The value of a corporation's Intellectual Property (IP) is a unique, forward looking indicator of corporate value. IP value reflects itself in stock price and can be used to create investment alpha that is uncorrelated with investments made using traditional '34 Act data. The reason for this is intuitive: the most innovative companies, i.e., those companies with the strongest IP portfolios, outperform their peers as a result of:

• A Federal government granted monopoly on the production of the patented product or service
• Proprietary market position
• Related economies of scale
• Premium pricing associated with unique features
• Lower cost due to protected methods of manufacturing

IP alpha becomes more focused and exploitable as the US economy progresses from a manufacturing to an innovation base. The US economy today is dominated by innovation value creation. A 2005 report by economists Kevin Hassett and Robert Shapiro estimated US IP is worth $5 trillion to $5.5 trillion, more than the gross domestic product of any other country. As shown in the graph immediately below, in contrast to 1975 where 83% of the aggregate market capitalization of the S&P 500 was represented by tangible assets, today only 25% is represented by tangible asset value.

The investment products shown below demonstrate the consistent positive contribution IP value has to corporations and investor returns. IP-based investing represents the vanguard of investor value creation as we progress deeper into the innovation age.

Ocean Tomo 300® Patent Index Family

The Ocean Tomo 300® Patent Index was the first intellectual property-based index. It represents a diversified portfolio of 300 companies with the best IP portfolios as measured by Innovation Ratio (patent value/book value). The OTP, the ETF that tracks the OT 300 stock index returned an annualized excess return of 4.38% versus the S&P 500 (SPY) for the 10 quarters ended July 2009.

Potential OT300 constituents include all equities trading on major U.S. exchanges that are among the 1,000 most liquid securities. The potential constituents are narrowed to a universe of companies that own patents. The patent-owning companies are divided into 50 style and size groups and ranked by their Innovation Ratios, i.e. patent value divided by book value where patent value is assessed by Ocean Tomo's PatentRatings® system. Each group contains an approximately equal number of patent-owning companies. The securities in each group are ranked using a 100% rules-based methodology that identifies those securities with the greatest patent value relative to book value, while maintaining broad-based diversification. The six highest ranking securities in each of the 50 groups are selected (resulting in a total of 300 securities) and then weighted by market capitalization.

The Ocean Tomo 300® Patent Growth Index is the financial industry's first growth index based on the value of intellectual property, representing a portfolio of about 60 companies with the highest Innovation Ratio [patent value/book value]. The Index includes the top growth companies of the broad-market Ocean Tomo 300® Patent Index, as determined by the price-to-book ratio. The Index is diversified across market capitalization.

The Ocean Tomo 300® Patent Value Index is the financial industry's first value index based on the value of intellectual property, representing a portfolio of about 60 companies with the highest Innovation Ratio [patent value/book value]. The Index includes the top value companies of the broad-market Ocean Tomo 300® Patent Index, as determined by the price-to-book ratio, and is diversified across market capitalization.

Further details may be found at www.OceanTomoIndexes.com.

IPXI / Ocean Tomo Enhanced Market Index Family

IPXI / Ocean Tomo offers a family of IP-enhanced market indexes. The indexes shown below were all constructed using a 130/30 weighting. Related ETFs are being developed that will allow investors to participate in IP-based index outperformance. IP-enhanced indexes created to date include:

• IPXI / Ocean Tomo Enhanced 500 Index
• IPXI / Ocean Tomo Enhanced 1500 Index
• IPXI / Ocean Tomo Enhanced Technology Index
• IPXI / Ocean Tomo Enhanced Clean Energy Index

The enhanced indexes start with the underlying index weights and then reducing weights by 30% in names with short IP signals while increasing weight by 30% in long IP signals (in both cases 30% is in total). The quantum added or reduced for individual names is proportional to IP signal. Since the IP signal is "sector neutral", this procedure does not change sector weighting (if applicable) resulting in an index tracking product with return and information ratio outperformance.

• The upper graph for each IP-enhanced index shows three year performance tracks for an IP enhanced portfolio (black line) overlayed against the performance track for the underlying index (red line)
• The lower graph shows the aggregate outperformance of the enhanced index and the performance box the annualized index outperformance, standard deviation and information ratio

In each case the enhanced index outperformed the underlying index with a better information ratio. Through its affiliation with the Ocean Tomo PatentRatings® system, IPXI has the capability to create any IP-based absolute return or benchmarked fund for which size, style and sector criteria are specified. For information on how to submit an index for consideration, please contact Dave Silverman at dsilverman@ipxi.com.