The Emerging Markets Update

The Emerging Markets Update 2015 Review and 2016 Perspectives EGA Investment Strategy Commentary January 2016 155 W 19th St. New York, NY 10011 +1 888 800 4347 emergingglobaladvisors.com 1

THE EMERGING MARKETS UPDATE Disclosures Investors should carefully consider the investment objectives, risks, charges and expenses of a Fund before investing. To obtain a prospectus for any EGA or EGShares Funds and other important information, as well as to obtain most recent index performance, please call +1 888 800 4347 or visit emergingglobaladvisors.com to view or download a prospectus. Read the prospectus carefully before investing. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. Emerging market investments involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, from economic or political instability in other nations or increased volatility, and lower trading volume. The value of an investment denominated in a foreign currency could change significantly as foreign currencies strengthen or weaken relative to the U.S. dollar. Frontier markets countries generally have smaller economies or less developed capital markets than in more advanced developing markets and, as a result, the risks of investing in developing markets countries are magnified in frontier markets countries. Diversification does not ensure a profit or protect against a loss. ETF shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. The content of this report is presented for general information purposes only. The statements and opinions expressed are those of the author and are as of the date of this report. All information is historical and not indicative of future results, and subject to change. Reader should not assume that an investment in the securities mentioned above was or would be profitable in the future. This information is not a recommendation to buy or sell. While the information and statistical data contained herein are based on sources believed to be reliable, we do not represent that it is accurate and it should not be relied on as such or be the basis for an investment decision. This report may include estimates, projections and other "forward-looking statements". Emerging Global Advisors, LLC assumes no duty to update any such statements. Due to numerous factors, actual events may differ substantially from those presented. EGA, EGShares and EGAI are service marks of Emerging Global Advisors, LLC. All other trademarks, service marks or registered trademarks are the property of their respective owners. Edward Kerschner is a registered representative of ALPS Distributors, Inc. EGA and EGShares Funds are distributed by ALPS Distributors, Inc. Emerging Global Advisors and ALPS are unaffiliated. EGS002654 Expires: 1/15/2017 2

The Emerging Markets Update SUMMARY 3

THE EMERGING MARKETS UPDATE Summary Emerging Markets Review 2015 Equities in emerging markets (EM) have now underperformed developed markets (DM) for the last 3 years In 2015, the S&P 500 Index (+1.4% total return) and the MSCI EAFE Index (-0.2%) led, whereas the MSCI EM Index (-14.8%) and the MSCI FM Index (-14.7%) brought up the rear Within EM regions, Asia (-9.8%) was the top performer, beating EMEA (-19.7%) and Latin America (- 30.9%) Countries that embraced reform (India, China) continued to outperform those embroiled in political crises (Greece, Brazil) Within EM sectors, the defensives outperformed the cyclicals and the consumer sectors led the broader EM Index A total of US$0.9 billion exited EM equity (ex-china A shares) ETFs in 2015 Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 4

THE EMERGING MARKETS UPDATE Summary 2016 Perspectives What EM Investors Need to Know 1. The International Monetary Fund (IMF) forecasts a renaissance in EM growth, which has historically proven key to EM equity performance 2. EM earnings are forecast to lead in 2016, with consumer earnings forecast to outperform 3. EM investors should not fear the U.S. Federal Reserve: During the last three Fed tightening cycles EM equities have performed well 4. EM consumer sector has benefitted more when U.S. interest rates rise 5. EM U.S. dollar debt concerns likely overblown with liabilities as a percent of GDP rangebound for over 20 years and no sign of balance sheet stress within EM corporates 6. EM valuations appear attractive relative to other markets and relative to their own historical average Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 5

Section 1. EMERGING MARKETS REVIEW: 2015 6

Total Return EMERGING MARKETS REVIEW: 2015 Global Index Performance Global Index Total Return 12/31/2014 12/31/2015 4% 2% 1.4% 0% -2% -0.2% -0.3% -4% -6% -8% -10% -12% -14% -16% S&P 500 Index MSCI EAFE Index MSCI World Index MSCI Frontier Markets Index -14.7% -14.8% MSCI Emerging Markets Index Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 7

EMERGING MARKETS REVIEW: 2015 Three years of underperformance from EM The MSCI EM Index lost 14.8% in 2015 and has not had a positive return since 2012 The prospect of the first U.S. rate hike in over 9 years pressured EM, with all of EM weakness coming before the Fed's December 16 move; in fact, while the S&P 500 lost over 1.3% since December 16, MSCI EM gained over 0.5% Slowing Chinese growth and falling commodity prices also contributed S&P 500 Index led global regional indices in 2015 and returned 1.4% An improving economic outlook in the U.S. as well as a stronger U.S. dollar helped U.S. equities perform better The MSCI EAFE Index was the worst performer in 2014, but in 2015 it showed strength and ended the year as the second best performing region with a flattish return of -0.2% The continued support in the form of quantitative easing (QE) by the European Central Bank (ECB) and Bank of Japan (BOJ), as well as initial signs of economic recovery helped EAFE perform better The MSCI FM Index lost 14.7% in 2015, after producing a return of 6.7% in 2014 The concerns over slowing global growth and the slump in commodity prices, particularly oil, led to the underperformance of the MSCI FM Index Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 8

Hungary Russia Philippines India China South Korea Asia Taiwan Mexico Czech Chile UAE Indonesia Qatar EMEA Malaysia Egypt Thailand Poland South Africa LatAm Turkey Peru Brazil Colombia Greece Total Return EMERGING MARKETS REVIEW: 2015 Emerging Markets Country Performance Emerging Markets Total Return by Country 12/31/2014 12/31/2015 40% 37.1% 20% 0% 5.0% -20% -6.0% -6.1% -7.6% -8.5% MSCI EM Index: -14.8% -9.8% -11.1% -14.4% -40% -16.5% -16.8% -17.9% -19.4% -19.5% -19.7% -20.1% -23.5% -23.6% -24.6% -25.2% -30.9% -31.5% -31.7% -41.2% -42.0% -60% -61.3% -80% Source: Bloomberg, MSCI, EGA, as of 12/31/2015. LatAm is the MSCI Latin America Index, EMEA is the MSCI EM Europe, Middle East and Africa (EMEA) Index and Asia is the MSCI EM Asia Index. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 9

EMERGING MARKETS REVIEW: 2015 Asia led, EMEA and Latin America lagged Within EM, just like 2014, Asia (-9.8%) was the best performer in 2015, Europe, Middle East and Asia (EMEA) (-19.7%) and Latin America (-30.9%) both posted heavy losses Hungary (+37.1%) and Russia (+5.0%) were the only countries to record positive returns; Philippines (-6.0%), India (-6.1%), China (-7.6%) and Korea (-8.5%) performed relatively better Hungary led the pack after signs of economic improvement in the euro zone Russia bounced back in 2015 after being the worst performing market in 2014 Reform-oriented countries like India and China did relatively better and reform-driven markets continued to outperform the broader EM index in 2015, continuing the trend from 2014 Commodity driven markets and those embroiled in political crises were the worst performing markets Greece (-61.3%), Colombia (-42.0%), Brazil (-41.2%), Peru (-31.7%) were the worst performing EM countries in 2015 Greece s performance was weighed down by the negotiation over a new debt agreement with its international creditors and the political drama that followed (market shutdown, referendum, re-election) Brazil s loss was caused by a slump in commodity prices, deterioration in economic growth, credit rating downgrades and rising political risk Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 10

Health Care Technology Staples Discretionary Energy Industrials Financials Telecoms Utilities Materials Total Return EMERGING MARKETS REVIEW: 2015 Emerging Markets Sector Performance Defensive sectors did relatively better compared to cyclicals Emerging Markets Total Return by Sector 12/31/2014 12/31/2015 All sectors registered negative returns for 2015 Health Care (-5.2%), Technology (-6.9%), Consumers Staples (-9.1%) and Consumers Discretionary (-11.4%) outperformed the MSCI EM Index Materials (-21.6%), Utilities (-20.7%), Telecoms (-19.2%) and Financials (-18.6%) were the worst performers 0% -5% -10% -15% -20% -25% -5.2% -6.9% -9.1% MSCI EM Index: -14.8% -11.4% -16.8% -16.8% -18.6% -19.2% -20.7% -21.6% Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 11

Estonia Lebanon Romania Argentina Jordan Slovenia Lithuania Vietnam Croatia Oman Morocco Pakistan Tunisia Mauritius Kuwait Bangladesh Kenya Nigeria Bahrain Sri Lanka Serbia Bulgaria Ukraine Kazakhstan Total Return EMERGING MARKETS REVIEW: 2015 Frontier Markets Country Performance Frontier Markets Total Return by Country 12/31/2014 12/31/2015 20% 10% 0% 11.7% 4.0% 1.9% -0.4% -10% -3.7% -4.2% -4.6% -5.4% -6.8% -9.4% -20% MSCI FM Index: -14.7% -12.9% -12.9% -15.0% -15.5% -16.2% -17.6% -18.1% -20.2% -21.6% -22.1% -30% -26.8% -40% -35.0% -50% -43.3% -46.2% Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 12

EMERGING MARKETS REVIEW: 2015 Frontier markets (FM) followed EM down The MSCI FM Index lost (-14.7%) in 2015 The concerns over the U.S. Federal Reserve (Fed) rate hike weighed on FM throughout the year. Like EM, FM losses were also before the Fed hike, with FM gaining over 1.3% since the December 16 Fed move, and S&P 500 losing over 1.3%. Slowing global growth and geo-political issues weighed on FM performance The losses were also linked to the sharp declines in commodity prices, which put pressure on commodity dependent economies Only three out of the twenty-four frontier countries managed to end 2015 in positive territory: Estonia (+11.7%), Lebanon(+4.0%) and Romania (+1.9%). Kazakhstan (-46.2%), Ukraine (-43.3%), Bulgaria (-35.0%), Serbia (-26.8%) and Sri Lanka (-22.1%) were the worst performers Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 13

Flows in US$ billions EMERGING MARKETS REVIEW: 2015 Outflows continue for emerging market equity ETFs A total of US$0.9 billion exited EM equity (ex-china A shares) ETFs. This follows US$3.7 billion of outflows in 2014. Emerging Market Equity ETF Fund Flows (cumulative) 1/1/2015 12/31/2015 In Q1, EM saw an outflow of US$3.1 billion Outflows increased in March when strong U.S. economic data signalled possibility of the Fed rate hike later in the year In Q2, EM experienced inflows of US$8.3 billion as the Fed pushed back the timing of its first rate hike 8 6 4 2 0-2 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Concerns over a global economic slowdown drained investors risk appetite in Q3 where EM saw outflows of US$10.5 billion; however in Q4 EM saw inflows of US$4.3 billion -6 Jan-15 Apr-15 Jul-15 Oct-15 Source: Bloomberg, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. -4 14

MSCI Emerging Market Price Index EMERGING MARKETS REVIEW: 2015 Notable Events in 2015 1110 1070 1030 990 950 910 870 830 ECB announced quantitative easing Alexis Tsipras elected as Greek PM The Fed removed its reference to being "patient" on rates Former military ruler Muhammadu Buhari wins Nigerian election Saudi Arabia announces stock market access for foreigners AK Party wins Turkey election; lost its single-party The Fed indicated interest government rates hike will be slow and gradual Governing PRI party did well in Mexico mid-term election Greece defaults on IMF payment Greece voted against further austerity IMF cuts World growth outlook China devalued its currency (RMB) IMF cuts World growth forecasts again Alexis Tsipras re-elected as Greek PM ECB lowered interest rate and extended asset purchase program The Fed raises interest rate by 25 bps 790 Brazil ratings cut to junk status by S&P AK Party wins Turkey reelection; gains single-party government 750 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Source: Bloomberg, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 15

Section II. 2016 PERSPECTIVE: WHAT EM INVESTORS NEED TO KNOW 16

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e GDP Growth (%) 1 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW A renaissance in EM growth IMF forecasts that emerging markets (EM) will grow 4.5% next year, up from an estimated 4.0% in 2015 10.0 EM GDP growth expected to accelerate in 2016 2000 2017e This would be the first acceleration since 2010, in part reflecting a less deep recession in countries that endured economic distress in 2015 (including Brazil and Russia) Developed markets (DM) expected to grow by 2.2% in 2016, up from an estimated 2.0% in 2015, supported by accommodative monetary policy and growth recovery in Europe and Japan 8.0 6.0 4.0 2.0 0.0-2.0-4.0 Change in EM GDP growth Developed Markets Emerging Markets Source: IMF World Economic Outlook, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 17

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e EM to DM GDP growth differential EM performance relative to DM 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW Growth is key to EM equity performance Growth is the key driver of EM equity performance Rising GDP differential signals better EM performance 2000 2017e Historically, when EM GDP growth accelerates quicker than DM GDP growth (i.e., the EM to DM growth differential increases), EM equities have usually outperformed 7.0 6.0 5.0 4.0 3.0 1.6 1.4 1.2 1.0 0.8 The GDP growth differential between EM and DM is expected to increase in 2016 for the first time since 2011 This may signal better performance for EM equities 2.0 1.0 0.0-1.0 0.6 0.4 0.2 0.0 EM - DM GDP differential EM performance relative to DM (rhs) Source: IMF, Bloomberg, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 18

EPS growth (2016e) 2 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW Strong EM earnings growth with consumer earnings forecast to outperform For the first time in 9 years, consensus forecasts EM Earnings per Share (EPS) growth will lead in 2016 Corporate earnings growth 2016 consensus estimates 25% During the last time EM earnings led (2007), the MSCI EM Index gained 39.7%, outperforming the MSCI ACWI Index (+12.4%), the MSCI EAFE Index (+11.9%) and the MSCI U.S. Index (+6.1%) 20% 15% 10% 7% 7% 10% 10% 12% 22% The companies in the Dow Jones Emerging Markets Consumer Titans 30 Index, the index that the EGShares Emerging Markets Consumer ETF (ECON) tracks, are projected to see their earnings grow by 22% next year 5% 0% MSCI EAFE Index MSCI World ex US Index MSCI Japan Index MSCI US Index MSCI EM Index Dow Jones EM Consumer Titans 30 Index Source: Bloomberg, MSCI, EGA, as of 11/13/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 19

MSCI EM Index performance MSCI EM Index performance 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW 3 EM investors should not fear the Fed During the last three tightening cycles ( 94, 99 and 04), EM equities have performed well Historically, EM equities on average have been 17% higher six months after the first hike in Fed Funds rates (vs. 13% for EAFE and 5% for S&P 500 Index); and on average EM returned 25% six months after the second rate hike (vs. 13% for EAFE and 5% for S&P 500 Index) Behavior of EM equities after 1st Fed rate hike Behavior of EM equities after 2nd Fed rate hike Last three instances Last three instances 130 130 120 1st Fed Rate Hike 120 2nd Fed Rate Hike 110 110 100 100 90 90 80 80 70 70 60-6 -5-4 -3-2 -1 0 1 2 3 4 5 6 60-6 -5-4 -3-2 -1 0 1 2 3 4 5 6 Months before/after the 1st Fed rate hike '94 rate hike '99 rate hike '04 rate hike Months before/after the 2nd Fed rate hike '94 rate hike '99 rate hike '04 rate hike Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 20

MSCI EM Index performance (6-months) 4 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW EM consumer sectors have benefited when U.S. interest rates rise Past data has already shown that rising U.S. interest rates is not necessarily a harbinger of doom and gloom for EM equities. On the contrary, EM stocks have risen after the Fed hikes interest rates. Within EM, it is the consumer that has benefitted more when the Fed tightened monetary policy. Over the last two cycles of rising U.S. interest rates, EM consumers have performed better than broader EM. 35% 30% 25% 20% 15% 10% 5% EM consumer stocks have performed better Last three instances 30% 22% 18% 6% 25% 0% n.a. '94 rate hike '99 rate hike '04 rate hike MSCI EM Consumers MSCI EM Index Source: Bloomberg, MSCI, EGA, as of 12/31/2015. EM Consumers is a market capitalization weighted average of the MSCI EM Consumer Staples and MSCI EM Consumer Discretionary indices. Data for MSCI EM sectors are available from 1995, hence n.a. for EM Consumers in 1994. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 21

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Household final consumption expenditure, per capita growth (constant 2005 US$), 10-yr avg 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW The rise of the Indian consumer India s per capita household final consumption expenditures levels (constant 2005 US$) has reached an all-time high $US730 7.0% India: consumption at an all-time high 1970 2014 This reflects a 10-year average growth rate up 84% over the past decade and at an all-time high Looking at contributing macro factors such as an aging, yet still young population, birth rates, and per capita GDP, our analysis suggests that by 2020 per capita levels could reach $1,025 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Source: World Bank, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 22

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 U.S. dollar liabilities of EM (billions) U.S. dollar liabilities of EM % of GDP 5 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW EM U.S. dollar debt should not be a concern U.S. dollar liabilities of EM economies (sovereign, corporate and individual) have been steadily rising over the last ten years 6,000 EM U.S. dollar debt 1980 2014 24% However, this concern appears overblown in context 5,000 4,000 22% 20% When these liabilities are measured as a percentage of economic output, a different picture emerges 3,000 2,000 18% 16% Liabilities appear to be rangebound since 1990 and these concerns appear overblown 1,000 0 14% 12% Total USD liabilities of EM Total USD liabilities of EM % of GDP (rhs) Source: BIS, IMF World Economic Outlook, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 23

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 EM Corporate Net Debt/Total Equity 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW No sign of balance sheet stress within EM corporates Investors and the media alike have expressed concerns over the debt burden assumed by EM corporates However, debt should be considered on a net basis, that is gross liabilities net of gross assets 120% 100% 80% EM: Net Debt/Total Equity 1995 2014 Using the net debt/total equity ratio, corporate EM does not appear to be too leveraged; the leverage ratio has been in a narrow range since 2000, after substantial deleveraging following the 1997 Asian crisis 60% 40% 20% 0% Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Net Debt is calculated by netting the value of a company s liabilities and debts with its cash and other similar liquid assets. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 24

12-month Forward P/E ratio 6 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW The valuation case for EM EM valuations appear attractive relative to other markets and relative to their own historical average The MSCI EM Index has declined around 35% since its 2011 high and now trades at 10.7x estimated earnings, or almost one-third less than the valuation of the S&P 500 Index 18 16 14 12 10 8 EM valuations are relatively cheap 12/30/2005 12/31/2015 EM currently trades close to its 10-year average forward P/E ratio, while valuations in other regions are much higher and close to their 10-year highs 6 4 2 0 MSCI EM Index MSCI EAFE Index MSCI ACWI Index S&P 500 Index Current Average (10yr) Source: FactSet, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 25

JPMorgan EM Currency Index 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW Keep in Mind: EM currencies are at an all-time low EM currencies have reached all-time lows and have fallen below the levels reached during the 2008 Financial Crisis Record low currencies and low relative equity valuations should be supportive of the EM equities 115 110 105 100 95 EM currency 1/31/2000 12/31/2015 90 85 80 75 70 65 60 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 26

Excess return from hedging currency exposures 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW Keep in Mind: Hedging EM currency exposure is expensive with no benefit Over the past 16 years, there has been no return benefit from hedging EM equity investments: it would have helped in 8 years and hurt in 8 years The estimated EM FX short term interest rate differential currently is 3.9% per year before transaction costs The currency markets for other international investments Europe (euro) and Japan (yen), are deep and liquid. However, EM is not. EM FX is heterogeneous and its currencies are much more difficult to hedge. 15% 10% 5% 0% -5% -10% -15% -20% Hedging EM: No benefit at a high cost 12/31/1999 12/31/2015 10% 10% 7% 5% 1% -1% 6% 6% 7% Average = 0.1% -1% -4% -5% -6% -9% -9% -16% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Hedged Returns are represented by MSCI Emerging Markets Index (Local), Unhedged are represented by MSCI Emerging Markets (USD). Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 27

Annualised Volatility 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW Keep in Mind: EM currencies do not create relatively higher volatility EM currencies contribute to higher volatility of U.S. dollar denominated equity returns EM currencies do not create relatively higher volatility 12/31/1987 12/31/2015 However, EM and FM are not alone with this challenge. Variations of currencies in UK, EAFE and Japan have led to even higher volatility in U.S. dollar returns in their respective equity indices. 24% 22% 20% 18% 16.8% 17.2% 20.7% 19.5% 23.2% 22.1% 19.0% 18.0% Over the long run, EM and FM currencies have each resulted in a 1.1% increase in equity volatility, which compares favorably to the 2.4% increase contributed by currencies in the UK, 2.2% increase in EAFE, and the 1.3% increase in Japan 16% 14% 12% 10% 14.4% MSCI UK Index 15.0% MSCI EAFE Index MSCI Japan Index MSCI EM Index MSCI FM Index 14.4% 14.4% S&P 500 Index US$ Local Currency Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Note: Calculations for the MSCI FM Index starts from May, 2002. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 28

Total returns of the MSCI EM Index 2016 PERSPECTIVES: WHAT EM INVESTORS NEED TO KNOW Keep in Mind: Time in the markets is more important than timing the markets Missing just a very few of the best performing trading days can be significantly detrimental to returns Total returns for the MSCI EM Index since the start of 2000 is 136%, yet falls off sharply to below zero once only the best 15 of the 4175 trading days have been missed 140% 120% 100% 80% 60% 40% EM: Market Timing vs. Time In The Market Since 2000 20% 0% -20% -40% 0 1 2 3 4 5 6 7 8 9 10111213141516171819202122232425 Missing the number of best trading days Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 29

THE EMERGING MARKETS UPDATE Summary 2016 Perspectives What EM Investors Need to Know 1. The International Monetary Fund (IMF) forecasts a renaissance in EM growth, which has historically proven key to EM equity performance 2. EM earnings are forecast to lead in 2016, with consumer earnings forecast to outperform 3. EM investors should not fear the U.S. Federal Reserve: During the last three Fed tightening cycles EM equities have performed well 4. EM consumer sector has benefitted more when U.S. interest rates rise 5. EM U.S. dollar debt concerns likely overblown with liabilities as a percent of GDP rangebound for over 20 years and no sign of balance sheet stress within EM corporates 6. EM valuations appear attractive relative to other markets and relative to their own historical average Source: Bloomberg, MSCI, EGA, as of 12/31/2015. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347. 30

DEFINITIONS AND ADDITIONAL DISCLOSURES 31

THE EMERGING MARKETS UPDATE Glossary of Terms Developed Markets (DM) are countries that are most developed in terms of economy and capital markets. They generally have high per capita income or GDP, as well as openness to foreign ownership, ease of capital movement and efficiency of market institutions. Earnings Growth is the rate at which a company has grown its profitability per unit of equity over a given time period. Earnings per Share (EPS) is the amount of income earned during a period per share of common stock. Emerging Markets (EM) are countries with less advanced capital markets and less established stock markets than those in developed markets; these countries have embarked on economic development and reform programs as well as begun to open up their markets and emerge. Frontier Markets (FM) are countries with less advanced capital markets and less established stock markets than those in the emerging markets. Gross Domestic Product (GDP) a money measure of the goods and services produced within a country's borders over a stated time period. Quantitative Easing (QE) is a type of monetary policy where central banks target the supply of money by buying government bonds. Price to Earnings Ratio (P/E Ratio) (Forward) is the sum of Bloomberg consensus estimates for the future 12-month earnings of the equity holdings, divided by the total market value of the equity holdings. Both positive and negative earnings are included in the calculation. 32

THE EMERGING MARKETS UPDATE Index Definitions Dow Jones Emerging Markets Consumer Titans 30 Index is a free-float market capitalization-weighted index that measures the performance of 30 leading emerging market companies in the Consumer Goods and Consumer Services Industries as defined by S&P Dow Jones Indexes. JP Morgan Emerging Market Currency Index is a benchmark for Emerging Markets currencies versus the US dollar. MSCI All Country World (ACWI) Index is an index that captures large and mid-cap representation across 23 developed markets and 23 emerging markets countries. MSCI Europe, Australasia, Far East (EAFE) Index captures large and mid-cap representation across developed markets countries around the world, excluding the U.S. and Canada. MSCI Emerging Markets (EM) Index is an index that is designed to measure the equity market performance in global emerging markets. MSCI EM Asia Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the emerging market countries of Asia. MSCI EM Europe, Middle East and Africa (EMEA) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the emerging market countries of Europe, the Middle East & Africa. MSCI EM Latin America Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of emerging markets in Latin America. MSCI Frontier Markets (FM) Index is an index that captures large and mid cap representation across 24 Frontier Markets countries. MSCI Japan Index is designed to measure the performance of the large and mid cap segments of the Japanese markets. MSCI United Kingdom (UK) Index is designed to measure the performance of the large and mid cap segments of the UK market. MSCI World Index is an index that captures large and mid cap representation across 23 Developed Markets countries. S&P 500 Index is a broad-based measure of U.S. stock market performance. 33

THE EMERGING MARKETS UPDATE Additional Disclosures The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an as is basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the MSCI Parties ) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of MSCI Inc. ( MSCI ) and Standard & Poor s, a division of The McGraw-Hill Companies, Inc. ( S&P ) and is licensed for use by Emerging Global Advisors, LLC. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. The Dow Jones Emerging Markets Consumer Titans 30 Index is a product of S&P Dow Jones Indices LLC ("SPDJI"), and has been licensed for use by Emerging Global Advisors. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Emerging Global Advisors. EGShares ECON ETF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the above mentioned indices. 34

E G A I N V E S T M E N T S T R A T E G Y T E A M : Edward Kerschner, CFA Vice Chairman Steve Mo Investment Strategist Neeraj Agarwal Investment Strategist C O N T A C T I N F O R M A T I O N VISIT: emergingglobaladvisors.com READ: Emerging Perspectives CALL: +1 888 800 4347 EMAIL: info@emergingglobaladvisors.com 35