THE EMERGING MARKETS INTERNET + ECOMMERCE ETF Our Presentation will begin shortly… 1 Something BIG is Happening in Emerging Markets November 2020 Alibaba HQ, Hangzhou, China A Random Walk Down Wall Street ~30% of EEM & VWO are SOEs 1992 3 “I Pray Towards Omaha” ~30% of EEM & VWO are SOEs 1993 4 “We want to invest in China” 2005 5 The Case For Emerging Markets 6 What are Emerging Markets? Emerging Markets Frontier Markets *MSCI & FTSE Disagree Americas Asia Brazil China Chile India Columbia Indonesia Mexico Korea* Peru Malaysia Argentina Pakistan Africa Europe Middle East Philippines Taiwan South Africa Czech Republic Egypt Thailand Kenya Greece Qatar Bangladesh Mauritius Hungary United Arab Emirates Sri Lanka Morocco Poland Bahrain Vietnam Nigeria Russia Jordan Tunisia Turkey Kuwait Croatia Lebanon Estonia Oman Lithuania Kazakhstan Romania Serbia Slovenia 7 Source: MSCI Classifications as of November 2018 The Case for Emerging Markets ▪ Different - Diversification benefits vs. Developed Markets – Correlation to S&P 500 < 1.0 ▪ Bigger - Larger Consuming Population – 85% of global population and 50% of global GDP ▪ Younger - Favorable Demographics – Millennials and Gen Xers spend 50% more time shopping online than Baby Boomers and Seniors ▪ Growing Faster – Consumption 8 Emerging Markets are 85% of the World World Population 7,000,000,000 6,205,000,000 5.6x 6,000,000,000 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,095,000,000 1,000,000,000 - Emerging & Frontier Markets Developed Markets 9 Emerging Markets Have Better Demographics World Population Under Age 30 3,500,000,000 3,212,146,000 8.8x 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 364,854,000 - Emerging & Frontier Markets Developed Markets 10 Emerging Markets are Passing Developed Markets 11 The Growth of the EM Consumer is THE Story “…the biggest growth opportunity in the history of capitalism…” - McKinsey & Company 12 Source: McKinsey Global Institute Investing in Emerging Markets 13 #1 Problem: State Owned Enterprises (SOEs) SOEs CONFLICTS OF INTERESTS Companies owned and controlled by the government in order to INEFFICIENT partake in commercial activities on the government's behalf POOR CORPORATE GOVERNANCE WIDESPREAD CORRUPTION Largest Emerging Market ETFs have ~30% in SOEs 14 #1 Problem: State Owned Enterprises (SOEs) ~30% of EEM & VWO are SOEs 15 Oligarchs & Korean Chaebol = kind of SOEs 16 EM 3.0 - The Evolution of Emerging Markets Investing Endowment and foundation emerging market exposure has gone through a number of phases over the years as familiarity and allocation grows so to does the variegated approach Source: The Endowment Investor: http://endowmentinvestor.com/ 17 Something Big is Happening in Emerging Markets: The Great Confluence 18 The Growth of the EM Consumer is THE Story “…the biggest growth opportunity in the history of capitalism…” - McKinsey & Company 19 Source: McKinsey Global Institute Smartphones Still A Relatively New Thing Leapfrog Leapfrog Effect Apple CEO Steve Jobs demonstrated the first iPhone at the Macworld expo in 2007. 20 Smartphones Changing Our Consumption Patterns OLD WAY 21 Smartphones Changing Our Consumption Patterns NEW WAY 22 Cheap Smart Phones – The First & Only Computer for EM 23 Increasing Smartphone Affordability AVERAGE SELLING PRICE OF A SMARTPHONE BY REGION $600 $567 $531 2013 2017 $500 $419 $400 $338 $288 $300 $259 $246 $262 $230 $215 $200 $100 $0 North America Europe Middle East and Latin America Asia/Pacific Africa Price Region 2013 2017 Difference North America $531 $567 6.80% Europe $419 $259 -38.20% Middle East and Africa $338 $230 -32.00% Latin America $288 $246 -14.60% Asia/Pacific $262 $215 -17.90% 24 Mobile Broadband = First Internet Connection for EM Smartphone Penetration by Country % of Total Population (2019) 83% 80% 79% 78% 74% 74% 70% 66% 66% 61% 60% 57% 54% 50% 46% 45% 34% 31% 30% 25% 19% 16% 15% Source: Newzoo Data 2019, CapIQ, CB Insights 25 Smartphone Penetration Still Early in Developing World Smartphone Adoption by Population (2019) 1,600 1,400 1,200 569 1,000 1,024 800 600 Total Population (millions) Population Total 400 69 186 171 200 0 Source: Newzoo Data 2019, CapIQ, CB Insights 26 Result #1 = Massive Revenue Growth EMQQ Index Total Revenue 2009-2019 ($MM) $344,044 - 10 Year CAGR of ~38% $257,424 $190,123 $138,473 $118,328 $87,942 $63,438 $43,378 $31,263 $14,204 $20,870 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 89% 99% 65% 58% 37% 30% 29% 30% 29% 31% Avg YoY Revenue Growth of EMQQ Holdings Source: Bloomberg Data, Big Tree Capital LLC Analysis. 27 EMQQ Index is not an investable product and the included time series data preceded the inception date of the live track record Growth in US $Dollars Result #2 = Value Creation #2 =Value Result $100 $200 $300 $400 $500 $600 $700 $0 at www.emqqindex.com at - Data Big TreeCapital Source: The performance depicted is of the Index and is not an investible product and contains backdated data. data. backdated contains and product investiblean and not is Index of the is depictedperformance The Jun-09 Dec-09 Jun-10 EEM EMQQ Dec-10 . Jun-11 Dec-11 Index EEM vsMSCI Index EMQQ Jun-12 Dec-12 As of 5/31/2020As of Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Live performance can befoundcan performance Live Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 111.71 592.28 28 BABA - Largest IPO in U.S. History 29 U.S. VC Funding EM Entrepreneurs = Better Governance 30 Social Networks – Tencent (HK: 0700) U.S. China 31 Mobile Payment Adoption is Pervasive 32 Mobile Payment Adoption is Pervasive 33 Mobile Payment Adoption Rapidly Expanding China's Total Online Transactional Value ($Trillions) $30 25.9 China’s Mobile Payment $25 Market Shares Others $20 8% 15.4 $15 WeChat AliPay 9.2 Pay $10 38% 54% $5 2.2 1.9 0.2 $- 2013 2014 2015 2016 2017 2018e PC Mobile 34 Ant Group - The Largest IPO Ever 35 Ant Group - The Largest IPO Ever • $35 Billion IPO ‒ Could hit $39.5 Billion if they fill the shoe ‒ $315 Billion Market Cap – larger than JP Morgan Chase ‒ Dual Listing in Shanghai (SSE: 688688) and Hong Kong (HKE: 6688) ‒ A Share premium! May “break the Chinese stock market” ‒ Will create 18 new Billionaires in one day! • Highlights How Big Fintech Part of EMQQ Story Is – EM Consumers are “Leap frogging” over traditional banking 36 Emerging Markets Are Way Ahead in Digital Payments Digital Payments Trend Transforming India 100% 92% 89% 90% 80% 78% 70% 60% 60% 58% 50% 39% 41% 40% 30% 20% 20% 10% 8% 3% 0% 2005 2010 2015 2020E 2025E Digital Cash Other Paper Source: Statista, NPCI, https://community.nasscom.in/communities/digital-transformation/fintech/india-digital- payments-2020-launching-the-first-adoption-index-time-is-now.html 37 MELI – “The Amazon/PayPal of Latin America” 38 YNDX – “The Google & Uber of Russia” 39 MMYT – “The Expedia of India” 40 India: What to watch for – Flipkart IPO? 41 India: What to watch for – Reliance Jio IPO? 42 JMIA – “The Amazon.com of Africa” 43 Private Companies - Didi 44 Private Companies - Paytm 45 The Case for the Emerging Markets Internet Sector • Growth - The Great Confluence ‒ EM Consumer + Smartphones + Internet via Mobile Broadband ‒ Ecommerce models “leapfrogging” traditional models ‒ Ecommerce growing 5x as fast as consumption • Better Corporate Governance ‒ No State Owned Enterprises ‒ Most companies backed by U.S. VC & trade on U.S. exchanges • Exposure to Private Companies & Frontier Markets 46 Impacts from Coronavirus 47 Social Distancing in Emerging Markets a Big Challenge Dharavi slum in Mumbai has a population of ~700,000 living in 0.81 square miles. 48 Our Speculation on Near Term Outlook (as of 10.1.20) • Emerging and Frontier markets may suffer the most (India, Indonesia, etc.) – Dense populations + weaker sanitation and health care – 7.28.20 – report 57% of people in Mumbai slums test positive for antibodies • China’s many advantages have allowed it to largely contain CV – Leadership and population have experience with similar outbreaks – Less bureaucracy & coordinated centralized health care – Advanced and distributed technology including an App for Contact Tracing • China looks like the one economy that resume quickest and suffer the least – Estimates of 70-80% levels of economic activity – Starbucks, Apple & Tesla are reporting resumption of business • Internet & Ecommerce based business models are getting a boost from CV – Surge in demand of widely adapted Ecommerce businesses – Accelerated adaption of certain platforms (Distance Learning, Telemedicine, Food Delivery, etc.) • EMQQ is particularly well positioned: – China is 65% of EMQQ and China is in the best position of any major economy – Ecommerce is increasing in relative importance as a result of the outbreak – Digitalization will stabilize at a much higher level 49 U.S.-China Trade War & “Delisting of Chinese Companies in U.S.” 50 S. 945 - Holding Foreign Companies Accountable Act • Passed Senate (05/20/2020) • Sponsor Senator John Kennedy R. LA (used to be a Democrat) • This bill requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make this certification if the Public Company Accounting Oversight Board is unable to audit specified reports because the issuer has retained a foreign public accounting firm not subject to inspection by the board. Furthermore, if the board is unable to inspect the issuer's public accounting firm for three consecutive years, the issuer's securities are banned from trade on a national exchange or through other methods.