1. Sustaining Long-Term Growth in ETF Industry Jennifer Muzerall June 26, 2016 Confidential. Not for re-distribution.

2. Cerulli Associates | www.cerulli.com2 Who We Are & What We Do

3. Cerulli Associates | www.cerulli.com3 Agenda State of the Industry Promoting New Products Targeting Non-Users

4. State of the Industry Cerulli Associates | www.cerulli.com4

5. 5 State of the Industry Advisors' Allocation to ETFs, 2008-1Q 2016 Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption Advisor portfolio allocation to ETFs has increased 1.4 percentage points from 11.2% in 2015 to 12.6% through 1Q 2016.

6. Cerulli Associates | www.cerulli.com6 State of the Industry ETF Product Replacement, 2016 More than half 58% claimed they were selling out of active mutual funds to purchase ETFs. Product TypeAll Advisors Active mutual fund58% New funds from client36% Passive mutual fund32% Individual equity securities26% Individual fixed-income securities8% Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption

7. Cerulli Associates | www.cerulli.com7 State of the Industry Average Flows by Sponsor and Product, 2016 ($ millions) Since 2010, the number of ETF sponsors has more than doubled from 29 sponsors to 66 sponsors. Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption

8. Promoting New Products Cerulli Associates | www.cerulli.com8

9. 9 Promoting New Products Advisors' Allocation of ETFs by Product Type,1Q 2016 vs. 2018E Advisors are currently allocating only 18% of their portfolio to strategic beta ETFs, though the percentage is expected to increase over the next two years. Product TypeAll Advisors Pure passive61% Active ETFs21% Strategic beta18% Channel - 1Q 2016 Product TypeAll Advisors Pure passive58% Active ETFs21% Strategic beta20% Channel - Expected 2018 Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption

10. Cerulli Associates | www.cerulli.com10 Promoting New Products Strategic Beta Education Topics, 2016 More than 60% of advisors want to learn how to use strategic beta for risk management purposes. Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption Education TopicsAll Advisors How to use strategic beta for risk management60.6% How to use strategic beta for return enhancement51.0% What strategic beta factors to use in different market environments41.3% How to tactically implement strategic beta34.6% How to strategically implement strategic beta25.0%

11. Cerulli Associates | www.cerulli.com11 Promoting New Products Advisors Top Interest in Strategic Beta, 2016 Nearly 60% of advisors are interested in multi-factor strategic beta. Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption Risk- weighted Multi-factor Low volatility Fundamental- weighted High qualityMomentum Most Interested Least Interested

12. Targeting Non-Users Cerulli Associates | www.cerulli.com12

13. Cerulli Associates | www.cerulli.com13 Targeting Non-Users Top Reasons Why Advisors Do Not Use ETFs, 2016 More than one-third of advisors who state they do not use ETFs claim the reason is because they prefer active management. Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption

14. Cerulli Associates | www.cerulli.com14 Targeting Non-Users Factors That Would Drive Advisors to Start Using ETFs, 2016 Nearly one-quarter of advisors indicate a better personal understanding of how to implement ETFs would make them inclined to start using them. Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption

15. Cerulli Associates | www.cerulli.com15 Targeting Non-Users Investor EducationAll Advisors ETF portfolio construction tools/websites53.5% Whitepapers on ETF research37.1% One-on-one wholesaler meetings27.6% Webcasts/conference calls27.1% Wholesaler presentations to group of advisors26.5% Seminars/workshops23.5% Meetings with ETF specialists20.6% Conferences18.8% Advisors find ETF portfolio construction tools/websites to be one of the most helpful education approaches from ETF sponsors. Advisor Preference for Education Tactics, 2016 Source: Cerulli Associates, The Cerulli Report - U.S. Exchange-Traded Fund Markets 2016: Strategies for Broadening Adoption

16. Contact Us Cerulli Associates | www.cerulli.com16 Jennifer Muzerall Associate Director, Retail Asset Management +1 617 437-1098, x151 jmuzerall@cerulli.com www.cerulli.com