EntrepreneurShares Pitch Book

EntrepreneurShares Pitch Book

INVEST IN VISIONARY LEADERSHIP

1 ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

ENTREPRENEURSHARES.COM

2000

Joel Shulman begins developing the 15-Factor Entrepreneur Model while studying at Harvard University.

the ENTREPRENEUR

2004

SH A RES s t o r y

After 11 years and 12,000+ candidates trained, CFA exam preparation business, The Shulman Review, is sold. 

2004

Joel Shulman writes, Getting Bigger by Growing Smaller,  with Thomas Stallkamp, former DaimlerChrysler COO.

PRODUCT TIMELINE

2005

LONG-SHORT HEDGE FUND LAUNCHED

Invest long in publicly-traded entrepreneurial companies and short those deemed bureaucratic. $5M seed provided by a high net-worth private investor.  

2010

LONG-ONLY GLOBAL MUTUAL FUND LAUNCHED This strategy carved out the long-side of the long-short  hedge fund, providing a separate record for the different performance streams. This included global equities, international equities, US large cap, US mid cap, US small cap, etc., and audited by The Spaulding Group.

2013

U.S. ALL CAP MUTUAL FUND LAUNCHED

This strategy launched on Dec. 17 beginning as an SMA.

This strategy launched on June 30 beginning as an SMA.  U.S. LARGE CAP MUTUAL FUND LAUNCHED 2014

2015

Long-short seed investor passes, hedge fund closes. 

2016

FOUNDER-CEO: RULES BASED INDEX LAUNCHED This incorporates five key factors that align with motivated leadership and is computed & distributed by Reuters.

2017

ENTREPRENEUR 30: RULES BASED INDEX LAUNCHED This represents the 30 largest "Entrepreneurial" companies by market cap and incorporates 5 of 15 proprietary entrepreneur factors utilizing a strict rules-based approach.

QUESTIONS? EMAIL US AT [email protected]

FOR FINANCIAL PROFESSIONAL USE ONLY

COMPANY OVERVIEW

WHAT WE DO

WE INVEST IN THE MOST ENTREPRENEURIAL PUBLICLY-TRADED COMPANIES

EntrepreneurShares is a boutique investment management firm investing in publicly-traded entrepreneurial companies identified through a proprietary model deeply-rooted in fundamental research.

3 ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

ENTREPRENEURSHARES AT A GLANCE

Strong ties into Babson College and entrepreneurship research community

Boutique investment firm SEC registered Boston based

Lean core team Directors Strategic partners

Extensive cumulative relevant industry experience

$274M AUM $241M Mutual Funds $33M SMA/UMA

3 mutual funds 4 active SMAs/UMAs

Founded by Joel Shulman Professor of Entrepreneurship at Babson College

Proprietary model derived from 30+ years of research

Distinct Industry -agnostic entrepreneurship focus

Inception of strategy in 2005

ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

4

PORTFOLIO MANAGER

Managing Director/Chief Investment Officer

JOEL SHULMAN PH.D.,CFA

• Founder of Long/Short equity Hedge Fund (2005-2015) • Founder of EntrepreneurShares LLC (2010-present) • P&I top Manager recognition • Professor of Entrepreneurship at Babson College (#1 ranked in Entrepreneurship) • Author of 2004 best business book Getting Bigger by Growing Smaller : A New Growth Model for Corporate America • Forbes contributor (2010 to present) • Founder of Shulman Review, a CFA test-prep company that trained 12,000+ investment professionals in 110+ countries (1993-2005) • Consultant for the World Bank; facilitated Capital Market development in Central Asian states (1995-2000) • MPA Harvard University, Ph.D Michigan State, CFA, CMA

5 ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

FOR FINANCIAL PROFESSIONAL USE ONLY

INVESTMENT PHILOSOPHY

THREE CORE BELIEFS GUIDE THE ENTREPRENEURSHARES INVESTMENT PROCESS

ENTREPRENEURIAL LEADERS CREATE FUNDAMENTAL VALUE

• Visionary entrepreneurial leaders have economic and non-economic incentives to create value • These leaders see far horizons and are resilient in tough times • Their organizations keep costs lean, debt levels manageable, and expansion projects within reach

ENTREPRENEURIAL COMPANIES OUTPERFORM THE COMPETITION

• Our research asserts that entrepreneurially run companies achieve higher long-run growth rates • Those companies emphasize motivated and transparent leadership and prioritize shareholders • They focus on sustainable organic growth and operational efficiency

ENTREPRENEURIAL BEHAVIOR TRANSLATES INTO SHAREHOLDER VALUE

• This dynamic drives earnings growth, stock price appreciation, and above average employment growth

7 ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

THE ENTREPENEURSHARES PROPRIETARY INVESTMENT MODEL STRIVES TO DELIVERVALUE TO INVESTORS

The EntrepreneurShares proprietary investment model identifies the most entrepreneurial companies

Entrepreneurial value creation can translate into strong portfolio characteristics

Proprietary investment model screens for entrepreneurial characteristics

Positioned as portable alpha driver and core holding for investors

Based on a set of quantitative and qualitative filters

Quickly narrows a pool of ~55K securities to investable universe of ~600 securities

Developed over 30+ years of research

ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

8

FOR FINANCIAL PROFESSIONAL USE ONLY

INVESTMENT PROCESS

OUR 3-STEP INVESTMENT PROCESS PRIORITIZES EVALUATION OF ENTREPRENEURIAL FUNDAMENTALS OVER STANDARD SECURITY EVALUATION

All major exchanges

~55k

15 entreprenurial attributes evaluated by proprietary model

15

ENTREPRENEURIAL FUNDAMENTALS

1

ENTREPRENEURSHIP EVALUATION

Market cap >=$300MM

MINIMUM BOUNDARIES

Bankruptcy risk

SECURITY EVALUATION

Security liquidity

Security liquidity

EMERGING MARKETS

INDEX CREATION

~600

US MID CAP

ER100

US LARGE CAP

(...)

2

SECURITY CHARACTERISTICS, FINANCIALS

Traditional fundamentals

Peer comparisons

Structural weakness

News and trends

FUNDAMENTAL ANALYSIS

PORTFOLIO CREATION

~300

(...)

IMPLX

US ALL CAP

US SMALL CAP

IMPAX

Monthly quant reexamination

Quarterly rebalancing

MONITORING, REBALANCING

Daily dashboard

3

MONITORING, REBALANCING, SELLING

7 Sell

Generally low turnover

SELLING

criteria

ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

10

ENTREPRENURIAL COMPANIES DISPLAY 15 KEY ATTRIBUTES IN 4 CATEGORIES

GROWTH TRAJECTORY

MOTIVATED LEADERSHIP

•Aligned executive compensation packages

• Organic growth opportunities

• Long duration

•Active strategic alliances /partnerships /licensing

of key managers

• Low executive turnover

15

• Sustainable growth

• Transparent governance

• Family involvement

STAKEHOLDER ALIGNMENT

SOLID FINANCIALS

• Above average ownership stake among key stakeholders

• Low SG & A

• Managble debt

•Other significant stakeholder relationships

• Low or no dividends

• High EBITDA margin%

•Above average return on investment capital

ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

11

ENTREPRENEURIAL UNIVERSE IS CONSTRUCTED BYGEOGRAPHYAND MARKET CAP

GLOBAL

Global 600+

Investable universe of global entrepreneurs

US ALL CAP

ER100 Investable universe of domestic entrepreneurs

Non-US all cap

US all cap

250+

350+

100 top entrepreneurs across US all cap

US LARGE CAP

Domestic securities $8B+ market cap

US MID CAP

US Large Cap

~80

Domestic securities $1.5B to $8B market cap

Market cap

~125

~125

US SMALL CAP

Domestic securities $300M to $1.5B market cap

US Mid Cap

~120

NON-US ALL CAP

Investable universe of non-US entrepreneurs

US Small Cap

DEVELOPED MARKETS

~150

Sectors /industries

Non-US securities $300M+ market cap

Geography

EMERGING MARKETS

Emerging market securities $300M+ market cap

ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

12

PORTFOLIO MONITORINGAND REBALANCING CENTERS AROUND DASHBOARD DRIVEN OVERSIGHT

Fundamental analysis and relevant news / developments

Risk analysis

Peer analysis

Performance monitoring

Momentum dashboard and sector comparison

Entrepreneur market barometer

Sector attribution

Quarterly rebalancing based on consistency with 15 entrepreneurial attributes

Monthly reexamination of quant model

Daily dashboards allow for timely interventions

ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

13

OUR PORTFOLIOS GENERALLYHAVE LOWTURNOVER, BUT SELL DISCIPLINE GUIDESWHEN TO EXIT POSITIONS

Relevant shifts in growth tactics (organic to acquisition-driven)

Significant balance sheet deterioration

Key managment turnover

Controversies , impropriety

Significant changes in executive compensation / compensation distribution

SELL CRITERIA

Valuation levels significantly above historical industry averages/peers (large cap and global portfolio)

Significant changes in executive ownership

ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

14

FOR FINANCIAL PROFESSIONAL USE ONLY

RESEARCH AND EXPERTISE

THE ENTREPRENEURSHARES INVESTMENTTHESIS ANDAPPROACH BUILDS ON MORE THAN 30YEARS OF IN-HOUSE RESEARCH

THE RICH GET RICHER AND SO CAN YOU – INVESTING IN A BILLIONAIRES’ INDEX

GETTING BIGGER BY GROWING SMALLER

The Journal of Index Investing, Fall 2010 Issue

Book. FT Press October 2003

• Lays out how larger companies can prosper by growing like entrepreneurs • Proposes Strategic Entrepreneurial Units • Analyzes corporate culture, compensation challenges, aligned long-term wealth creation, non-monetary manager motivation

• Construction of passive index tracking companies that drive wealth creation of the world’s wealthiest individuals • High volatility index with long-term outperformance of benchmarks

INVESTING IN TROUBLED TIMES – ENTREPRENEURS ARE YOUR SAFEST BET

THE EPHEMERAL LIFE OF AN EMERGING FUND MANAGER

The Investment Professional, Fall 2009 Issue • Identification of 15 entrepreneurial attributes • Assembly of Hedge Fund portfolio long on entrepreneurial companies, short on bureaucrats • Portfolio outperformed even in economic downturn

Journal of Investing, Winter 2015 Issue • Provides entrepreneurial insights of managing professional assets in competitive environment • Describes emerging patterns in Financial Services industry and how both institutional and retail investors can gain maximum benefit

NEW INVESTMENT STYLE – FEATURING AND INDEX OF ENTREPRENEURIAL COMPANIES

A PRIMARY RULE FOR DETECTING BANKRUPTCY: WATCH THE CASH

Financial Analysts Journal, Sept/Oct 1988 Issue

The Journal of Index Investing, Fall 2010 Issue

• Construction of passive index tracking most entrepreneurial companies

• Created a new liquidity measure for detecting bankruptcy: Net Liquid Balance

• Provides insights to both managers and analysts in assessing and developing an integrative approach to working capital managementcomparable benchmarks

• Index consistently outperformed all comparable benchmarks

PROFESSOR OF ENTREPRENEURSHIP AT BABSON COLLEGE

World’s leading entrepreneurship school

• Portfolio manager has 30 years experience teaching entrepreneurship and finance to undergraduate and graduate students

• Exposure to cutting edge entrepreneurship research, faculty, student body, and alumni network

16 ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

The fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company, and it may be obtained by calling 1-877-271-8811 or visiting www.ershares.com. Read it carefully before investing. Distributed by Rafferty Capital Markets, LLC, Garden City, NY 11530.

The EntrepreneurShares Global Fund invests in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. The Entrepreneur U.S. All Cap Fund invests in smaller companies, which involve additional risks such as limited liquidity and greater volatility. The Entrepreneur U.S. Large Cap Fund is exposed to common stock risk. Common stock prices fluctuate based on changes in a company’s financial condition and on overall market and economic conditions. Additional risks are detailed in the prospectus.

17 ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

THANK YOU

ENTREPRENEURSHARES | 175 Federal St, Suite 875 Boston, MA 02110 | 617 279 0045 www.ershares.com | FOR FINANCIAL PROFESSIONAL USE ONLY

THE WALL STREET JOURNAL.

© 2016Dow Jones e3 Company, Inc. AURightsReserved.

FRIDAY, DECEMBER 2, 2016

Category Kings in 10 Realms Total return for the top 10 funds ranked by year-to-date performance as of Nov. 30, 2016; assets, in m illi o n s of do ll ars , as of Oct. 31. Total return includes capital appreciation and reinvested d i strib u tions. Returns shown for periods of one year or less are cumulative. All performance numbers are final. Group average returns may differ from those in Yardsticks because this table uses a different set of o bj e cti v es ; for funds with mu l t i ple share classes, only the l argest is shown.

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