impact shares non-profit introductory book

1469.442.8424 www.ImpactShares.org

May, 2016

Democratizing Impact Investing

469.442.8424 www.impactshares.org

An Easy Access Platform of Capital, Social Issue and Corporate Engagement

2Why Impact Shares?

Corporations Non-Profits Investors• Issue specific, focus on their passions• Lower cost passive investing• Provide market returns in their portfolio• Support their cause, while growing assets

• Demonstrates commitment to specific cause• Positive press• Attracts key employees• Creates incentive to modify corporate behavior

• Adds awareness of mission• Develops a loyal following of future contributors• Enhances corporate engagement and develops a known system to measure corporate behavior• Reaches investors early in their investment lifecycle


Who is Impact Shares? 3

Impact Shares is an ETF issuer and Investment Manager that is creating a first of a kind platform for clients seeking maximum impact investing with market returns.

Ethan Powell, CFA, CPA Founder and President, Impact Shares

Goal: Build a capital markets bridge between Leading Non-Profits, Key Investors and Corporate America to direct capital and social engagement on specific issues that benefit all of mankind.

Impact Shares’leader enjoys a strong industry reputation as an ETF and investment management innovator

Heritage built on Social Awareness: Ethan’s father worked with Norman Bourlaug; an American biologist, humanitarian and 1970 Nobel laureate who has been called "the father of the Green Revolution", "agriculture's greatest spokesperson" and "The Man Who Saved A Billion Lives."


Strategic DevelopmentCustodyIndexingAdministrationAuditorDistributionFund CounselBoard CounselPrinting

Best-of-Breed Team 4


5

Investments intended to create positive impact alongside financial return

What is Impact Investing? Donor / Investor Screening Impact Intent Returns

PhilanthropyCharitable Donor Compliance, mission Full None

Strategic Philanthropy Impact, effectiveness Full w/ leverage None - LowVenture Philanthropy Impact, scalability Full w/ leverage None - Low

Impact InvestingDirect Impact Impact, then financial Significant Moderate

Indirect Impact Financial, then impact Some High

InvestingSustainable Investor Financial w/ positive ESG screen Modest High

Socially Resp. Investor Financial w/ negative ESG screen Neutral MaximizedFinancial Investor Financial None Maximized

Between philanthropic giving and pure profit motived investing


6The Market: ESG - 3 Investable CategoriesEnvironmental Considerations

Social Issues and Priorities

Governance Best PracticesE – Well defined - investable options• Carbon footprint• Green bonds

G – Incorporated in Investment Policy and Proxy Voting• Diversity in the Board Room• Reasonableness of Management Pay

S – Not Well defined – Few options• Called the Messy Middle• Open for Leading Non-Profits to advance their mission

ESG in the United States Today$6 Trillion follow ESG considerations Market having difficulty describing the social objectives of the strategies, therefore benefits are missed37 ETFs with assets totaling $3 billion Social relevance is too broad, and measurement is suspect5 ETFs with social mandates, less than $1 billion Opportunities for Leading Non-Profits to proactively define the Messy Middle by helping design appropriate rating metrics


Key Facts:• Over $43 trillion worldwide have some form of ESG mandate• Global Growth exceeds 70% for the 2 years ending 2014• Assets managed with ESG strategies now account for more than one out of every six dollars under professional management in the United States• The assets managed at the start of 2014 by investment firms considering ESG issues grew more than three-fold—from $1.4 trillion at the start of 2012 to $4.8 trillion. • Corporate Engagement mandates have grown by over 54% in two years• Institutions are dominate corporate engagement investors, Impact Shares gives the everyone a seat at the table

The Market: Growth in ESG Investing 7

United States has the highest growth rate but lags Europe significantly in ESG assets

ESG mandates in the United States grew by 76% from 2012-14

Europe63%

United States31%

Canada5%Australia1% Asia0%

REGIONAL COMPOSITION OF ESG ASSETS

Source: US SIF Report on US Sustainable, Responsible and Impact Investing Trends


Focus has been on EnvironmentalImpact with 55% of the AUM and only 18% considered true Socially Conscious

Two largest funds have broad social mandates and virtually no voice from the sponsor

The Market: Socially Conscious ETFs 8

37 ETFs labeled as Socially Conscious from 12 issuers – totaling $4.7 billion – just over 1% of the US ETF Market

Source: Morningstar Direct, as of February 2016


Tailwind: The Shift To Passive Investing 9

• The investing public is loosing confidence in the investment management community’s ability to generate superior risk adjusted returns and is moving to low cost passive solutions. • Active management is not being validated or valued, less than 25% of active managers beat their index between 2002 and 2012.• ETFs grew at a 25% annual rate over the last decade and now have more than $1.7trillion in US assets

Source: Investment Company Fact Book Source: etf.com 2016 Inside ETF conference presentation

ETFs are the preferred fund vehicle for passive investorsPassively managed index funds are growing at the expense of Active management

Why not get Social Alpha with your Beta Investments?


Tailwind: Wealth Transfer 10

$30 trillion of wealth is estimated to transfer from Baby Boomers to Millennials in the next two decades.Millennials don’t go utilize traditional financial channels.Millennials mistrust large institutions in part as a result of the recent financial crisis. As a result of this mistrust, many don’t look to banks or financial advisors for investment.

• 52% of Millennials say they look to their parents for advice; • Banks are the second choice at 24%, • Financial advisors are a distant third – 16% usage.

This self discretion aligns well with exchange-traded funds (ETFs) which unlike mutual funds or other financial products are generally accessible and trade on an exchange like an equity.

Profit From The Greatest Transfer Of Wealth In American History

March 30, 2016

$59 trillion to go to heirs, charity by 2061May 28, 2014

Great wealth transfer will be $30 trillion – yes, that’s trillion with a TJuly 22, 2014

An Enthusiastic Call to Target Millennials as Givers: What’s It Worth to You?

August 4, 2015

Educating the Next Generationof Investors

January 4, 2016

– Baby Boomers are Expected to pass along $30 trillion during the next 30 years

The “Greater” wealth transfer: Capitalizing on the intergenerational shift in wealth

Accenture Research: 2015


Tailwind: The disintermediation of finance11

• 85% of millennials surveyed and 76% of females say they use non-financial measures when making financial decisions (e.g. ESG and SRI) and 59% of millennials believe they haven’t seen products targeted at people like them.• Historically, financial advisors have rejected ESG in part due to insecurities surrounding the marginalization of their contributions should their clients judge portfolio success on anything other than risk adjusted returns.


Tailwind: The DOL Fiduciary Rule 12

• In 2008 – DOL issued Interpretive Bulletin 2008-1 that “unduly discouraged fiduciaries from considering economically targeted investments and environmental, social and governance (ESG) factors”• In 2015 – DOL replaced its previous guidance with Interpretive Bulletin 2015-01, released on Oct. 22, intending to lessen concern about potential fiduciary risks for those who make “economically targeted investments.”• “Companies that do not pay close attention to ESG factors in their business practices are seen as being more susceptible to litigation, damaged reputations and other types of risks that detract from investment potential.” Investment News, January 13, 2016

Labor Department acknowledges fiduciaries can apply environmental, societal and governance factors when investing


13Strategy and Holistic Engagement • Vision & Mission

– Bring to market ETFs that offer unique exposure to key globally impactful trends at lower prices– Become a content platform to inform the investment community about trends to impact the world and their financial market implications– Ultimately, participate in the dream of lowering the cost of capital for leading companies that are working to make the world better

• Solution– Lower cost products that democratize access to those Impact Investing– Passive strategies following single issue social indexes that are created by Wilshire and are easy to understand– Solid beta performers providing broad market exposure

• Proactive Engagement and Outreach– In depth segmentation, targeting and positioning – Co-develop marketing road maps– Implement them tactically

SOLUTION

Public Relations

ConferenceSponsorship

Advisor EducationSocial Media

EmailCampaigns

Email List

Webcasts

Focused Digital Advertising


Arts

Health

NatureHuman Welfare Global

Human Welfare Domestic

Religious

A World of Opportunity14


What We Are Looking For 15

Our Partners will benefit from –• Awareness of their mission• Create a lifetime of engagement for future contributors• More transparent and increased corporate engagement• Reaching future contributors and investors earlierThe growth potential is due to –• The shift from Active to Passive investment strategies • The growth in values based investment outcomes (e.g. ESG, SRI) from both institutional and retail investors.• The largest wealth transfer (estimated $30 trillion over two decades)• The disintermediation of the financial services market

Leading Non-Profit Partners to Develop Investable Indices for Impact Investors


What We Need From You 16

• Commitment to participate in the development of the Index• Explore cobranding opportunities• Participation in engagement and outreach events – not to sell product, but to facilitate discussion on your mission• Initial fund level seed investmentIf you are interested, please call Ethan Powell, President, Impact Shares

P: [email protected]

Logo – Celtic knots appear in the earliest cave art. They have no beginning and no end and are a reflection of the interconnectivity between all things. The Impact Share’s Celtic knot - symbolizes the interconnectivity between capital allocation and societal priorities. The knot’s reflection implies that everything you do is a reflection of who you are and how your actions impact the world around you.

impact shares non-profit introductory book

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