Product Strategy Comparison Prepared For: Client Name Prepared By: Wholesaler Name

Emerging Markets Strategy 1® ETF

FEMS

Emerging Markets Strategy 1® ETF

Emerging Markets Strategy 2® ETF

OBJECTIVE & STRATEGY

OBJECTIVE & STRATEGY

The investment seeks investment results that correspond generally to the price and yield (before the fund's fees and expenses) of an equity index called the De�ined Emerging Markets Small Cap Index. The fund will normally invest at least 90% of its net assets in common stocks and/or depositary receipts that comprise the index. The index is a modi�ied equal‐ dollar weighted index calculated by SPDJI based on select small cap securities from the S&P Emerging Markets BMI Index that may generate positive alpha relative to traditional passive‐style indices through the use of the AlphaDEX(R) selection methodology. It is non‐diversi�ied.

The investment seeks to track the investment results of the MSCI Emerging Markets Growth Index. The underlying index generally represents approximately 50% of the MSCI Emerging Markets Index and consists of those securities classi�ied by MSCI Inc. ("MSCI") as most representing the growth style. The fund generally invests at least 80% of its assets in securities of the underlying index or in depositary receipts representing securities in the underlying index. It is non‐diversi�ied.

FUND FACTS

FUND FACTS

Fund Inception

2/15/2012

Fund Inception

2/8/2012

ETF Ticker

FEMS

ETF Ticker

EGRW

CUSIP

33737J307

CUSIP

464286467

Gross Expense Ratio

0.80

Gross Expense Ratio

0.68

Net Expense Ratio

0.80

Net Expense Ratio

0.49

Firm Name

First Trust

Firm Name

iShares

Exchange

NYSE ARCA

Exchange

NASDAQ

Morningstar Category

US ETF Diversi�ied Emerging Mkts

Morningstar Category

US ETF Diversi�ied Emerging Mkts

Prospectus Benchmark Index

De�ined Emerging Markets SC TR USD

Prospectus Benchmark Index

MSCI EM Growth NR USD

Benchmark Index Inception

7/29/2014

Benchmark Index Inception

12/29/2000

Morningstar Rating Overall

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Morningstar Rating Overall

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Global Broad Category Group

Equity

Global Broad Category Group

Equity

Country Available for Sale

United States

Country Available for Sale

United States

SHORT TERM INVESTMENT GROWTH OF $10,000 Time Period: 2/16/2012 to 5/31/2015 Peer Group (5‐95%): Exchange Traded Funds ‐ U.S. ‐ Diversi�ied Emerging Mkts

Top Quartile

2nd Quartile

3rd Quartile

Bottom Quartile

13,750.0 13,000.0 12,250.0 11,500.0 10,750.0 10,000.0 9,250.0 8,500.0 7,750.0 7,000.0

5/2012

Emerging Markets Strategy 1® ETF

11/2012

13,142.5

5/2013

11/2013

Emerging Markets Strategy 2® ETF

5/2014

10,974.1

11/2014

US ETF Diversi�ied Emerging Mkts

5/2015

10,102.1

Page 1 of 7 Source: Morningstar Direct

Emerging Markets Strategy 1® ETF

FEMS

ROLLING 6 MONTH ALPHA Peer Group (5‐95%): Exchange Traded Funds ‐ U.S. ‐ Diversi�ied Emerging Mkts Calculation Benchmark: MSCI EM NR USD

Top Quartile

2nd Quartile

3rd Quartile

Bottom Quartile

60.0 52.5 45.0 37.5 30.0 22.5 15.0 7.5 0.0 ‐7.5 ‐15.0 ‐22.5 ‐30.0

Alpha

‐37.5 ‐45.0 ‐52.5

6/1/2010 ‐ 11/30/2010

12/1/2010 ‐ 5/31/2011

6/1/2011 ‐ 11/30/2011

Emerging Markets Strategy 1® ETF US ETF Diversi�ied Emerging Mkts

12/1/2011 ‐ 5/31/2012

6/1/2012 ‐ 11/30/2012

12/1/2012 ‐ 5/31/2013

6/1/2013 ‐ 11/30/2013

Emerging Markets Strategy 2® ETF

12/1/2013 ‐ 5/31/2014

6/1/2014 ‐ 11/30/2014

12/1/2014 ‐ 5/31/2015

6/1/2014 ‐ 11/30/2014

12/1/2014 ‐ 5/31/2015

MSCI EM NR USD

ROLLING 6 MONTH BETA Peer Group (5‐95%): Exchange Traded Funds ‐ U.S. ‐ Diversi�ied Emerging Mkts Calculation Benchmark: MSCI EM NR USD

Top Quartile

2nd Quartile

3rd Quartile

Bottom Quartile

1.6 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5

Beta

0.4 0.3 0.2

6/1/2010 ‐ 11/30/2010

12/1/2010 ‐ 5/31/2011

6/1/2011 ‐ 11/30/2011

Emerging Markets Strategy 1® ETF US ETF Diversi�ied Emerging Mkts

12/1/2011 ‐ 5/31/2012

6/1/2012 ‐ 11/30/2012

12/1/2012 ‐ 5/31/2013

Emerging Markets Strategy 2® ETF

6/1/2013 ‐ 11/30/2013

12/1/2013 ‐ 5/31/2014

MSCI EM NR USD

Page 2 of 7 Source: Morningstar Direct

Emerging Markets Strategy 1® ETF

FEMS

Emerging Markets Strategy 1® ETF

Emerging Markets Strategy 2® ETF

EQUITY STYLE VALUATION

EQUITY STYLE VALUATION

Portfolio Date: 3/31/2015

Portfolio Date: 3/31/2015

%

%

Value

55.0

Value

20.2

Core

30.3

Core

34.0

Growth

14.7

Growth

45.8

REGIONAL EXPOSURE

REGIONAL EXPOSURE

Portfolio Date: 3/31/2015

Portfolio Date: 3/31/2015

%

%

Developed Markets

21.8

Developed Markets

31.1

Emerging Markets

78.2

Emerging Markets

68.9

Basic Materials Consumer Cyclical Financial Services Real Estate Consumer Defensive Healthcare Utilities Communication Services Energy Industrials Technology

% 3.9 8.0 21.8 2.3 11.6 4.4 3.1 3.3 2.7 6.4 32.5

GICs SECTOR EXPOSURE

GICs SECTOR EXPOSURE Portfolio Date: 3/31/2015

Portfolio Date: 3/31/2015 Basic Materials Consumer Cyclical Financial Services Real Estate Consumer Defensive Healthcare Utilities Communication Services Energy Industrials Technology

% 14.1 12.6 4.5 27.0 6.6 2.2 4.4 3.3 1.1 11.2 12.9

Time Period: 4/1/2012 to 3/31/2015

Time Period: 4/1/2012 to 3/31/2015

100.0

100.0

87.5

87.5

75.0

75.0

62.5

62.5

50.0

50.0

37.5

37.5

25.0

25.0

12.5

12.5

0.0

6/2012

9/2012 12/2012

3/2013

Basic Materials % Real Estate % Utilities % Industrials %

6/2013

9/2013 12/2013

3/2014

Consumer Cyclical % Consumer Defensive % Communication Services % Technology %

6/2014

9/2014 12/2014

Financial Services % Healthcare % Energy %

3/2015

0.0

6/2012

9/2012 12/2012

Basic Materials % Real Estate % Utilities % Industrials %

3/2013

6/2013

9/2013 12/2013

3/2014

Consumer Cyclical % Consumer Defensive % Communication Services % Technology %

6/2014

9/2014 12/2014

3/2015

Financial Services % Healthcare % Energy %

Page 3 of 7 Source: Morningstar Direct

Emerging Markets Strategy 1® ETF

FEMS

Emerging Markets Strategy 1® ETF

Emerging Markets Strategy 2® ETF

STRATEGY DETAILS

STRATEGY DETAILS

ETF Ticker

FEMS

ETF Ticker

EGRW

Strategic Beta

Yes

Strategic Beta

Yes

Strategic Beta Group

Return Oriented

Strategic Beta Group

Return Oriented

Strategic Beta Attributes

Multiple

Strategic Beta Attributes

Growth

Branding Name

First Trust

Branding Name

iShares

Manager Tenure (Longest)

3.33

Manager Tenure (Longest)

3.33

Manager Tenure (Average)

3.33

Manager Tenure (Average)

2.73

Fund Size

$ 42,721,673

Fund Size

$ 8,237,394

Prospectus Objective

Diversi�ied Emerging Markets

Prospectus Objective

Diversi�ied Emerging Markets

Number of Holdings

217

Number of Holdings

436

% Assets in Top 10 Holdings

10.8%

% Assets in Top 10 Holdings

25.7%

STRATEGY RETURN PEER ANALYSIS Emerging Markets Strategy 1® ETF

STRATEGY RETURN PEER ANALYSIS

YTD

1 Year

3 Years

12.15

2.08

14.29

Median

YTD

1 Year

3 Years

6.00

1.45

7.35

Equity

Equity Peer group rank of peer group count

Emerging Markets Strategy 2® ETF

24,649 of 74,747 57,364 of 70,153 35,543 of 53,474 8.07

Peer group rank of peer group count

11.70

17.18

Median

45,981 of 74,747 58,269 of 70,153 45,524 of 53,474 8.07

11.70

17.18

Average

9.93

14.48

15.94

Average

9.93

14.48

15.94

Std Dev

10.80

19.89

9.27

Std Dev

10.80

19.89

9.27

Equity + Diversi�ied Emerging Mkts

Equity + Diversi�ied Emerging Mkts 21 of 897

170 of 813

10 of 550

269 of 897

196 of 813

172 of 550

Median

4.02

‐2.29

5.49

Median

4.02

‐2.29

5.49

Average

4.21

‐2.14

5.89

Average

4.21

‐2.14

5.89

Std Dev

3.50

5.46

3.07

Std Dev

3.50

5.46

3.07

180 of 642

135 of 607

113 of 409

Peer group rank of peer group count

Equity + Diversi�ied Emerging Mkts + Diversi�ied Emerging Markets

Equity + Diversi�ied Emerging Mkts + Diversi�ied Emerging Markets Peer group rank of peer group count

Peer group rank of peer group count

Peer group rank of peer group count

3 of 642

117 of 607

4 of 409

Median

3.93

‐2.26

5.34

Median

3.93

‐2.26

5.34

Average

4.10

‐2.10

5.64

Average

4.10

‐2.10

5.64

Std Dev

2.95

4.72

2.73

Std Dev

2.95

4.72

2.73

Equity + Diversi�ied Emerging Mkts + Diversi�ied Emerging Markets + Return Oriented

Equity + Diversi�ied Emerging Mkts + Diversi�ied Emerging Markets + Return Oriented 1 of 2

1 of 2

1 of 2

1 of 2

1 of 2

1 of 2

Median

5.26

‐7.91

2.47

Median

5.26

‐7.91

2.47

Average

5.26

‐7.91

2.47

Average

5.26

‐7.91

2.47

Std Dev

0.00

0.00

0.00

Std Dev

0.00

0.00

0.00

Peer group rank of peer group count

Peer group rank of peer group count

Equity + Diversi�ied Emerging Mkts + Diversi�ied Emerging Markets + Return Oriented + Multiple

Equity + Diversi�ied Emerging Mkts + Diversi�ied Emerging Markets + Return Oriented + Growth

Peer group rank of peer group count

1 of 21

10 of 10

4 of 4

Peer group rank of peer group count

Median

6.45

11.00

23.51

Median

Average

6.37

18.50

23.47

Average

Std Dev

5.25

11.57

0.07

Std Dev

1 of 1

1 of 1

1 of 1

Page 4 of 7 Source: Morningstar Direct

Emerging Markets Strategy 1® ETF

FEMS

UPSIDE DOWNSIDE CAPTURE Time Period: 10/1/2014 to 3/31/2015

Calculation Benchmark: MSCI EM NR USD

Calculation Benchmark: MSCI EM NR USD

Up Capture Ratio

150.0 120.0 90.0 60.0 30.0 0.0 0.0

30.0

60.0

90.0

120.0

150.0

Up Capture Ratio

Time Period: 1/1/2015 to 3/31/2015

Down Capture Ratio

190.0 150.0 110.0 70.0 30.0 ‐10.0 ‐50.0 0.0

20.0

40.0

60.0

Time Period: 4/1/2013 to 3/31/2015

Calculation Benchmark: MSCI EM NR USD

Calculation Benchmark: MSCI EM NR USD

Up Capture Ratio

20.0

40.0

60.0

80.0

100.0

120.0

Up Capture Ratio

Time Period: 4/1/2014 to 3/31/2015

120.0 100.0 80.0 60.0 40.0 20.0 0.0 0.0

80.0 100.0 120.0 140.0

Down Capture Ratio

Down Capture Ratio

120.0 100.0 80.0 60.0 40.0 20.0 0.0 0.0

20.0

40.0

60.0

80.0 100.0 120.0 140.0

Down Capture Ratio

Emerging Markets Strategy 1® ETF

Emerging Markets Strategy 2® ETF

MSCI EM NR USD

US ETF Diversi�ied Emerging Mkts

DRAWDOWN ANALYSIS Time Period: 6/1/2010 to 5/31/2015 0.0 ‐2.5 ‐5.0 ‐7.5 ‐10.0 ‐12.5 ‐15.0 ‐17.5 ‐20.0 ‐22.5 ‐25.0 ‐27.5

11/2010

5/2011

Emerging Markets Strategy 1® ETF US ETF Diversi�ied Emerging Mkts

11/2011

5/2012

11/2012

5/2013

Emerging Markets Strategy 2® ETF

11/2013

5/2014

11/2014

5/2015

MSCI EM NR USD

Page 5 of 7 Source: Morningstar Direct

Emerging Markets Strategy 1® ETF

FEMS

Portfolio Date: 6/8/2015 Top 30 holdings: 27.02% Other: 72.98%

Portfolio Weighting %

Ticker

Position Market Value (mil)

Latest Dividend

Latest Dividend Date

Future Land Development Holdings Ltd

1.04

01030

0.45

0.06

5/26/2015

CIFI Holdings (Group) Co Ltd

0.91

00884

0.39

0.11

4/21/2015

Zall Development (Cayman) Holding Co Ltd

0.90

02098

0.39

0.06

5/15/2013

KWG Property Holding Ltd

0.86

01813

0.37

0.42

6/9/2015

Logan Property Holdings Co Ltd

0.82

03380

0.35

0.11

6/4/2015

Long Bon Development Co Ltd

0.81

2514

0.35

0.40

7/10/2014

Fantasia Holdings Group Co Ltd

0.78

01777

0.33

0.05

5/18/2015

Modernland Realty Tbk Class A

0.77

MDLN

0.33

5.00

8/28/2014

China Dongxiang (Group) Co Ltd

1.21

03818

0.52

0.02

5/19/2014

Maoye International Holdings Ltd

1.09

00848

0.47

0.01

4/14/2015

Cashbuild Ltd

0.87

CSB

0.37

3.76

3/23/2015

Dogus Otomotiv Servis Ve Tic AS

0.79

DOAS

0.34

0.68

4/9/2015

Aksa Akrilik Kimya Sanayii AS

0.77

AKSA

0.33

0.66

4/2/2015

Xiamen International Port Co Ltd H Shares

1.30

03378

0.56

0.06

6/17/2015

Koza Anadolu Metal Madencilik Isletmeleri AS

0.87

KOZAA

0.37

Yestar International Holdings Co Ltd

0.80

02393

0.34

0.03

5/20/2015

Tianjin Port Development Holdings Ltd

0.80

03382

0.34

0.05

6/5/2015

EVA Precision Industrial Holdings Ltd

0.77

00838

0.33

0.03

5/26/2015

Tipco Asphalt PLC Shs Foreign Registered

1.47

TPY1

0.63

0.00

3/6/2015

Swancor Ind

0.95

4733

0.40

3.51

8/14/2014

Tiangong International Co Ltd

0.92

00826

0.39

0.05

5/22/2015

China Zhongwang Holdings Ltd

0.76

01333

0.33

0.08

5/19/2015

Equatorial Energia SA

0.88

EQTL3

0.38

0.48

4/20/2015

Inter RAO UES OJSC

0.84

IRAO

0.36

0.00

5/16/2011

Eletropaulo Metrop Elect Sao Paulo SA Pfd Shs

0.79

ELPL4

0.34

0.43

4/28/2014

China Fiber Optic Network System Group Ltd

0.80

03777

0.34

0.05

6/5/2014

Welling Holding Ltd

0.75

00382

0.32

0.08

6/4/2015

Asia Vital Components Co Ltd

0.75

3017

0.32

0.40

9/5/2014

Taiwan Life Insurance Co Ltd

0.96

2833

0.41

0.90

7/15/2011

Real Nutriceutical Group Ltd

0.95

02010

0.40

0.04

6/8/2015

Page 6 of 7 Source: Morningstar Direct

Emerging Markets Strategy 1® ETF

FEMS

toward the long‐term growth potential of small‐cap and value stocks. At the country level, TLTE is not a vast departure from its aforementioned rivals as China, South Korea and Taiwan combine for nearly 54% of the ETF’s weight. That says TLTE’s indexing methodology accounts for its out‐performance of equivalent, cap‐weighted funds. [EM ETFs the Smart Beta Way]

http://www.etftrends.com/2015/04/tilting‐ the‐right‐way‐with‐an‐emerging‐markets‐ etf/

To its credit, TLTE has managed to outpace its rivals this year despite relatively light exposure to, in some cases, resurgent state‐run companies. Although TLTE has a 26.4% weigt to �inancial services names, often a sector chock full of state‐run comapanies in the emerging world, the ETF’s combined allocation to also state‐run heavy materials, telecom and utilities sectors is less than 19%.

April 20th, 2015 at 10:30am by Todd Shriber

Investors are taking notice. Since the beginning of March, the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), the largest emerging markets ETF, has added nearly $366 million in new assets. Just last week, the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) added over $787 million in new assets.

Time Period: 6/1/2013 to 5/31/2015 Estimated Fund‐Level Net Flow ‐ aggr from share classes (Monthly)

Last Friday’s declines not withstanding, emerging markets equities and the relevant exchange traded funds have been impressive performers this year.

20,000,000.0 10,000,000.0 0.0 ‐10,000,000.0 ‐20,000,000.0 11/2013 Emerging Markets Strategy 1® ETF

FEMS, VWO and EEM are among the most well‐known emerging markets ETF, but with the asset class rebounding, investors should consider alternatives, including the FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (NYSEArca: TLTE). TLTE, which debute in September 2012 and is now home to $237.3 million in assets under management, is not your grandfather’s emerging markets ETF and that is OK because TLTE’s break from the traditional is driving signi�icant out‐performance of its peers this year. [A Different EM Tilt] While EEM and VWO are each up more than 8% this year, impressive to be sure, TLTE has surged 10.2%. TLTE tracks the Morningstar Emerging Markets Factor Tilt Index, which tries to provide “enhanced exposure” to emerging market equities by tilting exposure

5/2014

11/2014

5/2015

Emerging Markets Strategy 2® ETF

TLTE’s upside has been bolstered by the temerity of Chinese banks, of which three are found among the ETF’s top 10 holdings. That bullishness has been accrued against the backdrop of dividend cuts from Chinese banks. Amid rising bad debt, three of China’s four largest banks earlier this month announced payout cuts with one, China Citic Bank Corp., scrapping its dividend altogether, according to Bloomberg. [EM Dividend ETF Bounces Back] Add to that, pay cuts and restrictions have sparked a spate of executive departures at the Bank of China, Bank of Communications, and China Construction Bank, among others. Remember, the “tilt” in TLTE is away from large‐caps and towards higher allocations to mid‐ and small‐caps than are seen in most diversi�ied emerging markets ETFs. That strategy has proven advantageous in years in which state‐controlled �irms have been laggards. Since inception, TLTE’s underlying index has outpaced the MSCI Emerging Markets Index by nearly 70 basis points, according to FlexShares data.

Page 7 of 7 Source: Morningstar Direct