, 12