The Challenge of Mobilizing Assets Given the current state of the Islamic mutual fund industry 1 Thom Polson – CEO – Falah Capital

Endowment & Pension Investing Allocations are built around growth to cover expected & recurring withdrawals. Planning for recurring payments. Includes returns, fees, liquidity, and market dynamics. Investments have to be globally diversified in highly regulated and efficient products. 2

Islamic Mutual Funds 3 Benchmark vs. Islamic Mutual Funds (9/30) Total Return Annual Fees Return Less Fees vs. Benchmark / Index Product Russell-IdealRatings Islamic Global Index-4.6%14.4%22.7%5.8%38.2%0.7%35.6%0.0% Guernsey Domiciled – Islamic Global3.9%12.3%27.8%1.4%45.4%1.5%39.8%4.2% Luxembourg Domiciled – Islamic Global-5.0%14.8%22.7%1.9%34.4%2.1%26.4%-9.2% Ireland Domiciled – Islamic Global-5.5%9.9%25.7%3.2%33.4%2.0%25.9%-9.7% Saudi Domiciled – Islamic Global-3.5%9.4%19.3%6.0%31.2%1.5%25.6%-10.0% Active vs. Passive Management. The Fee Effect. Legal Jurisdiction. Three very important aspects for institutional investors. Are Islamic funds efficient in this way? Source: Bloomberg & Fund Fact sheets

Islamic Mutual Fund Constraints Most are domiciled in closed domestic markets. Most carry higher fees than conventional funds. Most have difficulty matching or outperforming industry standard benchmarks. Most are retail focused and home country biased. 4

Time for Product Diversification Diversification from oil price linked countries is a difficulty as most Islamic funds in the GCC are tied to local economies. Meaning if institutions choose to be Islamic, they are limited in what's available to invest in. Many groups have internal teams or outsource this work to discretionary mangers in the U.S. & Europe. 5

NYSE Listed Index ETFs Assets on massive level are flowing into passive, U.S. listed Exchange Traded Funds. Institutional investors in over 50 counties are using these products to gain broad market exposure through a highly regulated and liquid investment vehicle. Example 1: Pension funds in Chile have $16 billion in U.S. listed ETFs. Example 2: State Street has $135 billion from foreign investors in their U.S. Listed ETFs. Falah Capital has shown, creating NYSE Islamic ETFs is now a reality. A first step towards providing conventionally efficient Islamic funds. There is nothing stopping Islamic asset management companies doing the same, regardless of where their headquarters are. 6

Thank You Thom Polson, CEO Falah Capital, LLC Seattle, USA