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ETFINSIGHT YOUR SOURCE FOR THE LATEST ETF NEWS & INSIGHTS

“Home-Bias” + Class of 2014 (October 21, 2014)

Oct 21, 2014

ETFinsight – Ongoing updates, Weekly recaps, Monthly Perspectives, Model Portfolios, ETF screener, webinars

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ETFinsight - October 2014 webinar: “Home-Bias” + Class of 2014

Presenters: • Paul Bosse, CFA, Principal, Vanguard Investment Strategy Group • David Barber, CAIA, VP, National Accounts, First Asset Host: • Yves Rebetez, CFA, MD, Editor, ETFinsight

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ETFinsight - October 2014 webinar: “Home-Bias” + Class of 2014

Key considerations • • • •

Why is Home Bias an issue and what to do about it The “Currency Dimension” Are Canadians any different with regards to Home Bias? How so? ETFs for broad access to move away from that Home Bias issue

• Class of 2014 – Additions in terms of access: • Beyond some broad accesses – Factor specific ETF solutions • Such as Low Risk Weighted (What does that accomplish?) • Actively Managed ETFs (FHB – The “rational argument” in this respect)

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Are your clients missing over 90% of the global market?

October 2014

Paul Bosse, CFA Principal, Vanguard Investment Strategy Group

For institutional use only. Not for public distribution.

Canada is #4, but 4% of world capitalization Ranks higher than its population (35), or GDP (11)

Country Stock Market as a percentage of World Market Cap Rank

Country

12/31/2012

2/28/2014

1

Change

United States

45.05

49.06

4.01

2

United Kingdom

8.05

7.95

-0.10

3

Japan

6.90

7.64

0.74

4

Canada

4.26

3.58

-0.68

5

France

3.54

3.44

-0.10

6

Germany

3.03

3.27

0.24

7

Switzerland

2.93

3.17

0.24

8

Australia

3.32

2.71

-0.61

9

China

2.38

1.92

-0.46

10

Korea

2.20

1.59

-0.61

Source: Vanguard – MSCI country weights in Total World Stock Market Index

For institutional use only. Not for public distribution.

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Sector differences are large relative to the global economy

Canada has some major differences in sector exposure

Sector differences vs. ACWI IMI Sectors

MSCI USA IMI

MSCI UK IMI

MSCI Australia IMI

MSCI Canada IMI

Consumer Discretionary

0.8

-2.6

-8.8

-6.6

Consumer Staples

-0.4

5.2

-0.8

-5.7

Energy

0.4

6.1

-3.3

16.5

Financials

-4.5

-0.1

25.8

13.7

Health Care

2.6

-2.4

-5.4

-6.8

Industrials

-0.4

-2.9

-5.5

-3.8

Information Technology

5.7

-10.3

-11.8

-10.9

Materials

-2.6

2.5

12.6

6.3

Telecommunication Services

-1.6

3.8

-1.6

-1.3

Utilities

-0.1

0.7

-1.4

-1.4

Sum of absolute deviations

19.1

36.6

76.8

72.9

Source: Vanguard calculations based on Factset data. Yellow shading denotes deviations between 5% and 9.99%. Red shading denotes deviations 10% or greater. Note: Data is as of 12/31/2013

For institutional use only. Not for public distribution.

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Security name concentration is moderate

Canada has limited number of available securities and moderate concentration

Measures of concentration MSCI USA IMI

# Securities

MSCI UK IMI

2449 15%

% in top 10 Top 5 stocks Apple Inc (2.51%)

350 37%

MSCI Australia IMI

233 56%

MSCI Canada IMI

329 36%

MSCI ACWI IMI

8498 7%

HSBC Holdings (6.12%)

Commonwealth Bank of Australia (10.11%)

Royal Bank of Canada (6.34%) Apple Inc (1.24%)

Exxon Mobil (2.19%)

Vodafone Group (5.69%)

BHP Billiton (9.84%)

TD Bank (5.69%)

Exxon Mobil (1.08%)

Google (1.51%)

BP (4.56%)

Westpac Banking Corp (8.10%)

Bank Of Nova Scotia (4.93%)

Google (.74%)

Microsoft (1.46%)

Royal Dutch Shell (4.09%)

Austr and NZ Banking Group (7.13%) Suncor Energy (3.45%)

Microsoft (.72%)

National Australia Bank (6.60%)

General Electric (.69%)

General Electric (1.41%) Glaxo Smith Kline (3.91%)

Canada National Railway (3.14%)

Source: Vanguard calculations based on Factset data. Note: Data is as of 12/31/2013.

For institutional use only. Not for public distribution.

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Summary of all factors

Considering all factors, there is good reason to globally diversify Canadian equities

Historical minimum variance allocation to foreign equity (using the 1988-2011 period)*

US

UK

Australia

Canada

20%

20%

50%

70%

Domestic Sector Variation

Domestic Issuer Concentration Domestic Transaction Costs Domestic Liquidity Domestic Taxes

Potential impact on asset allocation Low potential impact Moderate potential impact High potential impact

Source: Vanguard Investment Strategy Group *Results will vary based on the time period used. For institutional use only. Not for public distribution.

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Bonds: why go global?

Bond correlation over time is less than one

Correlation of the monthly change in each country's 10-year government bond yield to that of Canada, Jan 1998 - Nov 2013 1.00

0.75 0.6 0.6

0.5 0.50

0.4

0.5

0.5

0.6

0.4 0.3

0.3

0.25 0.1

0.1

0.00

Source: Vanguard, based on data from Thomson Reuters Datastream. For institutional use only. Not for public distribution.

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What drives global bond returns?

Currency movements are highly correlated to rates

Average volatility and correlation to currency impact 1985 to 11/30/2013 20%

1.00

0.91

16%

0.80

12%

0.60 8.5%

8%

0.40

5.3% 3.4%

4%

Correlation

Annualized volatility

13.8%

0.20 0.05

0.05 0%

0.00 -0.02

-4%

-0.20 Global Stocks

Canadian Bonds

Average Volatility

Global Bonds Unhedged

Global Bonds Hedged

Correlation to currency impact

Source: Vanguard, based on data from Thomson Reuters Datastream and Barclays For institutional use only. Not for public distribution.

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Vanguard ETFs: Equities

Ticker

Index

MGMT fee/MER1

FTSE Canada Index ETF

VCE

FTSE Canada Index

0.05%/—

FTSE Canada All Cap Index ETF

VCN

FTSE Canada All Cap Index

0.05%/—

FTSE Canadian High Dividend Yield Index ETF

VDY

FTSE Canada High Dividend Yield Index

0.20%/—

FTSE Canadian Capped REIT Index ETF

VRE

FTSE Canada All Cap Real Estate Capped 25% Index

0.35%/0.39%

U.S. Total Market Index ETF

VUN

CRSP US Total Market Index

0.15%/0.17%

U.S. Total Market Index ETF (CAD-hedged)

VUS

CRSP US Total Market Index (CAD-hedged)

0.15%/0.16%

S&P 500 Index ETF

VFV

S&P 500 Index

0.08%/—

S&P 500 Index ETF (CAD-hedged)

VSP

S&P 500 Index (CAD-Hedged)

0.08%/—

U.S. Dividend Appreciation Index ETF

VGG

NASDAQ US Dividend Achievers Select Index

0.28%/0.31%

U.S. Dividend Appreciation Index ETF (CAD-hedged)

VGH

NASDAQ US Dividend Achievers Select Index (CAD-hedged)

0.28%/0.30%

FTSE All-World ex Canada Index ETF

VXC

FTSE All-World ex Canada Index

0.25%/—

FTSE Developed ex North America Index ETF

VDU

FTSE Developed ex North America Index

0.20%/—

FTSE Developed ex North America Index ETF (CAD-hedged)

VEF

FTSE Developed ex North America Index Hedged CAD Index

0.20%/—

NEW

FTSE Developed Europe Index ETF

VE

FTSE Developed Europe Index

0.23%/—

NEW

FTSE Developed Asia Pacific Index ETF

VA

FTSE Developed Asia Pacific Index

0.23%/—

FTSE Emerging Markets Index ETF

VEE

FTSE Emerging Index

0.23%/—

ETF Canadian equity

U.S. equity

International equity NEW

Source : The Vanguard Group, Inc. 1 Management Expense Ratio (MER) is the audited MER as of December 31, 2013 including waivers and absorptions and is expressed as an annualized percentage of the daily average net asset value. If Vanguard Investments Canada Inc. had not waived/absorbed certain expenses, MERs would have been higher. For more detailed information, visit vanguardcanada.ca. The Manager expects to continue absorbing or waiving certain fees indefinitely, but may in its discretion, discontinue this practice at any time. For institutional use only. Not for public distribution.

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Vanguard ETFs: Fixed income

MGMT fee/MER1

Ticker

Index

Canadian Aggregate Bond Index ETF

VAB

Barclays Global Aggregate Canadian Float Adjusted Bond Index

0.12%/—

Canadian Short-Term Bond Index ETF

VSB

Barclays Global Aggregate Canadian Gov/Credit 1-5 year Float Adjusted Bond Index

0.10%/—

Canadian Short-Term Corporate Bond Index ETF

VSC

Barclays Global Aggregate Canadian 1-5 year Credit Float Adjusted Bond Index

0.10%/—

VBU

Barclays U.S. Aggregate Float Adjusted Bond Index (CAD Hedged)

0.20%/—

VBG

Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index 0.35%/— (CAD Hedged)

ETF Canadian fixed income

U.S. fixed income NEW

U.S. Aggregate Bond Index ETF (CAD-hedged) International fixed income

NEW

Global ex-U.S. Aggregate Bond Index ETF (CAD-hedged)

Source : The Vanguard Group, Inc. 1 Management Expense Ratio (MER) is the audited MER as of December 31, 2013 including waivers and absorptions and is expressed as an annualized percentage of the daily average net asset value. If Vanguard Investments Canada Inc. had not waived/absorbed certain expenses, MERs would have been higher. For more detailed information, visit vanguardcanada.ca. The Manager expects to continue absorbing or waiving certain fees indefinitely, but may in its discretion, discontinue this practice at any time. * As of October 7th, 2014, the management fee for VCN was reduced from 0.12% to 0.05%, VCE was reduced from 0.09% to 0.05%, VDY was reduced from 0.30% to 0.20%, VFV was reduced from 0.15% to 0.08%, VSP was reduced from 0.15% to 0.08%, VDU was reduced from 0.28% to 0.20%, VEF was reduced from 0.28% to 0.20%, VEE was reduced from 0.33% to 0.23%, VAB was reduced from 0.20% to 0.12%, VSB was reduced from 0.15% to 0.10%, and VSC was reduced from 0.15% to 0.10%. For institutional use only. Not for public distribution.

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Disclosures Commissions, management fees and expenses all may be associated with the Vanguard ETFs™. Investment objectives, risks, fees, expenses, and other important information are contained in the prospectus; read it before investing. Copies of the prospectus are available at www.vanguardcanada.ca. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated. Date of First Publication: June 17, 2014. The opinions expressed in this presentation are those of the individual representative and do not necessarily reflect the opinions of Vanguard Investments Canada Inc. No implied or express recommendation, offer, or solicitation to buy or sell any ETFs or to adopt any particular investment or portfolio strategy is made in this material. This presentation is not research, investment and/or tax advice and it is not tailored to the needs or circumstances of any individual investor and thus, it should not be used as the basis of any specific investment recommendation for your clients or prospective investors. It is intended for educational and informational purposes only and does not replace independent professional judgment by a financial advisor. Information, figures and charts are summarized for illustrative purposes only and are subject to change without notice. Vanguard Investments Canada Inc. does not guarantee the accuracy, completeness, timeliness or reliability of all the information contained in these slides or any results from their use. The Vanguard ETFs are not sponsored, endorsed, sold or promoted by Barclays. Barclays does not make any representation regarding the advisability of Vanguard ETFs or the advisability of investing in securities generally. Barclays' only relationship with Vanguard is the licensing of the Index which is determined, composed and calculated by Barclays without regard to Vanguard or the Vanguard ETFs. Barclays has no obligation to take the needs of Vanguard or the owners of the Vanguard ETFs into consideration in determining, composing or calculating the Index. Barclays has no obligation or liability in connection with administration, marketing or trading of the Vanguard ETFs. S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and have been licensed for use by S&P Dow Jones Indices LLC and its affiliates and sublicensed for certain purposes by Vanguard. The S&P Index is a product of S&P Dow Jones Indices LLC and has been licensed for use by Vanguard. The Vanguard Fund(s) is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates, and none of S&P Dow Jones Indices LLC, Dow Jones, S&P nor their respective affiliates makes any representation regarding the advisability of investing in such product(s). For institutional use only. Not for public distribution.

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Disclosures (continued) “Dividend Achievers" is a trademark of The NASDAQ OMX Group, Inc. (collectively, with its affiliates, "NASDAQ OMX") and has been licensed for use by The Vanguard Group, Inc. Vanguard ETFs are not sponsored, endorsed, sold, or promoted by NASDAQ OMX and NASDAQ OMX makes no representation regarding the advisability of investing in the ETFs. NASDAQ OMX MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE VANGUARD ETFs. All rights in the FTSE Canada All Cap Real Estate Capped 25% Index and the FTSE Canada High Dividend Yield Index (the “Indexes”) vest in FTSE International Limited (“FTSE”). “FTSE®” is a trademark of London Stock Exchange Group companies and is used by FTSE under license. The Vanguard FTSE Canadian Capped REIT Index ETF and Vanguard FTSE Canadian High Dividend Yield Index ETF and the Vanguard FTSE Canadian High Dividend Yield Index ETF (the “Products”) have been developed solely by Vanguard. The Indexes are calculated by FTSE or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the Products and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Indexes or (b )investment in or operation of the Products. FTSE makes no claim, prediction, warranty or representation either as to the results to be obtained from the Products or the suitability of the Indexes for the purpose to which they are being put by Vanguard. Morningstar data © 2014 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. No part of this presentation may be reproduced, distributed, disseminated or referred to, in whole or in part, in any form, including to any investor, without prior written and express permission by Vanguard Investments Canada Inc. By participating in this presentation or by accepting any copy of the slides presented, you agree to be bound by these terms and conditions. © 2014 Vanguard Investments Canada Inc. All rights reserved.

For institutional use only. Not for public distribution.

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ETF Insight Webinar Class of 2014 ETFs October 2014

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Important information about each First Asset ETF Fund is contained in its respective prospectus. Individuals should seek the advice of professionals, as appropriate, prior to investing. This investment may not be suitable for all investors. Some conditions apply. Copies of the prospectus may be obtained from your Investment Advisor, First Asset or at www.sedar.com Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The indicated rates of return are the historical annual compound total returns including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or operational charges or income taxes payable by any security holder that would have reduced returns. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Performance is calculated net of all fees. The performance information shown is for Common units of the Funds, and may not be indicative of the performance of other series of the same Fund. Variations in performance data among various classes of the same Fund is due to differences in management fees attributed to each series. The First Asset ETFs are managed by First Asset Investment Management Inc.

www.firstasset.com | 1.877.642.1289 | [email protected]

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First Asset Exchange Traded Funds $1,200.00

AUM GROWTH $1,000.00

$800.00

$600.00

$400.00

$200.00

$0.00

Source: First Asset

www.firstasset.com | 1.877.642.1289 | [email protected]

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Yesterday’s Alpha is Today’s Beta

Alpha Alpha Factor Beta Portfolio Return

Regional Beta Beta

Country Beta Sector Beta

1970s

1980s

2000s Source: MSCI

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Factor-based Strategies  

Combines the benefits of active and passive management Cost-effective, transparent, rules-based ways to capture factors.

Factor-based Indexes Benchmarks

Factor Indexes

Active Mandates

Market Return

Transparent & CostEffective

Active Returns

Active Value Add Cap-Weighted ACWI IMI

Value Size Yield Quality Volatility Momentum

Strategic Factor Tilt Tactical Asset Allocation Security Selection Market Timing

Cap-weighted Indexes

Active Management

www.firstasset.com | 1.877.642.1289 | [email protected]

Tactical Factor Tilt and Overlays

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MSCI Low Risk Weighted Index Methodology 

MSCI Low Risk Weighted Indexes are designed to capture the low volatility factor



Exposure: US – top 150 RW stocks, Europe – top 100 RW stocks, Global – top 200 RW stocks



Reduction of portfolio risk over the long-term, with less drawdown than the broad market and higher risk adjusted returns historically



Constituents weighted using inverse of 3 year historical variance  Effective and transparent risk reduction weighting



Lowest risk stocks receive highest weighting



Semi annual rebalancing

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Why Risk Weighted? MSCI Europe Risk Weighted Top 100 Index

MSCI USA Risk Weighted Top 150 Index

MSCI World Risk Weighted Top 200 Index

2000

2001

2002

2003 2004 2005 2006 2007 2008

Dec-98 Oct-99 Aug-00 Jun-01 Apr-02 Feb-03 Dec-03 Oct-04 Aug-05 Jun-06 Apr-07 Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 Dec-13

Dec-98 Oct-99 Aug-00 Jun-01 Apr-02 Feb-03 Dec-03 Oct-04 Aug-05 Jun-06 Apr-07 Feb-08 Dec-08 Oct-09 Aug-10 Jun-11 Apr-12 Feb-13 Dec-13

Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

$35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $-

Name

1999

2009

MSCI USA Risk Weighted Top 150 Index S&P 500 Index Excess Return

-6.19 18.83 0.28 -9.00 23.73 17.28 3.68 17.17 -3.86 -27.41 16.41 13.47 11.90 11.18 25.03 21.04 -9.10 -11.89 -22.10 28.68 10.88 4.91 15.79 5.49 -37.00 26.46 15.06 2.11 16.00 32.39 -27.23 27.93 12.17 13.10 -4.95 6.40 -1.23 1.37 -9.35 9.59 -10.06 -1.59 9.79 -4.82 -7.36

MSCI Europe Risk Weighted Top 100 Index 5.56 13.85 -5.29 -9.80 15.86 27.82 21.69 30.82 2.75 -31.84 19.25 MSCI Europe Index 29.91 -2.16 -16.40 -29.36 19.78 12.24 24.93 19.05 6.04 -38.91 27.70 Excess Return -24.35 16.01 11.11 19.56 -3.92 15.58 -3.25 11.77 -3.29 7.07 -8.46

2010 2011 2012 2013

Average Average Down Return Year Return 7.50 -1.08 6.58 -15.60 0.92 14.52

8.61 1.10 14.14 19.36 6.83 -9.34 15.61 21.55 1.78 10.44 -1.48 -2.19

8.92 5.83 3.09

-6.40 -19.23 12.84

MSCI World Risk Weighted Top 200 Index -4.34 22.16 3.50 -3.88 17.05 24.20 14.21 22.51 0.78 -26.87 11.18 9.30 7.31 10.68 21.17 MSCI World Index 27.68 -9.87 -14.21 -24.09 24.91 11.32 15.77 15.55 4.69 -38.69 25.73 10.01 -5.49 15.71 28.87 Excess Return -32.01 32.03 17.71 20.20 -7.86 12.88 -1.57 6.96 -3.91 11.82 -14.55 -0.70 12.80 -5.03 -7.70

8.60 5.86 2.74

0.44 -18.47 18.91

Source: Morningstar Direct

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Morningstar US Momentum Index (ETF: YXM) *CAD Hedged* 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 12/2001

$43,923

$22,188

12/2003

12/2005

12/2007

12/2009

Morningstar US Momentum Target 50 Index TR (CAD Hedged) Ending Value: $43,923

12/2013

S&P 500 TR Index (CAD Hedged) Ending Value: $22,188

Index Performance (%)

Benchmark

12/2011

Risk Metrics

1-Year

3-Year

5-Year

10-Year

Up Capture

Down Capture

Std Dev

Sharpe Ratio

Sortino Ratio

11.54

25.60

19.16

10.74

132.35

111.42

20.25

0.52

0.78

19.73

22.99

15.70

8.11

100.00

100.00

14.21

0.17

0.23

Performance as at September 30, 2014. Source: Morningstar Direct †Returns of an index do not represent the ETF’s returns. An investor cannot invest directly in an index. All performance data for all indices assumes the reinvestment of all distributions. Morningstar index performance data results prior to September 12, 2013, are hypothetical, but are calculated using the same methodology that has been in use by the index provider since the Morningstar index was first published. Information regarding the Morningstar indexes, including the applicable index methodology, is available at http://indexes.morningstar.com. As a result of the risks and limitations inherent in hypothetical performance data, hypothetical results may differ from actual Index performance.

www.firstasset.com | 1.877.642.1289 | [email protected]

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Morningstar US Value Index (ETF: XXM) *CAD Hedged* 80000

$72,820

70000 60000 50000 40000 30000

$22,188

20000 10000 0 12/2001

12/2003

12/2005

12/2007

Morningstar US Value Target 50 Index TR (CAD Hedged) Ending Value: $72,820

12/2009

12/2013

S&P 500 TR Index (CAD Hedged) Ending Value: $22,188

Index Performance (%)

Benchmark

12/2011

Risk Metrics

1-Year

3-Year

5-Year

10-Year

Up Capture

Down Capture

Std Dev

Sharpe Ratio

Sortino Ratio

22.58

35.37

22.31

15.36

145.06

104.99

19.26

0.78

1.22

19.73

22.99

15.70

8.11

100.00

100.00

14.21

0.17

0.23

Performance as at September 30, 2014. Source: Morningstar Direct †Returns of an index do not represent the ETF’s returns. An investor cannot invest directly in an index. All performance data for all indices assumes the reinvestment of all distributions. Morningstar index performance data results prior to September 12, 2013, are hypothetical, but are calculated using the same methodology that has been in use by the index provider since the Morningstar index was first published. Information regarding the Morningstar indexes, including the applicable index methodology, is available at http://indexes.morningstar.com. As a result of the risks and limitations inherent in hypothetical performance data, hypothetical results may differ from actual Index performance.

www.firstasset.com | 1.877.642.1289 | [email protected]

Building Factor Portfolios: Risk/Return

Risk-Weighted

RISK

Value

Momentum

RETURN

SIZE

†Returns of an index do not represent the ETF’s returns. An investor cannot invest directly in an index. All performance data for all indices assumes the reinvestment of all distributions. Morningstar index performance data results prior to September 12, 2013, are hypothetical, but are calculated using the same methodology that has been in use by the index provider since the Morningstar index was first published. Information regarding the Morningstar indexes, including the applicable index methodology, is available at http://indexes.morningstar.com. As a result of the risks and limitations inherent in hypothetical performance data, hypothetical results may differ from actual Index performance.

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25

US Multi Factor Portfolio – Value/Momentum/Risk Weighted Indexes

26

$35,000

US Blended Portfolio

S&P 500 TR Index

$30,000 $25,000 $20,000

$15,000 $10,000 $5,000

Performance (%)

Aug-14

Apr-14

Dec-13

Apr-13

Aug-13

Dec-12

Apr-12

Aug-12

Dec-11

Aug-11

Apr-11

Dec-10

Apr-10

Aug-10

Dec-09

Apr-09

Aug-09

Dec-08

Aug-08

Apr-08

Dec-07

Apr-07

Aug-07

Dec-06

Apr-06

Aug-06

Dec-05

Aug-05

Apr-05

Dec-04

Apr-04

Aug-04

Dec-03

Aug-03

Apr-03

Dec-02

Aug-02

Apr-02

Dec-01

$-

Risk Metrics (Since Inception)

1-Year

3-Year

5-Year

10-Year

SI

Up Capture

Down Capture

Std Dev

Sharpe Ratio

Sortino Ratio

Portfolio

27.32

29.22

20.10

10.39

9.53

111.31

75.79

12.30

0.63

0.95

Benchmark

19.73

22.99

15.70

8.11

6.45

100.00

100.00

14.85

0.17

0.23

US Blended Portfolio consists of 33% Morningstar US Value Target 50 Index, 33% Morningstar US Momentum Target 50 Index and 33% MSCI USA Risk Weighted Top 150 Index, rebalanced annually on January 1 st. Performance as at September 30, 2014. Source: Morningstar Direct †Returns of an index do not represent the ETF’s returns. An investor cannot invest directly in an index. All performance data for all indices assumes the reinvestment of all distributions. Morningstar index performance data results prior to September 12, 2013, are hypothetical, but are calculated using the same methodology that has been in use by the index provider since the Morningstar index was first published. Information regarding the Morningstar indexes, including the applicable index methodology, is available at http://indexes.morningstar.com. As a result of the risks and limitations inherent in hypothetical performance data, hypothetical results may differ from actual Index performance.

www.firstasset.com | 1.877.642.1289 | [email protected]

27

European Banks Show Deep Value 

Euro Banks need to rise significantly to reach pre-crisis levels  Since the crisis began, the European bank index remains far below its Canadian and US peers  The Canadian banks are over 40% above their pre-crisis levels while the US banks are close European vs. U.S./Canadian Bank Recoveries(1) (Current Index Constituents, Equally-weighted)

140 120

Canadian Banks (STDBNK Index) European Banks (SX7P Index) US Banks (BKX Index)

100 80 60 40 20 0 Jan '07

European Banks

Jan '08

Jan '09

Jan '10

Jan '11

Jan '12

Jan '13

Jan '14

1. Historical returns calculated using current index constituents, equally-weighted. "European Banks" represented by the SX7P Index, "Canadian Banks" represented by STDBNK Index. "U.S. Banks" represented by the BKX Index. Source: Bloomberg, Hamilton Capital

www.firstasset.com | 1.877.642.1289 | [email protected]

First Asset Hamilton Capital European Bank ETF Symbol FHB

1

Experienced Team Hamilton Capital team has over 40 years of combined experience in financial services

2

Discounted Valuations European banks trade at significant discounts to U.S. and Canadian banks

3 4

Significant Profit Growth European banks continue to experience significant earnings growth from sector’s ongoing credit recovery

Full Recovery Forecast by ‘15 Analysts forecast European banks earnings will have fully recovered by 2015, i.e., by end of next year Source: Hamilton Capital

www.firstasset.com | 1.877.642.1289 | [email protected]

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Disclaimer Important information about each First Asset ETF Fund is contained in its respective prospectus. Individuals should seek the advice of professionals, as appropriate, prior to investing. These investments may not be suitable for all investors. Some conditions apply. Copies of the prospectus may be obtained from your Investment Advisor, First Asset or at www.sedar.com Commissions, trailing commissions, management fees and expenses all may be associated with ETF investments. The indicated rates of return are the historical annual compound total returns including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or operational charges or income taxes payable by any security holder that would have reduced returns. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Performance is calculated net of all fees. The performance information shown is for Common units of the Funds, and may not be indicative of the performance of other series of the same Fund. Variations in performance data among various classes of the same Fund is due to differences in management fees attributed to each series. The commentaries presented are prepared as a general source of information. They are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. The opinions contained in this document are solely those of First Asset and are subject to change without notice. This document includes information that has been obtained from third party sources. The reference information was obtained from publicly available sources, and although First Asset believes that these independent sources are generally reliable, the accuracy and completeness of such information is not guaranteed and has not been independently verified. First Asset assumes no responsibility for any losses or damages, whether direct or indirect, which arise from the use of this information and expressly disclaims liability for any errors or omissions in this information. First Asset is under no obligation to update the information contained herein. The Funds are managed by First Asset Investment Management Inc. Morningstar Indexes are trademarks of Morningstar, Inc. and have been licensed for use for certain purposes by First Asset. The Funds are not sponsored, endorsed, sold or promoted by Morningstar or any of its affiliates (collectively, "Morningstar"), and Morningstar makes no representation regarding the advisability of investing in these Funds. MSCI is a trademark of MSCI Inc. The MSCI indexes have been licensed for use for certain purposes by First Asset. The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The prospectus of the funds contains a more detailed description of the limited relationship MSCI has with First Asset and any related funds.

www.firstasset.com | 1.877.642.1289 | [email protected]

ETFinsight – Class of 2014

$ 1,245,322,641 $ 60,550,486 $ 210,097,900 $ 41,690,140 $ 59,171,331 $ 13,169,243 $ 27,430,750 $ 245,776,063 $ 30,233,244 $ 1,933,441,797

BMO ETFs iShares First Asset First Trust Horizons PowerShares Purpose RBC GAM ETFs Vanguard ETFs

7 3 22 15 4 5 3 13 5 77

common advisors currency alternative 7 0 3 0 11 11 3 12 3 4 0 5 0 1 3 0 13 0 4 5 0 63

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ETFinsight – Class of 2014

Ticker VXC VA VBG VE VBU FLI RWE RWW FHB RWE.B RWW.B RWU.B RWC FRF FDV RWU RWE.A RWU.D RWU.A RWC.A RWW.A RWW.D FLI.A FHB.A RWE.D FRF.A FDV.A

Inception 30-Jun-14 30-Jun-14 30-Jun-14 30-Jun-14 30-Jun-14 3-Sep-14 5-Feb-14 5-Feb-14 23-Jul-14 5-Feb-14 5-Feb-14 5-Feb-14 5-Feb-14 3-Sep-14 3-Sep-14 5-Feb-14 5-Feb-14 5-Feb-14 5-Feb-14 12-Feb-14 5-Feb-14 5-Feb-14 3-Sep-14 23-Jul-14 5-Feb-14 3-Sep-14 3-Sep-14

Provider Vanguard Canada Vanguard Canada Vanguard Canada Vanguard Canada Vanguard Canada First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset First Asset

ETF Name Vanguard FTSE All-World ex Canada Index ETF Vanguard FTSE Developed Asia Pacific Index ETF Vanguard Global ex-U.S. Aggregate Bond Index ETF Vanguard FTSE Developed Europe Index ETF Vanguard U.S. Aggregate Bond Index ETF (CAD-Hedged) First Asset US & Canada LifeCo Income Fund First Asset MSCI Europe Low Risk Weighted ETF (CAD Hedged) First Asset MSCI World Low Risk Weighted ETF (CAD Hedged) First Asset Hamilton Capital European Bank ETF First Asset MSCI Europe Low Risk Weighted ETF (Unhedged) First Asset MSCI World Low Risk Weighted ETF (Unhedged) First Asset MSCI USA Low Risk Weighted ETF (Unhedged) First Asset MSCI Canada Low Risk Weighted ETF First Asset Active Canadian REIT ETF First Asset Active Canadian Dividend ETF First Asset MSCI USA Low Risk Weighted ETF (CAD Hedged) First Asset MSCI Europe Low Risk Weighted ETF (CAD Hedged) First Asset MSCI USA Low Risk Weighted ETF (Unhedged) First Asset MSCI USA Low Risk Weighted ETF (CAD Hedged) First Asset MSCI Canada Low Risk Weighted ETF First Asset MSCI World Low Risk Weighted ETF (CAD Hedged) First Asset MSCI World Low Risk Weighted ETF (Unhedged) First Asset US & Canada Lifeco Income Fund First Asset Hamilton Capital European Bank ETF First Asset MSCI Europe Low Risk Weighted ETF (Unhedged) First Asset Active Canadian REIT ETF (A) First Asset Active Canadian Dividend ETF (A)

MER 0.2825 0.2599 0.3955 0.2599 0.226 0.8475 0.678 0.678 0.9605 0.678 0.678 0.678 0.678 0.7345 0.6215 0.678 1.5255 1.5255 1.5255 1.5255 1.5255 1.5255 1.695 1.808 1.5255 1.582 1.469

AUM $ 15,548,961 $ 4,496,760 $ 3,808,545 $ 3,383,058 $ 2,995,920 $ 135,903,000 $ 21,883,400 $ 11,604,150 $ 9,675,500 $ 7,826,250 $ 4,326,000 $ 3,937,500 $ 3,804,500 $ 2,189,250 $ 1,690,500 $ 1,684,500 $ 754,600 $ 562,500 $ 561,500 $ 543,500 $ 542,250 $ 540,750 $ 540,000 $ 522,000 $ 521,750 $ 243,250 $ 241,250

Advisors Series NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO YES YES YES YES YES YES YES YES YES YES YES

Oct 17/20, 2014 1-Month -2.96% -0.34% -2.15% -1.88% 0.26% -0.11% -4.98% -1.16% 1.27% -0.58% -5.62% -1.75% -4.96% -0.93% -0.37% -1.16% -7.36% 1.36% -3.74% -1.39% 0.46% -0.25% 1.16% 1.83% -2.76% -2.82% 1.34% 0.00% -4.24% 0.00% 0.36% -1.11% -5.01% -1.00% 1.07% 1.80% 0.27% -1.15% -2.76% -2.95% -0.41% -1.23% 0.42% -0.29% -5.65% 0.00% -7.38% 1.26% -3.79% -1.47% 1.23% 0.00% -4.25% 0.00%

3-Months 6-Months YTD 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -0.52% 3.76% 0.00% 1.00% 5.55% 0.00% 0.00% 0.00% 0.00% -2.45% -0.76% 0.00% 2.62% 4.64% 0.00% 4.27% 5.91% 0.00% 1.79% 6.33% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -0.33% 5.00% 0.00% -0.73% 3.33% 0.00% 4.05% 5.47% 0.00% -0.54% 4.49% 0.00% 1.57% 5.88% 0.00% 0.78% 5.11% 0.00% 2.40% 4.20% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -2.66% -1.18% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

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ETFinsight – ETFs Growth in new Millenium

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ETFinsight – Aggregate Allocation

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ETFinsight – Aggregate Allocation

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ETFinsight – ETFs AUM: Still heavily concentrated at the top … But

iShares iShares (former Claymore) BMO ETFs Vanguard ETFs Horizons ETFs PowerShares ETFs First Asset ETFs

35

ETFinsight – With a couple of layers of meaningful choices …

iShares iShares (former Claymore) BMO ETFs Vanguard ETFs Horizons ETFs PowerShares ETFs First Asset ETFs

36

ETFinsight – With a couple of layers of meaningful choices …

iShares iShares (former Claymore) BMO ETFs Vanguard ETFs Horizons ETFs PowerShares ETFs First Asset ETFs

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ETFinsight – Industry Update

38

ETFinsight – Factor-based ETFs

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ETFinsight – Factor-based ETFs breakdown

30-Sep-08

$

30-Sep-10

$

30-Sep-12

$

30-Sep-14

$

VALUE 25,660,603 VALUE 58,654,050 VALUE 67,057,899 VALUE 404,812,496 VALUE $15.78

MOMENTUM + GROWTH 39,068,046 MOMENTUM + GROWTH $ 42,885,016 MOMENTUM + GROWTH $ 57,059,133 MOMENTUM + GROWTH $ 236,134,641 MOMENTUM + GROWTH $6.04 $

RAFI / Quality SMALL CAP/EW 122,261,561 $ 89,831,605 $ RAFI / Quality SMALL CAP/EW $ 507,885,279 $ 496,442,740 $ RAFI / Quality SMALL CAP/EW $ 818,049,873 $ 1,635,378,244 $ RAFI / Quality SMALL CAP/EW $ 1,433,105,554 $ 2,221,147,176 $ RAFI / Quality SMALL CAP/EW $11.72 $24.73

VOL "DRIVEN"

$

-

$

VOL "DRIVEN" VOL "DRIVEN" 66,144,167 VOL "DRIVEN" 659,572,425 VOL "DRIVEN" infinity…

$ $ $

YIELD 298,778,838 YIELD 1,303,737,799 YIELD 2,421,875,045 YIELD 5,422,376,889 YIELD $18.15

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ETFINSIGHT YOUR SOURCE FOR THE LATEST ETF NEWS & INSIGHTS

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