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ETF VENTURES Cloud Computing • ISE Cloud Computing Index (CPQ) • First Trust ISE Cloud Computing Index Fund (SKYY) Take advantage of short- and long-term economic trends in cloud computing. DESCRIPTION The ISE Cloud Computing™ Index has been created to provide investors with a product allowing them to quickly take advantage of both event-driven news and long term economic trends as the market for cloud computing technology continues to evolve. METHODOLOGY The Index uses a market capitalization weighted allocation across the pure play, non pure play and technology conglomerate categorizations as well as an equal weighted allocation methodology for all components within each sector allocation. Index components are reviewed quarterly for eligibility, and the weights are re-set accordingly. HISTORICAL INDEX LEVELS FOR CPQ (as of 12/31/2015) 400 STATS Index Level 350 Components 300 34 250 Avg Market Cap $101.50 Billion 200 Dividend Yield 150 1.11% 100 Current P/E 26.30 50 0 2008 2009 2010 2011 2012 2013 2014 2015 Price/Sales 2.75 Cashflow/Share ISE Cloud Computing Index ISE Cloud Computing Index CLOSING PRICE LEVEL TOTAL RETURN PRICE LEVEL 22.68 COMPONENT SELECTION The following steps are taken to select the initial components for the ISE Cloud Computing™ Index: 1 Establish total population of exchange listed common shares and depository receipts for companies involved in the cloud computing industry. 2 Categorize and remove companies that do not meet the Component Eligibility Requirements. 3 If a component has multiple share classes, include the most liquid issue for that company (using average daily value traded during the prior six-month period) and remove the remaining classes. 4 Tech Conglomerate aggregate weight is fixed at 10%. Non pure-play and pure-play are market cap weighted in aggregate. 5 Adjust each component’s weighting to an equal weight within its sector’s aggregate weight. 6 Set liquidity thresholds: J Repeat steps 8 through 10 until all component percentage of average daily value traded is less than or equal to the percentage average daily value traded threshold Note that the index portfolio does not have a fixed number of stocks and attempts to include every stock in the industry that meets the eligibility requirements contained herein. COMPONENTS (as of 12/31/2015) Ticker Name Weight % ATVI UQ ACTIVISION BLIZZARD INC 0.93% ADBE UQ ADOBE SYSTEMS INC 0.92% AKAM UQ AKAMAI TECHNOLOGIES INC 3.93% GOOGL UQ ALPHABET INC A 4.01% AMZN UQ AMAZON.COM INC 4.08% AAPL UQ APPLE INC. 2.30% CA UQ CA INC 0.94% CHKP UQ CHECK POINT SOFTWARE (US) 0.86% CSCO UQ CISCO SYSTEMS INC 4.01% Set percentage of three month average daily value traded threshold to 500% EMC UN EMC CORP 3.83% EQIX UQ EQUINIX INC 4.03% Set investment threshold to $100 million FFIV UQ F5 NETWORKS INC 3.84% 7 Determine component percentage of average daily value traded given the investment threshold and the calculated weight of the component. 8 If component percentage of average daily value traded is less than the percentage average daily value traded threshold then that weight does not need to be adjusted. 9 If component percentage of average daily value traded is greater than the percentage average daily value traded threshold then assign new component weight such that percentage of average daily value traded is equal to the percentage average daily value traded threshold using the following steps: FB UQ FACEBOOK INC A 3.96% HPE UN HEWLETT PACKARD ENTERPRISE CO 2.65% IBM UN INTL BUSINESS MACHINES CORP 2.53% INTU UQ INTUIT INC 0.89% JCOM UQ J2 GLOBAL INC 0.95% JNPR UN JUNIPER NETWORKS INC 3.73% MSFT UQ MICROSOFT CORP 2.54% NTAP UQ NETAPP INC 3.53% NFLX UQ NETFLIX INC 3.72% NTCT UQ NETSCOUT SYSTEMS INC 0.88% Calculate component weight based on the investment threshold and three month average daily value traded threshold. N UN NETSUITE INC 4.12% OTEX UQ OPEN TEXT CORP 3.80% ORCL UN ORACLE CORP 3.79% PLCM UQ POLYCOM INC 0.88% RAX UN RACKSPACE HOSTING INC 3.84% RHT UN RED HAT INC 4.07% SAP UN SAP SE ADR 3.96% CRM UN SALESFORCE.COM 3.94% TDC UN TERADATA CORP 3.77% VMW UN VMWARE INC A 3.70% WIT UN WIPRO CORPORATION LTD ADR 0.87% ZNGA UQ ZYNGA INC. A 4.21% Calculate three month average daily value traded for each component based on daily closing price and number of shares traded Take the aggregate difference between the initial and adjusted weights of those components where percentage of average daily value traded is greater than percentage average daily value traded threshold and distribute evenly among stocks where percentage of average daily value traded is less than percentage average daily value traded threshold. Adjust weight of components with percentage of three month average daily value traded less than the three month average daily value traded threshold. QUESTIONS? online: www.ise.com/etfventures email: [email protected] The ISE globe logo, International Securities Exchange®, ISE®, and ISE Cloud Computing™ Index are trademarks of the International Securities Exchange, LLC. The ISE Sector index trademarks are the property of the International Securities Exchange, LLC. All other trademarks and service marks are the property of their respective owners. Copyright ©2015 International Securities Exchange, LLC. All rights reserved. All index values prior to 5/27/11 represent back-tested data [ETF-CPQ 0116]